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$2.00/FEBRUARY 24 - MARCH 2, 2014
Insurer’s founder fighting tender offer Spachman says American Financial’s bid for National Interstate isn’t adequate By SCOTT SUTTELL ssuttell@crain.com
The board of specialty insurance company National Interstate Corp. officially is taking no position on a
$283 million tender offer for the company’s common stock by a unit of Cincinnati-based insurance giant American Financial Group Inc. But that’s not stopping National Interstate’s founder, Alan R. Spach-
man, from staking out a position opposing the deal — and raising questions about the fairness of the entire offer process. In a filing last Wednesday, Feb. 19, with the Securities and Ex-
change Commission, Richfieldbased National Interstate said its board “has determined not to express an opinion on the tender offer and to remain neutral with respect to the tender offer” from
Great American Insurance Co. Great American, a subsidiary of American Financial, on Feb. 18 increased to $30 a share its tender offer for the common stock of National Interstate that it doesn’t already own. It didn’t say why it raised the offer. See OFFER Page 7
Historic property soon will hit market Maker of Kleenex lays plans to sell National Terminal apartment complex By STAN BULLARD sbullard@crain.com
JANET CENTURY
Chase Pinchot, general manager at Bunker Hill Golf Course in Medina, plays on one of the six indoor simulators located at the golf club.
THE GAME WITHIN THE GAME
08
Golf course operators exhaust every option to get customers through door in bad weather
By KEVIN KLEPS kkleps@crain.com
W
hen Mother Nature rains down on Northeast Ohio in the spring, summer and fall, and buries it with snow and ice in the winter, golf courses try everything and anything to get customers through the door.
Ultimately, though, there are only so many food and drink specials, golf course simulators, weddings and gimmicks such as comedy shows — yes, comedy shows — to offset the greens fees that never materialize on Mom’s bad days. “If you lose a day (because of weather), you’re done,” said David Kinnell, head pro at Pine Hills Golf Club in Hinckley. “There is no way you can make up for it.” See GAME Page 8
The National Terminal Warehouse Apartments, a trailblazing, 250-suite complex that helped establish downtown Cleveland as an apartment market in the 1990s, is about to go up for sale. Real estate insiders quietly have been looking at the complex for months. Brokerage firm Marcus & Millichap plans to start marketing the property for sale if the loft building’s owner wins approval from Cleveland City Council to repay on an accelerated and discounted basis city loans that helped finance the old warehouse building’s conversion to apartments in 1996. See PROPERTY Page 19
INSIDE Huge step Streetsboro-based toy manufacturer Step2 is making major strides in its efforts to do big business in China. PAGE 5
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HIGHER EDUCATION Aspiring college presidents sometimes chart their own paths to the top job ■ Pages 13-18 PLUS: DIVERSITY PROGRAMS ■ AD CAMPAIGNS ■ & MORE
Entire contents © 2014 by Crain Communications Inc. Vol. 35, No. 8
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CRAIN’S CLEVELAND BUSINESS
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WWW.CRAINSCLEVELAND.COM
FEBRUARY 24 - MARCH 2, 2014
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Ahmet Erdemir knows that he’ll never be able to build a virtual knee that perfectly mimics how a real human knee behaves. But with help from researchers all over the world, he and his team at the Cleveland Clinic can get a lot closer — and develop a lot more virtual knees. Erdemir is leading an effort to recruit biomechanics researchers interested in creating better models of the human knee. He doesErdemir n’t care where they live, because researchers who participate in the $2.1 million Open Knee(s) project will work together via the Internet. Erdemir already has built a small community of researchers who use a virtual knee model that he built four years ago and gives away for free at Simtk.org. It’s a site that serves as a hub for researchers who work with 3D models of various body parts. Some of the 350-plus people who have downloaded that 3D model have helped Erdemir improve it. Now, however, he aims to recruit researchers and software developers who can get involved in the design process from the start. “I think we have a users’ community now, but we need a developers’ community,� said Erdemir, an assistant staff member within the department of biomedical engineering at the Clinic’s Lerner Research Institute. Erdemir has access to the abundant resources of the Clinic. He directs Lerner’s Computational Biomodeling Core, the team at the Clinic that develops virtual models of different body parts. But they could use help from other researchers. Developing a single 3D model that functions like a real human knee requires gathering large numbers of MRI images and lots of data on how real knees respond to different forces. The Clinic gathers that kind of data by running tests on knees taken from cadavers. Erdemir’s goal is for participants in the Open Knee(s) project to develop at least six models representing different types of knees. One might function like the knee of a young, healthy male, while another might resemble the knee of an older woman with arthritis. “It requires a lot of investment in experimentation, a lot of investment in engineering time,� he said. If the Open Knee(s) project goes well, the biomedical engineering department could try to develop
Project is enlisting help of community to develop 3D models of various body parts
CONTRIBUTED PHOTOS
These 3D knee images were developed by the Cleveland Clinic. models of other body parts by “crowdsourcing� input from other institutions, according to D. Geoffrey Vince, chair of the department. “This is trailblazing,� Vince said. “And I think this model could be reproduced in a lot of other areas.� Vince
Gathering ‘true believers’ Erdemir has allies in his effort, including the National Institutes of Health. Last September, Erdemir received a $2.1 million grant from the NIH’s National Institute of General Medical Sciences. That money will fund the Open Knee(s) project through May 2017. He also is receiving help from both the University of Utah, which created the simulation software that the project relies on, and the NIH Center for Biomedical Computation at Stanford University, which runs Simtk.org. The Open Knee(s) project is prompting the NIH center to upgrade the site, which will link researchers involved in the effort. Professor Steve Klisch says he’s among the “true believers� in the Open Knee(s) project. His school, California Polytechnic State University, is developing grant proposals to secure money that would allow it to develop models for the project. The university decided to become involved after one of its master’s students used Erdemir’s first online knee model to conduct research for a thesis project, according to Klisch, a member of the school’s mechanical engineering department. Providing knee models for free
Volume 35, Number 8 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, ex-
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online “represents a paradigm shift in how biomechanics research is conducted,� Klisch said via email. By doing so, Erdemir’s team “is accelerating research and educational activities across the international biomechanics landscape,� he said.
Joint venture Klisch isn’t the only one grateful for Erdemir’s efforts. A research paper published last year by the University of Iowa described his first knee model as “a potent springboardâ€? for the study, which focused on how different techniques used during ACL surgery affect the knee. Connections such as these should help Erdemir create a community of researchers interested in building new knee models. “At many conferences, I’ve been known as the Open Knee guy,â€? he said. Erdemir also will use some of the grant money to finance internships for students or anyone else interested in spending three months on a project related to the effort, wherever they may live. The project also could help the Clinic generate revenue. The biomedical engineering department at some point could charge a fee to researchers who want help adding features to the new 3D models or using them to conduct research, Erdemir said. The models also could help researchers at the Clinic and elsewhere identify problems with the knee joint and find ways to fix them. That process could inspire the invention of new medical implants and other devices, said Vince, chair of the biomedical engineering department. “This is a platform from which IP (intellectual property) can be generated,â€? he said. â–
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FEBRUARY 24 - MARCH 2, 2014
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
5
INSIGHT
Degree programs are on chopping block Akron could cut as much as 10% of its offerings; CSU and Kent are evaluating theirs By TIMOTHY MAGAW tmagaw@crain.com
Thinking about quitting your day job and earning a bachelor’s degree in guitar performance or theatre arts from the University of Akron? You might be out of luck. Local institutions of higher education are combing through their
degree offerings, hoping to ax those that might be underperforming in terms of enrollment or show little promise of employment for grads. Many of the programs on the chopping block have struggled for years, but budget concerns and mounting political pressure on colleges to invest in programs with the best job prospects have schools rethinking
their offerings. The University of Akron made perhaps the strongest statement locally that it plans to overhaul its catalog of degree programs. Earlier this month — and after years of evaluation — it identified 55 degree programs that could be suspended. Programs in the crosshairs represent about 10% of the university’s
offerings; they range from bachelor’s degrees in theatre arts and geography to master’s degrees in physics and elementary and secondary education. The university estimates the potential program closures could affect 600 students, or about 2% of its student body. The University of Akron isn’t alone in its quest to quell underper-
STEP2 TAKES BIG STEP TO FAR EAST
“One thing is for sure. Kimberly-Clark will not give it away. They don’t need to do so. They’re too big to sell for anything less than what they want.” — Ralph McGreevy, executive vice president, Northeast Ohio Apartment Association trade group. Page One
By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com
“You try to get people to eat, drink and come to the pro shop. It’s not always related to golf, but usually it is. Your core customer is the golfer.”
W
hile U.S. consumers might be used to seeing “made in China” stamped across the bottom of children’s toys, one local company is going against the grain. In the last year, Streetsboro-based Step2 Co. has started to make a push into the Chinese market, earning the necessary China Compulsory Certifications last fall for its toy products, while keeping the manufacturing of products sold in China in Northeast Ohio. “The opportunity is there,” chief marketing officer Jerry McDermott said. “It’s a big opportunity.” With more than 16 million births a year, China is a huge market for a company making children’s products. Step2 mentioned the Chinese market as a priority to Crain’s in 2008, but it has taken awhile to get in touch with the right business partners, McDermott said. The maker of toy and lawn products had limited retail channels in the country in the past and, without a way to sell in volume, it didn’t make sense for Step2 to invest in the testing for the certification.
— Jimmy Hanlin, director of golf, Little Mountain Country Club in Concord and StoneWater Golf Club in Highland Heights.
“My theory is as they watched the president, seeing the increasing complexity of the president’s job, a lot of provosts have decided it is not a position for them.”
See STEP Page 19
Groups make requests for more state cash Three groups chosen by Gov. John Kasich have put together a $39.6 million wish list for Northeast Ohio now that the governor is re-opening the capital budget to projects around the state. The Greater Cleveland Partnership has foKasich cused its requests for Cleveland and Cuyahoga County on opening up the lakefront. In the Akron area, the Greater Akron Chamber put the emphasis on boosting startup businesses.
Cuyahoga County asks for $20.4 million from capital budget, including $7 million to go toward proposed pedestrian walkway And a governor-appointed statewide arts panel is seeking state money for investments in more than a dozen cultural attractions in Northeast Ohio. At the top of the $20.4 million list for Cuyahoga County is a $7 million request to help move forward a $47 million pedestrian walkway and attached parking garage proposed by the city of Cleveland and Cuyahoga County to connect the Lake Erie waterfront with the rest of downtown. The list also includes $6 mil-
See PROGRAMS Page 21
THE WEEK IN QUOTES
Streetsboro toy maker makes push into Chinese market
By JAY MILLER jmiller@crain.com
forming programs. With a new provost at the helm, Cleveland State University is in the early stages of launching an academic review process similar to the one the University of Akron started almost a decade ago. Also, officials at Kent State University say they regularly evaluate whether certain programs still make sense.
lion of the expected $16.7 million cost for a riverfront park on the east bank of the Flats. The biggest single piece of the Akron area’s $10.6 million request is $3.7 million for the Center for Bits and Atoms, an expansion of the Akron Global Business Accelerator. The plan, said Anthony Margida, the accelerator’s CEO, is to convert an existing building into “a place for anyone to make anything and make a business of it.” In both cases, the groups made
INSIDE: A look at the local capital budget requests. Page 22 the top priority for inclusion on their lists a project’s expected impact on the region’s economy. To make the capital budget, a proposal must involve the acquisition of property, new construction or a major renovation. Separately, the arts panel is recommending $8.6 million in spending for upgrades to 16 museums and cultural institutions in the region. That list includes improvements to the Rock and Roll Hall of Fame and Museum, Severance Hall’s Reinberger Auditorium and Stan Hywet Hall & Gardens in Akron. See CASH Page 22
— Ronald Berkman, president, Cleveland State University. Page 14
CORRECTIONS ■ Hiroyuki Fujita, founder, president and CEO of Quality Electrodynamics LLC, or QED, is involved with the Manufacturing Council of the U.S. Secretary of Commerce. That involvement was misstated in the Feb. 17 Power 150 section. ■ Daniel B. Hurwitz is CEO of DDR Corp. The last part of the company’s name was incorrect in the Power 150 section. ■ Zev and Jeffrey Weiss are co-CEOs of American Greetings Corp. The Power 150 section listed the wrong titles for the Weiss brothers due to incorrect information provided by a company representative.
