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VOL. 37, NO. 5
FEBRUARY 1 - 7, 2016
Business of Life
RNC: College prep Partnership is win-win for area schools
Clever transition
P. 4
AT WORK: Better vending
Insurance adjuster turns ‘rusty items’ into art
Healthier options are offered here
P. 18-19
P. 5
CLEVELAND BUSINESS
FOCUS: Workplace Employee wellness clinics are on rise P. 13-17
The List Region’s largest engineering firms P. 23
Huntington is sizing up state
CONTRIBUTED PHOTO
A NASA composite of a single-aisle hybrid plane
FirstMerit buy will give bank largest market share in Ohio
BY CHUCK SODER csoder@crain.com @ChuckSoder
NASA Glenn Research Center is leading an effort to develop a hybridelectric airplane. And we’re not talking about some little two-seater: By 2025, NASA aims to create a single-aisle hybrid plane that could travel 4,000 miles with 150 passengers on board. Picture a Boeing 737, with smaller jet engines and a powerful electric fan on the tail. It’s a big goal, for sure. After all, the project’s lead engineer, Amy Jankovsky, says that “there are a whole bunch of problems you have to solve between now and whenever this sucker gets built.” But researchers at Glenn and other NASA centers already are tackling those problems. And Jankovsky says that they appear to be solvable. She and other researchers weren’t so sure that would be the case when the project formally began two years ago. Sure, they knew how to convert power from a jet engine into electricity that could be used to generate thrust. But building such a system
on an airplane requires adding more equipment — and more weight. At first, they thought the plane would weigh too much. But they went ahead and plugged the data they had into a computer model. The model spit out some numbers that surprised them. If their assumptions are correct, they should be able to cut fuel consumption by 12% for a 4,000-mile trip, Jankovsky said. That would be a lot, judging by the feedback that plane manufacturers have given Jankovsky and Jim Heidmann, who oversees several NASA programs that aim to improve the energy efficiency of civilian aircraft. “If you get a tenth of a percent, they’ll jump for joy,” Heidmann said. The hybrid plane also would produce less noise and less air pollution. Granted, it exists only in the form of a computer animation right now. But a few dozen NASA researchers — including 22 Glenn employees and the equivalent of about 10 full-time, local contractors — already are working on technologies that could bring the idea to life. Among other things, they’re studying the design of the motors
Entire contents © 2016 by Crain Communications Inc.
SEE PLANE, PAGE 6
jnobile@crain.com @JeremyNobile
Consolidation has stirred up Ohio’s banking sector in recent years, but this deal just gave it a good shake. As Huntington Bancshares Inc.’s acquisition of Akron’s FirstMerit Corp. is completed, the Columbusbased parent company of Huntington Bank will assume a new position as the dominant bank in Ohio by market share. Meanwhile, Huntington will step over PNC Bank to control the second-largest swath of the Northeast Ohio market, trailing only Cleveland’s KeyBank. So among a flurry of mergers and acquisitions, this combination is noteworthy for how it positions a native Ohio bank to continue chipping away at the competition. Of course, there are plenty of chal-
lenges to manage with an acquisition of this size, from the integration itself and the restructuring that brings for FirstMerit to the pressures of retaining both customers and talented staff. Those challenges for Huntington, though, should present opportunity for other banks, particularly those institutions in Northeast Ohio that will see one less bank to jockey with. “If you’re a competitor of Huntington or FirstMerit, you’re going to be calling on their clients and looking for an opening,” said Ken Marblestone, managing director at Detroit-based investment bank Cascade Partners LLC and an adviser for Thornapple River Capital, a Grand Rapids, Mich., fund that invests in banks, including some in Northeast Ohio. FirstMerit, at $25.5 billion in assets, may not have a lending portfolio filled with particularly large corporate clients, but it does offer a sizable book of small and midsize
businesses — a sector that Huntington has worked particularly close with. Those are the clients competitors large and small will look to target in the coming months in addition to bank staff.
By the numbers Huntington announced its acquisition of FirstMerit on Tuesday, Jan. 26, in a deal valued at about $3.4 billion that is expected to close in the third quarter of the year. With the absorption of FirstMerit, Huntington will capture 15.53% of the entire Ohio market, jumping from third place to first. U.S. Bank and Fifth Third Bank will trail just slightly behind with 14.9% and 14.45% deposit market share, respectively, according to most recent data from the Federal Deposit Insurance Corp. Meanwhile, in Northeast Ohio, SEE HUNTINGTON, PAGE 22
Firm heading for the Flats Accenture is leaving Public Square spot, will occupy former headquarters of Sammy’s restaurant BY STAN BULLARD STAN BULLARD
NASA Glenn takes aim at hybrid plane
BY JEREMY NOBILE
sbullard@crain.com @CrainRltywriter
Accenture, a global professional services firm, plans to trade its mainstream address on Cleveland’s Public Square for the former home of Sammy’s restaurant and City Life catering overlooking the city’s Flats. About 200 workers based at Accenture’s Cleveland office at 200 Public Square will begin working this spring at 1400 West 10th St. after the Dublin, Ireland-based publicly trad-
ed company leased the top floor of the three-story building. The building is being converted to a multitenant office by an investor group led by Scheer Real Estate Group of Chagrin Falls. It offers a loft-style SEE ACCENTURE, PAGE 6
“Rather than come in and see an old building, Accenture saw the possibility.” — Joel Scheer, developer
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Jerald Goins, a political science major at Baldwin Wallace University, speaks during the breakfast with The Washington Center on Jan. 28. (Baldwin Wallace University photos)
Local colleges will have crucial role during RNC BY RACHEL ABBEY MCCAFFERTY rmccafferty@crain.com @ramccafferty
It won’t just be politicians, celebrities and media personnel flocking to Cleveland for the Republican National Convention in July. Thanks to a partnership between The Washington Center for Internships and Academic Seminars in D.C. and Baldwin Wallace University in Berea, more than 100 college students from across the country will be making the trip, too. The Washington Center is a nonprofit that provides students with experiential learning opportunities, like its two-week seminars around the political conventions. Baldwin Wallace has been affiliated with the Washington Center’s more traditional internship program for a number of years. When Cleveland was named as the site for this year’s Republican convention, the Washington Center reached out, said Kevin Nunley, the Washington Center’s vice president of student affairs. According to information from the center, the group’s partner for the Democratic National Convention in Philadelphia will be Temple University. The Washington Center has been helping students get firsthand experience at political conventions since 1984, but this year’s program in Cleveland will be a little bit different. For the first time, the Washington Center has foundation funding for the convention seminar. The Cleveland Foundation has given $50,000 to help fully fund scholarships for 24 students in Cuyahoga County, Nunley said. The foundation also is stipulating that students meet certain demographics, like being non-traditional students or students from a lower socioeconomic class. The cen-
Baldwin Wallace president Robert C. Helmer said higher education is about more than just preparing students for jobs. ter is seeking additional funding to supplement the Cleveland Foundation’s, but has committed to providing the full scholarships for those two dozen local students. Nunley said Baldwin Wallace identified Cuyahoga Community College as a possible partner to help the program reach the underserved students the foundation wants to support. The Washington Center doesn’t often get to work with community colleges, Nunley said, and this is offering them a great opportunity to get access to the school. “For us, it’s a win-win all around,” Nunley said. The presidents of both Baldwin Wallace and Tri-C spoke at a small breakfast last Thursday, Jan. 28, to formerly kick off the Washington Center convention partnership at the Union Club in Cleveland. About 30 people, including representatives from the Cleveland Foundation and the Washington Center, were in attendance. Ohio state Reps. Bill Patmon and Mike Dovilla also spoke on the importance of getting to participate in conventions as young people. Patmon shared his experience attend-
s Cleveland Bus sines ss (ISSN 0197-2375) is published weekly at 700 West St. Volume 37, Number 5 Crain’s Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2015 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. s Cleveland Bus sines ss, Circulation Department, 1155 POSTMASTER: Send address changes to Crain’s Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 212-2 210-0 0750 Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-9911, or email to customerservice@crainscleveland.com, or call 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777.
ing the convention in Atlanta in 1988, getting the chance to talk to people like Bill Clinton and Jesse Jackson. “That gave me a sense of being part of the process,” Patmon said. Overall, the center aims to attract between 175 and 250 students from across the country to each convention seminar, Nunley said. Students can be nominated by their college presidents, participate through a faculty-driven program or apply independently, though Nunley said the center likes students to be able to earn credit for their experience. Students will stay on Baldwin Wallace’s campus, starting the week before the convention. Kelly Eaton, senior vice president and chief academic officer at the Washington Center, said students will spend their first week in sessions on topics like the political process, while the second week is more “active” and “engaged.” Students will be placed with organizations ranging from interest groups to the host committee to the media. “This is a learning venue for students of almost any major,” she told the group at the breakfast.
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Vending, with a fresh twist Local couple is among growing group bringing micro markets to company break rooms BY CHUCK SODER csoder@crain.com @ChuckSoder
The vending machines that once graced The Adcom Group’s fourthfloor break room are gone. They’ve been replaced by a kiosk that resembles a tiny little convenience store. But nobody works at this store. You just grab what you want and pay for it yourself — using an app on your phone or an iPad that’s attached to the kiosk. Plus, the food is healthier than what you might normally find at your neighborhood Kwik-E-Mart. These so-called “micro markets” are starting to show up in company break rooms all over the country, and at least one local couple is working to make sure that trend takes off here in Northeast Ohio. Patrick and Kristin Connaughton have installed eight micro markets in this region over the past four months, and they’ve already bought 13 more that should be deployed over the next few months, Patrick said. “I have a pretty good hopper of folks wanting to come on board,” he said. They are franchisees of Fresh Healthy Vending. As you might guess, they put a heavy emphasis on offering fresh, healthy choices. As do many other companies that sell micro markets. That’s why Adcom, a marketing firm in downtown Cleveland, want-
ed to install one. Linda Russian was actually hunting for a new vending machine supplier — one that could offer healthier products — when she learned about Fresh Healthy Vending. It seemed like a good option: Adcom didn’t have to buy the machine — it’s still owned by the Connaughtons’ company, Cleveland Healthy Micro Markets LLC. And it gave Adcom a much broader variety of food choices than their vending machine supplier could provide. The kiosk does contain some unhealthy food. If you want, you can buy a Snickers bar, a bag of Cheetos and wash it down with a can of Mountain Dew. But there’s a lot of healthy stuff, too, like soups, salads and wraps. The organic cookies fall somewhere in between. “I gotta tell ya, those are really good,” said Russian, an executive administrator at Adcom. The machine has proven to be pretty popular at Adcom, she said, noting that the Connaughtons customize the selection, based on Adcom’s suggestions. Russian highly recommends that other employers give it a try. “They really should. It’s a really, really good option,” she said. No wonder micro markets are spreading so fast. At the start of 2013, there were only about 3,000 micro markets in the United States, according to the National Automatic Merchandising Association. Today, the two largest manufacturers have each deployed roughly 5,000 of their own micro markets, ac-
cording to figures from Crain’s Detroit Business. And those two companies — Avanti Markets, which is based in the Seattle area, and 365 Retail Markets in Troy, Mich. — were both founded just seven years ago. Big food service companies like Aramark offer micro markets as well. Their website shows entire rooms filled with micro markets — shelves, refrigerated units and freezers. As for the Connaughtons, their goal is to install 100 micro markets in the Cleveland area. Most of them will be located in company break rooms and other private areas. Why not put them in a lobby of a big building? It’s possible, but micro markets are better suited for private locations, according to the National Automatic Merchandising Association. If someone grabs a bag of organic popcorn and doesn’t pay for it, the security camera will spot them. And you might actually know who they are. Patrick Connaughton, who used to sell software, said he always wanted to own a business, and given that his family is into physical fitness, Fresh Healthy Vending seemed like a good match. Plus, he thinks that a growing number of people share that interest, judging by how many people are counting their steps these days. And that bodes well for his business. Business has been good so far, he said. So even though he and Kristin are doing everything today, that may change. “As it grows, I’ll just have to grow,” he said.
