Issuu

20150608-NEWS--1-NAT-CCI-CL_--

6/5/2015

3:20 PM

Page 1

$2.00/JUNE 8 - 14, 2015

The importing of foreign steel to Ohio mills has become a big topic of debate in the industry — P. 3 The return of Cuyahoga County’s commercial docket is ‘happening,’ but likely will take a while — P. 3

of Interest is through roof Plenty grocers NBA Finals might be 70% city’s biggest-ever Year-over-year sales price increase for media event and its Cavs tickets hottest ticket since ’95 onSeatsFlashduring Len Komoroski, the CEO of the Cleveland Cavaliers and Quicken Loans Arena, believes the NBA Finals is the biggest media event in the city’s history. The NBA’s championship series, which features the Cavs for just the second time in its 69-year history, is also producing what might be Northeast Ohio’s most coveted tickets in at least 20 years. “It’s really strong — on par with the ’95 World Series,” Mark Klang, owner of Mayfield Village-based Amazing Tickets Inc., said of the market for Games 3, 4 and 6 in Cleveland. Numbers provided to Crain’s by secondary-market brokers, as well as the tracking of sales on Flash Seats, the secondary marketplace operated by Dan Gilbert-owned Veritix, back up Klang’s claim. SeatGeek content analyst Chris Leyden said the average sales price for Game 3 of the NBA Finals on Tuesday, June 9, at The Q was $1,196. The market for the NBA Finals openers at Golden State (Game 1 was producing an average sale of $1,325 on the eve of the June 4 tipoff of the series) and Cleveland was stronger than any Finals game in at least the last five years, according to SeatGeek. TiqIQ — like SeatGeek, a New Yorkbased broker — wasn’t tracking sales prices as high as its competitor (an average sale of $947 for Game 1 and $937 for Game 3), but the company said the ticket market for the 2015 Finals was better than any since it started analyzing Finals data in 2010. Amazing Tickets’ Klang, who sells his vast collection of season tickets on his website, said that once the Cavs-Warriors

See INTEREST, page 6

By STAN BULLARD sbullard@crain.com

750

Grocery retailers from Meijer Inc. to Whole Foods Market are starting to set the table for more competition for consumers’ dollars in Northeast Ohio. The busiest retail sector — far surpassing apparel and electronics retailing — promises to get far busier as Grand Rapids, Mich.-based Meijer has acknowledged interest but has not consummated deals to add its hypermarket stores in Avon, Bainbridge Township, Stow and North Canton. Meantime, Phoenix-based Fresh Thyme Farmers Market has surfaced as a potential tenant for Golden Gate Shopping Center in Mayfield Heights after opening two stores downstate in the past year. The competition will be intense as Northeast Ohio is losing mouths to feed, not gaining them. The most recent population estimate by the U.S. Census Bureau shows that Cuyahoga, Geauga, Lake, Lorain, Medina, Portage and Summit counties combined lost almost 45,000 people in the last five years. Although the Meijer stores are bound for outer-ring suburbs where home construction has gained some population from neighboring counties due to slow growth in housing development, convenience only

Out-of-town media members expected to be at The Q for Game 3

$5M Estimated economic impact of each NBA Finals game held in Cleveland

P. 7 More facts and figures, breaking down the NBA Finals.

See GROCERS, page 25

ALSO INSIDE: NEWSPAPER

74470 83781

Competition in area is getting pretty intense

the regular season

By KEVIN KLEPS kkleps@crain.com

setting up shop

MIDDLE MARKET

A step-by-step look at companies’ blueprints for producing quality products ■ Pages 17-23 PLUS: ADVISER ■ TAX TIPS ■ CONTENT MARKETING ■ & MORE

20150608-NEWS--2-NAT-CCI-CL_--

6/5/2015

11:26 AM

Page 1

Small Business Matters i Want more information and resources on this week's topics, ideas and events? Go to www.cose.org/smallbizmatters.

PRESENTED BY

BIG IDEAS

The Medici Effect Author Shares His Insights on Innovation and Success Frans Johansson, best-selling author of ;OL 4LKPJP , LJ[ and ;OL *SPJR 4VTLU[, writes about what he is passionate about. And in writing his books, he has shattered assumptions about how great ideas happen and the idea that in business you can strategize, plan and analyze your way to success. Johansson will share his insights as the featured speaker at COSE’s next [OPUR ZWV[ L]LU[ >L YLJLU[S` OHK [OL VWWVY[\UP[` [V HZR Johansson a few questions about how he got his start, his advice for entrepreneurs and what to expect at his upcoming [OPUR ZWV[ appearance. What can the audience expect from your think spot presentation? Innovation will be the underlying theme of my talk. I will focus on how we come up with H NYLH[ PKLH HUK [OL KP LYLU[ HWWYVHJOLZ ^L take in response to it – whether innovative or ordinary. Your best chance for groundbreaking innovation is at the intersection where diverse concepts, disciplines, cultures and industries collide. I’ll talk about ways you can tap into your community and your life to make unique connections that can bring about breakthroughs. Tell us a bit about ;OL 4LKPJP , LJ[ and The Click Moment. 4` Ä YZ[ IVVR ;OL 4LKPJP , LJ[, is named for the phenomenon that happened in Florence hundreds of years ago when diverse concepts, cultures and disciplines intersected, leading to one of Europe’s most creative eras, the Renaissance. I started thinking about what happens if you combined architecture and termites, bikinis and burkas, and techno music and Martin

Luther King. How and why are those combinations possible? You would assume that they aren’t. But out of these seemingly random combinations have come groundbreaking ideas Thursday, June 24, 2015 that have created whole new 5:30 - 8 pm industries. I discovered that the Renaissance, Cleveland unexpected outcomes in every life journey can have the biggest Register at impact on the fortunes of others. www.cose.org/thinkspot Frans Johansson @V\ JHU OH]L [OH[ ZHTL L LJ[ PU your organization or business if `V\ JHU Ä N\YL V\[ H ^H` [V IYPUN HIV\[ KP Z\JJLZZM\S ¹ :\JJLZZ JVTLZ PU THU` KP LY versity. ent forms, but it virtually always comes from My next book, ;OL *SPJR 4VTLU[, delves the unexpected. This book uncovers ways to into how to harness serendipity to stand capitalize on those unexpected moments. apart. It’s a study of randomness and luck. I say that if a good idea is a light bulb going i 9LHK TVYL VM V\Y PU[LY]PL^ ^P[O V V]LY `V\Y OLHK H [Y\L JSPJR TVTLU[ PZ H 1VOHUZZVU HZ OL KPZJ\ZZLZ [OL ILZ[ supernova exploding at 100 billion degrees. HK]PJL OL L]LY YLJLP]LK HUK V LYZ There is no cheat sheet for life. No one can OPZ V^U HK]PJL MVY LU[YLWYLUL\YZ H[ ^^^ JVZL VYN UL^Z say, “Follow these three steps and you will be

ASK THE EXPERT

6MMLYPUN >VYRWSHJL )HURPUN HZ HU ,TWSV`LL )LULÄ [ Economic recovery can be a mixed blessing for small business owners. Certainly, I\ZPULZZ V^ULYZ ^LSJVTL HUK ILULÄ [ MYVT increased demand for services. At the same time, economic recovery can also create additional stress for businesses. More business JHU TLHU PUJYLHZLK KLTHUK MVY X\HSPÄ LK LT ployees, particularly those with experience in high-demand segments. Therefore, employee recruitment and retention remains a top of mind issue for most business owners. Owners have numerous options to incent and reward their employees. They can boost wages, provide or improve health insurance ILULÄ [Z VY LZ[HISPZO YL[PYLTLU[ ILULÄ [Z such as matching a percentage of employees’ 401Ks. These tactics are all valuable, but are also expensive. However, there are other ways for small I\ZPULZZ V^ULYZ [V V LY ]HS\LK LTWSV`LLZ HKKP[PVUHS ILULÄ [Z >VYRWSHJL IHURPUN WYV NYHTZ HYL VUL L_HTWSL VM H ILULÄ [ LTWSV`LLZ

[OLT ^P[O L]LY`[OPUN MYVT THUHNPUN JHZO Å V^ and improving credit scores to retirement planning. In addition, many workplace banking proNYHTZ V LY YLK\JLK WYPJPUN VU IHURPUN ZLY vices. This may include checking accounts and reduced rates on loans, including mortgages. Many workplace banking programs are able Matthew Wyner, to complete account applications at the work KeyBank site so employees don’t have to remember to enroll online from home or make a special trip to HWWYLJPH[L [OH[ V^ULYZ JHU V LY ^P[OV\[ HU` a bank branch. Typically, a small business owncost to them. er can expect a workplace banking program to A recent MetLife survey showed 45 percent V LY HJJLZZ [V H SPJLUZLK PU]LZ[TLU[ THUHNLY of employers surveyed said it is important to HZ ^LSS HZ Ä UHUJPHS LK\JH[PVU PUMVYTH[PVU [OLT [V WYV]PKL Ä UHUJPHS LK\JH[PVU [V LT 0U]LZ[PUN PU LTWSV`LLZ I` V LYPUN [OLT WSV`LLZ ZV LTWSV`LLZ JHU ILJVTL Ä UHUJPHSS` ^VYRWSHJL IHURPUN JHU WH` V IPN MVY THU` secure. The study shows that employees who I\ZPULZZ V^ULYZ ( TVYL Ä UHUJPHSS` ZLJ\YL HYL TVYL Ä UHUJPHSS` Z[YLZZLK [OHU [OLPY WLLYZ HUK JVUÄ KLU[ LTWSV`LL PZ VM[LU H TVYL SV`HS believe they are less productive at work. and productive employee. >VYRWSHJL IHURPUN WYVNYHTZ ILULÄ [ LT MATTHEW WYNER, WSV`LLZ PU ZL]LYHS ^H`Z )HURZ V LY Ä UHUJPHS LK Senior Vice President, Retail Banking, ucation to business clients’ employees, assisting East Ohio Region, KeyBank

52 TIPS FOR YOUR BUSINESS

of money coming in. ¸>OH[ VM[LU OHW pens is that a small business owner will focus too much on their checkbook balance and not on who owes them money or ^OV [OL` TH` V^L ¹ ZH`Z 9PVU :HÄ LY VM 9PVU :HÄ LY (JJV\U[PUN ¸0[»Z PTWVY[HU[ [V WH` IL[[LY attention to the whole process of billing, collecting and payments.” Most businesses at some point will experiLUJL ULNH[P]L JHZO Å V^ I\[ [OH[ PZ UV[ ULJ essarily a sign of failure. Accounts receivables are almost always to blame – nearly 70 percent

By The Numbers Small Business: Job Creators

Small businesses have generated more than

65% of the net new jobs since 1995.

SOURCE: U.S. CENSUS BUREAU

Connection Calendar COSE WEBED SERIES: ENGAGING YOUR EMPLOYEES: HOW TO GET YOUR STAFF TO CARE AS MUCH AS YOU DO Practical advice from Charlie Colon, global channel manager for Employee Engagement for Gallup, on how to change how leaders view their work, employees and customers.

JUNE 16 11 AM – NOON Cost: FREE Register at www.cose.org/events.

TECH GROWTH: LESSONS FROM THE DEAL Cleveland’s own OverDrive, Inc. recently sold for more than $400 million, a fantastic success by any measure. CEO/Founder Steve Potash shares inside details on the company’s early days, growth and lessons learned from the very fruitful selling of the company.

JUNE 18 11:30 AM - 1 PM Lockkeepers, Valley View Cost: OHTec and COSE members $25; non-members $40 Register today at www.cose.org/events.

#23: Keep the Cash Flowing *HZO Å V^ THUHNLTLU[ PZ JY\JPHS PU L LJ [P]LS` THUHNPUN `V\Y I\ZPULZZ Ä UHUJLZ /H] PUN H WVZP[P]L JHZO Å V^ ZOV^Z SLUKLYZ PU]LZ tors and vendors that your business is in good Ä UHUJPHS OLHS[O" H ULNH[P]L JHZO Å V^ W\[Z `V\Y I\ZPULZZ PU ZLYPV\Z Ä UHUJPHS YPZR ;OL KP LY LUJL IL[^LLU WVZP[P]L HUK ULNH[P]L JHZO Å V^ JHU TLHU [OL KP LYLUJL IL[^LLU H Z\JJLZZM\S year and bankruptcy. Creating prolonged periods of positive cash Å V^ NVLZ T\JO KLLWLY [OHU Q\Z[ YL]PL^PUN `V\Y TVU[OS` IHUR Z[H[LTLU[Z ;Y\L JHZO Å V^ management is a delicate balance, stemming from your ability to hold onto your cash for as long as possible while keeping a steady stream

June 8

RNC SUPPLIER FORUM Find out how to become a supplier for the estimated $100 million spend for the 2016 Republican National Convention.

of businesses have accounts that are greater than 60 days past due. Other contributing factors include normal cyclicity or seasonality in business operations. If you can anticipate that someday down the road you may fall short on cash, arrange for a line of credit to cover operating expenses for when things get tight. If you wait until that day arrives, chances are you won’t get approved.

CONTENT PROVIDED AND PAID FOR BY THE COUNCIL OF SMALLER ENTERPRISES

JUNE 24 3:30 – 4:30 PM Renaissance, Cleveland Cost: Free Reserve your seat at www.cose.org/rnc.

Check out www.cose.org/events for all the latest happenings.

20150608-NEWS--3-NAT-CCI-CL_--

6/5/2015

2:58 PM

Page 1

JUNE 8 - 14, 2015

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

DAN SHINGLER

Deliveries of steel pipe are expected to keep the Port of Cleveland busy through November, port vice president of maritime and logistics Dave Gutheil said.

Foreign imports weighing on some Workers at Ohio mills are protesting delivery of steel from overseas; proponents say reason is simple By DAN SHINGLER dshingler@crain.com

Recently, steel pipe has been coming into the Port of Cleveland from Europe and then heading to a yard in Massillon, where union workers are complaining that it’s being handled by non-union, out-of-state companies. Is the oil and gas industry turning its back on U.S. workers and steel companies, or is it doing all it can to buy American? That depends upon whom you ask. The steel coming into Cleveland is from Europe, and it ultimately will end up underground in Ohio, Pennsylvania and Michigan as part of the Rover Pipeline being built by Dallas-based Energy Transfer Partners. The $4.2 billion, 710-mile line will take gas from eastern Ohio, western Pennsylvania and

northern West Virginia, and transport it to other pipelines and end-users in Michigan and Canada. The line is using big pipe — usually 36 inches or 42 inches in diameter, and in sections 40 feet long. It will take about 93,000 of those sections to make up the entire line. It’s keeping union longshoreman plenty busy in Cleveland, where it’s stacked up at the Port. “I think there’s a total of nine vessels bringing it in. This is the third one now,” said Dave Gutheil, the port’s vice president of maritime and logistics. The deliveries are expected to keep the port busy through November, Gutheil said, when the last of about 100,000 tons of steel pipe will be offloaded and sent to Massillon. The use of foreign steel is not something

the oil and gas industry tends to brag about. Since the nation’s shale-drilling revolution began, if not before, the industry has boasted about how it buoys American jobs by supplying industry with cheap, homegrown energy, and by using American labor and materials in its own work. The steel industry certainly saw some benefits. When drilling picked up in Ohio around 2009, it spurred hiring and investments at steel mills in Lorain and Canton. It even led to the construction of a mill in Youngstown by France’s V&M Star, which has spent nearly $1 billion on its steel tube mill. But when oil and gas prices collapsed — ironically, largely because of the success of the drilling industry here — steel felt the sting of the sword’s other side. Mills that had been hiring slowed down

and sent workers home, most notably in Lorain, where U.S. Steel laid off more than 600 workers last year. The steel industry has been particularly sensitive about foreign imports, and workers have protested at Ohio mills, complaining about steel being “dumped” in the U.S. by other countries. Steelworkers at the nation’s pipe mills might have particularly good reasons to gripe, too. While steel imports to the United States were up only about 3% in May from the like months of 2014, steel pipe imports were up a whopping 70%.