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A Twinsburg-based startup that has raised nearly $2.5 million from angel investors, including some well-known Northeast Ohio business leaders, is positioning itself to grow the software it has created for sales forces. Citing one memory expert, Marc Miller, CEO of SpearFysh, says half the words spoken during a sales call are forgotten within an hour, 65% within one day and 80% within a month. Backed by investors and board members including A.J. Hyland, who grew Hyland Software Inc. into the largest software firm in the region, and Marc S. Byrnes, chairman of business insurance broker Oswald Cos., SpearFysh captures what the memory might not. The startup’s software marries speech analytics and an iPad as a notetaking device to capture the audio of full conversations and convert them to text — all while allowing the notetaker to tag parts of the audio for easy locating later. It’s a lot of data, yes. But SpearFysh allows “users to go into that big sea of data and spear out those golden nuggets that can move the needle and make them more money,” Miller said. “It’s turning the art of selling into the science,” he said. “It’s really saying to a massive profession of 20 million salespeople, today, you don’t get a lot of insight on how to go out (and be) more effective. Here’s a datadriven approach.” Roughly 125 salespeople at 12 companies, including the Benesch law firm and General Electric, use the software now, Miller said. He said break-even for the company would come when roughly 3,000 salespeople — charged $60 a month per person — are using SpearFysh. He thinks that’s achievable by mid2015. In the final quarter of 2013, which was the first period in which SpearFysh went to market “in a meaningful way,” Miller said, the
startup generated more than $100,000 in revenue and started selling its app in the Apple iPad app store in December. Byrnes, whose Oswald Cos. has a team of eight people — including himself — piloting SpearFysh, said he has been in the sales business for 38 years and has “never seen STEVE BENNETT anything like this that can be this Visit CrainsCleveland.com/SpearFysh to see how the company’s note-taking tool works. advantageous.” Though some salespeople have been hesitant to for a company’s executives to mine broach the topic of recording con- data — down to the very word — to versations with their customers, deduce what their best salespeople Byrnes said the system creates great are doing. efficiencies. “It really creates accountability, Customers ‘want to be heard’ and when you create accountability, At Cleveland-based OnShift Inc., there’s no mystery,” he said. where the 10-person sales force is using the technology, the aggregated Fishing for more voice of customers is shared with its In addition to the $2.5 million marketing and product developSpearFysh has raised from angel ment teams, said Mark Woodka, investors, the 3-year-old company CEO of the provider of staff scheduling also has received $125,000 from non- and shift management software for profit entrepreneur assistance group the health care field. JumpStart Inc. “We get to hear the voice of the The startup now is raising another customer, and that’s huge for us,” $1 million from angel investors, said Woodka, who is a SpearFysh according to Miller. It aims to raise board member. “What you get (typi$3 million to $5 million in venture cally) is the salesperson’s opinion of capital in the latter half of 2014, and what the customer said, not what the it’s likely to double its employees, customer said. We’re able to listen.” Miller said. At present, it employs 12 The conversations SpearFysh cappeople, up from just Miller in 2012. tures are improving OnShift’s coachHe knows his is not the first inno- ing and mentoring of its salespeople, vation to record sales calls. It is all of Woodka said, and they limit how SpearFysh’s layers that make it dis- much new salespeople ask custinctive, he said. tomers to repeat themselves. SpearFysh applied a couple years “If a rep turns over, what most ago to patent its broader business people do is send a new rep in (and) process of collecting voice data, ask the same questions the previous indexing it as it’s captured via notes rep asked,” Woodka said. “If you or the touch of the iPad screen, and know that ahead of time, you’re uploading and converting it to text picking up right where the other left in a central repository where an off.” entire team may retrieve it. There is the risk, Woodka said, The latter feature is a major capa- that it all can feel a bit like Big Brother. bility of SpearFysh, Miller said: All That’s only natural, Miller said, but the recorded and transcribed con- he noted more than 90% of cusversations can be uploaded to a tomers consent to being recorded company’s customer relationship during sales calls by SpearFysh. management system, such as Sales“Customers want to be heard,” he force.com, providing the opportunity said. “They want you to get it right.” ■
WEB VIDEO
PD discusses ‘digital first’ strategy By JAY MILLER jmiller@crain.com
The Plain Dealer’s shift to a socalled “digital first” strategy, and the end to seven-day home delivery, are attempts to retain the lion’s share of the audience for local news and eventually translate that hold into advertising revenue, its managing editor, Thomas Fladung, told a journalism organization last week. The strategy looks to re-create as much as possible online the domination of local ad revenue that hometown newspapers had in the days before the Internet. The digital first strategy is predicated on what the newspaper’s owner, New York’s Advance Publications, believes is an unstoppable slide in print ad revenue at the Cleveland daily and at other newspapers as advertisers
move spending online. “For six consecutive years, The Plain Dealer had double-digit losses in advertising revenue; that’s compounding on one another,” Fladung said at a gathering sponsored by the Cleveland chapter of the Society of Professional Journalists at the Market Garden Brewery in Cleveland’s Ohio City neighborhood. “Whether you are a business reporter or not, it’s not hard to see that that’s a jetliner nose down,” he said. “The business model was broken.” Fladung said the decision to cut home delivery to four days a week was precipitated by the revenue dive. The publication’s strategy, he said, “is a market-share play in the digital space.” By focusing on shorter stories, posted continuously and updated if necessary, the paper hopes to lure readers away from television
station websites and other sources of local information. Trying to grow market share also means not charging for the privilege of reading stories on the paper’s digital site, cleveland.com. Charging readers who link to stories from search engines or from other websites — what the industry calls “erecting a paywall” — would thwart Advance’s strategy. “Whether you like or hate what Advance is doing, it is a business model, it’s a strategy,” he said. Fladung said the website set a record in January for the number of pages viewed by readers. But Fladung conceded the company doesn’t know whether this digital first strategy will work. “Somebody’s right and somebody’s wrong,” he said. “And we’re going to find out who.” ■
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Offer: Spachman says price was at ‘lowest end’ of valuation range continued from PAGE 1
American Financial announced Feb. 5 that Great American had begun a tender offer for more than 9.5 million National Interstate common shares at a price of $28 a share — about 26% above the company’s share price at the time. Subsidiaries of American Financial already own 10.2 million shares of National Interstate. In a separate filing on Feb. 19 with the SEC, Spachman, a member of National Interstate’s board, made it clear that even at the higher price, he doesn’t like the deal. The filing stated that Spachman “believes that the tender offer is a brazen attempt by a majority shareholder to force minority shareholders of the company to sell their shares at a price that is unfairly low, pursuant to a flawed process orchestrated by the majority shareholder, on terms which are designed to be extremely coercive and with inadequate disclosure to the public holders of shares.” Spachman said in an interview last Friday morning, Feb. 21, that the makeup of National Interstate’s 10-member board — six members of which the filing calls “conflicted” due to their ties to American Financial or Great American — has led to a process in which National Interstate shareholders are getting “steamrolled,” and the four other directors’ concerns about the tender offer are rebuffed. For instance, Spachman said the four independent directors — in addition to himself, they are his son, Michael Spachman, Joel Schiavone and Donald Schwegman — were rejected in efforts to establish a special committee to examine the
READ THE FILINGS ■ You can see National Interstate founder Alan R. Spachman’s filing with the Securities and Exchange Commission at: tinyurl.com/nktt8uy ■ National Interstate’s filing from the same day can be read at: tinyurl.com/p2rm3k9 Great American offer. There’s no legal requirement to set up such a committee, but it’s a common step in deals to mitigate the potential for conflict between the interests of controlling shareholders and those of minority shareholders. “I don’t want to stop a sale,” Spachman said. “I just want a fair process and outcome for shareholders, where they can determine the fairness of the offer, and we haven’t had that.” A National Interstate spokesman didn’t return a phone call last week. Neither did an official at Great American. Alan Spachman founded the company in 1989 and has served as a director since then. He was CEO from 1989 through 2007 and was National Interstate’s chairman from 2004 until February 2013, when he was voted out of that role. According to his filing, Spachman currently has “sole voting power and sole dispositive power with respect to 1,823,685 shares,” or about 9.2% of the company’s shares outstanding.
Laying out his case According to Spachman’s SEC filing, his objections to the tender
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offer are in four broad categories: “Unfair offer price;” “flawed process controlled by parent and purchaser;” “inherently coercive structure” and “inadequate disclosure.” His filing stated that National Interstate’s shares “traded above the increased offer price for a significant portion of 2013.” In addition, the filing stated that Spachman “also believes that the tender offer was opportunistically timed to take advantage of the shares trading near their 52-week low price. The closing share price on the day prior to the commencement of the tender offer was $22.17, only slightly higher than the 52week low closing price of $21.82 on January 8, 2014. The 52-week high closing price was $35.68 on July 17, 2013.” In the interview last Friday, Spachman said he was concerned about the offer process immediately, given that he and other independent directors were not informed of the tender offer until after documents were filed with the SEC. “There’s typically a little bit of a courtesy head’s up, if you will,” he said. At a board meeting on Feb. 7, the independent directors, including Spachman, called for the formation of the special committee, a request that was denied, according to Spachman’s filing. Later that week, though, the company retained Duff & Phelps LLC as financial adviser to National Interstate “to provide an opinion, from a financial point of view, of the fairness of the initial offer price,” according to a National Interstate filing last week. In a board meeting last Monday,
Feb. 17, Duff & Phelps produced a report that found the initial offer price of $28 “is not fair from a financial point of view” to shareholders, according to the National Interstate filing. Joseph Consolino, who is chairman of National Interstate as well as chief financial officer of American Financial, then “advised the board of directors that the purchaser would be announcing, before the market opened on February 18, 2014, that it had increased the initial offer price to the amended offer price” of $30 a share, the National Interstate filing stated.
“I’m very concerned at this point that there are going to be people voting (on the tender offer) who are very uninformed.” – Alan R. Spachman, founder, National Interstate Corp. Spachman said in last Friday’s interview that using the Duff & Phelps opinion to set Great American’s revised offering price was not appropriate because the Duff & Phelps analysis “was done for confidential purposes of National Interstate, not for the acquirer.” He said Duff & Phelps subsequently resigned its role as financial adviser. Duff & Phelps did not respond last Friday to a request for comment. Spachman also maintained that the $30 amended price “was clearly at the lowest end of the (valuation) range” laid out by Duff & Phelps. In its filing, National Interstate stated that a representative of Duff & Phelps “advised management … that Duff & Phelps would decline to
deliver an opinion as to the fairness, from a financial point of the view, of the amended offer price.”
What’s the hurry? Last Wednesday, the National Interstate board reconvened in person and via conference call to vote on the new offer, according to the company’s filing. The filing stated that Consolino “called for a vote on the proposal that the board of directors express no opinion on the offer and remain neutral with respect to the offer.” Spachman said the independent directors wanted to continue to negotiate on the offer price. But by a vote of 6-4, the board voted to express no opinion on the amended offer. Spachman is not alone in his concerns about the proposed deal. In a case, Cambridge Retirement System v. Joseph Consolino, et al., filed last week in Summit County Court of Common Pleas, the plaintiff alleges that the defendants “breached their fiduciary duties (including the duty of due care, good faith, candor and loyalty) to the company’s public stockholders,” according to National Interstate’s filing. The Massachusettsbased pension fund seeks, among other things, to create a special committee in connection with the offer and to extend the tender offer period, which expires March 6. Spachman said a delay in the process would be a good development. “I’m very concerned at this point that there are going to be people voting (on the tender offer) who are very uninformed,” he said. ■
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Game: Brighter days are best recipe for success continued from PAGE 1
JANET CENTURY
Chase Pinchot is shown in front of one of Bunker Hill Golf Course’s six simulators. In the background are Dan Mikich, left, and Fred Mulhorn.
“We have six simulators and you could have 24 golfers (four on each simulator) in there from 9 in the morning to 9 at night, and that still isn’t going to make up for a course full of people all day.” – Chase Pinchot, general manager, Bunker Hill Golf Course
In Northeast Ohio, courses lost plenty of days in 2013, according to an analysis by PGA PerformanceTrak, which calculates rounds and revenue data for the industry. The Northern Ohio section of the PGA reported a 6.2% drop in rounds played and an 11% plunge in days open in 2013 versus 2012. Nationwide, rounds played last year were down 4.8% and days open declined 6.9% from 2012. One reason for the stark contrasts is the weather in 2012 was abnormally warm, and the elements last year were nowhere close to as bright as the pants golf pro Jimmy Hanlin wears on television. But 2013 wasn’t nearly as bad as the very rainy 2011, which Hanlin, director of golf at Little Mountain Country Club in Concord and StoneWater Golf Club in Highland Heights, refers to as “Armageddon.” “Everything seems great compared to that year,” Hanlin said. Great is, of course, a relative term, but local courses surveyed by Crain’s said by keeping a tight grip on their expenses and exhausting every revenue outlet, they were able to keep their finances in line in 2013.
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Bunker Hill Golf Course in Medina has six simulators — a realistic form of indoor golf, if you will. Depending on the model, the hightech gadgets that can simulate play on big-name courses such as Pebble Beach and Doral can cost as much as $90,000 each. It’s a cool way for a golfer suffering from cabin fever to get in a round at the course of his or her choosing. But for the host golf course, it’s not a cure-all for the bad-weather blues. “That is a good way for us to make up a little extra (money),” said Chase Pinchot, general manager at Bunker Hill, which stays in touch with customers all year long via email. “But in the same sense, we have six simulators and you could have 24 golfers (four on each simulator) in there from 9 in the morning to 9 at night, and that still isn’t going to make up for a course full of people all day.” Kinnell said Pine Hills has discussed adding simulators “as a winter revenue source,” but the cost — at $60,000 to $65,000 apiece for good simulators — might outweigh the benefits. “If everyone starts doing it, it doesn’t make much sense,” Kinnell said. Another consideration: Pine Hills would need to add on to its clubhouse to create space for the simulators, and Kinnell estimated that makeover would cost about $750,000, including the price of the simulators. “You have to make enough room for it to be enjoyable,” Kinnell said.