Operations associate Bekah Hunter uses Adcom’s new “micro market” machine from Fresh Healthy Vending. (Chuck Soder)
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and the electrical systems that power them; they’re looking for better ways to insulate electrical wires in the system; they’re analyzing new materials for magnets; and they’re dipping coils in liquid nitrogen as they study ways to lower electrical resistance — work that builds off Glenn’s experience working with superconductors.
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All those improvements will be funneled into a design conceived at NASA Langley Research Center in Virginia. In that design, the smaller jet engines would create some of the thrust that planes need to fly, but they’d also be used to run 1.45megawatt generators on each wing. Electricity from those generators would flow to the back of the plane, where it would be used to run a powerful fan that would create more thrust. So why is this setup more efficient? After all, the final product might not weigh less than a comparable plane with bigger jet engines,
even if NASA can make the electrical system significantly lighter. But the hybrid plane has a different advantage: Generating thrust from the wings of a plane disrupts the air as it flows past the plane. That creates drag, slowing the plane down. But if you can generate some of that thrust at the back of a plane, the air flows more smoothly, reducing drag. GE Aviation is interested in the concept, and so are the plane manufacturers that buy its jet engines, according to Deborah Case, spokeswoman for the General Electric subsidiary, which is based in the Cincinnati area. Cutting fuel consumption is “the No. 1 directive for all of our engines,” Case said, noting that GE Aviation isn’t currently working on the hybrid plane project.
All-electric future Typically, GE Aviation will come up with ways to improve fuel efficiency by 1% each year, she said. Adding a 12% gain on top of those improvements would be huge. But that isn’t NASA’s final goal.
Heidmann said the hybrid plane project is “a stepping stone to even more aggressive options down the road.” Namely, an all-electric passenger plane. A few companies are already developing small electric passenger planes. For instance, a two-seater built by Airbus flew across the English Channel in July 2014. But there are some big technical problems that need solved if anyone is ever going to fly an all-electric commercial airliner. NASA researchers already are working on the superconductor technologies that could help make that plane viable. Another big hurdle is battery technology. Today, if you created a battery strong enough to power a large plane, it would be way too big to fly. Fortunately, companies in the auto industry and other sectors are working to improve battery technology. NASA will be paying close attention to the progress they make. “Every time batteries get better, you can talk about different concepts,” Jankovsky said.
ACCENTURE CONTINUED FROM PAGE 1
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environment among timber beams with expansive views of the Cuyahoga River, Jim Dickey, managing director of Accenture’s Cleveland office, said, “We aim to provide a workspace that demonstrates our uniqueness, digital capabilities and is a fit to our local needs. This move will drive continued innovation, support growth and attract digital talent.” The lease is a breakthrough for the south end of Old River Road, which has languished for years. The renovation is an early sign of spinoff development momentum from Flats East Bank Neighborhood, which has transformed the Old River north of Main Avenue into a mixed-use neighborhood with the Ernst & Young office tower, Aloft hotel, apartments and retail space. Accenture will exit 12,000 square feet of space on the 19th floor of 200 Public Square for the building undergoing rehabilitation as Settlers Point. The 7,000 square feet Accenture has leased will be transformed with advanced digital tools from the justreleased Microsoft Surface Hub, which provides a collaborative platform for meetings with up to 10 people, a touch-enabled media wall and presentation rooms with digital tools to collaborate and share content from any device in real time. And it will all go into a building with wood floors that dates from 1900. “This is a statement of the old meeting the new,” Dickey said. “We’ll be in a landmark that’s convenient to dining and can go to Settlers Landing (the riverfront park where city namesake Moses Cleaveland’s surveying crew came ashore in 1796) to work outdoors.”
Imagine the possibilities The space even will offer a thirdfloor patio for Accenture workers that overlooks the river and Nautica stage. Developer Joel Scheer plans to install a glass-enclosed penthouse on the building’s roof that he sees as
a light feature at night for the south end of the Flats. The penthouse is part of a $5-million basement-to-roof renovation of the building by Fairlawn-based Welty Building Co., for Scheer’s investor group. Welty’s Cleveland office and e4b office furnishings firm will occupy its first floor. “Rather than come in and see an old building, Accenture saw the possibility,” Scheer said as he led a tour of the structure. “They understood the value of this in recruiting. Can you imagine interviewing a 27-yearold applicant for a job in an environment this dynamic?” It also did not hurt that Accenture’s New York City location recently set up shop in Soho — it will use some concepts from that location in the Cleveland office — and, Dickey said, “that as we looked at it the first time with our consultants an ore boat sailed by.” Rico Pietro, a principal of Cushman & Wakefield Cresco in Cleveland, said Accenture executives and real estate team “immediately got developer’s vibes for the space. Things other groups thought were challenges they saw as, ‘This is cool.’ ” Pietro said the property has what corporations seek: access to public transit, parking for executives and “the beam and brick look.” None of the parties would disclose Accenture’s rent. “You have to do what you have to do to get a company like this,” Scheer said. “It’s competitive.” Asking rent for the space is $25 a square foot, according to Cushman & Wakefield Cresco’s listing on the LoopNet realty listings site. While 200 people sounds like a lot of bodies for a 7,000-square-foot space, Dickey said many of the firm’s associates travel often and the company has long embraced the open office and hoteling, where workers do not have designated workspaces. Dickey said the lease is another sign of Accenture’s continued commitment to Cleveland, its home for 70 years. Accenture until 2002 was
Andersen Consulting, and survived the failure of its sibling Arthur Andersen accounting firm. The practice today provides services for companies in the areas of strategy, consulting, digital, technology and operations. It has 373,000 workers around the globe. Remaking the building — technically three connected buildings on West 10th Street — is the property’s third revival. Formerly a picture-frame factory and later offices of a boat-making company, the structure has been associated with bringing new life to the Warehouse District west of Public Square and the Flats since restaurateur Denise Fugo opened Sammy’s there in 1985. In the late 1980s, it was a pricey, top-rated restaurant. The late Richard Jacobs was a regular when he first bought the Cleveland Indians. Today, workers have reopened windows that were bricked-in decades ago, harvesting blocks to use them for repairs elsewhere in the structure. “A hundred years of layering of drywall and duct tape have been taken out of this building,” Scheer said. Improvements include new plumbing, electrical and heating and cooling systems. The current wood stairways will be replaced by steel ones, a requirement set by Accenture corporate safety guidelines. Scheer hopes to put a café in the building’s basement, which faces the level of Old River Road, along with a place for worker’s bikes. The second floor — which has the largest windows in the structure — remains available. Scheer said his investors pursued the remake of the building, which they bought from a lender in 2014 after Fugo’s City Life shut down in 2013, for redevelopment. He did not consider apartments for it although his wife, Liz, wanted to install a suite to live downtown. “I had to say,” Scheer recalled, ‘Honey, we have two office tenants for it.’ ”
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Groups shifting into GEAR Community development corporations using new tool to track progress BY LYDIA COUTRE lcoutre@crain.com @LydiaCoutre
The success of community development initiatives has long been measured at the end of a program, through outcomes and statistics. But a new tool being piloted in five Cleveland neighborhoods looks to evaluate progress along the way. “One of the challenges of working in community development is how do you know you’re on the right track?” said Ilanit Gerblich Kalir, managing director of international operations for the Jewish Federation of Cleveland. “You have a lot of examples of talking to people, of meeting people, and you have a sense that you’re on the right track, but it’s very hard to measure where you are in the process of community change,” Kalir said. In comes GEAR (Governance, Economy, Activism and Relationships), a tool developed by Bridge to the Future, an Israel-based community revitalization organization supported by the Jewish Federation of Cleveland. The evidence-based tool combines fact and informed opinion to measure the effectiveness of initiatives, giving leaders the chance to make changes to programs as needed. The federation has allocated $400,000 annually for the past eight years to Bridge to the Future as it works with the federation’s sister city of Beit Shean, Israel. GEAR is one piece of Bridge to the Future’s
work in Beit Shean and the surrounding communities. The federation saw the success of using GEAR to evaluate ongoing change in Beit Shean and decided to help bring it to Cleveland through a collaboration with Cleveland Neighborhood Progress, a nonprofit that works with community development corporations. Supporting the strength and vitality of Cleveland is part of the responsibility of the Jewish community, said Oren Baratz, vice president of external affairs for the federation. The five Cleveland community development corporations — St. Clair Superior, Northeast Shores, Detroit Shoreway, Union-Miles and Famicos — are the first in the country to pilot the new tool, according to the Federation. This tool is important as community development work becomes more complex and shifts from ensuring livable housing to a broader view that adds educational and employment opportunities, food access and other components that make up a community, said Michael Fleming, executive director of the St. Clair Superior Development Corp. To use GEAR, agencies or organizations gather a group to answer a series of questions. The group discusses — with supporting examples — the strength and endurance of various aspects of a community’s government, economy, activism or relationships. Together, they decide on an answer for each question. Is the government’s self-management emergent, developmental, stable,
mature or long-lasting? What about the community’s partnerships? The economy’s infrastructure? The answers are mapped out in a chart, and the group can reassess as often as needed to see how different issues are progressing. “By nature, what Bridge to the Future is trying to do is stay in a community for a limited time frame,” Kalir said. The goal is to help municipalities and communities build their capacity to move forward, to empower them to do the local work and then move on. GEAR helps gather snapshots to measure progress toward self-sufficiency. The pilot in the Cleveland neighborhood allows local organizations to use the tool on their own efforts and to measure any program big or small. Joel Ratner, president and CEO of Cleveland Neighborhood Progress, said he’s never seen a tool quite like GEAR. He’s used many different tools to measure change, but they’re always driven by quantitative, objective numbers. “That’s why we were excited
about trying it,” Ratner said. “We thought that it really might be sort of an answer to this question of how we do measure something that is qualitative.” The group is evaluating whether it ultimately will adopt the tool. The pilot has offered a chance to measure how people are feeling about their neighborhoods. Ratner said he wants to see if it can be used over time to measure changes in residents’ attitudes toward neighborhoods. Baratz said Bridge to the Future and the local communities have a lot to learn from one another in community development, grassroots organization and the ability to monitor both. “Developing communities is an issue that exists all around the world, and it’s wonderfully gratifying that we can take two communities that are 6,000 miles apart and bring the communities together to help people,” said Lee Lazar, board president for the St. Clair Superior Development Corp. “If the world could do more of this, the world would be in much better shape.”
