Quicken Loans makes big-money debut with Super Bowl commercial, PAGE 16
FEBRUARY 1-7, 2016
Experts: Bank on even more mergers Consolidations to bring branch closings, job cuts By Tom Henderson email@example.com
COURTESY OLYMPIA DEVELOPMENT
BUILDING CITY BLOCKS Area around new Detroit Red Wings arena teeming with proposed retail, office, multifamily housing, hotel projects By Kirk Pinho and Bill Shea firstname.lastname@example.org; email@example.com
Woodward Square The next wave of planning for the arenaanchored central hub of The District Detroit includes a range of features: Retail, including a major grocery store Hundreds of units of multifamily housing A high-end hotel 160,000 square feet of office space More project details, Page 18
The clearest picture to date of what is expected to be built around the new Detroit Red Wings arena includes a dizzying mix of retail, office, multifamily and hotel space expected to be largely completed by the time the first puck of the 2017-18 season drops. And within six months — two months after this National Hockey League season ends in June with — a series of substantial milestones, including major tenants such as a large grocery store and hotel, are expected to be announced. Among those seriously being courted is Walker, Mich.-based Meijer Inc. , which has been exploring conceptual plans for smaller stores to fit in dense urban areas, according to Olympia Development of Michigan executives and other real estate sources. In the area immediately around the arena
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billed as Woodward Square, Olympia is building about 160,000 square feet of office space. Offices for the Red Wings and Olympia Entertainment , the venue management arm of team owners Mike and Marian Ilitch’s business holdings, are expected to take about 100,000 square feet of that. An additional 55,000 square feet of retail space, plus a 350- to 400-room upscale hotel and more than 120 multifamily units, will be in the area bounded by Woodward and Cass avenues to the east and west and Sproat Street and the Fisher Freeway service drive to the north and south. Total investment in the Woodward Square area — one of five neighborhoods in the area Olympia intends to rehabilitate as part of its broader The District Detroit plan — is now $1.2 billion, of which 75 percent is (or will be) private spending, according to Olympia executives. SEE ARENA, PAGE 18
Back to school to make a change Taking on a degree program midcareer offers a chance to broaden horizons. Page 9
Whatever the eventual success of last week’s pair of bank deals, industry watchers say to expect ongoing bank consolidation — and continued branch closings and job reductions. It was a coincidence of timing, but not of strategy, that two big deals were announced Tuesday: Midland-based Chemical Bank ’s purchase of Troy-based Talmer Bank and Trust , and the
acquisition Columbus, Ohio-based
Huntington Banc - David Provost: shares Inc. (Nas- There will be some
daq: HBAN) of job cuts,Talmer Akron, Ohio- chief says. based FirstMerit Corp. (Nasdaq: FMER). The Huntington-FirstMerit deal, which joins two banks with a major presence in Michigan, is at valued $3.4 billion in cash and stock. It will create a bank with nearly $100 billion in assets that will operate across eight states in the Midwest. The impact on branches and jobs will vary greatly in these two deals, although few details are available yet. While it is clear there will be substantial closings of FirstMerit branches in Michigan, all of their employees will be offered jobs at Huntington. Chemical Bank has 185 branches in Michigan, and Talmer has 51, with very little overlap. David Provost, Talmer Bancorp’s president and CEO, said five or six branches might close. He said there will be some backoffice job cuts at both banks, the number of which has yet to be determined, but he said Talmer’s current headquarters in Troy will continue to be a major presence in the combined entity. Provost said some of the cuts in SEE BANKS, PAGE 20
C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 1 , 2 0 1 6
BRIEFS Front porch fix-up part of Grand Hotel winter face-lift This has been an especially busy winter offseason at the Grand Hotel, as Mackinac Island’s famed hotel is undergoing a significant face-lift. Construction crews are redoing the hotel’s iconic front porch, building its sixth restaurant, updating guest bathrooms and restoring furniture, MLive.com reports. The biggest project is the front porch, which will take two winters to complete. Crews are now redoing half of the 660-foot porch that is original to the hotel, built in 1887. “It’s really a big deal,” Julie Rogers, the hotel’s marketing manager, told MLive. Construction has also begun on the hotel’s Grand Sushi restaurant, to open in May.
Ford Museum to reopen in June after renovations The Gerald R. Ford Presidential Mu seum in Grand Rapids is expected to reopen in June after being closed last fall to allow crews to install new, permanent interactive exhibits and
conduct renovations, officials announced. The project in the former president’s hometown includes construction of the 8,000-squarefoot DeVos Learning Center , which seeks to foster civic engagement among students, The Associated Press reported. Videos, interactive digital elements and historical artifacts are being incorporated into the new museum exhibits. The Ford Presidential Foundation said more than $15 million was raised for the learning center, exhibit updates and other work. Related projects include the digitalization of papers at Ford’s presidential library in Ann Arbor.
Growing company equips craft brewing industry Although it hasn’t reached its second birthday, Oronoko Iron Works Inc. plans this year to double the size of its plant in the Berrien County village of Baroda. The reason: The company is one of the state’s few manufacturers to specifically target the nation’s $19.6 million craft brewing industry, noted an MiBiz report. Strong growth in that industry
has boosted demand for Oronoko Iron Works’ material handling products used in brewhouses. The company seeks to add another 10,000 to 15,000 square feet at its existing facility, which has capacity to build about 200 machines annually, according to founder and CEO Rusty Riley. The number of manufacturers supplying purpose-built equipment for craft brewing remains small. Industry sources attribute manufacturers’ hesitation to factors ranging from the steep learning curve needed to produce quality equipment to the challenges of courting brewers from out-of-state suppliers. “We knew about the vibrant brewing community in Michigan, but the state also has a robust workforce,” Riley told MiBiz.
MICH-CELLANEOUS 䡲 Speaking of the craft brewing industry, new news is good news for two Michigan companies. Elk Rapids-based Short’s Brewing Co . said it will begin out-of-state distribution of its beer and cider products in February, and the Hollandarea Big Lake Brewing has begun distributing its beer statewide at more than 70 locations. Short’s did not immediately say which states it will distribute in. According to the Holland Sentinel, most of Big Lake’s distribution remains in West Michigan, but the brews can also be found
at a few Detroit-area locations. 䡲 Bloomfield Township real estate investor Matt Lester completed a deal to purchase the Drummond Island Resort and Conference Center and The Hunt Club . Lester, founder and CEO of Princeton Enterprises LLC, sidestepped a planned auction
of the resort and conference center — built three decades ago by Domi no’s Pizza founder and former De troit Tigers owner Tom Monaghan — by making an offer on it before the auction began. Lester declined to disclose the purchase price, but said it exceeded the $3.5 million reserve price. The property had been most recently owned by Clifton Haley, the former Budget Rent-a-Car Corp. CEO and board chairman who bought the property from Monaghan for $12 million along with Denny Bailey. 䡲 In a deal involving two Grand Rapids-based companies, IT consulting firm Open Systems Technolo gies announced the acquisition of human-centered design consulting firm Visualhero Design. Financial details were not disclosed. OST, which employs 185, is looking to grow its $165 million revenue stream. Visualhero has 12 employees. The companies remain in their headquarters, which are about a block away from each other.
䡲 Gerald R. Ford International Air port in Grand Rapids beat passen-
ger traffic records every month of 2015 and led to an all-time annual record of 2.5 million travelers. Last
INSIDE THIS ISSUE BUSINESS DIARY . . . . . . . . . . . . . . . . 15 CALENDAR . . . . . . . . . . . . . . . . . . . . . . . 15 CAPITOL BRIEFINGS . . . . . . . . . . . . . . 5 CLASSIFIED ADS . . . . . . . . . . . . . . . . 17 MARY KRAMER . . . . . . . . . . . . . . . . . . . 7 OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . 6 OTHER VOICES . . . . . . . . . . . . . . . . . . . 6 PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . 16 RUMBLINGS . . . . . . . . . . . . . . . . . . . . 22 WEEK ON THE WEB . . . . . . . . . . . . . . 22
COMPANY INDEX: SEE PAGE 21 year’s traffic eclipsed the 2014 record of 2.3 million and is the third consecutive year the facility broke travel records, The Grand Rapids Press reported. The airport recently began a $45 million project that includes updates to security screenings and the facility’s Grand Hall. 䡲 Columnist Susan Demas, editor and publisher of the Lansing newsletter Inside Michigan Politics, started a new website — susanjdemas.com — to share her work, just as she published her final column with statewide news organization MLive Media Group . MLive, part of Staten Island, N.Y.-based Advance Publications Inc., recently announced plans to restructure operations and no longer will publish the work of several freelance columnists. On her website, Demas said she has written for MLive since 2008. 䡲
C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 1 , 2 0 1 6
Social media like Detroit Networking companies boost region’s ad, tech talent By Marti Benedetti firstname.lastname@example.org
etro Detroit has joined an elite club of areas that have offices for every major U.S. social media company. Eric Kracht isn’t surprised. “It’s because of the strength of the advertising market here,” said Kracht, vice president of sales for Fox Networks in Troy and president of the Adcraft Club. “Detroit is one of only a few U.S. cities that have a location for every social media outlet.” He said only cities such as New York, Los Angeles and Chicago can make the same claim. The focus on Detroit by Facebook, Twitter and their Eric Kracht: Strength is the competitors is a testament to advertising market. both the importance of the region’s automotive business to advertisers, and the central role social networking has come to play in marketing. Kracht said the outlets’ presence allows ad agencies to work on highly creative digital and
social media. For example, GMC ran one of its first Instagram (owned by Facebook) campaigns with a carousel ad, which are made up of a series of images showing a product or a series of frames that tell a short story about a product. “Detroit-based ads for the companies here are some of the most progressive. We have some of the newest, best ads in (the business),” he said. Michelle Morris, group director, global marketing solutions, auto and financial services for Facebook and its apps and services, said Detroit is a treasure trove of auto industry experts. “The talent in Detroit is experienced and sophisticated,” she said. “People come here from our other Facebook offices and are impressed with the (automotive) talent. A lot of these people have worked for multiple OEMs.” Kracht said social media outlets’ interest in Detroit was happening before the city’s downtown revival, but that “has helped speed the process.” The new offices have resulted in a spate of new advertising and technology jobs, while client companies, such as the automakers, have hired talent to handle their social media needs.
Federal-Mogul’s future questioned Pep Boys buy, decision not to split troubles some By Dustin Walsh email@example.com
When Federal-Mogul Holdings Corp. this month scrapped its plan to split in two, it raised eyebrows because it came right after its largest shareholder agreed to acquire the auto parts chain Pep Boys – Manny Moe & Jack. So far, any connection between the two moves remains theoretical. But the timing has raised more questions than answers about the future of the Southfield-based auto supplier. Federal-Mogul pointed to market conditions as the culprit behind its decision not to split its aftermarket parts division from its powertrain division. Billionaire Wall Street investor Carl Icahn, an 82 percent stakeholder in Federal-Mogul, won a $1.03 billion bidding war for Pep Boys, and experts believe he’ll use the parts retailer as a mainline for Federal-Mogul parts but fear his verti-
cal integration strategy will hurt the company over the long term. Pep Boys’ 800 stores, paired with Icahn’s other aftermarket retailer, the 278-location Auto Plus , would make up the fifth-largest retail auto parts chain in the U.S. Even with Pep Boys’ stores, Auto Plus would be significantly smaller than rivals Ad vance Auto Parts Carl Icahn: Won $1.03 billion bidding Inc., Autozone Inc. and O’Reilly Autowar for Pep Boys. motive Inc.
The decision to call off the split and Icahn’s Pep Boys acquisition comes in the midst of global financial headwinds faced by FederalMogul. Colleen Hanley, vice president of communications and investor relaSEE FDML, PAGE 21
SEE SOCIAL, PAGE 17
BorgWarner shrugs off its Wall Street beating By Dustin Walsh firstname.lastname@example.org
BorgWarner Inc. is being punished by Wall Street. So far, though, CEO James Verrier isn’t worried. The Auburn Hills-based powertrain supplier has witnessed its share price plummet over 12 months, down nearly 47 percent to $28.47 in Thursday trading. BorgWarner shares topped out in mid2015 at $54.88. The street’s negative viewpoint of BorgWarner stems from successive quarters last year of lowered financial guidance, despite doubling its bottom line between 2009 and 2014. Its revenue reached $8.3 billion in 2014, up from $4 billion in 2009. The adjustments are due in large part to slowing growth in China, effects of the Volkswagen AG diesel emissions scandal and weaker-than-ex-
MUST READS OF THE WEEK Filling the gap
Flint water crisis
Tom Berkowitz’s growing nonprofit helps working poorpayforhealth insurance underAffordable Care Act,
Businesses step up to help,government weighs aid,
Page 4. For continuing updates, see CrainsDetroit.com/flintwater
pected commercial vehicle sales. However, BorgWarner projects continued growth, albeit at a slower pace, and Verrier and auto experts say Wall Street’s take on the supplier is shortsighted. “Our focus is on running the business and creating economic value for our stakeholders. The market will eventually James Verrier: align itself with “Our focus is runour performning the business.” ance,” Verrier said. BorgWarner supplies to every major automaker, including Ford M o t o r C o . , G e n e r a l M o t o r s C o . , Fiat SEE BORGWARNER, PAGE 21
C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 1 , 2 0 1 6
Flint water crisis: Lawmakers target aid; biz provides help
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As last week ended, lawmakers in Lansing and Washington were proposing millions in emergency aid to Flint in response to the city’s water crisis, and local and national businesses stepped up efforts to help city residents. In Lansing, Michigan lawmakers directed another $28 million on Thursday to address Flint’s leadcontaminated water supply, allocating money for bottled water, medical assessments and other costs for the financially struggling city, The Associated Press reported. The quick, unanimous approval by the House and Senate came just over a week after the funding was proposed by Gov. Rick Snyder, who signed it into law on Friday. “We obviously have a number of issues that we have to deal with, whether it’s infrastructure, whether it’s folks having to pay for water that obviously is undrinkable,” Senate Minority Leader Jim Ananich, DFlint, told AP. “But the most important (issue) I think right now ... is to start the focus on the assessment and the providing of services.” This is the second round of funding enacted since the crisis was confirmed in the fall, bringing the total allocated to nearly $39 million. Snyder has promised to put forward more funding for Flint in his upcoming annual budget proposal, but has not said how much. It is unlikely to be as high as the figure of up to $400 million mentioned in Congress on Thursday. Senate Democrats proposed that amount in emergency federal aid to Flint, with a requirement that the state match the spending on Flint pipes, dollar for dollar. “This is a state responsibility,” Michigan Sen. Gary Peters said at a news conference at the Capitol. “The state broke it. They need to fix it.” Flint’s water became contaminated when the city, under emergency state management, switched from the Detroit municipal system and began drawing from the Flint River in April 2014 to save money. State regulators failed to ensure the new water was treated properly and lead from pipes leached into the water supply. Some children’s blood has tested positive for lead, which has been linked to learning disabilities and behavioral problems. While the damage to Flint’s water distribution infrastructure potentially is $713 million, according to an assessment done by Genesee County and cited in the state’s request for federal assistance, Snyder and the Republicans who control the state Legislature said it is far too early to talk about a wholesale replacement of the pipes. Snyder’s administration has estimated it could cost up to $55 million to repair some 15,000 lead pipes. Officials are hopeful that the addition of anti-corrosion chemicals will effectively recoat the lines.
