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Firms ante up for talent the economy grows. Counteroffers are extended most frequently for skilled positions in sectors such as manufacturing and information technology, where talent is hard to find and companies know the cost of replacing workers — potentially hiring a recruiter, training a new employee and losing productivity — is likely higher than beating another’s offer and retaining an existing employee, recruiters say.
Headhunters and HR executives say improving economy leads more companies to make counteroffers to keep key employees By MICHELLE PARK mpark@crain.com
Wilson Revehl is fending off the “poachers” as best he can. Over the last year, three of his 14 employees received offers to leave Go Media, a web design and development firm in Cleveland’s Ohio
City neighborhood that Mr. Revehl co-founded. In two cases, he couldn’t compete with the pay dangled before his employees, but in a third, he counteroffered — and won. Go Media is among those Northeast Ohio employers that increasingly are using the weapon of the counteroffer to stop others from
pilfering their talent. The bidding wars come after years of layoffs and stagnant pay at many employers. Headhunters and human resources executives predict the number of counteroffers will build from here as baby boomers retire, fresh talent is needed and employers’ confidence in
INSIDE Advanced look for RVs A Willoughby company’s line of luxury motor homes takes a Mercedes-Benz Sprinter the size of a delivery van and turns it into a six-figure house on wheels. PAGE 3
See EMPLOYERS Page 8
ANALYSIS
Another healthy giant is growing Catholic Health Partners’ acquisition of Kaiser adds to its formidable local base
LOCKED DOWN
By TIMOTHY MAGAW tmagaw@crain.com
care industry to start documenting what they’ve done to protect that data. That’s because, starting Sept. 23, they could be audited by the federal government.
Catholic Health Partners’ northern conquest gained steam last week when the Cincinnati-based behemoth announced plans to acquire Kaiser Permanente’s money-losing Ohio operations — a move industry insiders suggest is another sign the state’s largest health system is intent on becoming a force in Northeast Ohio. Coupled with plans announced earlier this year to buy one-third of Summa Health System in Akron, Catholic Health Partners — an organization with $5.6 billion in assets and 24 hospitals under its belt — appears to be laying the groundwork
See LOCKED Page 23
See GIANT Page 24
FOTOLIA
HIPAA changes will affect how many businesses protect employees’ health data By CHUCK SODER csoder@crain.com
22
H
IPAA isn’t just for health care providers anymore. The federal law that requires your doctor to
protect your privacy soon will apply to other organizations that come in contact with patient data. Changes to the Health Insurance Portability and Accountability Act are forcing businesses that provide all sorts of services to the health
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EDUCATION Sister Carol Anne Smith is stepping aside after more than 20 years at Magnificat ■ Pages 15-21 PLUS: BOARDING SCHOOLS ■ CLASS SNAPSHOTS ■ & MORE
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COMING NEXT WEEK More schooling What happens to students who are accused of plagiarism during their college years? How do schools address the issue? Crain’s will examine that and much more, including faculty members who double in duties as recruiters, in next week’s Higher Education section.
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JUNE 3 - 9, 2013
MAKING PROGRESS U.S. companies in April conducted 1,199 “mass layoffs” — job cuts of 50 or more employees — involving 116,849 jobless claims by workers. That was down from 1,337 mass layoffs in March and 1,403 in April 2012, and it represented the lowest number for any month since June 2007. The number of mass layoffs has averaged 1,322 a month this year; for the first four months of 2012, the average was 1,351 mass layoffs. Here are data for mass layoffs and initial claimants for unemployment insurance for the first four months of this year, plus numbers for April 2012:
Private Layoffs Claims
Nonfarm Layoffs Claims
Manufacturing Layoffs Claims
April 2013
1,199
116,849
1,051
104,746
293
29,744
March 2013
1,337
127,939
1,183
115,664
311
36,696
February 2013 1,422
135,468
1,218
119,856
295
39,407
January 2013
1,328
134,026
1,197
123,088
357
43,068
April 2012
1,403
138,164
1,235
122,236
294
34,929
Note: Layoffs are mass layoffs; Claims are initial claims; Source: U.S. Bureau of Labor Statistics; www.bls.gov
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INSIGHT
Patients feeling at home, on call Telemedicine is allowing doctors to connect with clients via high-definition webcam and other gadgets By TIMOTHY MAGAW tmagaw@crain.com
During a recent checkup, Thom Henkel’s doc — University Hospitals’ George Kikano — asked him to lean forward so he could inspect a blemish that appeared to be growing on his temple. It was a standard request from Mr. Henkel’s longtime physician, though the visit was still a bit peculiar considering Dr. Kikano wasn’t in the room. Dr. Kikano, who chairs the department of family medicine and community health at UH, was seated in his cozy office at UH Case Medical Center, while Mr. Henkel was perched in front of a high-definition webcam in his apartment at Judson Manor, a retirement community on East 107th Street. “It was essentially the same experience as a visit to the doctor, but there was George sitting at his desk, and here I was in my apartment,” said the 77-year-old Mr. Henkel, who worked for 38 years for what would become the diversified manufacturing giant, Eaton Corp. See PATIENTS Page 25
RACHEL ABBEY MCCAFFERTY
The interior of a Mercedes-Benz Sprinter motor home before any customizations have been made by Advanced RV of Willoughby.
OPEN ROAD TO LUXURY O
Advanced RV caters to customers’ fancy tastes with Mercedes-Benz motor home
By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com
INSIDE: A look at the finished version of the motor home. Page 11
CONTRIBUTED PHOTO
See LUXURY Page 11
THE WEEK IN QUOTES “The business associates who don’t think they’re in the health care business, those are the ones who are going to be thunderstruck by this.”
Earlier this year, University Hospitals rolled out enclosed HealthSpot kiosks at its Chagrin Highlands Health Center in Orange Village.
ften, when people step down as president of their business after 30-plus years, they want to take time to travel. Mike Neundorfer instead chose to help other people travel in style.
— Michael Stovsky, chairman of the Innovations, Information Technology and Intellectual Property Practice Group, Benesch. Page One
“I think that it (the Horseshoe Casino Cleveland) has served to put a greater focus on safety downtown. I think it’s bringing a lot of people into the city.” — From a response in The Big Issue. Page 10
“For me, my life and service in Catholic education has first and foremost been a ministry.” — Sister Carol Anne Smith, outgoing president, Magnificat High School. Page 15
“All of our students, with the exception of a few, are no more than a short drive away from Cleveland. Through this exchange they get the chance to interact with students and teachers all over the world. … Instead of taking a class with kids from Cleveland, they can take a class with kids from Japan, Seattle, Texas and Jordan.” — D. Scott Looney, head of school, Hawken School. Page 16
Ferro must regain ‘credibility’ after proxy fight President says new board members have come together with old regime to put company’s best interests first after struggle By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com
Ferro Corp. has had a particularly tumultuous few months, but its new leadership is confident the maker of specialty chemicals based in Mayfield Heights can overcome its recent challenges and bounce
back. President and CEO Peter Thomas, who officially took office in late April after holding those posts for more than five months on an interim basis, said he thought Ferro held up well despite the distractions of a proxy fight. Ferro delivered results that were above the
company’s guidance in the first quarter, though its earnings were down 77% from the first quarter of 2012. With the May 22 annual meeting behind Ferro, it’s time for the company to focus on delivering consistent, predictable results and meeting its goals, Mr. Thomas said.
“It’s about us gaining our credibility back,” he said. Ferro’s recent trouble began when it saw big drops in revenue in 2011, attributable to a cooling down in the solar power industry, which it supplied with conductive pastes used in the production of solar cells. It sold the solar pastes business for an undisclosed price last February to Germany’s Heraeus, a privately owned producer of precious metals and advanced materials.
Earlier this year, a dissident group of shareholders put up an alternate slate of board candidates and launched an aggressive campaign to get them elected. The group said it was concerned about underperformance over time and contended that Ferro’s leadership had done shareholders a disservice by rejecting a hostile takeover bid from Akron-based plastic resins maker A. Schulman Inc. See FERRO Page 7
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Hotel industry lines up in battle over online bed tax
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Newmark Grubb Knight Frank is pleased to announce the Cleveland music landmark, the Euclid Tavern was sold to University Circle Visit Incorporated on May 3, 2013. TerryCoyne.com Terry Coyne and David Hollister Or Call Terry at represented the seller. 216.453.3001 1350 Euclid Ave, Ste. 300 Cleveland, Ohio 44115
WHAT IGNITES YOU? E D U C AT I N G P H Y S I C I A N S , P H A R M A C I S T S A N D H E A LT H C A R E R E S E A R C H E R S
n e o m e d . e d u
Groups say state is missing out on millions from travelers who book rooms on websites
THE ARGUMENT IN FAVOR OF A CHANGE TO THE STATE BUDGET:
By JAY MILLER jmiller@crain.com
“It’s a fairness issue. These out-of-state travel companies have an unfair tax advantage over in-state Ohio hotels.”
Ohio’s lodging industry and the state’s convention and visitors bureaus hope the Legislature will side with them in a tax battle with online travel services. Current law, which predates the Internet, is allowing the online services to shortchange the state and the CVBs on sales and bed taxes, Ohio lodging interests contend. Matthew MacLaren, executive director of the Ohio Hotel & Lodging Association, estimates the state is missing out on $7 million to $10 million in tax revenue annually as travelers avoid some state taxes by booking their accommodations through services such as Orbitz and Expedia. A large portion of the bed tax is used by convention and visitors bureaus to attract tourists and conventions to their communities. The fight in Ohio is similar to battles going on across the country by brick-and-mortar merchants who compete with online retailers that don’t charge sales taxes. The clarification of state law was not included in the two-year state budget bill that moved out of the Senate Finance Committee last Wednesday, May 29. But proponents hope reworked language will make it in the budget that goes to Gov. John Kasich. Mr. MacLaren said the language needed to be re-
fined to ensure that traditional travel agents aren’t caught in the net of any new legislation. The in-state travel industry wants the General Assembly to require online travel services to collect sales and bed taxes on the full, retail room rate hotels charge, not on the lesser rate hotel operators offer to the Expedias, Orbitzes and Travelocitys of the online world. Local supporters contend the online travel services “buy” hotel rooms at wholesale and add the bed and sales taxes on to that price rather to a larger “retail” price.
Numbers game The lodging industry is fighting the online firms on this issue across the country. The American Hotel & Lodging Association argues that if a customer books a $100-a-night hotel room in a community with a 10% bed tax, the hotel adds the tax to a customer’s bill and forwards $10 to the tax collector. The customer pays $110. The third-party intermediary also charges its customer $110 for the room. But it has paid only $80 for that room so it adds an $8 tax and pays the hotel operator, which passes the $8 on to the tax collector. The remaining $22 is the online company’s service fee. “It’s a fairness issue,” Mr. MacLaren said. “These out-of-state travel companies have an unfair tax advantage over in-state Ohio hotels. We’d like to see the Legislature close that gap.” But Robin Reck, director of communications for the Travel Technology Association, the online travel industry’s trade group, said Mr. MacLaren’s characterization is inaccurate. For instance, she said her members don’t buy rooms at wholesale and turn around and sell them at retail. She described the online companies as travel agents who negotiate discounts from hotel operators and charge customers that rate plus a service fee. Traditional brick-and-mortar travel agents are paid a commission after a booking, typically a percentage of the pre-tax purchase price. A federal appeals court in Cincinnati last September sided with the online companies when the lodging industry sought to use existing law to enforce their interpretation of state tax law. It ruled that the online travel company fee was not subject to the tax because the companies are not hotel operators and do not maintain and lease hotel rooms. The Travel Technology Association backed the online companies in this legal action.
Identifying an ‘intermediary’ The language in the House version of the budget bill, which by law must be resolved and signed by the
– Matthew MacLaren, executive director, Ohio Hotel & Lodging Association
“If online travel companies are more accurately taxed, there is the potential for additional bed tax dollars that can go toward growing tourism in our community.” – Mike Burns, senior vice president of convention sales and services, Positively Cleveland governor by the end of June, subjects the services of a “hotel intermediary” to the bed and sales taxes. The bill would require hotel intermediaries to collect the sales and bed taxes on the full amount of the cost of a hotel room, and it would require the hotel to collect any shortfall from the hotel guest. Mr. MacLaren said new language that clearly excludes local travel agents is being prepared, and he hopes it will be inserted in the budget bill before it reaches the governor. In testimony before the Senate Ways and Means Committee on May 22, Justin Kuntz, director of government affairs for Orbitz Worldwide, said his company opposes the new interpretation of hotel-room tax. He said his company has distribution agreements with 1,500 Ohio hotels and motels and that the proposed language would “stand to tax not only the hotel room rent, but the separate services online travel companies provide in the form of expert advice, applesto-apples comparison shopping and easy-to-use technological convenience.” In an emailed statement, Mike Burns, senior vice president of convention sales and services for Positively Cleveland, the regional convention and visitors bureau, said the organization supports the legislative change. “(T)his is an important issue for the entire Cuyahoga County tourism industry, but also our community as a whole as it would result in more bed tax dollars overall,” Mr. Burns wrote. “If online travel companies are more accurately taxed, there is the potential for additional bed tax dollars that can go toward growing tourism in our community.” Positively Cleveland is a recipient of part of the bed tax collected by Cuyahoga County. Another part of the bed tax goes to pay for the new convention center complex. ■
Volume 34, Number 22 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2013 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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JUNE 3 - 9, 2013
ByteGrid has big plans for Cleveland Technology Center Business will create user-ready data center on massive Rockwell Ave. site By STAN BULLARD sbullard@crain.com
ByteGrid Holdings LLC, a data center operator based in McLean, Va., has bought the massive Cleveland Technology Center, 1425 Rockwell Ave., and plans to create in part of the space a user-ready data center that it can lease to corporate, institutional and government tenants. Ken Parent, ByteGrid CEO, said the company bought here because the region is served by fewer large data center operators than Los Angeles, New York, San Francisco and Washington, D.C., but has a combination of large corporations and institutional users that may need data center services. ByteGrid purchased the property under a strategy of adding data center operations in smaller markets around the country, he said, and to offer large users disaster recovery services in varied locations. The 330,000-square-foot building houses multiple telecommunications firms. Mr. Parent declined to say how much ByteGrid paid for the building, which the seller, Matrix Realty Group Inc., had acquired for $12.5 million in 2005. The structure was converted to a telecommunications hotel to tap Cleveland’s abundance of fiber-optic wires passing through the area. The property is 60% leased to Internet companies, communications services providers and government agencies, ByteGrid said.