Driftwood spots are full for RNC Scott Kuhn, managing partner of The Driftwood Group, which operates seven restaurants in Northeast Ohio, says his restaurants are booked for the week of the Republican presidential nominating convention in July. The Hill, a Washington, D.C., political website, will be at Hodge’s, a short walk from the convention site at Quicken Loans Arena. The company’s other locations, including Bin 216 and Cibreo Italian Kitchen at Playhouse Square, also will be closed to the public during the convention, which runs from July 18-21. Kuhn said he couldn’t identify the other end users since he’s been dealing mostly with intermediaries, though he said the Arizona state delegation will be a customer that week. “We’ll have people camping out at all of our stores,” Kuhn said. “We’re really excited.” Driftwood also operates 87 West at Crocker Park in Westlake, Washington Place Bistro and Inn in Little Italy; Welshfield Inn in Burton; and Green Rooster Farms, quick-serve restaurant in the Hanna Building in Playhouse Square. The week poses an unusual problem for restaurants. Downtown restaurants are especially concerned that their usual dining customers will be staying away during the convention. — Jay Miller
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The job market in the seven-county Cleveland-Akron metropolitan area closed 2015 with a relatively strong performance, adding 2,350 jobs from November on a seasonally adjusted basis. The latest Ahola Crain’s Employment (ACE) Report projects that the region’s private sector grew to 1,162,540 jobs in December from 1,160,190 in November, an increase of 0.2%. Compared with December 2014, the Northeast Ohio workforce also is in positive territory, as it has posted a modest gain of 2,438 jobs since then. Local economist Jack Kleinhenz, who compiles the ACE Report data, wrote in an analysis accompanying the December report that the month’s non-seasonally adjusted estimate of 1,171,636 jobs “is ahead of the 3-month and 6-month averages, which indicates further
economic activity and job growth.” But Kleinhenz offered a caveat, noting, “In looking forward, however, it is typical for the trajectory of monthly employment in the region in the early months of the year to be pared significantly back. Seasonal adjustment of this series masks that fact. … “We expect a similar pattern to take place and recognize that some dampening of the pace of employment gains is projected,” he wrote. “This near-term development is not surprising in that the manufacturing sector has been battered and bruised.” The not-bad, not-great nature of the December ACE Report is consistent with the state of Ohio’s jobs report for the month, which found unemployment rose to 4.7% from 4.5% in November. Nonagricultural wage and salary
employment increased 15,200 over the month, to 5,451,500 in December from a revised 5,436,300 in November, according to data from the Ohio Department of Job and Family Services. However, the number of workers unemployed in Ohio in December was 269,000, up from 255,000 in November. On balance, through, the state is better off than it was a year ago, as the number of unemployed has decreased by 23,000 in the past 12 months from 292,000. In December 2014, Ohio’s unemployment rate was 5.1% Crain’s partners with The Ahola Corp., a payroll and human resources services company in Brecksville, and Kleinhenz for the ACE Report to provide monthly data about the size of Northeast Ohio’s workforce. — Scott Suttell
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Federal health records push causing pain BY LYDIA COUTRE lcoutre@crain.com @LydiaCoutre
Rules for the third and most demanding stage of a federal push for providers and hospitals to implement electronic health record systems have drawn widespread criticism for their aggressive timeline and pass/fail approach. Many agree that the ultimate goal of the Centers for Medicare and Medicaid Services’ meaningful use program, which sets specific objectives for eligible hospitals and professionals to establish electronic health record systems, is a positive shift. “It’s supposed to, at the end of the day, improve the process of care,” said Greg Kall, Summa Health System’s senior vice president and chief information officer. “Our providers, with having an electronic medical record, should do a better job taking care of patients, because we eliminate duplications, you provide information quicker, qualities should improve, you know all those good things.” But Kall, like others, notes that the requirements come with plenty of burden. For one, if hospitals and other providers don’t meet certain requirements, they could lose out on critical Medicare dollars. However, even as some physicians across the country abandon the program, Northeast Ohio hospitals are moving forward. “The program to date has continued to be an all-or-nothing program,” said Dr. Robert White, associate chief medical information officer at Cleveland Clinic and medical director of meaningful use. “You
either pass them all or you might as well miss them all, because if you miss one, you miss either the incentive or you get a payment penalty for that year.”
An aggressive push The feds launched the three-stage meaningful use program as part of the American Recovery and Reinvestment Act of 2009 to promote the adoption and continued use of electronic health record systems. Stage three builds on various metrics from the previous stages. The first focused on putting technology in place to gather health information in a standardized way and start tracking some of that data. Stage two became more rigorous and increased certain requirements, such as the frequency of sending prescriptions electronically. Stage three becomes even more rigid. For instance, physicians are already required to send patient care summaries to the next provider who sees that patient. Stage three requirements now stipulate that the next doctor receives and inputs that information. Various metrics like this have a range of thresholds that eligible professionals and hospitals must meet, with many increasing as the stages progress. Providers must meet every single one. Also, meeting 95% of the measurements means the same penalties — or loss of the same incentives — as having met none. While many have called that approach too rigid, others say a line has to be drawn somewhere. “At the end of the day, somebody has to decide these are the rules,” said Dr. Jeffrey Sunshine, chief med-
ical information officer for University Hospitals. “I don’t mean to dismiss the complaints, but I think that in part they lose the focus I think of what at least the initial stages were about, which was to get on the systems and then start using them to see how your care is being delivered.” While incentive programs jumpstarted the requirements, those are transitioning to penalties. Financial penalties took effect in 2015 for eligible providers who don’t meet requirements. The reduction starts at 1% and increases each year an eligible provider doesn’t demonstrate meaningful use, to a maximum of 5%, according to CMS. CMS has done “a little bit to temper the aggressive timeline,” Kall said, but it remains a challenge. Although more time to implement changes would be helpful, Sunshine credits the program for accelerating hospitals and providers toward electronic records. “Left to a natural progression, that would have taken twice as long,” he said.
The next step The next step toward stage three falls largely on third-party vendors, who have to develop and test software changes to comply with the new regulations and then roll them out to their customer base. Sunshine said once that’s available, UH will have to implement the software, adjust documentation and manage communications to meet the requirements. Some of the transitions are a natural step forward, such as bumping up a requirement threshold, he said,
but others are more complex and challenging, such as having to prove that providers connect with patients electronically. “We can encourage them, but we have no way to mandate that,” Sunshine said. White expressed similar concerns. Doctors are held to a certain percentage of their patients interacting through patient portals or other electronic means, he said. For some, it comes easier, but the requirements are the same for subspecialists or general practitioners.
“It’s supposed to, at the end of the day, improve the process of care.” — Greg Kall senior vice president and chief information officer, Summa Health System
“We find less of our patients messaging their subspecialists than our primary care doctors,” White said. “That’s understandable. They potentially have a different relationship with their primary doctor.”
White said he sees physicians at times struggling to get appropriate numbers to pass a couple of the measures, including patient online interaction, which further demonstrates the need for flexibility on the pass/fail approach. While it is all a big undertaking, Kall said the program could have gone further. The exclusion of certain providers — such as home care, rehab hospitals and skilled nursing facilities — from the requirements is a missed opportunity in the continuum of care, he said. Although it jumpstarted an industry shift toward electronic medical records, a lot of the systems don’t talk to one another, Kall said. He’d like to see stage three do more to establish standards for transferring information. “I think the lack of being able to move clinical information between electronic medical record systems has really hampered our ability to improve quality at a faster rate,” Kall said. Dr. Brian Keaton, chief medical information officer for Cleveland Clinic Akron General, compares the shift to electronic health records to the United States sending a man to the moon. It’s a broad goal and visionary idea that had widespread impacts no one could have dreamt of, like computerization and telecommunications. He predicts the implementation of meaningful use will be a historic turn in health care. “It didn’t make it pretty to live through and doesn’t make it fun to have to do, but I think in the long run it will turn out to be a good thing,” Keaton said.
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Opinion From the Editor
Cleveland has role in cancer ‘moonshot’
Editorial
Home stretch In a little more than a week, when Republicans in New Hampshire vote in their party’s primary, we’ll know whether John Kasich’s presidential campaign will live another day — he’s staking everything on a strong showing in the Granite State — or if he’ll join the likes of Rick Perry and Scott Walker as competent governors who didn’t get the promotion they wanted. Kasich has been trending in the right direction, both in the polls, where he has been gaining, and in the substance of the campaign. Whatever verdict the voters deliver in New Hampshire, Kasich throughout the campaign has provided a rational voice in a party that, if polls are accurate, has seen many of its members give in to their worst impulses. Kasich has found support in New Hampshire by casting himself as a results-oriented conservative who’s willing to set aside party doctrine — most notably on health care — in pursuit of policy solutions that advance the interests of all Ohioans. If the Kasich campaign carries on past the Feb. 9 vote in New Hampshire, he’ll have a chance to burnish that reputation on a few fronts back at home: z On energy, Kasich recently warned Ohio Republican lawmakers that he won’t allow them to gut the state’s policy requiring electric utilities to provide energy efficiency programs for customers and to sell more green power. “Some wanted to basically … stop the development of solar and wind and even efficiency standards,” he said during a New Hampshire campaign stop. He added, “We are going to have development of solar and wind, and if the Legislature wants to gut it, then I’m going to go back to the goal because I’m not playing around with this.” Ohio has not been a leader in this area. Kasich shouldn’t hesitate to use his veto to help put Ohio at the forefront of the clean energy economy in the Midwest. z Ohio lawmakers are making progress on a bill that would allow state residents to register to vote online,
saving money for the government. Republican Secretary of State Jon Husted — a potential governor after Kasich — wants the House to move a bill by the end of February to ensure that his office has enough time to get the system up and running in time for the Nov. 8 election. A nudge from Kasich would help this initiative. z Kasich has said he’ll work to promote a system that creates more competitive maps and eliminates gerrymandering. In Iowa last week, he said the gerrymandering process results in polarized politics in which candidates worry only about keeping their own base happy rather than appealing to a broader electorate. On this he’s surely right. Ohio has some odd districts — most states do — and if Kasich were to expend some political capital on this issue, he could make a lasting contribution to state politics.
The Kasich brand nationally is about rising above the fray to get things done. He should keep that in mind if he gets beyond New Hampshire in the crazy 2016 race.