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StoneWater, which went private in 2014, does “all kinds of stuff” to increase its revenue, Hanlin said. Besides food and beverage specials, merchandise sales, live musical performances and even dance lessons, the well-regarded club has hosted comedy shows, including one on Feb. 1 that featured popular
local comedian Chad Zumock. “You try to get people to eat, drink and come to the pro shop,” Hanlin said. “It’s not always related to golf, but usually it is. Your core customer is the golfer.” Sean McHugh, director of golf operations for Cleveland Metroparks, said his group has tried something different — cross country skiing at the park system’s golf courses. “We rent out skis, which gave us a little (revenue) bump,” McHugh said. But the skiing also meant more labor costs, which eat up a large chunk of the profits, McHugh said. Shale Creek Golf Club didn’t turn its Medina course into a skiing attraction, but it did have a big, new draw — an 11,000-square-foot clubhouse that opened last May. Shale Creek manager Scott Schreck said the course only had about a 2% dip in rounds played in 2013 — a figure he attributes to the new clubhouse helping to generate a booked calendar of golf outings and group events. The public course is surrounded by 300 private lots, on which 240 houses have been built, Schreck said. Shale Creek has a pool and fitness center that is available only to residents. “We’re lucky in that situation,” Schreck said. “We’re more of a community than a golf course.” Fowler’s Mill Golf Course in Chesterland had a similarly optimistic view of an otherwise gloomy 2013. Course general manager Mike Mucciarone said rounds played were down 2% compared to 2012, but revenues rose, thanks in part to its banquet and wedding facility. “We actually had a great year last year,” Mucciarone said.
Tightening the belt Several courses said they were able to keep their 2013 profits close to even with their 2012 totals by keeping their expenses to a minimum. But when it rains, it often pours for workers who hoped to be needed on a particular day. “You use every little measure you can to save a dollar here and there,” said the Metroparks’ McHugh. “We watch the weather. If the weather looks bad, we’ll tell the starters and rangers not to come in. In a way, it’s sad because you’re telling someone not to come to work, but it’s business, I guess.” Shale Creek’s Schreck said trimming labor costs is the “No. 1” way for parent company Granite Golf Properties to counter poor weather. “We have to manage that dollar very closely,” he said. “It’s difficult at times. We look to manage that labor dollar without giving up the service our customer has come to expect. It’s not their fault that the weather is bad.” Ultimately, many course operators are left with hope — for brighter days. In some sense, it’s their only hope. “There really isn’t much you can do,” Hanlin said of bad weather. “You just try to have a better year the next year. People aren’t coming to the golf course to eat and drink if it’s raining. Those revenues are really tied into how many people are driven to the door.” ■
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Suppliers are back in driver’s seat in General Motors contracts Trouble with its technology partners was too big a risk for automotive company By DAVID SEDGWICK Automotive News
General Motors’ dramatic aboutface this month on its standard purchasing contract was more than a gritty admission by GM’s purchasing chief that she was wrong. It was confirmation of a seismic shift in the balance of power between automakers and suppliers of cutting-edge technology. As automakers race to boost fuel economy, improve infotainment and make their cars collision-proof, suppliers of the technologies that make such innovations possible feel no particular need to accept unfavorable contracts. Indeed, the titans of tech have shown they can’t be pushed around In an exclusive interview with Automotive News, a sister publication of Crain’s Cleveland Business, GM purchasing chief Grace Lieblein revealed that the company is eliminating controversial portions of its standard contract, introduced just six months ago, that had outraged suppliers and was seen as an effort to exert unprecedented control over vendors. It “was a misstep for sure,” Lieblein said. “I don’t want to be talking to CEOs about terms and conditions. I want to be talking to them about technology and quality and driving waste from the system.” When GM unveiled its revised terms and conditions in July, there was an immediate uproar. Angry suppliers said the contract could saddle them with open-ended liability for parts later deemed unsafe, even if those parts were made to GM’s specifications. Another stinker was intellectual property rights. Suppliers said GM was not obligated to keep their technical data confidential unless the two parties signed a separate agreement. Critics said the terms had roots in a long-gone era in which automakers played the tune and suppliers obediently danced. In the early 1990s, GM purchasing chief Inaki Lopez demanded huge price cuts from suppliers, who feared Lopez would share their technology with rivals if they refused. But now, for several key technologies, a few specialized suppliers control the market. Airbags are a good example. Five companies — Takata, Autoliv, TRW, Key Safety Systems and Toyota Gosei — control the bulk of worldwide sales. If you don’t like their prices, you can’t order cheap knockoffs from a hole-in-the-wall factory in Shanghai. So it’s no surprise that Takata Corp. is a member of GM’s supplier council, an inner circle of 11 companies that spent several months suggesting revisions to GM’s terms and conditions. GM told the council it would assert the right to a supplier’s intellectual property only during periods when the vendor is unable to ship products, and that satisfied Robert Fisher, president of Takata’s North American subsidiary. “I think GM gets it,” Fisher told
Automotive News. “Their behavior will determine which suppliers they attract, and those suppliers will determine what new technology and innovation they get.”
Audi lets supplier shine The contract dispute has been a trial by fire for Lieblein, who became purchasing chief in December 2012 after her predecessor, Bob Socia, was put in charge of GM China. She had not worked in purchasing but had experience overseeing product launches and manufacturing as president of GM’s operations in Brazil and Mexico. After she revised GM’s terms and conditions about six months into her tenure, suppliers complained they had not been consulted and objected to GM’s take-it-or-leave-it stance. While Lieblein was working to placate GM’s suppliers, other automakers assiduously have built alliances with suppliers to access their technology. Audi AG is a good example. When Audi CEO Rupert Stadler spoke last month at the International CES show in Las Vegas, he used a driverless car to illustrate his company’s tech prowess. After a modified Audi A7 sedan drove itself onstage in the swank Chelsea theater, Stadler bragged that future Audis will feature a new and more powerful computer chip: the Tegra K1, developed by Nvidia. Then he invited Nvidia CEO JenHsun Huang onstage to bask in the applause. Stadler’s message: Nvidia was a partner in Audi’s development of driverless cars.
company’s decision to share sensitive information with Ford. He said BorgWarner’s senior management met once a month with top Ford executives. The execs dispensed with the usual PowerPoint presentations and staff support. Instead, both companies listed on a sheet of paper the problems that threatened the launch. “These meetings were brutally honest,” Verrier said. “They were very, very intense.” The executives — a half-dozen or so — were empowered to make decisions, Verrier said. The companies shared more information than they normally would, and that kept the program on track. Verrier shared that information because he was confident Ford wouldn’t misuse it. According to a supplier survey published in May, GM trailed rivals in the trust category. Last year, consultant Planning Perspectives Inc. asked North American suppliers whether they were willing to share new technology with automakers without a purchase order. Ford ranked third, behind Honda and Toyota. GM ranked fifth out of six automakers studied. Lieblein’s revisions of GM’s terms and conditions will help change that situation, said Planning Perspectives president John Henke, who conducted the survey. Said Henke: “This is one of the most profound things that GM has done in my experience.” ■ David Sedgwick is a special correspondent for Automotive News, a sister publication of Crain’s Cleveland Business.
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General Motors has acknowledged mistakes in its negotiations with suppliers of cutting-edge technology.
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Who do you trust? Another case of automaker-supplier cooperation is the 2014 Jeep Cherokee’s all-wheel-drive system. Years ago, before the new Cherokee was on the drawing board, American Axle & Manufacturing Inc. pitched an all-wheel-drive technology to Chrysler that could switch between front-wheel drive and all-wheel drive by engaging or disengaging the driveshaft from the transmission to the rear differential. That ability would allow the Cherokee to perform like an SUV off-road while achieving the fuel economy of a hatchback in regular driving. Chrysler was interested. American Axle began working on the Cherokee’s all-wheel-drive system before Chrysler gave it a production contract. That wouldn’t have happened if the two companies lacked trust. Ford purchasing chief Hau ThaiTang discussed the need for collaboration with suppliers in an October session with reporters. Asked about Ford’s standard contract, he said the company revised it in 2004 after lengthy consultations with key suppliers. Ford’s efforts paid dividends when it awarded BorgWarner Inc. a contract to produce turbochargers for EcoBoost engines. Last month at the Automotive News World Congress, BorgWarner CEO James Verrier described his
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PUBLISHER/EDITORIAL DIRECTOR:
John Campanelli (jcampanelli@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Story time
W
hen Ohioans elected John Kasich and Mary Taylor in November 2010, they put their faith in these leaders to fix a state that was on the brink of financial ruin and had suffered massive job losses over the previous four years. Today, thanks in large part to the leadership of Governor Kasich and Lt. Governor Taylor, our state is stronger and Ohioans from every walk of life see a brighter future with more opportunity. So begins a page titled “Ohio’s Comeback Story” on the Kasich Taylor for Ohio campaign web site. Kasich and Taylor are running for re-election this year. And, with the governor set to give his State of the State address this week in Medina, it’s likely he’ll use the speech to build on the “comeback story” theme he has touted during his first term in office. But how much of a comeback has it been? Is the state really stronger? And do Ohioans from every walk of life truly see a brighter future with more opportunity? If strength is gauged by how hard it is for a state government to balance its budget, then Ohio is in far better shape than it was in early 2011, when it was staring at an $8 billion general fund deficit. The Kasich team in the state’s latest two-year budget matched revenue with expenses without much of a sweat, even with cuts in personal and small business taxes. However, if the strength of a state is defined by how much its cities and school districts struggle to make ends meet, then Ohio still is hurting from the severe recession that decimated their finances more than five years ago. The state added to their suffering when Kasich alleviated billions of dollars of state budget-balancing pain in 2011 by reducing the aid the state traditionally extended to local governments and schools. Many still haven’t regained the solid footing they were on before the downturn. As for Ohio being the land of opportunity for all its citizens, job statistics show it is a dubious claim. When Kasich took office in January 2011, Ohio’s unemployment rate was 9.0%. In December 2013, it was an estimated 7.2% — a definite improvement, and far better than a jobless rate that exceeded 10% from May 2009 to May 2010. However, dig deeper into the job numbers and the “comeback” doesn’t look quite as good. If anything, it seems as though the state’s economy has been sputtering over the last 12 months. Consider that the number of employed Ohioans in December 2013 was estimated at 5,322,271. That figure is only 29,000, or 0.5%, higher than the number of people who were employed in January 2011, and is nearly 22,000 lower than the number of people employed in December 2012, when the jobless rate was 6.7%. The primary reason the jobless rate is down since the start of 2011 is because the number of people looking for work fell by 82,000 over the first three years of Kasich’s term. That’s not a sign of people seeing more opportunity; it’s an indication that more people may have given up trying to find work. Comeback story or so much political propaganda? Ohio voters ultimately will be the judge this fall.
FROM THE PUBLISHER
Basics, not boasts, may win a convention crat, guaranteeing victory for the rival arlier this month, Joe Namath party — if the convention comes to Censhowed up at the Super Bowl in a tral Ohio. ridiculous fur coat. (Someone on Representatives from Las Twitter implied the Vegas were also in WashingHall of Fame QB had killed JOHN ton; they set up free Wi-Fi and Lassie). It was pure Namath and CAMPANELLI two open bars for RNC members. Coleman didn’t blink. probably the only highlight “Here’s how it works,” he from the game. Yet it was said, lifting Sin City’s motto. hardly the most Broadway “What happens in Columbus, Joe-esque moment of 2014. ends up in the White House.” That honor belongs to ColumI think it’s wonderful that bus Mayor Michael Coleman. Coleman was mature enough Coleman was in Washingto put aside partisanship; ton last month hobnobbing 40,000 visitors and $400 milwith Republican National lion in economic impact tend Committee members who had to increase the objectivity of any mayor. gathered to choose a site-selection committee for the GOP’s 2016 convention. I also enjoy the public cheerleading. While addressing the group, the mayor We’re going to see more of it, too. channeled Namath, circa 1969. Cities that want to host the convention “I have two guarantees,” Coleman said. need to have their bids into the RNC this “If you have a Republican National Conweek. Besides Columbus and Vegas, vention in the city of Columbus, I guaranDenver, Kansas City and Cincinnati are tee you it will be your best convention expected to be in the mix. ever. Second, if you have the Republican And, of course, Cleveland. National Convention in the city of We were finalists to host the GOP conColumbus, you will win the state of Ohio.” vention in 2008 and the Democrats’ It must have been a remarkable scene: shindig in 2012. This go-round is differthe mayor of Ohio’s largest city, a Demoent: Cleveland has a new convention
E
center, a new casino, more dining and entertainment options and literally thousands more hotel rooms — roughly 5,000 in downtown alone by the summer of 2016. And that’s where this competition — and the coming contest to land the Democratic convention — will be won or lost. Because aside from the free booze and gift bags, convention-wooing is pretty vanilla. I envision lots of PowerPoint presentations about hotel space and concentric circles of walkability. Coleman’s guarantee means nothing. There is little evidence the location of a convention affects the general election. In 2012, when the Republicans met in Tampa, Romney lost Florida. The Dems met in Charlotte and lost North Carolina. This, like politics itself, will come down to a sales job, and Cleveland’s softsell approach can work. If the Republicans go to Columbus, Coleman and his guarantee may become part of the story. If they choose Vegas, Sin City becomes part of the narrative. If they choose Cleveland, the media focuses on their message and candidate. As long as Clint Eastwood stays home. ■
TALK ON THE WEB Re: Coke’s local logo ■ Tell us who the employee was who won the Cleveland Coca-Cola Bottling Co. design contest! It’s a great logo. — Rosann Jones (Editor’s note: Bryan Arborgast developed the idea, and Coca-Cola enhanced it to the approved logo.)