CONTRIBUTED PHOTO
A rendering of the changes ByteGrid Holdings LLC plans to make to the exterior of the Cleveland Technology Center building it purchased. Mr. Parent said his company plans to add infrastructure to provide turnkey services to more tenants by adding raised floors and heavy-duty wiring to unused parts of the property. ByteGrid will continue to lease space to tenants on an as-is basis, he said, but its focus is on providing readily available space to tenants. ByteGrid also plans to update the building’s brick exterior, little changed from its origin as a warehouse for electrical and lighting parts spanning three city blocks. “We’ll give the building a new skin to make the building look more high tech, primarily for marketing purposes,� Mr. Parent said. But nothing overstated. “You don’t want to advertise what is inside it� for security reasons, he noted. The building’s current staff of four was retained and will be raised to at least 15, primarily building engineers, in coming months to provide round-the-clock security and oversee the structure’s infrastructure, Mr. Parent said. The Cleveland data center is the third property acquired by ByteGrid, which operates a data center
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in Silver Spring, Md., and another in Atlanta. Although potential users and a fiber-rich location were important in settling on the purchase, Mr. Parent said the company was attracted to Cleveland by its $3.8 billion building boom, which includes the Global Center for Health Innovation and Cleveland Convention Center, the new casino and the rapid physical expansion of health care providers. Another building dedicated to providing heavy-duty broadband services is the Sterling Building, 1255 Euclid Ave. Mark Munsell, managing partner for the building’s ownership group, said the market for such space “is still very strong.â€? “The market for existing data center and telecom space is tight,â€? Mr. Munsell said. However, he noted that a data center operation “is a very investment-intense business because of the raised floorsâ€? and other equipment needed to serve such customers. Two calls to Matrix were not returned by Crain’s deadline Thursday. â–
HB Chemical purchases former Forest Manufacturing building Company buys 115,000-square-foot digs for $3 million, plans to add equipment By STAN BULLARD sbullard@crain.com
Need to get past the Gatekeeper? CALL TODAY, 440 575 -7000
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An empty building in Twinsburg Township formerly occupied by Forest Manufacturing Co. soon will be empty no more. Random Shores LLC, an affiliate of HB Chemical Inc. in Cuyahoga Falls, on May 24 bought the 115,000-square-foot building at 1667 Enterprise Parkway for $3 million, according to Summit County land records. Jeffrey Rand, president and owner of HB Chemical, said in an interview last Friday, May 31, that HB needs room to grow and he wanted to own a building because it increases flexibility in operations. The new building is about twice the size of HB’s current, leased building at 140 E. Ascot Lane, its home for 15
years. Moving to the new building also will allow the company to reduce its use of public warehousing for storage. The Twinsburg building will be a distribution center for rubber and rubber additives, and plans call for adding processing equipment in several years. Mr. Rand said about 30 employees will move to Twinsburg when it is ready for occupancy and the Cuyahoga Falls lease expires in 2014. Rubber & Plastics News, a sister publication of Crain’s Cleveland Business, recently reported about the potential expansion of HB Chemicals’ business due to becoming the North American distributor of carbon black for Jiang Xi Black Cat Carbon Black Ltd. of China. HB provides chemicals to rubber, plastics and coatings businesses. Car-
bon black is a key raw material in the production of tires and rubber products. Mr. Rand said the move is partially to accommodate the gains he expects to make from the carbon black distributorship. The sale of the Twinsburg building reflects the tightening inventory of industrial space in the market, said Jeff Calig, a real estate broker who is part of a team at NAI Daus of Beachwood that represented the seller, Forest Manufacturing. “It’s refreshing,â€? Mr. Calig said of the speed the deal closed. NAI Daus put the property on the market five months ago. There were six showings the first week and two offers, he said. One of those offers was from the new owner, HB Chemical. Mr. Rand said the tightness of the market prompted HB Chemical to “jump on the building sooner than we anticipated.â€? “Properties this size are not all over the place,â€? he said. â–
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Eliza Jennings is set Ferro: New group getting acquainted to extend dementia treatment nationally continued from PAGE 3
Nonprofit is close to deal with Japan institute that would give it revenue jolt By TIMOTHY MAGAW tmagaw@crain.com
Although Eliza Jennings’ work has focused on the Cleveland area for the last 125 years, the Lakewood-based nonprofit plans to extend its reach through schooling other aging services organizations nationwide in a treatment option developed in Japan for individuals suffering from dementia. Eliza Jennings is finalizing a deal with the Kumon Institute of Education in Osaka, Japan, that would allow the local nonprofit to act on Kumon’s behalf and train other nursing homes, assisted living facilities, retirement communities and others in what’s known as Saido Learning. It’s a non-pharmaceutical treatment for dementia that employs various mental exercises, which, according to its advocates, slows the progression or reverses the symptoms of dementia. Deborah Hiller, Eliza Jennings’ president and CEO, said the sublicensing agreement with Kumon could infuse much-needed revenue into the nursing home operator, which, like other providers of senior services, has seen its budget strained by declining reimbursements from government payers. The state of Ohio, for instance, has looked to slow the growth of nursing home spending by pushing more individuals toward home care. “One thing that has been very difficult in the nonprofit world is that the reimbursements we are getting from the state for providing nursing care for older adults have been dramatically slashed,” Ms. Hiller said. “Consequently, we’ve been searching, in many ways, for new revenue streams.” As part of the sublicensing agreement, Eliza Jennings said it will earn revenue through training and credentialing other aging-services
Greg Harris
David Gilbert
“When some people hear about this treatment, they’re internally rolling their eyes. But there’s practically nobody alive in the United States that hasn’t been touched by Alzheimer’s or dementia.” – Deborah Hiller, president and CEO, Eliza Jennings providers in the treatment that was developed by Kumon and Ryuta Kawashima, a researcher from Tohoku University in Sendai, Japan. Eliza Jennings plans to roll out Saido Learning to about 20 organizations across the country in the latter half of this year. “It will become its own enterprise that we hope will fund us long term,” said Sheryl Sereda, Eliza Jennings’ vice president and chief advancement officer. “As a not-forprofit, this is an opportunity to develop a business venture that can financially sustain us over time.” Saido Learning has been practiced in Japan for more than a decade at more than 1,400 nursing facilities. In 2010, Eliza Jennings became the first organization to practice the treatment outside of Japan when it was selected by Kumon for a six-month research trial, in which Ms. Hiller said participants demonstrated significant improvement in their cognitive ability. The treatment — to put it simply — consists of stimulating the prefrontal cortex of the brain of the dementia patient through arithmetic, reading and writing exercises during 30-minute therapy sessions. During the research trial at Eliza Jennings, some participants have shown enough progress to take up old hobbies, such as reading to their grandchildren. “When some people hear about this treatment, they’re internally rolling their eyes,” Ms. Hiller said. “But there’s practically nobody alive in the United States that hasn’t been touched by Alzheimer’s or dementia, so seeing the changes and giving these people and their families some hope is just a privilege.” ■
However, just a week before the annual meeting, the company and the dissident shareholders reached an agreement and put a combined slate of board members up for election. David A. Lorber and Jeffry N. Quinn, the new members of the board that represent the dissident shareholders, could not be reached for comment for this story. Mr. Lorber failed to return two phone calls late last week, and Mr. Quinn’s office said he was in meetings and was unavailable.
Getting to know you In an interview last Tuesday, May 28, Mr. Thomas would not get into the details of the proxy fight. The important thing, according to Mr. Thomas, is that the board members, new and old, come together in the company’s best interest. Mr. Thomas said he thinks they are. The group met last week and spent about three or four hours going over the company’s overall strategy and growth opportunities. Mr. Thomas called the meeting “introductory” in an email and said most of the time was spent getting the new members up to date on the company’s operations, its management and the progress it has made toward its
“value creation strategy” so far. Mr. Thomas said he views 2013 as something of a “cleansing” year for Ferro as leadership works to cut costs and increase efficiencies. The company has sold two businesses so far this year and is looking to cut other non-core businesses, he said. Ferro announced a strategic realignment of its business segments in February, creating efficiencies around related technologies and manufacturing, said Mary Abood, director of corporate communications. The company pared down its business segments to five from six, losing its pharmaceuticals segment altogether with a sale in April. The electronic materials segment was split into two after the solar-related sale in February. Ms. Abood said this change is just one of many focused on increasing efficiency and lowering costs for Ferro. Last October, the company announced a 10% staff reduction across the globe, which is still ongoing, Ms. Abood said. In the first quarter of 2013, Ferro reported that it had about 4,700 employees across the globe. Ferro also has been walking away from customers or products that aren’t a good fit, a move Ms. Abood said could hurt revenue in the short
term but is focused on increasing profit margins in the long term. In the first quarter report, the company reported that total sales in 2012 were $1.8 billion.
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In terms of growth, Mr. Thomas has high hopes for the company. While he declined to talk about coming new products, he said efforts are underway to increase the company’s portfolio of products and to expand Ferro geographically, especially into fast-growing areas such as India and Thailand. Ferro also is looking for growth through acquisitions that can strengthen its core businesses or take the company into markets that are adjacent to those core businesses, he said. But despite those plans for growth, Ferro’s leadership hasn’t completely ruled out an offer from A. Schulman. Mr. Thomas said the initial offer of $6.50 a share was taken seriously and looked into closely, and future offers from A. Schulman or other companies would be treated the same way. If A. Schulman came back with a higher offer, Ferro would consider it, he said. “We work for the shareholders,” Mr. Thomas said. ■
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JUNE 3 - 9, 2013
Employers: Engineers, machinists, IT personnel in high demand continued from PAGE 1
TOUGHEST TO FIND
The annual Talent Shortage Survey released last week by ManpowerGroup amplifies the point. It revealed that 39% of U.S. employers are struggling to fill open positions. Skilled trades were the hardest jobs to fill. Alliance Search Solutions has found this year that half the time it extends an offer on behalf of a client company, the candidate in question receives a counteroffer from his or her current employer, said Tony Nicol, managing partner of the Independence firm, which places employees with manufacturing and distribution companies. In contrast, counteroffers were extended probably 20% of the time last year, Mr. Nicol said. The size of such stay-where-youare offers runs the gamut, Mr. Nicol said. On the lower end, he’s heard of salary increases of 15% to 20%; on the higher end, people are netting double their previous salaries. But it isn’t just money current employers are using to convince talent to stay, Mr. Nicol noted. Counteroffers frequently also involve benefits; added flexibility, such as the luxury of working from home or via virtual means; and ca-
ManpowerGroup's Talent Shortage Survey identifies the top 10 most difficult jobs to fill in the U.S. A look at this year’s top 10: ■Skilled trades ■Sales representatives ■Drivers ■IT staff ■Accounting and finance ■Engineers ■Technicians ■Management/executives ■Mechanics ■Teachers See the full breakdown at: tinyurl.com/nngz5rg
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reer advancement of some sort. Champion Personnel System, a Garfield Heights staffing and recruiting firm specializing in blueand white-collar manufacturing hiring, went from seeing almost no counteroffers two years ago to hearing them extended probably 20% to 30% of the time today, said Robert Schepens, the firm’s CEO. Given the number of companies that are enjoying better performance but not yet opening their pocketbooks to existing personnel, he anticipates competition and
Power in candidates’ court Since the middle of last year, attempts to lure away Mr. Revehl’s computer programmers have increased both from headhunters and other employers. One left for nearly triple the money. “I’ve had people try to recruit me, and I’m one of the founders,� he said. “The demand for computer science professionals is significantly greater than the supply,� he added. “That’s why these people are being poached. They’re not out there. There’s not a computer science guy sitting on the couch looking at the classifieds.� Engineers, machinists and IT personnel are among the positions receiving the most counteroffers, recruiters say. Those employers that hired skilled positions at $15 an hour in 2009 now are forced to pay close to $20, said Stephanie Bondi, vice president of Global Technical Recruiters, a Clevelandbased staffing agency that primari-
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counteroffers to increase in the near term. “I don’t think it is an epidemic, but it is headed that way,� Mr. Schepens said.
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ly fills manufacturing and industrial positions. And it’s not just people with loads of experience receiving such counters; people with three to five years of experience are getting them, too, Alliance Search’s Mr. Nicol said. Staffing firms knew competition would intensify as baby boomers retire and companies seek new talent, Mr. Nicol said. Given how profitability has returned for many companies that became lean in recent years, more have the confidence and willingness today to invest in the talent they want to retain, Mr. Nicol and others said. “Top-skilled people are harder to find, and companies are forced to offer more money and do things to keep those candidates,� Ms. Bondi said. “From a candidate’s perspective, it’s a really good thing,� she added. “They can definitely get top dollar out there. They kind of can dictate what they want, whereas it was more of an employer-driven market a few years ago.� The shift in the balance of power toward employees isn’t just apparent in the frequency of counteroffers. While executives with Ratliff & Taylor, a human resources consulting firm in Independence, aren’t seeing an uptick in counteroffers for the C-suite executives they recruit, they are seeing increased numbers of offers per candidate and more generous relocation packages, including benefits such as the reimbursement of a second mortgage, said Barbara Danforth, senior vice president.
Pain and gain While increased hiring translates to increased business for staffing firms, a surge in counteroffers can throw a wrench into their best-laid plans. Global Technical Recruiters has lost placements because of counteroffers, Ms. Bondi said, and Mr. Nicol estimates that right now, about 20% of the time that candidates receive counters, they accept and stay put. “It’s just another thing we have to worry about,� Mr. Nicol said of staffing firms. “(When) you have someone coming in and offering something different, it shakes things up. From our perspective, it’s a pain, but it’s great for the people who are in these roles. “We’re a contingency search firm,� he added. “If they (job candidates) stay where they’re at, we don’t get paid for the work that we’ve done.� Champion Personnel often advises employees who cite purely financial reasons for wanting to leave their current employers to go back to those employers and talk honestly about their compensa-
HANGAR FOR LEASE
tion, Mr. Schepens said. It is people who have career reasons for leaving — such as being blocked from growth opportunities — that Champion seeks to put before its client companies, he said.
Fix the leaks Recruiters say the fierce competition for talent should prompt action by companies even before employees give notice. “The growth that we’re beginning to experience should tell companies they need to be intentional about retaining talent and making sure their talent pipeline isn’t leaking,� Ratliff & Taylor’s Ms. Danforth said. Danny Spitz recommends companies provide employees with performance reviews at least annually and conduct market analysis to ensure their salaries are competitive. “Do not wait too long to review your strong employees’ compensation,� advised Mr. Spitz, CEO of EverStaff International, a recruiting and staffing firm based in Independence. “It’s always easier to be proactive,� he said. “You’re then in control of the process, rather than being reactive.� Ms. Bondi already is seeing changes in employer behavior. For one, some companies — faced with the option of counteroffering or losing top talent — are warming up to training people they can pay less.
Long memories Though they’re rising in frequency, counteroffers are not always in the best interest of employees and companies, experts say. “Almost everybody loses, the reason being, when a person forces a company that they are currently with to either promote them or give them a substantial pay raise to stay, it is still considered to be a force,â€? Mr. Schepens said. “It’s rarely, if ever, forgotten.â€? Such employees, Mr. Schepens said, can be viewed as disloyal. And employees who agree to stay at a company they aimed to leave (for reasons other than money) often end up unhappy and leave months later anyway, Alliance Search’s Mr. Nicol said. Besides, companies that make the reactive decision to increase the pay of someone who would leave otherwise won’t necessarily see the employee’s productivity increase in lockstep, he said. EverStaff’s Mr. Spitz adds another warning: Don’t make a counteroffer simply out of expedience. “You don’t want an employee who’s going to hop at the next opportunity,â€? Mr. Spitz said. “It’s got to be an overall quality relationship between the employee and the employer.â€? â–
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20130603-NEWS--9-NAT-CCI-CL_--
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WWW.CRAINSCLEVELAND.COM
JUNE 3 - 9, 2013
PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Tax acts
J
ohn Kasich might wish the Ohio House and Senate were under the control of Democrats, not his fellow Republicans. Courtesy of members of his own party, the governor has seen both chambers of the Legislature take an ax to the tax proposals he put forth as part of the two-year state budget he presented back in early February. We can’t say we were fond of Gov. Kasich’s planned 20%, phased-in cut in personal income tax rates, which the House reduced to 7% and the Senate eliminated altogether. Nor did we favor the governor’s tax deduction for small business owners that would reduce by up to $375,000 the business income subject to taxation on their personal returns; the House dropped that proposal but the Senate reinstated it. However, we were solidly behind Gov. Kasich’s proposal to increase the severance tax that producers of oil and natural gas pay on the output from their wells. We suspect most Democratic legislators would back the governor on this tax hike, too. However, neither the House nor Senate versions of Gov. Kasich’s budget include the severance tax increase. Oil and gas producers must have pretty good lobbyists in Columbus, because the severance tax hike proposed by the governor isn’t oppressive relative to similar taxes in other states. Nonetheless, Republican lawmakers apparently bought into the argument that any tax increase would dampen energy company interest in doing exploration and production work in Ohio’s Utica shale region, thus killing a promising industry before it ever really got started. Of course, what’s happening in the shale fields offers evidence that a severance tax hike wouldn’t have that effect. Energy companies already have spent billions of dollars on mineral rights leases to gain access to the raw materials below landowners’ property, and have an incentive to recoup that investment by drilling on the land. Plus, processors and pipeline companies are proceeding with investments that also could run into the billions of dollars in anticipation of production from wells in the region. A modest tax increase won’t cause those investments to grind to a halt. As for reducing personal income and small-business taxes, we’d rather see the state put more money toward public education — at all levels, from kindergarten to college — than relinquish dollars when there isn’t a compelling economic reason to do so. According to the business climate rankings produced annually by Site Selection magazine, Ohio remains among the best-regarded states to locate a business by corporate real estate executives who influence those decisions. Ohio was No. 2, just behind North Carolina, in the latest rankings, which are determined in part by a business tax burden analysis by the Tax Foundation and tax advisory firm KPMG. It seems Ohio already ranks high on the businessfriendliness index. Where it could use improvement is in its investment in the futures of its younger citizens. Scrap the tax cuts, raise the severance tax and give education a shot in the arm.