Ty one on We don’t know much yet about the Cavaliers’ new head coach, Tyronn Lue, other than that he’s already an All-Star, and he’s promising a big change in how the Eastern Conference-leading team approaches the game. The firing of David Blatt — career NBA record: 83-40 — probably wasn’t fair, but pro sports are a merciless business, and an NBA championship is the only satisfying conclusion for a team led by LeBron James. GM David Griffin made a tough personnel call, and he made it quickly, in the face of what he knew would be sharp criticism. We hope Lue is similarly decisive in guiding the Cavs through the rest of the season.
ACTING PUBLISHER AND EDITOR: Elizabeth McIntyre (emcintyre@crain.com)
CLEVELAND BUSINESS
MANAGING EDITOR: Scott Suttell (ssuttell@crain.com)
It’s been difficult to watch Vice President Joe Biden as his grief has played out publicly the past nine months. The longtime politician has often worn his emotions on his sleeve, but this is different. Since losing his son Beau last year to brain cancer at the age of 46, Biden has seemed wistful and vulnerable. Biden is not alone. Rare is the person who hasn’t been touched by cancer, who hasn’t seen a friend, a coworker or a family member (worst of all, their child) suffer the pain of not only this disease, but its treatment. The American Cancer Society estimates that more than 1.6 million new cancer cases were diagnosed in 2015 and almost 600,000 cancer deaths occurred in the U.S. alone. So, when President Barack Obama last month announced at his final State of the Union address that he was embracing Biden’s call to launch a “moonshot” to cure cancer, and putting the vice president in charge of the Elizabeth effort, it struck a chord with many of us. McIntyre I cherish the photograph of my dear friend Dave, who during his treatment for testicular cancer took the time to visit our home to see my newborn son. The photograph of a life just beginning and another near its end has such meaning for me. Dave died not long after that. The moonshot makes me think of Dave, and of the father-in-law I never met, who died of colon cancer, and my colleagues who have battled breast cancer with such bravery and resolve. The moonshot is for them and for all who love them and, as Biden has said, it means an “absolute national commitment” to eradicating cancer. That won’t be easy. There is not one cancer, but many. Some have said landing on the moon was actually easier. We can take pride, though, in knowing that Northeast Ohio already is contributing greatly to the hard work of accomplishing this mission. The Case Comprehensive Cancer Center is a collaborative effort among University Hospitals Seidman Cancer Center, Cleveland Clinic Taussig Cancer Institute and Case Western Reserve University. The hospitals compete vigorously with each other for patients. But where cancer is concerned, they’ve formed the kind of silo-breaking relationship that needs to happen across the nation for the moonshot to have a chance. “Innovations in data and technology offer the promise to speed research advances and improve care delivery,” Biden wrote on his verified Medium account. “But the science, data and research results are trapped in silos, preventing faster progress and greater reach to patients. It’s not just about developing game-changing treatments — it’s about delivering them to those who need them.” Doctors, researchers and heroic patients at the Case Comprehensive Cancer Center are working on better detection, personalized medicine, immunotherapy, genomics and refining more traditional cancer treatments. And Cleveland contributes an important voice for another crucial component in the race to end cancer: Prevention. Clinic CEO Dr. Toby Cosgrove, joining Biden at the recent World Economic Forum in Davos, Switzerland, stressed prevention. The task is huge. It’s going to take money for research, the brightest brains, an informed public, fair insurance and drug pricing policies. It’s going to take an absolute national commitment. Northeast Ohio is stepping up. For Beau, for Dave, for the men and women who have died, for the survivors, for those who are healthy but may one day face cancer, the resolve must be lasting and it must be real.
WRITE US: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing letters@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.
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Web Talk Re: Spreading the casino money Sharing the revenue with inner-ring suburbs is a really great idea. Living in one of these inner rings, I know that we will greatly benefit from this. I suggest that some control be established on how and on what these monies are used for. History has shown that some waste too many of these dollars on not very beneficial elements. This is another great opportunity to think regionally and use the term METROPOLITAN CLEVELAND. — Neil Dick I wonder why Sunny Simon’s statement about taking a regional approach was quoted in Crain’s Jan. 18 editorial, “Invest outward.â€? Readers should know that Ms. Simon did nothing to develop a regional approach in her generation’s most important regional land use decision in the inner-ring suburbs of Cleveland: the sale of the former Oakwood Country Club. The Trust for Public Land optioned Oakwood, and it could be a Metropark today. However, because of Ms. Simon’s refusal to take a regional approach, Oakwood is now a Walmart. ‌ Ms. Simon stood by while citizens asked for her assistance while Oakwood was for sale. She did nothing to pull together South Euclid, University Heights, and Cleveland Heights in a regional approach to this important land use opportunity to enrich these communities. Oakwood Country Club was even at the geographical nexus of these three cities. ‌ I do not fault the editorial’s author, but I hope that in the future when a county council person is asked to talk about regionalism, that the council person selected actually has done something to promote, not undermine, regionalism. — Fran Mentch
Re: Rise of Complion This is a group of really, really talented people. Flashstarts CEO Charles Stack is a wise investor and solid board member. I met Complion founder Rick Arlow when he was with LaunchHouse when it was still downtown. The whole group at Complion gets two thumbs up from me all the way around. — Susie Sharp
Re: From CLE to NYC I would like to hear from the airline why flights to California are cheaper than the one-hour flight to NYC? United is the worst. — Bill Applegate This may be moot at this point, but best way to get to Manhattan from Newark Airport is the train via New Jersey Transit. It’s efficient and costs about $15. — 208583
Personal View
Bioscience remains bright spot in NEO’s economic recovery BY TIM MILLER, PH.D. As the CEO of a successful bioscience company located in Northeast Ohio, I read with interest the Jan. 25 Crain’s article about the local bioscience industry. The article was based on the Ohio Bioscience Growth Report 2015 published by BioOhio that summarized an economic analysis conducted by the University of Cincinnati. The report provided a balanced view of a number of industry successes, as well as challenges. While no industry is without its challenges, I can personally attest to the overall positive momentum that overwhelmingly characterizes bioscience in this region. I would suggest that few other industries could document the amount of growth and success as what the Northeast Ohio bioscience industry continues to demonstrate year-after-year. Here are just a few shining examples of that success, many of which were highlighted in the BioOhio report. First, consider that the average wage of Northeast Ohio bioscience workers increased from $61,774 in 2009 to $68,866 in 2014. This is a $7,092 (11%) increase during a time when our nation was in recovery from a near-depression. This tells me that jobs in the Northeast Ohio bioscience industry have demonstrated increased value and appreciation as a key area of growth in a highly technical sector. Similarly, another success highlighted in the BioOhio report is that the number of Northeast Ohio bioscience locations (defined as an office or facility operated by a bioscience company) increased from 1,105 in 2009 to 1,234 in 2014. This is a 12% increase of 129 locations over a five-year period. This proves the point that bioscience companies are expanding their operations in Northeast Ohio with economic incentives supported by the city, county and state. The recent expansion and improvements in the Heath-Tech Corridor further reflect this growth. I’m the president and CEO of a publicly traded bioscience company who recently decided to locate and expand my company, Abeona Therapeutics, in Northeast Ohio instead of any other state or region in the United States. Why? Because Northeast Ohio provides a unique set of assets to aid the growth of a bioscience company, including internationally renowned clinical, educational and research institutions; supportive government and economic development engines; funding; and a highly talented and abundant workforce. Abeona is developing novel gene therapies in an effort to treat patients — mostly children — with rare diseases. In 2015, Northeast Ohio institutions received more than 650 awards from NIH, bringing more than $280 million coveted research funds into the region. This funding supports research and development in the life sciences, providing support for discoveries at our Northeast Ohio institutions and private companies. Without this significant support from NIH, and collaboration with our world-class Northeast Ohio institutions, companies like Abeona could not develop the therapies that change people’s lives. Since 2006, Northeast Ohio educational institutions have graduated more than 18,000 bioscience workers. A company like Abeona is only as good as its employees and must find those employees quickly to sustain our rapid growth. Within the past year, Abeona has increased its local employee base 300% and plans to add additional scientific, manufacturing and technical positions for our new Cleveland facility in the coming year. Abeona isn’t the only local company enjoying success. Our region is rich with talented entrepreneurs who have chosen to make Northeast Ohio their homes and have since garnered significant investment dollars, often from investors who are outside our region. Many of these entrepreneurs have come from other parts of the country and even other parts of the world. They came to Northeast Ohio specifically because of our strong reputation for health care and biotech success. As with all industries, the bioscience industry is not without its cycles or challenges. However, as entrepreneurs understand, with challenges come opportunities, and Northeast Ohio is fortunate to have some great minds tackling those challenges with the goal of continuing the upward growth that has characterized the regional bioscience industry for the past decade. The numbers prove it, and those of us living and breathing bioscience every day here in Northeast Ohio know it firsthand: Bioscience is alive and well in our region. Miller is the president and CEO of Abeona Therapeutics.
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Focus WORKPLACE
SALON LOFTS - P. 14
z
Q & A - P. 15
ADVISER - P. 16
z
At-work wellness clinics are healthy start BY LYDIA COUTRE lcoutre@crain.com @LydiaCoutre
The Wildcat Health and Wellness Center is one of the Cleveland Clinic’s AtWork program sites. (Contributed photo)
When Mayfield City School District Superintendent Keith Kelly came down with a cold, he headed to the new on-site clinic for district employees and families. He got some advice at what’s been named the Wildcat Health and Wellness Center, which is operated by the Cleveland Clinic’s AtWork program, and headed back to work in about 10 minutes. If not for the convenience of the facility that opened in January at Mayfield High School, he admitted he probably wouldn’t have sought care. Kelly said he hopes that convenience for district employees and their families will ultimately help keep staff healthier, costs down and teachers in the classroom. “If they’re healthier, it decreases absenteeism rates and keeps staff in front of our kids, which is our mission,” Kelly said.
Worksite clinics have been around since the 1920s, but primarily as occupational health centers, said Larry Boress, executive director of the Chicago-based National Association of Worksite Health Centers. In the last decade or so, they’ve expanded to include preventative services, primary care, acute care and chronic disease management. More recently, however, they’ve focused more on wellness, according to Dr. Michael Adornetto, president of Westshore Primary Care, a physician group affiliated with University Hospitals’ St. John Medical Center who manages a worksite clinic at Hyland Software in Westlake. “With the shift to higher deductible plans and putting more and more on the consumer, employers are actually helping their employees find more reasonable solutions for health care,” Adornetto said. The Clinic manages about a dozen on-site employee clinics.
University Hospitals manages four — two focusing on occupational medicine and two on wellness, one of which serves two employers. The Wildcat Health and Wellness Center, which is staffed by a Cleveland Clinic nurse practitioner and medical assistant, manages and treats chronic conditions, such as diabetes, asthma and high blood pressure or cholesterol, as well as acute medical conditions like cold, flu or infections. Statistics on the overall growth of these clinics are limited, but consulting firm Mercer’s national survey of employer-sponsored health plans details some of the growth. In 2014, 29% of employers with at least 5,000 employees provided an onsite or near-site clinic that offered primary care services, up from 24% the year before.