Giving 100% to get to 76% So why doesn’t an industry that is normally very concerned about public relations — See IMPORTS, page 26

‘Hopeful’ signs for return of commercial docket By JEREMY NOBILE jnobile@crain.com

If you’re hoping to see a commercial docket restored in Cuyahoga County Common Pleas Court, don’t give up just yet. Several judges and attorneys convened April 28 to discuss the pros and cons of the commercial docket designed to be dedicated to the streamlined resolution of often complex business-to-business lawsuits like trade secret disputes, noncompete contracts and shareholder disagreements. Judges, generally, want to see some changes to how the docket is managed, said administrative and presiding Judge John J. Russo. Corporate lawyers, meanwhile,

simply want the docket back, said Cleveland Metropolitan Bar Association president Bruce Hearey. He said that what’s promising for lawyers is that the dialogue is ongoing, adding he’s “hopeful” for a “satisfactory resolution.” He described the April meeting, which drew 13 judges and at least 15 lawyers, as civil, but said it’s clear some judges were adamantly against the docket as much as some lawyers were passionately in favor of it. “I think the message is people should not interpret silence as a sign of the demise of the commercial docket,” Hearey said. “There are efforts going on to restore it. It’s not happening as quickly as attorneys would like, but it’s

happening.” The docket was officially — and supposedly permanently — adopted in Cuyahoga County in 2013 following a three-year pilot program. But the court dissolved it in late January following the rejection of Judge Cassandra Collier-Williams from the docket by the Supreme Court’s Commercial Docket Subcommittee, whose chairman said Collier-Williams was not qualified for the position. Since then, the legal and business community has implored the court to restore it. Litigators say they appreciate the predictability created by a small group of dedicated judges on the docket and fast case turnover. If there are any Cleveland attorneys who didn’t ap-

preciate the docket, Hearey said, “I’m not aware of them.” Joe Roman, CEO of the Greater Cleveland Partnership, has lauded the docket as a positive for businesses. “Anything that can reduce regulations, that can speed up permitting, make lawsuits and the time surrounding them more efficient and effective, all those things reduce the costs of doing business,” Roman told Crain’s in February. “For a community who can do this, it’s an advantage.” Hearey said he’s learned that some judges are simply philosophically against the docket itself — something Common Pleas Court Judge John Sutula voiced to Crain’s in March.

“There was a perception, and it’s not an illegitimate philosophy, but there was a perception among some of the judges about what’s so special about businesses that we’re creating a special group of judges for them when we don’t do something similar for say indigent plaintiffs of criminal defendants or that kind of thing,” he said. Burt W. Griffin, a retired Cuyahoga County Common Pleas judge who served on the bench between 1975-2004, has said he believes the docket was disbanded largely because judges wanted to show support for Collier-Williams when she was rejected as a judge for it. But beyond the way judges are selected, Russo said judges don’t See DOCKET, page 26

20150608-NEWS--4-NAT-CCI-CL_--

6/5/2015

3:55 PM

Page 1

CRAINâ€™S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

)25 /($6(

&/$66 $ )/(; 63$&( '$5,&( 3$5.:$< 67521*69,//( 2+,2

JUNE 8 - 14, 2015

Regulations strengthen biz at Twinsburg company Technoform Glass thinks stricter energy-efficiency codes will provide boost By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com

6) DYDLODEOH 6) RIĂ€FH 6) ZDUHKRXVH 'LYLVLEOH WR 6) GRFNV GULYH LQ GRRUV Âˇ FOHDU

For more information, contact our licensed real estate salespersons:

Terry Coyne, SIOR, CCIM 216.453.3001 tcoyne@ngkf.com Kristy Hull, CCIM 216.453.3055 khull@ngkf.com

Visit

TerryCoyne.com

1350 Euclid Avenue, Suite 300 Cleveland, Ohio 44115

Complimentary In-flight Wi-Fi

AIR CHARTER SERVICE AIRCRAFT MANAGEMENT

Northern Ohioâ€™s Premier Air Charter Service Serving the area with 10 Jets â€˘ 24-HOUR JET CARD NOW AVAILABLE â€˘ www.FlySkyQuest.com â€˘ 216-362-9904 Charter@FlySkyQuest.com

Some companies complain about regulations. Not Technoform Glass Insulation North America Inc. As energy-efficiency codes get more stringent, Technoform Glass expects to grow. At its plant in Twinsburg, the company makes rigid warm edge spacers for windows, designed to decrease the energy lost more efficiently than traditional aluminum or pure stainless steel spacers. Technoformâ€™s product is made of co-extruded polypropylene and stainless steel, and itâ€™s resistant to condensation, mold and corrosion. Technoform Glass Insulation is the North American branch of a German company, Technoform Group. Technoform Glass started about 15 years ago and opened its current U.S. site about nine years ago, said manufacturing engineer Jason McIntire. The company wanted to be closer to its North American customers, McIntire said, and Ohioâ€™s proximity to the major glass makers and the stateâ€™s base in steel, plastics and tooling manufacturing made it a good fit. â€œThe support was there,â€? McIntire said. Today, the Twinsburg operation, which Technoform Glass shares with its sister company, Technoform Bautec, remains the companyâ€™s only U.S. manufacturing site. Product manager Laura Woods claims itâ€™s the only company making rigid warm edge spacers domestically. There are 26 Technoform Glass employees in the United States, a number thatâ€™s been steadily increasing since its founding. Recently, the company was listed in the ARCOM MasterSpec, a resource for architects. Both the spacer category for insulating glass and Technoform Glass were first listed this spring. And Technoform Glass officials sound optimistic the trend will continue, though they declined to share sales figures. While the company is established globally, McIntire said it seemed to set up shop in the United States a few years too early, as demand for energy-efficient products was more developed in the European market.

mance criteria for fenestration products; California Energy Codes Title 24, U.S. DOEâ€™s Zero Energy Ready Home, Passive House, International Energy Conservation Code, and LEED, just to name a few.â€?

System processing

CONTRIBUTED PHOTO

Technoform Glass Insulation North America Inc. manufacturing engineer Jason McIntire sets up the roll-forming station at the Twinsburg company. But domestic codes, like the Energy Star standard, are beginning to catch up to European standards, McIntire said. And as states that have upped their energy efficiency standards start to attract more businesses, the ones lagging behind likely will be motivated to follow suit to stay competitive, he said. Technoform â€œhas become a major player in the commercial window spacer market in the U.S.,â€? in the years since the company started here, said Rich Walker, president and CEO of the Schaumburg, Ill.based American Architectural Manufacturers Association, in an emailed statement. While the construction industry is still recovering from the recession and the harsh weather earlier this year, Walker said he sees stronger energy efficiency regulations on the rise. â€œIncreasingly stringent energyefficient codes are certainly on the horizon for windows, doors and skylights,â€? Walker said. â€œWith Energy Star version 4 nearly fully implemented (except in the northern U.S. climate zone), the development of version 6 is already underway. In addition to Energy Star, many programs are driving tighter energy-efficiency perfor-

Itâ€™s not just that codes are getting stricter, said Kerry Haglund, executive director of the Efficient Windows Collaborative in Minneapolis. Itâ€™s that consumers are starting to ask for more energy-efficient products in commercial and residential settings. Bill Yanek, executive vice president of the Glass Association of North America in Topeka, noted such products are important for new construction and retrofitting projects. Overall, Haglund said, components like the spacers made by Technoform are just part of a larger product, along with frames and glass, that need to work together to be successful. â€œIt all has to work together as a system,â€? Haglund said. McIntire recognizes this. One of the goals he mentions when talking about the companyâ€™s growth is extending its product lifespan. He wants to be able to approach customers and tell them Technoformâ€™s product can help extend the warranty of their window. The U.S. plant offers customers more customization than its European counterparts, giving consumers choices between sizes and colors of its spacers. â€œWe want to be the one-stop shop,â€? McIntire said. To help with that goal, Technoform Glass in Twinsburg started working with a local company to create its own punch-cutting, or shear-cutting, machinery, which McIntire said will allow the company to make rapid changes. The companies have been working on the equipment for about a yearand-a-half, he said, and he expects the first machine to arrive by September. Going forward, the company has plans to renovate its existing office and to open distribution sites around the country and Canada.

CORRECTIONS A May 25, Page 3 story about entrepreneurial initiatives in Akron provided incomplete information about the creation of The Bit Factory business accelerator. Three entrepreneurs â€” James and Jack Hilton, as well as Austin Kettner â€” worked with the city of Akron and the Akron Global Business Accelerator to create the program. The program is owned by the nonprofit Akron Development Corp.

An incorrect photo appeared with the June 1 adviser column written by Thomas R. Crookes, a partner in the Akron office of Vorys and a member of the firmâ€™s labor and employment group. This is the photo that should have accompanied the article, â€œPrep for, but donâ€™t ban politics talk.â€? The full article can be found here: bit.ly/1Q6LByB.

Volume 36, Number 23 Crainâ€™s Cleveland Business (ISSN 0197-2375) is published weekly at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright ÂŠ 2015 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 Crainâ€™s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 212-210-0750

Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crainâ€™s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-9911, or email to customerservice@crainscleveland.com, or call 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777.

20150608-NEWS--5-NAT-CCI-CL_--

6/5/2015

2:41 PM

Page 1

JUNE 8 - 14, 2015

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Don’t know where to eat? Ask Wheedle By CHUCK SODER csoder@crain.com

If Wheedle can convince Clevelanders to use the app it’s about to launch, the chic restaurant Lago finally will have a way to target those people who sit around debating where they want to go for dinner. The Cleveland-based startup company is in the process of recruiting restaurants, bars and other entertainment venues that want to use the new app, which works like Groupon, but in reverse: Instead of getting a steady stream of daily deals, people type in what they want to eat or do, then establishments offer them deals and perks in an effort to win their business. The establishment would then pay Wheedle a fee for each person who shows up. Lago, an Italian restaurant on the east bank of the Flats, and about 30 other local establishments signed up to try out an early version of the software during a three-week test run last October. Over the course of a few days, Lago sent Wheedle offers to roughly 10 people and groups. Two of them ended up making reservations, according to Andrew Czarzasty, chief operating officer of the Salerno Group Restaurants. If Wheedle can get enough people to use the new version of the app — which is scheduled to launch on July 9 — it could become a powerful marketing tool, according to Czarzasty. His reasoning: Why wouldn’t a restaurant like Lago want to make special offers to people who explicitly state that they’re planning to spend more than $30 per person on a random Tuesday night? “You’re going to say, ‘Yes, come eat here, please,’ ” he said. Wheedle aims to have at least 75 local restaurants on board when its new app launches, according to Brian Stein, Wheedle cofounder and president. At the same time, however, the company also needs to convince people to download and use the app — which Stein said could be the company’s biggest challenge. “We need to grow those curves in lockstep,” he said. Wheedle plans to spend about $100,000 to market the app in conjunction with the launch. For instance, the company will be sending out “street teams” to promote the app in places like the Warehouse District, Ohio City and Tremont. They can afford it: The company recently raised $550,000 from an individual investor and a family investment group, both of whom have experience owning restaurants. Wheedle has restaurant experience, too. The company’s CEO, J.P. Weston, came up with the idea while doing marketing for Corporate Management Group, which owns restaurants like the Barley House, Town Hall and Willoughby Brewing Co. He often used social media to hunt for people having a birthday or planning to go out. He offered discounts, free party bus transportation and even told people they could meet the DJ. But it was hard to talk to people who didn’t already follow Barley House on sites like Facebook and Twitter. And it was “a lengthy

process,” Weston said. “Why isn’t there somewhere I can go where people say, ‘Hey, I want to go out. What can you do for me?’ ” he said. Barley House also was among the establishments that tested the early version of the software, which is still available at WheedleApp.com. However, the company aims to retrain all of them on how to use the new mobile app, which will contain features such as “Auto Wheedling” — which will allow establishments to automatically send offers to anyone who makes a particular type of request. For instance, if a local bar typi-

cally is slow at 5 p.m. on Tuesdays, it could tell the app to automatically send offers to anyone who says they want to go out in Cleveland for a happy hour on a Tuesday.

“Eventually, we want to be the eHarmony of reservations.” – Brian Stein, cofounder and president, Wheedle The software also asks how many people will attend, how much they each plan to spend and whether they’re visiting for a specific pur-

pose, like a corporate event or a bachelor party. “Eventually, we want to be the eHarmony of reservations,” Stein said. For now, there’s only one location you can choose: Cleveland. However, Wheedle plans to expand into Chicago next, using the money it already raised. And eventually it plans to broaden its services. For instance, maybe people could one day use Wheedle to shop for a hair salon or a tailor, Stein said. “I could say, ‘Here are my measurements. I want a custom suit,’ ” he said.

WATCH EVENT SATURDAY, JUNE 13 | 10AM-5PM During this one-day watch event, meet with representatives from each brand. We will be showcasing limited edition watches as well as previewing new collections.

TEST DRIVE A WATCH AND TAKE A TESLA MODEL S FOR A RIDE The Tesla Model S is the world’s ﬁrst premium electric sedan and sets the standard for 21st century performance. Take one for a ride at the Alson watch event.

216 BISTRO FOOD TRUCK 11:30AM-2:30PM Enjoy complimentary lunch from 216 Bistro during the event.

• 12 MONTHS INTEREST FREE FINANCING AVAILABLE • FREE WATCH WINDER with any automatic watch purchase.

28149 Chagrin Blvd | 216.464.6767 | alsonjewelers.com

6/5/2015

3:19 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

For Sale - 23,607 SF Office Building 9,000 SF also Available for Lease

225 Heritage Woods Dr., Copley, OH 44321 • 23,607 SF Office Bldg. for Sale

• Great Access to I-77 & Rt 18

• 9,000 SF Available for Lease

• Generous Parking

• Beautiful Park-like Setting

• Minutes from Restaurants,

• Open Floor Plan

Hotels, and Shopping

Jack W. Drescher, CPA, SIOR

216.861.5049 JackDrescher@HannaCRE.com

HannaCRE.com

INTEREST continued from page 1

matchup was set, the demand for tickets was double the market for the 2007 Finals between the Cavs and San Antonio Spurs. Klang said the demand was helped by the eightday layoff between the Warriors winning the Western Conference and the start of the NBA Finals. That gave fans additional time to book travel and schedule days off work, he said. “We’ve had quite a bit of out-ofstate action,” Klang said. Scott Merk, who operates Merk’s Tickets in Brook Park, said he’s been selling seats for between $400 and $7,500 for Games 3 and 4, and he thinks there’s one way it can get even better. If the Cavs return to Cleveland with a 3-2 series lead for Game 6 on June 16, Merk expects the price range to be between $600 and $10,000. Klang agreed. If the Cavs are up 3-2, demand for the potential title-clincher, and Cleveland drought-breaker, will be “through the roof,” he said.

Sellers’ market

Working Together to Improve the Health Care System Helping employers get high-quality, accountable health care at a lower cost.

Join us on the journey. Better care, better health, lower costs. www.betterhealthpartnership.org • info@betterhealthpartnership.org

JUNE 8 - 14, 2015

For some Cavs season-ticket holders, the pent-up championship demand is a way to recoup a chunk of the cash they spent throughout the season. And because any digital ticket exchange has to happen via Flash Seats, even those sales that occur on other secondary markets, the vast majority of the sales occur on the team-operated marketplace. That’s meant millions in additional business for Gilbert, whose Flash Seats charges a 23% fee to the buyer for every ticket that is resold, plus a 5% fee to the seller if he or she is not a Cavaliers season-ticket holder. During the regular season, the average sales price for a ticket sold on Flash Seats increased 70% yearover-year, and there was a whopping 350% jump in year-over-year sales volume for Cavs games on the market. And last week, the market seemed to be as lucrative as ever. By mid-afternoon on Wednesday, June 3, fewer than 51 hours after the Flash Seats market opened for Games 3 and 4 at The Q, more than 100 upper-level seats for Game 3 had been sold for $399 and up. About 12% of the sales for seats in the 200 level were going for $500 or more. In the 100 level, almost 58% of the sales for Game 3 were generating prices of $800 or more, and a quarter of the transfers of seats in the 100 sections were for at least $1,500. Club seats, which overlook the length of the court on both ends, were being sold for between $500 and $1,430, and courtside and VIP tickets had been sold for $5,000, $10,000 and $15,000. Wine & Gold United members, who paid NBA Finals prices ranging from $25 to $100 for seats in Sections 200 and 212, were selling some Game 3 tickets for $490 or more. Asked about the demand for tickets on Flash Seats the day before the series started, Komoroski said, “I would think that would only continue to evolve here. As we start playing games, the drama will continue to build. It will be fun to watch. It

GETTY IMAGES

20150608-NEWS--6-NAT-CCI-CL_--

THE ‘OTHER’ CLEVELAND-OAKLAND PLAYOFF BATTLE You might remember the last time a Cleveland team played a club from Oakland in the postseason. If not, three words — OK, two and a number — will refresh your memory: Red Right 88. The Oakland Raiders defeated the Browns 14-12 in an AFC divisional playoff game on Jan. 4, 1981, thanks to Mike Davis’ end-zone interception of Brian Sipe in the final minute. The Raiders went on to win the Super Bowl that year, and the Browns suffered one of the most infamous losses in their history. It’s not all bad, though.

really speaks to the interest in this series in particular.” One particular sale showed how crazy the hype was. Four Game 3 seats in the second row of Section 109, near midcourt, went for $2,900 each on Flash Seats. Once the 23% fees are factored in, that’s a sale of about $14,268. A Cavs season-ticket holder who asked to remain anonymous told Crain’s he sold Game 3 tickets in Loudville for a profit of $275 each — proceeds that covered what he had spent on the seats for the Cavs’ previous seven playoff games at The Q.