FROM THE PUBLISHER
An education alliance worth cheering
L
thorough in the scarce couple of minast week, I got one of those interutes the producers allowed. And there esting emails that come every was this one very important innow and then from John gredient I wished could have Zitzner, the heart and BRIAN been mentioned that makes soul of E-Prep, Village Prep and TUCKER the success story of these the now-larger group of highschools nothing short of astonperforming charter schools ishing. known as Breakthrough The Breakthrough Schools Schools. accept all students whose fam“Watch CBS Evening News ilies agree to adhere to the basic on Wednesday for a story on requirements of the longer Breakthrough,” read the text school day, longer school year, message on my phone (always uniforms and codes of disciaccompanied by that gentle pline — and who can promise to get apology about any misspellings — he their child to and from the school. must have thumbs like mine). Think about that for a moment. These My first call was to the Tucker family schools are raising the achievement levCTO — my wife, of course — to set up els of kids who most likely start from bethe DVR to record the show. I was anxhind. They are not picking and choosing ious to see just how the reporting would from the best and brightest from Cleveplay out. land; they just want kids and families My concern was that the story would committed to hard work. be superficial; it turns out that it wasn’t And Eric Gordon, superintendent of at all. In fact, it was pretty well told, with the Cleveland public schools, rightly has a look at several of the schools and how decided to partner with these high-perthey achieve the remarkable results that forming charters rather than consider they do. them the enemy. Much like Mr. GorBut like all broadcast reporting prodon’s transformation plan for the disjects, the story couldn’t be completely
trict, this is one more tool in the long process of fixing urban education. And fortunately for us, Eric, John, Breakthrough CEO Alan Rosskamm and Mayor Frank Jackson are allied in this cause. Marshall Emerson III, the gregarious and thoughtful former head of school at E-Prep, began building a similar group of charter schools in 2010, and his “I Can” schools are now in four Cleveland locations, with additions planned this fall in Canton and Akron. The formula is familiar: long, disciplined school days and committed parents and teachers. Urban education, entangled as it is with the poverty, broken families and decaying neighborhoods that plague all of America’s major cities, is the key to any serious effort to save those cities. Imagine if, right here in Northeast Ohio, we are able to come up with the right formula that teams high-performing charters with dedicated public school systems. You are talking about no less than a wholesale transformation of America’s cities and their people. Now that is something for which we should all be cheering. ■
THE BIG ISSUE Cleveland has had a casino for a year. What difference, if any, do you think it has made for downtown?
STEVEN SIMS
CHUCK SEGALL
CONOR MCLAUGHLIN
DIANE MAKELA
University Heights
South Euclid
University Heights
Brooklyn
I think it’s had a positive impact. I think that it’s served to put a greater focus on safety downtown. I think it’s bringing a lot of people into the city.
It seems to be that there’s people coming downtown for dinner or just for the entertainment of the casino. And I’ve been there for lunch a couple of times, and the place has been packed, even at lunchtime. So, I think it’s had a pretty good impact.
I think the biggest impact is that it’s brought people downtown. There’s more activity downtown, and it seems like it’s a livelier place.
I think it’s brought people downtown, booming business. I think it’s great for our economy.
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JUNE 3 - 9, 2013
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
11
RACHEL ABBEY MCCAFFERTY
The inside of a finished Advanced RV motor home is designed to make the most of the space.
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Luxury: Customers have paid between $128,000 and $164,000 for vehicles
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Mr. Neundorfer, CEO, chairman and former president of air pollution control company Neundorfer Inc., last May started Advanced RV, a producer of luxury motor homes in Willoughby. “I love to build things,� Mr. Neundorfer said. And the challenge of building a home in the space the size of a delivery van particularly appealed to him, Mr. Neundorfer said. Advanced RV has sold seven motor homes since its first sale in January, and Mr. Neundorfer said the company’s sales goal for this year is 20. Ultimately, he’d like to sell 50 of the Mercedes-Benz Sprinter motor homes that his company customizes each year, which would be a very small share of the recreational vehicle market. The company sells directly to clients, rather than going through dealerships. Mr. Neundorfer has experience with the customers he’s targeting; he and his wife have owned three Mercedes-Benz Sprinter motor homes over the years. “We love the freedom of that kind of travel,� he said. Mr. Neundorfer is trying to increase the level of freedom involved for his fellow travelers with his company’s standard and optional customizations. The company uses lithium iron batteries to store energy so that people don’t need to be plugged in to an electric source when camping. The motor homes even can use solar charging technology. Advanced RV also takes advantage of technology to increase safety for its customers, Mr. Neundorfer said. There’s a remote tire pressure monitor, a camera to alert drivers if they veer over a line, a smart phone app to monitor the temperature in the motor home — good for travelers with pets — and a centralized control panel for all the electronics. There are nice amenities, too.
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The seven-cubic-foot refrigerator and freezer can hold two to three weeks of food, and the water tanks are larger than normal. Travelers also can check the battery and tank levels, program the heated floors and set temperature levels.
Pricey, but plush Mr. Neundorfer said he’s tested some of these features during his own travel. He and his wife spent 21 days on the road in January, traveling to a large RV show in Florida. During those three weeks, the couple only had to plug in once, he said. When Advanced RV gets one of its new Mercedes-Benz Sprinter chassis, it’s just a steel interior with two seats, an engine and a transmission — it doesn’t even have windows at that point. By the time employees are done with a vehicle about 12 weeks later, it’s a different story. Mr. Neundorfer said the company works hard to create a feeling of space in the motor homes, which range from nearly 23 feet to just over 24 feet long. He even brought in interns from the Cleveland Institute of Art to help create a design that gives a sense of space and elegance in a small area. The heater and water heater are below the floor, and a screen door allows the travelers to let air in while keeping bugs out. The high-quality materials, from the granite countertops to the hightech entertainment system to the sound and heat insulation, can cost quite a bit, but that’s not a concern to Mr. Neundorfer. Costs vary because customers can pick their own configurations, but the prices so far have ranged from $128,000 to $164,000. “Our customers, they like the
comfort and the convenience,� Mr. Neundorfer said.
Forget the cookie cutter One particular challenge was figuring out how to create and install cabinetry in a van that had no straight surfaces, aside from the floor, said employee Robert Wick, who works in cabinet design and manufacturing. All the cabinetry, which lines the sides of the motor home’s interior, is assembled and installed by hand at the company’s secondary plant in Chardon. The motor homes include indirect lighting with a valance so there is a uniform reference point for attaching the cabinets, Mr. Wick said. The first van and the templates were created from scratch, and the cabinetry for the first six or seven vans was made by hand, though the company has now signed on a company that does CNC (computer numerical control) machining to cut the cabinets. Even the upholstery now is made by the staff at Advanced RV; that segment started May 1. When a company is continuing to innovate, it’s harder to work with outside companies, Mr. Neundorfer said. There are 15 full-time employees and two full-time contract employees at Advanced RV at present, Mr. Neundorfer said. Working with people, especially selecting the right people for the job and helping everyone communicate, is one of Mr. Neundorfer’s favorite parts of running a company, he said. Employee Gavin Votaw, who works in plumbing, heating and electrical manufacturing, said Advanced RV is a “great place to work,â€? calling Mr. Neundorfer a hands-on and involved boss. The communication between employees is strong, he said, and there’s a sense of accomplishment in building high-quality, not “cookie-cutter,â€? pieces. “The environment here is phenomenal,â€? he said. â–
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CRAIN’S CLEVELAND BUSINESS
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JUNE 3 - 9, 2013
TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.
LIENS FILED New Management Inc. 12800 Shaker Blvd., Cleveland ID: 20-3059036 Date filed: April 2, 2013 Type: Employer’s withholding Amount: $365,439
Amount: $78,027 Daynas Homecare Co. 3100 E. 45 St., #311, Cleveland ID: 26-1493159 Date filed: April 18, 2013 Type: Employer’s annual federal tax return Amount: $71,279 Classco Realty Corp. LLC 10605 Chester Ave., Suite 400, Cleveland ID: 26-4461707 Date filed: April 12, 2013 Type: Employer’s withholding Amount: $60,495
First Fruits Child Care Center LLC 21877 Euclid Ave., Euclid ID: 20-5120191 Date filed: April 2, 2013 Type: Failure to file complete return
M E Pfahler Construction Inc. 100 Pelret Parkway, Suite A., Berea ID: 34-1720576 Date filed: April 5, 2013 Type: Employer’s withholding Amount: $45,378 New Hope Specialized Services LLC 13951 Progress Parkway, Suite A, North Royalton ID: 80-0690155 Date filed: April 5, 2013 Type: Employer’s withholding Amount: $45,116
2182 Brecksville Ltd. an LLC 8918 Brecksville Road, Brecksville ID: 26-4607557 Date filed: April 18, 2013 Type: Employer’s withholding Amount: $57,193
Community Child Care Center LLC 944 E. 152 St., Cleveland ID: 74-3227340 Date filed: April 23, 2013 Type: Employer’s withholding Amount: $225,873
Type: Employer’s withholding, unemployment Amount: $47,467
Larisa LLC 30111 Lorain Road, North Olmsted ID: 83-0384045 Date filed: April 11, 2013 Type: Employer’s withholding, unemployment, failure to file complete return, corporate income Amount: $35,977
United Stones International Inc. 5905 Harper Road, Suite C., Solon ID: 26-4660923 Date filed: April 12, 2013 Type: Employer’s withholding, corporate income Amount: $55,614
WR Resources Inc. 24100 Chagrin Blvd., Suite 380, Beachwood ID: 34-1802111 Date filed: April 11, 2013 Type: Corporate income Amount: $35,006
Studiothink LLC 1301 E. Ninth St., Cleveland ID: 56-2474763 Date filed: April 16, 2013
FOR US, IT’S ALL ABOUT BREAKING NEW GROUND. At Vorys, we’ve been working with oil and gas producers and operators since the early 1960s. So when something new comes along, whether it’s new technology or new changes in the regulatory system, we have history and experience on our side. The oil and gas business works differently here in Ohio than it does in other places, and we’ve been actively involved in the development of the statutes, rules and regulations that guide Ohio’s industry. So whatever it takes to break new ground is nothing new to us.
Mic Ray Metal Products Inc. 9016 Manor Ave., Cleveland ID: 34-0699197 Date filed: April 11, 2013 Type: Employer’s withholding Amount: $32,421
Sheet Metal Masters Corp. 4200 Coral Gables Drive, Parma ID: 26-4208327 Date filed: April 2, 2013 Type: Employer’s withholding Amount: $15,800
Daynas Homecare Co. 3100 E. 45 St., #311, Cleveland ID: 26-1493159 Date filed: April 16, 2013 Type: Unemployment, employer’s annual federal tax return Amount: $31,636
Gustavo A Munoz LLC 4126 W. 145 St., Cleveland ID: 20-3908720 Date filed: April 2, 2013 Type: Employer’s withholding, unemployment, failure to file complete return, employer’s annual federal tax return Amount: $14,775
Stratum Energy Systems LLC 1791 E. 40 St., Cleveland ID: 20-1173906 Date filed: April. 2, 2013 Type: Employer’s withholding Amount: $31,188 Special Transport & Rigging Inc. 4730 Warner Road, Garfield Heights ID: 34-1898934 Date filed: April 2, 2013 Type: Employer’s withholding Amount: $30,495 Center for Little Angels Inc. 3939 Lee Road, Cleveland ID: 34-1322419 Date filed: April 23, 2013 Type: Employer’s withholding Amount: $26,028 Diez Hermanos Inc. El Rio Grande 1541 Golden Gate Plaza, Mayfield Heights ID: 27-1256184 Date filed: April 2, 2013 Type: Employer’s withholding Amount: $25,186 Perco Pizza Co. Tiffanys Pizza & Grinders 5035 Turney Road, Garfield Heights ID: 34-1768738 Date filed: April 23, 2013 Type: Employer’s withholding, corporate income Amount: $21,802 ESP Electrical Contractors Inc. 5055 W. 5 St., Brooklyn Heights ID: 20-2738058 Date filed: April 16, 2013 Type: Employer’s withholding Amount: $20,515 MRSO Elite LLC 20800 Center Ridge Road, Suite 205, Rocky River ID: 27-0472298 Date filed: April 23, 2013 Type: Employer’s withholding, unemployment Amount: $17,866 Mindlin Consulting Group Inc. 16111 Clifton Blvd., Lakewood ID: 34-1941325 Date filed: April 2, 2013 Type: Employer’s withholding Amount: $17,506
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Medical Care Center LLC 1250 Superior Ave. E, Cleveland ID: 34-1905631 Date filed: April 5, 2013 Type: Employer’s withholding Amount: $16,977
Xtra Hands Home Healthcare Inc. 14330 Claremont Ave., Middleburg Heights ID: 34-1955690 Date filed: April 25, 2013 Type: Employer’s withholding Amount: $14,447 North Coast Flyers Travel Inc. 1601 N. Marginal Road, Cleveland ID: 43-2004714 Date filed: April 11, 2013 Type: Corporate income Amount: $12,843 Word of Righteousness Family Life Center Word of Righteousness Ministries P.O. Box 25584, Garfield Heights ID: 20-3784966 Date filed: April 25, 2013 Type: Employer’s withholding Amount: $12,701 Eighty-One Holdings LLC 24481 Detroit Road, Westlake ID: 45-3012486 Date filed: April 25, 2013 Type: Employer’s withholding Amount: $10,679 Expert Networking LLC 5441 Broadview Road, Parma ID: 83-0408919 Date filed: April 2, 2013 Type: Employer’s withholding, corporate income Amount: $10,281
LIENS RELEASED Euclid Fine Foods Inc. 16044 Euclid Ave., East Cleveland ID: 35-2174080 Date filed: Feb. 14, 2011 Date released: March 14, 2013 Type: Employer’s withholding Amount: $10,112 Orca Foods Inc. 14341 Euclid Ave., East Cleveland ID: 34-1737000 Date filed: March 13, 2008 Date released: March 20, 2013 Type: Employer’s withholding Amount: $7,227 Ralph Siegenthaler Inc. 5584 Mayfield Road, Lyndhurst ID: 34-1292394 Date filed: Nov. 6, 2009 Date released: March 14, 2013 Type: Employer’s withholding Amount: $9,507
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JUNE 3 - 9, 2013
GOING PLACES JOB CHANGES ARCHITECTURE VOCON: Angelo M. DiPierro to project manager, graphics.
CONSTRUCTION CACM SOLUTIONS LLC: Paul Kilgore to construction specialist.
Kilgore
Thomas
Jones
Bowman
Weakland
Muller
Ross
Yi
Holder
Daut
Johnson
Milano
Phillips
Koehler
Fuller
DiSilvio
DISTRIBUTION ASW: Graham Thomas to industrial engineer.