Gov. Rick Snyder announces appointments to the Flint Water Interagency Coordinating Committee at a news conference last week. The state spending bill includes $500,000 for outside experts to study the integrity of the water system infrastructure. The money approved Thursday will pay for developmental assessments of children age 3 and younger, additional school nurses, lead and blood testing, plumbing fixture replacements and other costs. The largest allotment — $4.6 million — is for bottled water, filters and replacement cartridges being distributed to residents in the city of nearly 100,000 people. About $3.9 million will be used to treat children with high blood-lead levels. In Washington, Senate Republicans were non-committal on whether they would back the measure that would spend up to $400 million without any offsetting budget cuts and add to the federal deficit. The Senate could vote as early as this week on the proposal. The measure introduced by Sens. Debbie Stabenow, D-Mich., and Peters requires federal action if a state refuses to warn the public about unsafe water and authorizes $20 million a year for 10 years to monitor lead exposure in Flint. The measure also would require the En vironmental Protection Agency to alert the public if there is a danger from lead in the water system, if the state refuses to act. The Michigan senators and other Democrats offered the measure as an amendment to a bipartisan Senate energy bill. Meanwhile, local and national business communities — including many in metro Detroit — announced philanthropic activities to assist Flint Tom Gores: residents. Detroit Pistons Pledged at least $10 million. owner Tom Gores, who grew up near Flint, pledged to raise at least $10 million from the private sector for immediate and long-term recovery efforts. How the $10 million will be distributed, and a timetable for the aid, hasn’t yet been determined, said a spokesman for Gores’ Beverly Hills, Calif.-based Platinum Equity LLC . Gores will donate some or all of the
money himself while seeking contributions from the business community, locally and via his connections in the corporate and sports worlds. Among other relief efforts: 䡲 The 2016 Meridian Winter Blast presented by Quicken Loans has set a goal of $75,000 in a fundraiser to benefit Flint. The Feb. 12-14 festival in Detroit will feature 46 bands whose members will donate 10 percent of their pay. That sum will be matched by the Winter Blast Foundation in partnership with The Community Foundation of Greater Flint. 䡲 Comcast Corp. technicians in Flint were taking water filters and pamphlets on their trucks to hand out during their customer visits, according to a company spokesman. Comcast was also keeping these items at its Flint service center. 䡲 Troy-based mortgage lender United Shore collected and shipped nearly 60,000 bottles of water and more than 10,000 paper and plastic goods last week to the Flint community after a weeklong relief drive. 䡲 The Consumers Energy Founda tion said it will contribute up to $50,000 to support the children of Flint through the Community Foun dation of Greater Flint . The foundation is the philanthropic arm of Jackson-based Consumers Energy. 䡲 The United Way of Southeastern Michigan will distribute cases of water to Flint residents through a project spearheaded by Huntington Woods-based CrowdRise, an online platform for charitable fundraising, and Craig Newmark, a Michigan native and founder of Craigslist. Other water crisis-related news: 䡲 Snyder named a 17-member committee of medical and field experts to determine long-term solutions to fix Flint’s water system, AP reported. 䡲 A state official said Michigan offered fresh bottled water for state employees in Flint starting in January 2015, although residents were told that tap water was safe to drink until last fall. A liberal group critical of Snyder had released state emails describing how water was being provided to the State Office Building in Flint. 䡲 The Michigan Board of State Canvassers rejected petitions to recall Snyder over his handling of Flint’s water, according to The AP. 䡲
CRAIN’S DETROIT BUSINESS // FEBRUARY 1, 2016
Recent UM graduate ZF TRW leases Farmington Hills launches drive against building for global electronics HQ state auto dealer law By Kirk Pinho email@example.com
LANSING — A recent University of Michigan graduate who aspires to work in politics is single-handedly launching a ballot petition drive to allow automakers to sell their vehicles directly to buyers. Mick Yuille, 22, knows he has a hurdle to climb: He has until June 1 to collect more than 252,000 signatures in order to put his proposal before the Legislature, or to voters in November. He said he believes if he throws enough enthusiasm behind the project, he could have a shot. Mick Yuille: Must Yuille formed collect more than a ballot com252,000 signatures. mittee, Eliminate (i), and did not file a waiver with the state saying he plans to raise or spend less than $1,000 — which would have exempted him from some campaign finance filings. That doesn’t mean he expects to have that much money, he said, adding that he wanted to keep all options available. He said he will have to depend on donations and is still working on a final plan for how he’ll gather signatures. The Board of State Canvassers last week signed off on the proposal’s form, which starts the signature-collecting process. If successful, the petition would go to the Legislature. If it isn’t adopted, it would be placed on the November ballot. Yuille’s proposal would repeal a section in a 1981 state law that pro-
LINDSAY VANHULLE Capitol Briefings firstname.lastname@example.org Twitter: @LindsayVanHulle hibits automakers from selling new vehicles other than through franchised dealers; he called it the “anti-Tesla provision.” Silicon Valley-based electric carmaker Tesla Motors Inc . has challenged Michigan’s law, arguing it prevents the company from doing business in the state because Tesla doesn’t sell its vehicles through dealerships. In 2014, Gov. Rick Snyder signed legislation that tightened up that provision by striking the word “its” — a reference to automakers’ own franchised dealerships — to clarify that auto manufacturers can’t directly sell cars to consumers at all. “This law was passed so that the dealers could have their sales model protected from competition,” Yuille said. Yuille graduated in December with a degree in political science. He will begin serving this summer with City Year Detroit, an Ameri Corps service program that places groups of volunteers in schools to work directly with students. He said he would like to run for office someday, and counts the petition drive as good campaign experience. 䡲
ZF TRW will open its new global electronics headquarters in the Ar boretum Office Park in Farmington Hills by the end of the second quarter following a lease of a 171,000square-foot building. ZF TRW, the active and passive safety technology division of German parent ZF Friedrichshafen AG, signed a lease recently for the Arboretum III office building at 34605 W. 12 Mile Road, which is owned by Farmington Hills-based Friedman Integrated Real Estate Solutions LLC and Bloomfield Hills-based Kojaian Management Co. The company will keep about 100 employees in a building that it owns at 24175 Research Drive in Farmington Hills, and more than 600 employees will move from other locations into the new space in the Arboretum III building, including engineers, technicians and office staff, said John Wilkerson, senior communications manager for ZF TRW. The ZF TRW North American headquarters will remain in Livonia. “The new (global electronics) headquarters will house full component and vehicle testing capability when complete across ZF TRW’s driver assist, occupant safety and RF electronics product lines,” Wilkerson said in an email. “The ZF TRW electronics busi-
ZF TRW leased this 171,000-square-foot office building in the Arboretum Office Park in Farmington Hills.
ness is a key growth driver for ZF and on the leading edge of the development of advanced safety and partially and fully automated driving development.” The Arboretum III building is just north of I-696 and east of Drake Road. Wilkerson said the move is in response to the need for more office space, laboratory and vehicle testing areas as engineers and technicians are added to the payroll. The Research Drive building will be ZF TRW’s testing and validation area, Wilkerson said. That building is 80,000 square feet, according to CoStar Group Inc. , a Washington, D.C.-based real estate information
service. A joint venture between Friedman and Kojaian bought four buildings in the Arboretum Office Park almost two years ago for $8 million from New York City-based Petra Capital Management LLC, according to CoStar. The buildings totaled 421,000 square feet. Earlier this month, ZF North America Inc. , the Northville-based subsidiary of ZF AG, announced that it would move its headquarters to Livonia. ZF Friedrichshafen AG purchased TRW Automotive in a $12.4 billion deal less than a year ago. 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB
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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 1 , 2 0 1 6
CRAIN’S DETROIT BUSINESS
U.S. economy has more room to expand
OPINION Marathon emissions issue needs solution M
arathon Petroleum Co. has invested $2 billion to expand its Detroit footprint, even buying the homes of nearby residents to accommodate its expansion. Now it is running into serious opposition as it seeks permits to increase emissions at the refinery in Southwest Detroit. The state Department of Environmental Quality has not yet decided whether to approve Marathon’s revised air pollution permits. The conundrum: Federal regulators have demanded that refiners reduce sulfur content in gasoline. The process to do that creates more sulfur dioxide This is not the as a byproduct. It’s gotta go — right? Or does it? time to expect somewhere What if technology and more incalm scientific vestment could reduce what’s discussions. emitted into the air and capture it another way? It is the time Environmentalists remember to look for a a time a few decades ago when so better solution. much sulfur dioxide was released into the atmosphere that it returned as “acid rain.” Even at lower levels, studies indicate exposure to sulfur dioxide can exacerbate asthma attacks in children. Marathon’s quest has two strikes against it: a public distrust of regulators who say emissions are safe (thank you, Flint water crisis!) and Detroit Mayor Mike Duggan, who has threatened to sue if the state signs off on increased emissions. The plant expansion also would increase emissions of oxides of nitrogen, carbon monoxide, volatile organic compounds and other compounds, the Detroit Free Press reports. This is not the time to expect calm scientific discussions, not with emotions running high at public meetings over public health concerns. This IS the time to look for a better solution. This seems like an opportunity to regroup, identify better options and invest in technologies to reduce potentially unhealthy and bad-smelling emissions. With $2 billion invested already, that may be Marathon’s best course.
Inaction sends wrong message Quick decisive action when employees do the wrong thing is important. Action — and inaction — send different messages to employees, clients and corporate peers. Take last week’s saga in the advertising world. Our sibling publication Advertising Age reported that an internal “joke” email extolling “Ghetto Day” was sent internally to Campbell Ewald staff several months ago from an employee in the San Antonio office; Detroit-based CEO Jim Palmer reportedly didn’t tell superiors of the email or immediately discipline the author. But digital communications have their way of traveling. Eventually, the memo reportedly cost the agency a client, USAA. And it apparently cost Palmer his job, as announced last Friday by IPG, Campbell Ewald’s parent company.
OTHER VOICES Cliff Roesler This piece was written by Cliff Roesler, Rick Larkin and Steve Sredzinski of Angle Advisors LLC, Birmingham. The early 2016 stock market gyrations have caused many M&A dealmakers to wonder aloud over how long before the next recession hits. Having heard “five years on, two years off” one too many times, despite a relatively anemic expansion since 2010, we decided to look at the statistics. We wondered how much gas could be left in the tank. The analysis, comparing real GDP growth in each economic expansion dating back to 1950, suggests that at our 2 percent growth rate, we should have at least three to four years left in a “typical” U.S. recovery. While we thought the findings were interesting, we also sought evidence to suggest that this time is special. Despite concerns about falling prices in oil, the fact is that when energy is cheaper, one tends to see more spending. Name one thing that humans do where cheaper energy
doesn’t stimulate activity. We think low-cost energy is a boon, making all commodities cheaper, which allows for greater spending power. Most expansions last longer than five years. Duration notwithstanding, we also note that larger recoveries tend to follow larger recessions. Combined, we see the U.S. in line for continued growth. The average recovery over the past 50 years has generated well in excess of 25 percent real GDP growth. The recoveries that follow steeper recessions average over 30 percent real GDP growth. We are at only 13 percent real GDP growth for this recovery to date. Based on the current 2 percent growth rate, history suggests the U.S. economy has plenty of room to expand. At the current rate, it might take five to seven
more years to reach an average expansion. And, while unemployment has fallen to 5 percent, wage inflation has not materialized. In fact, wage growth is stagnant, meaning the long-term unemployed are resuming their jobs hunt as jobs now become available. If one considers a key driver of expansion to be consumer spending, and consumer spending is dependent on job and wage growth, we still have only half the cylinders firing (job growth without wage growth). Yes, there will always be talking heads telling us to crawl under our beds, but to us, this U.S. economic expansion might say (if it could speak), “The rumors of my death have been greatly exaggerated.”
Consider impact of mental health service changes Editor: Send your letters: Crain’s Detroit This letter is in response to the Business will consider for Crain’s article “HMOs seek mental publication all signed letters to the health bids” from the Jan. 18 edition. editor that do not defame Let’s not forget the people at the individuals or organizations. Letters center of this discussion. The peomay be edited for length and clarity. ple who receive important support will be negatively impacted by lobEmail: email@example.com bying and contract changes. Consideration of the reasons why we have a carve-out of long-term not medical, medical care, or health supports and services for people care. with developmental disabilities — Second, despite claiming success and those with a working with peomental illness — ple with developThe people could be useful. It mental disabilities would certainly be who receive in other states, the more useful than the important bulk of those efself-serving stateforts are in the area ments of those support will be of acute health whose eyes grow negatively care. Nowhere large when looking have managed at the potential in- impacted by health care plans crease in their bot- lobbying and worked, for any tom lines. period of time, First, the support contract with the long-term and assistance peo- changes. supports and servple with disabilities ices, for any subneed and which are Dohn Hoyle,Sherri Boyd,The Arc stantial number of arranged, provided people with develor administered by opmental disabilithe public mental health system are ties. While some have done so with not medical. They were not de- persons who have a mental illness, signed nor intended to be medical. the results are, at best, mixed. PeoThey are personal care and assis- ple with a mental illness and their tance needed to accomplish daily supporters are not in favor of such a goals of productivity, community move. inclusion and independence. While Third, nowhere else in the it is likely therapeutic, it is decidedly country do people with develop-
mental disabilities have the opportunities they have in Michigan. Unlike the vast majority of states, we do not have a waiting list for services. In most states, thousands of people are on a waiting list and have been there for a decade or more. Michigan, in addition to being a leader in person-centered planning, has more people engaged in self-determination and other innovative options, like independent support brokers, than any other state. People with developmental disabilities, their families and advocates embraced and helped design managed long-term supports and services through the public mental health system. This has clearly stemmed the growth in the cost and been a boon to individuals and their families. Our 1915(b) waiver is also innovative in that it applies to people with a mental illness — as well as those with a developmental disability. Understanding that nearly all the assistance provided through the public mental health system is funded through waivers is also ignored by those who want to expand their organizations. There also are many rules and requirements regarding home and communitybased services established by the Centers for Medicare and Medicaid SEE NEXT PAGE
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Services and other agencies. The rules governing waivers, including person-centered planning, provide for an individualized planning and support plan that will be foreign to and beyond that capability of entities which manage acute health care. The timing of the health plans’ effort to “integrate” and expand their business is interesting. Michigan has just initiated four pilots on integrating health care for people eligible for both Medicare and Medicaid. These efforts utilize the carveout for long-term supports and services for people with mental illness and developmental disabilities. Calling for integration, without allowing us to learn from the pilots, is silly at best. Despite automatic enrollment (unless they take action to opt-out, people are automatically enrolled) and despite significant incentives to be and stay enrolled, people with a mental illness and especially those developmental disabilities are opting out. Could this demonstration of unwillingness of these populations to be enrolled with an ICO (Integrated Care Organization) be the reason the plans push for integration without seeing or hearing from the pilots? Despite serious concerns about the discrepancies from one part of the state to another and others, our organization, on behalf of people with developmental disabilities and their families, continues to support the carve-out as clearly in their best interests. We also believe it remains clearly in the best interests of the State of Michigan.
Re: Michigan lawmakers approve $28M more for Flint water crisis Enough already about Flint ... every
hour of every day talking about this. Hope somebody is accounting for all of the dollars flowing into Flint from all of these people that didn’t even know Flint existed until this tragedy. There isn’t enough spotlight for all the people clamoring for the “light.” Skandy1
How about that? Going to take the Democrat senators to get the fed funds for Snyder’s mistakes; maybe
the Repubs can have some more re spect for the big government they
detest. john md
“He also expects some of the redevelopment cost to be financed through a crowdfunding campaign that will kick off later this year.” Is
Re: The Flint water crisis: What’s next?
this what we’ve come to?