‘Unprecedented’ showcase League sources told Crain’s that about half of all ticket revenue from the NBA playoffs goes to the league’s playoff pool, which in 2015 will total $14 million. That prize money is divided among the players, via per-team bonuses that range from $94,684 (for the sixth seed in each conference) to $2,479,327 (to the NBA champs). If the Cavs claim the city’s first championship since 1964, the players will divide a combined $3,631,684. (If they lose, they’ll have to settle for $2,795,220.) Various estimates peg the perhome-date profit margin of NBA playoff games at more than $1 million. “There’s a different set of economics with playoff games,” the Cavs’ Komoroski said. “They’re played at our buildings, but these are NBA events. There’s a greater level of control, scrutiny and involvement than what you typically see during the regular season.” Jackie Spencer, the public relations and communications coordi-

The Browns played another team from the Bay Area — the San Francisco 49ers — for the All-America Football Conference championship on Dec. 17, 1949. Cleveland, led by quarterback Otto Graham and running back Marion Motley, defeated the 49ers 21-7 for their fifth consecutive title. The Indians have never played the Oakland Athletics, nor the San Francisco Giants, in the postseason, and the Cavs’ first playoff matchup against a team from the Bay Area is their current NBA Finals opponent, the Golden — Kevin Kleps State Warriors.

nator for Destination Cleveland, Cuyahoga County’s convention and visitors’ bureau, said the economic impact of the NBA Finals is expected to be $5 million for each game that is played in the city. The estimated impact of the first three rounds of the postseason was $3.6 million per game, which for Cleveland would be roughly $25 million. “The great thing about the games being during the week (the Cleveland games are scheduled for a Tuesday, Thursday and Tuesday) is our downtown businesses and attractions should see a big spike in business,” Spencer said. That’s an area of great interest to Komoroski, who seems to champion the merits of downtown as much as anyone. “You’ll see the city showcased as they come in and out of the (ABC) broadcast,” the Cavs’ CEO said. “Beauty shots — all those great things. The thing about it is the sports teams end up being the window to the world for our cities because of the international media coverage. “The landscape,” Komoroski added, “is going to play to hundreds and hundreds of millions of people (all over the world). In a lot of respects, you can say it’s an unprecedented level of media in our marketplace for any event in Cleveland’s history.” The Cavs are expecting about 750 out-of-town media members, and another 150 international reporters, for Game 3. “This is at a different dimension,” Komoroski said when asked the difference in the level of interest between the 2007 and 2015 Finals. The ticket brokers concur. And they can’t help but think about what could happen if there’s a Game 6.

20150608-NEWS--7-NAT-CCI-CL_--

JUNE 8 - 14, 2015

6/5/2015

3:28 PM

Page 1

CRAINâ€™S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

WE HELP

BUSINESS AT T H E H I G H E S T L E V E L . When a company has a problem that gets kicked upstairs, upstairs kicks it to us.

For more information, visit vorys.com. Vorys, Sater, Seymour and Pease LLP 200 Public Square, Suite 1400, Cleveland, Ohio 44114 106 South Main Street, Suite 1100, Akron, Ohio 44308

Columbus

MEMBER FDIC

Washington

Cleveland

Cincinnati

Akron

Houston

Pittsburgh

20150608-NEWS--8-NAT-CCI-CL_--

6/5/2015

2:36 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

SALT • SALT • SALT • Water Softener • Industrial • Food • Ice Melt • Sea Salt

Call For Pricing!! Minimum Delivery: 1Pallet

1-800-547-1538 Salt Distributors Since 1966

WWW.CRAINSCLEVELAND.COM

JUNE 8 - 14, 2015

Virginia Marti changing course By TIMOTHY MAGAW tmagaw@crain.com

Bold changes are underway at the Virginia Marti College of Art and Design, including a shift in ownership from the Lakewoodbased institution’s namesake and longtime proprietor. Virginia Marti Veith, now 86, has sold a minority stake of the school she has operated since 1966 to Milan Milasinovic, an experienced fashion industry executive who most recently served as vice president for academic affairs and chief academic officer at New York City’s LIM College, a for-profit school focused on the business side of the fashion industry. Terms of the sale were not disclosed. Veith will be active on the college’s board of directors, but complete ownership is expected to transfer to Milasinovic — now the school’s president — over the next two years. Milasinovic’s vision for the school is especially ambitious. For instance, he hopes to extend the small college’s reach globally by opening small offices abroad — Milan first, with Paris and London to follow — and launching exchange programs. Historically, the college has only granted associate degrees, but Milasinovic said the school is working toward offering bachelor degrees that can be completed in three

years and building the foundation for a future graduate school. Also, the school has been slow to embrace online learning, and within five years, Milasinovic expects 60% of the school’s enrollment to be online. “My vision for Virginia Marti comes from who I am, where fashion, business, art and design converge,” said Milasinovic, who served as dean of graduate studies at the London-based European School of Economics before his stint at LIM College. Milasinovic’s transformation of the school won’t come easy. Virginia Marti’s enrollment has fallen from its peak of about 300 students a little less than a decade ago to about 150 students today. Part of the reason for that decline, Veith said, has been students’ and their parents’ preference for four-year degrees rather than the two-year programs Virginia Marti has pushed for years. Also, the public’s embrace of the for-profit education sector has waned in recent years as the federal government and accrediting bodies questioned whether these types of schools were preparing students to get jobs. “We’ve always run a good school and worked very hard to try to get every graduate a job,” Veith said. “That I’ll tell you is what kept us going.” “We had people come in who al-

ready had their master’s who wanted to fill gaps so they could get a job.” Milasinovic, who is still commuting from New York, is plotting a complete rebranding of the school in time for its 50th anniversary next year, though its name — Virginia Marti College of Art and Design, or VMCAD for short — will remain. He’s not expecting a sizable investment in the rebranding, given that the school has so much inhouse expertise with its faculty and students. He also expects the school will stay at the 20,000-square-foot home it owns on Detroit Avenue in Lakewood given the current real estate climate, although he’d love for the campus to be located in downtown Cleveland one day. With his arrival in February, Milasinovic also vacated the building the school leased next door in order to consolidate the campus and cut costs. As for Veith, she’s on board with Milasinovic’s plan to remake the school she’s operated for nearly half a century. She plans to stay busy, though, and hopes to open a third orphanage in Kenya. She opened two others with her late husband, Herb. “I really believe this is what was meant to be,” she said. “Everything happens for a reason.”

THE WORLD’S LARGEST CONTENT MARKETING EVENT RETURNS TO CLEVELAND IN 2015!

September 8-11, 2015 • Cleveland, OH USA Cleveland Convention Center You will leave with all the materials you need to take a content marketing strategy back to your team – and – to implement a content marketing plan that will grow your business and inspire your audience.

contentmarketingworld.com • #CMWorld rld

20150608-NEWS--9-NAT-CCI-CL_--

6/4/2015

2:30 PM

Page 1

JUNE 8 - 14, 2015

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Akron tire companies share space, resources Steelastic and RMS, both owned by Heico, are in a new, 100,000-square-foot facility By MIKE McNULTY Rubber & Plastics News

Steelastic Co. and RMS Equipment LLC are now operating under one roof. After producing machinery in separate but adjacent buildings for years, the two companies have moved to a much larger plant in Akron. Manufacturers of automated machining systems for the global tire industry, the companies have set up their operations in a new 100,000square-foot facility that features a state-of-the-art laboratory along with a research and development operation and office space that spans about 15,000 square feet. Steelastic and RMS completed the move on March 1, but the companies won’t have a ribbon cutting ceremony and open house until June 19. They gained more production ca-

pacity along with superior research and development facilities and tools with the move, according to Armand Massary, president of the Akron-based companies.

Combining resources Bringing Steelastic and RMS together under one roof facilitates combining various resources — including sales, engineering, production and others — to make them “more efficient from both a sales and marketing perspective as well as project execution,” he said. They moved from much smaller sites in Akron and their combined workforce of about 100 was not impacted. “We are fortunate to be able to bring our resources together to provide our customers with the toplevel services they have come to expect from Steelastic and RMS,” Massary said.

Steelastic and RMS, along with Rome, N.Y.-based Bartell Machinery Systems L.L.C., form the Heico Tire and Rubber Group of Heico Cos. Steelastic was purchased by Heico in April 1992, and not long after that, Heico acquired RMS and Bartell to create the tire and rubber group. Together, RMS and Steelastic supply machinery for the tire component prep sector of the tire market. Steelastic makes radial belt and body ply systems, bead apexing systems, cap strip systems and inspection systems. RMS produces extrusion systems, roller die head technology, air spring building systems and hose building systems. They primarily serve the passenger radial, truck and bus radial, offthe-road tire, aircraft track, industrial hose, air spring and conveyor belt industries. “We sell to every major tire manufacturer and have equipment in 60-plus countries around the world,” Massary said. “In total, we have sold more than 800 machines in our 40 years of doing business.” He said the move to larger quarters will afford the company more

manufacturing capacity. It will provide newer manufacturing tools and flow that generate greater efficiencies, he said, adding “we will also have a new fully functioning lab that will house our latest technologies. “The lab area will allow us the opportunity to accelerate our research and development process and work closer with customers to develop manufacturing and tire technologies,” Massary said.

Solid growth Growth of the two companies has been rapid during the last several years, Massary said, and the move was needed to support the companies’ business strategy and growth plans. He said Steelastic has a long history of being a business that works hard for, and with, customers. “We supply high-quality products that are reliable and provide great value to our customers, and we have for years. We are known as the industry standard for our belt systems and have the best bead apexing systems in the world.”

RMS’ strength lies in its extrusion and single roll roller die technology, he said. “The SRRD technology is something that RMS invented years ago and still provides for the best and most precise products of any system on the market.” Massary noted that the two companies were known as industry innovators in the past and are working hard to return to that status. “The size and capabilities of our technical staff have and will continue to grow, and we are very focused at this time on becoming more innovative,” he said. That is why the companies are investing so heavily in the businesses, Massary said. The focus of the businesses is to “own the component prep sector,” he said. It has a detailed strategy plan in place that is being executed to position the companies’ products and technologies to be the best across the globe, Massary said. McNulty is a senior reporter for Rubber & Plastics News, a sister publication of Crain’s Cleveland Business.

UPCOMING CUSTOM SECTION

RESOURCES, GROWTH AND PERFORMANCE

In partnership with:

Are you a human resources expert? Have your voice heard in this custom section! The HR Leadership group of Northeast Ohio and Crain’s publishes an annual section on the strategic role HR plays in corporate leadership and growth.

ISSUE

DATE:

August 3

RESERVE

YOUR SPACE BY:

June 29

ARTWORK

DUE:

Reserve your space today. Contact Nicole Mastrangelo at 216-771-5158 or nmastrangelo@crain.com.

July 6

20150608-NEWS--10-NAT-CCI-CL_--

6/4/2015

4:23 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 8 - 14, 2015

PUBLISHER:

John Campanelli (jcampanelli@crain.com) EDITOR:

Elizabeth McIntyre (emcintyre@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

A level field Last week, online retail juggernaut Amazon began collecting sales taxes from Ohio customers. The decision was part of an announcement that the Seattle-based company would invest $1 billion in three data centers in the Columbus suburbs, creating more than 1,000 jobs in the state over the next few years. Getting Amazon to collect sales taxes in Ohio is a big deal, but there are thousands of other e-commerce sites that still skirt sales-tax collection here, including third-party sellers who use Amazon to peddle their wares. Our tax system badly needs updating to level the playing field between bricks-and-mortar stores and online retailers. Certainly there is room for online commerce in the realm of retail, but local stores should be able to compete for business. And that is hard to do when your online competitor offers what amounts to a steep discount for the same goods by failing to collect taxes. If mom-and-pop stores and even big-box retailers have to close, imagine what would become of your town. Imagine what would become of the tax base and the services it funds. When you buy something in a physical store, the retailer is legally required to collect sales taxes as part of the transaction. Buy the same item online, though, and the burden shifts from retailers to consumers, who are now responsible to report and pay the sales tax to their state department of taxation. And let’s be honest. Only a small fraction of people voluntarily pony up the sales tax owed on online purchases when they file their returns. According to the National Conference of State Legislatures, Ohio lost more than $300 million in uncollected sales taxes from e-commerce sales in 2012. In the wake of the deal with Amazon brokered by JobsOhio, the state’s privatized business development agency, officials declined to estimate the potential sales tax windfall for Ohio. But Paul Misener, vice president of global public policy for Amazon, did. He said Ohio could see $150 million to $300 million in sales taxes added to its coffers if a national requirement for all online retail purchases was established. And that’s what needs to happen. Congress needs to get serious about finally passing the Marketplace Fairness Act, which would create an equitable tax system among the 45 states with a sales tax. The MFA would allow states to force remote retailers to collect a sales tax even if they have no physical presence in that state. The time has come to take away the unfair advantage that online retailers have enjoyed for far too long over traditional sellers. It’s time to allow them to compete fairly on price.

FROM THE PUBLISHER

When excitement becomes obsession Wile E. Coyote caught the Road Runsession to a disorder. ner once. Forget about an elephant in the It happened in “Soup or Sonic,” an room, the years of close calls, disapanimated short made in 1980, years afpointment and heartbreak now take up ter Warner Brothers’ best work. a stadium section in our psyche. At the end of the cartoon, Coyote You cannot go to an Indians, Browns bear-hugs the leg of Road or Cavaliers game without Runner, who had grown to feeling the weight of 51 years about 10 times his original in the air. size moments earlier. Coyote I am worried that we have puts on a bib and grabs a become Wile E. Coyote, and knife and fork. that we somehow now define After the two rivals exourselves — and have been change a glance, he then defined — by the fruitless looks toward the audience chase and the fruitless chase and holds up two signs. alone. “Okay, wise guys, you alWhen that chase ends and JOHN ways wanted me to catch our city finally wins, hopefulCAMPANELLI him.” ly before we turn our calen“Now what do I do?” dars to July, will we cheer and Then the credits roll. party and parade … and then, someIt’s such an awkward moment, and it time in July, hold up a sign: “Now what feels completely wrong. do we do?” The fun built up over decades of carI’m actually not worried that will toon chases is simply … ruined. happen. Instead of being like that I’ve been thinking about that scene dreadful cartoon, the end of our chase over the past two weeks, and I’m a bit is going to be great, but it will probably worried — worried that over the past not live up 51 years of buildup. I’m not five decades, Cleveland’s championship going to go as far as to use the word “androught has gone from a chase to an obticlimactic,” but it may be like many

teenagers’ first kiss: terrific but terrestrial. It might be a week before we do, but we’re still going to have to get up for work or school. Still going to have to clean our bathrooms and scoop the litter. Our identity as a hard-luck sports town is an easy and comfortable role to play. We’ve performed it brilliantly for decades. But that’s going to need to end. Changing something that’s become so rote might not be easy. When the drought ends, we’ll have a great opportunity to wash ourselves clean of defeatism, of gloom, of inferiority. To put our collective psyche on the same soaring trajectory as the city itself. That’s what a championship can do. It’s what so many of us have wanted to be our whole lives: champions. It will be time to act like one to, embracing it and looking ahead. It will be time to get off the sports psychiatrist’s couch and do something else besides wallow and grumble. First thing? We’ll be able to answer that sign. “Now what do we do?” Win another.