Re: Insurance enrollment surge ■ The handwriting is on the wall on this. There will be fewer healthy young people paying for insurance than they want. There will be fewer paying premiums for plans out of pocket than the advocates promised. Payments coming from other than the government share will be skipped more often than predicted. And the program will cost far more than the “projections” told us. We can just pay the bill and shut up
Reader responses to stories and blogs that appeared on: www.crainscleveland.com
about it as the program is here to stay. — soccerfaynes
Re: Cosmax expansion in Solon ■ Absolutely great news as northeast Ohio proves to be a great place to live and work! — 175368
POLL POSITIONS If a friend from out of town was considering a job offer in Cleveland, what would you tell him or her about the city? It's a great place. Take the job without reservations.
63.6% It's OK. As long as the job is good, you'll be fine.
Re: Frontier Airlines adds more Cleveland flights ■ I knew if Cleveland could rid itself of the unfriendly skies of United Airlines, that more and better service would be provided by more friendly airlines. — Top Gun See WEB Page 11
30.7% It's better to look elsewhere
5.7% Vote in the poll each week at CrainsCleveland.com.
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PERSONAL VIEW
Volunteering your services helps Cleveland become a better place By KEVIN GOODMAN
The national media frequently rank Cleveland and Northeast Ohio at or near the top of various notable lists. Increasingly, some of those lists illuminate glaring disparities about our area. The ones that keep coming up seemingly in the negative are centered on our poverty level. Certainly, pockets of our metropolitan areas are more than 30% comprised of residents living at or below poverty levels. Each day, one in five children faces hunger; one in six is hungry as you read this. Where we fall on this list should inspire rather than discourage us. A line that reminds me of the resiliency of the human spirit and the amazing capacity to begin again is, “He who falls lower can climb the highest for he starts from lower down.� This resonates with me when I think of how business can both benefit and serve the part of its work force that is suffering. During the 1990s, I volunteered for five consecutive years at the bread line at St. Malachi’s in Cleveland. I spent practically every Wednesday from noon to 3 p.m. there, even sleeping one Saturday night at the hospice to relieve caregivers. I learned many life lessons while serving there, most of which were taught by Father Paul Hritz. I was honored and privileged in that time to have served under his guidance in the bread line, at the Monday night meal, the clothing center, the shower program for the homeless, the detox center, and Malachi House. “The persons we serve at Malachi House are not patients, they are residents,� Father Hritz would say. This helped remind and affirm to me the idea to know whom you serve in life, and to hold dignity and
Kevin Goodman is managing director and partner with BlueBridge Networks, a data center business based in downtown Cleveland. respect high for all. Yet another big one was, “You are not serving and feeding, you are being fed. You are being served.� This latter lesson was hard learned one day, when I asked a man if he wanted coffee with his sandwich at the bread line. He said, “Yes.� I handed him the steaming hot coffee, and he exclaimed, “This is cold,� and threw it in my face. It was indeed hot, and I came out the door and scuffled with him. About a year later, the same thing happened. But as a result of feeding and caring for others over that time and reflecting on Father Hritz’s words, I handed the gentleman another cup, wished him well and cleaned myself up. The volunteer work was indeed serving and changing me. There was an amazing reciprocity in the seeming “giving.� It is important for a company, no matter its size, to encourage all employees to volunteer as a way of supporting the community. Remember, small and large contributions of time, talent and treasure add to the whole. Whatever a corporation or institution has to give counts more than the end result. The effort is galvanized in a chain link among persons. It is important to note that whatever is attempted helps to set a tone in the office. Ordinary efforts over time begin to uphold a legacy of giving and reciprocity while reminding employees that what they do matters and makes a difference and impacts on the greater good of a community. That adds up to job satisfaction. This can prove to be a terrific tool to both attract and
retain human resources. Our legacy as a city for those who care to admit it is that many of our citizens who came here did so because it was not going well where they had come from — thanks to famine, persecution or limited economic opportunity. I suspect it is a reason we are one of the highest charitable giving cities per capita. Our United Way is one of the most efficient and prolific in the country and the world, as are our various Dioceses and the Jewish Community Federation. The doors of our city remain open, and we remain a city that welcomes all. A young Northeast Ohio leader I strongly respect, Jose C. Feliciano Jr., the commissioner with the Ohio Commission on Hispanic/Latino Affairs, said, “If we are only as great as our weakest link, then we have some work to do as a region. We can either ignore or hope it will somehow go away or we can use this as an opportunity to try and change lives. Everyone needs to recognize that what happens in East Cleveland and other areas impacts all of us and prevents us from moving forward as a region. “I know this task is a massive undertaking, but this is why we can only do this together, to move our region forward. For these reasons, this quote from Roberto Clemente is a guiding principle for me: ‘Any time you have an opportunity to make a difference in this world and you don’t, then you are wasting your time on Earth.’ â€? That is why many of us remain optimistic and committed to serving our community and helping making Cleveland a better place. Despite any evidence to the contrary, we know better and can do better. We are a people with a collective resilient DNA. â–
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Re: Dubious LinkedIn profiles ■There are some great pointers in Chuck Soder’s Feb. 10 story headlined, “’Cal’ and friends seem to have a lot in common.� Everyone should read it. However, unlike the article suggests, I accept 99% of my invites. Why? Because most of the time they want access to my connections and the folks you accept tend to appreciate it and return the favor when you ask them to review
something — an article for example. — Mark Contorno
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Re: Dots bankruptcy
■Zzzzzzz. Predictable. Same old faces. There must be more interesting folks doing great things, Crain’s. — Larry DeAngelis
■I wish Bob Glick would buy back the business that was so successful when he left. It was in great shape, otherwise Irving Place Capital would not have bought it from him in 2011. I miss Dots the way it was when I worked there. I miss everyone so much that was there “under the old management.� — Shellie
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GOING PLACES JOB CHANGES ARCHITECTURE VAN AUKEN AKINS ARCHITECTS LLC: Joshua Haney to designer; Christina Schmitz to project architect; Eva Gladly to interior designer. Pauley
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INSURANCE ALEX N. SILL CO.: Ryan Wittensoldner to general adjuster; Jeremy Geier to contents appraiser.
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C O N G R AT U L AT I O N S Newly elected officers and board members Mechanical Contractors’ Association of Cleveland, Inc.
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President: Vice President: Treasurer: Chairman: Board Member: Board Member: Board Member: Board Member: Board Member: Board Member: Board Member: Executive Director:
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TUCKER ELLIS LLP: M. Patricia Oliver to partner and financial services chair.
marketing and professional services; Ken Mencini to director of finance. SEAMAN CORP.: John Crum to president and COO.
MARKETING THE KARCHER GROUP: Darla Brown to content strategist.
NONPROFIT NOPEC INC.: Joseph Migliorini to chairman.
REAL ESTATE CBRE INC.: Preston Hoge to associate. KELLER WILLIAMS REALTY: John Corral to sales associate, Chervenic Realty Team.
SERVICE FREEDONIA GROUP: Dan Meges to business development manager, custom research.
TECHNOLOGY
KING NUT COS.: Michael Smith to managing director, manufacturing and plant operations.
MCPC: Jaymes Johnson and Chris Cummings to OSC analysts I; Jonathan Hrubik to onsite network administrator; Kevin Werthmuller to technical recruiter; Al Vasek to co-director managed services; Darryl Seguin to customer on-premise support Citrix engineer; Jared Dusky to desktop support technician.
PMI INDUSTRIES INC.: Cheryl Doell to vice president, office operations; Timothy Fiala to vice president, supply chain and logistics; Larry Taylor to vice president, sales
PARAGON CONSULTING INC.: Jesse Snyder to quality assurance analyst; John Hochberg to project manager; Elizabeth Christ to developer.
COATINGS RESEARCH GROUP INC.: Richard Scott to executive director.
BOARDS CLEVELAND PLUMBING CONTRACTORS’ ASSOCIATION INC.: John C. Marotta (Ridge Plumbing Inc.) to president; James Roddy Jr. to vice president; Daniel Miller to treasurer; Scott Wallenstein to chairman; Thomas J. Wanner to executive director. MECHANICAL CONTRACTORS’ ASSOCIATION OF CLEVELAND INC.: Michael Brandt (Smith & Oby Co.) to president; Annie Sterle to vice president; Richard Bukovec to treasurer; Geoff Engel to chairman; Thomas J. Wanner to executive director. NORTHEAST OHIO PUBLIC ENERGY COUNCIL: Ron McVoy to chairman; Georgine Welo to vice chair.
AWARDS INTERNATIONAL WINDOW CLEANING ASSOCIATION: Micah Johnson (SBS Window Cleaning) received the 2013 Window Cleaner of the Year Award.
Send information for Going Places to dhillyer@crain.com.
Carfax: Millions of online car buyers weren’t aware of unfixed recalls in ’13 By TIRE BUSINESS
Carfax, the purveyor of vehicle history reports, claims online shoppers may have unknowingly purchased millions of used cars with unfixed recalls in 2013. The company’s annual research on the issue showed more than 3.5 million cars were listed for sale online with an open safety recall. Ohio, Texas, California, Missouri and Florida led the nation with the most recalled cars for sale online last year. While every state has unfixed recalled cars for sale, nearly one-third of the total were in just those five states, according to the company. “Open recalls are still a major
“Open recalls are still a major public safety issue. In fact, our research indicates that more than one in 10 used cars for sale online has an open recall.” – Larry Gamache, communications director, Carfax public safety issue,” said Larry Gamache, communications director at Carfax. “In fact, our research indicates that more than one in 10 used cars for sale online has an open recall. “It’s another reminder that consumers, especially those shopping
online, need to know as much as possible about a used car before they buy,” Gamache said. “This includes if an open recall or other potentially dangerous issue exists. It helps make our roads safer for everyone.” VIN-specific open recall information is reported to Carfax directly from the auto manufacturers and is included on its Carfax Reports, the company said. Carfax, which was acquired by IHS Inc. last year, said it maintains a vehicle history database comprising more than 12 billion vehicle records from more than 81,000 sources across North America. ■ Tire Business is a sister publication of Crain’s Cleveland Business.
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INSIDE
17 CREDIT UNION BRANCHES OUT.
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HIGHER EDUCATION Colleges outline diversity programs By CHRISSY KADLECK clbfreelancer@crain.com
C
uyahoga Community College announced last month that it plans to double the number of underrepresented minority students graduating with science, technology, engineering and math — or STEM — degrees during the next five years. Case Western Reserve University’s Weatherhead School of Management is spearheading a first-ofits-kind Leadership Lab for Women in STEM — a six-day executive education program that begins in March — to help women succeed and remain in male-dominated, technology-driven fields.
INSIDE: Maintaining diversity can be challenging for law schools. Page 16
SHARON SCHNALL
During her job interview with Lake Erie College president Michael Victor, Jana Holwick was very forthright about her aspirations. Holwick is now vice president for academic affairs and chief academic officer at the private Painesville college.
CHARTING A PATH TO THE PRESIDENCY Road to leading an academic institution is more diverse and challenging than ever By SHARON SCHNALL clbfreelancer@crain.com
J
ana Holwick remembers her job interview with Michael Victor, president of Lake Erie College. The position she was being considered for was vice president for finance and administration/chief financial officer. During that late 2006 interview, she recalls being asked about her professional goals. “ ‘I want your job,’ ” she said to Victor. “ ‘I don’t specifically want your job here, but I want to be a college president.’ ” “He (Victor) has known from the very beginning where I want to be,” said Holwick, now vice president for academic affairs and chief academic officer at the private Painesville college.