A healthy strategy Boress estimates that today about 30% of employers of all sizes have SEE WELLNESS, NEXT PAGE
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some type of on-site or near-site clinic, though the format can vary widely from a nurse who’s on-site a couple of hours a week to a fullystaffed clinic open full-time. The center at Mayfield falls in between, with availability at three days a week. The space, constructed with financing through the district’s selfinsurance fund, has three exam rooms with equipment, supplies and a layout similar to what patients are used to seeing at a typical physician office. “It’s just like walking into a clinic anywhere,” Kelly said. It is the 12th such facility through the Clinic’s AtWork program, which aims to help reduce health care spending by offering on-site services to manage employees’ health and return them to work as soon as possible, said Kevin Sears, the Clinic’s executive director of market and network services. UH has been in the business of corporate health and occupational medicine for around 15 years, said Dr. David Rosenberg, medical director of corporate health at UH. Worksite clinics are among the gamut of services for employees, he said, such as injury care, and pre-employment exams. In the past couple of years, he’s seen increasing requests for wellness or urgent care services for nonwork related issues. “What it comes down to is I think companies are finally realizing the importance of wellness and if you keep your employees healthy, you have a healthy effect on the whole
company,” Rosenberg said. Boress said he sees four primary factors that have motivated employers to begin offering these clinics: reducing health care costs, increasing productivity through reduced absenteeism, offering easy access to care and, as these clinics grow, recruitment and retention. Hospitalmanaged worksite clinics are only a portion of the growth, with about 60% run by third-party vendors and about 25% self-managed by employers, he said.
Opening doors Worksite clinics create an access point where people can receive care at a convenient time and place. Often, visits can happen in 30 to 45 minutes over lunch or before the work day, Sears said. Without this option, employees who work when physician offices are open would have to take time off. Many patients would put off or entirely forgo care. “We see people accessing primary care services routinely who otherwise would not access those services or would access them only once they had become ill or experienced an acute exacerbation of their chronic condition,” Sears said. Boress said he’s found that 40% to 60% of people who walk into the clinics for care don’t have a primary care doctor. Hyland Software is entering its third year having a work-site clinic for the 1,500 employees at its Westlake campus. Debbie Connelly, vice president of human resources at Hyland, said
she’s seen more employees accessing health care and then following referrals to UH specialists since adding the Hyland Wellness Center Provided by Westshore Primary Care. The result is a lower cost to the employees and to Hyland, which also offers some of the clinic’s services for free. “They’re not putting those visits off and then having to enter later that evening an ER to be treated or an urgent care,” Connelly said. “The costs of our visits are lower than an urgent care and certainly lower than an emergency room, so that has truly had the biggest impact on our health care costs.” Typically, the worksite model makes the most sense for employers of all types with more than 500 employees, which Sears said translates to 2,000 or more beneficiaries with employees bringing in their families, Sears said. Often, the clinics are located in unused or underused existing spaces that the employer retrofits. The Clinic has one additional worksite health center at ShurTech Brands. It is managed through the hospital system’s Richard E. Jacobs Family Health Center in Avon rather than AtWork, which has been around for 15 years. The ShurTech clinic focuses on primary care, while AtWork clinics include occupational health services as well as primary care. The clinic at ShurTech helps employees not put off care for chronic conditions, said Melanie Canning, manager of marketing services for ShurTech. While people may get
acute, immediately bothersome issues taken care of, Canning said for some of the more chronic conditions, it’s easy to put that off or say, “Oh well. I’m too busy for this.” Employees can stay clocked in while visiting the physician assistant for their chronic conditions, she said. Since its clinic opened last June, the response has been great, Canning said. In the first couple of months, she estimates between 80% and 90% of employees stopped in at the clinic to at least get their biometric screenings and initial checks. “We’ve wanted to help our folks stay healthier,” she said. The worksite clinic is a way “to enable them to
not have to deal with wait time and travel time to see the doctor, and make sure that we can help them out with the chronic conditions.” Although it’s too early for data, Canning said she expects the clinic to help lower ShurTech’s overall health care insurance costs. Kelly predicts the same at Mayfield City School District, which also expects to recoup the cost of retrofitting and remodeling the clinic space in five years. It’s a “no-brainer,” Kelly said. “We have very talented people here, and we want them healthy and well and happy and doing their very best for the kids,” he said. “That’s really the bottom line.”
Salon Lofts model trims ‘headaches’ BY DOUGLAS J. GUTH clbfreelancer@crain.com
Liam Dunning has 14 years of experience as a color specialist and stylist. What had been missing from his career was the freedom of owning his own salon, a situation he recently remedied by harnessing a beauty-industry business model undergoing considerable growth. Dunning, 30, is an owner at Salon Lofts, a national chain offering space to independent beauty professionals. A Redken-certified colorist for the Cleveland Cavaliers dance team, Dunning has enjoyed the flexibility and autonomy of Salon Lofts’ Beachwood location since relocating there in October from a salon in Rocky River. “I was at the point where I wasn’t able to rise in the business anymore,” Dunning said. “Here I’m my own boss and able to make that ex-
tra income.” Unlike traditional salons that allow stylists to lease a single chair, Salon Lofts rents budding beauty-care entrepreneurs a small space in which to market and price themselves however they see fit. In addition, the Columbus-based company’s suite of proprietary software — called Open Chair — lets independent contractors engage with potential customers. Since his move last fall, Dunning has secured 30 new clients, a jump he attributes to his own networking efforts as well as the power of the Salon Lofts brand. “People know the name, so clients are excited to see what we have to offer,” he said. Salon Lofts has 66 shops nationwide, with seven of those stores situated in Northeast Ohio, said CEO Steve Schillinger. The business launched in 2003 SEE SALON LOFTS, PAGE 17
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Q & A:Mathias Ellegiers
Co-founder, Jaswig
At 26 years old, Mathias Ellegiers has already traveled the world and launched a few companies. The Belgium native, who earned a master of engineering and management degree from Case Western Reserve University in 2014, most recently launched Jaswig, a standing desk company, with a group of friends. The StandUp — Jaswig’s first desk — is the only all-wooden, height-adjustable standing desk on the market, according to Ellegiers. Its design, he said, is “unique and beautiful enough to put it in your living room.” The desks include a footrest and are compact and manually adjustable. “So you can put it anywhere, small spaces and even the garden,” he said. “But don’t leave it outside; it is wood.” Desks sold in the Unites States — which range from $299 to $499 apiece — are manufactured in Cleveland. Crain’s chatted with Ellegiers about his vision for the company and why he thinks standing desks should be in every workspace. — Timothy Magaw Where did the idea for Jaswig’s standing desk come from? My girlfriend and co-founder Daphne Fecheyr-Lippens, who is working on a unique Ph.D. in biomimicry at the University of Akron with global recognition, started suffering back pains and neck issues. The doctor linked this to her highly sedentary lifestyle — even though she is athletic — and said she should try a standing desk. We didn’t have the space nor money to buy the ones out there (and didn’t like the looks of them) so we made our own out of wood in the think(box) facility at Case Western Reserve. Friends liked it and we made a few more. Then doing research on the benefits and critically thinking about why everyone sits always everywhere, and we linked it to schools. Every person is asked for the first few years of their life to sit down and sit still. Many teachers like to use a more dynamic and collaborative style now, but the furniture doesn’t always allow this. So we went on to redesign our beautiful living room standing desk into an innov-
ative, high-quality student desk. This story quickly picked up in Europe as well, and soon after launching, we opened a European branch with production in Belgium. The desks sold in the United States are made in Cleveland. What does the company’s name mean? The name comes from Jigsaw because our desks are very easy to assemble. They come flat packed in a 100% recyclable box to eliminate as much cost and pollution. We puzzled the word to create a new word, and Jaswig was born. What are the benefits of a standing desk? Are you standing at one as you answer these questions? Haha, I am! Ask people who have tried a standing desk for several weeks, and they will convince you that it is better. The benefits are different for different people and vary from pure muscle activity and blood flow, which makes you feel good, to calorie burn and prevention of cardiac disease and obesity. I refer you to many
doctors and research papers to tell you what it is good for, as I am not a health care expert. The most important point is that a standing desk gives you the option to sit or stand at your choice any time. Please try to convince me why you would ever consider buying a desk that forces you to sit always now that standing desks exist at the same price of a sitting desk. Are all of your products manufactured in Cleveland? What’s the process like? Yes, the whole concept of being healthy and happy is supporting your local economy. If my neighborhood is nicer because there are more jobs, I will be happier. We are able to make our products here in Cleveland because we use digital manufacturing to an industrial scale. Very simplified, digital manufacturing makes use of 3D computer drawings that are packed in one small file of code that consist of coordinates and can be plugged into a machine that will put out exactly what we designed. This
has made the jump to Europe possible. We had to email the code file and optimize it for European machines and materials, but that’s it. Now practically the same desk is made there as here in Cleveland. The material is recyclable, correct? Every piece of material is reusable or recyclable as long as the designer/manufacturer thinks about the purpose after its lifecycle. That is one thing I’m really disappointed in is that most designers/engineers/manufacturers are too lazy to think about long-term use of the materials. It is easy to make something, it is not easy to make something that can be disassembled and reused in the supply chain. So for the StandUp specifically, every wooden piece is designed to be disassembled so it doesn’t lose its material value, and we are putting in place a program for taking back any part of the desk to refurbish or replace in case it would be damaged. Don’t be fooled, there is always some waste and some
pieces won’t be reusable anymore. In that case, the wood and glue is not harmful for the air we breathe or soil we eat from. How’s the company doing so far? Are people buying the desks? We are off to a good start, but it is very early to make assumptions. Since our launch on Kickstarter in August 2015, we have generated more than $150,000 in revenue (U.S. and Europe combined), and now need to scale up our operations. What’s the biggest challenge to growing your business? Choosing a market. There is limited experience in the team and limited hours in a day. We have many different options and choosing a specific one to go after has proven extremely difficult because we have no experience to go off. We could do them all, but doing many different things reduces the pace you can go at, plus the quality you can deliver toward one specific segment.