TALK ON THE WEB Re: Kasich as No. 2? Nah Any “political scientists here in the Buckeye State” who see John Kasich as veep are woefully poor practitioners of their trade. — Peter Jensen

Re: Lakewood activists sue Cleveland Clinic $400 million. Ouch, that hurts, Toby, doesn’t it? — CCF juggernaut

Re: Growth of Gabriel Partners Anti-money laundering work = $$$$$$. Banks are hemorrhaging money, and

consulting firms are filling their swimming pools. — Jennifer

Re: Meijer sizes up Geauga Lake land Not everyone wants to see shopping center after shopping center, especially when a block down the road you have a bunch of vacant stores within the Target/Walmart/Home Depot shopping area. Talk about sad. I live just down the road from there, and the last thing Aurora and Reminderville needs is more urbanization, more traffic congestion, and more crap from the inner city moving into the area. Will it bring in more tax revenue? Sure for about 10 years, until they decide to

vacate the property and move on to the next town. Then guess what? You have another vacant eyesore. How about tearing up the remains of the old Geauga Lake and letting nature take it over? Not everyone wants to see the countryside get turned into a city. — Robert Bailey

Re: Getting ready for the GOP in 2016 There are two things I wish would be done. First, because many visitors will take the rapid, it would nice if the trash along the tracks would be cleaned up. Second, the North Marginal Road must be resurfaced. It is not drivable now. — David Oloughlin

20150608-NEWS--11-NAT-CCI-CL_--

6/4/2015

3:20 PM

Page 1

JUNE 8 - 14, 2015

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

LETTER TO THE EDITOR I am responding to Dave Black’s “scary” concerns regarding the Convention of States project in his Personal View, “Amendments can be a scary step,” in the May 11 issue of Crain’s. His assessment of how Article V actually works is disjointed at best. First of all, there is zero possibility of a “runaway” Constitutional Convention. A convention can only propose amendments and any that are adopted must be approved by 38 states. There have been several thousand amendments proposed in Congress since 1789, and only a fraction of a percentage of those received enough support to actually go through the constitutional ratification process. Adopting new amendments to the Constitution is not supposed to be an easy process. That’s why only 17 amendments have been ratified since the original 10 in the Bill of Rights. Members of Congress can meet

and discuss possible amendments at any time, without fear of a “runaway” because of the 3/4 states rule. Article V of the Constitution gives all 4,000 state legislators equal authority with the 535 “elitist” members of Congress. Either group can propose amendments, but only the states can ratify. Black’s “claim” that there is no legal precedent for requiring 3/4 of states to ratify is wrong because Article V plainly states that amendments can be adopted “when ratified by the legislatures of three fourths of the several states.” Currently, Ohio is one of 38 states that have begun the process of passing “applications” for an Article V convention. There are four states that have completed their applications — Georgia, Florida, Alaska and Alabama. There have been more than 400 applications from state legislatures for an Article V convention in the

history of the Republic. No such convention has ever been called because there has never been an application from twothirds of the states for a single subject. The “subject” in all state applications for the Convention of States must be “limited to proposing amendments to the Constitution of the United States that impose fiscal restraints on the federal government, limit the power and jurisdiction of the federal government, and limit the terms of office for its officials and for members of Congress.” The separation of powers has been severely damaged in the last 50 to 100 years. The federal bureaucracy is out of control and must be reined in to give back the power to the citizens through their state governments. You can get full information on the Convention of States project at www.conventionofstates.com. — Jim Petsche Macedonia

TALK ON THE WEB (CONTINUED) Re: Trauma drama The Northern Ohio Trauma System, or NOTS, started five years ago, and UH was invited four years ago. UH was grumpy to not be brought in on a new, possibly about-to-fail system? (No one knew if NOTS would succeed at first, I am sure). Quit your belly-achin’ UH. You are all about the $$$$$. You are doing this for revenue, not the betterment of mankind! Psst, UH, trauma is an expensive business — be ready to shell out big bucks. — Friendlier

Timothy Magaw’s June 1 article, “A tale of two trauma centers,” was very well-written — the most clear to date by a reporter. I hope the media will watch for UH attempting to “cherry pick” or limit their trauma care to desired clientele. They suggest a broad reach for their level 1 trauma scope (i.e., MVA victims far from UH), but neglect to mention the “knife and gun club” members that live next to UH. Will their doors swing wide to accept those as well? That is their premise for a trauma center on the East Side, after all. By the way, Metro’s copters fly all

over Northeast Ohio to extract trauma victims. Remember that NOTS involves all the CCF system, which exceeds the size of the UH system, and Metro picks up from many small, unaffiliated centers all over NEO. — UH disbeliver

PROUD SPONSOR OF RELAY FOR LIFE

Saturday, June 20 12:00PM-12:00AM MAYFIELD HIGH SCHOOL

elkandelk.com/relayforlife

BE WHERE YOU WANT TO BE

Re: The rise of Merwin’s Wharf LOVE this concept and implementation! Now Cleveland’s people need to reward the effort with food and recreation dollars. — Dan Morgan

Let us help you get there. We help business owners plan for and implement a successful exit strategy. Increase Value. Minimize Taxes. Protect Assets.

700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383, Fax: (216) 694-4264, www.crainscleveland.com

Publisher: John Campanelli (jcampanelli@crain.com)

Events manager: Jessica Rasmussen (jrasmussen@crain.com)

Credit: Todd Masura, 313-446-6097 (tmasura@crain.com)

Editor: Elizabeth McIntyre (emcintyre@crain.com)

Special events coordinator: Kim Hill (kehill@crain.com)

Customer service/subscriptions: 877-824-9373

Managing editor: Scott Suttell (ssuttell@crain.com)

Marketing strategist: Michelle Sustar (msustar@crain.com)

Crain Communications Inc.

Advertising director: Nicole Mastrangelo (nmastrangelo@crain.com)

Keith E. Crain: Chairman

Sections editor: Amy Ann Stoessel (astoessel@crain.com)

Rance Crain: President

Call our Certiﬁed Exit Planning Advisor, Ray Lampner: 330.572.8014 Ray.Lampner@bcgcompany.com • www.BCGLegacyAdvisors.com

2015 LEADERSHIP DEEP DIVE

Associate editor/Akron: Sue Walton (swalton@crain.com)

Senior account executive: Dawn Donegan (ddonegan@crain.com)

Assistant editor: Kevin Kleps (kkleps@crain.com) Sports

Account executives: Lindsie Bowman (lbowman@crain.com) John Banks (jbanks@crain.com) Laura Kulber Mintz (lmintz@crain.com) Rob Divine (rdivine@crain.com)

Mary Kay Crain: Treasurer

enormous impact on me, giving

William A. Morrow: Executive vice

me a deeper understanding of

president/operations

how to truly motivate and inspire

Office coordinator: Denise Donaldson (ddonaldson@crain.com)

Director of Strategic Operations KC Crain: Executive Vice President,

techniques in my work every day,

Web Editor: Damon Sims (dpsims@crain.com)

Director of Corporate Operations

whether I’m in a room with five

Dave Kamis: Vice president/production

Digital strategy director: Nancy Hanus (nhanus@crain.com)

& manufacturing

managers or leading a conference

Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Energy, steel and automotive Tim Magaw (tmagaw@crain.com) Health care and education Rachel McCafferty (rmccafferty@crain.com) Manufacturing and energy Jeremy Nobile (jnobile@crain.com) Finance Research editor: Deborah W. Hillyer (dhillyer@crain.com) Art director: Rebecca R. Markovitz (rmarkovitz@crain.com) Cartoonist/illustrator: Rich Williams

YOU CAN WATCH US, TOO

Audience development director: Eric Cedo (ecedo@crain.com) Web/Print production director: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Billing: Michele Ulman, 313-446-0353 (mulman@crain.com)

Merrilee Crain: Secretary

Chris Crain: Executive Vice President,

Anthony DiPonio: Chief information officer

“Leadership Deep Dive made an

others. I apply these principles and

call with 500 store managers across the United States.”

Thomas Stevens: Chief financial officer Mary Kramer: Group publisher

G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996)

Look for Crain’s Weekly Report webcast, which will hit your inbox Friday afternoon. To sign up, go to: crainscleveland.com/register.

M A RY K AY O’CONNOR-WENTE Senior Vice President of Stores and Operations at Charlotte Russe

Visit weatherhead.case.edu/deepdive for more registration, pricing and discount information.

20150608-NEWS--12-NAT-CCI-CL_--

3:20 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Join the leadership that is transforming health care. The challenges facing health care today can only be met by strong leadership, collaboration across disciplines and creative thinking.

GOING PLACES CONSTRUCTION PCS: Debbie Coakley to director of business development.

ENGINEERING AUSTIN CO.: Mark Hamilton to senior electrical engineer; Aleks Daukss to senior estimator; Biljana Radic to mechanical engineer; Bianca Holtier to purchasing agent; Eric Spitzer to architectural designer.

FIRST FEDERAL LAKEWOOD: Anthony Yannucci to vice president, commercial real estate loan officer.

FINANCIAL SERVICE CORRIGAN KRAUSE CPAS: Christine M. Eichmuller to manager, tax services; Lisa Satonick to human resources manager; Susan G. Johnson to bookkeeper.

Application deadline is June 15, 2015. Learn more and apply today at weatherhead.case.edu.

DAWSON COS.: Laura Park to rating specialist.

MANUFACTURING

Rachel A. Margulis, CPA/PFS

Fairport Asset Management that Rachel A. Margulis,

Aaron S. Nuti and Joyce A. Zak have been

Send information for Going Places to dhillyer@crain.com

JOB CHANGES

INSURANCE

is pleased to announce

JUNE 8 - 14, 2015

Coakley

Yannucci

Boyson

Klein

Roddy

Norris

Valponi

Molten

FINANCE

The Cleveland Clinic-Weatherhead Executive MBA at Case Western Reserve University combines Weatherhead’s breakthrough business concepts of leadership in management with Cleveland Clinic’s innovation in health care to make this program the premier option for experienced professionals in health care.

promoted to Advisors

LEGAL RENNER, OTTO, BOISSELLE & SKLAR LLP: Bonnie Smith to associate patent attorney.

NONPROFIT ELIZA JENNINGS: Richard M. Boyson Jr. to president and CEO. NACM GREAT LAKES REGION: Jim Hugo to membership consultant, Greater Cleveland and Northern Ohio.

BOARDS RAINBOW BABIES & CHILDREN’S FOUNDATION: Jill Goubeaux Clark to president; Terri A. Kennedy to vice president/ treasurer; Jocelyne K. Linsalata to vice president/secretary; Robin L. Baum, Stacey L. Hanna, Michelle L. Snyder and Stephanie Antunez to vice presidents; Dinah Kolesar to immediate past president.

REAL ESTATE

BABCOX MEDIA: Michael Madej to director, digital media.

ALLEGRO REALTY ADVISORS LTD.: Ben Klein to associate, strategic advisory services.

MARKETING

STAFFING

FALLS COMMUNICATIONS: Allison Baker to account supervisor; Katherine Cameron and Ansley Gogol to assistant account executives; Erin Foster to art director; Samantha Gasco and Dawn Kaczynski to account executives; Melissa Gutschmidt to senior account executive; Linda Rodriguez to accounting manager; Jordan Testerman to senior account supervisor.

ANCHOR MEDICAL STAFFING: Elaine T. Hollo to vice president; Katie Drdek to director of staffing/sales; Bridgette Coljohn to staffing coordinator/recruiter; Wendy Rosado to office assistant/compliance.

STEVENS STRATEGIC COMMUNICATIONS: Meredith Traxler to office manager.

OECONNECTION: Michael Crowdes to product manager, ecommerce solutions.

at the ﬁrm.

DIRECT RECRUITERS INC.: Brian Roddy to project manager, public safety and government practice.

TECHNOLOGY

AWARDS GREATER CLEVELAND COMMUNITY SHARES: Betsie Norris (Adoption Network Cleveland) received the Eleanor R. Gerson Leadership in Social Justice Award. OHIO ASSOCIATION OF CHILD CARING AGENCIES: Betsie Norris (Adoption Network Cleveland) received the Virginia Colson Award for Service to Families and Children. ST. EDWARD HIGH SCHOOL: Mark J. Valponi (Taft, Stettinius & Hollister LLP) received the 2015 Legal Eagles Man of the Year Award. UNIVERSITY SCHOOL: Donald C. Molten Jr. (University School) received the 2015 Alumni Graduate Award.

STAY CONNECTED WITH CRAIN’S TWITTER: @CrainsCleveland INSTAGRAM: instagram.com/crainscleveland FACEBOOK: Facebook.com/CrainsCleveland DAILY E-NEWSLETTERS: CrainsCleveland.com/register LINKEDIN: linkedin.com/company/crain’s-cleveland-business Joyce A. Zak, RPSM

Aaron S. Nuti, CFA, CAIA

6/4/2015

Does your asphalt surface look like this? Then it’s time to make a call to:

GET DAILY NEWS ALERTS FROM CRAIN’S REGISTER FOR FREE EMAIL ALERTS AND RECEIVE: THE MORNING ROUNDUP BREAKING NEWS ALERTS

800.PAVE.NOW

DAILY HEADLINES REAL ESTATE REPORT: Published Monday. HEALTH CARE REPORT: Published Tuesday. MANUFACTURING REPORT: Published every other Wednesday.

www.FairportAsset.com Quality and Excellence in Asphalt Paving Since 1939

•

Asphalt Paving • Pavement Milling Pavement Marking • Hot Mix Production Facility • Concrete and Excavating Services

www.RonyakPaving.com

SMALL BUSINESS REPORT: Published Thursday. SHALE AND ENERGY REPORT: Published Friday. SPORTS BUSINESS REPORT: Published Monday. CRAINSCLEVELAND.COM/REGISTER

20150608-NEWS--13-NAT-CCI-CL_--

6/4/2015

3:25 PM

Page 1

JUNE 8 - 14, 2015

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Juventas drug misses goal, still has promise By CHUCK SODER csoder@crain.com

Juventas founder Marc Penn didn’t sound too concerned about the fact that the company’s experimental drug failed to achieve its primary goal during a recent Phase II clinical trial. Sure, heart failure patients who received the drug didn’t do all that much better than those who received a placebo. But several data points suggest that the drug might be able to help patients whose hearts are in particularly bad shape. That data — which came from a group of 10 patients — has convinced the Cleveland company to start designing a second Phase II clinical trial that aims to enroll up to 200 patients in the high-risk heart failure category, Penn said. Juventas and its investors believe that there’s “every reason” to conduct a follow-up trial, said Penn, who also is director of cardiovascular research at Summa Health System in Akron. So why did the drug — which tells the body to send stem cells to the site of an injury — fail to hit its primary goal? For the most part, patients who received the drug showed significant improvement 12 months after receiving treatment. But so did patients who received a placebo. In both groups, most patients were able to walk further in six minutes one year later, and they filled out surveys suggesting that they are enjoying a higher quality of life. However, placebo patients with more severe heart problems didn’t improve much on those two measures — the trial’s “primary endpoints.” And they actually deteriorated on

other, more objective tests that measure the size of a patient’s heart and how much blood it expels on each squeeze. But the 10 patients who received the largest dose of the drug, JVS100, continued to improve by “clinically meaningful” margins, Penn stated. Patients who received a smaller dose showed slight improvement as well. Both Penn and CEO Rahul Aras downplayed the importance of missing the primary endpoints. They both described the trial as “exploratory.” It was designed to test different doses of the drug on patients suf-

fering from different degrees of heart failure. The results were informative, Aras said. “We’re happy with them. We’ve learned a lot,” he said. Granted, it obviously isn’t good for a clinical trial to miss its primary endpoints. For instance, another Cleveland company, Athersys, saw its stock price plummet in April, after its stem cell therapy missed its primary endpoints during a Phase II trial targeting stroke patients. The stock fell despite the fact that a subgroup of 27 patients who received treatment earlier did signif-

icantly better than those who received a placebo. That’s a larger subgroup than the one Juventas is relying on. However, Juventas’ data is cleaner in one respect, according to Dr. David Hooper, the senior scientific adviser at Clinical Research Management, a Hinckley-based company that helps researchers conduct clinical trials. Hooper thought Athersys’ subgroup data was interesting. However, he noted that Athersys defined its subgroup after the company received data from the trial, which leaves room for bias to creep into the data.

Juventas, however, planned from the start to conduct a separate analysis on the most severe heart failure patients. The idea of conducting a followon Phase II study that focuses on severe heart failure patients “looks reasonable,” Hooper said, after checking out publicly available data from the trial. It make sense that the drug would have a bigger impact on patients with severe heart problems, Penn said, citing data from previous studies conducted by Juventas. “We actually predicted that would be the case,” he said.

It pays to tend to your ﬂock. Over the past 5 years, employee out-of-pocket expenses have risen nearly 40%.1

Aﬂac can help protect your employees with cash to cover their bills in the event of a covered

Crain’s 2015 program nominations

sickness or injury. And now employees’ claims

Nominations are now open for all of Crain’s Cleveland Business’ 2015 programs. Deadlines for each of the programs are:

Small businesses like how easy it is to add

can get paid in a day with Aﬂac’s One Day PaySM when they submit online.2

voluntary coverage to their benefits at no direct cost. Especially when it is from Aflac, the number one provider of worksite/voluntary insurance sales for 13 consecutive years.3 Aflac

■ Crain’s 52 — Nomination deadline: June 22

may even be a pre-tax deduction, so when we say it pays to tend to your ﬂock, it just might.