EDUCATION AUBURN CAREER CENTER: Marcy R. Trew to director of adult workforce education.
marketing and relationship coordinator; Katie Muller to advisory practice manager.
senior managing director and co-supervisor, Akron office.
LEGAL
HEALTH CARE
TUCKER ELLIS LLP: Sarena Holder to associate.
FINANCE
CBIZ FINANCIAL SOLUTIONS INC.: Ryan Pittinger to retirement plan consultant.
CHARTER ONE: Nicole Marche and Tyler Martin to branch managers.
CEDAR BROOK FINANCIAL PARTNERS LLC: Jo Ross to executive assistant.
FINANCIAL SERVICE
CIUNI & PANICHI INC.: Matthew Hinder to staff accountant.
ENGINEERING KS ASSOCIATES INC.: Michael D. Jones to professional surveyor.
BEACON FINANCIAL PARTNERS: Kelly Bowman to client relations coordinator; Rachel Weakland to
SS&G: Robert M. Littman to CEO; Gary S. Shamis to senior managing director; Mark A. Goldfarb to
CLEVELAND CLINIC: Qing Yi, M.D., to chair of cancer biology, Lerner Research Institute. METROHEALTH SYSTEM: Nazha Abughali, M.D., to chairperson, Department of Pediatrics.
INSURANCE DELTA DENTAL OF OHIO: Tom Bartram to senior sales executive.
MANUFACTURING EATON: Matthew A. Coberly to director of security. NEXTANT AEROSPACE: John Daut to U.S. regional sales director for the Northeast. OASIS GROWER SOLUTIONS: Paul Johnson to director of global grower operations.
MARKETING Tuesday, June 18, 2013 7:00-8:00AM - Registration/Breakfast/Networking 8:00-9:30AM - Program/Panel Discussion Embassy Suites, Independence Ohio
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AKHIA: Susan DiMauro, Casey Milano and Olivia Mihalic to senior account executives; Ryan Stainbrook to assistant account executive; Nicole Batchelor and Teresa DeJohn to account executives.
NONPROFIT BUCKEYE INDUSTRIES: Sean P. Kiniklis to director, Vocational and Day Services. CLEVELAND ORCHESTRA: Alexandra Preucil to assistant concertmaster; Yun-Ting Lee to member, second violin section. DIABETES PARTNERSHIP OF CLEVELAND: Tina Milano to president, CEO. IDEASTREAM: John C. Phillips to CFO. SUMMER ON THE CUYAHOGA: Jean Koehler to executive director.
Nancy Paton, Chief Public Affairs Officer, Kaiser Permanente of Ohio
REAL ESTATE ALL STOR STORAGE: Elaine
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REGISTRATION: CrainsCleveland.com/BREAKFAST
Ferretti to vice president, human resources and administration; Cindy Ashby to vice president, operations. MARCUS & MILLICHAP REAL ESTATE INVESTMENT SERVICES: Craig M. Fuller to director, National Retail Group and Net Leased Properties Group.
BOARDS OHIO WOMEN’S BAR FOUNDATION: Marilena DiSilvio (Reminger Co. LPA) to president. RECOVERY RESOURCES: Victor F. Faris (Western Reserve Partners LLC) to chair; Michael G. Riley to vice chair; Brian D. Marita to treasurer; Renee Holcomb Hardwick to secretary. TAX CLUB OF CLEVELAND: Mitch Thompson (Squire Sanders) to president. VILLAGE OF MARYMOUNT: Joseph Fornal Thompson to chair; Christine Shibley to vice chair; Don H. Smith to treasurer; Sister Anne Marie Luberda to secretary.
AWARDS UNIVERSITY SCHOOL: Robert McCreary (CapitalWorks) received the 2013 Alumni Graduate Award.
Send information for Going Places to dhillyer@crain.com
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INSIDE
18 BOARDING SCHOOLS ARE A 24-HOUR LEARNING ENVIRONMENT FOR DIVERSE GROUPS.
15
E DUCATION PREP AND PAROCHIAL Different revenue streams sought Old Trail School head says for-profit methods can help By KATHY AMES CARR clbfreelancer@crain.com
J
ohn Farber is challenging prep and parochial schools to think like for-profit entities. The traditional approach of hiking tuition, cutting teacher salaries and ramping up fundraising is not a sustainable financial model if schools want to remain competitive, said Mr. Farber, head of school at Old Trail School in Bath Township.
INSIDE: Alumni events are much more than just fundraisers. Page 17
landscape in education — both within the walls of Magnificat and beyond. Indeed, there were 38 sisters serving at Magnificat in 1971; today, there are two. Social issues have become increasingly complicated as well, she said, not to mention the advancement of technology. On a broader level, she was involved in the creation of the Cleveland Scholarship and Tutoring Program during her time with the diocese — an initiative that involved working with parents, legislators, school officials and church leaders from throughout the community.
“Schools needs to consider creating for-profit links that generate revenue that feed into their school,” said Mr. Farber, who addressed the subject in an article titled “The Financial Model is Broken: Here’s How We Fix It,” which appeared in the fall 2012 issue of Independent School magazine. “Independent school families are tapped out between paying higher tuition bills and writing checks for school-based philanthropic activities,” he said. Profitable avenues can include renting athletic facilities to outside organizations, leasing real estate or creating overseas satellite campuses. “I know schools in California, Utah and Minnesota that are reaping large fees for advising groups in the Middle East and China about utilizing their curricula,” he said. Old Trail School, for example, is renting its athletic facilities, fields and tennis courts to recreation groups and sports organizations. The school — which is a coeducational school serving preschool through eighth grade — has added two new summer teacher institutes and in recent years has expanded its after-school and summer programs. Those non-tuition revenue sources generate about $100,000 to $150,000 per year, or about 2% to 3% of overall revenue, though Mr. Farber would like to see it match the 10% yielded through fundraising. “We’re just beginning non-tuition programs. We’re going to become a lot more aggressive” in adding new sources, he said.
See REFLECT Page 16
See REVENUE Page 20
JANET CENTURY
Sister Carol Anne Smith is leaving her post as president of Magnificat High School at the end of this school year.
A TIME TO REFLECT Magnificat president leaving after more than 20 years of service to school By AMY ANN STOESSEL astoessel@crain.com
F
or Sister Carol Anne Smith it’s all about following what you are called to do. That’s exactly what the president of Magnificat High School and longtime leader in Catholic education is doing in leaving her post at the end of this school year. “For me, my life and service in Catholic education has first and foremost been a ministry,” she said. It’s a ministry that has included more than 20 years at Magnificat in various roles
and a time as superintendent for the Cleveland Catholic Diocese. And while Sister Carol Anne says staying in her post would “probably be the simplest thing” to do, she believes the time is right given the strength and foundation present at the 775-student, allgirls school in Rocky River. “She is so grounded in her faith … you always know that is the compass she is using to navigate through life,” said Moira Clark, Magnificat’s dean of student life and formation. A Northeast Ohio native, Sister Carol Anne has been witness to a changing
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“The experiences she brings to the table are legendary,” said Marilyn Arundel, Magnificat’s dean of faculty and academics. Sister Carol Anne started at Magnificat in 1971 as a theology and English teacher, eventually becoming principal. She left in 1992 to work at the diocesan level at the request of Bishop Anthony Pilla. “Coming back to Magnificat was like coming home in so many ways,” said Sister Carol Anne of her return in 2007. And since coming back to the school, Sister Carol Anne’s leadership style has been “transformational,” said Ms. Clark, who along with Ms. Arundel took on a co-leadership role of the school under the direction of Sister Carol Anne, ultimately replacing the principal position. “I have never been more excited to be part of this place,” Ms. Arundel said. Another key initiative under Sister Carol Anne’s watch has been the development of a concept called Surround Learning, a project being bolstered by a $5 million capital campaign launched in 2011. The goal is to redesign onequarter of the school to better address student learning needs through the school environment. The first phase of the project was completed in 2012 with the transformation of the resource center into the Surround Learning Center. The area is equipped with Wi-Fi, accommodating a range of electronic devices and promoting a variety of learning from independent study to collaborative technologies. The next phase, the redesign of the kitchen and cafeteria into the Marian Commons, will be completed this summer. Social justice is a constant focus
as well, and Sister Carol Anne said initiatives such as a focus on fair trade and sustainability efforts have become a part of the school’s fabric, while immersion programs allow students to experience realities other than their own. “The world needs very much the type of student graduating from Magnificat and from our Catholic schools,” said Sister Carol Anne.
Next act Magnificat’s board of directors, with the support of the Sisters of the Humility of Mary, last month appoint- Rafferty ed Renata J. Rafferty as the school’s next president. Mrs. Rafferty is president of the international firm Rafferty Consulting Group Inc. She also is serving as adjunct faculty, full time, with Zhongshan University (Maryknoll China Teachers Program) in Zhongshan, China. She has a bachelor of arts degree from Loyola University of Chicago and a master of arts degree from Tufts University in Boston. In addition, she is a former Fulbright Scholar with the Jagiellonian University in Krakow, Poland. As for what’s next for Sister Carol Anne, she said she does not immediately know, other than she plans to take a sabbatical that includes time for quiet reflection and prayer. And she has faith that her next step will become clear in time, as it always has. “Probably the one thing I planned in my life is entering the Sisters of the Humility of Mary,” she said. ■
JUNE 3 - 9, 2013
Academy helps Hawken go global By JUDY STRINGER clbfreelancer@crain.com
T
raditionally, brick-andmortar schools could offer students only as many course options as they have teachers to teach and periods to fill. That is not the case in the virtual world, where a student from Cleveland can take a class taught by an instructor in Thailand unencumbered by the availability of on-campus teachers, scheduling conflicts or even geographic restrictions. Broadening its student course catalog — from less than 200 traditional classroom-based courses to what may someday be thousands of online course options — is one key reason why Hawken School has joined a virtual learning consortium offered by the Global Online Academy. D. Scott Looney, head of school, said the move will provide Hawken’s 450 high school students with access to a variety of classes not currently available at its Lyndhurst campus, from specialized courses focused on iPhone/iPad applications, Arabic and bioethics, to artistic classes such as playwriting and cultural studies, such as “9/11 in a Global Context.” And, Mr. Looney said, all of those digital courses are taught by instructors at independent, private schools like Hawken, which means students will get the same quality and rigor online that they currently get offline. “Only one-third of the course proposals get accepted as an online course,” he said. Global Online Academy is a nonprofit consortium of international independent schools founded to create digital versions of the lessons taught inside their institutions and offer those classes online for credit to students at other
Success starts early at Laurel School!
member schools. Course materials are shared via the consortium’s portal, and students demonstrate their understanding by taking online quizzes and tests or posting responses to instructor prompts or peer comments — often at their own pace. Teachers and students interact using a web chat function, and working on team projects means collaborating with students who can be as far away as Beijing. “Just like in regular classrooms at our member schools’ campuses, there is an emphasis on engagement, interaction and collaboration among students and with the teacher,” said Global Online Academy director Michael Nachbar, noting that unlike popular MOOCs — or Massive Open Online Courses — in which tens of thousands of students can enroll in a single course, the Global Online Academy limits its online class sizes to 18 students. Many teachers, in fact, report a stronger connection with their virtual students than those in traditional classrooms because of scheduled “office hour” online chats, Mr. Nachbar said, although he is quick to assert that both teaching environments have their benefits and challenges.
Extension to the classroom The Global Online Academy was launched in 2011 after Mr. Nachbar and fellow administrators at Lakeside School in Seattle invited 15 other independent schools for a three-day conference to discuss how they could work together to extend their in-house offerings to one another through an e-learning partnership. Today, 32 schools from all over the world are members. Each school pays $30,000 per year to be part of the consortium and the tuition for each course is $700 per semester. Mr. Looney said some member schools, like Hawken, pick up the cost of tuition on behalf of their students in addition to the annual fee. In some cases, member schools can recoup a portion of that investment when one or more of their teachers offer a course through Global Online Academy, Mr. Looney added. The consortium pays $10,000 for each year-long course. Teachers who conduct an online class in addition to their nor-
mal, full-time teaching load — which is four classes at Hawken — get to pocket the $10,000, but Hawken gets that money should a teacher reduce his or her workload by a class to teach the online course. Hawken expects to have two teachers on the Global Online Academy course list next year. Mr. Looney said the advantages of the consortium go beyond adding more course options. Global awareness is another benefit. “All of our students, with the exception of a few, are no more than a short drive away from Cleveland. Through this exchange they get the chance to interact with students and teachers all over the world,” he said. “Instead of taking a class with kids from Cleveland, they can take a class with kids from Japan, Seattle, Texas and Jordan.” In addition, Messrs. Nachbar and Looney stressed the importance of preparing students for a future that is sure to include elearning, whether it be at college or online training modules in the workplace. Then there is the free summer training program Global Online Academy provides to teachers who will be customizing their courses for e-learning. “This provides an opportunity for our own teachers to get better at what they do,” Mr. Looney said. The Global Online Academy restricts membership to one prep school per metro area, so it will be the only one offering these courses in Cleveland.
Leading the pack It is, however, not the only local private school looking to the Internet to enhance its curriculum and expose students to online learning. Laurel School in Shaker Heights was one of the founding institutions of The Online School for Girls established in the summer 2009. Neighboring Hathaway Brown School has since joined that initiative. Patrick Bassett, president of Washington, D.C.-based National Association of Independent Schools said these affiliations reflect well on private schools in the Cleveland area, which appear to be leading the movement to take the hallmark “high-touch” approach of independent school high tech. “That’s a huge advantage for your community,” Mr. Bassett said. ■
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Events in spotlight as way to reconnect with alumni By SHARON SCHNALL clbfreelancer@crain.com
T
his weekend is the due date of Greta Rothman’s “baby.” Of course, nine months of preparation and anticipation preceded the arrival. The “baby” to which she proudly refers is not a newborn but rather an annual weekend-long alumni reunion held at Western Reserve Academy of Hudson. Ms. Rothman is director of special events for the private co-educational school serving grades 9 through 12, and she is one of a number of staff members at the region’s private schools who are experts at the craft of engagement at all levels. Founded in 1826, Western Reserve has a little more than 400 day and boarding students, according to the school’s website. Approximately 260 alumni and their guests alone attend the reunion weekend, said Ms. Rothman, who three months from now will begin the planning process anew for the 2014 reunion. The reunion, while substantial, hardly accounts for all of Ms. Rothman’s time, though. Her office also arranges for a wide range of other gatherings, from holiday parties to career networking, both in Northeast Ohio and places such as New York City, Chicago, Boston, Washington, D.C., Los An-
“Every event is a show. There’s a cast. There are characters. There are lines to be learned. And your audience has to be happy.” – Greta Rothman, director of special events, Western Reserve Academy geles, San Francisco and Florida. Ms. Rothman said the events she organizes annually attract an estimated 1,500 or more participants, and primarily emphasize engagement; fundraising, including the annual fund, is discussed but is not the sole concern. “Most of the events that we are doing are to strictly reconnect. We want to keep people engaged. We want to keep people informed,” she said.