What’s next? The government will give millions of taxpayer dollars to the same inept bureaucrats who ruined the water system and squandered millions over the last 25 years, and in five years it will be essentially the same.
Re: Officials file federal lawsuit to block voting ‘gag order’ law
Re: Palazuelo sets sights on more property in Detroit
passing laws that aren’t needed, prudent, or wise, here comes the GOP legislature, ready to gag local officials! BrewPubNate
GP for Life
Lansing fails to fix our roads, they fail to provide affordable college to Michigan students, they fail to fix the glaring problems of mold and vermin in Detroit schools, and stand idly by while other school districts fall into chaos. … Yet when it comes to meddling in local affairs, and
Re: Deal reached in Providence CRNA dispute I am sure this would be an interesting study in contract negotiations. Hank
Re: State puts off decision on I-375 redevelopment Such vision, such decisiveness! If the decision is tough, do nothing.
Dohn Hoyle Director of public policy Sherri Boyd Executive director The Arc, Michigan
Max & Erma’s betrayed family touch in closings Editor: The recent and unexpected closing of all but three Max & Erma’s restaurants in Michigan was understandably a shock to the employees who reported for work. Interviews with employees indicated that all had enjoyed what they referred to as the “family atmosphere” in each of the facilities. Unfortunately, that family value was not shared by American Blue Ribbon Holdings, which owns and operates the restaurants. The jolt of employees reporting for work and seeing a sign that their restaurants had been closed certainly is not indicative of how real families operate. Real families have open lines of communication and engage in problem-solving discussions. The website heralds something called “Happiness Hours” where guests can enjoy a price reduction on specific items during certain times. Presumably, there will be no happiness for the staff or for those of us who enjoyed $5 burgers on Thursday and free cookies on Wednesday! Bill Kalmar Lake Orion
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Applicants could use fresh approach to college rankings olleges and universities, and those applying to them, have an ever-increasing selection of rankings and research reports to compare each institution with its neighbors. But do any of these have value beyond marketing, or advancing a certain public policy agenda? Dan Hurley, CEO of the Michigan Association of State Universities, thinks a ramp up in rankings could be a public service, if the new lists offer enough fresh perspectives or pull attention away from flawed, traditional rankings. Rankings “have been proliferating, each with its own set of metrics and its own rationale for why its own approach is better than the others,” he said. “And they can be damaging if they create an arms race for rank or too much emphasis on aspects like reputation. But some universities can benefit from it.” One gold standard tracked by several admissions offices is the U.S. News and World Report ranking, published annually since 1983. But Hurley said that list has long had its critics for emphasis on selectivity or reputation. “The report is double-edged, because it is historically the most visible of all the listings, and universities will certainly tout (it) if they’ve made the list. But they essentially assign more points and more value based on an institution’s selectivity, so you’ll be ranked higher the more student applicants you turned away,” he said. “And you also get ranked on spending per student — the more you spend per student, the higher you rank, which is counter to good policy. Just because you can spend more doesn’t mean your students learned more.” Nonprofit research publications like The Hechinger Report have also called attention to schools recruiting applicants just to turn them down and improve their selectivity rates — a practice tied in part to rankings. Hurley said one relatively refreshing approach to ranking in recent years is the Washington Monthly report ranking colleges by “contribution to the public good” as measured by research, social mobility or recruiting and graduating students from low-income households, and service engagements or encouraging students to give something back to the community. The top three Michigan universities on this list — the University of Michigan in Ann Arbor (No. 13), Michigan State University (No. 33) and Michigan Technological University (No. 68) — all outperformed their most recent rank among national universities in the 2016 U.S. News list (Nos. 29, 75 and 123, respectively). Washington Monthly also gets support from the Indianapolis-based Lumina Foundation for Education, which aims to improve educational access. 䡲
SPECIAL REPORT: BUSINESS
EDUCATION BACK TO
SCHOOL From a journalist to a doctor, six share their stories about pursuing an MBA Profiles by Chad Halcom
Local business executives often take a little time midcareer to go back to school for new skills — but the reasons can be as varied as the degrees they pursue. Many have advancement goals in mind with their current employers, while others want to diversify their skills or meet new demands. But returning to school can mean adapting to new modes of education like online learning, or balancing work and family demands that didn’t exist in their undergraduate years. Crain’s spoke with a few current and recent midcareer students on tackling those challenges. Profiles begin here and run through Page 11.
Tracy Gallo: Click created opportunity, Page 10
Sam Mossallam: Leader in health care, Page 10
Scott McGregor: Diversification, Page 11
David Contorer: His network grows, Page 11
Marta Salij: From journalism to accounting, Page 11
Andrea Klaver: MBA student wants to hone her administrative skills. Pictured above. PHOTO BY JACOB LEWKOW
ANDREA KLAVER, 31 Clarkston Research coordinator Beaumont Research Institute, Royal Oak Current program: MBA, Walsh College, Troy. Expected completion, early 2018. Previous degree: B.S. in microbiology, Michigan State University, 2006
ometimes people who get pro-
Smoted in an organization feel that their new management duties are a redirection from the career they first chose. But Andrea Klaver wants to delve further into her leadership role. Klaver, a research coordinator after two promotions at the Beau mont Research Institute of Beaumont Health in Royal Oak, started pursuing an MBA part time at Walsh
College in fall 2014 and is taking one course per 11-week semester, or four per year. Her degree doesn’t have a specific focus, but she expects it to hone her administrative skills. “I realized, due to the Affordable Care Act being passed in 2010, health care and research were going to have to be managed differently,” she said. “So I’m hoping now to not be just a part of the
massive shift that’s underway in health care, but to help lead it.” One new experience in her current degree program has been taking some classes completely online — but most have involved a mix of two hours in class per week and two hours online. The new degree is not a training program for any specific position, but Klaver SEE KLAVER, PAGE 10
C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 1 , 2 0 1 6
SPECIAL REPORT: BUSINESS EDUCATION ometimes it pays to click on those Web
or Sam Mossallam, getting a promotion
Slinks offering new executive training op-
portunities. Tracy Gallo found one about three years ago through a Web service that General Mo tors Co. dealers use to look up incentive information on their vehicles, and decided to check it out. After nearly 30 months in an executive MBA program that Northwood University offered in coordination with GM, Gallo left her job as a finance/insurance manager at Columbiana Buick Cadillac Chevrolet in Ohio last December for a new consultant position on GM’s Shop-Click-Drive shopping program. Gallo enrolled in the first class of students in the new 30-month MBA program starting in January 2014. That has meant a combination of intensive online learning and traveling to Northwood’s satellite campus in Troy for a week every semester of intense on-site learning. In her new role, Gallo is a kind of dealer contact manager on Shop-Click-Drive for about 500 of GM’s 4,300 U.S. dealerships in Michigan, Ohio, Indiana, Kentucky and Tennessee. Launched in November 2013, the online GM auto shopping tool had been adopted by about half of all dealerships in late 2015 and allows users to browse inventory, line up financing and pick accessories before signing paperwork at a local dealer. Gallo helps coordinate with dealers on site optimization and troubleshooting technical issues in the new role. “The new degree made it (the GM position) possible, I believe. This is an upcoming pro-
Fand new administrative duties at
Henry Ford Health System while completing an MBA
TRACY GALLO, 41 Lisbon, Ohio Consultant General Motors Co. Current program: Executive MBA, Northwood University, Troy regional education center. Expected completion, May 2016. Previous degree: Undergraduate in secondary education with a concentration in English, Youngstown State University, 1996. Piece of advice: Mustering self-confidence is essential. “Having been away from academics for many years, it can be very intimidating. A lot of things have changed in the past 20 years. … (But) no matter how much support you have from your family, or how little support you get from your employer, the confidence has to come from within yourself to make the first step.”
gram within GM, and just as a retail dealership employee, that would have been a more difficult transition to try to make,” she said. “The new degree program has helped me to be marketable. I’m really liking the new program. It’s a huge opportunity, and I think as a service it’s only going to get bigger.”
degree program to make him a better administrator was just a coincidence. But it hasn’t hurt a bit. Mossallam started at Henry Ford as a senior staff physician in the department of emergency medicine in 1999, and was associate chief medical officer when he started taking MBA courses at Oakland University in September 2014. “Some of the big issues facing health care include the complexity in administration,” he said. “Physicians tend to do OK with that if they have the wherewithal and skill set for it, but having the MBA background and experience that goes with it is invaluable as an administrator. And there is some literature to suggest physicians who lead make better health care leaders, but of course I’m biased.” Last year, Mossallam became vice president and medical director of international initiatives, overseeing consulting and development projects oversees, including staffing and organization of the planned Aldara Medical Center under construction in Riyadh, Saudi Arabia. Aldara hopes to open the outpatient-focused care center by summer for its first patients, then add new health services over time like cardiac catheterization, obstetrics and gynecology and bariatrics, under a con-
SAM MOSSALLAM,45 Bloomfield Township Vice president and medical director of International Initiatives Henry Ford Health System, Detroit Current program: MBA, Oakland University, Rochester Hills. Expected completion, April 2016. Previous degree: Doctor of medicine, State University of New York Health Sciences Center at Brooklyn, 1994.
sulting and intellectual property licensing agreement with Henry Ford, which has overseen some hiring and organization. “In the region they are in some ways about 20 years behind us in looking at the modeling of patient services, and we’re looking to help bring an outpatient delivery model and help health professionals with making an important paradigm shift,” he said. Other international projects for Henry Ford are expected to follow, possibly in China and India, Mossallam said.
Piece of advice: Have at least some goals for your degree program outside of your current career track. “I wanted it for self-fulfillment. As a professional goal, the degree will help and certainly not hinder, but I had various reasons to do it.”
KLAVER FROM PAGE 9
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considers it an investment in her own future. “Ideally I’d love to stay here (at Beaumont), because I know the ins and outs of this organization right here, and I know research,” she said. “But I’d also like to have a role in human resources management and find a way to work up into Beaumont.” Klaver returned to college while raising two preschool-age children. She credits her family with supporting her in the time commitment, but said her experience doesn’t seem unusual among part-time graduate students at Walsh. “I’m right about in the mean on my age,” she said. “I don’t feel singled out or a lot older than the group. I didn’t know that I ever wanted to go back at first, and it took me six or seven years in my career to realize this. But there are plenty of others like that as well.” Piece of advice: There is no perfect timing for anything, including a new college degree. “A year from now, I’m going to be one year older anyway, so I may as well be one more year further into my degree program. I just have to study differently now that I’ve got a family, finding every small opportunity to do so. I carry my school supplies with me everywhere.”
C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 1 , 2 0 1 6
SPECIAL REPORT: BUSINESS EDUCATION might be an understateD iversification ment for what Scott McGregor has been
W the side benefit of improving your
doing the past four years. After his seventh academic year working for Huron Valley Public Schools in Oakland County, he didn’t really see his high school math teacher job as a long-term prospect. So he looked to Oakland University for a second graduate degree, this time a masters in business administration — but he also started taking real estate classes and spent about a year as an agent. His MBA focus changed over time, from finance to human rePiece of advice: sources and big data. Business degree “I still wanted to uticourses will inlize my mathematics volve plenty of background, so I startcollaborating in ed out with more of a teams, which finance focus. But as I was familiar for moved through the him as an educaprogram, data analyttor but can be an ics was really just comadjustment for ing along,” he said. some. “Don’t go in ex“I had taught an AP pecting certain statistics course, but I things of people started to get really in— have an open terested in that and mind. Your peers moved in that direccan sometimes tion.” teach you more He hasn’t left bethan your hind education comcoursework can.” pletely, however, and coaches varsity baseball at Lakeview High School in St. Clair Shores. More than halfway through his degree program, he also found an internship at Troy-based Kelly Services Inc. in the fall of 2013. That was supposed to last a year, but by early 2014 he’d advanced to a full-time position in the organizational effectiveness. His
network of friends and business contacts, David Contorer has found. Contorer was director of philanthropic services at the Community Foundation for Southeast Michigan in Detroit when he returned to school part time in 2010 to pursue an MBA at what is now the Mike Ilitch School of Business at Wayne State University. The degree seemed like a good way to supplement his University of Michigan social work degree and nonprofit career experience with some accounting and finance training. Plus, Contorer’s children were getting a bit older, and it seemed easier to make a time commitment outside the home. But the Wayne State program also has allowed him to interact with for-profit business managers from several backgrounds and broaden his own horizons, he said. That interaction enhanced his own graduate education, he said, and he hopes his fellow students benefited as well. “My particular course of instruction has really allowed me to cross-pollinate and meet people in various backgrounds and industries I wouldn’t otherwise have any contact with,” he said. Contorer has since moved to become executive director at Bloomfield Hillsbased Hebrew Free Loan , a 120-year-old nonprofit that gives interest-free loans to Jewish residents of Michigan who have qualifying needs for personal assistance, education or starting a new business. Now with three semesters to go (counting the current winter term), Contorer hopes to apply the new business training at Hebrew Free Loan. Historically, the organization recoups about 98.5 percent of its loan capital from borrowers, while
anting to improve yourself often has
Scott McGregor, 32 Madison Heights Consultant for organizational effectiveness and adaptive analytics Kelly Services Inc., Troy Recent program: MBA in human resources, Oakland University, 2014 Previous degree: In education with specialty in mathematics, University of Michigan, 2005, and education administration, Eastern Michigan University, in 2010
latest job title is consultant for organizational effectiveness and adaptive analytics. That involves focusing on performance management data for Kelly corporate employees, looking at five-year and 10-year progress and outcomes for people hired with certain traits, spotting connections and helping to guide future hires and professional development. The performance data also allows him to study trends like turnover of employees, to help form new corporate strategies. Maybe ironically, his own outcome doesn’t much resemble what he envisioned in seeking an OU degree. “This kind of fell into my lap, and I’ve loved it for two and a half years,” he said. “And I’m excited to see what’s coming, within my organization and within data analytics.”
DAVID CONTORER,46 Royal Oak Executive director Hebrew Free Loan, Bloomfield Hills Current program: MBA,Wayne State University, Detroit. Expected completion, December 2016. Previous degree: Master of Social Work, University of Michigan, 1995. Piece of advice: Finance and marketing courses, and applying previous experience (in Contorer’s case, social impact organizations), in the MBA program have been particularly helpful. “It became a wonderful part of the mutual learning, actually, for me to share with students and professors about philanthropy and charitable organization ‘business,’ and I believe this enhanced my (and others’) experiential journey.”