■ CFO of the Year Awards — Nomination deadline: July 10

Call your local agent and visit aﬂac.com/smallbiz

■ General & In-House Counsel Awards — Nomination deadline: Aug. 21 ■ Who to Watch in Manufacturing — Nomination deadline: Aug. 24 ■ Who to Watch in Marketing/Creativity — Nomination deadline: Oct. 26

2014 Employer Health Benefits Survey, The Henry J. Kaiser Family Foundation, September 10, 2014. 2One Day PaySM is available for most properly documented, individual claims submitted online through Aflac SmartClaim® by 3 PM ET. Aflac SmartClaim® not available on the following: Short Term Disability (excluding Accident and Sickness Riders), Life, Vision, Dental, Medicare Supplement, Long Term Care/ Home Health Care, Aflac Plus Rider and Group policies. Individual Company Statistic, 2015. 3Eastbridge Consulting Group, U.S. Worksite/Voluntary Sales Report. Carrier Results for 2002-2014. Avon, CT. Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.

For more information on how to submit your recommendations for each of the programs, go to: www.crainscleveland.com/ nominations.

Z150001R

Worldwide Headquarters | 1932 Wynnton Road | Columbus, GA 31999

3/15

20150608-NEWS--14-NAT-CCI-CL_--

6/4/2015

8:33 AM

Page 1

Turning Passion Into Purpose WITH THE CLEVELAND FOUNDATION

THE HIGLEY FAMILY

Building for Clevelandâ€™s Future $23 MILLION GIFT IS THE THIRD-LARGEST IN CLEVELAND FOUNDATION HISTORY AND HONORS BEVERLY AND ALBERT M. HIGLEY JR.â€™S WISHES OF SUPPORTING THE COMMUNITY IN PERPETUITY

or nearly two decades, the Higley Fund of the Cleveland Foundation has granted more than $8.1 million to 175 nonprofit organizations throughout Greater Cleveland with a focus on basic needs like food, clothing, shelter and medical care. Now, with a recent $23 million estate gift from Beverly and Albert M. Higley Jr.,â€“ the third-largest gift in the foundationâ€™s 101-year history â€“ the fund will substantially increase its capacity to serve those in need and become the single largest supporting organization of the Cleveland Foundation.

â€œOur parents believed in this community and believed in the value of giving back to create opportunities for others,â€? said Bruce G. Higley, Chairman of The Albert M. Higley Co. and president of The Higley Fund. â€œTheir legacy as true champions of the people and places that make Cleveland a great home will now endure permanently through the Cleveland Foundation so future generations can EHQHĂ€W IURP WKHLU SDVVLRQ IRU our community.â€? $QG MXVW DV +LJOH\ EXLOGLQJV have a sense of permanence and stature among the academic campuses, medical centers and corporate parkways they anchor, The Higley Fund is a concrete representation of the purpose-driven lives of the family.

The Albert M. Higley Co. was founded in Clevelandâ€™s roaring twenties and has been chaired by three generations of Higâ€œAl and Beverlyâ€™s philanthropy leys for 90 years. Itâ€™s one of was guided by their humility, the most respected family-led compassion and unwavering businesses in the region, and belief in what is right,â€? said Northeast Ohioâ€™s landscape is Ronn Richard, President & Albert M. Higley, Jr. and his wife, Beverly, Ă€OOHG ZLWK FRQVWUXFWLRQ SURMdedicated their fund to serving those in CEO of the Cleveland FounHFWV FRPSOHWHG E\ WKH Ă€UP DW need in the Cleveland community. With dation. â€œWe are honored to some of the areaâ€™s most venthis record-setting gift their legacy will work with The Higley Fund continue to assist future generations. erable commercial centers and to ensure that this legacy of institutional campuses. With a kindness and humanity lives SRUWIROLR RI PRUH WKDQ FRPSOHWHG SURMHFWV on through impactful grantmaking that meets the it would be rare if someone living and working needs of our community.â€? in Northeast Ohio had not set foot in a building touched by the Higley Company. Among the publiThe Higley Fund, established by the couple in 1994, cized ground breakings and celebrated ribbon cuthas contributed to organizations ranging from the tings, however, has been a family with strong valGreater Cleveland Chapter of the American Red ues working diligently to support another essential Cross and The Salvation Army of Greater Cleveframework: the social safety net.

June 8, 2015

WWW.CLEVELANDFOUNDATION.ORG/PURPOSE

20150608-NEWS--15-NAT-CCI-CL_--

6/4/2015

8:34 AM

Page 1

The Higley Family. (Far left:) Clockwise from bottom left, Sharon Higley Watts, Brian Higley, Bruce Higley, Beverly Higley, and Albert Higley, Jr. (Top right:) Albert M. Higley, Sr. (Bottom right:) His wife, Mildred Higley

need it most, the example of a man who lives honland to the Cleveland Sight Center and the Greater estly, and mercifully, and sincerely.â€? Cleveland Food Bank, through which the fund has provided more than 800,000 meals. The fund also The same words could be used to describe Al Higsupports a scholarship program through the Mandel ley, Jr., who followed in his fatherâ€™s footsteps, both in School of Applied Social Sciences at Case Western business, and in his commitment to the community. Reserve University and recently awarded $1 million to the school to establish the After attending Denison Albert and Beverly Higley University and serving in Research Commons. WKH .RUHDQ :DU KH MRLQHG â€œAL AND BEVERLYâ€™S The Albert M. Higley Co. The Higley family has been PHILANTHROPY WAS where he served as chairan integral part of the Cleveman and CEO from 1971 GUIDED BY THEIR land community for more to 1998. He, too, served on than 150 years. Its legacy of HUMILITY, COMPASSION the board of the Red Cross giving began with Alâ€™s father, AND UNWAVERING BELIEF and Rotary Club of Cleveâ€œAb,â€? who founded The Alland as well as The Salvation bert M. Higley Co. in 1925 IN WHAT IS RIGHTâ€? Army of Greater Cleveland, and went on to serve on and Cuyahoga County Children chair numerous civic and and Family Services and the community boards includUnited Way of Greater Cleveland. Seeking a philaning the Cleveland Chamber of Commerce, the Greatthropic partner, Albert and his wife, Beverly, estaber Cleveland Chapter of the American Red Cross, and lished a fund with the Cleveland Foundation. Togeththe Shaker Heights School Board. HU WKH\ VSHQW \HDUV HQMR\LQJ FKDULWDEOH JUDQWPDNLQJ DQG SOD\LQJ DQ DFWLYH UROH LQ QRQSURĂ€W RUJDQL]DWLRQV In 1946 Louis Seltzer, editor of the Cleveland Press, and causes throughout the community. Al passed described his life as the â€œstory of a builder, but not away in 2012, and Beverly in 2014. a builder of bricks and mortar aloneâ€Ś Ab Higley has built character and leadership, and sympathetic â€œFor our family, giving began at home â€“ with our consideration for his fellow men, a compassion for parents and in our community,â€? said Sharon Higthose who need the ministrations and understandley Watts, First Vice President of The Higley Fund. ing of others. He has built himself, and in the doing â€œWe are proud to continue our partnership with the RI WKDW KH KDV KHOSHG KLV FLW\ LQĂ€QLWHO\ PRUH WKDQ Cleveland Foundation to ensure that everyone has all of the other buildings he has put up, because access to services and opportunities that can create he is giving to his family, to his community, to his a better life.â€? friends, to his associates, at the very time all of us

FACEBOOK: THE CLEVELAND FOUNDATION | TWITTER: @CLEVEFOUNDATION

Crainâ€™s Cleveland Business

20150608-NEWS--16-NAT-CCI-CL_--

6/4/2015

3:56 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 8 - 14, 2015

TAX LIENS Are you ready for April showers and May flowers? CALL TODAY FOR YOUR COMPLIMENTARY ANALYSIS! Providing Commercial & Multi-Family Landscaping Service Since 1995

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

Landscape Maintenance

Lawn Fertilization • Mowing • Trimming & Edging Innovative Design • Landscape Construction • Mulching Tucker Landscaping Inc. • 986 Broadway Avenue • Bedford, Ohio • 44146 (440) 786-9840 • Tuckerlandscaping.net

Aorp Corp. 1-800-Radiator & AC of Ohio 25975 Emery Road, Suite G., Cleveland ID: 45-3848471 Date filed: April 24, 2015 Type: Employer’s withholding, unemployment, corporate income Amount: $14,344 R Engineering Team LLC P.O. Box 91746, Cleveland ID: 26-3681922 Date filed: April 15, 2015 Type: Employer’s withholding Amount: $15,124 Fortune Galore Inc. Bo Loong Restaurant 3922 Saint Clair Ave. NE, Cleveland ID: 34-1788514 Date filed: April 15, 2015 Type: Employer’s withholding, unemployment Amount: $14,892 Chiropractic Center of Solon Inc. 33414 Bainbridge Road, Solon ID: 34-1257924 Date filed: April 15, 2015 Type: Employer’s withholding Amount: $14,532 RSD Landscaping LLC DeWeese Landscaping 185 Willow Lane, Chagrin Falls ID: 32-0277111 Date filed: April 24, 2015 Type: Partnership income, failure to file complete return Amount: $14,068 Greenwich Partners LLC 1109 Carnegie Ave., Cleveland ID: 27-2941122 Date filed: April 15, 2015 Type: Employer’s withholding, partnership income Amount: $11,694 Action General Services Inc. 20600 Chagrin Blvd., Suite 350, Cleveland ID: 42-1750591 Date filed: April 24, 2015 Type: Employer’s withholding Amount: $11,534

A to Z Auto Service Inc. 13747 State Road, North Royalton ID: 13-4271845 Date filed: April 15, 2015 Type: Employer’s withholding Amount: $8,507 Dogtopia Ltd. 480 S. Green Road, South Euclid ID: 42-1620555 Date filed: April 7, 2015 Type: Employer’s withholding Amount: $6,515 Northern Interiors Ltd 22082 Lorain Road, Fairview Park ID: 34-1938614 Date filed: April 21, 2015 Type: Employer’s withholding Amount: $6,218 Ezzat Inc. Unity Food Market 10221 Union Ave., Cleveland ID: 55-0916244 Date filed: April 15, 2015 Type: Employer’s withholding, failure to file complete return Amount: $6,009

LIENS RELEASED Alert Door & Operator Co. 5534 Pearl Road, Parma ID: 34-10059766 Date filed: Feb. 5, 2015 Date released: April 7, 2015 Type: Employer’s withholding Amount: $26.586 Berry Insulation Co. 1600 E. 25 St., Cleveland ID: 36-4628732 Date filed: July 18, 2014 Date released: April 21, 2015 Type: Employer’s withholding, unemployment Amount: $73,866 Berry Insulation Co. 1600 E. 25 St., Cleveland ID: 36-4628732 Date filed: Nov. 30, 2011 Date released: April 21, 2015 Type: Employer’s withholding, unemployment Amount: $15,579 Berry Insulation Co. 1600 E. 25 St., Cleveland ID: 36-4628732 Date filed: Feb. 9, 2012 Date released: April 21, 2015 Type: Employer’s withholding Amount: $10,193 Blue Tee Golfer Inc. 8304 Dogwood Lane, Parma ID: 34-1739015 Date filed: Oct. 17, 2014 Date released: April 15, 2015 Type: Employer’s withholding, failure to file complete return Amount: $9,489

Care the Wrightway Inc. 756 E. 185 St., Cleveland ID: 45-4740431 Date filed: April 7, 2015 Type: Employer’s withholding Amount: $11,144

D & O Leasing Inc. 883 Addison Road, Cleveland ID: 34-1297801 Date filed: Nov. 22, 2013 Date released: April 7, 2015 Type: Employer’s withholding Amount: $23,364

Sky Mobil Inc. Sky Mobil Plus Urban Care 11100 Lorain Ave., Cleveland ID: 20-3553891 Date filed: April 15, 2015 Type: Employer’s withholding, employer’s annual federal tax return Amount: $8,844

Dzugan Method-Ohio LLC 29111 Center Ridge Road, Westlake ID: 27-1973663 Date filed: Sept. 22, 2014 Date released: April 24, 2015 Type: Employer’s withholding, unemployment Amount: $5,498

Suburban Veterinary Hospital Inc. 5257 Warrensville Center Road, Maple Heights ID: 26-0352008 Date filed: April 7, 2015 Type: Unemployment, corporate income Amount: $8,623

Etcetera Services Inc. Houswork Etc and Unpacking Etc. P.O. Box 40041, Bay Village ID: 34-1816713 Date filed: Aug. 10, 2010 Date released: April 21, 2015 Type: Employer’s withholding Amount: $15,597

Fountain Anti Aging LLC 29111 Center Ridge Road, Westlake ID: 20-5109466 Date filed: Aug, 19, 2014 Date released: April 7, 2015 Type: Employer’s withholding, unemployment Amount: $11,974 Great Northern Management Inc. 6430 Eastland Road, Cleveland ID: 34-1317120 Date filed: Dec. 3, 2014 Date released: April 15, 2015 Type: Employer’s withholding Amount: $20,514 J Schrader Co. 4603 Fenwick Ave., Cleveland ID: 34-0207795 Date filed: Nov. 29, 2011 Date released: April 15, 2015 Type: Employer’s withholding Amount: $19,477 Mars Group Inc. Action Pest Control P.O. Box 18721, Cleveland ID: 34-1756832 Date filed: Feb. 5, 2015 Date released: April 7, 2015 Type: Employer’s withholding Amount: $10,733 Miega Inc. 3820 Superior Ave. E, Cleveland ID: 90-0676858 Date filed: Dec. 30, 2014 Date released: April 21, 2015 Type: Corporate income Amount: $8,753 National City Mortgage Services Inc. 4100 W. 150 St., Cleveland ID: 26-2783255 Date filed: Nov. 16, 2012 Date released: April 21, 2015 Type: CIVP Amount: $499,887 Pro Surplus Inc. 21425 Aurora Road, Bedford ID: 27-1803119 Date filed: Jan. 22, 2014 Date released: April 7, 2015 Type: Employer’s withholding Amount: $19,797 Ran-Dan Transport Inc. 2506 Grovewood Ave., Parma ID: 92-0184993 Date filed: Oct. 29, 2010 Date released: April 24, 2015 Type: Employer’s withholding Amount: $23,116 Sunshine Flowers Inc. 6230 Stumph Road, Parma Heights ID: 20-0648677 Date filed: July 3, 2007 Date released: April 15, 2015 Type: Employer’s withholding Amount: $9,852 United Towing Services Inc. 3929 Superior Ave. E., Cleveland ID: 34-1873545 Date filed: March 13, 2015 Date released: April 15, 2015 Type: Employer’s withholding Amount: $14,147 Wanton-Horne Chapel of Peace Funeral Home Inc. 12519 Buckeye Road, Cleveland ID: 34-1725612 Date filed: Aug. 6, 2013 Date released: April 24, 2015 Type: Employer’s withholding Amount: $10,555 Wonder Go Inc. 6442 Metro Court, Suite K, Bedford ID: 34-1761991 Date filed: Oct. 5, 2005 Date released: April 15, 2015 Type: Employer’s withholding Amount: $9,650

CRAINâ€™S MIDDLE MARKET

20150608-NEWS--17-NAT-CCI-CL_--

6/4/2015

2:27 PM

Page 1

The supply chain for folder printing at Cleveland-based Jakprints:

START TO FINISH The supply chain for T-shirt order fufillment at Jakprints:

How companies like Jakprints control the quality of their products every step of the way SEE NEXT PAGE

ILLUSTRATION BY CHI BIRMINGHAM; INFORMATION COMPILED BY RACHEL ABBEY MCCAFFERTY

20150608-NEWS--18-NAT-CCI-CL_--

6/4/2015

2:27 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 8 - 14, 2015

KEEPING WATCH DOWN THE LINE Supply chain management is an important process that can’t be overlooked by middle market firms Relationship building

By RACHEL ABBEY McCAFFERTY rmcafferty@crain.com

Supply chain management is about more than just cutting costs and verifying quality — it’s an important step toward making sure a company’s suppliers are paying fair wages, following safety regulations and behaving ethically overall. Middle market companies may hold less sway over suppliers than larger corporations, experts say, but being clear with expectations and creating long-term relationships can go a long way. When establishing supplier relationships, it’s important to have a supply chain strategy that clearly outlines your company’s vision, philosophy and expectations, said James Domingo, president of The Domingo Group LLC in Twinsburg, which aims to help industrial manufacturers grow. Domingo had a long career at Swagelok Co. before starting his own business. Price is an important factor when selecting a supplier, but “capabilities and reliability” are often even more critical, Domingo said. Domingo suggests having a “checklist” of points on which to assess potential suppliers, including product quality, attention to health and safety and approach to environmental issues. By outlining your company’s principles, it becomes clear who is and who is not a good fit. And, he said, it’s important to have a way to clearly communicate those stan-

dards to suppliers. Companies can say that they’d like to see certain safety practices implemented at a business in order to use them as a supplier. “With good conscience, we can demand and expect that of suppliers,” Domingo said. A local example can be found at Great Lakes Cheese in Hiram, which did not respond to repeated

requests for comment. The company’s supply chain was brought into question after evidence of animal cruelty surfaced at one of its suppliers in November 2014. In March, the company updated its animal welfare policy. The policy clearly outlines expectations for suppliers, from requiring dairy farm employees to sign an annual

Employee Code of Ethics to asking suppliers to phase out tail docking by 2018 when possible. “Willful mistreatment or cruelty to animals will not be tolerated,” the company said as part of its animal welfare policy on its website. “High quality dairy products begin with high quality milk from well-cared for and humanely-treated animals.”

