MiBiz April 12, 2021 print edition

Grand Rapids explores reviving formal arts council

Open-heart surgery partnership a ‘game-changer’

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APRIL 12, 2021 • VOL. 33/NO. 13 • $3.00

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Drinking Economy

Gender disparities in the workforce ‘uncovered further’ by COVID-19 pandemic

CRAFT BREWERS RETOOL TO MAINTAIN PROFITABILITY

By KATE CARLSON | MiBiz kcarlson@mibiz.com

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en and women both experienced steep declines in employment at the beginning of the COVID-19 pandemic, but on average, the workforce for men is back to pre-pandemic levels in Michigan while women have left the workforce at disproportionate rates.

The pandemic’s negative effect on working women is amplified for working mothers, especially for women of color, according to a state Women in the Michigan Workforce report released at the end of March.

“Traditionally we have been facing this issue for a long time, it’s just the pandemic that Fauble is pushing it to the forefront,” said Blanca Fauble, chief development officer for the nonprofit Michigan Women Forward. “It’s always been there, it’s just now that it’s been uncovered further.”

Part of the problem is that more women than men are in low wage jobs. Because of the lack of workplace protections that lower wage jobs tend to have, employees in these roles were the most at risk for losing their jobs for longer periods of time during the pandemic.

According to 2018 data from the Brookings Institution, close to half of all working women in the country — 46 percent, or 28 million — worked in jobs that paid low wages averaging $10.93 an hour, while 37 percent of all working men earn low wages. These percentages are even higher for Black and Latina women in the workforce, of which 54 percent and 64 percent, respectively, are low wage earners. “(The pandemic) has opened our eyes to a lot of different things,” Fauble said. “From See WOMEN IN THE WORKFORCE on page 17

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

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ooking back on a 2020 plagued by the COVID-19 pandemic, Ed Collazo didn’t sound like a business owner who just saw his company’s revenue plummet by half a million dollars for the year.

“2020 was a blessing, dude,” said Collazo, CEO of Grand Rapids-based microbrewery City Built Brewing Co. There is certainly no disputing that top line revenue for virtually every craft brewery took a hit in 2020, a year when brewpubs and taprooms were either shut down completely or See PROFITABILITY on page 14

Also Inside: n Craft beverage roundtable, page 10 n Suppliers see highs and low in pandemic, page 12 n Group seeks affordable health plans for craft beverage workers, page 13 City Built Brewing Co. CEO Ed Collazo. PHOTO BY STEPH HARDING

8-story Spectrum Health development to ‘breathe more life’ into GR district

By MARK SANCHEZ | MiBiz msanchez@mibiz.com GRAND RAPIDS — The eight-story office tower Spectrum Health plans to build will bring a major new redevelopment and hundreds of employees to the Monroe North neighborhood near downtown Grand Rapids.

Spectrum Health aims to begin construction late this summer on

the Center for Transformation and Innovation that will rise on a 4.8-acre site along North Monroe Avenue and Ottawa Avenue just east of the Grand River. The $60 million to $80 million project will house about 1,200 Spectrum Health administrative staff — executive leadership, human resources, legal and finance — now working at 26 leased offices in the city.

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Michigan infrastructure planning would get boost from Biden plan

Cannabis startups seek entry to market outside of retail

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Spectrum expects to save about $15 million annually in rent.

Spectrum Health hopes the project will lead to further redevelopment and “breathe more life” into the Monroe North business district that most recently saw a former industrial site transformed into the 246-room Embassy Suites hotel, said Spectrum Chief Financial Officer Matt Cox.

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“I think it’s certainly going to transform the neighborhood. It’s going to bring even more life into a neighborhood that’s growing now, and I think more development will happen as a result of us being there than if we weren’t there,” Cox said.

The center also will house a training and a learning center in a first-floor meeting space for up to See SPECTRUM OFFICES on page 3

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WELLNESS AND THE HOME OFFICE Experts weigh in on tactics for health and wellness while working from home

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icture the perfect home office: sprawling wooden desk, latest high-definition monitor, plush leather chair, and of course, that perfect built-in bookshelf as a backdrop for Zoom meetings.

Though pleasant, this vision is far from reality for most people working from home during the COVID-19 pandemic. More likely are long hours spent at improvised workstations — laptops on stacks of books, the kids’ old crafting table or a dining chair. Meanwhile, children play in the background or attend virtual schooling, spouses work shoulder-to-shoulder.

This new reality of working from home can be chaotic, mentally draining and unhealthy.

MiBiz recently hosted a free webinar with occupational therapy practitioners Anita Joy Edwards, Kara Wong and Sydney Lyng of health consulting firm GIG Design LLC to discuss the importance of wellness in mitigating the physical and mental toll of working from home.

Even with a dedicated home office, working from home in the COVID-19 era has created myriad health challenges.

Increased chair time has led to weight gain, chronic pain, depression and other adverse impacts. Endless Zoom calls and increased screen time have led to digital eye strain and anxiety. And unclear work-life boundaries have yielded longer hours and increasing burnout. According to a study from staffing firm Adecco, social burnout from the pandemic is estimated to cost the global economy approximately $323 billion annually.

Experts believe the work-from-home transition fueled

by COVID-19 will become a regular part of professional life in the future. As such, both workers and employers alike need to adopt wellness practices to keep everyone healthy in the long-term. Ultimately, health and wellness largely come down to social interactions, said Edwards, founder and president of GIG Design.

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APRIL 12, 2021 / MiBiz

“There’s an old saying that ‘It’s better to eat Twinkies with friends than a salad alone’,” Edwards said. “This means that the quality of relationship with others and ourselves has a greater impact than following dietary rules. The salad is obviously a healthier option (but) a shared experience with trusted peers is the healthiest option compared to experiencing something alone.”

Employers’ role in wellness Employers have adopted a variety of tactics to promote social interactions among their employees and ease the burden of the pandemic. Lyng and Wong, both occupational therapy students at the Chan Division for Occupational Science and Occupational Therapy at the University of Southern California, noted some companies host virtual happy hours. Others hold “health circles” – meetings among peers in a safe environment where they can openly discuss challenges they face in the new work-from-home environment. Outside of promoting social interactions, some companies also issue stipends or bonuses related to health and wellness.

However, the speakers indicated the most essential thing employers can do for their worker’s wellness is to listen, empathize with their employees’ concerns and troubles, and above all, remain flexible.

“There’s a positive correlation between flexible work schedules and proactivity,” Wong said. “It’s important for companies to avoid setting very stringent schedules and deadlines. The emphasis on clock time can cause unnecessary stress on employees and encourage a company culture that may not be beneficial.”

The speakers also suggested employers exercise caution and weigh the impacts on employee wellness when making certain decisions. Many companies have turned

to software to track employee activity and monitor their activity at home. While these programs can be effective from a profitability perspective, they also easily blur the lines between clock time and personal time and risk total surveillance of their employee and the employee’s family.

“Using such technology is heavily cautioned,” Lyng said. “It’s crucial to not only request explicit consent from employees but also weave privacy preserving features into the design of their technologies.”

Personal Tactics On a personal level, Edwards and the other speakers noted that individuals can take small actions throughout the day to promote physical and mental wellness.

Incorporating micro-breaks, standing and stretching, performing squats or other aerobic exercises once an hour, and placing the printer away from the desk, are all ways being people can intersperse physical activity through the workday. Additionally, purchasing ergonomic equipment to maintain proper posture can also help the physical impacts of working from home.

Though the COVID-19 pandemic has forced both employers and their workers to adapt in unfamiliar and uncomfortable ways, incorporating wellness techniques and strategies into daily life can help everyone improve their physical and mental health.

GIG Design offers top wellness tips for employees who are working from home. The wellness consulting firm also offers a variety of health and wellness services for employers, including an employee wellness survey and follow-up consulting services.

GIG Design is a team of health consultants who help individuals achieve their personal, health, and wellness goals. Our approach is client-centered and process-oriented in order to create the best potential for long-term success that sticks. Visit www.gigdesign.me.

Find the webinar recap at mibiz.com/work-from-homewellness Visit www.mibiz.com

SPECTRUM OFFICES Continued from page 1

500 people, including hosting new employee orientations and corporate meetings. A pedestrian bridge will connect the 160,000-square-foot project to the adjacent 155,000-square-foot Brass Works building that Spectrum Health bought last year for $25 million and plans to renovate.

The Grand Rapids Planning Commission last week approved plans for the project, including a special land use permit for Spectrum Health to build two parking decks of 420 spaces each and a 100- to 150-space surface parking lot on Bond Avenue as part of the Center for Transformation and Innovation (CTI).

Approval of the parking structures represent an “intermediate step” for the project toward a full buildout that could include future retail and office development on the perimeter of the site, Grand Rapids Planning Director Kristen Turkelson said.

City staff has been meeting regularly with Spectrum Health on project plans, Turkelson added.

“From a planning perspective, we’re quite excited about this and appreciate the collaboration and coordination that Spectrum has worked with city staff so far,” she said.

The 1,200 employees that will relocate to the CTI will join about 300 Spectrum staff who now work at the Brass Works building, bringing the total workforce at the campus to 1,500 people.

Spectrum seeks to ensure that the proposed parking structures and lot “doesn’t overload the streets in our community,” said Alan Kranzo, the health system’s director of strategic real estate services.

The timing of future development on the site’s perimeter “is not yet known,” Kranzo said last week.

“Certainly we want to control the development of this site, so the nature of how that site will develop over time is not known at this time,” he said.

A resolution the Planning Commission unanimously approved for the parking plans noted that the project “will encourage other investment” in the Monroe North neighborhood, as well as benefit the

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Spectrum Health’s planned eight-story Center for Transformation and Innovation will move 1,200 employees to Grand Rapids’ Monroe North business district, which city officials say could spur more development in the area. RENDERING COURTESY OF SPECTRUM HEALTH downtown business district as Spectrum employees “patronize businesses in the vicinity.”

The CTI has been in the planning stages for two years as Spectrum Health acquired the parcels in the neighborhood, including the former Gill Industries Inc. facility on Ottawa Avenue.

The office building will feature “hoteling space” to accommodate Spectrum Health employees in the era of the COVID-19 pandemic who split their time between working remotely and coming into the office for team meetings or conferences, Cox said.

“We were able to change some things so it can be very useful in a post-COVID environment where we have people that maybe work at home three days a week and come in two days a week,” he said. “We’re creating it to be much more open so people can come in and find hoteling space or the work space that they need so they can continue to solve complex problems together and also build culture together in this environment.”

Spectrum Health targets occupancy of the CTI for the summer of 2023.

The CTI will give Spectrum Health a corporate headquarters and a single location for executives

and its administrative employees who are now spread out across Grand Rapids, plus eliminate staff travel time for team meetings. None of the finance staff that report directly to Cox, for example, work in the same office building where he’s based.

“To come together to solve complex problems is going to be a game-changer for us because we haven’t had something like that before. It’s just going to be a lot more convenient for people to work together,” Cox said. “By having one central location, it’s just going to be more efficient and more effective and a lot easier.”

The CTI also will free up space now used for offices at the nearby Butterworth Hospital campus on Michigan Street for future medical uses, he said.

Spectrum Health did look at several other sites around downtown and the city, as well as in the suburbs, to build the CTI, Cox said. The plan for the Monroe North site was the most economical and had the quickest payback, he said.

“Overall, we know this is the right place for the CTI,” Cox said. “Just like downtown Grand Rapids is the hub for business for West Michigan, this is where we wanted to have our hub for innovation and transformation.”

Editor Joe Boomgaard / jboomgaard@mibiz.com Managing Editor Andy Balaskovitz / abalaskovitz@mibiz.com (energy, policy) Senior Editor Jayson Bussa / jbussa@mibiz.com (manufacturing, tech, sports) Senior Writer Mark Sanchez / msanchez@mibiz.com (finance, health care, life sciences) Staff Writer Kate Carlson / kcarlson@mibiz.com (real estate & development, small biz) Contributing Reporter Josh Spanninga Contributing Photographer Steph Harding VP of Production & Audience Development Kristi Kortman / kkortman@mibiz.com Digital Specialist Danielle Affholter / daffholter@mibiz.com Graphic Designer Kaylee Van Tuinen / kvantuinen@mibiz.com Senior Advertising Consultant Shelly Keel / skeel@mibiz.com Sales & Marketing Associate Lauren Frailey / lfrailey@mibiz.com Director, Finance & Administration Tarah Buchan / tbuchan@mibiz.com

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A recap of recent stories from MiBiz.com.

Downtown GR law school building listed for $19.8M

The Western Michigan University Cooley Law School building in downtown Grand Rapids is on the market for $19.8 million.

The 108,654-square-foot building is situated on 1.45 acres at 111 Commerce Ave. SW, and is the latest large piece of downtown real estate to hit the market within the past six months.

We s t e r n Mi c h iga n University and Lansing-based Cooley Law School launched a formal affiliation in 2013. The entities use the Grand Rapids facility for educational purposes but operations are being consolidated in Lansing as Western and Cooley begin a three-year process to formally end their partnership, said JLL Senior Vice President Jeff Visit www.mibiz.com

Karger. JLL is marketing the Grand Rapids property.

The law school plans to operate in the downtown building until September, Karger said.

Auto supplier GHSP names new president

GHSP Inc. — a Holland-based manufacturer of control systems and technology solutions for the automotive, appliance and technology industries — named Dan Dawiedczyk as its new president late last month.

Dawiedczyk has more than 25 years of experience in the industry. He joined GHSP after a tenure with Troy-based Aptiv PLC, where he was vice president and managing director for the company’s Americas connection systems.

“I’m thrilled to join GHSP and take on an opportunity to lead a company with such a

rich history of innovation that dates back nearly 100 years,” Dawiedczyk said in a statement.

Dawiedczyk takes over for Thomas Rizzi, who was CEO of GHSP and also executive vice president and COO of closely held parent company JSJ Corp., which is based in Grand Haven.

GHSP told MiBiz that Rizzi has “moved on to pursue other opportunities.”

552 apartments planned at Walker golf course property

Developers are planning a 552-unit apartment complex at the English Hills Country Club property in Walker.

The Walker Planning Commission recently approved a preliminary site plan for the project from Mark Avis of Redhawk Multifamily LLC, along with a rezoning

request for adjacent property at 1470 Four Mile Road NW, which is part of the development plan.

The golf course property — north of I-96 between M-37 and Bristol Avenue NW — was rezoned to high density residential in 2003 when a developer proposed a previous multifamily project that never came to fruition. Planning documents show the golf course had reopened in previous years but closed again in 2020.

Event, entertainment organizers optimistic after ‘sobering’ 2020

After an economically grim 2020, Grand Rapids event and entertainment officials say they’re optimistic about pent-up demand, COVID19 vaccines and a new standard of hybrid in-person and

virtual programs.

Rich MacKeigan, regional general manager for ASM Global, which manages multiple downtown venues and the DeVos Place convention space, is “hopeful” that fullcapacity events will return to venues like Van Andel Arena and the DeVos Performance Hall by October this year. He also anticipates a groundswell

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of consumer demand after more than a year of venue closures.

“2022 and beyond are going to provide a decade of the roaring ’20s,” MacKeigan said during a recent panel hosted by the Economic Club

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of Grand Rapids. “The traffic on our calendar with artists and agents holding dates is tremendous for 2022.”

MiBiz / APRIL 12, 2021

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MANUFACTURING

MEDC makes new Industry 4.0 push with partnerships, $3M investment

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

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he Michigan Economic Development Corp. is mak ing a new push to place Michigan manufacturers ahead of the curve on Industry 4.0 technology.

The MEDC has formed partnerships with Troybased Industry 4.0 knowledge center Automation A l ley a nd t he Michiga n Ma nufacturing Technology Center (MMTC) in addition to devoting $3 million to fund two Industry 4.0-focused proposals that were submitted to state officials at the end of 2020.