“I think it’s healthy for the vice president to declare their goals and the president to embrace the goals. You have to have that type of trust.” – Michael Victor, president, Lake Erie College Is that candor regarding aspirations toward a college presidency unusual? Yes, said college presidents interviewed for this article. “It depends upon the relationship between the president and the vice president,” Victor said. “I think it’s healthy for the vice president to declare their goals and the president to embrace the goals. You have to have that type of trust.”
INSIDE: Mindset has changed for those in top officer positions at colleges and universities. Page 14
Cleveland State University, meanwhile, has a new program called Operation STEM, a National Science Foundation-funded program that started in summer 2013 that helps underrepresented minorities and first-generation students who are challenged by math. These Northeast Ohio institutions are among many in the area and nationally that are actively addressing the diversity divide in the STEM and legal fields through structured programming, grant funding and focused outreach efforts. The aim: to right the lopsided reality of too few underrepresented minorities and women in the classroom and ultimately in the work force.
Statewide effort
Presidential aspirations and mentorship toward that goal have taken place at area institutions. “Two members of my staff are now college presidents; I think I was a help in both instances,” said Andrew Roth, outgoing president of Notre Dame College of South Euclid. Roth was referring to T.J. Arant, president of Friends University of Wichita, Kan., formerly the vice president for academic affairs at Notre Dame; and most recently, David Armstrong, president of Thomas More College of Crestview Hills, Ky., who had been vice president of development and general counsel at Notre Dame before assuming the presidential post last July.
Belinda S. Miles, provost and executive vice president of academic and student affairs at Tri-C, said the college received $241,264 from Ohio State University to participate in the National Science Foundation-funded Louis Stokes Alliances for Minority Participation. The statewide effort involves 10 other Ohio colleges, including CSU, with the objective being to encourage minority students to study and earn degrees in STEM fields. “We have 3,662 enrolled in STEM programs as of fall of 2013, and we know that 1,254, or 34%, are underrepresented minorities. We work very closely with many school districts — the largest single one is Cleveland Municipal School District — so we have a good pipeline of potential students who would qualify for the opportunities that are available through this type of programming,” Miles said.
See PATH Page 15
See DIVERSITY Page 16
“We can’t be naïve that it is the case in every situation,” he added.
Not just blowing smoke
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Majority of university officers don’t strive for top job By SHARON SCHNALL clbfreelancer@crain.com
“My theory is as they watched the president, seeing the increasing complexity of the president’s job, a lot of provosts have decided it is not a position for them.”
I
n the past, being a chief academic officer, provost or vice president could help a person realize the professional goal of becoming a college or university president. The position still offers strategic positioning toward higher aspirations, but what has changed is the mindset of those employed in these top officer positions. Increasingly chief academic officers, provosts and their officer counterparts are content to serve their presidents and retire without becoming president. American Council on Education 2009 data on the presidency shows that the most common path to the presidency for first-time presidents is through the chief academic officer position. However, only 30% of chief academic officers (and other top academic officers surveyed) intend to seek a presidency at some time in the future, and 25% are undecided about their plans, said Jim Sirianni, director of the executive leadership group at ACE, in an emailed response. The living-in-a-fishbowl metaphor, while oft-used, may explain why some top-level administrators are not eager to become president. “To be a president, you have to be 40 different people,” said Michael Victor, president of Lake Erie College, describing how the president’s day may begin at a breakfast diner, engaging with a potential donor, and end
– Ronald Berkman president, Cleveland State University
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attending a black tie affair at the Union Club of Cleveland. “You have to be different people at different times and be confident in all settings,” he said. “… A lot of people don’t want to be on call 24/7; a lot of people don’t want to
make themselves and their families public figures.” Presidential skill sets involve cultivating and managing external relationships; doing more with less funding; real estate, construction and development
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expertise; working with deans, athletic directors and building and grounds managers all in the same day; and responding to increasing board oversight and involvement while demonstrating a strong understanding of academics,
enrollment and fundraising. “My theory is as they watched the president, seeing the increasing complexity of the president’s job, a lot of provosts have decided it is not a position for them,” said Ronald Berkman, president of Cleveland State University. While provost at Cleveland State, Geoffrey Mearns said he was not looking to become a president, but a persistent search firm representative helped changed his mind. Now president of Northern Kentucky University, Mearns acknowledged the added challenges of being president, particularly making decisions that affect so many lives and activities — but with the position he said also come rewards. “Provosts are relatively anonymous,” he said. “There isn’t the same level of scrutiny both on and off campus … (As a president) I’ve tried to be sensitive to it, but not imprisoned by it.” ■
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Path: ‘If done right’ succession planning can prove beneficial continued from PAGE 13
The mentorship dynamic between president and officer also contributed to the 2012 appointment of Geoffrey Mearns, former Cleveland State University provost and senior vice president of academic affairs, to president of Northern Kentucky University near Cincinnati. Mearns cited former Cleveland State president Michael Schwartz’s “non-traditional choice” of hiring him, a then BakerHostetler law partner, as law school dean, and the current president Ronald Berkman later targeting him as interim provost and eventually provost at Cleveland State. For Holwick, mentorship and exposure to a broader range of professional experiences occurred because of explicitly stated intentions, which offered her the opportunity to represent the college and the president on a county, state and national level. “It’s knowing what you’re aspiring to and recognizing the need for mentoring to make it happen,” she said. “It’s becoming more and more prevalent. It’s a smart way for higher education to move forward … Succession planning if done right is about the kind of mentoring that I have experienced at this institution.” The likely outcome, however, of this academia-specific succession process is that the presidential
“The breadth of the responsibility is the bigger challenge — the scope goes up another level.” – Geoffrey Mearns president, Northern Kentucky University and former Cleveland State provost aspirant will depart to another institution away from the one that provided the mentoring and training. The substantial investment in that administrator — albeit one who will probably leave — is worth it, Roth said. “The next person whom you recruit and hire sees what you did (for the past provost, chief academic officer or vice president),” he said. “It’s not just blowing smoke.”
Most likely to ascend In 2011, 34% of all (surveyed) presidents had most recently served as a chief academic officer, provost or other top academic officer; another 23% were previously senior executives within higher education; 20% had served as presidents at another
institution; and another 20% were hired from outside academia, according to “The American College President Study,” a 2012 publication of the American Council on Education, a Washington, D.C.-based association representing U.S. college and university presidents. “The path is much more diverse and open than it used to be,” Berkman said. “The traditional path to take to the presidency used to be through the provost position.” Now the path can also move through the various vice presidential posts including finance, advancement, student affairs and research, he said. Additionally, because of the “strong political role” of the president’s position and increasingly complex funding and revenue models, he said, “there is clearly more receptivity to looking at people outside academia.” Still, when asked how he would advise someone aspiring to the presidency, Berkman said, “I would counsel them to look for a provost position.”
A few surprises The provost, chief academic officer and vice president positions give presidential aspirants added responsibility and afford a sneak preview of the presidency through close contact
with the current president. “I have certainly taken every opportunity to learn about every area of the institution, even the ones that didn’t report to me,” Holwick said. “I have made a conscious effort to be out in the community. I made conscious choices of where I nationally would serve.” Presidential aspirants prepare; presidents mentor; and college boards select the presidential candidate offering the best fit for an institution. Yet more learning and a few surprises will follow. A 2011 American Council on Education brief, titled “Presidential Leadership in an Age of Transition,” indicates that “new presidents (surveyed) report being unprepared for some key tasks including fundraising, risk management, capital improvements, budgeting and entrepreneurial ventures … All presidents report that the responsibilities on which they spend the most time are fundraising, budgeting, community relations and planning.” “Fundraising is probably the biggest piece left for me,” Holwick said. “Unless you’re the VP for institutional advancement or the president, you’re not in the position of asking that final ask for a gift.” Fundraising traditionally is a key skill not acquired in the path to the presidency, Berkman said. “Entering presidents are very
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“A lot of people want to equate it to being a CEO. It’s more akin to being a mayor of a community.” – Andrew Roth, president, Notre Dame College often assisted in learning those skills. A VP of advancement can help the president acquire the skills and blossom as a fundraiser,” he said. For his part, Mearns said his experience was “relatively thin” regarding exposure to undergraduate activities and experience with externally sponsored research initiatives. Beyond that was not being “fully prepared for the broad scope of the job.” “The breadth of the responsibility is the bigger challenge — the scope goes up another level,” he said. Being a president is something aspirants think they understand but only truly understand after assuming the actual post, Roth said. “A lot of people want to equate it to being a CEO,” he said. “It’s more akin to being a mayor of a community.” ■
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Diversity: Focus is on attracting women, minorities continued from PAGE 13
Tri-C’s STEM certification programs — computer maintenance tech; automotive technology; and environmental health and safety — have the most underrepresented minorities at 41% of students, she noted. With the funding, Tri-C expects to identify and attract 40 to 48 students who fall in the category of underrepresented minority (African-American, Hispanic-American and Native American) to one of six areas of study: automotive technology; construction engineering tech; electrical engineering tech; environmental health and safety tech; manufacturing and mechanical engineering tech; and information technology. The students, who will receive a $1,000 stipend per semester, must agree to participate in project interventions and activities, including advisement and orientation; mentoring; supplemental education/tutoring; a summer bridge program; and undergraduate research experiences. “There are families where this is a great opportunity to move out of lower income status into jobs that can help them become very productive. There are jobs available that are going unfilled in these STEM areas and in emerging technology,” Miles said. “We know that we can create pathways of possibilities for students who really may not have heard of or understand what some of the possibilities are within the STEM-related fields.”
Nurturing diversity For many students, they recognize what the letters represent in the STEM acronym but they don’t understand the career opportunities that come along with all that “hard work in science and math,” said Rosa Rivera-Hainaj, dean of the science and mathematics division at Lorain County Community College. “There is a disconnect for people, and this would be a great area where we could focus some of the resources to help the public understand what you could do with a degree in science or engineering,” RiveraHainaj said. “The reality with STEM is you
need to start nurturing those minds since elementary school and you need to engage them in STEM. If you try to do it at the high school level or college level, you have lost them by then.” There are many programs and outreach to LCCC students and the surrounding community to engage them in what they call STEMM — the added ‘M’ stands for medicine. In April, the college will host a STEMM day for high school students at the campus. “We don’t have a dedicated diversity program for STEMM per se but we have a very diverse community, and by default, students are a reflection of our community,” she said. For instance, African-Americans make up about 8.5% of Lorain County’s population and 11.4% of LCCC’s STEMM enrollment. Hispanics account for 8.7% of the population, and 5.1% of STEMM enrollment. “Traditionally, when you talked about diversity you were mostly talking about ethnic backgrounds, but the National Science Foundation opened up that definition a long time ago to include economical background and first-generation college students,” she said. At CSU’s Washkewicz College of Engineering there is Fenn Academy, a consortium among the college, local school districts and industry partners that collaborates on educational activities designed to encourage high school students — and young women in particular — to pursue engineering as a field of study and career, said Anette Karlsson, dean of the college. “We really engage the students in engineering projects and show them what engineers actually do,” she said.
Leaky pipeline From developmental math programs and undergraduate mentoring to on-campus STEM-focused high schools and partnerships that promote urban health care, CSU has a myriad of programs geared toward attracting and supporting underrepresented minorities in STEM-career aspirations, said Dr. Meredith Bond, dean of CSU’s College of Sciences and Health Professions.