Globalization has made it so companies have to really do their due diligence when selecting a supplier that aligns with the behaviors they expect, said Oya Tukel, chair of the operations and supply chain management department at Cleveland State University’s Monte Ahuja College of Business. “Lot of times, suppliers overpromise and under-deliver,” she said. Creating long-term relationships with suppliers can help address that. Those types of suppliers understand their customers’ beliefs and can act accordingly, Tukel said. Jakprints Inc. in Cleveland has a relationship-driven supply chain, said CEO Nick DeTomaso. Suppliers have to align with the printer’s strong ecological values, he said, which has led to the company using mostly domestically sourced, responsibly forested paper for that part of its business. The company’s product development team reviews potential suppliers to make sure their business ethos matches Jakprints’, DeTomaso said. But as a printer, Jakprints — which has grown from annual revenues of about $5.5 million in 2005 to $25 million last year — is also familiar with being part of another company’s supply chain. Overall, communication is critical, DeTomaso said, especially when Jakprints becomes a larger See SUPPLY, page 20

20150608-NEWS--19-NAT-CCI-CL_--

6/4/2015

2:37 PM

Page 1

JUNE 8 - 14, 2015

TAX TIPS

WWW.CRAINSCLEVELAND.COM

CRAIN’S CLEVELAND BUSINESS

CARL GRASSI

Dividends are a key planning item There are many reasons corporations decide to not pay dividends to shareholders. Uncertain economic conditions have led many businesses to conserve cash over the last decade. Beginning in 2013, dividend rates increased by almost 60% for some taxpayers, from an all-time low of 15% to the current 20% (23.8% for those taxpayers subject to the net investment income tax). This increase provided an additional incentive for corporations to hold on to cash, because a distribution of earnings via a dividend is not deductible by the corporation and therefore represents the classic “double tax” scenario to which C corporations are subject. The IRS, however, does not like it when corporations hold onto their cash, and can impose a penalty tax for doing so. Many business owners are surprised to learn that the IRS can effectively compel them to make nondeductible dividend distributions. If a determination is made that the business is accumulating earnings to avoid the tax payable on dividends, the IRS can impose an “accumulated earnings tax” on the corporation, at the same rate imposed on dividend income. This is a penalty and is not reported by the taxpayer; it only comes up on audit when the IRS examiner determines that the corporation has accumulated more than a reasonable amount of earnings for the corporation’s business needs. Once the IRS examiner asserts that there is an unreasonable accumulation of earnings, the burden is generally on the taxpayer to show that such accumulation was reasonable given the needs of the business. The tax can be avoided if the corporation can show that the accumulation is not to avoid paying dividends, but to prepare and provide for legitimate business reasons such as the expansion of a facility, acquisition of another business or debt retirement, among other reasons. It is necessary for the business needs to have been in existence at the end of the year under audit; the corporation cannot “create” needs once the audit comes up and assert that these needs were present in the year under audit. It is therefore important to document these needs each year, ideally in the minutes of the shareholders’ or directors’ meeting. It is much more convincing to show an examiner minutes of a year-end meeting during which it was resolved to set aside funds for the eventual redemption of a significant shareholder (for instance) than it is to convince the examiner during an audit several years later that this was the reason for the accumulation. The company is also allowed to retain a sufficient amount of earnings to provide working capital to the business. Many years ago, the U.S. Tax Court established a formula known as the Bardahl formula, for determining the amount of working capital needed for this purpose. This formula takes into account the capital needed for the business by looking at the business operating cycle and the cash needed to operate the business for a taxable year.

An audit on the accumulated earnings issue can be time consuming and expensive, and because the issue of “reasonable needs” is subjective, it is better to avoid this issue in the first place. A solid history of paying significant dividends can help avoid this issue. Loans to shareholders should be very carefully considered (or avoided altogether) because they may be viewed as a non-taxable substitute for paying taxable dividends. Finally, an S corporation election will provide complete relief

prospectively because S corporations are not subject to the accumulated earnings tax, although the corporation would remain subject to audit for prior years’ accumulations. Because of the many factors that go into the analysis, it is important to have a comprehensive plan that takes into account (and documents) the needs of the business, from both a working capital and a future needs basis, along with establishing a dividend paying policy. The amount of IRS attention to

this issue has varied over the years. This was a significant issue in prior years when capital gains were taxed at a rate that was lower (and in some cases much lower) than dividend rates. It seems as though the IRS was less likely to focus on this issue in more recent years when dividend rates were very low. With the recent increase in dividend rates, this issue will be coming up more frequently in audits and should therefore again be an important planning item for corporations.

Grassi is president of McDonald Hopkins LLC.

SS&G has joined BDO The people you know at SS&G, one of the Midwest’s top accounting ﬁrms, have combined their dedicated professionals and staff with BDO. With both local knowledge and expanded resources, we look forward to delivering the same exceptional client service to entrepreneurial and growing businesses across the Midwest – and all over the world. BDO Akron 301 Springside Drive Akron, OH 44333 330 668 9696

BDO Cleveland 32125 Solon Road Cleveland, OH 44139 440 248 8787

www.bdo.com

BDO Downtown Cleveland Hanna Building, 1422 Euclid Avenue, Suite 1500 Cleveland, OH 44115 216 325 1700

20150608-NEWS--20-NAT-CCI-CL_--

6/4/2015

2:28 PM

CRAIN’S CLEVELAND BUSINESS

Page 1

WWW.CRAINSCLEVELAND.COM

JUNE 8 - 14, 2015

SUPPLY continued from page 18

Expertise Pays Off For more than 80 years, we have helped middle THYRL[ JVTWHUPLZ HJOPL]L ÄUHUJPHS Z\JJLZZ -PUHUJPHS [H_ 0; HUK VYNHUPaH[PVUHS K\L KPSPNLUJL 7\YJOHZL HJJV\U[PUN JVUZ\S[H[PVU ;H_ Z[Y\J[\YPUN + Risk assessment/risk mitigation (\KP[ [H_ HUK HK]PZVY` ZLY]PJLZ 3L[ V\Y RUV^SLKNL L_WLYPLUJL HUK L_WLY[PZL IL HU HZZL[ [V `V\Y JVTWHU`»Z VWLYH[PVUZ THUHNLTLU[ HUK ZOHYLOVSKLYZ

Cleveland | 216.363.0100 Canton | 330.966.9400 Delaware | 740.362.9031 Elyria | 440.323.3200 Business Advisors and Certified Public Accountants

maloneynovotny.com

part of another company’s supply chain. The company will fly employees out to the customer, even keeping a person on site if need be. Relationships are especially important in what DeTomaso calls the company’s virtual inventory fulfillment, which allows Jakprints to print products by the order for entities like Viacom Inc. and Sony Music Entertainment, instead of keeping items stocked in a physical warehouse. DeTomaso said Jakprints separated the virtual inventory part of its business from its legacy business so that it could curate its customers and choose those who work as true partners.

Size matters Companies with ethical supply chains are those that not only trust their suppliers, but also make sure to verify that everything’s happening as planned, said Michael Graska, president and owner of supply chain and logistics company IGSCM Group LLC in Brecksville. It’s also important to make sure expectations on price, delivery and ethics are clear to suppliers, a necessity that may be easier for smaller companies with fewer suppliers. “As you grow larger, as you expand, as you go from small to medium, you sometimes have a harder time being clear with your expectations,” Graska said.

Middle market companies face the same supply chain challenges as larger ones, but they have less leverage than a corporation the size of Apple Inc., said Mahesh Srinivasan, associate professor and program coordinator for supply chain at the University of Akron. If a smaller company goes to one of its suppliers and asks them to pay employees fair wages, suppliers may not have reason to listen, he said. Ultimately, Srinivasan said, the driving force behind corporate social responsibility practices is customer demands. Srinivasan has been studying such practices, looking at factors such as whether members of a supply chain are following laws or paying fair wages. And while there are companies that truly care about the issues, these practices can hurt competitiveness, he said, driving up prices and tightening margins. Working to make sure suppliers are acting ethically isn’t a new concern for companies, but as supply chains have become increasingly global, companies have to address new cultural and logistical issues, said Steve Ash, professor and chair of the department of management at the University of Akron. Smaller companies may have to even rely on intermediaries to manage those relationships. “That distance creates a lot of different barriers,” Ash said.

As your business expands, so does your need for proactive advice.

Comprehensive Services for any size business from FirstMerit Increased demand for eco-friendly solvents meant exponential growth for Lisa—and a conversation with FirstMerit Bank. With their Treasury Management, Payroll, International Services and more, Lisa not only kept up with increasing demand, but also created a new model for order fulﬁllment. Now, thanks to the help of FirstMerit, Lisa’s business no longer qualiﬁes as “small.”

TO L E A R N MOR E, C O N T A C T :

Sean Richardson, President and CEO, FirstMerit NorthCoast Region, at 216-802-6565 or sean.richardson@ﬁrstmerit.com. Follow the latest market trends @ﬁrstmerit_mkt

ﬁrstmerit.com Member FDIC 2544_FM15

20150608-NEWS--21-NAT-CCI-CL_--

6/5/2015

11:28 AM

Page 1

JUNE 8 - 14, 2015

ADVISER

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

GREGORY J. SKODA

Are you ready for an acquisition? One of the first questions to ask before pursuing a business acquisition is why do you want to acquire a business? You may have a long list of reasons, such as: More potential income from utilizing unused capacity more rapidly than organic growth might allow; An increase in the depth or quality of existing products or services; An expansion in services or products to existing customers; New customers in volume;

ternal skill sets and the time you are willing to invest internally to allow you to make the most of your opportunities. More often than not, most of your internal team has “day jobs” that absorb most, if not all, of their time. An acquisition can be a large investment of all of your resources, from time and money to your brand, and it needs full time attention. Has your external team had the experience of locating, buying, operating and evolving businesses?

Do team members have a volume of experience (not just one or a few times a year) in assisting others in locating, evaluating, negotiating, closing and executing in areas such as accounting, tax, legal transactions, intellectual property, finance, labor law, insurance and others that may apply? Growing by way of acquisition can be an exciting, all-consuming time if you allow it to be. It is important to understand why your organization wants to evolve this way and then determine if you have the right internal and

external team members to make it happen. The best teams have a collection of experience both internally and externally, and your team needs a leader who will see that there is a unified goal and a clearly defined path. Each team member must understand what success looks like. Are you ready to assemble your teams? Are you ready to build your playbook? Are you ready to define success? Are you ready to activate your plans? You can change the evolution of your company forever.

Gregory J. Skoda is a CPA and chairman of Skoda Minotti, a national CPA, financial and business advisory firm with offices in Cleveland, Akron and Tampa.

The addition of significant talent and an increase in the employee base at all levels, including potential management, leadership and maybe even future owners of the business; Geographic expansion, which could help in recruiting and retaining employees, or allow you to serve existing or future customers at levels and in ways you are currently unable to do. If you think you want to acquire a business for these purposes or have your own list of reasons, one thing is for certain: Your business is going to change in a big way. Are you ready? Now that you’ve determined you are ready to build your organization by way of acquisition, much like constructing a new building you will need to architect, engineer and design what it is you hope to achieve. Begin by evaluating your existing internal and external team members. You may have valued members of your organization who are great in their existing roles. If you are about to embark on a path to change your organization, will each of your key players be able to add value in locating, evaluating and eventually operating these potential additions to your organization? Does your team have experience either in growing businesses by acquisition or working in larger organizations that will prove beneficial? Will they thrive in organizations with more direct reports and with additional leaders with different leadership styles? It is important to assess what your current and future organization charts and roles will look like. This is just the beginning of laying the foundation on which you will build the next generation of your business. Does your company have the capacity to absorb new roles, will you need to hire or are you expecting to acquire the people you’ll need to get to the next level in each of your business units? You’ll need to consider IT, marketing, administration, accounting and finance, operations, sales, production, customer service and perhaps others. In addition to your internal team, do you have the right external team in place to help you define, execute and more than achieve your goals? The hard dollars and soft costs you’re about to incur in making your acquisition investments come in many different forms. These costs can vary by as much as five or 10 times depending on your external team and how you utilize those resources. It is imperative you have an external team that complements your in-

Commercial development is my practice. That’s a

legal foundation you can build on. I grew up around commercial construction in New York City. But my law practice has that consensusbuilding Midwestern style. I’m the Chair of our Real Estate & Environmental Practice Group. Serving developers and lenders nationwide, both new construction and redevelopment. We work with landowners, investors, tenants and municipalities. On everything from land acquisition to zoning. And we help raise equity—public and private. Today, mixed-use developments are the rage. But good-old service never goes out of style. It’s attention to detail that gets the deal done. And your project off the ground. I’m JEFF WILD. I’m on your team.

MY BENESCH MY TEAM > Chair, Real Estate & Environmental Practice Group > Representing developers, lenders, property owners, investors and tenants. > Legal Services Include: Commercial Financing, Joint Venture Formation, Single-Asset or Portfolio Acquisitions and Dispositions, and Commercial Development. > 216.363.4544 | jwild@beneschlaw.com

Cleveland • Columbus • Indianapolis • Philadelphia • Shanghai • White Plains • Wilmington • www.beneschlaw.com

20150608-NEWS--22-NAT-CCI-CL_--

6/5/2015

2:36 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 8 - 14, 2015

Marketing in the information age Many middle market firms place an emphasis on offering up valuable content to attract new customers By DOUGLAS GUTH clbfreelancer@crain.com

Modern consumers have shut off the traditional world of marketing, said Joe Pulizzi, founder of the Cleveland-based Content Marketing Institute. They fast-forward through commercials on their DVR, ignore magazine ads and use content-filtering extensions such as AdBlock to prevent advertisements from being displayed on their web browsers. Reaching prospective customers through the noise (and their annoyance) means communicating without selling, Pulizzi believes. Companies must deliver consistent, ongoing and valuable information that positions them as experts in their field, with the end goal of attracting the business and loyalty of new buyers. The idea of content marketing is of special significance to the middle market, where businesses straddling the line between smaller firms and billion-dollar behemoths are aiming to reach the next plateau of success, Pulizzi said. “Consumers will ignore you if you’re not giving them something helpful,” he said. “The majority of the buying process is often over for them even before they contact a company.” The first objective of middleground content curators should be to create a documented strate-

gy around their plan. While some midrange companies use social media as an extension of their brand, there often is not enough thought behind how that Facebook page or Twitter feed will develop an audience. Only about 30% of middle market leaders Pulizzi has interacted with have a long-term consumer attraction plan, he said.

created by the company. One recent post on the Westlake-based firm’s OnBase Blog relayed how technology can increase student success. The narrative-style post is told through the experience of a Hyland employee who also happens to be the mother of a middleschooler, and concludes with a friendly reminder to email the

“We’re creating stories over ads, based on the limited time people have to read content. We’re selling stories that drive action in an emotional way.” – Mickey Mencin corporate communications director, Hyland Providing a steady stream of quality content, be it in text, audio or video form, should be part of a middle market firm’s strategy whether its intended target is comprised of consumers or other businesses, Pulizzi said. “A company will publish a blog over a week and expect results,” he said. “These projects are happening in a bubble and aren’t being integrated into the organiztion.”