Contorer and the leadership of Hebrew Free Loan fundraise and cover the difference, allowing it to continue its social service mission. “I have no plans to jump out from here and launch a startup or anything,” he said. “Foundation work and planning is something I could clearly do more of in the future. But what I’ve really wanted was to experience in finance, technology and business management to enhance some of my direct service background.”
tional news outlets, Marta Salij saw the writing on the wall and decided to change careers rather than try to hold onto another media job. Also like many journalists, she found herself suited to another career that deals in hard facts and tangibles. Salij lost her job as a book critic for the Detroit Free Press in 2007 and started a few weeks ago as an intern for Troy-based Puckett, Clement and Schellenberg PC while she completes an accounting degree at Walsh College. “I could see what was happening to print journalism, and I decided it was time to spend a few years with my young kids and to write a novel,” she said. “(And) I did write most of a novel, and discovered I don’t like to write fiction at all. I like facts.” Salij started working as a seasonal tax preparer for H&R Block about four years ago, discovered she liked the work and is preparing to sit for her CPA exams later this year. Returning to college in June 2014, Salij said journalism and accounting have much in common and she chose Walsh over other local schools on the recommendation of several friends and neighbors. But with two semesters to go at Walsh, she already completed job interviews last fall and expects to start in
MARTA SALIJ,54 Birmingham Accounting intern Puckett, Clement and Schellenberg PC, Troy Current program: MBA with accountancy focus,Walsh College,Troy. Expected completion, September 2016. Previous degree: B.A. in English with a writing concentration, University of Tennessee-Knoxville, 1987.
a position at Baker Tilly Virchow Krause LLP in Southfield after graduation. Salij said Web-based research and student diversity were two of the most noticeable changes since completing her undergraduate degree at the University of TennesseeKnoxville. “I’m impressed with the number of international students in my classes,” she said. “The student body is so much more diverse than in the 1980s, in age and ethnicity.”
Piece of advice: Ask around and pick a school where graduates have good career prospects, and view the degree in terms of a return on investment.
many journalists downsized L ike in a shrinking market for tradi-
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SPECIAL REPORT: BUSINESS EDUCATION
Big data a big deal for colleges, students By Leslie D. Green Special to Crain’s Detroit Business
Nest Labs Inc. sells an estimated 1.2 million thermostats each year. Data scientists gather the temperature preference information from 100,000 households each month; and then Google , which purchased Nest in 2014, uses skilled data analysts to help the company more competitively run its business. Online retailers, social media and the Internet of Things — manufactured things that are connected to the Internet (like the Nest thermostat) — are generating extraordinary amounts of data. Plus, with computers and cloud computing cheaper and faster, companies can perform high-powered number crunching on data to personalize products or predict future trends. “Data is a strategic tool that makes you lower your costs, increase your revenues and increase
your profits,” said Amitabh Sinha, associate professor of technology and operations at the University of Michigan . A company with these tools, he said, puts competitive pressure on its rivals. The challenge, however, is finding people who have the right blend of skills who can do the work, said Mark Isken, associate professor of management Amitabh Sinha: information sysBig data can provide competitive tems at Oakland University. advantage. That’s where a number of local universities have stepped up their game, working to supply the students to fill that need. It hasn’t always been that way. Ten years ago, only a handful of
universities nationwide offered big data/analytics degree programs, said Ratna Babu Chinnam, a professor and co-director in the big data and business analytics group at Wayne State University . Now nearly 100 schools are enhancing data-related curriculums, adding undergraduate and graduate degrees and offering certificates for working professional or graduate students wanting to augment other degrees.
Job openings, high pay That was a good move for universities and students. The U.S. Bureau of Labor Statistics lists computer analysts, statisticians and management analysts among the top 21 occupations, with the most expected job growth through 2024. And Glassdoor Inc. , in its 25 Best Jobs in America report in January ranked data scientist No. 1, with more than 3,300 job openings and a median salary of $118,709. Chinnam, who also is director of WSU’s global executive Ph.D. program and supply chain research group, adds his own local observation to those numbers: “From what I hear, some … are willing to offer $110,000-$130,000 to fresh gradu-
ates, depending on their skills, but they aren’t able to attract them because these graduates are getting better salary offers elsewhere. It is another reason we need better programs.” He added that there are nearly 1,000 job openings for analytics professionals within 100 miles of Detroit alone. For its part, Wayne State plans to offer a master’s degree in big data and business analytics by fall 2016, Chinnam told Crain’s early last year. The board of governors in March will review the proposed degree that, if approved, would create a “comprehensive and holistic” program. He argued that programs at colleges and universities previously were too technical and fixated on computer science or so focused on business that they lacked analytical instruction. Now, “you are seeing a cross-pollination of colleges and departments that recognize new engineering programs, business methods and optimization. It’s hardware, software and business coming together to tackle the problem.” At OU, officials reworked its quantitative methods program, and
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last fall it opened a business analytics minor for undergraduate students and two new graduate programs: a business analytics concentration within its master of science IT management degree program, and started a program called Oakland that Isken calls an “interdisciplinary program in actuarial sciences where we partner with the department of math and statistics.” Traci Gusher, managing director of data and analysis at audit and research firm KPMG LLP , agrees with this interdisciplinary curriculum approach. “It doesn’t matter if students are philosophy majors, accounting or marketing majors or in any other field of study, data is fundamental to the work they will do,” she said. “Everyone is feeling the impact, and it’s only going to get bigger.” Individuals Gusher considers for employment not only did well in their fields of study but also took statistics, computer programming or other courses that taught analytical approaches. “Those are the skills that are going to put you ahead of your peers,” she said. Eastern Michigan University has a new joint-college degree program in the works for fall 2016. Andrew Ross, a math professor at EMU, said the undergraduate data science and analytics degree, if approved, would comprise math/statistics, business school and computer information systems courses. “Just having the data isn’t enough, and just knowing how to do the analysis isn’t enough,” he said. “We need to bring those two things together.” In January, UM added big data analytics and big data management to its curriculum of about six undergraduate courses and 10 to 15 graduate courses in everything from basic statistics to databases and data visualization to machine learning and advanced prescriptive and predictive analytics, Sinha said. He said about 80 percent of its bachelor’s of business and MBA students choose to take the courses. UM doesn’t offer a degree in business analysis or data science but does offer a certificate for those pursuing master’s degrees as part of its $100 million, five-year initiative to expand data science offerings to all of its graduate students.
Taking it outside the classroom Since 2013, Michigan State Univer sity has offered a popular master of
Learn more about our new name and future home in the District Detroit at ilitchbusiness.wayne.edu.
science in business analytics that is a cross collaboration between colleges. The number of applicants nearly doubled from 173 in 2015 to 341 in 2016, but only 30 students are admitted because “we make it experiential,” said Betsey Voorhees, CONTINUED ON NEXT PAGE
C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 1 , 2 0 1 6
SPECIAL REPORT: BUSINESS EDUCATION
Corporate Facility Graphics That Inspire
A customer checks a Nest Labs Inc. digital thermostat. Data scientists gather information from such devices, and analysts — the kind avidly sought by employers after college training — are needed to perform high-powered number crunching. FROM PAGE 12
MSBA program director at MSU. She said MSU’s business analytics students must participate in three “experiential” corporate projects where they work with “live, messy data” at one of the university’s many partners: Michigan Lottery, G e n e r a l M o t o r s C o . , S t e e l c a s e , United Service
(USAA), American Farm Bureau Federation , D i a g e o p l c , M i c h i g a n S t a t e U n i versity Federal Credit Union, Meijer Inc. and others. “Right now, students are working with Carhartt , which IBM sponsors with software,” Voorhees said. MSU reported the average annual salary among its M.S. business analytics graduates increased from $80,000 in 2014 to $90,020 in 2015 with 91 percent of its students getting job offers. In January, MSU added an online master certificate in business analytics for working professionals. University of Michigan-Dearborn in the fall plans to offer a new bachelor-level data science program as a
joint effort between several departments. It already has a master of science in business analytics available to graduate students in any discipline. “This program is the fastestgrowing program in our college,” said Charu Chandra, professor of operations management. Last fall, more than 100 students were enrolled in the degree program, he said, and about 75 percent of UM-Dearborn’s 500 MBA students take at least one of the elective business analytics courses offered. Chandra also has seen high average salaries — ranging from $60,000 after graduation to $120,000, depending on experience. “Think about this,” said Chandra, “If Kroger grocery store gives its customers a card to save money, they are capturing my buying history every time I swipe the card and buy Dannon yogurt. Then they can send out coupons related to my buying history. You can see it in automobiles: By mining the data of consumers over the years, they can see what colors they like and what fea-
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tures they like that will help sell these types of cars. They can personalize the product by analyzing the data. In addition to data analysis, companies need employees skilled at forecasting for future patents and in decision-making analysis as well, Chandra said. Like MSU, UM-Dearborn also offers an experiential instruction, though on a smaller scale. Each term, Chandra places nine graduate students on a research project with a local company. Put in groups of three, students work on unstructured problems, meeting with decision makers, understanding how to use data, software and an algorithm, come up with recommendation and develop a report. “This semester, we are working with Ford global analytics and Ste fanini,” he said. “The idea is that the students need to understand how to handle the industry problem so they can hone their technical skills and learn how to communicate and interact professionally.” “That’s priceless,” Michelle Pluskota, vice president of business services for Plymouth-based Com cast Corp. said of MSU’s and UMDearborn’s experiential programming. “Actual real-world experience is different than what’s taught in the classroom. I look for people at the director level that have some sort of analytics skill set in their background. Those who can take data, diagnose it, and turn it into something that benefits the business.” And companies are going to pay more for those who can interpret the data and come up with the right plan, Pluskota said. And, like Comcast, they are hiring. In 2014, Comcast added 78 new analytics-related jobs in its central division, 13 states including Michigan. Last year, the mass media company added 114 new data analytics positions. Comcast also has created a separate business intelligence unit that looks at how its customers buy, at opportunities in customer experience and at product strategies.
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Nonprofit helps working poor pay for insurance under ACA By Jay Greene firstname.lastname@example.org
A growing nonprofit is aiming to fill the gap for the working poor who find it hard to pay for federally subsidized Affordable Care Act plans. Tom Berkowitz, a federal software specialist turned independent stock market trader, wanted more control over his charitable donations, so last year he formed the Metro Detroit Health Insurance Pro gram.
From Nov. 1 through Jan. 31, when open enrollment ended for health insurance in the Michigan health insurance marketplace, Berkowitz and MDHIP helped about 160 people in metro Detroit pay their share of the governmentsubsidized premium for a silver plan. Coverage begins March 1. The subsidies MDHIP paid directly to the insurance companies averaged about $85 per month, said Berkowitz. The exchange offers four levels of coverage. Silver is the thirdbest of four plans. It covers 70 percent of costs, with platinum, the best, covering 90 percent of costs. “The Affordable Care Act has enabled many people access to health insurance they never could afford before. But sometimes even a $50 premium is too much for them,” said Berkowitz, 61, who was born in Oak Park and graduated from the University of Michigan before a 30-year
career with the federal government. Last year, Berkowitz helped about 50 people with subsidies through a pilot project with Michigan Universal Health Care Access Network, or MichUHCan. “We needed to fly under the radar last year and didn’t publicize it” Berkowitz said. “The project worked out so well we decided to expand it this year on our own. We need people to know about it so they can contact us or one of our agencies to see if they qualify.” Executive Director Marjorie Mitchell said Tom Berkowitz: MichUHCan last Seeking to expand year was the fiduhealth insurance ciary for the pilot project. project until Berkowitz gained 501(c)(3) approval. MichUHCan promotes comprehensive health care and improved patient outcomes. “MichUHCan was and remains concerned that health care is still unaffordable for many low- to middle-income individuals and families,” Mitchell said. “We supported the pilot as we work to get health care that is actually affordable.” Last year, the now-retired Berkowitz formed Metro Detroit Health and Well Being , the 501(c)(3)
organization doing business as MDHIP, after securing IRS approval on Sept. 22. “Everyone helping me are volunteers (two workers and five board members), and so our admin expenses are zero,” he said. To fund MDHIP in 2016, Berkowitz expects to contribute $150,000 of his own money. Besides Berkowitz, MDHIP’s funds come from public donations, which so far include family members and friends. He is seeking outside donations, which are deductible, and will be applying for grants from local foundations to expand for next year. “We tell them that each dollar donated can purchase from $4 to $80 worth of insurance, depending on the person’s age and income,” he said. “Therefore, donors can get a huge bang for the donated dollars.” For example, $400 of donations can translate into a health insurance policy worth $10,000, he said. “We pay the insurance bills of our enrollees directly to their insurance companies,” Berkowitz said. “For some lower-income enrollees, we will pay their whole bill each month as this group can’t afford anything and they get the largest subsidies, so their insurance is inexpensive.” For those who earn a little more, Berkowitz said they “have to reimburse us each month for a portion of their bill, but we always cover the
majority of our enrollees’ monthly premiums.” Essentially, MDHIP pays for most or all of the premium costs of silver plans that the federal subsidies, which averaged $276 per month, don’t cover. Nationally, about 18 million people have gained health insurance through Obamacare, including 10 million from the private exchange and 8 million people through Medicaid expansion. But Berkowitz said thousands either drop out of the private insurance program because they can’t afford premiums or never go through the enrollment process. “We are hoping to reach these people,” he said. In Michigan, about 82 percent of the more than 325,000 receiving private coverage on the insurance exchange in Michigan required subsidies from the federal government for the Silver plans. Of 325,000 on the exchange in Michigan, 68,624 enrolled in Southeast Michigan, 29,645 in the FlintSaginaw-Bay City market, 65,950 in Grand Rapids-Kalamazoo market, 4,667 in Lansing, 9,300 in the Marquette market and 24,968 in the Traverse City-Cadillac market. Berkowitz’s MDHIP is intended to help people who live in the counties of Wayne, Oakland, Macomb and eastern Washtenaw counties. Eligibility covers people who
earn too much for Medicaid ($16,243 individual $33,465 for a family of four) but are below 200 percent of the federal poverty level, which is $23,540 for an individual. With the average financial assistance about $85, the maximum MDHIP offers is $100 per household with one adult and $150 per month to a married couple. “These people live paycheck to paycheck and can’t afford even the subsidized health insurance plans that are available to them through the Affordable Care Act,” he said. Berkowitz said he believes many of the people eligible for his program have jobs but work at small companies that don’t offer health insurance. He said one of the problems lowincome people with subsidies face is reconciling their income at the end of the year. During open enrollment, people are required to estimate the amount of income they will earn during the year. The subsidy amount is based on this estimate. “People lose jobs or get raises during the year and that causes changes in their income,” he said. “They get a bigger refund if they underestimated and pay more if they overestimated,” Berkowitz said. “They must keep track of their income. If they know they will get more than expected, they need to call marketplace to let their credits get adjusted.” Because MDHIP doesn’t provide enrollment assistance, just the financial backing, Berkowitz said he has joined forces with 58 clinics and social service agencies throughout the metro Detroit area. “These organizations are offering our program to their low-income uninsured clients/patients,” he said. “They know if someone needs help paying the subsidies.” Krista Nordberg, director of enrollment and advocacy services with Washtenaw Health Plan in Ypsilanti, said she has referred about 40 people to MDHIP. “It has been a tremendous resource, and the people we are able to extend the assistance to probably would have gone without health insurance for 2016,” Nordberg said. “I have had tears of joy in my office when I discuss the program and complete relief on the faces of people with health conditions to know they will have their health insurance premiums paid all year. “Sometimes the hardest thing to explain about the program is that is it real, people just don’t expect this level of generosity.” Rachel Mundus, outreach and enrollment specialist with Detroit Central City Community Mental Health Inc ., said the health center has en-
rolled about 200 people for coverage this year, mostly into the Medicaid program. Other Detroit-based agencies that sign up exchange enrollees and refer clients to MDHIP include Ma trix Human Services, Advantage Health Centers and Mercy Primary Care. 䡲 Jay Greene: (313) 446-0325 Twitter: @jaybgreene
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CALENDAR WEDNESDAY FEB. 3
Professional Leadership — The Jack Aronson Story. 7:30-9 a.m.