Of undergraduates studying in her department, the highest minority enrollments can be found in psychology, health science and biology — areas one might perceive as “softer sciences” than chemistry, math or physics, she said. She said that in the College of Sciences and Health Professions, 25% of undergraduate students are underrepresented minorities, while about 11% of graduate students are underrepresented minorities. “We want to address issues of that sort of leaky pipeline,” Bond said. Kathleen Buse, adjunct professor at Case Western Reserve University’s Weatherhead School of Management and one of three faculty members spearheading the business school’s Leadership Lab for Women in STEM, had a long career in engineering before going back to earn her Ph.D. “What I found in my own career was that women were working in the industry and they wouldn’t stay,” said Buse, adding that about 20% of engineering graduates are women but only 10% to 11% of engineers in the work force are women. “Twice as many women leave engineering as a career as opposed to men. If we understand the characteristics of the women who persist in these male-dominated, technology-driven fields then we can give women skills so they can be successful in their careers.” Buse, who also is the faculty adviser for the Society of Women Engineers and works with the Women in Science and Engineering Roundtable group on campus, said she and her colleagues designed the Leadership Lab program for industry partners who want to retain women in their ranks. “This is a Cleveland program for women created by women,” she said. “We’re aiming for 30 women and we’re about halfway there in our enrollment. We are working with companies in the area making them aware of the program because it’s new and it’s very unique; no one else has anything like this in the country. The opportunity is now for us as women to step up in the STEM professions and really take a stronger role and to stay in our careers.” ■
‘NO SILVER BULLETS’ The legal field increasingly is becoming globalized, and Case Western Reserve University’s School of Law and its LLM program (Master of Laws) program has been attracting students from around the globe for 23 years. The one-year program is designed to give foreign legal students an extensive introduction to U.S. law, processes and legal thinking. While 85% of students return to their home country, the diversity is beneficial for all students on campus, said Lewis R. Katz, director of foreign graduate studies at CWRU. His current class — one of the largest with more than 80 students — represents 15 countries: Burma, China, India, Iraq, Ireland, South Korea, Kuwait, Libya, Russia, Taiwan, Thailand, Turkey, UAE, Uganda and Vietnam. “In addition, the law school has a growing number of foreign students who are coming here for a traditional three-year program — I suspect close to 10% of our incoming JD class are foreigners,” he said. Despite a 54% decline in minority applications since 2009, CSU’s Cleveland-Marshall College of Law has had a 20% increase in the percentage of enrolled African-Americans, Hispanics, Asians and Native Americans, which makes up slightly more than 16% of the student body, according to dean Craig Boise. This is against the backdrop of double-digit declines in applications overall and a general decline in women pursuing legal degrees. A rough economy and brutal job market are partly to blame for the declines, Boise said, and the fact that “law schools have been turning out twice as many graduates as there are jobs for quite some time. “Trying to maintain diversity in this type of environment is difficult. There are no silver bullets for fixing this. What it does take is a lot of attention and effort and a lot of outreach and a lot of phone conversations with prospective minority college students,” he said, adding that diversity is critically important in the legal field. “In law school we teach people how to practice law and we help them represent folks who need legal counsel,” he said. “They eventually become the people who shape the law; it’s really important that that be informed by a broad spectrum of perspectives.” — Chrissy Kadleck
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On-campus credit union makes academic and financial sense Making it work
By KIMBERLY BONVISSUTO clbfreelancer@crain.com
T
imes have been tough for a lot of people in recent years. And for those lacking financial literacy, the downturn in the economy was devastating. That’s the reason Cardinal Community Credit Union worked to open credit union branches at Lake Catholic High School in 2012 and Lakeland Community College campus in January. Cardinal CEO Christine Blake said the idea of opening a campusbased credit union isn’t new, but she said moreover Cardinal saw a need to educate young students on financial literacy after running focus groups out of its annual scholarship pool. Her background as a former part-time professor in Lakeland’s business department also gave her the perspective of seeing what happens to individuals who don’t have that financial literacy. “We started off at Lake Catholic with our student branch. That set the stage and helped us to see what was needed in financial literacy education and what was missing,” Blake said. “Since we saw the need in high school, we thought if this is missing here and these students graduate from high school with little knowledge, how can they be financially empowered when they get to college?” Lakeland president Morris W. Beverage Jr. said the timing was ideal as the college was in the process of bidding out its banking services. Now, Cardinal’s Lakeland branch serves as the centerpiece of the community college’s new financial literacy education program. Beverage said Cardinal will conduct free seminars on various areas of financial management and literacy for students, and Lakeland faculty will work with the credit union on developing ideas and topics for seminars. “In the course of talking further about this we discussed what it would look like and how it would
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The Cardinal Community Credit Union branch on the campus of Lakeland Community College help our students, both in terms of convenience and opportunities for financial literacy,” Beverage said, adding that the concept is “fascinating.” During Financial Awareness Week on the Lakeland campus, for example, Cardinal offered two weeks of non-credit courses that covered topics including: ■ Debit, credit and prepaid cards ■ Balancing your checking account ■ Developing smart saving habits and budgeting ■ My credit report ■ Fraud and identity theft ■ Understanding credit Some Lakeland professors are sending their students to these courses for extra credit, and the credit union is offering raffle prizes to attract interest. Each month, Cardinal will hold seminars on a featured topic, and Lakeland professors can invite the credit union into their classes for presentations. “Our end goal is financial literacy and financial independence,” Blake said. “We want to promote and cultivate positive behaviors so people are truly financially independent — and that’s what education does.”
Cardinal also is employing Lakeland students as tellers with the option of placement in other credit union departments or branches during summer months. Bijal Patel, a 38-year-old Lakeland freshman, is a part-time teller who juggles her part-time classes in business management/accounting with some additional back office work at Cardinal’s Mentor office. She also works part-time in Lakeland’s business department. Patel has a 10-year banking career background and owned her own business before life changes led her to Lakeland to focus on a different business career. She heard about employment opportunities at Cardinal through a business class and found that working for a smaller credit union gives her the opportunity to mingle with top management while learning all aspects of the business. She said a business degree and her experience with the company as a student will only help her in the future. “I would love to advance in that company, to manage or supervise for Cardinal,” Patel said, adding that she is interested in learning more about Cardinal’s seminars from a business perspective — how they will impact students and how the credit union represents its products and how to use them. Blake said she hopes to eventually expand the campus program, using Lakeland and Lake Catholic as a model for other high schools and community colleges. ■
Cardinal Community Credit Union branch manager Dedric D. Bonner speaks with Lakeland Community College student teller Tina Louise Antonelli, right. In the background is student teller Michelle Murawski.
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Schools working to stand out in crowded market marketing. Lakeland Community College’s annual advertising budget is $360,000, about one-half of 1% of the college’s annual budget, and the school uses local cable, radio, print, online and outdoor advertising to reach its target audiences, according to spokeswoman Jessica Novak.
Study shows the Cleveland/Akron area ranks seventh in the nation in marketing money spent by colleges and universities By DANIEL J. McGRAW clbfreelancer@crain.com
L
ike everything in the economics of higher education, marketing and advertising are in a state of flux among college and universities in some respects. The main problem for these institutions is to figure out to whom they should be marketing: High school juniors? Their parents? Career changers? The cost conscious? All of the above? “The real test for colleges and universities right now is to find ways in which they can distinguish themselves from other schools when they are trying to attract students,” said Rob Spademan, assistant vice president for marketing at Cleveland State University. “But there is a balancing act,” Spademan said. “In some respects, we are all fighting for the same student. But we also cannot be all things to all people, and we have to emphasize our differences. And sometimes we find ourselves marketing to a kid and their parents and to both as students sometimes.” Spending on higher education marketing has remained fairly steady over the last 10 years, usually less than 1% of a school’s annual budget. But huge spending by for-profit schools, such as the University of Phoenix, has changed some of the thinking. A letter in the mail doesn’t do it anymore. So
many schools are mixing traditional media such as TV, radio and print, with online placement, social media and event sponsorship. The Cleveland/Akron market is particularly competitive, given the large number of big public universities as well as the many smaller private schools in the market. In a recent study by Kantar Media, the Cleveland market ranked seventh nationally in higher education marketing spending, with $11.5 million spent from January through September 2013. In that same period, ad buys nationally for higher education totaled $918 million. While that number has stayed fairly steady through the last decade, schools are changing how they spend, using less of the more costly traditional media buys and substituting them with less expensive online placements and social media. Still, traditional media is being used. The University of Akron has been running a TV spot, which has appeared locally on WKYC-TV and WJW-TV during both the Olympics and Super Bowl. In all, it will air more than 1,100 times. It is part of a $205,000 ad campaign featuring retiring president Luis Proenza that includes billboards and radio spots. “Particularly because of the high visibility of the Super Bowl commercials, the campaign was designed to reach a wide audience, both prospective students and their families, and parents as well
You get what you pay for
The University of Akron spent $205,000 on an ad campaign featuring retiring president Luis Proenza. The commercial appeared locally during the Olympics and Super Bowl. as potential adult students,” said Wayne Hill, chief marketing officer for the University of Akron. “Research shows that parents have significant influence in the college decision-making process, so reaching them in this way is part of our overall marketing and advertising strategies.”
Not just the big guys For the smaller private schools, the current landscape offers particular challenges. More choices means the school has to go to the prospective student, rather than the prospective students going to the school. At Baldwin Wallace University in Berea, the school has to attract undergrad and grad students, adult program participants, as well as participants for its conservatory of music. “One of our challenges is to make it known to our students and alumni that the small amount of spending we do on marketing is very important to keeping our
quality of education high,” said George T. Richard, assistant vice president and director of university relations at Baldwin Wallace. “But we also know we are in a very competitive education market in Cleveland, and that the online, forprofit schools can also take away very good students from us.” Notre Dame College has used an emphasis — and expansion — of the school’s athletic programs to help grow its student population. The South Euclid school had 894 full- and part-time students in 2003, and this year enrolled 2,270. “Because of the flexibility of audience segmentation and relatively low production costs and speed to get on air, we employ quite a bit of radio, mostly event driven and athletics,” said Brian Johnston, Notre Dame College chief communications officer. “Much of our college’s significant growth has come from athletics, and we’ve gotten good traction from advertising at local high school football, wrestling and other athletic events (signage) and on media such as (Sports Time Ohio) high school football games of the week and ESPN. … We get not only athletes, but band, color guard, choir, theater and other extracurricular-involved students.” With higher education costs rising and many prospective students looking for ways to graduate college without a huge debt, community colleges are now seeing themselves as a first-choice option and have changed their approach to
The question that is difficult to answer is whether public universities should be in the advertising game in the first place. Does the cost of advertising have value that can be seen as a worthwhile expense for an institution during times of high tuition concerns for students? “One way to consider the advertising is to realize that we reduce the amount of time and effort a family needs to spend in order to decide which institutions to consider,” said Iris Harvey, vice president of university relations for Kent State University. “Judging from the response we are seeing in enrollment increases, especially among students with great evidence of college readiness, I would say our marketing communication is a good return on the investment for the university and families who apply and enroll,” Harvey said. And it is that multi-function purpose and multi-demographic student expansion that has higher education advertising and marketing execs seeing the playing field changing continually. “University of Akron recently opened a campus in Lakewood,” said CSU’s Spademan. “The private for-profits like the University of Phoenix are on your TV everytime you turn it on. Some small private colleges are in a do-nothing-or-die position, so they are putting more into advertising and marketing as a way to possibly stay alive.” “But what is evident is that people have more choices for higher education than ever before,” Spademan said. “So it is a time of uncertainty in many areas, and that brings out competition.” ■
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Property: Building was once largest loft conversion downtown continued from PAGE 1
Although the property at 1200 W. 10th St. technically is held by a group named National Terminal Apartments LLC, its owner is Kimberly-Clark Corp. of Irving, Texas — the maker of Kleenex tissues, Huggies diapers and other personal health and hygiene products. Bob Brand, Kimberly-Clark director of external corporate communications, said the property is held in Housing Horizons LLC, its affordable housing unit, and the company wants to exit affordable housing after making such investments for 20 years. When proposed in 1995, the makeover of the National Terminal building was the largest loft conversion project undertaken to that point in downtown Cleveland, with a total development cost of $27 million. Long empty before its renovation, the building was constructed for refrigerating food in the early 1900s. Apartments were a rarity downtown in the mid-90s. Almost two decades later, the city enjoys a 95%
apartment occupancy rate and renters often compete for downtown suites even as developers work at a fevered pace to convert empty office buildings to apartments. The National Terminal building faces both West 10th and West Ninth streets, and part of it is across Main Avenue from the new Flats East Bank Neighborhood office, retail and apartment development. The property is listed with brokers Michael Barron and Dan Burkons of Marcus & Millichap’s Cleveland office. Barron said his group plans to start marketing the property formally as soon as the debt repayment plan is inked with the city. As is typical, there is no stated asking price for the property. Cuyahoga County assigns the building a market value of almost $16 million for property tax purposes.The administration of Mayor Frank Jackson is asking City Council to accept an accelerated repayment of the unpaid balance plus interest on the loans
Step: Company is selling 150 products in China continued from PAGE 5
But in 2012, the company started working toward an agreement with an online retailer in China that McDermott declined to identify, and it became important to do the testing. Many of Step2’s products, such as its children’s furniture, don’t need that certification, McDermott said, but its toys do. The certifications — safety standards that operate like Food and Drug Administration approvals in the United States — first were implemented in May 2002 and made fully effective a year later, said Susan Whitney, office director for the U.S. Commercial Service in Cleveland. The certifications have been updated over time and now include products ranging from medical devices to electric tools. The current toy-related standards were enacted in 2006.
The price of admission Securing the necessary safety certifications for any country, including China, is expensive and timeconsuming, Whitney said, so a lot of smaller companies pass. Step2 received its certification after an in-person audit by Chinese government officials of its Streetsboro and Perrysville plants, where all the toys sold in China will be made, and “a lot” of paperwork, McDermott said. The in-person audits, which took about a week and included product testing, were on the company’s dime. McDermott declined to share how much Step2 paid for the audits, but said the opportunity to sell in volume justified the work. Shipping the products to China from Ohio does increase prices for consumers in China, but Meghan Hale, Step2 director of marketing communications and licensing, doesn’t see the added cost as an issue. “This hasn’t been a deterrent,” Hale said in an email. “Quality, American-made products are very appealing to the Chinese consumer and they are willing to pay a premium for them.” Step2 has been selling in some
form in China since 1998, mainly through distributors, but the direct online business began last fall, Hale said. At present, the company is selling about 150 products in China, but the goal is to offer its entire line over time, Hale said. Step2’s marketing in China is done through online channels, McDermott said, including social media. Its marketing in the United States has more of a blend of retailer-specific marketing, TV and print advertisements and online marketing, McDermott said.
neighborhoods. Councilman Tony Brancatelli, who chairs council’s economic development committee, in an email described the proposal as “a typical early-pay plan.” He said the only major uncertainty might be how council decides to earmark the recouped money.