‘Friend raising’ Like Ms. Rothman, Eleanor Anderson is in charge of organizing reunion and other engagement events, also known as “friend raisers” and “community gatherings.” Additionally, she organizes fundraising events. Ms. Anderson is director of alumni and parent relations and events at Hawken School. Now in
its 98th year, the co-educational private day school serves close to 1,000 students, grades pre-kindergarten through 12, at campuses in Gates Mills and Lyndhurst, according to its website. Ms. Anderson herself is a Hawken alumnus, class of 1979. Each year, she oversees events that attract more than 800 attendees. Ms. Anderson said she brought to the job knowledge of the community where she was born and raised. She described herself as an active alumnus; two older brothers, several cousins and uncles, and her father are Hawken alumni. The event planning component was first learned by observing a predecessor’s efforts and eventually by doing and later identifying what works and does not work, Ms. Anderson said. So, what works? “Faculty is always a draw,” she said. “Our graduates love to see their former faculty. … Graduates want to talk about career and academics; graduates like to tell them (faculty) what they are doing, ‘Thanks to you.’ ” Ms. Anderson said she routinely organizes events with input and assistance from parents, alumni and other members of the Hawken community; she utilizes alumni volunteers to help with venue selection and event themes. At Saint Ignatius High School of Cleveland, planning input from alumni committees for key events
also is standard process. Having current students participate in selected events is another Ignatius tradition. “It’s a nice way to get the students involved in giving back,” said Melissa Murphy, director of special events. Established in 1886, the allboys, private Catholic high school serves 1,450 day students, grades 9 -12, she said. Since 1939, students have sold raffle tickets for an annual scholarship drive; that effort includes an annual rally event. At reunions, students help as tour guides; National Honor Society students serve as ushers at Mass; and a student chorus performs at one of the reunion’s weekend events. Mrs. Murphy said the school exceeded its $1.8 million annual fund target for 2011-2012. Western Reserve wrapped up their annual fund campaign with more than $2.1 million in giving, for the same period, according to its website. In 2011-2012, giving was just over $1.2 million for Hawken’s annual fund, said Gina Walter, director of strategic marketing.
Putting on a show While the intent of these college preparatory schools’ events is engagement, fundraising or a mix of fundraising and engagement, other opportunities also arise between alumni and among alumni and students.
At The Cardinal Robert J. Bellarmine S.J. Luncheon, now in its 35th year, Ignatius alumni from the legal community “honor an alum(nus) for excellence in the legal field, promotion of fair and ethical principles in law and exemplary service” to the school, Mrs. Murphy said. Pre-law high school students attend and network, possibly developing the beginnings of a legal internship. Mrs. Murphy annually organizes events that attract an estimated 4,000 attendees; a Cleveland Orchestra holiday concert alone attracts 2,000 participants. The events, she said, support the future of students financially and, over time, alumni emerge as leaders for the next generation of Ignatius students. Monitoring is ongoing: Are the events successful? Are they wellattended? Do some need to be combined or eliminated? Mrs. Murphy said. “We don’t want to have so many events going on that people are torn — that dilutes things,” she said. The details always are being managed, said Ms. Rothman, who was a theater major in college and is active in community theater as a director, producer, writer, singer and actor. “Every event is a show,” she said. “There’s a cast. There are characters. There are lines to be learned. And your audience has to be happy.” ■
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Boarding school students adapt — around the clock By SHARON SCHNALL clbfreelander@crain.com
24-hour learning environment
See BOARDING Page 19
CLASS OF 2013
With the exception of Grand River Academy, all are co-educational and have day student populations. Some offer five-day boarding arrangements for students who commute on the weekends. Boarding and tuition costs, before financial assistance, range from approximately $35,000 to $45,000, which includes boarding fees that range from about $13,500 to $17,000. The differences among these schools offer choices for prospective families considering the boarding option. “We’re very different because, No. 1, we do have an equestrian program. We also have the Fine Arts (Association) program on campus,” said Chuck Roman, head of school at Andrews Osborne Academy. The pre-kinder-
garten through 12th-grade institution offers boarding for grades 712; 100 students, or 61%, of the 165 high schoolers are boarding. Additionally, Andrews Osborne this year partnered with Spire Institute of Geneva, in neighboring Ashtabula County, providing academics and boarding to those students enrolled at Andrews who are also trainees at Spire’s indoor athletic complex. Gilmour Academy is the only Catholic, Holy Cross boarding school in Ohio, said Steve Scheidt, director of middle and upper school admissions. Into the 1960s, Gilmour operated predominately as a boarding school; now the school operates as a day school for pre-kindergarten through 12th grades with a boarding component, he said. Boarding here also is open to grades 7-12; 53 high school boarders, or 12%, are part of the 430-member high school population. Grand River Academy, an all-boys school, helps students who have been academically
HAWKEN READY.
www.hawken.edu
H
istory books date U.S. boarding schools to the 1700s. Phillips Academy, one of the more famous, was founded in 1778 in Andover, Mass. In Northeast Ohio, the boarding school tradition, among private schools serving grades 9 through 12, dates to 1826 for Western Reserve Academy of Hudson and as recently as 2008 for the Montessori High School at University Circle. That high school-based boarding network also includes: Grand River Academy of Austinburg in Ashtabula County near Geneva; Gilmour Academy of Gates Mills; and Andrews Osborne Academy of Willoughby. All are within an hour’s drive from downtown Cleveland. “If you compared all our missions, we’re all different,” said Tim Viands, headmaster of Grand River Academy. “We’re really not in competition with any of the other
boarding schools in Ohio, nor is any other boarding school in Ohio in competition with one another.” Together, these five schools are responsible for boarding about 525 high schoolers.
SUBMITTED PHOTO
The International Dining Hall at Andrews Osborne Academy displays flags of all the countries represented by the student body.
Institutions increasingly have international flavor By SHARON SCHNALL clbfreelancer@crain.com
C
onsider sending your 14-year-old son or daughter to a boarding school in Ohio or out of state. Sameday visiting would be doable by car or plane. “Can you imagine the added dimension of thousands of miles that separate parents from their children when they’re coming from another part of the world? Parents are parents whether you’re the parent of a child from another country or state or suburb here in Cleveland,” said Steve Scheidt, director of middle and upper school admissions at Gilmour Academy of Gates Mills. International families have pursued boarding school enrollment at Western Reserve Academy of Hudson since the 1840s, first with Canadian and British enrollees, then with Japanese students in the 1870s, said Justin Zimmerman, dean of student life. They continue to pursue boarding options far from home. “The total number of international students in (a core sample of) Midwest boarding schools increased 12.1% between 2007-2008 and 20122013,” said Myra McGovern, senior director of public information of the National Association of Independent Schools of Washington, D.C.
“Among those boarding schools, the median percentage of international students was 21.6% in 2012-2013.” As a percentage of the school’s total high school population, day and boarding, international student makeup ranges from less than 10% at Gilmour Academy and Montessori High School at University Circle to 50% at Andrews Osborne Academy of Willoughby. That percentage is even higher when reflected as a percentage of each school’s boarding-only population. “Five years ago, we had more Asian students from Korea than China. In the past three years, that has reversed. The economy that impacted the U.S also impacted Korea; it did not have that impact on China,” said Chuck Roman, head of school at Andrews Osborne Academy. “The market for private (U.S., British and Canadian) boarding schools, it now is Asian: China, then Korea, Thailand, Hong Kong, Singapore.” Why this strong interest, particularly from families in China, toward boarding schools here and elsewhere? “One of the reasons is that some of the families ultimately seek to have their children go to college in the United States,” Mr. Scheidt said. See FLAVOR Page 19
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Flavor: Schools attract Boarding: Students are ‘self-reliant’ high interest from China continued from PAGE 18
continued from PAGE 18
Going global Toward that objective, they want their children’s English-speaking abilities and chances for a U.S. college admission strengthened. Having their child attend smaller classes where collaborative and participatory learning are present also is desired. Opportunities for creative learning and developing and applying problem-solving skills are not present in China’s government-run high schools, Mr. Roman said. Unlike their domestic counterparts, international students do not have to participate in an oncampus interview or shadow prospective classmates during an all-day or overnight visit. Some are interviewed in their home countries by visiting employees. Video conferencing, however, is the prevailing screening tool, assessing English skills and boarding school readiness and willingness. This past March, Mr. Roman made his fifth trip in five years to China and Korea. His itinerary includes: meeting with parents of children enrolled at Andrews Osborne; screening some, but not all, applicants; and talking with interested families who have sought him out through alumni parents and agent referrals. Finalizing international applications and getting better knowledge of the student and their language abilities are among the objectives of overseas travel for Western Reserve personnel, Mr. Zimmerman said. International boarding students contribute to the diversity of the private school population, and bring a global perspective into the
“When you have a large group of students coming from one place, there’s a tendency for them to split off.� – Nate McDonald, Montessori High School at University Circle classroom. Students develop connections with foreign classmates that lead to travel to other countries. On a practical level, international students help with language tutoring in the dormitories, Mr. Zimmerman said.
Keeping it balanced However, maintaining a balanced student profile is a factor. “We’re trying to be mindful of international to domestic students because of diminishing returns to both populations,â€? said Tim Viands, headmaster of Grand River Academy of Austinburg in Ashtabula County. The value of offering a U.S. boarding school experience to the international students, Mr. Zimmerman said, is providing “a Western experience.â€? A predominantly international population would decrease that perceived value, he said. Having ongoing, successful interactions for all students is critical and accomplished through oversight, encouragement and intervention. “When you have a large group of students coming from one place, there’s a tendency for them to split off, if you don’t teach them to integrate into the school community,â€? said Nate McDonald, head of school at Montessori High School at University Circle. â–
underachieving or not successful in a previous school setting, according to its website. And, as the eponymous name indicates, Montessori High School at University Circle instills the Montessori philosophy into the school’s academic and community approach. The environment is one that is responsive to individual development and associated needs and encourages students to become independent adults separate from family, said Nate McDonald, head of school. More than 20% of the school’s 99 students board. And while each boasts a niche, commonalities are present. “It’s a 24-hour learning environment,â€? said Justin Zimmerman, dean of student life at Western Reserve Academy. “We are a collegelike atmosphere with more support.â€? Of its 402 students, 61% board at Western Reserve; the remainder are day students. “It’s the fact that the boarding school ethos extends beyond class,â€? said Grand River’s Mr. Viands. “It’s the people being around ‌ There are learning opportunities after 3:15.â€?
“The faculty gets that once the school day is over, you’re still ‘on,’ � he said. “You live on campus and share your talents. You’re inviting kids into doing what you’re doing.� Currently, 104 Grand River Academy students board with a unique exception of one area resident who lives close by. Five dormitory parents, who also are teachers, live in apartments connected to the dormitories and are responsible for those students 24/7. Another 15 faculty and administrative staff also live on campus and are available as needed, Mr. Viands said.
Still just kids As a young man, Mr. Zimmerman attended an out-of-state boarding school. He said it was hard for his parents to allow him to go, but in the end he was given academic and athletic opportunities that would not have been possible in his hometown. “Because the students are minors and entrusted to us, we serve as an extension of the parents,� said Mr. Scheidt of Gilmour Academy. Staff is in regular contact with the parents; specific rules,
policies and guidelines shape the residential atmosphere. “It’s not the independence you get in a dorm in college. These are children. These are minors,â€? he said. Staff members ensure students complete their homework, attend class and have planned and intentional activities after school and on weekends, which may be enjoyed with day students. With parent permission, some spend time, including overnight stays, with day students’ families. At Gilmour Academy, students even are allowed to register a car with the school. “Students are independent here, but we can’t assume complete independence,â€? Mr. Scheidt said. Prospective boarders need to be motivated in academic pursuits, ready for a higher level of independence, and be sufficiently mature to support living miles away from home for days and weeks at a time. Attrition for the boarding-only population is low, lower than their day counterparts, Mr. Roman said. “They’re all coming in and not knowing anyone. How they adapt is amazing,â€? he said. “They learn to adapt to different situations; they become self-reliant.â€? â–
Look Out World, Here They Come 2013 GRADS WE SALUTE YOU!
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JUNE 3 - 9, 2013
Revenue: Tuition often accounts for more CLASSOF2013SNAPSHOTS than 70% of independent school’s finances Holy Name High School
continued from PAGE 15
Renting its equestrian center, soccer fields and dormitory space to various groups is nothing new to Andrews Osborne Academy, although that institution also is examining other non-traditional income opportunities, said a spokeswoman for the academy. The Willoughby-based school also formed in 2012 a partnership with Spire Institute to provide academic programming and housing to the Geneva-based sporting complex’s student athletes. Although the partnership is not a current revenue source, school officials say the program could lead to additional financial opportunities if it expands.
Dollars and sense Tuition typically makes up about 70% to 80% of an independent school’s revenue, followed by fundraising, which garners 10% to 20%, according to Mr. Farber. Tuition likely will continue to fall within this range, though fundraising revenue likely will need to be supplemented with additional income, as schools in the future will have to work harder to raise the same amount of money. And while many independent schools locally and abroad have instituted non-tuition revenue streams, such as summer and after-school programs, Mr. Farber argues those options aren’t enough to meet an institution’s long-term financial needs. Some independent institutions, much like their private collegebased counterparts, are grappling with how to generate income from other channels while reining in
“Right now, my philosophy is, don’t look at radical ways of doing things until the traditional means are actualized.” – D. Scott Looney head of school, Hawken School annual 3% to 4% tuition hikes. Institutions need a minimum of an annual 1% tuition increase as personnel, overhead and other costs increase, Mr. Farber said. Each 1% tuition increase at Old Trail School represents another $70,000, or about a $200 annual increase that is passed along to its 350 families, so administrators are scrutinizing ways they can substitute tuition increases with meaningful cost-cutting strategies and new revenue, Mr. Farber said. The school’s energy-efficiency upgrades — which over the last five years have included more insulation, a new energy management system and new boiler installations — yield $40,000 in annual savings. The goal is to slow Old Trail’s annual tuition increases of 3% to 4%, which are down from between 5% to 9% nearly a decade ago. Mr. Farber wants to expand the conversation on nontraditional revenue streams with local school leaders at a “Make It Work” conference July 15-16 at Old Trail School. The program is targeting heads of school, chief financial officers, board members and anyone interested in independent school financial strategies. “It’s the first year we’ve done this,” he said. “It’s a hot topic.”
Ways to go Still, other local independent institutions say they are realizing healthy returns from traditional revenue streams, including endowments, campaigns and donations, and are not as eager to delve into new money-making channels. D. Scott Looney, head of school at Hawken School, which has campuses in Gates Mills and Lyndhurst, said its $50 million endowment is approaching pre-recession levels, and enrollment is nearing a record level of 1,000. The school has added a staff member to “lean harder” into growing its annual fund, which increased 9% over 2012. “Right now, my philosophy is, don’t look at radical ways of doing things until the traditional means are actualized,” Mr. Looney said. “We’re putting more energy into making (traditional revenue sources) better.” The same holds true at Beaumont School in Cleveland Heights, where development director Barbara DiTurno said that institution is ramping up its traditional fundraising efforts to benefit the addition of eight new STEM (Science, Technology, Engineering, Math) building classrooms. Beaumont students, for example, are reaching out to senior classmates and recent alumni for annual fund pledges. “We don’t want to lose touch with our younger alums,” said Ms. DiTurno, who noted the fund’s value is about $250,000 and is increasing 10% to 15% annually. “We’re working really hard to do more individualized fundraising.” ■
■ Number of graduates: 147 ■ Number or percentage receiving scholarships: 54% ■ Dollar amount of scholarships offered: $11,173,882 ■ Plans of graduates: 75 students will attend a public school; 67, private; 12 will attend college out of state; 130 students plan to attend college in state; one enlisted in the Marines; and four intend to join the work force.
Benedictine High School ■ Number of graduates: 54 ■ Number or percentage receiving scholarships: N/A ■ Dollar amount of scholarships offered: $3,031,892 (over four years) ■ Plans of graduates: 67% will attend an in-state school; 24%, out of state; 8%, undecided or other public universities. ■ Percentage of graduating class with plans to attend college: 96%
Laurel School ■ Number of graduates: 61 ■ Number or percentage receiving scholarships: N/A ■ Dollar amount of scholarships offered: N/A ■ College plans of graduates: 46 will attend a private school; 15, public. ■ Percentage of graduating class with plans to attend college: All have been accepted to, and have deposited at, a college. There are four who are planning gap years, but plan to enroll in college in fall 2014.
Cleveland Central Catholic High School ■ Number of graduates: 102 ■ Number or percentage receiving scholarships: 20 seniors were offered scholarship assistance. ■ Dollar amount of scholarships offered: $1.7 million ■ Plans of graduates: 28% will attend a four-year college; 55%, a two-year college; 6%, military; 8.5% work force; 2.5% trade school. ■ Percentage of graduating class with plans to attend college: 83% are attending four- or two-year colleges.