Leadership Oakland. Featuring Jack Aronson, founder, Garden Fresh. MSU Management Education Center, Troy. $32 members, $36 nonmembers. Website: leadershipoakland.com. Inside the CEO Mind: Paul Glantz. 8-10
a.m. Detroit Regional Chamber. Glantz, the driving force behind Emagine Entertainment Inc., shares his story of becoming a cinematic expert and innovator. $30 DRC members, $55 nonmembers. Emagine Royal Oak. Contact: Marianne Alabastro, (313) 596-0479; email: email@example.com. CAM Construction & Design Tradeshow.
9 a.m.-4:30 p.m. Construction Association of Michigan. Products and services from more than 100 exhibitors will be on display at an event attended by commercial construction owners, contractors, suppliers, architects and engineers. MotorCity Casino Hotel, Detroit. Free with ticket. Contact: Amanda Tackett, (248) 972-1109; email: firstname.lastname@example.org. Why Salespeople Fail … and What You Can Do About It. 11 a.m.-1 p.m. Ann
annual technology industry report will be discussed. Detroit Institute of Arts, Detroit. $25 members, $45 nonmembers. Contact: Lori Podsiadlik, (248) 457-3212; email: email@example.com. The Unlocked Summit. 9 a.m.-5 p.m. Feb. 20. A la carte Galore,
EmpireLifeMag.com. A learning experience for entrepreneurialminded women, with workshops and a panel discussion on the “State of the New Detroit.” Keynote speaker and Unlock the City award recipient is Detroit City Council member Mary Sheffield. Tech Town, Detroit. $100$150. Contact: TaQuinda Johnson, (248) 716-0240; email: firstname.lastname@example.org. Detroit Policy Conference. 7:30 a.m. Feb. 24. Detroit Regional Chamber. Keynote remarks by David Maraniss,
Pulitzer Prize-winning journalist. MotorCity Casino Hotel, Detroit. $159 chamber members, $225 nonmembers. Contact: Janelle Arbuckle, (313) 596-0340; email: email@example.com. Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.
DEALS & DETAILS ACQUISITIONS & MERGERS Doeren Mayhew & Co. PC, Troy, a CPA
and advisory firm, has merged with Adler & Co. PC, Farmington Hills. Adler & Co. will operate under the Doeren Mayhew name. Adler & Co. founder Jay Adler, along with his staff, have joined the Doeren Mayhew team in the national headquarters in Troy. Website: doeren.com.
1981 W. Maple Road, Troy. Website: xfinity.com.
MOVES Siegfried Group LLP, an accounting
firm, has moved from 200 Town Centre, Suite 1900, Southfield, to One Woodward Ave., Suite 1425, Detroit. Telephone: (313) 230-2660. Website: siegfriedgroup.com.
Aqaba Technologies Inc., Sterling
ProQuest LLC, Ann Arbor, announced
Heights, a Certified Google Partner agency, has launched a new website for DynamicHR, Auburn Hills, a human resources firm. The website integrates portals for client payroll management and a separate employee portal. The site uses responsive Web design and is built on the WordPress content management system. Websites: aquabatech.com, dynamichr.com.
that the first collection of a women’s magazine archive will be available on the ProQuest platform by midyear. Digitized titles include Better Homes & Gardens (1922-2005), Chatelain (1928-2005), Good Housekeeping (1885-2005), Ladies Home Journal (1883-2005), Parents (19262005) and Redbook (1903-2005). The second collection will launch in the second half of 2016 and will contain six U.S. titles, including Cosmopolitan and Woman’s Day. Website: proquest.com.
CONTRACTS PublicCity PR LLC, Southfield, a pub-
lic relations agency, has added four new clients: Community Care Services, Lincoln Park, a nonprofit specializing in treatment of mental health and substance abuse disorders; Birmingham Bloomfield Art Center, Birmingham, a nonprofit art center that offers exhibitions, classes and other programs and events; Gazelle Sports Inc., Kalamazoo, an active-wear and fitness lifestyle retailer with a store in Northville; and SameAddress, Southfield, which provides in-home care and concierge services for older adults. Website: publiccitypr.net.
Goodwill Industries of Greater Detroit,
Detroit, has opened a new retail location at 3782 Carpenter Road, Ypsilanti Township. Website: goodwilldetroit.org. Macprofessionals Inc., Novi, an Apple authorized service provider for iPhone, is opening a store at the Hunter’s Square mall, 30907 Orchard Lake Road, Farmington Hills. Website: macprofessionals.com. Comcast Corp., Philadelphia, has opened a new Xfinity store at the Cambridge Crossing shopping center,
Global Telecom Solutions, Detroit, a telecommunications consulting firm, has launched a new website. Website: gtsdirect.com.
Deals & Details guidelines. Email firstname.lastname@example.org. Use any Deals & Details 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.
Arbor Spark. Attendees can learn how to close more sales by following a systematic approach. Ann Arbor Spark. Free. Registration ends 24 hours before the event at annarborusa.org. Contact: email@example.com.
Trust and Estate Experience
In Your Corner.
43rd Annual Women’s Recognition Luncheon. 11 a.m.-1:30 p.m. Henry
Ford College. Event supports HFC’s student outreach and support and student emergency fund; includes a raffle and silent auction. Student and Culinary Arts Center, Henry Ford College, Dearborn. $100-$1,000. Contact: Danielle Lewis, (313) 845-9610; email: firstname.lastname@example.org.
Over 30 years’ experience in helping clients protect their families with efficient, understandable, and effective estate plans.
Expertise in estate and income tax planning, assets protection, and business succession planning.
UPCOMING EVENTS Bridging the Leadership Gender Gap. 11:30 a.m.-1:30 p.m. Feb. 9.
Leadership Macomb. Local leaders from Baker College, DTE Energy and Plante Moran will discuss how they develop and promote women leaders. Sycamore Hills Golf Club, Macomb Township. $35. Contact: (586) 954-2788. Internship Forum and Software Talent Mixer. 11 a.m.-1 p.m. Feb. 12. Ann
Arbor Spark. An event offered for software-related businesspeople interested in finding and developing young talent. Ann Arbor Spark, Ann Arbor. Free. Contact: email@example.com. Website: messageblocks.com. Technology Industry Outlook. 8-11 a.m. Feb. 22. Automation Alley. The key findings of Automation Alley’s
First Tier Ranking Trusts & Estates
Contact Tom Bergh at firstname.lastname@example.org
Kalamazoo Ŷ Grand Haven
C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 1 , 2 0 1 6
Quicken Loans buys 60-second Super Bowl spot By Bill Shea email@example.com
Fans watching the Carolina Pan thers and Denver Broncos in the Super Bowl 50 telecast will get 60 seconds of Quicken Loans Inc. marketing during the first half. The Detroit-based online mortgage lender said last week it has bought a minute of airtime for a commercial on CBS during the Feb. 7 game to tout its Rocket Mortgage, which promises consumers the ability to get a mortgage in as little as eight minutes on their mobile device or computer. Quicken didn’t disclose how much it paid for the commercial time, which is the most expensive advertising on television because of the massive audience for the game. Last year’s Super Bowl drew 114.4 million viewers, the most for any broadcast in U.S. television history. Thirty seconds of airtime is selling for $4.6 million to more than $5 million, according to Advertising Age.
The Quicken spot was created by Minneapolis-based ad agency Fallon Worldwide Inc., best known locally as having the Cadillac account from 2010 to 2013. “The 60-second TV spot showcases Rocket Mortgage, the first end-to-end completely consumerdriven online and on-demand mortgage experience, and how it will positively impact America,” Quicken said in a statement. Quicken has been heavily marketing Rocket Mortgage with broadcast spots since December as part of its “Push Button, Get Mortgage” campaign. In the service’s November launch, Quicken said Rocket Mortgage customers can visually compare and customize interest rates, mortgage terms, monthly payments for numerous products with current pricing. They also can lock in an interest rate and get approval on conventional, FHA or VA mortgages. Quicken is using the Super Bowl
spot to suggest that Rocket Mortgage can aid a type of trickle-down economics that will boost the American economy: “If this new mortgage experience from Quicken Loans can turn an intimidating process into something less daunting, more people will buy houses. If more people buy houses, they will need kitchen gadgets, appliances and furniture for their house. We will then need more people to make those amenities. With more craftsmen employed, they will also buy houses ... and so on. It all starts with a website that simplifies home financing.” Coinciding with the commercial will be a sweepstakes at PushButtonGetStuff.com that will give away hundreds of American-made items, including a living room package, a Viking range, KitchenAid mixers, Blendtec blenders and Shinola bikes, Quicken said. The grand prize is $100,000 to pay off a mortgage or to buy a new home. “We are giving away items Amer-
FINANCE Marilee K. Bartl, Managing Director and Portfolio Manager, Norris, Perné & French
ADVERTISING & MARKETING Catharine Hansford, Senior Account Director, MVP Collaborative Looking to add value to their existing Blue Cross relationship and to serve the healthcare industry in new and expanding ways has led MVP Collaborative to engage Catharine Hansford. MVP is a full-service Marketing Communications company. Her years on the BCBSM Market Communications team bring broad institutional knowledge and expertise to the position. Her background as a subject matter expert in customer engagement, insurance and healthcare will fit in perfectly with her role.
TECHNOLOGY Chris Fowler, Vice President, CloudSAFE Ltd. CloudSAFE Ltd. announced that Chris Fowler has joined the company as vice president. He will work with partners and solution providers to deliver industry specific solutions for their clients and continue to expand CloudSAFE’s reseller network. Chris has held multiple product management, sales, marketing and consulting roles throughout the IT industry. He was the Regional Vice President of Sales for HRsoft. He has also held key positions at JobApp Network, UltraLevel, CDI and WebX Solutions.
Marilee K. Bartl has been appointed a Managing Director and Portfolio Manager. She will focus on further enhancing the firm’s stock selection process while helping manage NPF’s continued growth. Ms. Bartl brings nearly 20 years of investment industry experience to her new position, including a decade as partner with a Kalamazoo-based Registered Investment Advisory firm.
Stephen Wert, Managing Partner, Norris, Perné & French Stephen B. Wert, CPWA, has been named the firm’s firstever Managing Partner. He is charged with ensuring that NPF maintains and strengthens its unique structure as it grows. Mr. Wert began his career with NBD Bank and later joined the Chicago office of Deloitte & Touche as Director of Recruiting for the Audit, Tax and Specialty Consulting Practices. He joined NPF in 2007 as a portfolio manager and became a partner in 2009.
Crain’s has moved its complete list of appointments and promotions to www.crainsdetroit.com/peopleonth emove. Guaranteed placement in print and online can be purchased at this website. For more information or questions regarding advertising in this section, please call Lynn Calcaterra at (313) 446-6086 or email: firstname.lastname@example.org
ican families could use in their homes, and in keeping with the theme of our Super Bowl ad, all of the products were made right here in America by hardworking American craftspeople,” Quicken President and Chief Marketing Officer Jay Farner said in a statement. “This is exactly the story the ad tells — how much the simple act of buying a home impacts the entire American economy.” The other national Super Bowl 50 ad with local ties is the Buick brand’s first spot during the game, for its new Cascada luxury convertible. It was created by Troy-based Leo Burnett Detroit and features New York Giants wide receiver Odell Beckham Jr. and actress-model Emily Ratajkowski as part of the General Motors Co. brand’s “Experience the New Buick” perception campaign launched in 2014, according to Advertising Age. Locally, Super Bowl 50 will air on CBS affiliate WWJ-Channel 62. 䡲
Hector Sossi, Roma Café owner, dies at age 92 By Sherri Welch email@example.com
Hector Sossi, owner of Roma Café — one of Detroit’s oldest restaurants — died Jan. 23. He was 92. Born in Cleveland, Sossi at a young age returned to his parents’ native Italy, where he was raised and educated. At age 18, he joined the U.S. Army to fight for his native country in World War II. After the war, Sossi came to Detroit to work with his uncle, Morris Sossi, who had purchased Roma Café with a partner from its original owners, the Marazza family, in 1918 HectorSossi and become the sole owner a year later, according to the Roma website. In operation since 1890, the classic Italian restaurant in Detroit’s Eastern Market district claims to be the city’s oldest. Hector Sossi worked his way up at Roma, starting out as a busboy and assuming management of the restaurant during the early 1950s when his uncle returned to Italy. After marrying his late wife, Stella Martinico, who was the restaurant’s bookkeeper at the time, Sossi bought the restaurant from his uncle in 1965 and operated it ever since as a Detroit dining landmark. He is survived by his daughter and business partner, Janet Sossi Belcoure, and her husband, B.J.; and his granddaughter Jessica Belcoure Marcetti and her husband, Thomas Belcoure Marcetti. His daughter continues to operate Roma Café today as a third-generation owner, according to its website. Sossi was a member of the Grosse Pointe Yacht Club, the Detroit Golf Club and the Detroit Athletic Club. Memorial contributions can be made to Susan G. Komen for the Cure, P.O. Box 650309; Dallas, Texas 75265-0309. 䡲
PEOPLE: SPOTLIGHT MotorCity Casino set to name Holaday president MotorCity Casino Hotel plans to name Jenny Holaday, senior vice president of operations, as its new president after electing not to extend the contract of President and CEO Gregg Solomon for undisclosed reasons. Holaday’s appointment is pending approval of the Michigan Gaming Control Board, which next meets March 8. Bruce Dall, the Detroit casino’s senior vice president of finance and administration and CFO, will serve as interim president of the casino. Holaday has served in her current role at MotorCity for six years. The 30-year veteran of the industry previously was a marketing consultant through her own consultancy for three years.
Perceptron names Marz interim president, CEO Plymouth Township-based Perceptron Inc. named Richard Marz, its current board chair-
man, as interim president and CEO following the resignation of CEO Jeffrey Armstrong last week. Armstrong, also executive director of the board, stepped down after leading the metrology equipment supplier since November 2013. Perceptron reported a net loss of $2.1 million on revenue of $15 million in the third quarter of 2015, down from second-quarter income of $390,000 on revenue of $24.4 million.
Louis Gabel joins Jones Day’s Detroit office Former Assistant U.S. Attorney Louis Gabel has joined the Detroit office of Jones Day in the global law firm’s business and tort litigation practice. Since 2008, Gabel, 38, worked as a federal prosecutor in the U.S. Attorney’s Office’s white-collar crime unit and led several high-profile prosecutions. Before joining the Justice Department, Gabel worked as an associate in Jones Day’s Washington, D.C., office.