“A year and a half ago, we launched a strategic plan that was built around making sure Michigan had the fastest growing, most equitable and most resilient economy in the country,” said Josh Hundt, executive vice president and chief business development officer with the MEDC. “We launched a signature initiative specifically tied to advanced manufacturing that we knew we needed to win as a state in order for us to continue to be a leading state for businesses to choose to locate and be able to to grow,” he added. “We recognize that making investments in Industry 4.0 technology is what will allow our small to medium sized manufacturers to be in front of other states.”

The t wo proposals the MEDC submitted to the Michigan Strategic Fund (MSF) board in December focused on turning manufacturers from a l l c or ner s of t he state on to the idea of Coast Hundt Kelly Lyscas Industry 4.0 technology and practices.

The MEDC sought $2 million from the MSF to Cities, townships, counties, business advosolicit regional grant proposals from eligible orgacates, economic development organizations nizations that were interested in increasing Industry and other entities were eligible to submit these 4.0 awareness and readiness for local manufacturers. grant proposals. In the coming months, a Joint Evaluation Committee will bring the recommendations for award winners to the MSF board for final approval.

“We’re looking for an opportunity to complement the work that MMTC and Automation Alley are doing to ensure that we recognize that perhaps there are different needs in different corners of the state and we can have additional programming and support at a highly localized level through these regional grants,” Hundt said.

Another component to the MEDC’s Industry 4.0 effort is a $1 million marketing push executed through global advertising agency McCann Erickson.

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Strategic partners The MEDC has joined forces with two organizations that have long been on the frontlines of connecting statewide manufacturers with Industry 4.0 information and solutions.

Automat ion A lley isn’t just Michigan’s Industry 4.0 knowledge center, but also is designated by the World Economic Forum as one of only 12 Advanced Manufacturing Hubs in the world and the only one in North America.

Normally carrying a membership that hovers around 1,000 manufacturers — most of which are concentrated in the southeast portion of the state — Automation Alley is now extending free memberships to all 12,000 manufacturers throughout Michigan as part of its partnership with the MEDC. “We’ve always had 1,000 members, give or take, but now we’re putting it on massive steroids where anyone in the state that is a manufacturer now gets this free membership and access to all of our proprietary content,” said Tom Kelly, executive director and CEO of Automation Alley.

This arsenal of content contains everything from white papers on various Industry 4.0 concepts to seminars and roundtables. Kelly said that membership officially opened to all manufacturers in October, but the organization is only now making a push to raise awareness.

Kelly said that putting state dollars behind the Industry 4.0 effort is crucial. He pointed to the fact that all countries competing for manufacturing leadership have Industry 4.0 policies set in place at a federal level, creating a race to digitize.

“If I’m a small manufacturer, I’m focused every day, hair on fire, on getting product out the door — I don’t have time to focus on all this stuff,” Kelly said. “What the state resources bring is a way for us to reach all these manufacturers and really help them understand what financial choices they need to make to keep up with the pace of change.

It’s really existential for manufacturers.”

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Coming Soon!

DIVERSITY/ EQUITY/ INCLUSION MAY 10, 2021 While Michigan’s business community has been taking steps over the past few years to push for policies that encourage diversity and support a culture of equity and inclusion, the game changed in 2020. In this 2021 focus, we’ll spotlight how companies are accelerating their efforts and highlight best practices — and common mistakes — that companies make when it comes to building a diverse, equitable workplace.

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“We recognize that making investments in Industry 4.0 technology is what will allow our small to medium sized manufacturers to be in front of other states.”

— JOSH HUNDT EVP and Chief Business Development Officer, Michigan Economic Development Corp.

make technological upgrades to existing equipment instead of having to invest in new equipment.

The assessments also highlight how eliminating waste through lean manufacturing processes can ultimately fund upgrades.

“Most people think there are a lot of dollars involved with upgrading to this technology,” said Bob Lyscas, COO of MMTC. “(The assessment) shows them the lean waste that is sitting out there that can finance putting technology in place. You can also spin it in a way that (Industry 4.0) is benefiting everyone, including the fact that it upskills workers.”

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Targeting small companies

The Michigan Manufacturing Technology Center — with headquarters in Plymouth and bureaus located throughout the state, including in Grand Rapids — is also a heavily utilized resource for advanced manufacturing technology and processes.

Industry 4.0 assessments are one of the many resources that the MMTC provides for manufacturers and one of the more effective methods of getting manufacturers to engage with Industry 4.0 ideas and concepts.

These assessments are free through the state and require two to three hours of company time to complete.

“They spend maybe an hour or hour and a half to collect data, and we analyze it, walk the shop f loor, ask some more questions and that’s really what we do … and the state picks up the tab,” said MMTC President Mike Coast.

“These are feeders to get companies to buy into (Industry 4.0). At the end we say here’s the report, and a summary that tells them this is what they need to get going.”

MMTC often reveals that manufacturers can Visit www.mibiz.com

These latest efforts zero in on small to medium sized manufacturers for a reason. The MEDC’s Hundt noted that just 13 percent of small to medium sized manufacturers across the country have implemented Industry 4.0 technologies.

Kelly from Automation A lley called t he Industry 4.0 movement crucial to survival for small and medium manufacturers.

“This program was really derived to educate the smalls and help them come on board with the change,” Kelly said. “The Fords and GMs of the world are smart and have a lot of money. They’ll figure it out on their own — they don’t need our help necessarily. But they do need our help to get the small supply chain to come along with them otherwise they’ll just go around them.”

The MEDC and its partnering organizations are focused on getting 50 percent of small to medium sized manufacturers in Michigan ready to adopt Industry 4.0 technology by 2025.

“When you take a look at the small manufacturing companies, they’re really 90 percent of all manufacturers in the state of Michigan and that’s a stat that runs across the entire nation,” Coast said. “That’s where the backbone of the entire industry is.”

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MiBiz / APRIL 12, 2021

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REAL ESTATE & DEVELOPMENT

Financial health of malls a mixed bag as some consider reusing vacant space

By KATE CARLSON | MiBiz kcarlson@mibiz.com

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s national trends show a rapid decline in the value of shopping malls, West Michigan commercial real estate experts are most worried about the fate of RiverTown Crossings in

Grandville.

According to a Bloomberg analysis in March, U.S. mall values declined 60 percent after 2020 appraisals. Aditionally, few buyers show a willingness to take risks on aging shopping centers as the popularity of online shopping continues to grow.

“We’re fairly protected in West Michigan from devaluations of malls. The only one I’d be concerned about is RiverTown,” said Mark Ansara, managing principal and senior vice president of retail at Advantage Commercial Real Estate Services LLC. He specifically noted the closed Sears and Younkers at RiverTown as “two big vacant anchor stores.”

Toronto-based Brookfield Asset Management Inc. recently announced plans to acquire the shares it doesn’t already own in the real estate arm of its

company, Brookfield Property Partners LP, which bought RiverTown Crossings in 2018. This comes after Brookfield Property Partners laid off 20 percent of its roughly 2,000 retail division employees in September.

A Brookfield spokesperson based in Chicago could not be reached for comment.

Even though Wo o dland Mall ow ner Pennsylvania Real Estate Investment Trust (PREIT) filed for Chapter 11 bankruptcy in November 2020, the Kentwood shopping center is best-positioned out of the major malls in the area, Ansara said.

“They have the top quality and top tier stores when you look at the tenants. (There are) a lot of good national retailers in (Woodland Mall),” Ansara said.

Overall, Ansara said most customers are returning to malls and “the traffic is still there.” The rate at which tenants are paying rent is also improving as companies have weathered the pandemic and states are starting to open back up, Ansara said.

RiverTown has more vacancies than Woodland, including two big anchor stores that are especially hard to fill for a two-story mall, Ansara said.

RiverTown Crossings in Grandville faces unique challenges that could make it difficult to repurpose vacancies, commercial real estate experts say. COURTESY PHOTO “All of the retail around RiverTown seems to be doing OK and people came out fine,” Ansara said.

“Retail specifically is still doing OK, mom and pop stores are doing fine and are out there looking for their next store. Activity is definitely lower but deals are still getting done.”

The North Face opened in a new Woodland Mall expansion while Whole Foods Market has signed a lease at a nearby property because the shopping center is seen as a strong anchor in the area, said Jeff Tucker, senior managing director of brokerage and principal at Bradley Co. “Of the two (malls), if a store is going to relocate, it will go to Woodland,” Tucker said. “Over time the Apple Store and Urban Outfitters have raised the values for their other tenants.”

However, Tucker said the health of anchor stores at malls more generally is in question. Anchor stores have been especially hard-hit by online shopping, but it remains unclear whether these spaces could potentially be repurposed for something like housing or as a distribution center, Tucker said.

Reusing space

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APRIL 12, 2021 / MiBiz

Developers are discussing “all kinds of different plans” to redevelop vacant spaces at RiverTown, which is a common trend at most malls right now, said Mike Murray, senior vice president at Advantage Commercial Real Estate Services.

“Redevelopment in some fashion is being looked at in malls, starting with the bigger box stores,” Murray said. “In greater Western Michigan, we’re still low on available space, especially large space, and that’s one thing these malls offer.”

Securing agreements with anchor stores and sometimes the local municipality is a key obstacle for malls as they pursue non-retail or non-traditional uses for mall spaces, Murray said.

RiverTown has the additional roadblock of being a two-story mall, which requires replacement uses to either use all of the space or half of it. Plus, a second-story tenant is less visible and accessible to customers, Murray said.

The Lakes Mall in Fruitport Township is a possible candidate for redeveloping some of its vacant spaces into non-traditional uses, Murray said. The mall has two vacant anchor stores that used to house Sears and Younkers. Some malls are putting in hotels or grocery stores in their vacant anchor spaces, he added. “(The Lakes Mall) is not as centrally located as Woodland and RiverTown, but it is pretty close to Lake Michigan. They have some tougher challenges there I feel,” Murray said.

“We’re fairly protected in West Michigan from devaluations of malls. The only one I’d be concerned about is RiverTown.”

— MARK ANSARA Managing Principal and Senior Vice President of Retail, Advantage Commercial Real Estate Services LLC

Despite malls’ struggles in recent years and during the pandemic, Murray said it remains valuable to maintain and keep them open.

“There are some malls that no matter what happens they will go through a transformation or will change uses,” Murray said. “The Lakes Mall is a perfect example of people looking to use that mall for different uses just because of where it is positioned on the lakeshore.”

Brookfield sells Lansing Mall Brookfield Property Partners also owns The Crossroads in Portage and Grand Traverse Mall in Traverse City, and sold the Lansing Mall in March to New York-based Kohan Retail Investment Group.

The Lansing Mall reportedly sold for $9.2 million in early March.

Kohan Real Estate Investment Group also owns Adrian Mall, Birchwood Mall in Fort Gratiot, Eastland Center in Harper Woods, Midland Mall, Westwood Mall in Marquette, and Westwood Mall in Jackson.

Located at 5330 West Saginaw Highway, the Lansing Mall currently has 48 tenants, including JCPenney, operating in its 709,925 square feet of retail space, according to the property listing.

More than 240,000 square feet of the mall is currently vacant, with 60 percent of the space occupied.

Tenants generate a net operating income of $1.2 million annually, according to the listing.

“We’re hopeful that this brings some new energy and excitement to the mall and the entire corridor,” Delta Township Manager Brian Reed told MiBiz. “We’re eager to meet with the new ownership and hear their plans. We’re hoping to continue to work together and provide any assistance to their plans to make improvements.”

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New fund aims to raise $200M for small industrial properties, distribution centers

By MARK SANCHEZ | MiBiz msanchez@mibiz.com EAST LANSING — An East Lansing real estate investment firm looks to raise $200 million to invest in industrial logistics facilities in the Midwest and southeastern U.S. Riverstone Capital Partners’ Riverstone Investment Fund LP would target investments for acquiring smaller warehouses and distribution centers. The fund would hold the portfolio of properties for up to eight years before selling, said Riverstone Capital Partners Managing Partner Cutler Martin.

Ma r t i n C o m m e r c i a l Properties — a commercial real estate firm in East Lansing led by Martin’s father, Van Martin — will manage the properties in which the Riverstone Investment Fund invests. The fund will deploy Martin a substantial amount of the capital over the next year, depending on market opportunities, Cutler Martin said.

The Martins pursued forming the new investment fund “to work with the clients that we’ve built relationships (with) to offer essentially another service to them with what we have been doing for so many years” in property acquisitions, sales, management and leasing, Martin said.

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“We understand the true nature of real estate and how to add value to it, and we thought it was something that we should offer,” Martin said. “We are in the process of looking at a number of different opportunities. I would say in the next few months we would be looking to acquire our first properties.”

Riverstone Investment Fund began raising capital a few months ago. The investment fund in November filed a document with the U.S. Securities and Exchange Commission indicating plans to raise $200 million from investors.

Martin declined to say how much the fund has secured to date from investors, other than “it’s going well.” The fund has connected with high net worth individuals, institutional investors and family offices across the state, he said.

Strong, growing market In forming Riverstone Investment Fund, the Martins and partner Frank Freund at Riverstone Capital Partners look to tap into a strong and growing industrial real estate market for logistics centers.

Outlooks forecast a need for 1 billion to 1.5 billion more square feet of logistics space over the next five years. The U.S. presently has about 10 billion square feet of logistics space, he said.

“So, that’s just a huge increase in demand for this type of product and we feel that aligning with those tailwinds is a strategic advantage for us. With our expertise, we think we also have an

“We’re taking advantage of the proliferation of a regional distribution or model for the supply chain that is really going to focus on the delivery of products to consumers on a timely basis.”

— CUTLER MARTIN Managing Partner, Riverstone Capital Partners

advantage of being able to source this product,” Martin said.

A CBRE Group Inc. outlook in November projected that the U.S. industrial real estate market would “flourish” in 2021 “with low vacancy rates, record-high rental rates, and robust development and a return to pre-COVID levels of absorption gains.”

“CBRE anticipates nearly 250 million square feet of industrial and logistics space to be absorbed in 2021, more than the previous five-year annual average of 211 million square feet,” according to the outlook . The firm expects construction completions to grow by 29 percent this year from 2020, “and rents will continue to increase.”

In a February report, Chicago-based Jones Lang LaSalle IP Inc. (JLL) said industrial commercial real estate “looks bright” in 2021, especially in the subcategory for multi-use logistics facilities. Rents for multi-use logistics have grown more than 54 percent in the last decade and nearly 21 percent since 2017, “outpacing the national average for the broader industrial market,” according to John Huguenard, senior managing director and co-head of JLL’s Industrial Capital Markets group.

“This sub-class has huge potential upside on rent growth driven by low vacancy and limited new supply,” Huguenard said in a February news release.

The surge in e-commerce during the COVID-19 pandemic is among the expected growth drivers and has increased demand for smaller, industrial logistics facilities in population centers.

“We’re taking advantage of the proliferation of a regional distribution or model for the supply chain that is really going to focus on the delivery of products to consumers on a timely basis,” Martin said.

“As we’ve seen through COVID, a number of peoples’ habits have changed. More people are looking to order online than they are to walk down to the store and buy their household items.”

CBRE’s 2021 outlook noted that the surge in online sales in the last year “has put pressure on retailers, wholesalers and third-party logistics companies to reach consumers while lowering transportation costs.”

That could drive an acceleration to convert retail buildings into logistics facilities, according to CBRE.

MiBiz / APRIL 12, 2021

7

HEALTH BIZ

Spectrum Health financials steady through pandemic as outlook shifts for hospitals

By MARK SANCHEZ | MiBiz msanchez@mibiz.com GRAND RAPIDS — Spectrum Health maintained a solid financial performance for 2020 as the COVID-19 pandemic stressed operating margins at hospitals nationwide.

The Grand Rapids-based health system recorded operating income of $295.5 million for the year on nearly $8.3 billion in patient revenues for a 3.6 percent operating margin. The amount includes $188.9 million in operating income earned by Priority Health in 2020, plus a $24.8 million operating loss at Spectrum Health Lakeland in St. Joseph.