On the right track However, there are some local businesses getting it right, noted Pulizzi. Hyland Software, for one, directs its near daily blog posts at specific demographics interested in OnBase, an enterprise content management software product

writer for more details. “We’re creating stories over ads, based on the limited time people have to read content,” said Mickey Mencin, who leads a team of 25 content marketing specialists as director of corporate communications at Hyland. “We’re selling stories that drive action in an emotional way.” The content push is part of a year-old rebranding that put the name of Hyland’s flagship product front and center. Over the last 12 months, the company has had a 37% increase in traffic on its blog, as well as another 52% uptick on its LinkedIn page, which directs visitors to blogs and other social media channels. “Knowing your audience is crit-

MANAGE YOUR BUSINESS, NOT YOUR TECHNOLOGY.

ical, as is knowing how they want to consume content,” Mencin said. “Our content puts our culture and personality out there.” Szarka Financial’s ideal clientele is comprised of folks saving for retirement, said marketing director Kelley Drumm. To reach them, the North Olmsted company crafts relevant subject matter across a variety of platforms, including YouTube and Internet radio, where Szarka advisers cover such topics as Social Security and how to care for an elderly parent. “Content marketing is a way of reaching clients without selling to them,” Drumm said. “It allows us to deliver info that helps people be more intelligent about financial planning.”

Making an impression Tremco Inc., a supplier of roofing and waterproofing solutions headquartered in Beachwood, has always marketed content via traditional presentations, case studies and white papers, said John Buckley, manager of the business’s sealants and waterproofing divi-

sion. However, Tremco has widened its digital footprint over the last decade, expanding beyond its website into email, social media, video presentations and a blog. YouTube has been an especially robust content distributor in an era where easily digestible information is of the utmost importance for a burgeoning enterprise. Tremco’s marketing leaders even prefer video content over spoken presentations at trade association meetings or other settings where clients and businesses are being addressed. “Video gets our message across in a more fresh and engaging way,” said Buckley. “It makes a bigger impact than a dry presentation.” Northeast Ohio’s middle market firms must continue to find unique ways to separate themselves from the pack as the buying public turns away from the tsunami of marketing messages, said Pulizzi of CMI. “Content marketing is becoming the de facto term for the industry,” he said. “The hard part is the strategy, but publishing (content) is doable.”

Crain’s 2015 program nomination deadlines: Nominations are now open for all of Crain’s Cleveland Business’ 2015 programs. Deadlines for each of the programs are: ■ Crain’s 52 Nomination deadline: June 22

■ Who to Watch in Manufacturing Nomination deadline: Aug. 24

■ CFO of the Year Awards Nomination deadline: July 10

■ Who to Watch in Marketing/Creativity Nomination deadline: Oct. 26

■ General & In-House Counsel Awards Nomination deadline: Aug. 21

For more information on how to submit your recommendations for each of the programs, go to: www.crainscleveland.com/nominations.

SM COX 15 COXBUSINESS BUSINESSINTERNET INTERNET XX SM

99 mo*

For 12 months with a 2-year agreement*

CALL 866-791-2688 | VISIT COXBUSINESS.COM *Offer valid until 8/30/15. Minimum service term, equipment, installation, fees, taxes, and other restrictions may apply. See coxbusiness.com. ©2015 Cox Communications, Inc. All rights reserved.

It’s our priority to provide you with the tools, knowledge and advice for all your business needs. tĞ ĞůŝĞǀĞ ŽŶǀĞƌƐĂƟŽŶƐ ŚĂŶŐĞ ǀĞƌǇƚŚŝŶŐ͘

www.hwco.com

877-FOR-HWCO

20150608-NEWS--23-NAT-CCI-CL_--

6/5/2015

2:48 PM

Page 1

JUNE 8 - 14, 2015

WWW.CRAINSCLEVELAND.COM

CRAIN’S CLEVELAND BUSINESS

Every message has a messenger The willingness to impart knowledge upon a client should be in the DNA of any good businessperson, believes Kelley Drumm. Information is a particularly valuable currency in the financial realm, where decisions about real-life legal tender can impact people for decades. As marketing director for Szarka Financial, a North Olmsted firm providing professional services primarily for customers nearing retirement, Drumm assists a team of financial planners in taking advantage of the power of knowledge. Drumm, who joined Szarka in 2007, oversees all of the familyowned firm’s marketing communications, PR, advertising, events and business development. She not only works to keep the company’s website and social media channels current, she works with the firm’s financial advisers to create information-rich podcasts and video segments for release to the public. “It’s about refining our story — telling people who we are and what’s our brand message,” said Drumm, a 20-year industry veteran whose background includes marketing and sales with Vitamix and American Greetings. It’s also about being seen as an expert in the field, regardless of more traditional advertising and promotion avenues. Drumm works directly with firm

advisers on researching and crafting a message meant to reach niche audiences. For example, if a planner has expertise in how retirees can create a budget, Drumm will help him explore and edit a blog post or newsletter on the topic. “We’re taking a rifle approach over a shotgun,” she said. “It’s a very focused effort.” For Szarka, financial wisdom also comes in book form. Drumm and five advisers are completing a volume on basic financial planning that will publish in November, adding to a company library that includes “Money Brain,” a book on behavioral finance written by CEO Les Szarka. “When you share a book with clients instead of a business card, you’re sharing knowledge even before doing business with them,” Drumm said. This kind of storytelling is critical for an industry where referrals rev the economic engine, said company president Mike Perry. As reaching potential clients means cutting through the noise of half a hundred advertising conduits, Perry is happy to have someone on board who understands the importance of relaying engaging content to discerning clients beyond traditional marketing techniques.”You can have a great message, but if nobody’s reading it then you’re wasting your time,” Perry said.

“Kelley has a good sense of how to build messages and deliver them in an attractive way.” Higher levels of success may require a willingness to change direction and move onto something new, Drumm said. For example, Szarka ran radio ads for three years until switching to

videotaped advice segments that now appear on television. “A (medium) is not necessarily good or bad,” said Drumm. “Sometimes it’s just a matter of what works best in the timing of your business.” Integrating education into customer outreach is exciting for

Drumm, particularly as she watches the firm grow along with her efforts. “It feels good to help people get to a place where they can have a successful retirement,” she said. “Clients should be coming to us saying, ‘I want to work with that guy because he knows what he’s talking about.’” — Douglas Guth

Experience the Power of Being Understood ®

When you trust the advice you’re getting, you know your next move is the right one. That’s what you can expect from McGladrey: a team that can help middle-market executives navigate the opportunities and challenges they encounter here in Ohio, across the country or around the world. In other words, anywhere their businesses take them. That’s the power of being understood. To learn more about how McGladrey can help your organization, call our Cleveland office at 216.523.1900. Or go to www.mcgladrey.com/growingohio.

20150608-NEWS--24-NAT-CCI-CL_--

6/5/2015

11:27 AM

Page 1

CRAINâ€™S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 8 - 14, 2015

LARGEST PRIVATELY HELD COMPANIES I I AH2&

Company Address Rank Phone/Website

Estimated revenue (millions) 2014

2013

Number of local employees(1)

Year founded

Type of business

Top executive

8$ .!/ A$!A$ * / 9, 9*C B*? &HH - C - / &&2AA 4A2=5 02H)@&HH>DDD6 - 9*:6 1.

& <HH6H

& @HH6H

20&

AHH&

I-B.*/B. 91-- 391 B ?: "19 */ B:?9* : */ -B */' B?1.1?*C 91:3 B*- */' / 1/:?9B ?*1/

? C / 6 . ?9*1B ( *9. /

! $ 303 $ ' !' AH=H 6 */?( ?6 - C - / &&22$ 4A2=5 =!<)<HHH>DDD6. .B?B -6 1.

@ HHH6H

2 0HH

20@&

-?( */:B9 /

* , I6 (*9* 1:? 39 :* /? ( *9. /

' 8&& 0'. / $$$$ 991D 1 B :1/ &&A@= 4@@H5 =$=)A=HH>DDD6+1 //6 1.

A @=06H

A @A26H

2 $A=

20&@

9* / 9 "? 9 ? *- 9

*-- 1-? B 39 :* /?

8% .! & . 0!& / '.(+ / I. 9* / 1 - C - / &&2&& 4A2=5 A$A)<@HH>DDD6 . 9* /'9 ?*/':6 1.

A HHH6H

2 0HH6H

2 <&0

20H=

I. 9* / 9 ?*/': *: ?( 9 ?19 / . /B" ?B9 9 1" *//1C ?*C :1 * - E39 ::*1/ 391 B ?:

C *:: ""9 F 6 *:: 1) :

5 $'# '+ A0$HH 1-1/ 1 1-1/ &&2@0 4&&H5 A&!)&=HH>DDD6:D ' -1,6 1.

A HHH6H

2 !HH6H

& AHH

20&<

+19 C -13 9 / 391C* 9 1" %B* :F:? . 391 B ?: :: . -* : / : 9C* :

I9?(B9 6 I/?1/ 39 :* /?

'& / 7)2* 19?( 1*/? 0H2 , :* IC 6 - C - / &&22&)220H 4A2=5 $!=)@0@0>DDD6+1/ : F6 1.

2 !$H6H

2 <==6H

=A=

2!0@

' - : 9C* :

(9*:?13( 9 6 --F - C - / 3 9?/ 9)*/) ( 9'

/0 $ &/3. & / 9, *9 - :?# - /? 9 &&A$2 4@@H5 !!<)H2H2>DDD6D :?# - '936 1.

2 =0@6H

2 =@!6H

2 <!0

2!&!

*. - F

/:B9 / /,*/' / 9 - ? #/ / * - : 9C* : :?# - 91B3 - 9

& !6 '%% . ! $ ! $ 7/0 %/ 0H2 - C - / ?6 -F9* &&H@$ 4&&H5 @A0)0HHH>DDD6 / *E6 1.

2 HH<6H

!@&6H

$A$

20@H

*/' C -13 9 1" ?*C )C (* - : " ?F ? (/1-1'* : *9 9 , ( 9'*/' / 1/?91:F:? .: / 1.31/ /?:

1: 3( 6 I ( *9. /

.0 . 3% . '+ =H2 --. ' 1 /? &&A&H 4@@H5 =<@)=2HH>DDD6 9? 9-B. 96 1.

0<06A

0$=6$

$0H

20@A

B*- */' . ? 9* -: 9 ? *- 9

*- , ?? ( *9. /

,3!. 00'& ' / 2A< B -* 7B 9 B*? &0HH - C - / &&22& 4A2=5 &<0)!$HH>DDD6:7B*9 3 6 1.

!<H6H

<<$6H

A0!

2!0H

-1 - - ' - : 9C* 391C* 9

9 9* , 6 / 9 '*1/ - . / '*/' 3 9?/ 9; C* 6 11 . / - C - / . / '*/' 3 9?/ 9

!' 8 @00@ 6 1F -?1/ 1 91 C* D *'(?: &&2&< 4&&H5 $A=)=AHH>DDD61(*1 ?6 1.

!H@6<

=<<6H

&@=

20&$

? 93*-- 9 /'*/ / 7B*3. /? *:?9* B?19 (*1 19?( 9/ /?B ,F / 1B?( :? 9/

/ * /

// ?( 6 F-19 39 :* /?

4 7 . 6( .0 '+ 2$HH 6 /?B ?6 /? &&A&H 4@@H5 =<@)0$22>DDD6 C F6 1.

<!06H

<2@6!

==H

2!!H

9 : 9C* : '91B/ : . */? / / / 1/:B-?*/' : 9C* : "19 ?( 9 :* /?* - B?*-*?F 1.. 9 * - / '1C 9/. /? . 9, ?:

9- 6 9/, ( *9. / 39 :* /?

% . $ . '.% & 0 .! $/ AHAH 91/? ?6 B*? 2HH BF (1' --: &&AA2 4@@H5 02=)=<HH >DDD6 . 9 - . ? 9* -:6 1.

<$26H

<AA6H

2$H

AHH=

:: /B" ?B9 9 1" *?*C : F : #/ ( .* -: *.1?(F 39 :* /? . 9 - 1-F. 9 I *?*C : :*-* 1/ : / :3 * -?F 31-F. 9: / B:*/ :: '91B3

. .-/ '' / 2HH */ 1-/ F ::*--1/ &&=&= 4@@H5 !@&)&H@H>DDD6:( 9 9:6 1.

==$6@

$H=60

2 20@

20<&

/B" ?B9 9 1" :/ , "11 :

8 '' /7/0 %/ & + A$0H -. 1 99 / &&&!@ 4@@H5 @<A)=HHH>DDD6 C*"11 :F:? .:6 1.

=2$6H

=HH6H

2 0A$

20=H

I 11 :F:? .: ( 7B 9? 9 */ 99 / *: I/?(1/F F* C- : " .*-F)1D/ / 13 9 ? "11 : 9C* 39 :* /? 1.3 /F

!/ '3&0 .3 .0 & + A22 1.. 9 9*C */ &&A$= 4@@H5 <A$)A@&H>DDD6 *: 1B/?) 9B'. 9?6 1.

=H=6H

$<!6H

2 0=<

20=!

? *- 9B':?19

1/ 11 + ( 9C*G 11 + ( ( *9. /

. &/0 . '$ !& '+ <@$H 1B/' 9*C -?1/ *--: &&2&= 4&&H5 A@A)$2HH>DDD6?9 /:? 926 1.

=HH6H

$HH6H

2$H

20<$

B:?1. 9 : 9C* *:?9* B?*1/ . /B" ?B9*/' / 9 . /B" ?B9*/' 1" "? 9. 9, ? B?1.1?*C 391 B ?:

*.1?(F 1D :

# . '/0 0$ . 20HH 6 */?( ?6 B*? @AHH - C - / &&22& 4A2=5 =A2)HAHH>DDD6 , 9- D6 1.

$<06H

$&H6H

@0<

202=

' - : 9C* :

D*?? 6 ( D - C - / 1"# . / '*/' 3 9?/ 9; 6 ? C / :?/ 9 #9.D* ( *9. /

8& ./'& 3 '/ '+ $@HH 1 IC 6 19 :?1D/ &&&!2 4&&H5 A&!)!!HH>DDD6 / 9:1/) B 1: 6 1.

$$H60

&!$6H

2!<

2002

*:?9* B?*1/ 1" "11 3 3 9 / C 9 ' 391 B ?:

99 / 6 I/ 9:1/ ( *9. /

/ .4 & % &0 .'3( 2!@2 6 *'(- / 1 D*/: B9' &&H!< 4&&H5 $20)2<=!>DDD69 : 9C )'91B36 1.

&0H6H

&AH6H

AHH

2002

9 3 . ? - 391 ::19 :3 * -*G*/' */ " 991B: / /1/ " 991B: . ? -: / : 9 3 - ?91/* :

? C 1: 3( 39 :* /?

" /0! 0 $ 8 & + @2H00 ( '9*/ -C 6 B*? 2$H - C - / &&2A& 4!HH5 @A2)$$0H>DDD6. + :?* :? -6 1.

&A$6H

AA<

20<0

?*1/ - *:?9* B?19 1" 39*. ' -C /*G :? 1*-: / :( ?:

1 1D 39 :* /?

. + 8$ . 0 .' .7 '+ A<HH *- (9*:? 1 I,91/ &&@H$ 4@@H5 <@@)AA=@>DDD6 . :?19 :6 1.

&A26H

&H$6H

2 $&!

2!02

? *- '91 9F / 3( 9. F :?19 :

.$ & '+ @!HH 6 02:? ?6 - C - / &&2H$ 4!HH5 @A2)0@@=>DDD6' 9- / 16 1.

@<&62

A0!6@

222

2!0$

/B" ?B9 : 911#/' %119*/' 1 ?*/': C* 6 1,1: - /?: / . */? / / :F:? .: "19 1.. 9 * - */ B:?9* - / */:?*?B?*1/ - B*- */': 39 :* /?

$ 4 $ & '&/0.3 0!'& & + !=AH F- 9 -C 6 /?19 &&H=H 4&&H5 A$$)!HHH>DDD6 - C - / 1/:?9B ?*1/6 1.

@@@6!

A<!6<

20!H

1.. 9 * - B*- */' 1/?9 ?19 ' / 9 - / :B 1/?9 ?19 1/:?9B ?*1/ / :*'/ B*-

1/ 6 . -39 :* /?

7$ & 1 . 0'. ' & / A!$HH - . /: 1 :?- , &&2&$ 4&&H5 <!!)$HHH>DDD6(F- / 6 1.

@2<62

A<&6!