Gregory Gursky named a deputy state treasurer Gregory Gursky has been named Michigan’s deputy state treasurer for tax policy, a new position in which he will manage the Office of Legislative Affairs, the Bureau of Tax Policy and the Office of the Taxpayer Advocate. Gursky, 62, had worked as the director of global professional services firm Pricewaterhouse Coopers LLP’s state and local tax group, according to the state Treasury Department. He worked for more than 30 years with General Motors, including as the automaker’s property and non-income taxes director. 䡲
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SOCIAL FROM PAGE 3
“The advertising agency population countrywide is the highest it has ever been because of social and digital media,” Kracht said. “The economic rub-off of social (media) expertise is huge. The Detroit area is attracting talent in and outside the state.” Social media ad spending in 2015 was expected to reach $25 billion worldwide, a 33.5 percent increase from 2014, according to a recent story by emarketer.com. A survey by Duke University ’s Fuqua School of Business reported by Crain’s sister publication Advertising Age said social media spending made up 10.7 percent of marketing budgets in 2015 and chief marketing officers expected that to grow to 14 percent of budgets over the next 12 months. Social media outlets and their locales in the Detroit area include: 䡲 Google: Birmingham, a campus outside of Ann Arbor, Farmington Hills. 䡲 Facebook (which owns Instagram, WhatsApp and Messenger ): Birmingham. 䡲 LinkedIn: Birmingham. 䡲 Twitter: Detroit, Madison Building. 䡲 Yahoo (which owns Tumblr and BrightRoll): Southfield. Twitter opened an office in downtown Detroit more than four years ago. “We were the first social platform to establish a route in Detroit,” said Chad Rumminger, sales manager, Midwest Autos, Twitter Detroit. “We were fielding relationships out of Chicago for a small period of time. As Twitter grew, we figured our key partners in Detroit were important and wanted to invest in the city.” Rumminger said the office is seeing growth in Twitter as a platform. Twitter had previously worked with nonautomotive companies in Michigan such as Domino’s Pizza Inc. and Kellogg Co., but a year and a half ago, it decided the local office would focus only on the three Detroit-area auto companies.
“We believe a client partner needs to be focused on that partner. They need to understand everything about their business,” Rumminger said. Twitter Detroit saw substantial growth in 2014 and last year. “We need additional people for this office. We doubled our full-time employees last year — from four to nine,” Rumminger said. Rumminger said the auto industry has been slower than other industries in effectively using Twitter, so one of his team’s jobs is educating auto executives, managers and engineers. That’s helped increase use. “Detroit companies are open to innovation and are eager to get involved. Now it is becoming an everyday conversation,” he said. He said Twitter allows companies to target customers: “A person tweets, ‘I need a new car.’ We create opportunities to put a piece of content in front of that person. Maserati launched their (Twitter) handle in December. They had zero followers; now they are (reaching) luxury (buyers).” Twitter allows auto companies to deliver the right message at the right time and to share its products with the world. “An example: Ford used Twitter to reveal its GT at the Detroit auto show,” Rumminger said. Facebook’s Morris said a social media platform such as Facebook is “a place for engagement. They allow companies to reach specific markets. A lot of brands can be discovered on our platforms.” Facebook opened its office in Birmingham in 2008. The company chose Birmingham because of its central locale to all three car companies. “The auto business is important to Facebook,” she said, adding that the office invests in talent but also products and capabilities. The office also has financial services companies such as Quicken Loans and Nationwide. “There’s great crossover between the two categories, but the majority of the team is focused on automotive,” Morris
said. Instagram joined the Facebook office in early 2012 after Facebook bought the photo-sharing network. “It started as a very small, nimble company, and we were immersed in its capabilities,” Morris said. “There’s a lot of similarities (with Facebook), but they require different levels of expertise.” Like Facebook, Instagram makes money from ads but its ads are “less intrusive, native,” she said. Instagram is ideal for a live reveal or helping spread awareness about a vehicle to millennials. Facebook is amping up to offer two new features — 360 Video and Canvas — that Morris said will work well with the auto industry. 360 Video allows the user to see all sides of a video by moving around a mouse or a smartphone. Canvas is an advertisement unit that can be further explored by scrolling with a finger. Victoria Carlini, Alfa Romeo USA marketing lead, media and social media, for Fiat Chrysler Automobiles in Auburn Hills, said the company knows its customers peruse all kinds of media, including social media. “We put an emphasis to be where are customers are,” she said. The Alfa Romeo customer demographic is ages 25 to 54. “The average American looks at some form of social media 17 times a day, and it’s not just young folks,” said Carlini, who formerly had the social media job with Jeep. “Social media allows me one-on-one conversations with consumers in real time.” She said she manages a combination of media, social media and old-school advertising including TV, radio and print. “They work in tandem,” she said. Carlini said Alfa Romeo has a significant presence on social media. The challenge is keeping up with its constant evolution. “Every day a different platform emerges, and we’re making sure we are hitting our targets,” she said. Carlini said social media is a priority for FCA and all its brands: “It’s not an afterthought; it’s taken seriously.” 䡲
Inventev wins $500K federal grant By Tom Henderson firstname.lastname@example.org
Inventev LLC , a TechTown tenant
hoping to develop and market a mobile power-generation system for work trucks, has been awarded a $500,000 grant from the U.S. Department of Energy. The grant will allow the Detroitbased company to model and develop key components of a hybrid electric drive system that will allow truck fleets to runs tools and accessories at job sites without having to run their diesel engines. The grant is accompanied by $50,000 from the Michigan Economic Development Corp.’s MATch (Michigan Accelerating Technologies) Energy Grant, a fund administered by NextEnergy, the nonprofit across the street in Midtown from TechTown. “Supporting companies like Inventev with the MATch Energy Grant
positions startups to compete for federal funds, and ultimately keeps them on the path to growing new jobs,” said Jean Redfield, president and CEO of NextEnergy, in a news release. The grant is from DOE’s ARPA-E program, or Advanced Research Projects Agency-Energy, modeled after the Department of Defense’s DARPA program. It will help Inventev show it can use natural gas to generate costeffective, electric-grid-quality power at job sites, extend range for hybridelectric vehicles or serve as a generator during power outages. Collaborators on the project are providing $200,000 of such in-kind services. They include San Francisco-based Pacific Gas and Electric Co.; Waltham, Mass.-based A123 Systems Inc.; Chicago-based BorgWarner Inc.; Ford Motor Co.; the Troy-based Prod uct Assembly Group LLC ; and Torrence, Calif.-based Landi Renzo USA.
Dave Stenson, Inventev’s founder and CEO, said he hopes the DOE grant will help him raise a $1.5 million seed round to ramp up production. One hurdle Stenson said he must overcome is proving to investors that Inventev’s system is cost-effective despite the heavy upfront costs of retrofitting work trucks with the hybrid transmissions needed to generate power without idling. In 2014, Inventev won $3,000 for the best pitch at the Annual Collaborate for Entrepreneurship event in Livonia and got $25,000 for winning the advanced transportation category at the annual Accelerate Michigan Innovation event in Detroit. Stenson was formerly the executive director of General Motors’ performance division and chief technical officer with Hummer. 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2
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BUILDING FROM PAGE 1
When the district was publicly unveiled 18 months ago, the investment estimate was $650 million, including $450 million in public-private spending on the arena. The 20,000-seat venue is scheduled to open by September 2017 and its latest cost estimate is $627.5 million.
Why such a massive increase? Overwhelming demand for things like apartments, office and retail space, plus improvements to the original design of the arena, Olympia says. “We are out in the marketplace and we are reacting to this incredible feedback,” Steve Marquardt, vice president of Olympia Development, the real estate company owned by Mike and Marian Ilitch, said in an interview with Crain’s last week. The District Detroit is ambitious and daunting: 50 city blocks, the majority of which were remarkable mostly for their barrenness, wedged between the freshly blooming downtown and Midtown areas, teeming with recent development and business activity. At its heart is a hockey and event arena rising now at the corner of Woodward and Henry Street. Ancillary development is planned in dozens of individual projects spread across the 50 largely Ilitch-owned blocks, which will bring hundreds of thousands of square feet of office and retail space, plus about 1,000 multifamily units, to the market in the next several years.The arena’s steel skeleton and concrete guts are rising above a 40-foot hole dug into the ground for the lower bowl and ice rink. A pair of office and retail buildings flanking its southern and eastern side, expected to bring a mixture of local and national tenants such as restaurants, bars and shops, also are under way. “The plan appears to be very progressive and should contribute to Woodward and the surrounding streets’ walkability and urbanism,” said Robert Gibbs, managing principal of Birmingham-based Gibbs Planning Group Inc. “Unusually skillfully planned for such a large area.” Olympia said about $30 million has been spent just on infrastructure surrounding the arena. Across Henry Street, another office building is in the works. This one, 40,000 to 50,000 square feet for multiple office users with first-floor retail space, is known as Building C. To the west, about 132 multifamily units — 108 apartments (buildings D and E) and 24 townhomes — wrap around the nearly 1,200space, six-story main parking deck for the arena, according to a request for proposal from developers. That RFP, which focuses specifically on those two projects and was obtained by Crain’s last week, spells out 19 separate sites throughout the district where multifamily construction and redevelopments are possible. Among those possible projects (see map): 300 units along Woodward in the so-called “superblock;” another 75 in the former United Artists Building on Bagley Street;
Multifamily aspirations Residential properties for which Olympia Development is seeking proposals, according to an RFP obtained by Crain’s.
100 in the historic Eddystone Hotel that will be renovated; an undetermined number on a 1-acre patch of Brush Park land owned by Wayne County Community College District ;
and an additional 250,000 square feet billed only as “student housing” next to the planned Mike Ilitch School of Business for Wayne State University.
The superblock has long been talked about at the corner of Woodward and Montcalm in an area that is now surface parking lots just west of Comerica Park . The land is cur-
rently owned by St. John’s Episcopal Church. The United Artists Building is planned for about 75 multifamily units, the RFP says. According to a
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Details of arena district plans More specifics about the arena district, from plans outlined by Olympia Development of Michigan released Sunday and from an Olympia request for proposals for residential development obtained by Crain’s:
There is 160,000 square feet of office space planned to form the exterior of the arena, of which about 100,000 will be offices for the Detroit Red Wings and Olympia Entertainment, the venue management arm of team owners Mike and Marian Ilitch’s business holdings.
55,000 square feet of retail space. A 350- to 400-room upscale hotel and more than 120 multifamily units. 300 housing units along Woodward Avenue. 75 housing units in the former United Artists Building on Bagley Street. 100 units in the to-be-renovated historic Eddystone Hotel.
An undetermined number of units on a 1-acre patch of Brush Park land owned by Wayne County Community College District.
250,000 square feet billed only as “student housing” next to the planned Mike Ilitch School of Business for Wayne State University at Woodward and
An office building of 40,000 to 50,000 square feet for multiple office users with first-floor retail space at Henry Street and the Fisher Freeway Service Drive at Woodward. About 132 multifamily units — 108 apartments and 24 townhomes — are to wrap around the nearly 1,200-space main parking deck for the arena between Sproat and Henry streets along Clifford Street.
An Olympia map shows more specific plans for development surrounding the arena.
source, the redevelopment is expected to include first-floor retail space and a repurposing of at least some of the theater inside the 223,000-square-foot building, which was constructed in 1935 and has been owned by the Ilitches since 1997. It has not yet been determined how the theater would be reused, if at all, said Richard Heapes, cofounder and partner of White Plains, N.Y.-based Street-Works, the planning consultant on the project. The 250,000 square feet of multifamily space identified as “student housing” near the business school is not incorporated into the official plan for the new WSU building, said Steven Townsend, director of marketing and communications for the business school. Smaller planned projects — 15 units here, 25 units there, another 30 units there — are peppered along Second Avenue, Cass Avenue, Park Avenue and Temple Street, among others. There are still plenty of unknowns, however. Multiple sites spelled out in the RFP for multifamily development contain no information about the number of units they are expected to accommodate. All told, the RFP’s 19 sites total about 1.44 million square feet of building space, plus the acre of Brush Park land. The 675 units identified sit in about 958,000 square feet, or about 1,419 square feet per planned unit. At that rate, the 1.44 million square feet would accommodate about 1,015 units — right around how many units Olympia executives say are expected as part of the district project at this time. Even though there are 19 sites identified in the RFP, responses to which were due Friday, Olympia remains cautious about how many projects would actually materialize. Doug Kuiper, vice president of corporate communications for Ilitch
The new Little Caesars Pizza Global Resource Center headquarters at Woodward and Columbia Street will be nine stories, an increase from eight, bringing it to about 240,000 square feet. Holdings Inc. , parent company of
Olympia Development, said at least 10 residential projects are expected.
Office space The project is expected to add 500,000 square feet to the downtown office market across the 50block area, according to Kuiper. In addition to the added office space surrounding the arena, the first new office building construction in the downtown core is part of the project. Among the large office projects previously announced is the new Little Caesars Pizza Global Resource Center, plans for which have grown
by one floor to be a nine-story build-
$20.64 per square foot, according to JLL. There is another 1.12 million square feet north of the district boundaries in the New Center area, where the vacancy rate is 14.3 percent and the average asking rents are $18.54 per square foot. Total, the 13.96 million square feet of space is about 14.2 percent vacant with an average asking rate of $20.39 per square foot, according to JLL.
Retail Heapes said a mixture of local and national tenants is being sought for the retail space at ground level in the Woodward Square area.
Arena contractors Among the companies providing services to District Detroit projects:
Retail space leasing: CBRE Inc., Southfield Office and retail space advising: Plante Moran Cresa, Southfield Multifamily development advising: Ventra LLC, Detroit Arena construction: Barton Malow Co., Southfield; White Construction, Detroit; Hunt Construction Group, Indianapolis
Arena architect: HOK, Kansas City Arena design consultant: Giffels Webster, Detroit Traffic engineer: Parson Brinckerhoff, Detroit Landscape design: SmithGroupJJR, Detroit Workforce inclusion and business participation consultant: Heritage Development Services LLC, Detroit
Olympia Development’s RFP indicates 19 sites with about 1.44 million square feet of building space, plus the acre of Brush Park land. The 675 units identified sit in about 958,000 square feet, or about 1,419 square feet per planned unit. Olympia projects the public- and private-sector spending on the district is $1.2 billion, with about three-quarters of that being private investment. About $30 million has been spent by Olympia on infrastructure surrounding the arena. The 20,000-seat arena has a $627 million price tag, of which $250 million is public funding via bonds that will be repaid from property and other taxes already on the books and collected on the new value of property within a special taxing district. The rest of the arena cost is funded by private borrowing by Olympia and $200 million in bonds sold by the state that Olympia will repay from arena revenue. take a look at some of this retail if it’s right for them,” Bieri said. Specifically on food options, Marquardt said discussions are ongoing with well-known grocers. “We have a ton of conversations underway with all the names you’d expect,” Marquardt said Thursday. Heapes said, however, that one of the keys will be getting grocers to adapt “their own rules” to urban settings, a conversation that apparently is ongoing. “I know what the Target rules are,” he said. “I’ve tried to change them. The rules are in a grocery store — they want a big … sign, they want a street surface parking lot and they want freeway access. But how do you take dinosaur rules and get them to think differently?”