The 2020 operating margin was close to what Spectrum Health budgeted going into the year and followed expectations last spring for a difficult year financially after the COVID-19 pandemic hit, leading the state to impose restrictions on nonemergency care that resulted in the cancelation of elective surgeries, procedures, diagnostic tests and physician visits.

“We are very pleased with how we ended the year,” said Spectrum Health CFO Matt Cox. “If you think about back in February or March when

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all of my peers were drawing on lines of credit to get ready for what we thought was going to be an absolute once-in-a-lifetime financial disaster, we saw our volumes plummet and our profitability plummet in March and April.”

Cox Cox added that Spectrum was “projecting to have a really bad year, and if you would have told me back in March (2020) that we were going to end the year at a 3.6 percent operating margin, which is very close to our prior year and really close to our budget, I wouldn’t have Peters believed you.

“We don’t have a negative impact because of COVID like some other systems may have, so we can continue to implement our strategic plan (and) our capital plan, invest in our patient care and continue to invest in the things that we need to do to continue to be a solid organization.”

Cox credits strong cost control and making up much of the lost surgical volumes later in the year for generating the positive results for 2020, as well as the income from Priority Health.

In April 2020, Spectrum issued an undisclosed number of layoffs in mostly non-clinical positions, cut executive pay by 30 percent and 40 percent for CEO Tina Freese Decker, and temporarily halted contributions to employee retirement accounts from July through December. Across the region, Spectrum employs more than 31,000 people but the company still won’t say how many were laid off during the pandemic.

Spectrum Health ended 2020 with an even better cash position than it started the year. The health system had 246.3 days of cash on hand as of Dec. 31, an increase of 16.1 days from a year earlier.

Spectrum Health’s bottom line grew further with the receipt of $116.9 million in federal assistance through the CARES Act to cover costs related to the pandemic. Another $375 million in net investment income, minus a number of items such as losses on interest rate swaps and pension settlements, drove Spectrum Heath to $714.1 million in revenue over expenses in 2020, according to an audited financial report posted online.

The federa l f unding enabled Spect r um Health to take a more aggressive approach in responding to the pandemic as revenue fell last spring. The health system used the federal funds to buy dozens of ventilators and other equipment, millions of gloves, N-95 face masks and other personal protection equipment for medical staff, plus plexiglass barriers to separate workspaces.

“It gave us the ability to make investments quickly,” he said. “We basically took our warehouses and stacked them full of PPE to help get us through COVID.” Of the federal CARES Act funding, Spectrum Health has another $66 million to use in 2021 for

Spectrum Health’s Butterworth Hospital along Grand Rapids’ Medical Mile. COURTESY PHOTO COVID-related expenses in the present case surge, plus administering vaccines. Spectrum Health has until July 1 to use the funding or return it to the federal government, although Cox expects most of the money to get spent.

Patient volumes remain lower in some areas than pre-pandemic levels “and we think that those volumes are going to be down for the long term.

We don’t see them necessarily coming back,” Cox said. ER visits, for instance, are down about 10 percent.

National outlook, consolidation Nationwide, the American Hospital Association (AHA) estimates that U.S. hospitals combined would lose an estimated $323.1 billion for 2020 and that half could record negative operating margins by the end of the year.

An analysis conducted for the AHA by Chicagobased Kaufman, Hall & Associates LLC estimated losses would continue into 2021, with 39 percent of U.S. hospitals operating in the red under the bestcase scenario. Under a pessimistic scenario, half of the nation’s hospitals would operate at a loss this year with a median margin down 80 percent from pre-pandemic levels.

Prior to the pandemic, hospitals operated on a “very thin” margin that averaged 3.5 percent, a level that Kaufman, Hall & Associates said was “only minimally sufficient for many hospitals to maintain their facilities and operations, while investing modestly to improve their capabilities to meet community needs.”

Brian Peters, CEO of the Michigan Health & Hospital Association, believes that even with the federal aid provided to hospitals, the financial toll from the pandemic and lost volumes will accelerate a consolidation trend that’s been occurring for years.

Small, rural hospitals that remain independent and operate on thin margins may have to decide whether to pursue a partnership with a larger health system, Peters said.

“It has certainly tested the financial viability of those hospitals that were in a precarious position already,” he said, adding that hospitals that “might have been on the fence” about continuing independently for five to 10 years may have to start thinking about collaboration.

About 30 hospitals in Michigan remain independent, Peters said.

A Michigan Health & Hospital Association report in July estimated that hospitals in the state took a $1.1 billion financial hit last spring from the COVID-19 pandemic and that related costs would continue to grow. The net financial effect on Michigan hospitals resulted in $3.2 billion in revenue lost during the several weeks hospitals were unable to perform non-essential procedures and surgeries, plus $440 million in emergency expenses, according to the MHA. Several hospitals continue to report reduced inpatient and outpatient volumes as many individuals “are still hesitant to come to the hospital for elective care,” Peters said. “They’re waiting until that day when they feel the lion’s share of Michiganders have been vaccinated and positivity rates and other metrics are such that they believe the coast is now clear.”

Peters credits federal aid to hospitals through the CARES Act with helping to shore up finances at some hospitals and offset the cost of PPE, additional equipment, lost volumes, administering vaccines and other financial effects from the pandemic.

The federal money was “a life saver for a number of our hospitals,” Peters said. “That helped to keep the doors open for some of our members.”

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Open-heart surgery partnership could spur more collaboration between Metro, Mercy

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

A

new partnership for open-heart surgery could provide a broader base for Metro Health-University of Michigan Health and Mercy Health to further collaborate on specialized medical care in the

years ahead.

Plans for the Cardiovascular Network of West Michigan came together as Metro Health sought state certificate of need (CON) approval to perform heart surgery at Metro Health Hospital in Wyoming.

The state approved the CON request in late March, enabling Metro Health to launch a competing openheart surgery program next spring in the Grand Rapids metro area.

The Cardiovascular Network of West Michigan is the second major partnership between Metro Health and Mercy Health. The partnership also includes Michigan Medicine, the University of Michigan’s academic medical center in Ann Arbor that’s home to the Frankel Cardiovascular Center.

The health systems previously formed a similar venture, the Cancer Network of West Michigan, last year for oncology.

Although additional partnerships aren’t presently under consideration for the two health systems, Metro Health CEO Peter Hahn sees potential for further collaboration. That may not occur for some time, as Metro and Mercy for now focus on their cancer Biersack and cardiovascular partnerships, Hahn said.

“Could t here be ot her programs that we collaborate on? Absolutely. We’re early into cancer and now just getting (cardiovascular) up and running. I suspect it may be a while before we do the next one,” Hahn said. “I want to see this one take off, Hahn and I really want to see cancer truly make a meaningful difference to our community. ‘Let’s get two successful ones under the belt and then really look at another’ is sort of the way I’m thinking.”

Neurosciences is “a potential possibility” and “certainly one we would probably look at next” once the new cardiovascular network and cancer partnership are running at full speed, he said.

‘Just the foundation’ The Cardiovascular Network of West Michigan represents “another step” with Metro Health and Michigan Medicine following the formation of the cancer network last summer and other collaborations, said Mercy Health Saint Mary’s Interim President and Chief Medical Officer Dr. Matt Biersack.

The partnership will give Mercy Health a greater breadth and depth of specialized cardiac care and cardiovascular research, Biersack said.

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Metro Health Hospital in Wyoming will soon add open-heart surgery under a partnership with Mercy Health that will also bring competition with Spectrum Health in the West Michigan market. COURTESY PHOTO

“Hopefully this is just the foundation for us to improve general care in the West Michigan region.”

— DR. MATT BIERSACK Interim President and Chief Medical Officer, Mercy Health Saint Mary’s

Mercy Health Muskegon also staffs its openheart surgery program with Michigan Medicine surgeons. Michigan Medicine physicians also provide electrophysiology — a test to diagnose abnormal heartbeats or arrhythmia — at Metro Health, Mercy Health Muskegon and Mercy Health Saint Mary’s.

“At this point in time, these are the programs to focus on. But, hopefully, this is just the foundation for us to improve general care in the West Michigan region,” Biersack said. “Our relationship with Michigan Medicine and Metro and Mercy is limited to oncology and cardiovascular care, but we’ll see where these relationships take us. If there are other opportunities we identify that will help us to improve access to specialty care here in West Michigan, that may be something that we look at going forward.”

Open-heart competition Metro Health looks to launch open-heart surgery within a year through the new partnership with Mercy Health and Michigan Medicine. The CON approval enables Metro Health to bring a second open-heart surgery program to Grand Rapids that competes with Spectrum Health, which has one of the largest programs in the state.

The partnership for the Cardiovascular Network of West Michigan will create “truly a world-class cardiovascular program” that’s “going to be a gamechanger,” Hahn said.

In its application to the Michigan Department of Health and Human Services, Metro Health forecasted doing 311 heart surgeries annually that would include coronary artery bypass, cardiac valve repair or replacement, and repairing birth defects of the heart.

The partnership through a joint operating agreement will allow Metro, Mercy and Michigan Medicine to share expertise and medical staff. The three will work out a final operating agreement in the coming months.

In West Michigan, open-heart surgery is now performed at Spectrum Health in downtown Grand Rapids and Mercy Health Muskegon, plus

in Southwest Michigan at Ascension Borgess Hospital and Bronson Methodist Hospital in Kalamazoo, and in St. Joseph at Spectrum Health Lakeland Hospital.

Hahn estimates that Metro Health, which had steadily built cardiovascular care for years before pursuing approval to do open-heart surgery, refers about 200 cardiac patients annually for heart surgery, mostly to Spectrum Health.

“That is probably an underestimation because there were patients that didn’t come to us because we didn’t have open-heart capabilities at the time,” he said.

The partnership also keeps Metro Health and Mercy Health from competing for heart patients.

The two health systems instead will operate a joint program that will “be site agnostic,” Hahn said. “It’s going to be one program.”

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OCTOBER 15, 2018 VOL. 30 • NO. 26

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

Stephen Waterbury, Warner Norcross + Judd LLP.

If your company has been featured in MiBiz, the exposure you received reached more than 35,000 business executives in West Michigan. Now you can share the news about your company by ordering MiBiz reprints.

VOL. 26 • NO. 25

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Preparing for Transition Small business owners need to plan ahead to ensure smooth leadership transition

By NICK MANES | MiBiz nmanes@mibiz.com

F

or small family-owned businesses, getting the right succession plan in place can be a long, drawn-out undertaking.

Just ask Marcia Elgersma.

She and her husband, Al Elgersma, realized more than a decade ago that they needed to figure out a succession plan for Al’s Excavating Inc., the nearly fourdecade-old small business they co-own in Hamilton, Mich., about 10 miles southeast of Holland. At the time, they wanted to outline the roles their children would take on in the excavating company going forward.

But that was in the year 2000 and despite their best intentions, the planning process ultimately ended unsuccessfully.

“It just didn’t work at all,” said Elgersma, the company’s secretary and treasurer. “We didn’t understand the processes and we didn’t know how to determine who was Percentage of West capable of leading.”

Michigan familyIn the meanowned businessses time, the Elgersmas with no succession plan, according to found it was easier the Family Owned to grow their comBusiness Institute. pany to $6 million in annual sales than it was to figure out the transition plan, she said. After their failed try at succession planning, the business went back to its old model and the owners “just hunkered in.”

It wasn’t until more than a decade later and based on a referral from a friend that the owners of Al’s Excavating met with

81%

ground, make people calm and Waterbury’s career accomplishfind ways to help them out. ments as an M&A adviser, menThat’s a rare commodity, espetor and community builder cially with an intelligent attorearned him recognition as the riends and family saw Stephen Waterbury heading toward a ney who does a lot of deals.” first-ever winner of the Western career in law before he ever did.

Barnes & Thornburg LLP Michigan Dealmaker Hall of A desire to serve others and help them succeed was the drivattorney Michael Campbell, Fame Award. ing factor that led him to law school and to go on to a lengthy, who served with Waterbury Waterbury is “the last of accomplished legal career. on the board of ACG Western a dying breed,” said Richard After graduating with an undergraduate degree from Michigan State Michigan during the Noreen, CPA, a tax University, he applied and earned acceptance to Harvard Law School. early 2000s, agrees. partner at BDO USA A Lansing native, he later joined Warner Norcross + Judd LLP in M&A AWARDS He’s also been on the LLP who has known Grand Rapids, where he’s practiced business law for nearly 39 years.

INDUCTEE: other side of some Waterbury for a During his career, he has handled the legal work for hundreds of mergWESTERN MICHIGAN deals involving cliquarter-century and ers and acquisitions domestically and globally, and served as a mentor DEALMAKER ents Waterbury repworked with him on to the firm’s young associate attorneys at the dawn of their careers.

HALL OF FAME resented, and praises several client trans“Others assumed I would go into law earlier than I assumed I would him for his approach. actions. He praises go into law,” Waterbury said discussing his career during an interview “Steve is a true gentleman.

Waterbury’s “calming influat the law offices of Warner Norcross + Judd overlooking downtown He’s sharp. He’s respectful of ence” and consensus-building Grand Rapids.

SERVING WESTERN MICHIGAN SINCE 1988 everybody — the clients, the approach on getting dealsBUSINESS done.

“I ended up viewing it as a way of serving people — I wanted whatother attorneys. He’s a pleasure “No matter how contentious ever I did to have that be a central component,” he said. “At its highest to work with, even if he’s on the something was, Steve always and best, the legal profession is a service profession focused on helpother side,” Campbell said. found a way to find common ing people succeed.”

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

COPYRIGHT 2018 © MIBIZ.

Marcia and Al Elgersma, the owners of Hamilton-based Al’s Excavating, were typical of many small family-owned business owners in that they lacked a formal succession plan to transition to the next generation of leadership. After a failed attempt to develop a plan, the company tapped a team of local advisers to develop a leadership strategy and succession plan that it plans to launch Dec. 1. PHOTO: KATY BATDORFF business consultants and did a deep dive into the makeup of the family and analyzed which members were qualified to hold the various leadership positions.

Such delays in putting together a formal plan of succession are not uncommon among small and middle-market companies, experts say. In West Michigan, 81 percent of family-owned businesses lack a formal succession plan, according to the results of a study conducted by the Family Owned Business Institute (FOBI), a joint project of the Grand Valley State University Seidman College of Business and Western Michigan University’s Haworth College of Business.

Simply having a succession plan in place is not really enough for most companies, sources said. Rather, families and other shareholders in the business should do a thorough analysis of the company itself and the different people who could take on leadership roles, said Kirk Koeman,

a partner at DWH LLC, a Grand Rapidsbased business consulting firm.

Koeman was one of a handful of people to advise the Elgersmas as they put their plan together.

“In the case of Al’s Excavating, it took two years to make changes in the company,” Koeman told MiBiz. “Typically, there is a mindset that the owners’ sons will just take over. In many middle-market companies, that’s not always feasible, and you don’t really know that until someone from the outside talks with people in the company. … These people can still be owners, but they don’t have to be managers.”

During the two-year analysis of Al’s Excavating — during which time DWH served as general manager of the company so it could continue operating during a busy construction period — the research showed that members of the Elgersma family from both the second and third Continued on next page

COPYRIGHT 2014 © MIBIZ. Print subscriptions are free to qualified individuals who are employed in West and Southwest Michigan. For further information about MiBiz, visit www.mibiz.com.

For more info, call MiBiz today: 616-608-6170

PHOTO: KATY BATDORFF

A focus on serving others serves Waterbury well during four-decade legal career

SEPTEMBER 29, 2014 SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

HELMINSKI PILOTS AUXO TO GROW COMPANIES WHILE MAINTAINING WHAT’S ‘SACRED’

By JESSICA YOUNG | MiBiz jyoung@mibiz.com

J

eff Helminski, co-founder and managing partner of Auxo Investment Partners in Grand Rapids, successfully leveraged his atypical experience and path into the world of private equity in multiple deals last year.

Helminski has a diverse professional background, including experience in manufacturing engineering, high-volume assembly operations management and real estate development. His firm, Auxo, now specializes in investing in and growing founder- and family-owned industrial, manufacturing and business services companies.