Lutheran West ■ Number of graduates: 104 ■ Number or percentage receiving scholarships: 54 seniors, or 51.92% ■ Dollar amount of scholarships offered: $6,184,472 ■ College plans of graduates: 66 will attend public universities; 26, private; nine, out of state; 83, in state; eight are undecided; seven will be participating in the military; one will be attending an international university (Hankuk University of Foreign Studies in Seoul). ■ Percentage of graduating class with plans to attend college: 88.5%
Hathaway Brown ■ Number of graduates: 81 ■ Number or percentage receiving scholarships: School does not track. ■ Dollar amount of scholarships offered: N/A ■ College plans of graduates: 19% will attend in-state schools; 81%, out of state; 16%, public; 84% private. ■ Percentage of graduating
class with plans to attend college: 100% are attending four-year colleges.
Magnificat High School ■ Number of graduates: 189 ■ Number or percentage receiving scholarships: 72% ■ Dollar amount of scholarships offered: $15.9 million ■ Plans of graduates: 68 will attend state schools in Ohio; 16, state schools outside of Ohio; 27, Catholic colleges, outside of Ohio; 41, Catholic colleges, in Ohio; 14, private colleges, in Ohio; 13 private college, outside of Ohio; eight, two-year colleges; one, gap year. ■ Percentage of graduating class with plans to attend college: 100%
Hawken School ■ Number of graduates: 95 ■ Number or percentage receiving scholarships: 59% received merit scholarships. ■ Dollar amount of scholarships offered: $7.9 million ■ Plans of graduates: 33% will attend public universities; 67%, private. ■ Percentage of graduating class with plans to attend college: 100%
Andrews Osborne Academy ■ Number of graduates: 41 ■ Number or percentage receiving scholarships: 56% awarded merit scholarships ■ Dollar amount of scholarships offered: $2.5 million ■ Percentage of graduating class with plans to attend college: 100%
Lake Catholic High School ■ Number of graduates: 192 ■ Number or percentage receiving scholarships: 83% ■ Dollar amount of scholarships offered: $11,435,845 ■ Plans of graduates: 124 students will attend 18 different public schools; 68 students will attend 25 different private schools; 177 students will attend 33 different in-state schools; 15 students will attend 10 different out-of-state schools. Three students are enlisting in the military. ■ Percentage of graduating class with plans to attend college: 98%
Beaumont School ■ Number of graduates: 100 ■ Number or percentage receiving scholarships: 83% ■ Dollar amount of scholarships offered: $9 million ■ Plans of graduates: 56 will attend public universities; 42, private; 27 out of state; 71 in state. ■ Percentage of graduating class with plans to attend college: All members of the Class of 2013 are planning to obtain a degree. Two are optioning to delay their college starts.
Archbishop Hoban High School ■ Number of graduates: 192 ■ Number or percentage receiving scholarships: 118 seniors, or 61% ■ Dollar amount of scholarships offered: $15,764,807 ■ College plans of graduates: Students are attending 56 different campuses. ■ Percentage of graduating class with plans to attend college: 99%
See Page 21 for more Class of 2013 Snapshots.
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CRAIN’S CLEVELAND BUSINESS 21
CLASSOF2013SNAPSHOTS Notre Dame-Cathedral Latin School ■ Number of graduates: 192 ■ Number or percentage receiving scholarships: 55% (self-reported) ■ Dollar amount of scholarships offered: More than $13 million for four years of undergraduate studies (self-reported) ■ College plans of graduates: 95% will attend four-year institutions; 5%, two-year; 41%, private, four-year; 59%, public, four-year; 25%, out of state; 75%, in state; 25%, Catholic college or university. ■ Percentage of graduating class with plans to attend college: 100% are attending four- or two-year colleges.
Padua Franciscan High School
■ Ten Archbishop Hoban High school seniors were inducted into the Hoban Academic Hall of Honor, maintaining a 3.8 grade point average and scoring at the 98th percentile nationally on the SAT or the ACT. ■ At St. Vincent- St. Mary High School, 94% of seniors were accepted to their first-choice colleges. Class aspirations include dreams of becoming a golf pro, NFL agent, air traffic controller and nutritionist. ■ Of the Hawken School graduating class, 24% will attend one of the top 20 universities/colleges as listed in the 2013 U.S. News and World Report rankings; 7% of those will attend one of the traditional eight Ivy League institutions. ■ Cleveland Central Catholic High School has a senior who is a fashion entrepreneur and has designed a
■ Number of graduates: 206 ■ Number or percentage receiving scholarships: 64% ■ Dollar amount of scholarships offered: $16 million ■ Plans of graduates: 172 will attend in-state schools (two- and four-year); 29, out of state; 54, in state, private, four-year; 18, out-of-state, private, four-year; and one, U.S. Army. ■ Percentage of graduating class with plans to attend college: 98%
private; 1%, out of state. Two students are going into the military, one is attending an English nanny and governess school, and one is pursuing post-graduate studies. ■ Percentage of graduating class with plans to attend college: 97.5% are attending a four- or two-year college.
Saint Edward High School
Trinity High School
■ Number of graduates: 191 ■ Number or percentage receiving scholarships: 65% ■ Dollar amount of scholarships offered: More than $11.8 million ■ Plans of graduates: 113, public school; 70, private; 1, military academy; 142, in-state; 42, out of state. ■ Percentage of graduating class with plans to attend college: 96%
■ Number of graduates: 90 ■ Number or percentage receiving scholarships: 60% ■ Dollar amount of scholarships offered: $5,484,796 ■ Plans of graduates: N/A ■ Percentage of graduating class with plans to attend college: 99%
Saint Joseph Academy ■ Number of graduates: 161 ■ Number or percentage receiving scholarships: 126 seniors, or 78%, are receiving scholarships. ■ Dollar amount of scholarships offered: $20.8 million. ■ College plans of graduates: 52% will attend public universities; 48%, private. ■ Percentage of graduating class with plans to attend college: 96%
Saint Ignatius High School ■ Number of graduates: 365 ■ Number or percentage receiving scholarships: 70% ■ Dollar amount of scholarships offered: $30,138,148 for the four-year period ($7,578,162 for the first year) ■ Plans of graduates: 56% will attend public colleges/universities; 44%, private; 67%, in state; 33%, out of state. Two will attend the United States Air Force Academy; one, U.S. Military Academy; and two, U.S. Naval Academy. ■ Percentage of graduating class with plans to attend college: 99%
Saint Vincent-St. Mary High School ■ Number of graduates: 154 ■ Number or percentage receiving scholarships: 99 seniors, or 64%, are receiving partial or full scholarships. ■ Dollar amount of scholarships offered: $13,748,370 ■ Plans of graduates: 76% will attend public universities; 21%,
Lake Ridge Academy
ALSO OF NOTE
University School ■ Number of graduates: 96 ■ Number or percentage receiving scholarships: 38 seniors, or 40%, received at least one merit scholarship. ■ Dollar amount of scholarships offered: $3,250,840 (merit based, over four years) ■ Plans of graduates: The class of 2013 will matriculate at 59 different colleges in 23 states and the District of Columbia. One student will attend college in Scotland. Of 96 students, 64 will go to a college outside Ohio. ■ Percentage of graduating class with plans to attend college: All but two will be attending a four-year college. One senior will be studying violin in Germany and another will play junior hockey.
Walsh Jesuit High School ■ Number of graduates: 250 ■ Number or percentage receiving scholarships: 195 seniors, or 78% ■ Dollar amount of scholarships offered: $22,817,207 ■ Plans of graduates: 48% will attend a private, four-year institution; 52%, a public, four-year institution; 74%, in state; 26% out of state. ■ Percentage of graduating class with plans to attend college: 100%
Western Reserve Academy ■ Number of graduates: 110 ■ Number or percentage receiving scholarships: School does not publicize scholarships. ■ Dollar amount of scholarships offered: N/A ■ Plans of graduates: 76 will attend a private school; 32, public; 26, in state; 82, out of state; two, international.
clothing line called L.A.M.E., which stands for Living As Me Everyday. He took textile and sewing classes at Central Catholic and will pursue fashion design upon graduation. Cleveland Central Catholic is the only Catholic high school in the diocese that offers an educational program for students who are developmentally handicapped and learning disabled and 14% of the school’s students have special needs. Still, 98% of seniors graduate and 83% of students matriculate to college. ■ Three University School students signed National Letters of Intent, but six overall plan to compete at the NCAA Division I level. One plans to compete at the NCAA Division II level, and six plan to compete at the NCAA Division III level. ■ At Walsh Jesuit High School,
scholarships awarded by the school the student has chosen to attend amount to $6,106,025. ■ The only Northeast Ohioan and the only girl in the state to be named a 2013 U.S. Presidential Scholar is from Hathaway Brown School; and the only high school film-making competition in Northeast Ohio was created and facilitated by an HB senior. ■ One Laurel School student will attend a Canadian university, and one will be in Scotland. One was admitted to a combined BA/MD program. One is spending her gap year in Israel. Of the graduates, 50% were admitted to at least one highly selective school. ■ At Benedictine High School, the average yearly scholarship is $14,036 per student, with 193 accepted applications for an average of 3.6 per student. ■ Dollar amount of scholarships offered: $1,697,364 over four years ■ Plans of graduates: 20 will attend a public, two-year school; three, private, two-year; 25, public, four-year; 16, private, four-year; one military. ■ Percentage of class with plans to attend college: 98%.
■ Percentage of class with plans to attend college: 100%
Saint Martin de Porres High School ■ Number of graduates: 65 ■ Number or percentage receiving scholarships: 23%
■ Number of graduates: 34 ■ Number or percentage receiving scholarships: 70% ■ Dollar amount of scholarships offered: $2.8 million ■ Plans of graduates: 65% will attend an in-state school; 35%, out of state; 85%, private; 15% public. ■ Percentage of graduating class with plans to attend college: 100%.
Elyria Catholic High School ■ Number of graduates: 101 ■ Number or percentage receiving scholarships: 56% ■ Dollar amount of scholarships offered: $5,010,022 (total dollar amount offered) ■ Plans of graduates: 67% will attend an in-state, public school (including University Partnership through Lorain Community College and Cuyahoga Community College); 18%, in-state, private; 13%, out of state; 1%, University of Edinburgh, Scotland; 1%, Film Connection Internship. ■ Percentage of class with plans to attend college: 100%.
Information was solicited from some of the region’s largest private and parochial schools.
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JUNE 3 - 9, 2013
LARGEST PRIVATELY HELD COMPANIES RANKED BY ESTIMATED 2012 REVENUES
Company Address Rank Phone/Website
Estimated revenue (millions) 2012
2011
Number of local employees(1)
Year founded
Type of business
Top executive
1
Aleris 25825 Science Park Drive, Suite 400, Cleveland 44122 (216) 910-3400/www.aleris.com
$4,400.0
$4,826.4
262
2004
Aluminum rolled products and extrusions, aluminum recycling and specification alloy production
Steven J. Demetriou chairman, CEO
2
Medical Mutual of Ohio 2060 E. Ninth St., Cleveland 44115 (216) 687-7000/www.medmutual.com
$3,000.0
$2,100.0
1,900
1934
Health insurance
Rick A. Chiricosta president, CEO, chairman
3
Jo-Ann Stores Inc. 5555 Darrow Road, Hudson 44236 (330) 656-2600/www.joann.com
$2,329.0
$2,199.0
1,565
1943
Fabric and craft retailer
Travis Smith CEO, president
4
Swagelok Co. 29500 Solon Road, Solon 44139 (440) 248-4600/www.swagelok.com
$1,800.0
$1,500.0
3,800
1947
Designer and manufacturer of advanced fluid system products
Arthur F. Anton president, CEO
5
Jones Day(2) North Point, 901 Lakeside Ave., Cleveland 44114-1190 (216) 586-3939/www.jonesday.com
$1,716.0
$1,651.0
687
1893
Legal services
Christopher M. Kelly Cleveland partner-in-charge
6
Westfield Insurance One Park Circle, Westfield Center 44251 (330) 887-0101/www.westfieldgrp.com
$1,583.0
$1,507.0
1,465
1848
Insurance, banking and related financial services
James Clay chairman, CEO; Westfield Group Leader
7
Safeguard Properties LLC 7887 Safeguard Circle, Valley View 44125 (216) 739-2900/www.safeguardproperties.com
$1,009.9
$639.7
1,468
1990
Mortgage field services company
Alan Jaffa CEO
8
Fairmount Minerals 8834 Mayfield Road, Chesterland 44026 (440) 214-3200/www.fairmountminerals.com
$885.2
$909.7
104
1986
One of the largest industrial sand producers in the United States
Jenniffer D. Deckard president, CEO
9
Bendix Commercial Vehicle Systems LLC 901 Cleveland St., Elyria 44035 (440) 329-9000/www.bendix.com
$857.0
$842.0
450
1930
Leading developer of active-vehicle safety technologies, air brake charging and control systems and components
Joseph J. McAleese president, CEO
10
The Carter Lumber Co. 601 Tallmadge Road, Kent 44240 (330) 673-6100/www.carterlumber.com
$808.4
$671.4
500
1932
Building materials retailer
Neil Sackett president, CEO
11
Squire Sanders (US) LLP 127 Public Square, Suite 4900, Cleveland 44114 (216) 479-8500/www.squiresanders.com
$775.0
$740.0
333
1890
Global legal service provider
Frederick R. Nance, regional managing partner; David S. Goodman, Cleveland managing partner
12
The Davey Tree Expert Co. 1500 N. Mantua St., Kent 44240 (330) 673-9511/www.davey.com
$680.2
$646.1
602
1880
Tree services, grounds maintenance, and consulting services for the residential, utility, commercial and government markets
Karl J. Warnke chairman, president, CEO
13
BDI Worldwide 8000 Hub Parkway, Cleveland 44125 (216) 642-9100/www.bdi-usa.com
$630.2
$590.0
151
1935
Global distribution of industrial products and supply chain services
Carl G. James chairman, CEO
14
Ohio CAT 3993 E. Royalton Road, Broadview Heights 44147 (440) 526-6200/www.ohiocat.com
$592.0
$530.0
423
1945
Caterpillar engine and equipment distributor, Ohio, Northern Kentucky and Southeastern Indiana
Kenneth E. Taylor president
15
Discount Drug Mart Inc. 211 Commerce Drive, Medina 44256 (330) 725-2340/www.discount-drugmart.com
$566.0
$558.0
1,798
1968
Retail drugstore
Don Boodjeh, CEO Parviz Boodjeh, chairman
16
Baker Hostetler 1900 E. Ninth St., Suite 3200, Cleveland 44114 (216) 621-0200/www.bakerlaw.com
$510.0
$442.0
400
1916
Legal services
R. Steven Kestner, national executive partner; Hewitt B. Shaw, Cleveland office managing partner
17
Shearer's Foods LLC 100 Lincoln Way, Massillon 44646 (330) 834-4300/www.shearers.com
$498.9
$405.8
950
1974
Manufacturer of snack foods
CJ Fraleigh CEO
18
Fred W. Albrecht Grocery Co. 2700 Gilchrist Road, Akron 44305 (330) 733-2263/www.acmestores.com
$410.0
$410.0
1,477
1891
Retail grocery and pharmacy stores
Steve Albrecht president
19
Reserve Management Group 1831 E. Highland Road, Twinsburg 44087 (440) 519-1768/www.reserve-group.com
$400.0
$400.0
235
1991
Scrap metal processor specializing in ferrous and non ferrous metals and scrap electronics
Steve Joseph president, CEO
20
Anderson-DuBose Co. 5300 Tod Ave., Lordstown 44481 (440) 248-8800/www.anderson-dubose.com
$394.0
$372.0
212
1991
Distribution of food, paper and beverage products
Warren E. Anderson president
21
Transtar Holding Co. 7350 Young Drive, Walton Hills 44146 (440) 232-5100/www.transtar1.com
$350.0
$350.0
200
1975
Manufactures and distributes automotive transmissions, transmission replacement parts, Timothy Bowes CEO refinishing products, coatings
22
The Garland Co. 3800 E. 91st St., Cleveland 44105 (800) 321-9336/www.garlandco.com
$266.8
$259.8
107
1895
Manufactures roofing, flooring, coatings, David M. Sokol sealants and maintenance systems for president commercial, industrial and institutional buildings
23
MCPc Inc. 1801 Superior Ave., Suite 300, Cleveland 44114 (440) 268-4000/www.mcpc.com
$265.0
$240.0
271
2002
A customer-focused technology consultant, experienced in solving IT challenges including mobility, networking and cloud.