Block-building ing at Woodward and Columbia Street. It will sit next to the company’s current headquarters inside the Fox Theatre. Original plans called for a 205,000-square-foot building; it is expected to now be about 240,000 square feet, Kuiper said. Currently, there is about 12.84 million square feet in the central business district, about 13.7 percent of which was vacant in the fourth quarter last year, according to data from the Detroit office of real estate brokerage firm Jones Lang LaSalle. The average asking rent was
Jim Bieri, president of Detroitbased Stokas-Bieri Real Estate , said the types of tenants sought will depend significantly on the individual space sizes and configurations, but that Olympia gets a lot of firepower by bringing in CBRE Inc., the Los Angeles-based real estate brokerage with a local office in Southfield, to handle the retail leasing. “Because of the CBRE connection and because they have contacts with a lot of national tenants, I would hope that some of their national tenant assignments would
But patience, Detroit. Patience. “When we pitched the original vision, it was to connect downtown with [Midtown],” Heapes said. “This is the connector. As you can imagine, people say, ‘What the hell is going on?’ This is the biggest sports and entertainment project ever conceived in America. It’s not going to happen overnight in a city that hasn’t had new development in three decades.” Michael Cooper, president and managing principal of Southfieldbased architecture firm Harley Ellis
Devereaux Corp., said the revised plans reflect a commitment to what he called “complete communities.” “The community is built around the office, retail, hotel and multifamily. People can live, work and shop down there, have family come down there and stay with them,” he said. “That can involve the arena or another destination, but those are the sustainable pieces of a community that will work for the city and the region, regardless of whether a destination event is happening. The urban centers that are successful and vibrant and rich with energy have a sustainable, community-complete component where you have a full integration of all these things.” Eric Larson, CEO of Bloomfield Hills-based Larson Realty Group and CEO of the Downtown Detroit Partnership, agreed that diversity of product type has been executed well. “What they are creating is a very, very sustainable foundation for what is really an entirely new neighborhood,” he said. “The way they are approaching the mix of uses allow for not only diversity in product type, but also activities at all times of day and night, which is very important not only to the reality of a resilient community, but the perception of one.” Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB
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BANKS FROM PAGE 1
back-office jobs will be offset by the need to hire more compliance officers. Talmer has $6.6 billion in assets and Chemical about $9.2 billion; the combined entity will have substantially more than the $10 billion threshold that triggers more compliance requirements under the DoddFrank act. He said layoffs will also be offset by ongoing growth in other operations. “We’re hiring and expanding our core businesses,” said Provost, who said the bank will soon open its second location in the city of Detroit. Talmer employs about 1,400 and Chemical Bank about 2,400. FirstMerit and Huntington, however, have major overlaps in both Michigan and Ohio. During a conference call, Huntington Chairman and CEO Steve Steinour said about 39 percent of FirstMerit’s 367 branches, some 140 locations, are within one mile of a Huntington branch. Huntington employs 2,314 in Michigan, FirstMerit 1,176. In Michigan, Huntington has 191 branches and FirstMerit has 138. Combined, that would be a network of 329 branches. That is far more than the current branch leader, Chase Bank, which has 251, so there will clearly be substantial branch closings here. Branch closings are expected to start late this year or in the first quarter next year. “There will be meaningful branch consolidation,” said Steinour. The good news? “All FirstMerit branch employees will be offered a job — that will be a huge relief to them, I’m sure,” said Steinour. While FirstMerit operations in Michigan are headquartered in Southfield, the bank has a large back-office and banking operation in downtown Flint, a leftover from when FirstMerit bought Flint-based Citizens Republic Bancorp in 2013. Steinour said Huntington will continue to support a large presence in Flint. Job losses will be much greater in Ohio than Michigan. FirstMerit employs about 1,200 at its headquarters in Akron. While Huntington plans to move some of the operations at its Columbus headquarters to Akron, which employs 5,000 of its 12,500 employees, to mitigate the damage there, not all of FirstMerit’s headquarters employees will keep their jobs. “No, (they won’t),” FirstMerit CEO Paul Greig said in the conference call. “There will be a planning process. Certainly many will be (offered jobs). We haven’t gotten to this level of detail in our planning.” “We don’t have it all mapped out yet,” said Steinour, who said that job cuts will come from both Huntington and FirstMerit, and that some call-center jobs in Michigan might be transferred to Akron. In any event, expect continued bank consolidation. According to the Federal Deposit Insurance Corp. , there were about 14,000 banks in the U.S. in 1986. Today, there are fewer than 6,800. “It doesn’t make sense to have 6,800 banks,” said Ken Marblestone, a managing director at the Southfield-based investment banking firm of Cascade Partners LLC. “From a client service and cost standpoint, it makes sense to consolidate, and there are more and more investment funds in the country that have been formed that are counting on bank consolidation,” he said. “Given the fragmentation in the banking industry and slower earnings growth, consolidation is going to continue,” said David Sowerby, the portfolio manager in the Bloomfield Hills office of Loomis Sayles & Co. LP. “In general, at the stage of the cycle we’re in, call it the later innings, M&A will be at a peak the next 12 to 24 months,” he said. “We’ll see the smaller banks getting bigger instead of the larger banks getting bigger,” said Roberts. “There’s an incentive to stay under $50 billion because of the regulatory environment. The regulatory costs are considerably higher at $50 billion.” Donnelly said the Talmer-Chemical deal will have the combined entity looking for larger, more regional deals — “they won’t be as interested as they have been in small Michigan banks” — which will open up smaller Michigan deals for other community banks. “It could be Level One Bank who takes advantage,” he said, referring to the fast-growing Farmington Hills bank, which hit the $1 billion mark in assets after buying Novibased Lotus Bank last year and reaching an agreement to buy Farmington Hills-based Bank of Michigan. 䡲 Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2
Chemical-Talmer deal brings local applause; Wall Street not so sure By Tom Henderson firstname.lastname@example.org
Since raising $200 million in equity capital in 2010, almost $50 million from New York financier Wilbur Ross Jr., Talmer Bank has grown through eight acquisitions from being a onebranch bank with $75 million in assets to 71 branches in three states and assets of about $6.6 billion. Chemical Bank, which has assets of about $9.2 billion, has made 11 acquisitions since 2000, buying Holland-based Lake Michigan Financial Corp. and its $1.2 billion in assets in 2015 and the $873.8 million in assets of Traverse City-based Northwestern Bancorp in 2014. During last Tuesday’s teleconference for investors and analysts, Provost said his bank was so sure it had found the right partner in Chemical Bank that it did not shop around for a better deal. He said the combined bank would build better shareholder value through continued acquisitions than it would have through a sell for a higher price to the wrong strategic partner. Current Talmer shareholders will own 45 percent of Chemical if the deal is approved in the second quarter, as expected. By Thursday morning, at least nine law firms had announced they were investigating Chemical and Talmer for possible violations of securities law, an issue Provost pooh-poohed in an interview with Crain’s last Tuesday, saying, “Ninety-six percent of all deals get sued.”
Local industry watchers are applauding last week’s announcement that Midland-based Chemical Financial Corp. has agreed to buy Troy-based Talmer Bancorp Inc. for $1.1 billion. But Wall Street reaction has been mixed. New York Citybased Keefe, Bruyette and Woods Inc. upgraded Talmer stock to outperform, while Raymond James & Co. and Atlanta-based FIG Partners downgraded it to perform. There was nothing mixed about the reaction of Richard Glass, a portfolio manager in the New York office of Germanbased Deutsche Bank , who was sharply critical of Talmer for selling itself for less than 1.5 times tangible book value. “As a shareholder, we are very disappointed … you should be ashamed of yourselves,” said Glass during a conference call to explain the deal to shareholders and reporters. “Your fiduciary responsibility is to shareholders, not the banks’ future. From our perspective, the valuation is not great at all. It’s lousy. “It’s a great deal for Chemical shareholders and not a good deal for Talmer shareholders. I don’t know why all the shareholders for Talmer shouldn’t vote this down.” “You may be shortsighted, but we are not,” countered Dennis Klaeser, Talmer’s CFO. “Klaeser got it right, and the other guy is wrong,” said Brian “More sparklers than fireworks” Pollice, national group leader of the financial services practice Terry McEvoy, an analyst who covers Talmer for Little at Southfield-based Plante Moran PLLC, told Crain’s. “Clearly, Talmer wanted a merger of equals, and that’s what Rock, Ark.-based Stephens Inc., wrote: “The sale of Talmer they got. When you get a merger of equals, you get a lower comes as somewhat of a surprise to us, as we had believed price. This was a stock deal. If they wanted to cash out, they the company would pursue acquisitions until the bank grew closer to $10 billion in assets, at which point they would would have done that. “This was two smart guys named Dave who got in a room, more likely represent an acquisition target.” While McEvoy said that the sale represents a successful inchecked their egos at the door and got a deal done. It’s a great transaction,” said Pollice, referring to David Provost, Talmer vestment for the original investors in Talmer, he described the Bancorp’s president and CEO, and David Ramaker, the CEO and deal as “more sparklers than fireworks.” He maintained his equal-weight, or market perform, rating president of Chemical Financial. The deal was for 10 percent cash and 90 percent stock. Cur- of Talmer stock. In an interview with Crain’s Friday, McEvoy rent Talmer shareholders will own 45 percent was supportive of the leadership at Talmer and of the combined entity. “This deal is Chemical. “Management has a long-term view Each Talmer shareholder will get brilliant. of what it can accomplish, and it’s hard to disabout $1.60 per share after the deal agree that these companies over time can drive closes. Company insiders own It was a value,” he said. about 4 percent of the company’s wellMcEvoy said some institutional investors are stock. Based on their holdings as of disgruntled because it had been an assumption last March 15, Gary Torgow, Talmer’s crafted on the street that Talmer would continue to Bancorp’s chairman, will receive deal that make acquisitions until it got close to $10 billion about $974,000 for his 608,840 in assets, at which point it would find a buyer, shares, and David Provost, the holdhas a “which would give them a large pop in the stock ing companies president and CEO, will get great chance to price.” about $973,000 for his 607,893 shares. Tuesday’s deal popped that pop, and McEvoy Torgow will serve as Chemical’s chairman. be successful.” said some of those institutional investors decidProvost will serve on the board. Ninety-four percent of Talmer stock is John Donnelly,Donnely Penman ed to cash out on a bank that had outperformed the market in the previous 12 months, its share owned by institutional investors and mutual price up 17 percent prior to the announcement. funds, led by the Vanguard Group Inc. , which owns 4.4 million shares; Manufacturers Life Insurance Co., which About 273,000 shares of Talmer stock were traded Monday, owns 3.8 million shares; and Bank of New York Mellon Corp. , before the news broke. About 1.5 million shares traded Tueswhich owns 3.8 million shares. day and 2.6 million traded Wednesday. The stock opened the Deutsche Bank isn’t one of the 10 largest institutional in- week at $16.52 a share, hit a low of $14.51 on Wednesday and vestors. rebounded to $15.67 by midday Friday. “This deal is brilliant. It was a well-crafted deal that has a Ken Marblestone, a managing director at Southfield-based great chance to be successful,” said John Donnelly, managing investment banking firm Cascade Partners LLC, and a longtime director of Grosse Pointe-based Donnelly Penman & Partners, an banker who was president of Ohio and Michigan operations investment banking firm that focuses on financial institutions. for Charter One Bank in 2013, was effusive about the TalmerWhile Chemical (Nasdaq: CHFC) and Talmer (Nasdaq: Chemical deal. TLMR) used the tagline “Creating Michigan’s Community “I’m really excited about this deal. I’m a long-term inBank” in their printed material explaining the transaction, the vestor and like to think about long-term valuations,” he said. deal positions the combined entity to be a major regional play- “This is an opportunity for Chemical Bank to take its reputaer, Donnelly said. tion as a great community bank into Southeast Michigan “Chemical and Talmer are the two primary predators in the and Ohio. And what’s nice about it is there is almost no overMichigan landscape — and I mean that in a good sense — but lap between Chemical and Talmer. There won’t be a lot of this elevates them from being a state player to being a regional jobs lost.” player,” he said. “I think the deal makes a lot of sense, especially from a foot“They are big fish now, and they’ll be looking for big fish to print standpoint,” said Greg Roberts, an executive director at buy in the future. Their deals will be begin with a ‘B,’ now, in- Birmingham-based turnaround and consulting firm Conway MacKenzie Inc. “This represents a good opportunity for the new stead of an ‘M,’ ” he said. The Chemical-Talmer deal will create a bank with nearly $16 entity to grow.” 䡲 Tom Henderson: (313) 446-0337 billion in assets, $12 billion in loans and $13 billion in deposits Twitter: @TomHenderson2 at 266 locations, primarily in Michigan and northeast Ohio.