While he has managed dozens of transactions involving hundreds of millions of dollars during his career, Helminski believes last year’s transactions stand out as significant in establishing Auxo’s partnership-based model and the firm’s closely-aligned relationship between investors and fund managers.

With a fully subscribed fund, Helminski had the ability to invest in 10 to 15 companies in the first few years after building Auxo from scratch. Last year, Auxo

WINNER/INVESTOR: JEFF HELMINSKI

Co-Founder and Managing Partner, Auxo Investment Partners

Brief business description: Private equity firm that specializes in investing in and growing founder- and family-owned industrial, manufacturing and business services companies Personal information: Wife, Tammy Helminski, who’s a partner at Barnes & Thornburg LLP; two sons, Ryan, 7, and Dominic, 9 Academic degrees: MBA from the Stanford Graduate School of Business, master’s in Engineering from Purdue University, bachelor’s in mechanical engineering from Michigan Technological University Community involvement: Board membership in Spectrum Health Hospital Group, Broadway Grand Rapids, St. Thomas Educational Support Services

evaluated hundreds of opportunities and closed on several transactions, including deals for Prestige Stamping Inc. and Andrie LLC. “Both companies had a strong focus on people and culture with honest, hardworking, down-to-earth people throughout the organization from the shop floor to the C-suite,” said Helminski, the winner of the investor category in the 2019 MiBiz Dealmakers of the Year Awards. “The sellers of the businesses, both families, cared deeply about the legacy of the company, the employees and making sure they found a successor that was going to provide them with not only sustainable employment, but hopefully, greater opportunities going forward.”

The businesses found a perfect fit in values and approaches with Auxo, according to Helminski.

The October 2018 deal for Prestige Stamping was Auxo’s fifth acquisition in 13 months. The Michigan-based niche manufacturer of custom-engineered stampings for the fastener industry selected Auxo as the buyer even though the company was not the highest bidder, according to Helminski.

The reason: The seller was concerned about the future of the company’s employees and younger generations of the founding family that remained in the business, which aligned better with Auxo’s values and longer-term investment approach.

In February, Auxo acquired Andrie, a bulk marine transporter of specialty products including cement, liquid asphalt, light oil petroleum products, and calcium chloride throughout the Great Lakes. Andrie operates a fleet of 19 tugs and barges out of Muskegon, Helminski’s hometown.

The company, a mature industrial business and “market leader in the niche that they serve within their sector,” checked important boxes for Helminski.

The acquisition also followed the firm’s December 2017 deal to buy Metairie, La.based M/G Transport Services, an operator of inland barges. The two firms now operate as Auxo Marine, a newly formed platform company.

When Helminski launched Auxo with partners Jack Kolodny and Fred Tedori, the team made “a very conscious decision” to be based in Grand Rapids.

“Part of that was because the values of West Michigan align with our values, but also, to put us this close to a large number of the kinds of businesses that we’re interested in connecting with throughout the Great Lakes region,” Helminski said.

OCTOBER 14, 2019 VOL. 31 • NO. 26

Continued

Jeff Helminski, co-founder and managing partner, Auxo Investment Partners.

MIBIZ PHOTO: KATY BATDORFF

Being based in the same community as many family- or founder-owned businesses is important when the firm is communicating with a potential target, he added.

“My background is not the prototypical path to being in the private equity investing world,” Helminski said. “When I’m having a conversation with a family that is thinking about this transition that is often partly emotional and partly financial, I can talk to the family and say ‘here’s my story, here’s my background, this is the way I grew up in West Michigan.’ It makes a difference.”

Even so, specializing in the acquisition of family-owned businesses also comes with its own set of unique challenges and opportunities.

“What’s interesting is when (the businesses) have been so successful and there’s a big enough end market that they could try and grow into that they often just haven’t done yet,” he said. “In knowing that they need to do certain things differently or

professionalize certain aspects of the business that haven’t yet been professionalized, or haven’t been developed into a more scalable function within the company, that’s going to take change.”

Stabilizing long-standing, familyowned business cultures while at the same time growing profits is “one of the most difficult things” Auxo does.

“It’s a delicate balancing act between these two seemingly competing interests of stability and maintaining that which is great, with changing enough to accomplish the growth at a higher rate than what they’ve historically done,” Helminski said.

Pre-transaction, the firm researches not only a potential target’s financial viability but also its culture and talent.

“We have a roadmap to be able to see what things are sacred and we want to really protect within the business, and what things can be done better if the company is going to grow and scale up beyond the point that they’ve achieved today,” he said.

COPYRIGHT 2019 © MIBIZ

MiBiz / APRIL 12, 2021

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FOCUS: DRINKING ECONOMY — EXECUTIVE ROUNDTABLE —

Craft beverage producers adapt marketing approaches, deal with supply chain headaches as pandemic drags on

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

T

he COVID-19 pandemic and accompanying shutdowns of bars, brewpubs, taprooms and tasting rooms had an undeniably negative effect on West Michigan craft beverage makers and their balance sheets.

As brewers and spirits makers now begin to turn their sights to the post-pandemic era, they expect patrons may take their time to return in droves.

“We have a percentage of people who are still scared to go out,” said David Ringler, founder of Cedar Springs Brewing Co. “There is a percentage of people who are still pissed at you for enforcing the rules. That’s going to make everyone’s pool smaller.”

Ringler recently joined five fellow members of the craft beverage industry for an executive roundtable hosted by MiBiz and sponsored by Wyomingbased Vision ESOP Valuation LLC. While participants swapped war stories on how they have muddled through the pandemic and the bruises it has left on their businesses, much of the discussion focused on community support during the turbulent time and what it will take to achieve a level of pre-pandemic normalcy.

Still not normal For the last year, the pandemic has driven a wedge between local craft beverage makers and their patrons.

When brewpubs, taprooms and tasting rooms weren’t shut down completely, they have been hobbled with capacity and other restrictions, which led industry professionals to wonder if these barriers will cause irreparable harm to their customer base.

“You still have a large chunk of the population that you probably lost as customers for one reason or another,” said Josh Cook, founder and head of Kalamazoo-based Green Door Distilling Co. “Whether it’s because you weren’t open when they wanted to come by or you had restrictions that they didn’t want to abide by or it just became too complicated to order online and you lost people because the convenience is gone, it’s really hard to say what the next year will look like.”

The term “COVID fatigue” has worked its way into the public lexicon lately to refer to people who are burned out on abiding by sometimes-daunting or inconvenient restrictions placed on everyday life.

After a year of COVID-19, craft beverage producers that operate taprooms and bars are starting to notice that same phenomenon within their establishments.

“I think you’re seeing a lot of customers that are really fed up — I know ‘Karen’ is the popular term for it,” Ringler said. “We are getting people that have the expectations that it’s normal again and it is not normal. We’re still at 50 percent if you have a restaurant, and in some cases it’s less. We have skeleton crews and we can’t be open regular hours — we don’t have people to fill those hours. You can’t get a lot of supply, whether it’s a food product or a manufacturing product.”

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The relationship with customers is an important one for these local, independent establishments that rely on ties to the community as a key differentiator from chain restaurants and national and regional beverage brands.

This crucial link between the local companies and their customers became apparent when the pandemic first struck and “shop, eat and drink local” became the rallying cry for communities all over West Michigan to preserve homegrown establishments.

While craft beverage producers certainly appreciate that sentiment, the industry members MiBiz spoke with agreed that the local movement wasn’t necessarily effective in driving new customers to breweries and tasting rooms.

“It reinforced the people that were already doing it and already aware and proud to support their local small businesses, but I don’t think we gained a single customer from that push,” said Cook, pointing to the persistently long lines at drive-thrus as proof that most people continue to opt for convenience over supporting local businesses throughout the pandemic.

Muskegon-based Rake Beer Project LLC has operated almost entirely during the pandemic, having opened its doors right before COVID-19 hit.

Owner and head brewer Josh Rake said he noticed local support comes in waves. Whenever new restrictions were placed on the hospitality industry, patrons would respond with an influx of support.

“At the very beginning, it seemed to be a huge hug of local support, but not many new customers came in. The people who have always supported us were here,” he said. “That’s been our biggest thing, to figure out how to ride those waves and take the highs from the waves.”

Many breweries nationwide met their demise during the pandemic. Boulder, Colo.-based industry trade group the Brewers Association tracked 343 craft brewery closures throughout the country in 2020, and just 716 new openings, which was off by about a third compared to recent years. Retail sales in the $22.2 billion independent craft beer sector declined 22 percent compared to 2019, while volume fell 9 percent, ending an extended period of growth and expansion for the industry.

Even so, the 8,764 craft breweries that operated during 2020 set the highest number on record.

Over the last year, many breweries have stayed afloat in part because of state and federal grant funding and low-interest loans.

Kim Collins, owner, co-founder and head brewer at Saugatuck-based Guardian Brewing Co., noticed that some people are only conscious of the needs of local establishments when it’s too late. “(The local first movement) reinforced local for people who already do local,” said Collins. “For folks that don’t always do local, I think it only hits when their favorite places have closed.”

Communication ‘key’ Most craft beverage producers would agree that getting in front of customers with product and

Kim Collins, Guardian Brewing Co.

Josh Cook, Green Door Distilling Co.

Brandon Finnie, Vision ESOP Valuation LLC

Josh Rake, Rake Beer Project LLC

David Ringler, Cedar Springs Brewing Co.

Brian Tennis, Hop Alliance COURTESY PHOTOS

establishing genuine connections is the most effective form of marketing.

With taprooms and tasting rooms still under state restrictions and all major festivals and other public events shut down over the last year, craft beverage producers who have long relied on face-toface interactions with customers have had to modify their approach to communicating.

Most of them pivoted to social media to stay top of mind with their customers.

“For us, that was a key thing,” Ringler said.

“Being in a small community, we really expanded what we were doing (on social media). We actually did a little talk show thing for several weeks where we had other restaurateurs, bloggers and staff (on) in order to keep communicating.”

Brian Tennis, founder and president of Hop Alliance, an Omena-based commercial hop farm and broker, brings a different perspective as a business that supplies the industry. Communication with clients was still vital for a company in his position.

“We have definitely done a much better job of reaching out to Michigan breweries, whether that was through emails or direct marketing,” Tennis said. “Our sales to Michigan brewers have been up 25 percent year-over-year. We’re definitely seeing more support from Michigan brewers for Michigan ingredients.”

The industry also waits to see if this summer will feature festivals and similar events. While many craft beverage producers are optimistic that some semblance of normalcy will return in 2021, they are not yet banking on it.

“I’m still really hesitant to start directing any of our money toward getting ready for festivals and stuff like that,” Rake said. “I think it’s all something we hope is going to happen but it’s really hard to tell.

I don’t know if it’s a good thing to invest in.”

Collins of Guardian Brewing echoed that sentiment.

“We usually jump all in and book live music every single weekend (during the summer) and we just haven’t decided to pull the trigger on that,” she

said. “I don’t want to book a bunch of gigs, get the musicians all excited” and then have to cancel.

Multiple headaches Aside from the challenged dynamics with their customers, the industry also has plenty of other issues to contend with as it continues to tread water through the pandemic.

Supply chain issues have plagued virtually every industry, including the craft beverage sector, where shortages are manifesting themselves in the form of higher prices and longer lead times.

Cook, whose Green Door Distilling packages its products for statewide distribution, highlighted an acute supply chain challenge with glass bottles.

“We’ve had dramatic issues in glass,” Cook said.

“Our main packaging for our 750 milliliter bottles has been catastrophic.”

Cook said that the glass suppliers Green Door works with have all picked up contracts to make vaccine vials. Lead times skyrocketed from typical eight to 10 weeks to now 20 to 25 weeks.

“How can you plan for that? You really can’t,” Cook said.

Tennis from the Hop Alliance also noted rising shipping costs and increased lead times, which in turn affects all the company’s brewery client base.

However, it’s not all doom and gloom in the craft beverage industry. Companies have found silver linings and seized on opportunities throughout the pandemic. For new entrants looking to break into the industry, the time is right as these businesses continue scouring the market for new talent.

“Anyone wanting to get in the industry, man, is there not a better time?” Collins said, noting the industry-wide focus to hire more women and diverse candidates. “We are all hiring. You can get in the front of the house. You might be able to get into the brewery. If people are sitting at home reading this, and you think, ‘Maybe I want to be in the craft beer industry,’ there is no better time.”

MiBiz / APRIL 12, 2021

11

FOCUS: DRINKING ECONOMY

Craft beverage suppliers see highs and lows during the pandemic

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

O

ver the course of the COVID-19 pandemic, Dennis Grumm’s brand of can seamers went from a luxury amenity to a requirement for many craft beverage producers.

Grumm is the founder and CEO of Grand Rapids-based Oktober LLC, which manufactures machines that allow establishments to can all types of beverages onsite.

When the pandemic shut down taprooms, tasting rooms and all other forms of onsite consumption of food and beverage, Grumm saw skyrocketing demand for his seamers.

“We saw double the interest for a long time and had to go through ramping up production to meet that demand and Culver making sure our supply chain for cans was solid, which at times it was not,” said Grumm. “So, we had to put a lot of extra work into that. It’s been a humongous increase in interest.”

The volatility experienced by Oktober is shared by the variety of companies that supply the craft beverage space — from metal workers who build stills and brewing tanks to packaging companies that supply aluminum cans and glass bottles.

For Oktober, the pandemic-induced changes to the craft beverage industry ushered in a prosperous stretch, one in which the company brought on around 10 additional employees and experienced unprecedented sales.

Oktober found that more than just breweries were in the market for the seamers.

“Around 70 to 85 percent of (demand was from) breweries, but it was also restaurants, bars, golf courses and all kinds of crazy, different businesses you wouldn’t even expect ordering from us. As soon as cocktails became legal to-go, any place could be canning them and getting some revenue out the door,” Grumm said.

Oktober, which also supplies bulk orders of aluminum cans for its clients, was able to sidestep pains brought on by a nationwide aluminum can shortage last year. Other than indefinitely running out of 8-ounce stubby cans, the shortage did not touch Oktober.

“We have a diverse supply chain of cans. We have several places we could source them from,” Grumm said.

Ramping up production

Once existing breweries figured out that their business model was shifting to mostly selling beer to-go, at that point, they needed to produce more beer.”

Breimayer said that Psycho Brew’s existing clients started to lean on his company for additional equipment as they boosted production. Some of those clients have even taken measures to diversify their product offerings.

“We have definitely seen more demand for just wanting to buy more fermenting and bright tanks,” Breimayer said. “We have even had more requests for craft stills in order to produce spirits. (I’m) noticing more existing breweries trying to diversify by adding spirits to their repertoire of products.”

As for disruptions to his own business, Breimayer said he hasn’t had a lot of trouble procuring the needed materials for his systems. However, he did note that prices and lead times for stainless steel have skyrocketed as of late. Currently, Psycho Brew has been able to absorb the added cost and has extended its lead times with clients to accommodate for the changes.

“We haven’t really changed our business plan much,” Breimayer said. “We have been lucky enough to do business over the years without any debt and we have always made sure we had a good nest egg to fall back on in case the market decided to fall. Never in a million years did I ever dream it would be a pandemic that would challenge that.”

Chris Breimayer’s Greenville-based Psycho Brew LLC supplies a specific segment of the craft beverage industry, targeting nano brewers with its product offering.

Psycho Brew sells complete brewing systems and also designs custom systems for brewers looking to start with a system under 10 barrels. These are typically the startups that are transitioning from homebrewing to the commercial space.

“We feel the days of brewpubs starting out with larger than a 10 (barrel) brewhouse are over or at ‘Bobbing and weaving’ least winding down,” said Breimayer, who runs the However, not all craft beverage suppliers have found business with his brother, Pat. “New startups are good fortunes during the turbulent times of the more gearing toward smaller compact brewing pandemic. Grand Rapids-based craft beer equipequipment, which is what we specialize in.” ment maker Coldbreak features a signature prodThe COVID-19 pandemic has created a lessuct line that has stalled out under the current market than-ideal climate for startup breweries, but they conditions. weren’t non-existent.