Michael Trebilcock chairman, CEO, president
24
Cleveland Browns(3) 76 Lou Groza Blvd., Berea 44017 (440) 891-5000/www.clevelandbrowns.com
$258.0
$247.0
170
1946
Professional football team
Jimmy Haslam owner
25
Advanced Lighting Technologies Inc. 32000 Aurora Road, Solon 44139 (440) 519-0500/www.adlt.com
$250.0
$260.0
130
1984
Energy-efficient lighting
Wayne R. Hellman CEO
26
Dave's Supermarkets 5300 Richmond Road, Bedford Heights 44146 (216) 763-3200/www.davesmarkets.com
$247.3
$247.7
1,010
1935
Supermarkets
Daniel Saltzman president
27
Famous Enterprises Inc. 109 N. Union St., Akron 44304 (330) 762-9621/www.famous-supply.com
$238.0
$209.0
300
1933
Distributor of HVAC, plumbing, PVF, industrial, building products
Marc Blaushild president, CEO
28
Cleveland Construction Inc. 8620 Tyler Blvd., Mentor 44060 (440) 255-8000/www.clevelandconstruction.com
$235.0
$310.9
75
1980
Commercial building contractor
Jon D. Small president
29
Oatey Co. 4700 W. 160th St., Cleveland 44135 (216) 267-7100/www.oatey.com
$200.0
NA
400
1916
Manufactures plumbing products
Gary A. Oatey chairman
30
Thompson Hine LLP 127 Public Square, Suite 3900, Cleveland 44114 (216) 566-5500/www.thompsonhine.com
$192.0
$181.3
310
1911
Legal services
Deborah Z. Read, managing partner James B. Aronoff, partner-in-charge
31
Donley's Inc. 5430 Warner Road, Cleveland 44125 (216) 524-6800/www.donleyinc.com
$187.6
$247.2
227
1892
Design/builder, construction manager and general contractor, self-performs concrete construction
Malcolm M. Donley president, CEO
32
Cleveland Indians Baseball Co.(4) 2401 Ontario St., Cleveland 44115 (216) 420-4487/www.indians.com
$186.0
$178.0
217
1901
Professional baseball team
Lawrence J. Dolan, owner Paul J. Dolan chairman, CEO
See LIST Page 24
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Locked: Companies have to better document security procedures continued from PAGE 1
To make sure that data is locked down tight enough to meet HIPAA standards, some businesses will need to do more than they’re doing now, according to Michael Stovsky, an attorney at Benesch in Cleveland. None of the affected businesses that spoke with Crain’s Cleveland Business said they plan to overhaul their security practices because of the pending rule changes; however, other companies probably don’t even know they meet HIPAA’s definition of a “business associate” and therefore must comply with its regulations, Mr. Stovsky said. “The business associates who don’t think they’re in the health care business, those are the ones who are going to be thunderstruck by this,” said Mr. Stovsky, chairman of Benesch’s Innovations, Information Technology and Intellectual Property Practice Group. Net Activity Inc. is one of many local businesses that soon will need to comply with HIPAA. The small Valley View company’s core business has nothing to do with health care: Net Activity helps other businesses manage their computer systems. But among those businesses are physician practices, so the company has had to sign agreements stating it will comply with HIPAA. Not that the company is totally unprepared. Each quarter, Net Activity assesses the security of its processes and computer systems, which already should be up to HIPAA’s standards, said president and founder Harry Bhatia. But the company wouldn’t be prepared for an audit if one were to occur today, Mr. Bhatia said. “I’m sure we’ll be lacking on some documentation,” he said.
ARE COMPANIES HIP TO THE RULE CHANGES? “The business associates who don’t think they’re in the health care business, those are the ones who are going to be thunderstruck by this.”
“HIPAA is 90% documentation.” – Kim Wilcoxon, partner, Thompson Hine
– Michael Stovsky, attorney, Benesch the thousand-plus business associates that works with MetroHealth causes a data breach, the hospital system could terminate the contract and seek damages in court. Soon, however, a company in that situation could face additional federal penalties, Mr. Dickinson said. Plus, the federal government is
starting to do more HIPAA-related audits, Mr. Dickinson said. “They are in a much more serious condition when it comes to the federal government,” he said.
Heads up, subcontractors Like Net Activity, AtNetPlus Inc. of Stow provides information tech-
nology services to some physician practices. Partner Jay Mellon said he’s unsure if the company would qualify as a business associate, but if it does he worries that it could affect the company’s insurance rates. “My biggest concern would be, I hope my policy fees don’t go up,” Mr. Mellon said, adding that the company already should meet HIPAA standards. Security has been part of Iron Mountain Inc.’s core business since founder Herman Knaust converted a depleted iron mine in New York state into a shelter for corporate data. However, the Boston-based records management company — which has local facilities serving University Hospitals and possibly
other undisclosed customers — now must make sure its many subcontractors sign amended business associate agreements and understand HIPAA soon will apply directly to them, said Web Hull, senior privacy and compliance specialist. Iron Mountain is telling those subcontractors, including some in Northeast Ohio, to do the same for their own subcontractors, if they have access to patient data. With its security team refocusing on HIPAA compliance, Iron Mountain sees this moment as an opportunity to educate its subcontractors, Mr. Hull said. “For lots of other people who are business associates, this is going to be a major change,” he said. ■
Feds don’t fool around A lot of companies will need to do more to document their security procedures, according to attorney Kim Wilcoxon, partner in the executive compensation group at Thompson Hine’s Cincinnati office. The documentation process could be easy for a small company run by a single person who knows what’s going on throughout the entire business, Ms. Wilcoxon said. For a larger company, however, getting several different departments to produce the proper documentation can take months, she said. “HIPAA is 90% documentation,” she said. But documentation isn’t everything. Even companies that think they meet HIPAA’s security standards — which touch on the security of facilities, computers and administrative processes — could be wrong, Ms. Wilcoxon said. For years, hospitals and other health care companies liable under HIPAA have forced vendors to sign agreements stating that they’ll protect patient data and notify them of any security breaches. However, some companies that signed those forms might have installed security measures that no longer suffice because of changes in technology or the way they do business, Ms. Wilcoxon said. Companies qualifying as business associates need to conduct risk assessments regularly, she said. Joe Dickinson, privacy and security officer for the MetroHealth Systems, said business associates will face “significantly increased liability” once they’re directly accountable to the federal government. If one of
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LARGEST PRIVATELY HELD COMPANIES RANKED BY ESTIMATED 2012 REVENUES
Estimated revenue (millions)
Company Address Rank Phone/Website
2012
2011
Number of local employees(1)
Year founded
Type of business
Top executive
33
The Ruhlin Co. 6931 Ridge Road, Sharon Center 44274 (330) 239-2800/www.ruhlin.com
$175.0
$167.3
195
1915
Building, industrial and heavy civil construction and construction management services
James L. Ruhlin president, CEO
34
K&D 4420 Sherwin Drive, Willoughby 44094 (440) 946-3600/www.kandd.com
$128.6
$122.9
342
1984
Owns and manages 12,000 apartments throughout Greater Cleveland, Akron and Canton
Karen M. Paganini, president Douglas E. Price, CEO
35
Cavaliers Operating Co. LLC(5) 1 Center Court, Cleveland 44115 (216) 420-2000/www.nba.com/cavaliers
$128.0
$149.0
350
1970
Professional basketball team
Daniel Gilbert majority owner
36
The Millcraft Paper Co. 6800 Grant Ave., Cleveland 44105 (216) 441-5500/www.millcraft.com
$112.2
$138.8
55
1920
Wholesale distribution of fine printing paper, envelopes and packaging
Katherine M. Mlakar chairman, owner
37
East Manufacturing Corp. 1871 state Route 44, Randolph 44265 (330) 325-9921/www.eastmfg.com
$110.0
$65.0
410
1968
Manufactures trailer bodies; wholesale truck parts and accessories
David J. de Poincy president, COO
38
NACSCORP 528 E. Lorain St., Oberlin 44074 (440) 775-7777/www.nacscorp.com
$101.2
$100.0
95
1963
Distributor of books and general merchandise products to collegiate retailers
Kurt Schoen president, COO
39
Wolff Bros. Supply Inc. 6078 Wolff Road, Medina 44256 (330) 725-3451/www.wolffbros.com
$101.0
$96.1
255
1965
Wholesale electrical, plumbing, HVAC, lighting and cabinetry
Howard E. Wolff president, CEO
40
Panzica Construction Co. 739 Beta Drive, Mayfield Village 44143 (440) 442-4300/www.panzica.com
$98.0
$115.2
100
1956
General contractor, construction management, design/build
Anthony M. Panzica owner, president, CEO
41
Valley Ford Truck Inc. 5715 Canal Road, Cleveland 44125 (216) 524-2400/www.valleyfordtruck.com
$97.6
$108.0
75
1964
New and used truck sales, leasing, service and parts
Brian E. O'Donnell president
42
The Reserves Network 22021 Brookpark Road, Fairview Park 44126 (866) 876-2020/www.trnstaffing.com
$92.5
$90.7
80
1984
Provider of total staffing solutions to office, industrial, technical and professional markets
Neil Stallard CEO
43
Fortney & Weygandt Inc. 31269 Bradley Road, North Olmsted 44070 (440) 716-4000/www.fortneyweygandt.com
$73.9
$79.3
95
1978
National account general contractor, serving commercial, retail, hospitality, institutional and multi-family markets
Robert L. Fortney founder
44
The Austin Co. 6095 Parkland Blvd., Cleveland 44124 (440) 544-2600/www.theaustin.com
$61.6
$69.0
82
1878
Consulting, architecture, engineering and construction services for industrial, commercial Michael G. Pierce president and government clients
45
Mar-Bal Inc. 10095 Queens Way, Chagrin Falls 44023 (440) 543-7526/www.mar-bal.com
$59.0
$48.0
182
1970
Custom thermoset molding and material manufacturing
Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. (1) As of May 1, 2013. (2) Revenue number from the AM Law 100, May 1, 2013. (3) Revenue number from Forbes, NFL Team Values, The Business of Football, Sept. 5, 2012. (4) Revenue number from Forbes, The Business of Baseball, March 27, 2013. Employee number is number of employees in Ohio. (5) Revenue number from Forbes, NBA Team Valuations, Jan. 23, 2013.
Scott Balogh president, CEO
RESEARCHED BY Deborah W. Hillyer
Giant: System employs more than 33,000, operates 24 hospitals continued from PAGE 1
to build an enterprise designed to lock horns with Northeast Ohio’s own medical giants, the Cleveland Clinic and University Hospitals. While Catholic Health Partners wouldn’t say whether it was looking to absorb others in the area, observers note the financial pressures facing smaller health care providers make Northeast Ohio fertile ground for acquisitions. And given Catholic Health Partners’ strong balance sheet and recent appetite for local institutions, additional deals could be on the horizon. “There are still some pieces on the table that could be cobbled together to make a fairly dynamic third health system in Northeast Ohio,” said Bill Ryan, president of the Center for Health Affairs, an advocacy group for local hospitals. “Clearly, CHP has the resources to do something like that. You start to connect those with Summa, and now you’ve got a pretty formidable group with a pretty extensive reach.” Catholic Health Partners already has a peppered presence in Northern Ohio, with community hospitals in Lorain, Lima, Toledo, Warren and Youngstown. In all, the health system employs more than 33,000 and operates more than 250 health care facilities, including 24 hospitals. With the Kaiser deal, Catholic Health Partners is poised to add 15 medical offices in Northeast Ohio. Plus, the system will have access to
“There are still some pieces on the table that could be cobbled together to make a fairly dynamic third health system in Northeast Ohio.” – Bill Ryan, president, Center for Health Affairs Summa’s robust infrastructure in the Akron market. Thomas Campanella, executive director of Baldwin Wallace University’s health care MBA program, sees Catholic Health Partners’ interest in Northeast Ohio as a welcome development for health care consumers. “Like in anything, in sports or whatever, competition brings out the best in everybody,” Mr. Campanella said. “For the region, it’s a real positive situation. There are different players with different models of care. That provides some choices.”
Insuring success The network Catholic Health Partners appears to be forming in Northeast Ohio carries added intrigue as both recent deals have involved health care providers with robust insurance arms. Health care systems have been urged by the federal government to shift their care delivery and operating models toward ones that focus on keeping people healthy and out
of the hospital. But because hospitals largely are paid for the volume of services they provide, there’s been little incentive to invest in such changes. However, given the size of the statewide enterprise it’s building and the in-house insurance offerings it’s adding to its own, Catholic Health Partners may make that transition more easily than most, some observers say. When a health system also has skin in the insurance business, there’s further motivation to reduce costs in the system through eliminating unnecessary procedures. “The world is going to be more price-competitive in the years to come,” said J.B. Silvers, a health care finance professor at Case Western Reserve University. “That’s pretty clear. Positioning yourself to have the lower-cost providers is not a bad strategy. My guess is that’s the thing they’re trying to do.” The so-called “integrated” delivery model — one that includes an insurance arm and an exclusive provider network — always has been Kaiser Permanente’s forte and a key to its success in California. However, Kaiser has had difficulty establishing itself in Northeast Ohio given the dominance of insurance giants such as Medical Mutual of Ohio, which has maintained strong relationships with large local employer groups. Kaiser Permanente’s enrollment in Ohio, for example, fell 16.5% to 86,338 in 2012 from 103,503 in
2011, according to state records. Also, the health plan posted a loss of about $13.9 million through March of this year, and in 2012 stomached a $59.6 million loss. In announcing the deal, Nancy Paton, Kaiser Permanente Ohio’s chief public affairs officer, stressed it was “really great news” for Kaiser’s enrollees to link up with a “well-resourced” enterprise such as Catholic Health Partners. “What’s really great with CHP is their mission and their dedication to integrated care matches completely our mission and our approach,” Ms. Paton said.
A risky venture? Despite its solid financial position and calculated moves in this market, Catholic Health Partners could find it hard to siphon market share from either the Clinic or University Hospitals. Both Cleveland institutions have had their own challenges of draining any meaningful market share from each other despite their costly expansion projects in the region. A spokeswoman for Catholic Health Partners said the organization hasn’t decided yet how it would brand itself in Northeast Ohio in the wake of the pending Kaiser acquisition. Its identity is something that could determine whether the organization has any chance at competing in the region’s crowded health care landscape. “Having this religious affiliation could be valuable to them because they won’t be seen as an organiza-
tion that is trying to skimp on health care and pad their bottom line but instead is maintaining a focus on caring for their population,” said Mark Votruba, an associate professor of economics at Case Western Reserve. “If they can develop that as their brand, they could end up competing, but I think they’ll have a difficult road ahead of them because of the dominance the Clinic and UH,” Mr. Votruba said. In recent years, Northeast Ohio’s remaining independent hospitals have softened their rhetoric regarding their preference of remaining unattached to a larger health system. In addition to Catholic Health Partners’ desire to spread its wings, the Clinic has expressed interest in acquiring institutions locally and across the country. Akron General Health System rebuffed an offer from the Clinic in recent years, but its current CEO, Dr. Timothy Stover, told Crain’s earlier this year it likely would become an arm of a larger medical system given the trends in health care. Asked late last week whether Akron General was in discussions with Catholic Health Partners or any other health system, an Akron General spokesman said in an email, “We clearly realize that working with other health care organizations is our best opportunity for continuing to excel, however, we are not prepared to discuss any specific organizations at this time.” ■
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Patients: UH unveils enclosed kiosks for communication with docs continued from PAGE 3
“It was amazing and very enlightening to me. The quality of the image is amazing.”