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speed bump for a company that always seems to be drifting. The comFROM PAGE 3 pany never seems to really go anytions for Federal-Mogul, said cur- where and isn’t considered a great rency exchange from Brazil, Europe innovator.” and Asia were the deciding factors Wall Street also hasn’t viewed in ending the split. Federal-Mogul favorably as it strugCurrency fluctuations evaporat- gles to find a strong path to profed 10 percent of its earnings in the itability. third quarter of 2015, according to Since January 2011, Federalan investor conference call. Mogul shares have plummeted Hanley declined to discuss nearly 79 percent to $4.49 per share whether the Pep Boys acquisition in Thursday afternoon trading from played a part in the decision. more than $22 per share. It lags beFederal-Mogul announced the hind most of its peers, such as split 16 months ago through a tax- Magna International Inc., whose stock free distribution of shares from its has risen 20 percent over the same aftermarket parts division, which it period, and BorgWarner Inc. , which renamed Federal-Mogul Motorparts has seen a decline in share price of in May 2014, to current Federal- nearly 14 percent. Mogul shareholders. The Pep Boys acquisition by The company began restructur- Icahn isn’t expected to do Federaling its aftermarket parts division in Mogul any favors in the long term, 2012. Federal-Mogul historically said Tony Cristello, managing direcunderperformed in the aftermarket tor of equity research for Richmond, sector, which led to red ink for the Va.-based BB&T Capital Markets. While Federal-Mogul may gain company as a whole, including a some initial $161 million loss in market share 2014, though its after- “Obviously from Pep Boys market sales were up market turmoil and Auto Plus, 10 percent. Earlier this made this larger retail competitors year, Federalthe wrong may pull back Mogul on Federallaunched its time to Mogul parts, he Garage Gurus approach said. program to “If you’re teach auto techthe split. buying from nicians the It’s Federal-Mogul value of its afand now sudtermarket brands. another speed denly they are a The program was de- bump. ...” competitor, do signed to boost its aftermarket parts sales. Fred Hubacker,Conway Mackenzie you really want to be supportBut aftermarket ing that comrevenue fell an additional 5 percent in the third quarter petitor?” Cristello said. “By buying Pep Boys, (Icahn) has created a of 2015. The U.S. automotive aftermarket huge conflict of interest. I wouldn’t is forecast to grow at an annual rate be surprised if Pep Boys is the tipof 3.4 percent through 2017, accord- ping point for Federal-Mogul’s cusing to a joint review by the Automo - tomers to look for other options.” tive Aftermarket Suppliers Association Cristello said the bottom line is and the Auto Care Association. Total that Federal-Mogul makes higheraftermarket sales are projected to quality but higher-priced parts than grow from $238.4 billion in 2013 to foreign competitors at a time when $273.4 billion in 2017, according to customers are more price-conthe group. scious. Fred Hubacker, managing direc“This has put them in a bad positor of Birmingham advisory firm tion, and they’ve got to find a way to Conway Mackenzie Inc., said the split- overcome that, which they still ting of its aftermarket business from haven’t done,” Cristello said. “Maybe the rest of the operations made (Icahn) isn’t done doing acquisitions sense at the time, but the market … but we’re still not sure whether conditions made it an impossibility. he’ll be successful (in making Feder“Obviously market turmoil made al-Mogul more profitable).” 䡲 Dustin Walsh: (313) 446-6042 this the wrong time to approach the Twitter: @dustinpwalsh split,” Hubacker said. “It’s another
INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: 9 Beaumont Research Institute ..........................9 3 BorgWarner..........................................................3 Chemical Financial........................................11, 20 Comcast .............................................................113 21 Conway Mackenzie............................................2 20 Donnelly, Penman & Partners ........................2 Eastern Michigan University............................112 3 Facebook..............................................................3 FCA.......................................................................117 3 Federal-Mogul Holdings.....................................3 FirstMerit ..............................................................11 General Motors..................................................110 Hebrew Free Loan...............................................111 Henry Ford Health System ..............................110 Huntington Bancshares .....................................11 Ilitch Holdings....................................................119 Inventev ..............................................................117 Kelly Services ......................................................111
Metro Detroit Health Insurance Program .....114 9 Michigan Association of State Universities ...9 Michigan State University................................112 Michigan Universal Health Care Access Network .114 Nest Labs............................................................112 Northwood University......................................110 Oakland University ......................................110, 12 Olympia Development of Michigan ..................11 Puckett, Clement and Schellenberg ...............111 Quicken Loans ...................................................116 Roma Cafe..........................................................116 Talmer Bancorp .............................................11, 20 3 Twitter Detroit.....................................................3 University of Michigan......................................112 University of Michigan-Dearborn ...................113 9, 11 Walsh College .................................................9 Wayne State University .........................111, 12, 18 5 ZF TRW .................................................................5
vided BorgWarner access to electrification technology, and no matter FROM PAGE 3 what Wall Street insiders believe, the Chrysler Automobiles NV , Toyota supplier is an innovator. Motor Corp., etc., and expects a new “We are focused on leading in business growth rate of 4 percent to powertrain electrification with a 6 percent through 2018. whole spectrum of innovative BorgWarner was a Wall Street products — from electrically capadarling following the Great Reces- ble parts to hybrids to pure EVs,” sion, outperforming the S&P 500 Verrier said. “The real message is with stock rising more than 97 per- we have current products and cent between 2011 and mid-2014, continually develop new products until mid-2015 when global eco- for all types of powertrains — effinomic turmoil and unfavorable cient gasoline, clean diesel, currency exchange rates injured its stop/start, hybrid and electric vebottom line. hicles. If it’s a powertrain, we can The supplier’s 2015 third-quar- make it more efficient.” ter revenue of $1.88 billion missed Richard Hilgert, senior automoanalysts’ estimates of $1.94 billion. tive equity analyst for ChicagoIt also lowered its 2015 full-year based Morningstar Inc. , said Wall outlook (results are expected in Street has unfairly punished Borgthe next six to eight weeks) saying Warner because it’s missing the revenue was expected to fall be- broader view of automotive and tween 5 percent and 6 percent. mobility. “(Wall Street) put BorgWarner in Much of the drop was attributed to lower sales from its largest cus- the penalty box for missing its guidtomer, Volkswagen, which is suf- ance, but I think the company is still fering from a scandal involving on track to enjoy growth rates in exdoctored diesel emissions testing cess of global vehicle production growth,” Hilgert in the U.S. and Eusaid. “That rope. “The truth is growth is going Mike Wall, direcdiesel isn’t going to come from intor of automotive analysis at away next creasing penetration of fuel-savSouthfieldyear or ing based IHS Au anytime technologies.” tomotive Inc. , said the VolkVerrier said soon, and fluctuations swagen scanin it’s not dal has trigauto sales won’t gered a make or break like “downward BorgWarner. trajectory” for sup- BorgWarner is “We’re not repliers tied to diesel. 100 percent lying on vast vol“That news event ume growth,” he crafted a narrative wedded to said. “Our growth about how Wall diesel” will be from penStreet, and others, etration gains.” feel about diesel,” Mike Wall,IHS Automotive Wall Street has Wall said. “The truth taken a similar is diesel isn’t going negative outlook away next year or of Ford Motor Co. , anytime soon, and it’s not like Borg- which has seen tremendous sales Warner is 100 percent wedded to gains coupled with sliding stock diesel. As events happen, compa- prices. Ford shares have slid more than nies course-correct, and that’s what 15 percent in 2016 despite reporting BorgWarner is doing.” Due to stricter emissions regula- record earnings in 2015. Traders have turned to new playtions, such as those that Volkswagen tried to defeat by rigging a device to ers in the automotive market, such provide better results, diesel en- as Apple Inc. and Google Inc., with the gines may be on the decline, ac- thought they will shake up the automotive establishment. cording to industry analysts. “The stock market’s like ‘Hey, In a January Deutsche Bank investor conference call, Verrier said we’ve seen this before. This indusBorgWarner is prepared for the fall- try is incredibly ripe for disruption. The disruption’s probably not out. “We realized two years ago or going to come from the 100-yearthree years ago or more that there old mechanical legacy,’” Adam would be a gradual decline in Jonas, managing director of Morgan diesel and an uplift in gasoline Stanley’s global automotive retechnology, and we proactively search team, said at the Automorecognize that and that’s why we’ve tive News World Congress event in been building our portfolio of January. products to match that shift to Wall, however, doesn’t see a gasoline,” Verrier said in the con- changing of the automotive guard. ference call. “So, our turbocharger “We’ve seen new companies technology is the leading technolo- creep in, and they are making noise. gy in the gasoline space.” The industry is welcoming disrupAs fuel economy and emissions tors, but I struggle to see who is standards ramp up in U.S. and Eu- going to innovate to the top of the rope, BorgWarner recognized the market better than BorgWarner,” importance of electrification of the Wall said. “Where is this company powertrain by acquiring Remy Inter- that’s going to revolutionize the national Inc. in July in a $1.2 billion powertrain? If it’s not BorgWarner, deal. Remy manufactures alterna- then who?” 䡲 tors, starters and hybrid motors. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh Verrier said the acquisition pro-
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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 1 , 2 0 1 6
WEEK Jim Palmer out as CEO at Campbell Ewald fter a turbulent tenure marked with account losses and the publication last week of a racist email sent by a staff member in Texas, Jim Palmer was fired as CEO of Detroit-based advertising agency Campbell Ewald. President Kevin Wertz will assume leadership of the agency, parent company Interpublic Group said in a statement Friday. Palmer, 57, was with the agency for 25 years.
COMPANY NEWS 䡲 The University of Michigan introduced Warde Manuel
Warde Manuel: Returning to his alma mater.
as its next athletic director. A UM graduate and former football player and athletic department official, Manuel will begin his new job March 14. He has
been AD at the University of Connecticut since 2012. He replaces Jim Hackett, interim AD since David Brandon resigned in October 2014.
䡲 St. John Providence Health System should regain just less than
half of the 66 certified registered nurse anesthetists it lost amid an outsourcing contract dispute at the outset of the year, after management reached a deal with most of the former employees who hadn’t found other jobs. The CRNAs had rejected offers to be outsourced. 䡲 The Detroit Lions confirmed the exit of Elizabeth Parkinson, the team’s senior vice president of marketing and partnerships. Also gone is Jennifer Cadicamo, the team’s vice president of marketing/partnership activation. 䡲 Visteon Corp. CFO Jeffrey Stafeil plans to step down at the Van Buren Township supplier, the company said, pending the choice of his successor. 䡲 Two prominent local nonprofit executives are departing the area to take top positions with organizations in other states. James Lewis, manager, major giving at Detroit Public Television for the past three years, was named CEO for the Academy of Arts and Sciences, a public charter school system based in Thousand Oaks, Calif., and Dara Munson, COO of the Girl Scouts of Southeastern Michigan, was named CEO of the Chicago Child Care Society. 䡲 Farmington Hills-based Beringea LLC announced a $4 million investment in Chicago parking mobile app maker ParkWhiz.
ON THE WEB JAN. 23-29
Detroit Digits A numbers-focused look at last week’s headlines:
The minimum amount Detroit Pistons owner Tom Gores pledged to raise from the private sector to aid recovery efforts in the Flint water crisis. The billionaire investor will donate some or all of the money himself while seeking contributions from the business community.
The percent increase of minority students accepted into the Wayne State University School of Medicine for the 2016-17 class over this year’s totals. The increase is in response to a scathing report last fall from national accreditation officials about the school’s inclusion of minorities.
The percent increase of 2015 beer distribution in Michigan by Short’s Brewing Co. The Elk Rapidsbased brewer announced it would expand distribution in February to Illinois and Pennsylvania.
䡲 Barbara Ann Karmanos Cancer Institute in Detroit and the Wind sor Regional Hospital Cancer Pro gram announced the first accredited trans-border medical physics residency program. 䡲 After leasing space the past five years, Evangelical Homes of Michigan has signed a letter of intent with St. Joseph Mercy Ann Arbor to acquire a St. Joseph’s outpatient facility in Saline for an unspecified amount. 䡲 Farmington Hills-based AccessPoint, a professional employer organization company, acquired Preferred Solutions, a Livonia IT staffing, training and consulting firm. Terms were not announced. 䡲 Birmingham-based Griffin Claw Brewing Co. will open a second location in Rochester Hills as a teaching and training facility for its brewers and fans of its craft beers. Food service has yet to be decided for the new Griffin Claw’s ThinkTank and Test Kitchen. 䡲 LLamasoft Inc., the Ann Arbor-based tech company that broke state records in venture capital funding, signed a lease for new headquarters in downtown Ann Arbor. 䡲 Ten Detroit businesses will share $500,000 in grant funding in the second round of Motor City Match awards. The largest new grant of $100,000 went to Chad Dickinson, the owner of propertyand business-development business I’m Here LLC. 䡲 The DTE Energy Foundation said it awarded $15 million in grants last year, the most in its 32-
year history and up 25 percent from 2014. 䡲 Southwest Solutions, J.P. Morgan Chase & Co. and Mission Asset Fund launched Lending Circles, a new loan program that allows Detroit residents to build credit through zero-interest loans. 䡲 Milwaukee-based auto supplier Johnson Controls Inc. agreed to merge with New Jersey-headquartered security systems manufacturer Tyco International Plc, Bloomberg reported. JCI is continuing with its plan to spin off its Plymouth Township-based automotive-seating operations. 䡲 Swedish home furnishings retailer Ikea plugged in a 40,000square-foot expansion to the solar energy array atop its Canton Township store.
OTHER NEWS 䡲 At a public hearing, Detroit Mayor Mike Duggan threatened to file a lawsuit if state regulators allow a Marathon refinery to increase emissions of certain pollutants. 䡲 Denise Page Hood was introduced as the new chief federal judge in eastern Michigan, AP reported. She takes over administrative duties from Gerald Rosen, the previous chief judge. 䡲 Hatch Detroit is taking its community redevelopment project to the city’s west side with the newest addition to its neighborhood initiative, Grandmont Rosedale, with help from the Detroit Lions Charities and the nonprofit Grandmont Rosedale Development Corp.
䡲 A waterfront of high-rise buildings, a Jefferson Avenue transit system and integrating empty industrial buildings with new development were among ideas presented to a panel of redevelopment experts by six architectural teams vying to design plans for Detroit’s East Riverfront area. 䡲 The Detroit Federation of Teachers filed a lawsuit against Detroit Public Schools, with the union calling for repairing “deplorable” conditions and removing stateappointed Emergency Manager Darnell Earley, AP reported. 䡲 The North American International Auto Show at Detroit’s Cobo Center drew 815,575 in total ticketed attendance, organizers said. That topped last year’s 803,451; the event’s attendance record is 838,066 from 2003. The Detroit Auto Dealers Association announced the 2017 show dates: Jan. 9-10 for the media preview, Jan. 13 for the Charity Preview and Jan. 14-22 for public view. 䡲 A Bloomfield Hills physician, Gerald Timmis, M.D., plans to cap his 61-year career in cardiology with a $2 million gift to Beaumont Hospital in Royal Oak. An endowed chair at the hospital will honor his wife of 49 years, Dorothy Timmis, who died in 2004. 䡲
RUMBLINGS Alibaba hears Detroit pitch; will expansion follow? hina’s Alibaba Group Holding Ltd., the largest e-commerce provider and fourthmost-valuable company in the world, is getting pitched on Detroit. Last week, Tiger Wang, Alibaba’s chief marketing officer, visited Detroit at the behest of the Troy-based Detroit Chinese Business Association. Wang held a meeting with Jay Farner, president and chief marketing officer at Quicken Loans Inc., and toured the city, said Milan Stevanovich, vice president of global strategy for the DCBA. “We’re looking for them to open an office for strategic business partnerships and potential investment opportunities as well,” Stevanovich said. “Then, hopefully, they can open a regional or North American office here in Detroit.” Stevanovich said Detroit became an interest for Alibaba after General Motors Co. invested $500 million in San Francisco ridesharing company Lyft Inc. in January. Alibaba, which reported quarterly revenue of $5.3 billion last week, led a $250 million funding round for Lyft in 2014. Executives from Alibaba will be returning to Detroit for the DCBA’s Chinese New Year Gala on Feb. 22 at the Max M. Fisher Music Center.
fundraiser, a masquerade gala with Gabriel Music Society, on Feb. 6.
Marche du Nain Rouge to launch crowdfunding push
has signed on as the title sponsor of a Feb. 12 fundraising concert aimed at keeping the doors open at Detroit’s historic Music Hall Center for the Performing Arts. The historic music venue must raise $1.7 million by April 30 to avoid falling into default on debt taken out with a private equity firm during the recession. So far, Music Hall has raised $1.08 million, including a $50,000 pledge from Blue Cross Blue Shield, President and Artistic Director Vincent Paul said. In addition to individual gifts, Music Hall has also received gifts and/or commitments from organizations including United Auto Workers, DTE Energy Foundation, Detroit Medical Center, Lear Corp., Ford Motor Co. and ITC Holdings Corp. Individual tickets range from $59 to $115, and Music Hall is offering group tickets from $500 for a pair of main-floor tickets to $25,000 for 10 tickets with access to a preglow, the concert, an afterglow and your name displayed on Music Hall’s donor wall in the main lobby. For more information, visit www.musichall.org. 䡲
Legoland to open at Great Lakes Crossing in March Legoland Discovery Center Michigan
at Great Lakes Crossing Outlets in Auburn Hills will celebrate its grand opening on March 24-25. Events will include a special ribbon cutting ceremony March 24, and doors will be open to the public for the first time on March 25. “We are looking forward to opening our doors to children and families who are looking to experience a world of color, creativity and imagination,” general manager Hayley Anderson said in a news release. The 32,000-square-foot indoor attraction will feature millions of Lego bricks and themed exhibits including a 4-D cinema, two interactive rides, large soft-play areas and more. It is another addition to the attractions owned by United Kingdom-based Merlin Entertainments, which operates 23 attractions and one Lego hotel in the U.S.
Business stepping up to save Detroit Music Hall Blue Cross Blue Shield of Michigan
The Marche du Nain Rouge, an annual spring parade that began six years ago, comes with real costs. The nut for the parade — which celebrates the fiction liberation of the Nain, a whimsical demon that aspired to destroy the city of Detroit — includes police and fire presence, permits for street closures and barricades, insurance, portable bathrooms, marketing, staging sound production, said co-founder and event coordinator Francis Grunow. This year, the nonprofit Marche du Nain Rouge has also committed to grant $1,000 to each of Detroit’s seven neighborhood districts to build a float or large-scale costume for the parade, he said. It’s coordinating the neighborhood float competition with the city Department of Neighborhoods. Marche du Nain Rouge plans to launch a crowdfunding campaign in early February to help support the neighborhood costume and float building competition, Grunow said. It’s also co-hosting its first
Caribbean Mardi Gras Productions performs at
the 2014 Marche du Nain Rouge. Organizers of the annual spring parade in Detroit are planning a fundraiser to cover the event’s costs. MARCHE DU NAIN ROUGE
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