Coldbreak manufactures jockey boxes, which According to data from nationwide indusallow breweries to go mobile with try trade group the Brewers their draft beer — ideal for large Association, the U.S. saw 716 new tasting events such as beer festivals. breweries open during 2020. This FOOD BIZ The pandemic has wiped out was a 30 percent drop in new brewNEWS almost every large event over the ery openings from 2019, but only half — Sponsored by: past year, and Coldbreak’s sales of this drop was attributed to COVID. DAN VOS have ref lected t hat. Company The slow down in new brewerCONSTRUCTION President and co-founder Boyd ies meant changing demands from COMPANY Culver said that 55 percent of all Psycho Brew’s clients, but only after jockey box sales for 2020 were a nearly complete pause in business completed in January and February, which is when the pandemic first gripped the industry. the company’s slowest time of the year.

“From the end of March 2020 until around June “It was essentially like a valve got shut off,” Culver or so, we didn’t really have any new work coming said. “Unfortunately, since (early spring), none of in,” Breimayer said. “The brewing industry was so that has changed in regard to jockey boxes. We still uncertain at that time that everyone was sitting tight.

Grand Rapids-based Oktober LLC has experienced a spike in demand for its can seamers during the pandemic. COURTESY PHOTO have consistent web activity but people haven’t been pulling the trigger.”

Culver and his company have marketed what is a fairly versatile product to mobile bars, which have been growing in popularity as the pandemic wears on.

“It’s very versatile and super applicable to mobile bars,” Culver said. “But, it’s always been so easy for us to sell jockey boxes to breweries because they know what they’re looking at, they know how it operates and they can see with their eyes that it’s far superior to prior existing products. With mobile bars, we have to teach that person how to use a jockey box and what a jockey box is and even how to tap a keg.”

Still, Coldbreak has been propped up by its product diversity. While jockey and jumper boxes might be its marquee products, the company also manufactures home brewing equipment for itself and larger manufacturers.

But even in that segment of the business, Culver has faced skyrocketing prices on materials.

For instance, the company uses copper as the primary component for its line of immersion chillers. Culver said that prices for copper have shot up 100 percent and lead times for raw copper jumped from five weeks to 27 weeks.

“We’re definitely bobbing and weaving, to say the least,” Culver said.

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Trade group looks to extend affordable health plans to craft brewers, distilleries, wineries

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

A

health plan that for years has provided coverage for employees at beer and wine wholesalers in Michigan now looks to offer the same benefits to craft brewers, distilleries and wineries across the state, providing a potential lower-cost option to consider.

An offshoot of the Michigan Beer & Wine Wholesalers Association, the Michigan Beverage Collective decided a year ago to extend to craft beverage producers an association health plan that presently covers more than 4,000 people at 33 companies.

The Michigan Beverage Collective offers health plans through Blue Cross Blue Shield of Michigan and HMO subsidiary Blue Care Network, including five high-deductible medical plans with a health savings account and three HMO and PPO plans. The colNevins lective also offers four dental and vision options, and shortterm disability.

“These are good plans,” said Spencer Nevins, president of the Michigan Beer & Wine Wholesalers Association.

“They’re plans for good jobs.”

The Michigan Beverage Collective dates back to Rivard 1990, when the Beer & Wine Wholesalers Association formed a trust to offer employee benefits to members.

Federal regulations for years have allowed small businesses in a common sector to pool together for an association health plan. Changes made to federal rules in 2018 broadened criteria for association health plans and allowed the employee benefits trust to transition in early 2020 to offer coverage to craft brewers, wineries and distillers, Nevins said.

“It just made sense to reach out to our partners in the industry — people who we know care about their employees … and want to provide good benefits and take care of those that are taking care of them,” he said. “It just seemed to be a really good fit to offer the program to them because we think we can offer them really great packages in insurance benefits at a really competitive price.”

Creating market awareness Now focused on distributors and alcohol beverage producers, the collective spent the last year working to promote and create market awareness of the association health plan.

After the COVID-19 pandemic slowed the roll out, the collective is now ready to begin enrolling craft brewers, distilleries and wineries.

“For the first year, our goal was just to get out there and make relationships, get in the door to start talking to people. Insurance is a relationshiptype thing. You have to know people and kind of build that relationship, so that’s been our focus,” said Nevins, who estimates that there are some 500 alcohol beverage producers in the state between craft brewers, distilleries and wineries who are eligible to join the plan.

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“Obviously, we’d love to have all of them, but if we can bring in a handful a year until people start to get used to the program, and then start growing faster than that, we’d consider that a success,” he said.

Federal rule changes Because of the larger collective pool of participating employers, association health plans are not subject to the same coverage mandates for 10 essential benefits under the federal Affordable Care Act, which enables them to craft lower-cost benefits packages.

U.S. Department of Labor rules under which the Michigan Beverage Collective offers health benefits differ from regulations issued in 2018 under the former Trump administration. The regulations allowed different types of small businesses within a state to come together to form an association health plan and collectively qualify for large group coverage.

A federal court ruling in 2019 set aside that portion of the Department of Labor rules, saying they amounted to an end run around mandates in the Affordable Care Act. The case remains under appeal.

In West Michigan, a family health plan in 2020 cost an average of $1,500 a month, according to an annual survey by The Employers’ Association. A two-person plan had an average monthly premium across all plan types of $1,100 and an individual health plan costs about $500 per month.

Talent attraction A large part of extending the Michigan Beverage Collective’s insurance pool to include craft brewers, distillers and wineries was to enable them to potentially afford health benefits that can help to attract and retain employees.

“It is very hard right now to attract and retain talent, and good health benefits are a tool to do that,” Nevins said. “There is a talent crunch out there. We hear it all of the time. We hear it from craft brewers, we hear it from wineries, we hear it from distributors, we hear it from everyone working in the alcohol beverage industry.”

That’s the case at Rockford Brewing Co., where partner Seth Rivard says employee health insurance is simply unaffordable.

Rockford Brewing employs about 40 full time employees at its taproom, restaurant and brewery.

The inability to afford health benefits puts the small company at a competitive disadvantage in attracting and retaining talent, especially chefs who are in short supply right now and will migrate to larger organizations that offer insurance coverage.

“It’s hard for us to compete with that,” Rivard said. “We just can’t make the numbers work.”

To afford employee health coverage, Rockford Brewing needs costs at about half of what the company has been quoted, Rivard said.

Nevins said the Michigan Beverage Collective’s health plans are “very competitive” in price and generally beat other products on the market, often quoting policies “lower than what people are already paying,” although he could not say by how much.

Of the beer and wine wholesalers that now use the Michigan Beverage Collective, “most years we have a 100 percent retention rate” for policy renewals, Nevins said. “We’re a very stable plan with great benefits.”

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FOCUS: DRINKING ECONOMY PROFITABILITY Continued from page 1

operating on strict capacity limitations. Still, some breweries did see the hardship as an opportunity to fine-tune their businesses.

While the pandemic forced the hands of Collazo and his peers to make drastic changes to operations, Collazo focused on growing the most profitable aspects of his business while leveraging available state and federal relief grants.

“We were more profitable in 2020 than we were the year before on $500,000 less in sales,” Collazo said.

Labor adjustments Some of the changes Collazo implemented at City Built were similar to those made in other West Michigan breweries. The pandemic highlighted to Collazo that his company carried too much labor.

The pandemic gave him an opportunity to recalibrate this area of his business as, when statewide shutdowns went into effect, the brewery went from around 50 employees to just three overnight.

“It just became a thing where: How do we wisely add people that match our new sales?” Collazo said.

“And, what we’re finding is that our sales are almost back to what they were before the pandemic only without all the labor.

“We have half the kitchen people on any given day but our numbers are looking pretty close to what they were prior to COVID.” City Built made a few adjustments to accommodate a leaner crew, such as opening at 3 p.m. instead of from 11 a.m. to 11p.m. each day. City Built also stopped serving customers at their tables and, instead, started counter service.

“I don’t see that changing (back) — I think it’s awesome that the public is allowing us to make that change (because) they continue to show up. …

I think the changes we made to our food menu and to our beer menu all help to accommodate the counter service and quick food.”

Collazo also found dollars in the types of beers City Built brews and how they were distributed.

Before the pandemic, City Built distributed 50 percent of its beer offsite, a figure that changed to

just 5 percent currently. The brewery is canning, but only to make it more convenient for patrons to grab-and-go or drink onsite within a designated social zone.

Because of this inconvenience, the average number of beers sold went from less than one per person to almost three per person, according to Collazo.

As for selection, City Built focused on hot-selling styles like hazy IPAs, fruit-loaded sours and pastry stouts. Early in 2020, City Built brewed a batch of pastry stout that used 250 pounds of coconut. It sold in a matter of weeks for $30 per four-pack.

Collazo also has embarked on collaborations with multiple breweries across the state to raise City Built’s profile.

“These are breweries that had big followings and were brewing beer that we wanted to make,” he said.

Those collaborations were done with names like Ascension Brewing Co. in Novi, Drafting Table Brewing Co. in Wixom, and with hip-hop group Run The Jewels, which routinely collaborates with breweries around the world to create a portfolio of craft beer.

“We didn’t have a banner year (as a business) but our brand had a banner year,” Collazo said. “We were down half a million dollars. We found a way, with less, to be more profitable. … As things open up, we have lots of momentum and are positioned very well to take advantage of the fact that now people are willing to get out and people are getting vaccinated.

Our concern is that we can’t make enough beer (to meet demand).”

Universal struggles David Ringler, founder of Cedar Springs Brewing Co., went through a similar exercise as Collazo and his fellow brewery owner brethren.

“When we were in regular operations, we probably carried a little more fat than we had to. Things like this force you to focus on the things that are absolutely necessary rather than things that might not be necessary,” said Ringler. “For that reason, when this all happened, we all tried to be able to operate as thinly as we can and get by with lesser revenues. The fact of the matter is that revenues are significantly less and your overhead is still based on revenues.”

City Built Brewing Co. CEO Ed Collazo says 2020 “was a blessing” that created opportunities to cut some overhead costs while maintaining profitability. PHOTO BY STEPH HARDING While some breweries may have weathered the storm better than others, Ringler said that “profitability” can be a deceiving word in this case, especially with revenues taking such a dramatic hit and many breweries surviving on relief grant money.

“The (Economic Injury Disaster Loan), (Paycheck Protection Program) and other programs have injected cash into the system and allowed people to get by with other income,” Ringler said. “I don’t think that’s profit — because it’s not — but it is positive cash flow. And cash flow is king when you get down to it.”

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JANUARY 18, 2021 • VOL. 33/NO. 7 • $3.00

Despite new state law, no solid plans for Kalamazoo event center

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HELP ON THE WAY More flexibility comes with latest round of PPP loans

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Cybersecurity standards to reshape defense manufacturing PAGE 4 OCTOBER 26, 2020 • VOL. 33/NO. 1 • $3.00

Managed service providers play key advisory role in shift to work-from-home

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

R

ichard Reiffer and his staff at Grand Rapids-based Fusion IT LLC tend to take a proactive approach when it comes to advising clients on digital strategies.

So when COVID-19 transitioned into a full-blown pandemic in early March, the team was already telling the midsize companies it works with to start facilitating effective remote work.

Fusion IT, which works with businesses Reiffer on an ongoing basis as a managed service provider (MSP), even developed white papers to serve as a reference for effective work from home strategies.

“We started warning our clients early and most of them acted on it to get equipment if they didn’t already have equipment capable of running their remote work,” said Reiffer, the company’s vice president of strategic initiatives. “For a while there, the backlog to get laptops was about six months.”

The ongoing pandemic has ushered in a tidal wave of remote working for companies that were either forced to send workers home or did it out of precaution. Many of these companies’ MSPs have become the brain trust for workfrom-home setups and strategies.

Uneven footing With remote work a growing trend before the COVID-19 pandemic, many companies already had a rough infrastructure in place to make the transition smoother, Reiffer said.

Still, some businesses had to swiftly make up ground while some of it was dictated by their respective industries.

See WORK FROM HOME on page 12

P

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R

I

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I

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KALAMAZOO — A new funding tool recently signed into law is intended to help finance an event center in downtown Kalamazoo, but it’s unclear if there is a desire or solid plans to move forward with the venue.

House Bill 4816 was sponsored by former state Rep. Brandt Iden, R-Oshtemo Township, and was signed into law by Gov. Gretchen Whitmer on Dec. 30. The Regional Event Center Financing Act creates a financing program for potential venue projects in Kalamazoo, Ottawa, Muskegon, Ingham and Washtenaw counties.

“The impetus for this legislation was basically to allow access to another economic PAGE 22 development tool that larger communities have like Grand SERVING WESTERN MICHIGAN BUSINESS 1988 www.mibiz.com Rapids and Detroit,” IdenSINCE told MiBiz. “I have always supported an event center downtown because I believe that Iden if urban core centers don’t grow, then they have a tendency to just die out.”

Iden was term-limited out of office at the end of 2020. He served on the Kalamazoo County Board of

By JAYSON BUSSA | MiBiz Commissioners for two years before he was elected jbussa@mibiz.com to the state House of Representatives in 2014.

“The bettors event center onlycasino ever discussed ILLUSTRATION: KAYLEE VAN TUINEN ports and was online gamers found inthemselves concept. There were formalized sitting onnever the sidelines in plans Michigan for orall a formal agreement about thewas sizeaand scope of hope of 2020, even when there glimmer ofthat the project,” said.

“It’s always been pre- before the stateIden would launch online gaming liminarily the year discussed was out. as a high-level concept for the community.”

However, people seeking to place wagers from computThedevices new legislation requires center weeks. ers and mobile can likely do soan inevent the coming programthe to describe theisproposed “We’refinancing ready when industry ready,”size, Michigan location,Board cost and financing structureDirector of the proGaming Control (MGCB) Executive Rick Kalm

By MARK SANCHEZ | MiBiz has a |relatively posed facility, and to specify an assessment to be

By ANDY BALASKOVITZ MiBiz short applicatold MiBiz. tion window based on previous the program, which can’t exceed abalaskovitz@mibiz.com That’slevied whereunder this high-profile issue stands at the4 start of msanchez@mibiz.com demand. percent county-wide hotel room charges.

The period 2021, weeks afterofstate officials waived a 15-day review he latest stateRAPIDS effort — Randy Applications for the $55 would effectively be a small increaselicenses GRAND Thelen describes the milon sportsassessment betting rules and then issued provisional to provide financial Michigan to a county’s hotel lodging tax.just eight days later. The COVID-19 pandemiclion as an “inflectionSmall point”Business that for 15 different platform providers aid tocan Michigan small Survival Grant Program open Thethe financing defines an event center as a shift the course of economic development in at actions paved way foract online gambling to go live. businesses and enter9 a.m. on Jan 19. The application convention hall,awaiting auditorium, stadium, music— hall, West Michigan.

The MGCB is now each platform including tainmentThelen, venues who that wasprocess closes noonas onthe Jan. 22.

PAGE sites 26 like DraftKings and FanDuel Sportsbook — to selected last at month popular See KALAMAZOO EVENT CENTER on page 3 of their are ailing from thenew COVID-19 panand live music president and CEOEntertainment of The Right Place Inc., undergo independent testing to ensure the integrity restrictions venues can apply formore the $3.5 says the challenges of 2020 will likely create games. This extensive www.mibiz.com vetting ensures that platforms are demic and resulting

using geolocation properly and are able to properly identify a bettor so that bets are not placed by someone who is underage or not located in the state of Michigan.

competition among cities, and generate opportunity for a wider umbrella that includes equity as a key priority in economic development.

“Every region in the world is wrestling with what’s next,” said Thelen, who’s planning his move back to Michigan from Denver, where he’s currently senior vice president of Downtown Denver Partnership Inc., the city’s Thelen economic development SEE agency.

PAGE 4“The markets that can come together and move forward together are going to be winning markets and be able to leapfrog some of the competition.”