“It was amazing and very enlightening to me,” Mr. Henkel said. “The quality of the image is amazing.” Mr. Henkel’s checkup, part of a pilot project rolled out by Dr. Kikano, is one of several so-called telemedicine efforts taking root at Northeast Ohio’s medical institutions such as the Cleveland Clinic, MetroHealth System, Summa Health System and others. The idea is to employ sophisticated technology, such as high-definition video conferencing, to reach individuals who otherwise might not be able to access care. Telemedicine candidates could include people in poor, urban centers or those in rural communities. They also could include those from other parts of the country who want easy access to Northeast Ohio’s top-flight medical care without traveling hundreds of miles for face-time with a doctor. The Cleveland Clinic already runs a telestroke program in which its stroke specialists can consult smaller, community hospitals in Ohio and Pennsylvania via a teleconferencing system that rolls to a patient’s bedside. “The pendulum has started to swing, and it’s driving a general redesign of how we think about care delivery,” said Dr. C. Martin Harris,
Contact: Phone: Fax: E-mail:
– Thom Henkel, retired Cleveland resident, on his telemedicine appointment with Dr. George Kikano of University Hospitals the Clinic’s chief information officer. “If we can find venues where we can deliver high quality care but in a much more cost-effective manner, that’s a huge step forward.”
About that reimbursement … The wrinkle in the whole telemedicine space, at least locally, is that providers largely go unpaid for providing such services, given that Medicaid doesn’t reimburse for such services and commercial payers have been spotty at best at doing so. However, legislation has been proposed in both chambers of the Ohio Legislature that would allow providers to be reimbursed by Medicaid for such services. Representatives from the Ohio State Medical Association and Gov. John Kasich’s Office of Health Transformation say, in general, they’re supportive of efforts to reimburse such services if they help expand access to quality medical care. Until then, providers largely are
Denise Donaldson (216) 522-1383 (216) 694-4264 DDonaldson@crain.com
tackling telemedicine efforts on their own dime or with outside support. University Hospitals, for instance, secured a $12.7 million federal grant last year to launch an initiative, which includes several telemedicine components, to bolster pediatric care. As part of its so-called pediatric accountable care organization, University Hospitals this month plans to hand out iPad minis to select pediatric patients with complex, chronic conditions, so they can have direct access to their medical teams through videoconferencing. Earlier this year, the health system also rolled out at its Chagrin Highlands Health Center in Orange Village an 8-foot by 5-foot enclosed kiosk furnished with a touch screen computer, audio system and highdefinition video conferencing capabilities that allows patients to communicate with an off-site doctor. The kiosk is staffed by a medical attendant who can take the patients’ vitals. “It’s truly a wonderful patient experience,” said Dr. Andrew Hertz, medical director of UH Rainbow Care Connection, the system’s pediatric accountable care organization. “It’s much better than Skype or (Apple’s) FaceTime with a doctor because there are medical components to this. It’s a true medical encounter.”
UH plans this summer to open two more kiosks — which are designed by HealthSpot, a company in Dublin, Ohio — in low-income areas, though Dr. Hertz wasn’t ready to say where they’d be, other than to indicate they wouldn’t be at UH facilities or locations generally thought of as hubs for medical care. The Cleveland Clinic already operates HealthSpot kiosks in three of its community health centers in the region. Also, MetroHealth plans to have one operational at the Cuyahoga County administration building on Ontario Street in downtown Cleveland in late July.
Technology to the rescue Despite the high costs associated with employing such technology and the dearth of dollars flowing in to pay for the services, the doctors involved say telemedicine has the potential to curb skyrocketing health care costs as it could deter people from frequenting the emergency room with minor health concerns. Instead, they could visit a HealthSpot kiosk, where the overhead, unlike an emergency room, isn’t incredibly high as it doesn’t require a bevy of specially trained docs to be on call. Telemedicine also could help with staffing issues as doctors, in some sense, now can be in two places at once via telemedicine. A
REAL ESTATE
AUCTION
single doctor can manage several patients in different geographic locations. And with a looming physician shortage, Dr. Kikano said, that accessibility could prove to be beneficial. “The technology is there,” Dr. Kikano said. “We just have to figure out the best protocols to use it.” MetroHealth’s new CEO, Dr. Akram Boutros, said he wants the health system to deliver care through telemedicine, as many of the health system’s low-income patients have transportation issues. Last summer, MetroHealth started treating inmates in the Cuyahoga County jail through telemedicine. It’s an effort the health system, which is subsidized by the county, says could save taxpayers money as the county no longer would need to go through the timeconsuming and costly process of transporting inmates to the hospital. It’s also an extension of the hospital’s mission of providing care for the county’s most vulnerable, hospital officials say. “Inmates also didn’t like coming over in their jumpsuits, and it could be a humiliating experience if they saw someone at the hospital that they knew before they went to jail,” said Dr. Ann Avery, an infectious disease physician at MetroHealth. “From a pride and self-respect standpoint, it’s a nice option.” ■
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THEINSIDER
THEWEEK MAY 27 - JUNE 2 The big story: Cincinnati-based Catholic Health Partners, the largest health system in Ohio, agreed to acquire Kaiser Permanente Ohio, which employs about 1,600 people and is the smallest of the enterprises across the country run by health care juggernaut Kaiser Permanente. Several steps, including regulatory approval, must be taken over the coming months before the deal is finalized. The resulting organization would continue to provide care for more than 80,000 members enrolled in Kaiser Permanente Ohio’s health plan. See more, Page One. The sands of time:
Fairmount Minerals in Chesterland, a producer of industrial sands, named president Jenniffer Deckard as the company’s CEO. She succeeds Chuck Fowler, who is retiring after 17 years in the post. Mr. Fowler will continue as a director and as chairman of the Executive Committee of the company’s board. Although Mr. Fowler is stepping down from day-to-day management responsibility, he will continue as a mentor and adviser to Fairmount management.
Towering gift: Southwest General Hospital in Middleburg Heights announced it has received a $3 million gift — the largest in its history — from one of its own doctors. The gift from Dr. Vasu Pandrangi, a plastic surgeon who has served as chairman of Southwest’s board of trustees since 2007, and his wife, Lisa, will support the hospital’s capital campaign. The campaign is financing the hospital’s $128 million expansion project on its main campus, which will include a new patient bed tower with 96 private rooms. The new tower will be named in honor of the Pandrangi family.
Network news: Fairlawn-based A. Schulman
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Forget the ‘hospital’ — it’s ‘Children’s’ now
■ With 16.9 million votes, the son of National
Interstate Corp.’s founder has taken a seat on the company’s board of directors just as his father wanted. Michael A. Spachman was one of six directors elected at the Richfield company’s annual meeting of shareholders in May, the company revealed in a public filing. Incumbent director Theodore H. Elliott Jr., who had served on the board since 1989, was not reelected. Mr. Spachman was nominated by Alan R. Spachman, who founded the specialty insurance company in 1989, but Michael Spachman’s name was not added to the official proxy. Alan Spachman said he nominated his son because there was a need for new blood on the board. Shareholders of National Interstate voted on a cumulative basis for the directors. Under Ohio General Corporation Law, cumulative voting allows a shareholder to multiply the number of shares owned on the record date by the number of directors to be elected and to cast the total for one nominee or distribute the votes among the nominees. Alan Spachman owns 1.7 million National Interstate shares. All six directors are to serve until the 2015 annual meeting of shareholders or until a successor is elected and qualified. Michael Spachman also was appointed to the company’s audit committee at a board meeting following the shareholders meeting. Both Messrs. Spachman declined to comment about Michael’s election to the board. — Michelle Park
WHAT’S NEW
BEST OF THE BLOGS
■ The Cleveland Clinic Children’s Hospital has dropped “hospital” from its name. For the institution now known simply as Cleveland Clinic Children’s, the change is the culmination of a rebranding effort that started last year when Dr. Giovanni Piedimonte joined the Clinic as chairman of its pediatric institute, said Paul Matsen, the health system’s chief marketing officer. “People rarely use the word hospital anymore,” Mr. Matsen said. “It gave us an opportunity to refresh and make the name much more encompassing.” The new name, Mr. Matsen said, is more reflective of all the services the Clinic offers in the pediatrics space, as it offers services in the inpatient and outpatient arenas. The health system also refreshed the Children’s logo, blending what had been just a green handprint with the Clinic’s iconic green and blue square logo. The Clinic’s services geared toward children are wide-ranging. The Clinic operates its rehab services and Lerner School of Autism at its Shaker Heights campus, offers acute care to children at its main campus and offers other pediatric services at its community hospitals. — Timothy Magaw
Not on the ballot, but now on the board
Inc. reached an acquisition agreement — but not with Ferro Corp., which has rebuffed its merger overtures. The maker of plastic resins agreed to buy Network Polymers Inc. in Akron, a niche plastics compounding and distribution business, for about $50 million. Network Polymers operates a 72,000-square-foot manufacturing facility in Akron and employs about 70 people. It recorded revenues of $65 million in fiscal 2012.
Excerpts from recent blog entries on CrainsCleveland.com.
Getting their Irish up
Fleet response: Diebold Inc. said it’s upgrading one of the largest automated teller machine fleets operated by a credit union in the United States. The producer of ATMs and bank security equipment said it will update and replace more than 1,100 ATMs for State Employees’ Credit Union of Raleigh, N.C. Diebold did not disclose the value of the work for what it said is the country’s secondlargest credit union, serving 1.8 million members.
Cashing in: The board of the Ohio Bureau of Workers’ Compensation unanimously approved plans presented by Gov. John Kasich to distribute $1 billion in cash rebates to 210,000 Ohio employers. The board also signed off on a 2.1% average reduction in base rates for private employers. The cash rebate to private employers and public employer taxing districts is made possible by larger-than-expected fund balances generated by strong investment management, the bureau said. The 2.1% base-rate reduction is for the 2014 policy year, which begins July 1.
This and that: A coalition led by the Cuyahoga County Land Reutilization Corp., commonly known as the Cuyahoga Land Bank, completed the distribution of nearly $41 million in federal stimulus money that was awarded in 2010 to help stabilize Cleveland-area neighborhoods. …An executive with the online home of The Plain Dealer was named the new publisher and CEO of the Cleveland Jewish News. He’s Kevin S. Adelstein, 45, who has been director of sales and co-manager of cleveland.com and now will be the “chief professional officer” of Cleveland Jewish Publication Co.
COMPANY: Fidanza Performance, Perry PRODUCT: Lightweight aluminum flywheel #186091 Fidanza says the flywheel is for use on the 2012 and newer Mustang GT 5.0L. The high-performance product “is constructed of 6061 T6 aluminum for optimum weight reduction and tensile strength, delivering faster acceleration, quicker throttle response, better vehicle braking, increased clutch efficiency, and long-lasting durability,” Fidanza said. It features a precision-machined ring gear along with Fidanza’s replaceable steel friction surface. Fidanza said the flywheel “will never require resurfacing or replacement when changing out clutches, saving owners both time and money.” Designed to make the newest 5.0L Mustang even more fun to drive, this lightweight flywheel “frees up additional horsepower to the wheels and delivers the added excitement and performance Mustang owners will love,” according to the company. For more information on Fidanza’s aluminum flywheels and other products, and to locate a dealer, visit www.fidanza.com.
Send information about new products to managing editor Scott Suttell at ssuttell@crain.com.
■ Apple got tagged as a tax-avoider, but a New York Times op-ed piece, which referenced Eaton Corp.’s tax strategy, said the real problem is the corporate tax system itself. Steven Rattner, a longtime Wall Street financier, noted that while Apple grabbed the headlines, a drug maker called Actavis announced it would spend $5 billion to acquire Warner Chilcott, an Irish pharmaceuticals company less than half its size. Buried in the fifth paragraph of a news release was “the curious tidbit that the new company would be incorporated in Ireland, even though the far larger acquirer was based in Parsippany, N.J.,” he wrote. As a result, Actavis “expects to reduce its effective tax rate from about 28% to 17%, a potential savings of tens of millions of dollars per year for the company,” Mr. Rattner wrote. Does that strategy sound familiar? It should. As Mr. Rattner pointed out, it’s the same one used by Eaton, a diversified power management company based for nearly a century in Cleveland, which also became an “Irish company” when it acquired Cooper Industries last year. These perfectly legal maneuvers underscore a central truth: “As muddled and broken as the individual income tax system may be, the rules under which the government collects corporate levies are far more loophole-ridden and counterproductive,” Mr. Rattner concluded.
Money in the bank ■ U.S. companies have been sitting on cash for a while, and there’s no sign that’s about to change. “The buildup of cash and marketable securities accelerated in the first quarter on a year-over-year basis to a record $1.73 trillion after slowing in early 2012,”
You better book for these tickets ■ Shut out of tickets for “The Book of Mormon?” You now have a fresh chance to see the Tony Award-winning musical when it comes to Cleveland later this month. PlayhouseSquare and “Book of Mormon” producers last Friday announced a “lottery ticket policy” for the show’s national tour, which stops in Cleveland June 18 to July 7 (excluding July 4) for performances at the Palace Theatre. In Cleveland, the production will conduct a pre-show lottery at the PlayhouseSquare box office, making 16 tickets available for each performance at $20 apiece. Here’s how it works: Entries will be accepted at the box office beginning 2 ½ hours prior to each performance. Each person will print his or her name and the number of tickets (one or two) they wish to purchase on a card that is provided. Two hours before curtain, names will be drawn at random for a limited number of tickets priced at $20 each. Only one entry is allowed per person. Cards are checked for duplication prior to drawing. Winners must be present at the time of the drawing and show valid identification to buy tickets. “The Book of Mormon” won nine Tony Awards in 2011, including Best Musical. It features book, music and lyrics by Trey Parker, Robert Lopez and Matt Stone; Messrs. Parker and Stone are the Emmy Award-winning creators of “South Park.” — Scott Suttell
Bloomberg reported. “At the same time, capital spending in the most recent quarter rose by the least since March 2010, when the U.S. was still emerging from a financial crisis.” Bloomberg looked at data from 2,300 U.S. companies. The cash buildup means the U.S. economy “loses a driver of job creation and risks staying locked in below-average growth, giving even more cause to hold tight,” according to the story. Nick Raich, CEO of Earnings Scout, an independent economic research firm based in Cleveland, told the news service, “What concerns me is that companies have all of this excess cash and they are not deploying it into their long-term operations. Public outcry will erupt if companies do not spend and create jobs.”
Growth stories ■ Two Cleveland companies made the 2013 Inner City 100, a list of the fastest-growing inner-city businesses in the United States. The Inner City 100 program is a joint effort of the Initiative for a Competitive Inner City and Fortune magazine. At No. 7 on the list is APB & Associates, at 55 Erieview Plaza, an IT consulting firm that provides project management services to large firms and the government. The company has $2.2 million in annual revenue and a 75% annual growth rate, according to Fortune. “CEO Andre Bryan founded the company in 2004 with money he had made as an independent consultant,” the magazine said. “APB has been able to attract local talent and pay for many of its employees to attend college.” DuneCraft Products, at 14215 Caine Ave. in Cleveland, was No. 70 on the list with a five-year annual growth rate of 19% and revenue of $4.1 million. The company, led by CEO Grant Cleveland, makes science and nature products.
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