Owner ‘will not give it away’
STAN BULLARD
The National Terminal Warehouse Apartments building at 1200 W. 10th St. is being put up for sale. price the building fetches. Such measures have been approved for other projects in the past, partly because the proceeds allow the city to recycle the repayments as loans for other economic development projects. Maureen Harper, spokeswoman for Mayor Jackson, said the city has a deeply subordinated position behind other loans on the property. She said proceeds will be earmarked to help projects in city
extended to Kimberly-Clark to help finance the building’s conversion. The city loans originally totaled $1.5 million; the balance outstanding on the loans is $1.43 million. The loans are due at the end of 2016, according to mortgage documents on file with Cuyahoga County. Legislation clearing the way for the repayment would allow the city to recoup immediately at least 50% of the loan balance, and perhaps all the balance, depending on the
On Feb. 20, Crain’s hosted its second-annual Shale Summit at Executive Caterers at Landerhaven. This year’s half-day summit focused on environmental and land-owner issues, as well as an update on the Utica Shale and predictions about where it is headed.
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‘Made in the USA’ cache About 10% of Step2’s revenue comes from products sold outside of North America, McDermott said. Aside from strong markets in Canada and Mexico, Step2 also exports to markets that include Europe, South Korea, New Zealand and Australia. He declined to share the company’s total revenue. The approximately 1,000 employees in Step2’s two Ohio plants produce almost everything the company sells — about 90%, McDermott said. The company’s only plants are in Ohio, but it has a license agreement with a partner in South Korea and a joint venture in Saudi Arabia to make some products, Hale said. The company in 2014 expects to release about 20 new products, which is in line with its product introductions in recent years. McDermott said he expects the company’s new coupe, kitchens and basketball sets to be hits around the globe. McDermott said Step2’s customers are looking for products that can help their children’s development, a selling point that is deemed critical in China’s market. He said parents will bypass a toy’s “playability” for one that helps with development. Step2’s customers view their products as a durable good or an investment, McDermott said — they aren’t impulse buys. And many of them want a product that was made in the United States. “They do see ‘Made in the USA’ as a quality piece,” he said. ■
The large property downtown is certain to garner broad interest, real estate insiders say. Ralph McGreevy, executive vice president of the Northeast Ohio Apartment Association trade group, said he understands the building has received several looks already. When the full-court marketing press begins, McGreevy expects strong interest by multiple wellheeled apartment investors from the region and far afield. However, the challenge will be finding an offer that’s acceptable to Kimberly-Clark because the new owner will need to invest heavily in improvements to the property. “One thing is for sure,” he said. “Kimberly-Clark will not give it away. They don’t need to do so. They’re too big to sell for anything less than what they want.” ■
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1. Keynote speaker Tom Stewart kicked off the morning with his presentation titled, “Dry Hole or Gusher - Utica Update.” 2. Attendees sit on on one of the environmental panels, which included panelists Dave Hill, OOGA, Jack Shaner, Ohio Environmental Council and Bob Chase, Marietta College 3. Rob Johnson and Doug Jones with display sponsor Boiler Specialists chat with a fellow attendee. 4. Dave Couture and Burt Huber with display sponsor EMS also attended the event 5. G. Allen Brooks, luncheon keynote speaker, addresses the crowd during his presentation
Visit CrainsCleveland.com/ShaleSummit to view additional post-event coverage
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Gas, oil, tax and environment — lots to discuss at the Shale Summit
REBECCA R. MARKOVITZ PHOTOS
Above, Ohio Oil and Gas Association executive vice president Tom Stewart gave the crowd some great information on how the Utica shale play is shaping up — not to mention a primer on state severance taxes and a thorough outline of his organization’s position opposing a tax increase.
Above and right, guests network at the buffet and sponsor tables between panel discussions. Below left, David Hill, president of OOGA, Jack Shaner, of the Ohio Environmental Council, and Bob Chase, a professor of geology and petroleum engineering at Marietta College, discuss shale drilling and its impact on the environment. Below right, national oil and gas analyst G. Allen Brooks gives the lunchtime keynote about how the U.S. got to where it is today with regard to oil and gas, and how the Utica shale might fit into the national energy picture.
More than 260 people joined Crain’s at Executive Caterers at Landerhaven on Feb. 20 for the annual Crain’s Shale Summit. This year’s event featured Ohio Oil and Gas Association president David Hill and executive vice president Tom Stewart, who updated attendees on pending severance tax legislation, development of the Utica shale and environmental issues surrounding shale drilling. Other panelists spoke on the legal issues of mineral rights leasing in Ohio, the use and management of water for drilling and how the Utica might stack up against other major U.S. shale plays. As usual, the event drew an engaged audience with a lot of questions for the speakers, who spent time between sessions talking with guests.
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Programs: Colleges attempt to end low enrollment programs “I think we’ll see more of this rather than less,� said Richard Vedder, director of the Center for College Affordability and Productivity, a Washington, D.C.-based higher education think tank, and an economics professor at Ohio University. “We have turned out oodles of graduates, and there’s now a mismatch between the aspirations of students and what the labor market is demanding,� Vedder said.
Shuffling priorities It’s a delicate process and one that puts faculty on edge. Academics, for one, often are sensitive to closing a program for which they’ve devoted a lifetime of study. At Akron, the university maintains faculty won’t necessarily lose jobs and students will be given the opportunity to finish their programs if already enrolled. The University of Akron notified prospective students planning to enroll in the targeted programs and said they might not be around come next fall, which faculty union president Steve Weeks contends is like “putting the cart before the horse and basically killing the programs.� Still, Mike Sherman, the university’s provost, said there’s “no reason or very little reason for anybody to be surprised,� as these programs have struggled for years. He noted that many of these programs were told they had to turn things around if they wanted to remain on the books. “We need to use our resources in such a way that they’re used in programs that are highly productive and highly relevant,� said Sherman, also the university’s chief operating officer and a senior vice president. In the 1960s and 1970s, higher education blossomed at an incredible rate. Enrollment surged, state support ballooned and colleges and universities added scores of programs. Maintaining such a robust catalog of programs has proven difficult in recent years as employers demand graduates with technical skill sets and certain programs aren’t drawing interest like they once did. Universities — even private ones — are targeting investments in their hallmark programs and pruning those that aren’t. “It’s not quite like General Motors deciding they don’t need Pontiacs, Oldsmobiles or Saturns, but it’s difficult,� said Steve Stahl, provost at
STAY CONNECTED ■Crain’s on Twitter: @CrainsCleveland ■Crain’s on Facebook: Facebook.com/CrainsCleveland ■Crain’s daily e-newsletters: CrainsCleveland.com/register ■Newsletter schedule: Weekdays: Morning Roundup and daily headlines; Mondays: Real Estate Report; Tuesdays: Health Care Report; Wednesdays: Dealmaker Alert; Thursdays: Small Business Report; Fridays: Shale and Energy Report
Baldwin Wallace University, which phased out its bachelor’s degree in geology and evaluates all its programs on a rotating basis. In 2003, Kent State offered 290 degree programs. Today, the university offers 287. Yet while the net loss is negligible, there have been a host of changes in the university’s offerings. The school in 2012 nixed a bachelor’s degree in Latin American studies and a Ph.D program in ethnomusicology but added undergraduate programs in digital sciences and insurance studies. “In the past, you could be all things to all people,� said Todd Diacon, Kent State’s senior vice pres-
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ident and provost. “That’s nearly impossible in today’s world.� Cleveland State provost Deirdre Mageean said it was “far too early� to say which programs might be targeted as part of the university’s review process. However, she stressed the need to invest more heavily in Cleveland State’s most popular programs, including those in the health sciences and engineering.
An entrepreneurial world In July 2009, Kent State shifted its budgeting model to a decentralized approach known as responsi-
bility-centered management that essentially rewards academic units experiencing the most growth. Proponents of the budgeting system argue that it encourages entrepreneurial activity and pushes individual programs to keep their student numbers on the upswing. Diacon said that budget model has allowed the university to shy away from making sweeping cuts to its academic offerings. The University of Akron’s Sherman said he expects his institution to move toward a similar budgeting model over the next year. Sherman and other local higher education leaders say they’re also
2014
continued from PAGE 5
working on ways to track job placement among their graduates — something with which colleges and universities historically have struggled. Select academic programs often track job placement largely because of accreditation requirements, but university-wide efforts have been few and far between. Vedder of the Center for College Affordability and Productivity called higher education’s lack of effort over the years in tracking job placement a “national disgrace.â€? “I see a lot more demand for that information,â€? he said. “Some programs are going to be in trouble.â€? â–
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CRAIN’S CLEVELAND BUSINESS
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FEBRUARY 24 - MARCH 2, 2014
Cash: GCP narrowed its list of requests from 46 to nine continued from PAGE 5
The Cleveland list also includes $1 million for the last piece of the Cleveland Museum of Art’s $323 million overhaul.
Policy reversal During the recession, the state trimmed its capital spending to about $1.7 billion and limited it to construction and renovation projects sought by state agencies, colleges and universities. As part of its cuts, the state did not offer matching funds for “community projects,” such as the construction of new stadiums or improvements to handicap accessibility at small museums. The state late last year reversed that policy, perhaps only coincidentally, months before Kasich begins his re-election campaign. The governor may hope that spending on these projects is enough to offset the complaints about earlier budget decisions that cut nearly $2 billion in biennial support to local government from the state general fund budget. This capital budget likely will exceed the last biennial budget’s $1.7 billion, though it’s not known yet by how much. At least 90% of the capital budget will go to higher education capital expenditures as well as spending by state agencies. Those expenditures still should leave more than $100 million for community projects. The money comes from bonds issued by the state against its general tax revenue. The state money is typically only a portion of a project’s total cost. When the governor last fall said community projects would be eligible for state capital spending dollars, he put the task of creating wish lists in the hands of six community organizations from the state’s metropolitan areas. Proposals also may
come directly from legislators, especially from smaller counties outside the metro areas. Which projects actually will end up with state money won’t be known until the governor and the Legislature’s leaders release a final bill. Originally, that bill was planned for a February introduction. However, Michael Dittoe, spokesman for the Republican majority in the Ohio House, said last Thursday, Feb. 20, in an email that no timetable has been set. “Those details are still being worked out but I expect it will be introduced soon,” Dittoe wrote.
Eyes on the waterfront In Cleveland, after a call for proposals, Greater Cleveland Partnership winnowed a list of 46 projects to nine. “We still don’t know” how much money will be allocated, said Carol Caruso, GCP senior vice president for advocacy. “But that’s OK because they may be thinking about growing the pie.” Caruso said state officials told her to look at history in deciding for how much to seek. That look back, she said, showed Cuyahoga County securing state capital dollars in the $12 million to $19 million range. The focus for the county is on developing the waterfront to attract tourism and more broadly boost economic development. Four of the nine projects are aimed at opening the waterfront to the public. Two others help with the rebuilding of two Cleveland neighborhoods. The Cuyahoga County wish list also includes a community health center in Cleveland’s Central neighborhood, a hiking trail that ends at the lake and renovations at the former St. Luke’s Hospital in Cleveland. “We cast a very wide net,” Caru-
ment of the lakefront an easier sell to developers. The city and the county each have pledged $10 million to this plan, which has been turned down three times for a federal transportation grant.