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ADVISER: Victor Geraci
Gun control can be tough topic The right to bear arms under the Second Amendment of the U.S. Constitution is sometimes in conflict with other rights and obligations, including specific requirements of state and federal law. This is especially true in the workplace, where employers are generally assumed to have the authority to control the conditions of access to their property. In Ohio, employers may — by statute — impose rules prohibiting employees from bringing firearms to the workplace, including the employee parking lot, and can exclude customers or business invitees on the same basis. Conversely, the right to exclude firearms from a particular location is not the same as an obligation to do so, and it is generally assumed that employers have discretion to determine whether to prohibit weapons. Further, the absence of a direct workplace policy may allow employees with concealed carry permits to bring firearms to work. Against this backdrop, and in keeping with concerns about gun control generally, there is renewed interest in the federal government’s regulatory authority under the Occupational Safety & Health Act, or OSHA. In particular, proponents of President Barack Obama’s executive orders in the area of gun control point to OSHA’s General Duty Clause as a possible basis for a national “no guns at work” policy. The General Duty Clause requires employers to maintain a safe workplace, including the implementation of policies that may be necessary to further that goal. Proponents argue that this significant increase in workplace violence coupled with the expansion of concealed carry laws would be the basis for this regulatory change. Moreover, because a General Duty Clause already exists within the OSHA statute, there would not be a need for congressional approval. The coming disputes, likely to reach the U.S. Supreme Court, will involve questions relating to state laws intended to override aspects of the OSHA regulations. Currently, more
Geraci is a partner at Fisher & Phillips in Cleveland and an experienced labor and employment attorney. than 20 states — not including Ohio — have so called “Parking Lot” laws that allow employees to have weapons in their personal cars while at work, and most contain specific prohibitions against discrimination or discipline by employers. In recognition of the federal regulatory situation, a number of states have included provisions asserting that the statutes nullify enforcement efforts under OSHA’s General Duty Clause. The intent is to set up a constitutional claim under the supremacy clause of the Constitution, with the specific question being whether a federal regulation under OSHA can preempt state law. So far, lower courts have sided with the state legislatures, but this issue is far from settled. Another issue related to the right of an employer to control the workplace is the definition of that term. Given that many employees travel in their personal vehicles for work purposes, the question is whether “workplace” can be expanded to include those vehicles. The best advice for employers, especially those with operations in a number of states, is to implement policies regarding workplace violence, and to zealously protect their right to control the work environment.
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SALON LOFTS CONTINUED FROM PAGE 14
when real estate developer Daniel Sadd transformed a Columbus beauty shop into a bustling loft space. Today, each shop carries about 25 individual lofts, some of them shared by more than one proprietor. Rent varies by location, while interior design and beauty services vary by stylist. Lease prices in the Cleveland area range between $200 to $300 per week. For that cost, renters get a physical space mostly free of the issues that beset first-time salon owners, Schillinger noted. “You’re consolidating headaches like maintenance that are typical for entrepreneurs starting out,” Schillinger said. “The goal is for stylists to spend more time engaging with clients.” Technology is another perk of the Salon Lofts model, one that has helped boost the company’s development, Schillinger said. Visitors to salonlofts.com can filter and book local stylists by clicking on services like hair, nail, skin and massage. The database system allows tenants to track customer visits as well as notes from other stylists. “The website is a huge help for marketing,” said Gina Mote, a hair stylist and skin care specialist who runs a space out of a mixed-use development in Mentor. “If you need training on how to use the site, Salon Lofts provides that, too.” The online lead-generation tool has resulted in 90,000 appointments for the salon chain’s 1,700 loft owners, Schillinger said. High client volume has led to a 90% tenant retention rate, well above the industry average. “Chair rentals have been around for a long time as a real estate play,” Schillinger said. “The support and environment we offer is a highergrade experience. There’s a whole team of people supporting (loft owners) every day.” By hiring independent contractors as stylists, Salon Lofts is part of a lucrative trend in the beauty business. “Non-employer” establishments like Salon Lofts have increased 83% in the last 10 years, while sales in these
settings increased 93%, according to a 2014 report from the Professional Beauty Association, a Scottsdale, Ariz.-based trade group. Kim Coe, operations leader at the Paul Mitchell School in Cleveland, is a supporter of the concept, though she encourages her graduates to try an employee-based business first. “It gives them an opportunity to be more comfortable in a salon environment while building their clientele,” Coe said. “An independent business model is going to be tough for those that don’t have the clientele to support it.”
“Chair rentals have been around for a long time as a real estate play. The support and environment we offer is a highergrade experience.
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Like his fellow loft owners, Dunning, along with his business partner Aja Dillard, pays for his own hair products and furnishings, which is why he tells prospective Salon Lofts tenants to save $3,000 to $4,000 before opening their own space. “The best advice I have if you’re going into this is to have money set aside,” Dunning said. “It can take time to get clients in.” The marketing and managerial support offered by Salon Lofts has made the expense more than worth it, he said. “This space offers everything I need,” Dunning said. “I hope to be here for the rest of my career.”
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NOVEMBER 23 - NOVEMBER 29, 2015
ALLYSON O’KEEFE, 37 Partner; Porter Wright Allyson O’Keefe started her legal career at Porter Wright in 2004 after completing a summer internship there as a Case Western Reserve University law student. Since then, she has worked on many significant deals across Cleveland, including Flats East Bank, The Metropolitan at the 9, Uptown in University Circle and Steelyard Commons, and has been promoted to real estate partner. “Young professionals who live downtown are so excited about the city,” said O’Keefe, a Columbus native who lived downtown for 10 years before moving to Rocky River. “The ones who aren’t from here are often more excited about it. When you move here from somewhere else, you don’t take it for granted.” When O’Keefe is not working or spending time with her husband and two children, she can be found volunteering on the boards of nonprofit organizations and watching college football. WHAT INSPIRES YOU ABOUT YOUR WORK? Just seeing what Cleveland has gone through in the time that I’ve been here, there’s obviously a lot of excitement around real estate development. I started in 2004 when we were crazy busy with development. That was sort of the boom from ’04 through ’08. I saw it go through the downturn, then I saw it rise again, even stronger than before locally.
For more information contact Krista Bora, Reprint Account Executive kbora@crain.com • tel 212.210.0750
MANY OF THE PROJECTS YOU WORKED ON ARE MIXED-USE URBAN PROJECTS. IS THAT AN AREA OF EXPERTISE? Yes, definitely. Real estate is extremely interesting because every deal is different. You can never get bored because there’s so much variety there, from tax credits to historic renovations, from ground-up development to rehab, from mixed-use to residential. HOW WOULD YOU DESCRIBE YOUR LEADERSHIP STYLE? I definitely believe in leading by example. I expect the people with whom I work, my associates, to work hard, and they see me working very hard. For me, it’s all about working hard and doing good work. WHAT OTHERS ARE SAYING: WHAT WAS IT LIKE TO WORK WITH O’KEEFE ON THE FLATS EAST BANK PROJECT? “Allyson is extremely bright and quick witted, but what truly distinguishes her from most successful attorneys is her exceptional people skills. She has an uncanny ability to encourage the ‘adversaries’ in her negotiations to work in concert with her to achieve win/win solutions to difficult problems,” said Scott Wolstein, CEO of Starwood Retail Partners and co-developer of the Flats East Bank project. — Lee Chilcote
Reprinted with permission from the Crain's Cleveland Business. © 2015 Crain Communications Inc. All Rights reserved. Further duplication without permission is prohibited. Visit www.crainscleveland.com. #CC15040
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Business of Life TRANSITIONS: Larry Fielder Crain’s occasional look at people who are forging a new path. Tell us about your story: clevedit@crain.com
Rust, dust and a lot of creativity BY JAY MILLER Insurance claims adjuster Larry Fielder loves his Lincoln MIG-15. That’s not a fancy new car. It’s an arc welder made by Lincoln Electric Co. of Euclid. “MIG (metal and inert gas) welding revolutionized the industry,” Fielder said. “When I was doing auto body work, we used oxyacetylene gas welders. The MIG welder uses very little heat and it creates very little distortion. You had to do a tremendous amount of work with an oxyacetylene welder to make a clean weld and minimize distortion.” Fielder was 20 years removed from an auto body shop when he bought his Lincoln, though. He didn’t buy it to get back to fixing fenders. It would be, he believed, essential to his more recent off-hours pursuit. Now, as he looks forward to retirement, the 61-year-old Fielder is planning to turn his full attention to turning what he calls “lonely, forgotten, unwanted and rusty items” into industrial sculptures and household furnishings. The precision welder was critical to a series of Cleveland skyline pieces Fielder cut out of old license plates. “A lot of people bring me stuff,” he said. “A lot of times I don’t know what it’s going to be.” As a result, his workshop is littered with pieces and parts — cast iron plates from an upright piano, a bird cage, a traffic light and an old, brass fire extinguisher, for example. Fielder has turned some of the rusted or oil-covered bits into drawer pulls made out of wrenches and pliers. He has made lamps made from early electric toasters, antique auto jacks and discarded gears, complete with replicas of late 19th century Thomas Edison lamps. Toy Tonka trucks are joined with solar-powered backyard lights that are mobile. He has built a coffee table on a twowheel warehouse dolly. “I’m trying to get away from tables, they’re too bulky to take to flea markets,” Fielder said. He even has made a few lamps that have as their bases old industrial heaters made by the Reznor Co. of Pennsylvania. They are a nod of appreciation to another industrial artist. Fielder said, and
the company website confirms, that Trent Reznor, the musician who created the industrial rock group Nine Inch Nails in Cleveland, is a direct descendent of company founder George Reznor. “I’ve always done goofy things like this that I could never explain to anybody,” he explained. “You either like it or you don’t.” Since December 2014, he hangs out at Art in Cleveland, a gallery in the East Side Waterloo neighborhood where he shares workshop and gallery space with a several other artists. That happened when his garage filled and he realized he could no longer just give his work away. “All my friends and family had several pieces, and they wouldn’t take any more,” he said. “But I still wanted to create. At first, it was hard to let things go to strangers. But now I enjoy the conversation and the feedback.” He’s also renting storage space for his growing inventory once his garage in Euclid filled up. On a recent Saturday, Fielder was hard at work with his assistant, his grandson Noah. Up front, in the gallery, his work is displayed alongside paintings and sculptures by artists including Rachel Latina, Susan Ross and Guerin Wolf. He sells his creations at the gallery, online at Facebook and Etsy, and at flea markets and other shows under the name “Rust, Dust & Other 4 Letter Words.” But Fielder can’t bring himself to label himself an artist. “I’m not comfortable with the term artist just because there are so many gifted artists out there,” he said. “I don’t want to insult them by saying I’m an artist. If a person sees a piece I made as artistic, that’s wonderful. That’s a huge compliment.” But Fielder’s calling card fudges on that characterization a bit, describing him as a “maker of Funk-Tional & ReEnvisioned Art from found items.” For now, “Rust, Dust & Other Four Letter Words” is a sideline, but he plans on changing that soon. “I’m getting close to retirement, and I want to keep doing it and maybe pay the bills,” he said.
We don’t just see people for who they are; we see
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In the past year, Some of the many
84%
pieces Fielder has created include cabinet and drawer pulls from wrenches, a large variety of lamps, and baskets and wall hangings depicting the Cleveland skyline, made from vintage Ohio license plates.
of people engaged in United Way-funded workforce development programs have obtained employment.
Photos: Rebecca R. Markovitz
them for who they can become.