During previous recessions, Thelen said Denver “doubled down, invested in itself,” which allowed it to “accelerate out of recession and bypass that competition.” He’s leaving a “hyper growth market” in the Mile High City that’s attracted investments particularly from large tech firms such as Google, Twitter and Facebook.

“Virtually any tech company you can imagine has put up a sizable outpost in Denver,” Thelen said. “It’s a healthy reminder that the product of a region matters, and talent and placemaking drives business decisions. There’s been a lot of good movement in that area in West Michigan in the last 10-15 years. We’ve got to continue that.”

See ONLINE GAMING on page 3

developers say is critical for both businesses and households.

Eliminating the so-called “digital divide” must become as important as extending electrical and telephone service into rural markets in the 1930s, Birgit Klohs, CEO of The Right Place Inc. in Grand Rapids, said durKlohs ing a recent virtual panel discussion at the Michigan Economic Developers Association’s annual conference.

shortage among top ag priorities this year

The issue has become increasingly important during the pandemic as companies conduct business v irtua lly and students learn remotely, Klohs said. The pandemic brought greater awareness to the issue and how in some areas the digital divide “is more like the Grand Canyon,” Klohs said.

PAGE 11 “Our children shouldn’t be sitting in cars in the parking lot of a restaurant to get Wi-Fi so they can do their homework. I think that’s just Third World,” Klohs said.

See MEDA on page 3

By KATE CARLSON | MiBiz hold promise for the city’s transforkcarlson@mibiz.com mation. The projects also involve a variety of local interests and invesMANISTEE — The lakeshore city tors, including regional developers, of just more than 6,000 people is the local American Indian tribe and seeing multiple new downtown a nearby community college. developments that local officials “There are a lot of pieces when and investors say are critical for you’re transforming a downtown,” reinvigorating empty storefronts, said Scott Ward, president of West diversification and emerging betShore Community College, based ter off after the pandemic. about 20 miles south in Scottville.

In Manistee, two planned The college and community A vision for the Spirit of the Woods Manistee Gateway Project prehotels, a larger downtown “gategroups have been instrumental

By KATE CARLSON | way,” MiBizand a new to —education such housing, sented to city officials in September. COURTESY RENDERING centerincluding See MANISTEE on page 9 kcarlson@mibiz.com high-density rentals.

The Lansing-based Michiest Michigan citgan Municipal League has P E R I O D I C A L ies are examinstepped in to help local goving new poliernments solve their housing cies to expand puzzle. The MML plans to issue affordable housing and create guidance in early 2021 on code a supportive environment for reform that can help increase developers as studies show an affordable housing units. ongoing need for more units.

That includes incentivizing The renewed discussions affordable housing developers this year among city officials through tools like brownfield PAGES 10-11 in Grand Rapids, Holland, credits, streamlining zoning SEE PAGE 13 Kalamazoo and Grand Haven codes and a refined applicacome as the COVID-19 pantion process. demic has driven high unem“What happens is you have Drew Phillippy is president of Grand Rapids-based Purple East, which ployment and financial strain, developers sinking a lot of recently emerged from bankruptcy under a new law meant to help small raising concern among offimoney into the process and businesses. cials who say it could exacerit makes it harder for them to bate the need for affordable build housing developments housing. affordably,” said MML Policy Cities are attacking the Research Director Shanna problem in a variety of ways, Draheim. including revamping outdated Meanwhile, studies conzoning codes to make it eastinue to show a need for affordier for developers to include able housing throughout the affordability in housing develregion. A recent Housing Next opments, as well as prioritizing study shows at least 5,340 more affordable or mixed-use housrental units and 3,548 more For small businesses facing bankruptcy, the new ing for incentive tools such as owner-occupied units are brownfield credits. needed in the next five years federal Small Business Reorganization Act is proving Despite the effort being in Grand Rapids to meet housto be a cost-effective and timely lifeline. A Grand made to add more housing ing demand. Housing North, a Rapids retailer offers an early test case. SEE PAGE 14 stock at varying price points, nonprofit that spans 10 counhousing advocates and local ties in the northwestern Lower planners are still confronting Peninsula, showed last year STORY BY ANDY BALASKOVITZ // PHOTO BY KATY BATDORFF a stigma associated with — the region would need about See HOUSING on page 11 and community opposition

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million Stages Survival Grant Program beginning at 9 a.m. on Jan. 21. The applications window for Stages grants closes at noon on Jan. 28.

The small window for the Small Business Survival Grant Program stems from an expectation that demand will easily outstrip available funding

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Natalia Kovicak takes helm at GR Econ Club

Panel: Rural broadband development should mirror electric gridlabor build-out Trade, ichigan and the nation need the same kind of concerted effort to deploy broadband internet access as 90 years ago when America set out to electrify rural areas following the Great Depression, economic developers say.

The COVID-19 pandemic has heightened the need to fix a lack of affordable high-speed internet access in some markets of the state that economic

he new round of federal Paycheck Protection Program loans includes a number of changes from the prior funding intended to aid small businesses hurting from the COVID-19 pandemic.

As with the first round last spring and summer, borrowers working through a lender can again use PPP funding from the U.S. Small Business Administration to pay operating expenses.

The new $284 billion PPP round extends eligible expenses to property damage incurred in last summer’s civil unrest that was not covered by insurance, supplier costs and worker protection expenditures. As well, eligible expenses now include costs to adapt to the pandemic such as facility modifications, software and cloud computing and delivery services.

See PPP LOANS on page 12

Thelen to lead The Right Place amid economic development ‘inflection point’ State expects ‘extremely high’ demand for $58.5M in small business COVID-19 relief

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Regulators, platforms, consumers gear up as online SERVING WESTERN MICHIGAN BUSINESS SINCE 1988 gaming prepares to launch

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

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New Priority Health leader on accelerating change in health care

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6.21.2021

Jane Ghosh takes helm at Discover Kalamazoo

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because of a “far, far greater need that exists than any amount of resources that we are facilitating,” Michigan Economic Development Corp. CEO Mark Burton said last week. Grant programs last year to provide relief for thousands of small businesses statewide quickly See MEDC GRANTS on page 10

INSIDE:

West Michigan cities weigh policy changes to bolster affordable housing

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Telehealth soars during pandemic, sparking new health coverage options

INSIDE:

M&A Deals in Review: 2020

See THELEN on page 12

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New chapter for Chapter 11

INSIDE:

Mergers & Acquisitions PAGE 7

7.5.2021

Industry 4.0: Automation Contract Deadline: 6.23.2021

7.18.2021

West Michigan Tribal Economy Contract Deadline: 7.7.2021

8.2.2021 Insurance

Contract Deadline: 7.21.2021

8.16.2021

Automotive Supplier Outlook Commercial Lending Quarterly: Growth Lending Update Contract Deadline: 8.4.2021

8.30.2021

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Solar industry on edge

Contract Deadline: 6.9.2021

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Putting pieces together in Manistee Industry 4.0 Two hotels, downtown education center lock in community investments in anticipation of post-pandemic recovery, local officials say

Transportation

Education/Talent Development

SEE PAGE 16

Contract Deadline: 8.18.2021

9.13.2021

Family Business

Contract Deadline: 9.1.2021

9.27.2021

Cannabis Cannabis Roundtable

Contract Deadline: 9.15.2021

Contact Us Today!

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MiBiz / APRIL 12, 2021

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SMALL BIZ

Beyond retail: Entrepreneurs pursue alternative routes to cannabis industry

By KATE CARLSON | MiBiz kcarlson@mibiz.com

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pening a cannabis dispensary comes with significant barriers, but West Michigan entrepreneurs are looking at opportunities other than retail storefronts to get their foot in the door of the burgeoning industry.

Michigan voters allowed for a wave of new businesses when they approved the Proposal 1 ballot initiative in 2018 to legalize recreational cannabis.

While licensing and zoning red tape, as well as a high start-up costs, have served as obstacles for individuals looking to open a dispensary, many are finding ways to work in the cannabis space without opening a storefront.

“Creating a dispensary is the most well-known side of the recreation industry,” said Grand Rapids resident Erica Tyler, who is planning to open a cannabis processing or safety compliance facility. “That is going to begin to be a saturated market at some point, so why not create a business where they have to come through our door (first)?”

Tyler is a member of the recently launched Fluresh Accelerator, a business incubator and education program launched by Fluresh LLC for local businesses and entrepreneurs to enter the cannabis industry.

“It’s disheartening to know that so much information is available to those that have the money and connections,” Tyler said. “The things that I have learned are things I didn’t even know existed.”

Wormies Vermicompost is another startup in the Fluresh program. The company launched in 2018, and after Prop 1 got a boost in business from home growers and caregivers looking for high quality soil to grow cannabis, said owner Luis Chen Aguilera.

The Grand Rapids-based company has a compost pickup service for households and restaurants, and also sells worm castings — a high-quality natural soil amendment for organic gardening — and a variety of other soil products.

“At the beginning of starting the business I didn’t have a big market, but once the industry came into place for cannabis they all started buying from me,”

Aguilera said. “Craft cannabis growers or people with small operations care a lot about the plant. That industry coming into place really helped Wormies expand composting operations.”

Aguilera is now looking into how Wormies could become a licensed facility to compost cannabis waste, which currently is mostly going to landfills, Aguilera said. Using a plant’s own biomass as compost for when it is grown also provides numerous benefits.

“When we talk about growing organically, that’s the dream,” Aguilera said. “The microorganisms that we would be culturing in this compost would be grown in the place where they are going to thrive and where they are needed. It just makes sense.”

Wormies is in the process of gathering more information on how to properly compost cannabis waste, and seeking clarity about proper licensing from the state, Aguilera said.

The Michigan Marijuana Regulatory Agency has various requirements for how to dispose of cannabis waste, including destroying the waste until it is rendered “unusable and unrecognizable” and recorded in the state’s monitoring system. Cannabis waste must then be disposed of into a landfill, a compostable materials operation or facility or an invessel digester.

Marketing, branding cannabis “You don’t have to touch a plant to be a part of what’s going on,” said Roberta King, owner and founder of Canna Communication, which assists with marketing efforts for medical provisioning centers, dispensary owners and other cannabis-related businesses. She was referring to the ancillary business opportunities in the cannabis market.

King started Canna Communication after she left her job as the Grand Rapids Community Foundation’s vice president of public relations and marketing. She wanted to find a way to start her own firm that would provide her more flexibility toward the end of her career.

King often works with municipalities to help destigmatize cannabis and aids clients by advocating for changes in local regulations. Many cannabis business owners are also unaware of the unique way

Participants in Grand Rapids-based Fluresh LLC’s business accelerator program for cannabis startups. COURTESY PHOTO cannabis businesses are prohibited from advertising on mainstream search engines and social media channels because cannabis is still illegal at the federal level, King said.

“You have to rely on a lot of public relations, and (search engine optimization) content, as well as personal, relational tactics,” King said. “It’s also a lot of face-to-face with customers and in-store promotions.”

This also led King to secure a marijuana events organizer license. The city of Muskegon, where King resides, is one of the few cities in the state that has opted in to allowing marijuana events.

She is planning to work with the city and Park Place Provisionary to hold an outdoor event this July.

“It fit with what I was doing more than anything else and seemed like a good opportunity,” King said.

“Events like this will help destigmatize cannabis a bit more and get people to realize it is legal, just like a beer and wine tent at an event.”

Being creative with an entrypoint into cannabis can open up different opportunities along the way, said Sarah Tupper, co-founder of Sarah Jane, which she launched in 2018 with her business partner, Jessica Lind.

The Grand Rapids-based cannabis brand launched its first line of products in 2020, including microdose gummies, cannabis spray and pre-rolls that are carried in six different dispensaries across the state. Sarah Jane is marketed toward women who perhaps have not tried cannabis before or have not been to a dispensary but want to try it for the first time, Tupper said.

“We thought there was a gap in the Midwest market where we really felt like nobody was speaking to this demographic,” Tupper said. “That’s how our business model evolved — to not only wanting to be a company geared toward products, but also resources, education, community engagement and just a place for women who are looking for some honest dialogue about how to integrate cannabis into their life.”

Launching the Sarah Jane brand has been a “great first step” to getting into the cannabis industry, and will allow them to explore expanding their products or see what other opportunities they can take with the brand, Tupper said.

“It really offered us that really intense education really quickly and an awesome window into meeting so many other women who have been so supportive of our message and our brand,” Tupper said.

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ECONOMIC DEVELOPMENT WOMEN IN THE WORKFORCE Continued from page 1

equity and racial issues to childcare, it’s just all brought it to the forefront.”

B e t w e e n Fe b r u a r y a n d December 2020, roughly 136,000 women left Michigan’s labor force, resulting in a 5.8-percent decline, according to the Women in the Michigan Workforce report issued by the state Department of Technology, Management and Budget. For men, the labor force is back to pre-pandemic rates and Feenstra Wall was up by 18,000 workers during the same period, for a 0.7-percent increase.

To address some of these disparities, Michigan Women Forward gave out grants to nearly 200 women and minority-owned businesses across the state in 2020 to try to ease some of the financial burden caused by COVID-19.

Kelly “We deal with a lot of entrepreneurs and see a lot of the impact the pandemic has had on a lot of them,” Fauble said. “For a lot of women that we work with, because they are the caretakers of the children and are trying to run a business, it is harder. A lot of the time these women are single parents, so it’s a double impact. They need to run their business to survive the pandemic and feed their families and help their employees as well.”

Workforce inequities by gender and race cause some of the wage and workforce discrepancies that have been highlighted by the pandemic, experts say. But social norms, such as most women still serving as the primary caretaker of their children, offer another reason for women not returning to the workforce at the same rate as men.

Parenting in a pandemic More than 17 percent,or 10 million, of all working women across the U.S. rely on childcare and schools to keep their children safe while they work, according to the Brookings Institution. The lack of in-person schooling, coupled with childcare being shut down last year under COVID-19 precautions, caused a complete upending of the workforce that affected women the most.

The first month of the pandemic was especially awful, said Megan Feenstra Wall, architect at Mathison | Mathison Architects in Grand Rapids. She also serves as the president of American Institute of Architects’ Grand Rapids chapter. Feenstra Wall and her husband both have full-time jobs but also had to teach their children in kindergarten and first grade at home when schools shut down.

“Things were working for me (before the pandemic) because I had these systems in place that were set up to make this all work. But suddenly those went away and there were overlapping deadlines, 50-60 hour work weeks while also trying to school our children and then extra things like wiping down groceries,” she said.

The duties were shared with her husband, but Feenstra Wall knows of “more than one” woman in architecture outside of her firm that stopped taking on new work when the pandemic started because she was expected to help a child with virtual school.

“I don’t have any clue how you would do this if you were a single mother. I just don’t know, and I feel for the women who are doing this alone,” Feenstra Wall said.

“There are so many talented and driven women coming up in the (architectural) profession right now in West Visit www.mibiz.com

Michigan and I know them and am excited about what’s coming. I haven’t heard of them leaving the profession or going part-time, but I worry we’re going to lose some of those gains.”

When Alita Kelly founded Southeast Market in Grand Rapids — which opened in January 2021 — she and her co-founder, Khara DeWit, both knew firsthand about the extra hardships the pandemic has caused for women and mothers, especially of color.

“My daughter is still in remote (schooling),” Kelly said. “It’s been a year since she’s been at home for school and we’ve been building the business this entire time.

It’s such a hard time psychologically for them being estranged from other children, and that translates to me not being able to hold all of the balls for the business.”

Because Southeast Market’s priority and mission is to work with vendors who are Black, brown, Indigenous, local and women-led, Kelly sees it as a growing concern among many of her vendors as well.

“I’ve seen a mom’s goal for expanding into farming having to take a backseat because she has to care for the children in a way she wasn’t really expecting before the pandemic,” Kelly said.

Kelly said she has seen resiliency in her vendors despite the pandemic, but being able to understand their experiences on a personal level is crucial in knowing how to support them when they need it.