CAPITAL BUDGET REQUESTS A look at the local projects and the amounts requested from the state: ■ Cleveland Lakefront Access: $7,000,000 ■ Flats East Gateway and Riverfront: $6,000,000 ■ Akron Global Business Accelerator: $3,700,000 ■ New Economy Neighborhood Fairfax Renaissance: $3,000,000 ■ Cascade Plaza Renovation: $2,500,000 ■ Austen BioInnovation Institute, Advanced Prototyping and Preparedness Structure: $1,500,000 ■ Cleveland Museum of Art: $1,060,522 ■ Karamu House renovation: $1,060,522 ■ Rock and Roll Hall of Fame theater renovation: $1,060,522 ■ Severance Hall Reinberger Auditorium renovation: $1,060,522 ■ Stan Hywet Hall and Gardens restoration: $1,060,522 ■ Akron Mayflower Manor Redevelopment Area: $1,000,000 ■ Central Neighborhood Care Alliance Health Center: $1,000,000 ■ Gordon Square Arts District: $1,000,000 ■ Euclid Waterfront improvements: $1,000,000
Lofty lists
so said. “There was a lot of pent-up demand.” The keystone of the Cleveland waterfront plan is a pedestrian bridge and garage that would link the Mall above the new Cleveland Convention Center with the lakefront. Not only would that make FirstEnergy Stadium and the lakefront museums more accessible, but it also would make the city’s hoped-for commercial redevelop-
Rep. Nickie Antonio, a Democrat whose 13th House District runs from the Cuyahoga River to the Rocky River along Lake Erie, said she hopes three projects in her district will end up in the final bill. “Those dollars would be well spent,” she said. “But we know they all can’t be funded.” The projects in her district are $350,000 to build a $1.4 million terraced park along the shore in Lakewood; $402,349 to make the Beck Center for the Arts in Lakewood more energy efficient and more accessible to the disabled; and $1 million to renovate the Cleveland Public and Near West theaters in the Gordon Square Arts District on Cleveland’s West Side. In addition to the Global Business Accelerator project, the Akron chamber is requesting $1.5 million for its medical device prototyping center in a building near the business center and is seeking $450,000 that the Medina Economic Development Corp. wants for a study to see if a new freeway interchange to ease traffic and attract new business is justified. The arts list, meanwhile, includes $255,000 to renovate the Burke Mansion in University Circle, a part of The Music Settlement; $150,000 for the restoration and expansion of the Cleveland African American Museum; $1.06 million for theater renovations at Cleveland’s Karamu House; and $800,000 to allow the new Museum of Contemporary Art Cleveland to close out its $34.5 million building campaign. ■
ON THE WEB
Story from www.crainscleveland.com
Housing sales fall in January Ohio’s bitter winter weather apparently helped cool off housing sales statewide last month, though they still were up from January 2013 in Northeast Ohio. According to the Ohio Association of Realtors, a 30-month string of higher home sales on a year-over-year basis ended in January when the number of homes sold statewide fell 4.9%, to 6,972 last month from 7,329 units in January 2012. However, in the 17 Northeast Ohio counties covered by the NEOHREX multiple listing service, home sales continued to rise, with the number of units sold edging up 1.6%, to 2,247 last month from 2,211 in January 2013. “The Ohio housing market, for the first time in two-and-a-half years, experienced a reduction in activity levels,” said Chris Hall, president of the Ohio Association of Realtors. “Certainly, the extreme weather conditions throughout the state during the month contributed to the downturn.” Despite the number of homes sold declining statewide, the total dollar volume of sales across Ohio nudged up 0.5%, to $887.7 million last month from $883.4 million in January 2013. Also, the average selling price climbed 5.6%, to $127,327 from $120,533. In the NEOHREX market, the total dollar volume of home sales increased 5.7%, to $269.6 million last month from $255.1 million in January 2013, while the average selling price rose 4%, to $119,989 from $115,369. — Mark Dodosh
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FEBRUARY 24 - MARCH 2, 2014
CRAIN’S CLEVELAND BUSINESS
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THEINSIDER
THEWEEK FEBRUARY 17 – 23 The big story: The push officially is on to attract a national political convention to Cleveland. Cleveland Mayor Frank G. Jackson and Cuyahoga County Executive Ed FitzGerald, both Democrats, said they will ask their respective legislative councils to pass resolutions that support spending money to woo either the Democrats or the Republicans to Cleveland in 2016. A community coalition will create a nonprofit, the Cleveland 2016 Host Committee Inc., to make the city’s case for a convention.
Inn other news: Four Residence Inns in Northeast Ohio were purchased for more than $53 million by affiliates of Atlanta-based Noble Investment Group LLC. The deals signal an upswing in the region’s lodging market, said David Sangree, president of the Hotel and Leisure Advisors consultancy in Lakewood. “Portfolio sales do not happen every day,” he said. “And you don’t see four better-quality hotels sell at one time here.” The largest of the four sales, for $19.4 million, was for the Residence Inn in Beachwood. Also sold were properties in downtown Cleveland, Independence and Mentor. Attention, sinners:
Community leaders kicked off the campaign to renew the sin tax for Cleveland’s three major league sports facilities. They stressed the importance of passing the tax on cigarettes and alcohol to keeping FirstEnergy Stadium, Progressive Field and Quicken Loans Arena in good condition, which, in turn, is important in keeping the Browns, Cavaliers and Indians in Cleveland. The tax is 4.5 cents per pack on cigarettes, 16 cents a gallon on beer, 32 cents per gallon on wine and $3 a gallon for liquor. If voters reject the 20-year extension of the tax on May 8, the city and the county could be forced to cover improvement costs for the three buildings from their general funds.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
AeroClay is going away to Texas
✟ A Texas company is taking over the effort to commercialize AeroClay, a versatile, foam-like material developed at Case Western Reserve University. Compadre, a transportation packaging company, has obtained an exclusive license to AeroClay, which originally was to be commercialized by a local startup that as recently as 2011 had employees and equipment in Bedford Heights. The startup, AeroClay Inc., had raised $1 million in startup money, including a $125,000 economic development loan from Cuyahoga County’s North Coast Opportunities Fund, The Plain Dealer reported in September 2011. Now the technology will be commercialized through AeroClay LLC, which will be based in Austin, Texas, as a subsidiary of Compadre. However, Case Western Reserve will retain equity in the subsidiary. Plus, inventor David Schiraldi’s laboratory at the university will play an ongoing role in developing AeroClay products, according to Case Western Reserve. Depending on what polymers are added to the mixture, the AeroClay material “can be used as an absorbent, insulator, packing material, industrial catalyst, or even an electrical conductor,” Case Western Reserve stated in a news release announcing the licensing deal. Because the material acts as a fire retardant, Compadre is thinking about using it to package products that contain hazardous materials, the release stated. Schiraldi said in the release that the li-
✟ Sen. Sherrod Brown is throwing his support behind a bill that would crack down on people who steal metal from businesses and homeowners. The Cleveland Democrat is scheduled to be part of an event at 11:15 a.m. today, Feb. 24, at the Bohemian National Hall in Cleveland, in which he’ll announce he’s backing the Metal Brown Theft Prevention Act. In a news release ahead of the event, Brown said the bipartisan legislation, sponsored by Sen. Amy Klobuchar of Minnesota, would make metal theft a federal crime; would give state attorney generals the power to bring civil actions to enforce the bill’s provisions; would open metal theft to potentially tougher sentences; and would “make it significantly more difficult for criminals to sell stolen metal to scrap metal dealers.” Backers of the legislation estimate that criminals cost Americans $1 billion a year by stealing metal from infrastructure, companies and houses. Between 2010 and 2012, Ohio has reported more than 3,200 claims
WHAT’S NEW
BEST OF THE BLOGS
The gang’s all here: A new trade association focused on representing organizations that finance and support entrepreneurs based in Ohio is attracting a couple dozen new membership commitments on a daily basis and has plans to pursue several key policy initiatives and programs. The association is named VentureOhio, and it’s led by president Frank Samuel. Mark Kvamme, former head of the state’s JobsOhio economic development program who founded Drive Capital in Columbus, is board vice chairman. Stephen Haynes, chairman, founding partner and managing partner of Glengary LLC in Beachwood, is secretary/treasurer. This and that: William Montague, former director of the Louis Stokes Cleveland VA Medical Center, pleaded guilty to 64 counts of enriching himself by sharing confidential information and working with a design firm bidding on veterans hospital jobs while he still was working for the Department of Veterans Affairs. … Directors of Myers Industries Inc. of Akron, in an effort to return more capital to shareholders, raised the company’s quarterly dividend by 44% and authorized an additional $40 million in repurchases of its common stock.
Sherrod puts pedal to metal theft bill
Excerpts from recent blog entries on CrainsCleveland.com.
The regulatory haze
Stating their case: Ohio State University and Signet Enterprises in Akron partnered to launch a software company they say will help health care organizations share data easily without the costs and difficulties of centralizing such information. The new company, Signet Accel LLC, will license a portfolio of software developed at Ohio State. As part of the agreement, Signet has paid Ohio State a $275,000 licensing payment. The agreement between Ohio State and Signet is projected to generate “several million dollars” in licensing fees during the life of the agreement.
censing deal “is an opportunity to bring a technology platform into the marketplace where it can do some good, and we can do it with people who have a proven track record.” — Chuck Soder
COMPANY: Zinkan Enterprises Inc., Twinsburg PRODUCT: ArcticREADY Extreme The water treatment technology company says ArcticREADY Extreme “was specifically developed for freeze conditioning to keep mining operations running at extreme subzero temperatures.” During winter, according to Zinkan, untreated coal, aggregate and other mine resources can freeze together and can stick to railcars, which can affect delivery schedules and increase downtime for plants. ArcticREADY Extreme has a formulation “that overcomes the difficulties of working with other freeze conditioning agents in extreme climate conditions,” according to the company. It’s a proprietary chemical “that maintains low viscosity, almost half that of glycols, at extremely low temperatures,” Zinkan says. The final freeze point of ArcticREADY Extreme “is below that of glycols, salts and glycerin, without the corrosive properties of salt or the viscosity problems of glycerin at these operating temperatures,” the company maintains. ArcticREADY Extreme “allows our customer to be operable at temperatures down to -50 degrees C,” says Timothy Drake, the company’s vice president of marketing and product development.” For information, visit www.zinkan.com/ArcticREADY.
Send information about new products to managing editor Scott Suttell at ssuttell@crain.com.
■ A Cleveland insurance expert was quoted in a Wall Street Journal story about the extent to which compliance is shaping the emerging marijuana industry and creating opportunities for entrepreneurs “who profit from a regulatory labyrinth.” Although marijuana is still illegal under federal law, “it is legal at the state level in a growing number of states, but on different terms in almost every jurisdiction,” The Journal reported. Regulatory complexity “has made it difficult for marijuana enterprises to get basic business services such as banking, credit card processing and insurance.” That complexity is creating opportunities for some firms. One of them is Canassure Insurance Services, based in Cleveland, which specializes in insuring marijuana businesses. Founder Patrick McManamon’s family has been in the insurance business since 1946. “My background is medical malpractice,” he told the newspaper. “I saw that the model of the niche insurance carrier and products could be successful in this sector.” The biggest risks in the industry are not legal, the story noted, but fire, thefts and business risks. “At least 70% of the marketplace is uninsured or underinsured,” he said.
Make it a rom-com night ■ Know what helps keep a romantic relationship strong? Watching sentimental movies together, according to a New York Times story that included comments from an Ashtabula couple. The paper said a University of Rochester study “found that couples who watched and talked about issues raised in movies like ‘Steel Magnolias’ and ‘Love Story’ were less likely to divorce or separate than couples in a control group. Surprisingly, the ‘Love Story’ intervention was as effective at
— the most in the United States, according to Brown’s office. The senator will be joined at the event by Nate Coffman, executive director of the Ohio Community Development Corporations Association, and Howard Wise, men’s director of Sokol Greater Cleveland. The organization’s local headquarters, the Bohemian National Hall, recently had metal grating stolen from it and the adjoining parking lot. — Scott Suttell
Sbarro cuts us a break, doesn’t slice local stores
✟ Food-court pizza lovers, rejoice. Your Northeast Ohio Sbarro stores have been spared. Sbarro last week announced it would close 155 stores nationwide, but its stores at SouthPark Mall in Strongsville, Chapel Hill Mall in Cuyahoga Falls and Summit Mall in Fairlawn made the cut. Also, its shop in Concourse D at Cleveland Hopkins International Airport is safe. Five of Sbarro’s Ohio outposts in Dayton, Heath, Columbus, Lancaster and Beaver Creek weren’t so lucky. “The action represents an important step towards improving the financial performance of the company and is designed to facilitate continued growth and investment in the brand,” the company said in a statement. Sbarro filed for bankruptcy protection in April 2012, but emerged later after trimming its debt and receiving an infusion of capital. Despite its closures, Sbarro operates 800 stores worldwide, including 81 that opened last year. — Timothy Magaw
keeping couples together as two intensive therapist-led methods.” The findings, while preliminary, “have important implications for marriage counseling efforts,” according to The Times. “The movie intervention could become a selfhelp option for couples who are reluctant to join formal therapy sessions or could be used by couples who live in areas with less access to therapists.” Among those taking part in the study’s movie therapy are Matt and Kellie Butler of Ashtabula, who have been married for 16 years and “feel the movie intervention has helped their relationship,” according to the story. So far they have watched “Love and Other Drugs” and “She’s Having a Baby.” “It’s kind of powerful,” Mr. Butler told the paper. “It’s like watching a role play in a group-therapy session, but it’s a movie so it’s less threatening and more entertaining. … We’ve been married 16 years, but it’s not something you sit down and have a conversation about. When you watch the movie, it focuses your conversation on your relationship.”
Heritage foundation ■ The Museum of the Jewish People, known as Beit Hatfutsot, in Tel Aviv, received a pair of $5 million gifts from American philanthropists, one of whom is well-known in Cleveland. One of the gifts came from Milton Maltz, a retired broadcasting mogul, and his wife, Tamar. Mr. Maltz helped found the International Spy Museum in Washington, D.C., the Rock and Roll Hall of Fame in Cleveland and the Maltz Museum of Jewish Heritage in Beachwood. The Maltzes “said they were spurred to contribute because they believe museums are becoming increasingly important to educating young people,” according to The New York Times.
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