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z FEBRUARY 1 - 7, 2016 z CRAIN’S CLEVELAND BUSINESS
BUSINESS OF LIFE
Source Lunch Jill V. Akins is the principal of Van Auken Akins Architects LLC, a firm much in the news the last few years. VAA is a partner with Turner and Ozanne construction companies on the Hilton Cleveland Convention Center Hotel rising on Ontario Street. The firm also worked on the Cleveland Convention Center and Global Center for Health Innovation. VAA serves as an architecture, interior design and construction management firm. Akins launched the firm hoping to capitalize on the rise of female-owned businesses, a strategy that has reaped benefits. A Cleveland native, she planned to go to Chicago after getting her degree in architecture from Notre Dame University in South Bend, Ind. Her family prevailed on her to come home. A few years into her career, she got a job offer from a firm in Washington, D.C. She passed. “I had started to realize what — Stan Bullard a great town Cleveland is,” Akins said.
Why did you pursue architecture as a career? It was not a female-friendly business when you got into it. I thought my dad was the coolest thing since sliced bread. (Her late father, Richard Van Auken, was an architect who late in his career purchased a construction firm.) I remember going with him to the office on Saturdays. He would sit me down at a drafting table and I would draw for hours. I have six brothers. He would ask who wanted to be an architect. My arm went up. Before I started college, he was very clear to me about how challenging the field is. He thought I was too social to work for hours in college designing an office building. After I graduated, I worked as a bartender at Charley’s Crab in Beachwood. He would bring in clients and had to be mortified: his daughter the architect. But the money was good and I landed my first architecture job. How do you help clients design their space? My goal has always been to surprise clients in a good way. I don’t want to have a client say, “I did not think it would look like that.” Some people have trouble visualizing the space. We have an architect who can create computer 3D drawings so you can see the view from anywhere in a space. That is huge. It really helps the clients. They don’t always know what they want. Sometimes you have to push them to find out.
About 20% of VAA’s staffers started there as interns. Why is that?
Why did you move your office to downtown Cleveland from Beachwood?
We like to make sure the person is a right fit for us. We are a close-knit firm. I think students have a tough time getting into a firm if all they have done in college is work at a restaurant or store. We pay our interns. Everyone here is working hard. I had one student tell me they would be glad to work for the experience. I told her she should not make that offer again. I think it’s awful not to pay your interns, and some firms do that. We like to have one or two interns at any given time. My team and I love them. We always keep an eye on them as someone we might want to hire.
I was downtown more than I was on the East Side. Allen Wiant (of Playhouse Square Real Estate Services) is a friend from way back. He showed us space on the 10th floor of the Hanna Building that was comprised of four old nasty offices with paneling on the walls. We gutted it. We created a LEED-certified space. We started out in 7,500 square feet and are expanding with another 2,500 square feet, so we will have most of the floor. I absolutely love being at Playhouse Square. There is always something going on. The vibrancy is terrific. It’s also super clean. It’s a great place to be in the summer when they have activities planned for the square.
How do you feel about the city’s future? I’m very optimistic. Cleveland is on a surge of growth. It’s very exciting. Every sector you can think of is on fire, from the Metroparks to the Cleveland Clinic. The important thing is to also keep people interested in living downtown. As a native, what is the most surprising thing going on in Cleveland today? Getting the Republican National Convention. It’s fabulous we are becoming a destination city.
How do you feel about out-of-town architects landing so many of the really big assignments around town? It’s interesting. We go out of town for work and so do other firms. Clients seek the expertise you have.
Jill V. Akins ARCHITECTURE
FIVE THINGS: FAVORITE STATION WZAK-FM, 93.1. It reflects my eclectic tastes in music. I love opera. When my daughter was being born, I had The Three Tenors blasting in the room. The doctor asked me to turn it down.
THE FOOD I am a follower of Zack Bruell. I love what he does with things.
SURPRISING PURSUIT? I love coupons.
READS I read the Sunday New York Times and Plain Dealer. When I read The PD, I start with the front page, the arts section and then glance at the business page.
WHAT’S FUN? I love to exercise and be outdoors. So I love golf. I also love to travel.
LUNCH SPOT Cowell & Hubbard 1305 Euclid Ave. 216-479-0555 www.cowellhubbard.com
The meal One had Mediterranean salad and chicken breast stuffed with queso fresco, empanadas, chayote slaw and lime butter. The other had tomato bisque and seared salmon on a bed of fingerling potatoes, broccoli and ginger lemon butter.
The vibe Despite the historic building it is in, the space feels sleek and contemporary. Quiet and perfect for chatting.
The bill $59.40, plus tip
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CRAIN’S CLEVELAND BUSINESS z FEBRUARY 1 - 7, 2016 z PAGE 21
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A partner in the Employee Benefits and Executive Compensation practice group, Steve advises public and private companies and non-profit organizations on their executive compensation programs and arrangements. Steve also counsels clients on fiduciary issues and transactional matters relating to retirement plan assets. A member of the Cleveland Metropolitan Bar Association, he provides pro bono legal services to the local arts community through its Volunteer Lawyers for the Arts Committee.
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Greater Cleveland Food Bank Fromet is working to lead Studio Graphique in developing brand strategy and way finding systems in civic and community spaces, higher education campuses, medical complexes and large-scale consumer environments in Kentucky, Michigan and Indiana. She will assist and report to Rachel Downey the agency's President & Founder who plans to continue her leadership of Studio Graphique while building a new entrepreneurial consultancy, Place Holder, focused on strategic planning for destinations.
Foundation Software, Inc., developer of FOUNDATION, America's #1 Construction Accounting Software, announces the addition of Paul Noonan as the company's first Chief Growth Officer. As CGO, Noonan's primary responsibilities will include refining processes and structures to facilitate growth, improving current products and services, and exploring new acquisitions and markets. He most recently comes to Foundation from International Data Management, which he founded in 1994.
TECHNOLOGY John Haluch Director, Field Services & PartsBrokerDirect OEC
The Greater Cleveland Food Bank is pleased to announce Tracey N. Mason as the new Vice President of Partnerships & Client Services. Mason comes to the Food Bank with more than twenty years of experience in nonprofit management. In this role, Tracey will oversee strategic partnerships, SNAP outreach, and the Food Bank's over 800 partner agencies and programs. Most recently, Tracey served as the Chief Administrator of Cuyahoga County, Division of Senior & Adult Services.
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20160201-NEWS--22-NAT-CCI-CL_--
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z FEBRUARY 1 - 7, 2016 z CRAIN’S CLEVELAND BUSINESS
HUNTINGTON CONTINUED FROM PAGE 1
the bank will have a similarly strong presence. Huntington will control 13.56% of the Cleveland MSA. That moves Huntington from fifth place in market share here to second, sandwiched between KeyBank and PNC Bank, which have 28.1% and 12.15% of the same market, respectively. And in FirstMerit’s hometown in the Akron MSA, Huntington will be a dominant force with 35.15% market share, placing it well ahead of its nearest competitor there, JPMorgan Chase Bank, which has 13.1% of the market. The combination grows Huntington’s total asset base to just shy of $100 billion, roughly a 33% increase. Huntington executives also plan to shave off 40% of FirstMerit’s expense base. Considering that amassing of size, Marblestone, who also is a former regional president for Charter One (Citizens Bank today) and RBS Citizens Financial Group, described the acquisition as “very bullish” for Huntington, which also grows its footprint to Chicago and Wisconsin with the deal. “When you think about the cost efficiencies generated through the merger,” Marblestone said, “those will result in Huntington being even more competitive from a pricing standpoint. And on the corporate side, they’ll be able to compete more effectively because they’ll be able to make
MARKET IS RIPE FOR BANK CONSOLIDATIONS
bigger loans and have a more technologically sophisticated product set.” But even though Huntington will have a much stronger market share, it doesn’t necessarily mean it will be seen as a threat to the bank’s larger competitors like KeyBank and PNC Bank among others, said Charlie Crowley, a Cleveland managing director at investment bank Boenning & Scattergood. The opportunities for other banks will come from the potential to attract customers during the transition period and, likely, some talented FirstMerit bankers and lenders who either won’t fit into the new Huntington company as restructurings occur or simply are poached by competitors. When that happens, there’s the potential for those people to take their relationships with them to the next company.
Sensing an opening Jon Park, president and CEO of Westfield Bank, a $1.1 billion-asset bank headquartered in Westfield Center, west of Akron, views the merger opportunistically. While the combination will have some impact on the local economy as FirstMerit’s legacy operations are restructured, from a competitive standpoint, Park said the deal is “pretty appealing to us.” “It will have implications, so it’s unfortunate for Akron,” Park said. “This does create new potential for
The acquisition of FirstMerit Corp. by Huntington Bancshares Inc. was surprising to some in the local market, but not because there’s been any shortage of consolidation in the banking sector lately. And while experts like Fred Cummings, president at Elizabeth Park Capital, a bank-focused hedge fund in Cleveland, say the deal is unlikely to spur any other local mergers, conditions are ripe for more consolidation to happen. Growing margins and revenues is particularly challenging today for several reasons, from the pressures and costs imposed by stiffer regulations to a prolonged low-interest rate environment. As a result, combining companies has become an effective way for banks to grow in both size and value for shareholders. Kevin Jacques, Boynton D. Murch chair in finance at Baldwin Wallace University and a former economist at the U.S. Department of the Treasury, notes that it’s particularly tough for regional banks right now. Most analysts saw FirstMerit as an acquirer for that reason. And the motivation to spread today’s costs of doing business over a larger base likely will drive even more consolidation. Yet, despite the trend, analysts point out that some of the motivations in every deal are unique to the companies
us that wasn’t there previously.” FirstMerit has roughly 2,000 employees at its Akron headquarters alone. And although Huntington president and CEO Stephen Steinour has said the bank will not only offer a job to every branch employee in addition to replacing any locally lost jobs within two years — the cumulative effect on staff hasn’t been finalize yet, Steinour has said — most experts are skeptical every job will be replaced, or at least replaced with a position of similar caliber (i.e., pay). That’s simply a common area for cost savings that helps validate a merger like this.
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opportunity to get more aggressive with either one of those sides,” Zimmer said. Larger competitors certainly see the same opportunities. And then there’s the potential to grab some of the branch locations Huntington will divest. The company will control more than 35% of the market share in the Akron MSA. The bank has already said it plans to close some branches. And regulators could require the selling off of others if the market share is considered too high. When that happens, the region’s smaller banks will look to gobble those up.