“I definitely feel like we make space for ourselves, and when we’re aware of challenges other mothers are facing, we work with them,” Kelly said. “There needs to be that type of heart in company culture. If you have mothers making decisions that are at the top in a company, that will be reflected in a company’s policies.”

Kelly says customers may at times feel the market’s service is lacking in certain ways or that they are providing services in unconventional ways. She tries to share that she and DeWit are teachers, mothers, homemakers and business owners all at once.

“It always comes back to representation and diversity,” Kelly said. “We were able to build this business with the lens of being mothers, women and people of color, and you can feel that in every aspect of our business.

I’m so grateful to have that culture be the foundation of the market.”

Women

Men 17,900

20,000 0 - 20,000 - 40,000 - 60,000 - 80,000 - 100,000 - 120,000 - 140,000

- 136,000

Source: Women the Michigan Workforce report, Michigan Department of Technology, Management and Budget.

Michigan unemployment rates by gender Women 25.0% 22.2%

Men 22.6%

20.0%

15.0%

10.0% 7.3%

7.3%

3.9%

5.0% 2.4% 0.0%

Dec. 2019

April 2020

Dec. 2020

Source: Women the Michigan Workforce report, Michigan Department of Technology, Management and Budget.

MiBiz / APRIL 12, 2021

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POLICY

Biden plan could provide major funding influx for Michigan infrastructure plans

By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

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resident Biden’s recently proposed $2.25 trillion infrastructure plan comes as state officials and local planning experts make gains in plotting investment needs across Michigan.

Last month, the Michigan Infrastructure Council announced a new online portal that tracks where and when projects including utilities, roads and water and sewers will take place. It’s part of a broad attempt to coordinate hundreds of public and private entities planning more than 10,000 infrastructure projects across Michigan in the coming years and decades.

“We’ve all known there has been a disinvestment over the last couple of decades in infrastructure. Our state certainly has suffered from that,” said John Weiss, chairman of the Michigan Infrastructure Council and executive director of the Grand Valley Metropolitan Council.

With so many infrastructure projects in the queue — ranging from road repairs to sewer replacement to broadband internet — state officials say a roadmap is critical to avoid overlapping or duplicative projects. For example, the project

aims to address the question of whether utility distribution infrastructure could be replaced while a road is torn up.

The Michigan Infrastructure Council’s “dig once” portal launched in mid-March and already has more than 10,000 planned projects statewide.

It’s the latest in an ongoing attempt to “maintain a long-term emphasis on infrastructure and changing the culture in Michigan,” Weiss said.

American Jobs Plan After a years-long focus on infrastructure spanning several governors, Michigan officials are now examining a concrete federal proposal, albeit one that’s subject to change.

Biden’s American Jobs Plan includes more than $600 billion for roads, bridges and highways; $85 billion for public transit; $174 billion for electric vehicles and charging infrastructure; $100 billion for high-speed broadband internet; $100 billion to invest in the power grid; and $300 billion to invest in the manufacturing supply chain.

Following Biden’s announcement, Amtrak issued a map of proposed projects that included potential enhancements to commuter rail between Grand Rapids and Chicago, as well as new routes

Coming Soon!

CLQ: COMMERCIAL LENDING QUARTERLY 2021 promises to be an interesting and challenging year for commercial bankers. In line with that, MiBiz will expand its coverage of commercial banking activity around the West Michigan region.

We’ll ramp up our regular editorial coverage of the region’s financial institutions and also roll out a quarterly report on commercial lending activity throughout the region. The Commercial Lending Quarterly (CLQ) sections are scheduled for: • Commercial Real Estate Lending Update - May 10, 2021 • Growth Lending Update - Aug. 16, 2021 • Commercial Lending Wrap-Up - Nov. 22, 2021 Contact your rep to book in all four of the CLQ issues today.

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APRIL 12, 2021 / MiBiz

Gov. Gretchen Whitmer surveys an I-94 bridge in Jackson last month that’s being repaired under the state’s Rebuilding Michigan bonding initiative. COURTESY PHOTO connecting Detroit to Toledo and Detroit to Toronto.

Biden’s plan also calls for $45 billion to replace U.S. lead pipes and service lines and $10 billion to monitor and remediate perand polyfluoroalkyl substances (PFAS) in drinking water.

“Anytime you can bring more construction activity in a community like ours it Bennett Lunger Weiss will have a huge benefit for communities,” senior director of government affairs with the Grand said Ryan Bennett, business manager for the West Rapids Area Chamber of Commerce.

Michigan Plumbers Fitters and Service Trades Lunger said the Grand Rapids Chamber is “typiLocal 174 and president of the West Michigan cally pro-infrastructure,” but favors funding models Building Trades Council. He cited the former based on user fees over tax increases.

Obama administration’s American Recovery and “We need to do something,” Lunger said of infraReinvestment Act of 2009 for helping to spur constructure projects. “We’re very supportive of the idea struction at an LG Chem battery plant in Holland. of infrastructure investments, but so far there’s just “We’re anticipating shovel-ready projects like a lot of questions and concerns over the methodolthat looking for federal funding to push it over the ogy of generating revenue.” edge,” Bennett said. “We’ve been neglecting investLunger added that raising corporate income ments in wastewater, sewers and potholes. (The taxes in the wake of a now year-long pandemic runs Biden plan) calls out the replacement of lead sercounter to economic recovery efforts. Bennett and vice lines — that’s going to be a lot of plumbing and other supporters of the Biden plan are skeptical of pipefitting work.” business groups’ stance.

Weiss said local and state governments and pri“The argument that it’ll somehow cost us jobs vate entities that own infrastructure have spent years or be a negative for the economy hasn’t really identifying needs and, just as importantly, how to proven to be the case,” Bennett said of raising pay for them. corporate income taxes. He also noted that his “If more funding becomes available, more projpersonal taxes increased after former Trump ects can be done off those lists at a faster rate, which administration policies. “The money’s got to will help us to avoid some problems we had in the come from somewhere.” past of waiting too long or waiting for a crisis,” Weiss In remarks last week, Biden said he’s “open said of the Biden proposal. “To get on top of this to good ideas and good-faith negotiations” with planning curve is part of the reason that whatever GOP opponents, but noted that “inaction simmoney becomes available, it will help us to move ply is not an option.” Democratic congressional faster to what we know are already identified needs.” leaders have said they hope to move the plan later this summer or fall.

Business apprehension Although business groups are opposed to Funding Biden’s $2.25 trillion remains clouded the corporate tax increase to pay for the infrawith uncertainty. The administration proposes to structure, Weiss said the business community is increase the federal corporate income tax rate from “reacting positively” and becoming more closely 21 percent to 28 percent. The rate was reduced from involved in the Michigan Infrastructure Council’s 35 percent to 21 percent four years ago during the work around a project roadmap.

Trump administration.

While federal funding details and project priThe tax increase already has generated strong orities are still unclear, any potential plan would opposition from GOP leaders and apprehension leave it to public planners to “use whatever funds from some key Democrats, who hold slim majoriwe can in the most efficient manner,” Weiss said. ties in the U.S. House and Senate.

“Any effort that takes place at the federal, state Based on initial feedback from its members, or local level to get on top of this infrastructure “There’s a little bit of concern about how much crisis we’re currently facing will help us as a counis being lumped in there, but mostly going away try be more stable in the future,” Weiss said. “It’s from user fees and raising the corporate income a need that’s been out there. It’s very expensive, tax hasn’t been well received,” said Joshua Lunger, but it’s also very expensive to do nothing.”

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FINANCE

Grow Michigan Fund II eyes $100M with increased focus on minority-owned businesses

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

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statewide loan fund to provide growth capital to Michigan small businesses expects to start closing deals by the end of the month after securing state support.

Grow Michigan Fund II has landed commitments of nearly $40 million from investors, including $9.6 million approved in late March by the Michigan Strategic Fund board.

The state commitment to the mezzanine fund “allows us to leverage some more investment” for Grow Michigan Fund II, which had temporarily put fundraising to prospective investors on hold as the Michigan Strategic Fund Board weighed support.

“Now that we’ve gotten the green light, we’re full speed ahead,” Grow Michigan CEO Patrick O’Keefe said.

Grow Michigan Fund II O’Keefe succeeds a prior fund and has a lofty goal of ultimately raising $200 million from investors, half of which will be targeted at minority-owned small businesses that need growth capital.

O’Keefe expects the fund can reach $100 million by the end of 2021. Backers so far include large banks in the state, some of which have committed $5

million with a promise to go as high as $30 million “if we meet some of the aspirational goals of the fund in terms of seeding minority businesses,” he said.

“We’re open to all Michigan businesses, but to the extent that we make a dent, they’re willing to commit more capital,” O’Keefe said.

Grow Michigan Fund II — the successor to a mezzanine fund formed in 2012 with the backing of state funding and investments from several banks — will target small businesses in an array of sectors including manufacturing, distribution, transportation, life sciences and enabling technologies.

Eight banks so far have committed to Grow Michigan Fund II, and O’Keefe expects 16 to 20 overall to invest. Eight banks invested in the first Grow Michigan fund.

Grow Michigan is also seeking investments from foundations in the state, O’Keefe said.

Filling a demand, overcoming delays By targeting half of the capital the fund raises toward minority-owned businesses, organizers of Grow Michigan Fund II seek to fill a demand for growth capital across the state, especially in underserved markets. The fund right now has eight potential deals in the pipeline, he said.

“We think that we will get some traction in finding new businesses and growing small ones to really create more jobs in the state and move it forward,” O’Keefe said.

The first Grow Michigan fund made 33 loans totaling $67.1 million to companies that went on to leverage the funding to collectively secure $320 million in private-sector capital and support more than 3,200 jobs, according to the Michigan Economic Development Corp.

Of the first fund’s approved loans, more than 80 percent went to qualified small businesses, 36 percent were in low to moderate income areas, and 14 percent went to minority-owned businesses The Michigan Strategic Fund board initially committed in October 2018 to investing in a second Grow Michigan fund. The commitment came as Grow Michigan was completing investments in the first fund, resulting in a slow start to fundraising for the second fund. That fundraising didn’t begin for several months as final terms and agreements were negotiated, said Chris Cook, the MEDC’s director of capital access.

“The management of the fund was kind of at that point still pulling double duty because it was seeking to make investments at the same point it was seeking new investments into the fund,” Cook said.

Proposed changes at the time in the federal Community Reinvestment Act also slowed banks’ interest in investing in Fund II, Cook said.

That all resulted in Grow Michigan lacking enough investors by the Dec. 31, 2019, closing date for raising capital and signing private-sector lending partners that would prompt the state’s investment, Cook said. Rather than extend the closing date, the Strategic Fund opted to re-evaluate the market needs and alter the fund’s scope, he said.

The onset of the COVID-19 pandemic in Michigan in March 2020 further delayed the process.

The pandemic “made it more difficult” to proceed with Fund II as the MEDC concentrated on creating and administering small business relief funds and banks “understandably were focused” on assisting clients and managing the crisis internally, Cook said.

The Strategic Fund board’s approval in March to commit $9.6 million also reduced Grow Michigan Fund II’s minimum loan size from $1 million to $250,000. The approval also added a seat to expand the board of managers to 10 members to focus on equity by directing half of the capital raised to minority-owned businesses.

The MEDC put $7 million into the first Grow Michigan fund and expects to receive a positive return on investment, Cook said.

Grow Michigan has met the MEDC’s goal to leverage private-sector investments, leading to the subsequent $9.6 million commitments for the second fund, Cook said.

He added that the first fund showed an ability to leverage the private sector but also an ongoing need for “this kind of small mezzanine-type lending that doesn’t otherwise have significant availability in the market.”

The second fund’s “much more of a specific effort to be equitable in its lending practices and seeking out additional opportunities to provide lending to historically underserved areas and businesses are all in line with goals of the MEDC,” Cook said.

Who Inspires You? AWARDS

Gala

Do you know someone who •••

• • • • • • •

Leads and inspires others Gives back to the community Is a neighborhood cornerstone Contributes to local arts and culture Elevates the well-being of others Embodies healthy living, or Is a champion for those in need?

To help celebrate their achievements, please nominate them today!

To nominate, scan QR code or visit SeniorNeighbors.org/nominate

Each year, the 16 Over 60 awards gala recognizes 16 individuals 60 years of age or older for their inspiring engagement in our community. This year’s celebration is sure to be especially poignant!

To learn more or view past Honorees, please visit SeniorNeighbors.org/16over60.

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Senior Neighbors proudly serves more than 4,000 area seniors annually, helping them maintain their independence, dignity and well-being.

For nearly 50 years, we’ve offered programs and services supporting self-sufficiency, especially for those with physical, social or economic needs.

SPONSORSHIP OPPORTUNITIES

AVAILABLE FOR 2021!

Please contact Brian Clark: BClark@SeniorNeighbors.org or (616) 233-0738

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INFORMED IMPACT To overcome racial, social and economic inequities we must respond with intention and care. Grand Rapids Community Foundation uses the tools of philanthropy to answer community needs.

Our partners inspire, motivate and guide our work.

The Community Foundation connects people, passion and resources to meet our region’s toughest challenges.

Learn more at grfoundation.org.

Grand Rapids Community Foundation is a proud sponsor of MiBiz’s nonprofit news section.

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NONPROFIT ORGANIZATIONS

Grand Rapids officials, arts organizers explore a revived arts council

Muskegon Museum of Art raising funds for expansion

By JOSH SPANNINGA | MiBiz jspanninga@mibiz.com

G

rand Rapids officials say part of the city’s post-pandemic rebound for events and entertainment should include a focus on reviving a local arts council to coordinate funding and programs.

Evette Pittman, supervisor of the city’s Office of Special Events, said during a recent webinar that such an organization is high on her priority list as the region bounces back from widespread event cancellations during the COVID-19 pandemic, which collectively have wreaked havoc on local economic activity.

“To build back better, we need a better functioning arts and culture infrastructure on a community-wide scale,” Pittman said during the webinar. “We need to be more systematic. An operational arts council will serve as endowment support for the arts community in Grand Rapids, instead of businesses and corporations receiving dozens of individual asks. Arts endeavors would work through a singular arts council to create a vibrant arts scene in Grand Rapids.”

Grand Rapids’ previous arts council, which formed in 1967, was created to provide organized support for arts and cultural institutions throughout the city. The organization provided its artist members with exhibition space and professional support, and provided member organizations with financial and strategic assistance.

However, the Arts Council of Greater Grand Rapids disbanded in late 2011.

Various factors, including the recession and state budget cuts, were cited for dissolving the organization before remaining funds were distributed as grants to local artists and organizations.

By 2019, the need for a collective arts group in Grand Rapids became apparent.

In response, Steelcase Inc. helped facilitate what is now known as the Arts Working Group (AWG), a collection of 27 different Grand Rapids arts organizations dedicated to supporting and strengthening the local art community through open dialogue, strategic planning and other types of support.

Louise “Punky” Edison currently serves as the AWG’s accountability partner.

“They intentionally do not have a designated leadership model, and that’s on purpose,” Edison said of the group. “So I support them in doing what they decide they want to do.”

Edison worked for the former Arts Council for four years, as have some other members of the working group. According to Edison, the group also has arts and cultural leaders who are new to Grand Rapids and bring their experiences with various other arts council models to the table.

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Muskegon Museum of Art. COURTESY PHOTO

By JOSH SPANNINGA | MiBiz jspanninga@mibiz.com

An alleyway mural in downtown Grand Rapids. PHOTO BY KATE CARLSON

“To build back better, we need a better functioning arts and culture infrastructure on a community-wide scale.”

— EVETTE PITTMAN Supervisor, Grand Rapids Office of Special Events

to help look at the history of what worked and didn’t work, and build something for Grand Rapids that will meet its needs,” Edison said.

The AWG consists of a wide variety of arts organizations in Grand Rapids, from big hitters like the Urban Institute for Contemporary Arts (UICA) and Grand Rapids Art Museum (GRAM) to smaller organizations such as Lions & Rabbits, a local arts center dedicated to creating accessible arts education and enrichment programs. The intentional lack of a leadership model allows AWG members to all speak freely and openly about pressing issues, concerns and ideas, and then subcommittees are formed to address specific topics.

“From grassroots to institutions, we all meet,” said Lions & Rabbits founder and owner Hannah Berry. “There are a couple of committees. The committees are for diversity, equity and inclusion, and the next committee is about reopening in COVID, so that’s more for anybody who’s working in policy, or working alongside venues reopening, or grants, or PPE or anything like that.”

Berry feels that the AWG has major potential to benefit all t ypes of arts endeavors, from large projects with the UICA or GRAM all the way down to individual artist grants and support. That potential could increase with the support

of an official arts council.

“There are a lot of artists that … should just be artists,” Berry said. “That’s the best case scenario where they could be paid to do the best job that they’re incredibly good at, but there’s less organization behind it.

So having an arts council, for me, is really empowering local artists to be able to do their own entrepreneurial (pursuits).”

Conversations in early stages With the city of Grand Rapids’ renewed interest in an arts council, the AWG could play a pivotal role in helping to mold what a new organization could look like. While conversations between the city and the AWG are still in the early stages, advocates see potential.

“I think that the Arts Working Group coming together as a whole is like 10 steps forward,” Berry said. “I think the city acknowledges that because the city management understands the importance of the arts.”

While no formal meetings have been held yet, Grand Rapids City Manager Mark Washington has sat in as a guest at one of AWG’s meetings. AWG members have also met with the Grand Rapids Area Chamber of Commerce for informal discussions.

“I do think we’re very early in that conversation, but there does seem to be some recognition that having some ‘connective tissue’ pulling that all together, and thinking about the past, the present and the future of the arts in Grand Rapids could help all of the arts organizations and artists to flex that creative muscle,” said Assistant City Manager and Chief Administrative Officer Doug Matthews.

Both the city and AWG seem hopeful about the creation of a new arts council in some capacity, though officials are proceeding with caution.

“The reason that we’re trying to be very intentional and thoughtful about what’s next is because there’s a lot of important work already,” Matthews said. “We don’t want this to distract from that work, but it could be a result.”

MUSKEGON — In mid-March the Muskegon Museum of Art announced a $9.9 million expansion plan to add additional gallery space to the facility, which — according to museum officials — has already been mostly funded.

“For the first year it’s been a quiet campaign behind the scenes, and by announcement we were up to $7.2 million or $7.3 million,” said Executive Director Kirk Hallman. “Then on March 16 we brought the campaign public and have nudged it up to $7.4 million, and hopefully by this summer we’ll wrap it up.”

Hallman said plans for a museum expansion have been in the works for several years. Nearly 20 Hallman years ago the museum purchased a nearby medical arts building, which was subsequently torn down to make space for parking, and then later purchased an additional parking lot. The extra space will allow the museum to increase its permanent exhibition space by more than 200 percent and its rotating exhibition space by 60 percent.

“It’s been a long strategic process,” Hallman said. “Finally a couple of years ago we were ready to do the campaign to do the expansion because we have about 5,000 pieces in the collection and we do about 15 to 20 rotating exhibitions every year. It’s a high quality collection, and we can only get in our current space maybe 150 pieces at a time.

So there’s a big need to show more of the collection, to have touring exhibitions come in, and have some better improved classroom space.”

Museum officials have also learned lessons during the pandemic to incorporate into the expansion, including a refurbished HVAC system.

“It drives a lot of interesting possibilities that a year ago we never would have thought of,” Hallman said.

The museum stores the vast majority of its collection in underground vaults beneath the premises. The proposed expansion will allow a larger portion of its permanent collection to be shown, while at the same time creating additional gallery space to host large touring shows that Hallman believes will make it a “destination regional museum.”

“It’s going to have a tremendous NONPROFITS economic impact for not only the city NEWS — of Muskegon, but for West Michigan as Sponsored by: well,” Hallman said.

GRAND RAPIDS COMMUNITY In 2017, the museum experimented FOUNDATION with its own large collection of Edward Curtis’ photography to draw in larger audiences.

“We turned the whole museum over to that show, and we got 40,000 people from all 50 states and 29 countries,” Hallman said. “It was a huge success, and we know we can pull those crowds in.”

The Muskegon Museum of Art plans to break ground on its expansion project this fall and officials hope to begin construction by early 2022.

Muskegon-based marketing agency New School created the brochures that have been used in much of the museum’s fundraising efforts throughout the past year. New School Director of Brand Strategy Josh Herder told MiBiz that the agency is no stranger to working with local nonprofits.

“It’s a soft spot for us,” Herder said. “We really have a heart for West Michigan nonprofits and helping support them in any way we can.”

The agency has previously worked with nonprofits including the Grand Haven YMCA, Gracious Grounds, and The Arc. The Muskegon Museum of Art, however, was an especially exciting project for Herder, who says the museum was a large part of his childhood education.

“Not a lot of people understand what that museum is capable of,” Herder said. “This expansion is going to be incredible for them. We’re just happy to have been a part of helping raise that money in an efficient manner for them.”

MiBiz / APRIL 12, 2021

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Woman-owned, gluten-free brewery makes a craft beverage splash A Q&A with Jessica Stricklen, owner of Brewery Nyx LLC

B

rewery Ny x LLC ow ner Jessica Strick len recently unveiled plans for what will be the first gluten-free microbrewery in Michigan, to be located at 506 Oak land Ave. SW in Grand Rapids’ Roosevelt Park neighborhood.

Stricklen, who previously worked in management roles for wine labels in Portland, Ore., plans to initially launch the new brewery as a production space and small tasting room. Teaming with veteran brewer Sebastian Henao Van Bommel, Brewery Nyx will also sell cans of its beers out of its home facility in addition to maintaining self-distribution. Stricklen, among the few women owners of craft beverage companies, spoke with MiBiz about the new venture and navigating the craft beverage industry during the COVID-19 pandemic.

What sort of demand for gluten-free beer do you anticipate, especially when gluten-free drinkers have cider, wine and seltzer to choose from?

Almost everyone I have talked to about the project has said, ‘Oh, I know somebody who is glutenfree that would love that.’ What’s so sad is that there are so many people who are gluten-free either by choice or by necessity. Just because (gluten-free beer) is not available does not mean people don’t want it. Beer is its own thing. Cider is great. Wine is great. And then there is also spirits and seltzer. They all have their own place, but nothing is a replacement for beer.

Some brewers offer beers that reduce or remove gluten. What’s the difference between those products and what Brewery Nyx will offer?

That is gluten-removed or gluten-reduced beer. It’s not 100 percent gluten-free. It’s made from grains that contain gluten so it’s still made from wheat, barley and rye and they put an enzyme in it to drop out the gluten protein and it’s still not 100 percent gluten-free. Our product will be — from grain to glass — gluten-free. All of our ingredients are gluten-free and our whole facility will have no gluten on site.

Is there a stigma surrounding the taste of gluten-free beer, and does that make you hesitant to prominently promote the fact that your beer is gluten-free?

We’re not going out of the gates screaming with our arms raised up, ‘Hey! We’re gluten-free!’ My brewer and partner makes fantastic beer and it happens to be gluten-free.

The majority of gluten-free beers available are mostly made from sorghum grain, which leads to sort of a bitter, metallic aftertaste that we’re going to avoid. We don’t want to go out of the gates saying, ‘We’re gluten-free, but I promise it’s good — please try it.’ We’re making great-tasting beer.

It’s a premium brand because we have premium ingredients and all of our ingredients are 100 percent gluten-free.

You’re also pursuing a distiller license. What are your plans with that?

The plan is to start with gins, agave spirit, and bourbon — all produced and packaged in our dedicated gluten-free facility.

The craft beer industry has made strides toward diversity and inclusivity, but are there any barriers for you as a woman in a male-dominated industry?

Absolutely there are barriers — I am a woman in a white male dominated industry. Yes, I hit a few extra bumps in the startup process, but there has also been overwhelming support from people who understand the vision and have gotten to know me. I really don’t yet have much experience in the local beer industry — we’re not even open yet. You can ask me again in a year or two. Even with the inclusion and diversity efforts within the local industry, I really just don’t have the experience to comment one way or the other.

With so many craft breweries located in and around Grand Rapids, is market saturation a concern for you at all?

I’m not worried about market saturation. We have gluten-free beer. We are bringing people into the mix who can’t drink any other beer. Or, the beers that they have drank are not local craft beers.

Most people don’t really enjoy the (gluten-free) beers available right now, anyway. We’re pulling from a completely different population that is currently not a part of the craft beer scene and not at their own fault. It’s really exciting for us to bring everyone back to the table.

Has your past experience in the wine industry helped you navigate the unprecedented industry conditions brought on by the COVID-19 pandemic?

It has helped just by having experience with startups and understanding you need to be flexible and figure out what works. If something’s not going to work, you need to change.

Interview conducted and condensed by Jayson Bussa. Courtesy photo.

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APRIL 12, 2021 / MiBiz

IN THE NEWS M&A

n Grandville-based Kerkstra Precast Inc., a producer of precast and prestressed concrete products, has been acquired by private equity-backed Fabcon Precast LLC, based in Minneapolis, Minn. Founded in 1962, Kerkstra serves the industrial, commercial, residential and infrastructure markets throughout the Midwest. The company’s product offerings include architectural wall panels, hollowcore planks, beams, columns, double tees and stairs. In addition to a Grandville location, Kerkstra also maintains a location just outside of Detroit. n Otsego Crane & Hoist Co., a manufacturer that specializes in overhead material handling equipment, has been sold to individual investors. Grand Rapidsbased merger and acquisition advisers Calder Capital LLC advised the Otsego-based company on the sale.

Terms of the deal were not disclosed. The company was purchased by two Grand Rapids-based intellectual property attorneys, who chose to remain anonymous. n Lincolnshire, Ill.-based Camping World Holdings Inc. (NYSE: CWH) signed an agreement to purchase Escanaba-based Hilltop RV Superstore, according to a statement. The companies expect the deal to close in May. Hilltop RV operates dealerships in Ishpeming and Escanaba and sells a range of new and used RVs, as well as outdoor products and accessories. The deal expands Camping World’s reach into the Upper Peninsula for the first time. With the addition of Hilltop RV, Camping World will operate six dealerships in Michigan, including a location at 201 76th St. SW in Byron Township along U.S. 131. Terms of the deal were not disclosed. n Pittsburg, Kan.-based Watco Companies LLC, a railroad operator of short lines that owns the Grand Elk Railroad Inc. in Grand Rapids, has signed an agreement with Canadian National Railways to take over about 650 miles of track in Michigan’s Upper Peninsula and Wisconsin from its Wisconsin Central Ltd. subsidiary. The deal also includes about 250 miles of track in Canada, including the Agawa Canyon Tour Train scenic passenger rail service that operates out of Sault Ste. Marie, Ontario. The CN lines included in the deal service more than 90 freight customers, according to a statement. n Hudsonville-based M&A firm NuVescor Group advised New Hudson-based industrial controls company Outbound Technologies Inc. on its sale to France-based firm VINCI Energies S.A. Outbound Technologies was established in 1994 and works with companies in a variety of industries to implement network and software, control, and computing technologies. For VINCI Energies, which employs 80,000 people and operates in 56 countries, the purchase further expands its industrial business portfolio in the U.S. n Kentwood-based Wolverine Building Group Inc. has expanded its footprint to Southeast Michigan with the acquisition of Brighton-based construction firm Contracting Resources Inc. Contracting Resources has 21 employees and offers construction management services to health care, retail, religious, commercial and medical office markets. The company was founded in 2001 by Jim Barnas, a Brighton native who has 40 years of industry experience. He plans to continue working at Contracting Resources during the transition through the end of 2021 before retiring. n A division of Grand Rapids-based wood products manufacturer UFP Industries Inc. (Nasdaq: UFPI) has acquired a Wisconsin-based arts and crafts supplier. Handprint, which is a home and decor business unit of UFP Industries, announced that it would acquire Walnut Hollow Farm Inc., which was founded in 1972 and located in Dodgeville, Wis. With sales of around $11 million in 2020, Walnut Hollow produces a variety of finely finished wood surfaces for hobby, craft and woodworking projects. n Platinum Driveline Inc., a distributor of automotive clutch kits that is located in both Eureka, Mo. and Queretaro, Mexico, acquired West Michigan-based parts provider Global Parts Source Inc. The Holland-based company stands as one of the leading distributors of FTE brand hydraulic clutch parts and components. n Byron Center-based Starlite Kitchens & Baths Inc., which specializes in designing, delivering and installing cabinets and countertops for both homeowners and builders, was acquired by Brighton-based KSI Kitchens. Founded in 2000 and currently employing 29

people, Starlite worked with Grand Rapids-based mergers and acquisitions advisers Calder Capital LLC to sell the business. For KSI Kitchens, the strategic acquisition adds a ninth design studio for the family-owned company and its first one in the West Michigan market. n Traverse City-based insurance broker High Street Insurance Partners, backed by Detroit-based private equity firm Huron Capital Partners LLC, acquired Elliott Hartman Agency of Waterloo, Iowa, and Wall Street Insurance of Colorado. Since forming in August 2018, High Street Insurance Partners has closed on 21 acquisitions and says it continues to pursue additional deals.

EXPANSION

n Petoskey Plastics Inc. — a manufacturer of plastic films, bags and resin — aims to meet surging demand in one of its business segments by expanding operations to a new facility in Texas. The Petoskey-based company, which employs 451 full-time and 113 part-time or temporary employees, recently announced that it is investing $30 million into a facility located in the Dallas-Fort Worth suburb of McKinney. The new Texas facility will help address market pressures, allowing the company to increase output by around 15 percent over the next year.

The existing building is 53,000 square feet, and Petoskey Plastics plans to add an additional 40,000 to 60,000 square feet by August 2022. n Wyoming-based Express Employment Professionals launched a professional and executive search firm, Specialized Recruiting Group, to focus on professional placement and executive searches in West Michigan across a number of industries and position types. They include nonprofit, human resources, supply chain, operations, engineering, I.T., accounting and finance, and sales and marketing positions. Heather Merrick, an Express employee since 2015, leads Specialized Recruiting Group as managing director.

CAPITAL RAISE

n Lake Odessa-based Union Financial Corp., the holding company for Union Bank, completed a private placement to accredited investors by issuing common stock that netted $6 million. Union Bank plans to use the proceeds for continued growth that includes expansion in the Grand Rapids market, where the bank recently hired Tim Doyle as executive vice president and chief lending officer. Union Bank has offices in Ada, Lake Odessa, Dimondale, Hastings, Mulliken, and Westphalia. The bank ended 2020 with $296.4 million in total assets and $270.2 million in deposits.

LAW

n Grand Rapids-based Warner Norcross + Judd LLP completed the buildout of its new Detroit office.

Once Michigan’s COVID-19 office safety regulations allow, the law firm plans to move up to 60 attorneys and team members into the third floor of the building on Woodward Avenue. The Ilitch family’s Olympia Development built and developed 2715 Woodward, located between Little Caesars Arena and the Mike Ilitch School of Business at Wayne State University, as part of its District Detroit project to transform a 50-block area into a business, sports and entertainment district.

HEALTH CARE

n Mercy Health and an Auburn Hills-based operator of psychiatric hospitals plans to build a new facility in Kent County through a joint venture. Havenwyck Hospital Inc. — an affiliate of Pennsylvania-based Universal Health Services Inc. — received tentative state approval for a 60-bed adult inpatient psychiatric hospital near Mercy Health’s Southwest Campus at Byron Center Avenue and M-6. The new psychiatric hospital will have room for 24 additional inpatient beds for geriatric psychiatric patients and for future expansion. n Grand Rapids-based Mary Free Bed Rehabilitation Hospital will provide physical therapy beginning this summer at the Holland Community Aquatic Center. Mary Free Bed clinicians will use the center’s warm-water pool, fitness space and private treatment rooms to treat a variety of conditions and provide aquatic therapy. Mary Free Bed will “begin with the basics and add more specialized programs, some of which are unique in West Michigan,” CEO Kent Riddle said.

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