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For a growing community bank that competed with FirstMerit in similar business lines, the chances to attract new bankers, lenders and clients is clearly promising. “From our standpoint, we lost one competitor,” said David Zimmer, president of ERIEBANK, a division of Pennsylvania’s CNB Financial Corp. that recently acquired the $152 million asset Lake National Bank in Mentor to truly establish a foothold in Northeast Ohio. “Basically, (the merger) elevates what we should already be doing. From the employee and customer standpoint, this provides us a good
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involved. Interestingly, though, larger community-style banks in Northeast Ohio, like FirstMerit, which also have a strong market presence here and outside the state, are fading away. That’s creating a widening gap in this market between larger regional and so-called super regional banks (like KeyBank and PNC Bank) and smaller community banks as well-performing small and midsize companies have been frequently targeted. There have been lots of those deals here recently. Lake National Bank sold to CNB Financial Corp. (of Pennsylvania); Lorain National Bank sold to Northwest Bancshares Inc. (of Pennsylvania); and Farmers National Bank of Canfield has bought both First National Bank of Orrville and Tri-State First Banc Inc. of East Liverpool. All those deals were announced in roughly the last year. And in each case, acquirers touted the benefits of achieving more scale and market share. So where will the consolidation come from? Strong smaller banks surely will be targeted as larger community banks continue seeking additional size. But if the recent deals between Huntington and FirstMerit — and even an announced combination between KeyCorp and New York’s First Niagara — show anything, it’s that banks see deals of all size on the table. — Jeremy Nobile
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The List THIS YEAR
COMPANY ADDRESS PHONE/WEBSITE
LARGEST ENGINEERING FIRMS Ranked by number of local registered engineers TOTAL LOCAL LOCAL NUMBER OF REGISTERED ENGINEERS LOCAL ENGINEERS (2) EMPLOYEES
CORPORATE HEADQUARTERS YEAR FOUNDED 2015 PROJECTS
(1)
2015 LOCAL ENGINEERING BILLINGS ($ TOP LOCAL EXECUTIVE MILLIONS) TITLE
AECOM 1375 Euclid Ave., Cleveland 44115 (216) 523-5600/www.aecom.com
209
121
544
Los Angeles 1904
Volvo Grassroots Plant; BMW SLP project; confidential new HQ office building; Cleveland Museum of Natural History; Cleveland Innerbelt Bridge project
152.3
Dana S. Mitchell, v.p., office manager, architecture, design consulting services division, Cleveland/Akron; J. Brandon Davis, sr. v.p., industrial group
2
GPD Group 520 S. Main St., Suite 2531, Akron 44311 (800) 955-4731/www.gpdgroup.com
152
252
558
Akron 1961
City of Cleveland general engineering; East Bank of the Flats; Cleveland Airport systems
90.1
Darrin Kotecki president
3
Middough Inc. 1901 E. 13th St., Suite 400, Cleveland 44114 (216) 367-6000/www.middough.com
58
110
195
Cleveland 1950
BP Husky heavy oil upgrade; NEORSD PSIM; Benteler Pipe Mill
34.0
Ronald R. Ledin chairman, CEO
4
CT Consultants Inc. 8150 Sterling Court, Mentor 44060 (440) 951-9000/www.ctconsultants.com
41
56
127
Mentor 1922
Lakewood integrated wet weather improvement program (IWWIP); Avon Mills Road 3.0 MG elevated water tank; Ohio Turnpike mainline pavement
32.0
Dave Wiles president
5
Westlake Reed Leskosky 1422 Euclid Ave., Suite 300, Cleveland 44115 (216) 522-1350/www.wrldesign.com
40
4
140
Cleveland 1905
Cleveland Clinic Avon Hospital; Hawken Upper School; Cleveland Clinic Medical School
15.0
Paul E. Westlake Jr. managing principal
6
Osborn Engineering 1100 Superior Ave., 300, Cleveland 44114 (216) 861-2020/www.osborn-eng.com
37
76
100
Cleveland 1892
Public Square redevelopment; MetroHealth executive engineer; Cleveland Museum of Natural History
13.3
Gary F. Hribar president, CEO
7
DLZ 614 W. Superior Ave., Suite 1000, Cleveland 44113 (216) 771-1090/www.dlz.com
36
39
51
Columbus 1916
City of Akron Ohio Canal interceptor tunnel; NEORSD E. 140 St. consolidation and relief sewer; ODOT district 12 construction inspection
14.5
Vikram V. Rajadhyaksha CEO
7
HWH Architects Engineers Planners Inc. 1300 E. Ninth St., Suite 900, Cleveland 44114 (216) 875-4000/www.hwhaep.com
36
58
69
Cleveland 1908
Tire manufacturing plant, R&D testing facility, new equipment installations for the automotive, energy and commercial products sectors
11.5
Peter P. Jancar chairman
9
ms consultants inc. 600 Superior Ave. East, Suite 1300, Cleveland 44114 (216) 522-1926/www.msconsultants.com
33
38
93
Youngstown 1963
U.S. 30 final design; Shenango Township sanitary sewage improvements; Youngstown Riverfront Park and Amphitheater
9.3
Raymond J. Briya executive vice president
10
Thorson • Baker + Associates Inc. 3030 W. Streetsboro Road, Richfield 44286 (330) 659-6688/www.thorsonbaker.com
29
77
120
Richfield 1993
Akron Children's Hospital Kay Jeweler's Pavilion; North Olmsted High School; Cleveland Zoo tiger exhibit; One University Circle
18.8
Gordon R. Baker Michael G. Thorson principals
11
Karpinski Engineering 3135 Euclid Ave., Cleveland 44115 (216) 391-3700/www.karpinskieng.com
27
60
114
Cleveland 1983
Cleveland Clinic Fairview Hospital Emergency Department; Cuyahoga County headquarters; Cleveland Museum of Art
10.3
James T. Cicero president
11
Michael Baker International 1228 Euclid Ave., Suite 1050, Cleveland 44115 (216) 664-6493/www.mbakerintl.com
27
41
60
Pittsburgh 1940
ODOT Lakefront West; GCRTA Mayfield Road rail and transit station construction and bridge rehabilitation; Cleveland Airport System projects
15.0
Paul Gluck vice president, Ohio office executive
13
R. E. Warner & Associates Inc. 25777 Detroit Road, Suite 200, Westlake 44145 (440) 835-9400/www.rewarner.com
23
42
71
Westlake 1951
Timken Caster; Hilton Convention Center Hotel; CMC Mill expansion
NA
Theodore A. Beltavski president
14
Burgess & Niple 100 W. Erie St., Painesville 44077 (440) 354-9700/www.burgessniple.com
17
25
38
Columbus 1912
Cuyahoga County, Rockside Road bridge rehabilitations; Akron, CSO long-term control plan program management; Lake Cty. Dept. of Utilities
8.7
Charles J. Zibbel director, Great Lakes region
14
Hatch Mott MacDonald LLC 18013 Cleveland Parkway Drive, Suite 200, Cleveland 44135 (216) 535-3640/www.hatchmott.com
17
18
21
Iselin, N.J. 1996
Euclid Creek Tunnel; Dugway Storage Tunnel
4.7
Michael G. Vitale, senior vice president; Michael F. McCarthy, vice president
14
The Mannik & Smith Group Inc. 23225 Mercantile Road, Beachwood 44122 (216) 378-1490/www.manniksmithgroup.com
17
24
28
Maumee 1955
Fresenius Dialysis Center; 3 Trilogy senior living centers; MarkWest Hopedale Fractionation Ph2 and compressor sites; Lake County solid waste facility
NA
Mark A. Smoley senior vice president, principal
17
Environmental Design Group 450 Grant St., Akron 44311 (330) 375-1390/www.envdesigngroup.com
15
7
45
Akron 1984
City of Green, municipal engineering services; Canal Fulton Cherry St. intersection improvements; City of Norton flood control program
NA
Dwayne Groll president
18
Euthenics Inc. 8235 Mohawk Drive, Cleveland 44136 (440) 260-1555/www.euthenics-inc.com
14
16
22
Strongsville 1969
Rehabilitation of Tower City bridges; East 79th St. bridge replacement; US 42 widening, Medina
NA
Alan R. Piatak president
18
Scheeser Buckley Mayfield LLC 1540 Corporate Woods Parkway, Uniontown 44685 (330) 896-4664/www.sbmce.com
14
27
38
Uniontown 1959
University of Akron Zook Hall; John Marshall High School; KSU Van Deusen and art annex
NA
James E. Eckman president
20
Chagrin Valley Engineering Ltd. 22999 Forbes Road, Suite B, Cleveland 44146 (440) 439-1999/www.cvelimited.com
13
18
38
Cleveland 1996
Multiple infrastructure projects for 15 municipalities throughout Northeast Ohio
NA
Donald F. Sheehy president
20
KS Associates Inc. 260 Burns Road, Suite 100, Elyria 44035 (440) 365-4730/www.ksassociates.com
13
14
32
Elyria 1987
Detroit Superior Bridge, bridge inspection; The Foundry Rowing facility, engineering services; Cleveland Public Square construction surveying
NA
Lynn S. Miggins president
20
Richard L. Bowen + Associates Inc. 13000 Shaker Blvd., Cleveland 44120 (216) 491-9300/www.rlba.com
13
17
72
Cleveland 1959
Kent State University College of Architecture & Environmental Design; Cleveland 3rd District Police Station; Shoppes at Parma
NA
Richard L. Bowen president
23
The Austin Co. 6095 Parkland Blvd., Cleveland 44124 (440) 544-2600/www.theaustin.com
12
23
75
Cleveland 1878
151 Foods, N.J.; The Boston Globe, Mass.; Northrop Grumman, Fla.
7.0
Michael G. Pierce president
23
HDR 1100 Superior Ave. East, Suite 650, Cleveland 44114-2518 (216) 912-4240/www.hdrinc.com
12
23
25
Omaha, Neb. 1917
NEORSD automation master plan; Ohio Department of Transportation
NA
Richard G. Atoulikian, v.p., NE client service manager; Joanne Shaner, bridge section manager
23
McHenry & Associates Inc. 25001 Emery Road, Suite 200, Warrensville Heights 44128 (216) 292-4696/www.mchenryassociates.com
12
18
24
Warrensville Heights 1960
Thistledown Racino, Warrensville Heights; West Virginia University Health Science Center infrastructure, Morgantown, W.Va.; Giant Eagle stores in Ohio and Pa.
NA
William Hulsey president
23
PTA Engineering Inc. (3) 275 Springside Drive, Suite 300, Akron 44333 (330) 666-3702/www.ptaengineering.com
12
21
28
Akron 1953
Three enterprise data centers; Cleveland Clinic/Akron General Emergency Department
NA
Patrick W. Klanac Michael J. Casseday principals
27
CDM Smith Inc. 1468 W. Ninth St., Suite 750, Cleveland 44113 (216) 579-0404/www.cdmsmith.com
11
14
15
Cambridge, Mass. 1947
NEORSD Union/Buckeye green infrastructure; Erie Water Works membrane filtration plant; North Coast Harbor pedestrian bridge
NA
Edward J. St. John associate
1
RESEARCHED BY DEBORAH W. HILLYER Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Numbers as of Jan. 1, 2016. (2) Includes local registered engineers and local professional engineers who are not registered as of Jan. 1, 2016. (3) Formerly Peters, Tschantz & Associates Inc.
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