2 &0H

2002

/ : /? 939*: 1/? /? . / ' . /? 4 5 :1"?D 9 :B*?

*-- 9* . 9 39 :* /?

!$$5'' & + @<H! /? 9/ ?*1/ - 1B- C 9 * // &&&<@ 4@@H5 @0@)&&HH >DDD6.*--D11 */ 6 1.

A!$6H

A$H6H

A$H

200@

/ B:?9F - 9 1" 3 -- ?: 3 , '*/' 1/:B. - : . ? 9* - ( / -*/' 3 , '*/' :F:? .: / B/*? -1 ? (/1-1'F

*1/ - 6 9 *- 1 , ? C *-- 9 1) 39 :* /?: 3 9?/ 9:; 1/ */'/ :: E B?*C C* 39 :* /? 3 9?/ 9

0 7 '+ &<HH 6 2=H?( ?6 - C - / &&2@$ 4A2=5 A=<)<2HH>DDD61 ? F6 1.

A!$6H

A<$6H

&HH

202=

/B" ?B9 9 1" 3-B. */' 391 B ?:

9F I6 ? F ( *9. /

%'3/ &0 .(.!/ / & + 2H0 6 /*1/ ?6 I,91/ &&@H& 4@@H5 <=A)0=A2>DDD6" .1B:):B33-F6 1.

A<<6H

A$=6H

@HH

20@@

*:?9* B?19 1" I 3-B. */' */ B:?9* - B*- */' 391 B ?:

9 - B:(*- 39 :* /?

$ 4 $ & .'5&/)1* <= 1B 91G -C 6 9 &&H2< 4&&H5 !02)$HHH>DDD6 - C - / 91D/:6 1.

A<=6H

A=&6H

2!$

20&=

91" ::*1/ - "11? -- ? .

*..F :- . 1D/ 9

!$$ . 0 ( . '+ =!HH 9 /? IC 6 - C - / &&2H$ 4A2=5 &&2)$$HH>DDD6.*-- 9 "?6 1.

AA$6!

2&H6A

20AH

/ 3 / /? * D :?) : *:?9* B?19 1" #/ 39*/?*/' / 1"# 3 3 9: /C -13 : 3 , '*/'>3 , '*/' 7B*3. /? / '9 3(* :*'/ 391 B ?:

?( 9*/ 6 - , 9 ( *9. / 1D/ 9

1B9 8 /"19. ?*1/ *: :B33-* F ?( 1.3 /* : B/- :: "11?/1? 6 9 */8: - C - / B:*/ :: 1 : /1? */ 3 / /?-F C 9*"F ?( */"19. ?*1/ / ?( 9 *: /1 'B 9 /? ?( : -*:?*/': 9 1.3- ? 19 B9 ? 6 D - 1. -- 9 :31/: : ?1 1B9 -*:?: / D*-- */ -B 1.*?? */"19. ?*1/ 19 - 9*# ?*1/: */ 1.*/' *::B :6 425 I: 1" F 2 AH2$6 4A5 AH2& 9 C /B "91. ( I. 9* / DF 9 I39*- A< AH2$ C* ? ?*:? 6 4@5 C /B /B. 9: 9 "91. 19 : . -B : ( B:*/ :: 1" 11? -- IB'6 AH AH2& / IB'6 2& AH2@6

9 - *'(

*. 91B? 39 :* /?

I 19 ( 6 *--F 9

20150608-NEWS--25-NAT-CCI-CL_--

6/5/2015

2:37 PM

Page 1

JUNE 8 - 14, 2015

WWW.CRAINSCLEVELAND.COM

GROCERS continued from page 1

goes so far in keeping stores afloat. More organic specialty stores also are poised to expand. Whole Foods Market is completing construction of its first store in the west suburbs in Rocky River, in addition to stores it already operates in South Euclid and Woodmere Village. In addition, a real estate developer shows a Lucky’s — a fast-growing organic and natural foods chain — going into a proposed Cleveland shopping center at Clifton Avenue and West 117th Street. The Niwot, Colo.-based grocer declined to confirm the location but said it is interested in setting up shop in the region. Fresh Thyme, which announced its second store in Dayton last year, surfaced as a potential tenant when Golden Gate Shopping Center coowner Hornig Real Estate of New York requested, but did not receive, approval for a sign for Fresh Thyme at the property. Daren Hornig, a principal, declined to comment on whether Fresh Thyme is a prospect for the center but said his plan for it calls for a high-end grocer. Fresh Thyme’s corporate office and ad agencies did not respond to three emails and two phone calls by Crain’s deadline last week. Fresh Thyme also has two stores open in Cincinnati, one that opened last year and another planned to open this year.

Because we understand your business… rationale for pushing into the region. Meantime, Heinen’s and several local operators stand to also get competition from the expansion of Whole Foods or advent of Fresh Thyme. Jim Rego, the operator of Rego Brothers Lake Road Market in Rocky River, is skeptical about what Whole Foods will bring that’s new to the western suburb. “We’ve got what they’ve got,” Rego said, noting that he has long offered organic foods and specialty foods. “We had quinoa for years. Now everyone has it.” He noted there are subtleties to the market, such as being busier during the holiday season and summer than the winter months. The reason: the high population of snow birds who exit ritzy nearby neighborhoods for the winter. In a sign of how competitive the region is, consider Greensboro, N.C.-based Earth Fare, which operates stores in Fairlawn and Fairview Park but shut its Solon store last year after only a year of operations. Conversely, the Trader Joe’s in Eton Collection in Woodmere Village is heading for a freestanding store at

the west end of the center to expand from an inline store.

Hungry for more Part of the buzz over grocers comes from the lack of energy in other retail sectors as consumers stay price-conscious in the wake of the Great Recession. Rich Moore, a Solon-based real estate analyst for RBC Capital Markets, said at the recent International Conference of Shopping Centers trade show in Las Vegas, realty developers who have centers with grocery stores or such shopping centers in the planning phase are excited about the movement as new grocery concepts hunt space or old ones retool. “As the economy picks up,” Moore said, momentum will go back to discretionary items. Livingston added, “The grocery business is always good. If not, you just have a bad operator.” Rego notes he occupies a secluded location near Lake Erie and believes his clientele is loyal enough to return. “We’re ready,” Rego said. “Bring it on.”

Business Litigation Employment & Labor R e a l Ess t a t e & C o n s t r u c t i o n H e a l t h & M e d icinn e Tr u s t & E s t a t e s

... you thrive Your business is more than just a job; it is your livelihood, your passion, your calling – we get it. We also understand that at the heart of every business lies someone who will go to great lengths to protect it. That’s where we step in.

Buckingham, Doolittle & Burroughs, LLC Akron • Canton • Cleveland bdblaw.com

Rugged competition If Fresh Thyme commits to Northeast Ohio, its format the size of OfficeMax stores could produce multiple opportunities. Keith Hamulak, a CBRE Group Inc. vice president and retail specialist, said a store of such size could find many more opportunities to set up shop in empty space in existing shopping centers. By contrast, the 200,000-square-foot Meijer stores require as much ground as a small farm to open a store — and that is scarce in populated Northeast Ohio markets. In such a situation, new entrants must take away market share from existing operators, said David Livingston, managing partner of Milwaukee-based grocery site consultancy DJL LLC. In this case, it’s either Giant Eagle, which dominates the region with multiple stores, or Marc’s. He said Marc’s penchant for low prices makes it less a target than Giant Eagle. Meijer has long operated in Ohio but eschewed the state’s northeast corner. Giant Eagle had tried entering the Toledo market, where both Meijer and Kroger operate, but shut its two stores there last year. However, Livingston said Meijer might have a tough time taking on Giant Eagle in Northeast Ohio. “Giant Eagle actually runs pretty good stores,” Livingston said. “It’s not like they are an easy company to compete with. What is the compelling reason to shop at Meijer? It does not have anything that Giant Eagle does not.” On that basis, Meijer marching on Northeast Ohio makes geographic sense — it surrounds Northeast Ohio, with its closest store in Sandusky. However, Livingston said, “It does not make sense strategically.” He believes Warrensville Heightsbased Heinen’s Fine Foods will be clear of the fray as an upscale operator. Meijer did not respond to two emails and phone calls about its

CRAIN’S CLEVELAND BUSINESS

HOW BAD IS THAT LEAK?

Keep your assets safe by taking the time to ensure that problems at the top of your building are not damaging your bottom line.

Carey Roofing Corp. has eliminated asset damage due to a leaking roof with practical solutions since 1946.

CAREY

Roofing Corp.

216 • 881 • 1999 www.careyroofing.com founded in 1946

MEMBER: National Roofing Contractors Association

20150608-NEWS--26-NAT-CCI-CL_--

6/5/2015

2:58 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 8 - 14, 2015

IMPORTS continued from page 3

the oil and gas industry — use more U.S. pipe for projects like the Rover pipeline? Simple, industry representatives say: In an era of massive U.S. pipeline development, there isn’t enough of it to go around. “We’ve sourced about 76% of the steel from the U.S.,” said Vicki Granado, spokeswoman for Energy Transfer Partners, the company building the Rover line. “We got as close as we could to 100%.” Granado said her company would like to have used exclusively U.S. steel to build the pipeline. The reason it’s using foreign steel for about a quarter of the project, she said, is not because of price, but because U.S. mills that make pipe suitable for the pipeline — high quality and large diameter pipe — could not make it fast enough. “We’re looking at more than 700 miles,” she said. “To buy that amount of pipe, to find U.S. steel mills that can produce it, in the time that we need it … there just wasn’t enough available in our timeframe to be able to use it at 100%.” Such a scenario didn’t surprise Shawn Bennett, executive vice president of the Ohio Oil and Gas Association (OOGA) and one of the industry’s chief spokespeople in the state. Pipelines are built on tight schedules, he said, so they need to line up all of their materials well in advance of construction to make

DOCKET sure there are no delays. The bigger the pipe they need, the fewer mills there are that produce it, he said. At 42 inches, the Rover line is one of the biggest. “You’re going to go to your local suppliers first, but a lot of these projects have very tight turnaround times,” Bennett said. “With tight turn-around times, once you exhaust your local manufacturers, you have to go elsewhere. … I think that’s what you’re seeing with ET Rover.”

Qualified support But the controversy also doesn’t end with who makes the steel. There also are issues over who handles it. In the case of the Rover line, the steel is being handled by a variety of union and non-union workers. The dockworkers who take it from the ships in Cleveland are unionized, but in Massillon, only some of the workers who unload steel that comes are union — members of Operators Union Local 18, to be specific. The Operators Union is glad for the work but is disappointed not to be getting more of it, said Michael Bertolone, a trustee for Local 18. That’s especially true since Bertolone and his union staunchly supported the Rover project, testifying at governmental hearings and public meetings in support of its development, he said. Local 18 is picketing the rail yard

in Massillon where the pipe is being handled, he said, because nonunion workers from a company in Louisiana are unloading half of it. Granado said that’s not a decision that Energy Transfer made. Rather, the matter was handled by one of its contractors from Texas. But Bertolone isn’t satisfied with that explanation.

“We’ve sourced about 76% of the steel from the U.S. We got as close as we could to 100%.” – Vicki Granado spokeswoman, Energy Transfer Partners “We’ve been to every open house, every scoping meeting,” Bertolone said. “We’ve done everything we could to get this thing approved. Now they say, ‘Well it’s not us.’ … It’s aggravating to do all this ground work for them and then get the door slammed in our face.” The Operators Union continues to support the project, Bertolone said, but unless it’s guaranteed more work, it won’t be sending him or union members to appear in public on behalf of the project like it’s done in the past.

Consider the source Aside from handling pipe in the yard, though, the Operators Union

and other unions definitely will get more work from the pipeline, Granado said. “We have committed to using 100% union labor for the construction of this pipeline,” she said. “We’ve said that from day one and that has not changed.” That means members of the operators union will be digging 700 miles of trench to put the line in, moving pipe into it so that the Pipeliners union can assemble it, and filling in and remediating the site once the line is installed. As for the making of the steel itself, the steel for Rover already has been ordered, so there’s little chance that U.S. mills will make more than the 76% of the line’s steel that’s planned for. In the meantime, Ohio is one state that is taking steps to ensure that, regardless of whether U.S. steel is used by the oil and gas industry, people will know exactly where the industry’s steel comes from. “Starting next year, what you’re going to see are steel reporting laws in Ohio, so you’ll see where these companies are getting their pipe,” OOGA’s Bennett said. That might be of particular interest to workers at Ohio’s mills, which tend to produce more steel for use by drillers than for large pipelines. The state is following others, including Pennsylvania, in requiring that oil and gas companies disclose where they buy their steel, Bennett said.

continued from page 3

always like which cases were assigned to the docket. Debt collection suits, for example, that “weren’t so needy of time for a judge and hands on, which is what the docket was purported to be,” shouldn’t be commercial cases, he said. “If there is an opportunity to have the docket still here in Cuyahoga County,” Russo said, “I want to be able to develop what it looks like and have input at that time from the bar association … on what looks good or bad.” Depending on what changes are made and how drastically the docket is altered, the court may or may not have to get approval from the Ohio Supreme Court before restoring it. But Russo emphasized the Supreme Court is “not driving the discussion,” although Chief Justice Maureen O’Connor has been interested of what comes of the discussions. There’s no strict timeline set to settle the debate, Russo said. Judges will meet again this month, but those regular meetings go on hiatus for the summer. The goal is to revisit the discussions and the next steps formally in September. “To be fair, we’re not rushing it,” Russo said. “There’s no set timeline. But I do want to continue to move forward so we’re letting the community, bar association, chief justice and my bench know what we’re doing.”

REAL ESTATE CLASSIFIED Phone: (216) 522-1383 Fax: (216) 694-4264 Contact: Denise Donaldson E-mail: DDonaldson@crain.com AUCTION

AUCTION JUNE 27 @ 11 AM 3.5 ACRES - LAKE FRONT

902 Main Street, Marblehead Ohio Lake front plus great quarry view. Zoned Commercial. Public Utilities. 5% Buyer Premium. Call auctioneer Len Partin 419.356.8777 or visit www.902Main.com

LAND

Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card

FOR LEASE

BUSINESS OPPORTUNITY

Broadview Hts.

For Sale

Four 6500 sq ft buildings on the Broadview Hts. City campus will be available for lease in July. 9543 Broadview Road. Currently house the NR School Kindergarten program. Bldgs in excellent condition lots of amenities. For info contact David Schroedel (440) 526-6259

Stamping, Tool & Die operation Owner Retiring 12,000sf Building, Press Capacity up to 250 ton Strategic west side location

BUSINESS SERVICES C. W. JENNINGS INDUSTRIAL EXCHANGE Global Expansion Consulting Construction • Acquisitions Exporting • Financing

(855) 707-1944

Call (440) 823-7185

DON’T FORGET:

For daily on-line updates, sign up @ CrainsCleveland.com/Daily

Crain’s Cleveland Business on-line @ CrainsCleveland.com

COMMERCIAL PROPERTY

INVESTMENT OPPORTUNITY

FOR LEASE

New Business For Sale

BUSINESSES FOR SALE

FLYNN ENVIRONMENTAL

40-Slip Marina with 3-Bed Home

UST REMOVALS • REMEDIATION DUE DILIGENCE INVESTIGATIONS

Has over $45,000 Potential Income Just in Rental. $349,000

(440) 967-4362

OLMSTED FALLS SUBDIVISION 8 Fully developed buildable 60’ Cluster Home Lots w/17 lots to be developed. Beautiful private street off Bagley Rd.

5,000 Sq. Ft. Heated Warehouse Minutes from I-48 & I-77 (2) Overhead Drive thru Doors Height 16’ to Deck

440-243-5500

Call (216) 662-3764

Full-Service Car Wash. Extremely Profitable. Excellent Location Passive or Active Ownership See our listings at www.empirebusinesses.com

440-461-2202

BUSINESS SERVICE OWNERS! Submit your business card to promote your service.

To find out more, contact Denise Donaldson at 216.522.1383

(800) 690-9409

Position Wanted OEM inside sales Estimating, product assessment. Sheet metal fabrication background.

440-842-4753

20150608-NEWS--27-NAT-CCI-CL_--

6/5/2015

3:48 PM

Page 1

JUNE 8 - 14, 2015

WWW.CRAINSCLEVELAND.COM

THE WEEK JUNE 1 - 7 The big story: Cleveland economic development organization Team NEO has a new CEO — banking veteran William R. Koehler. Koehler will start June 15. He succeeds Thomas A. Waltermire, who retired as CEO of Team NEO on Dec. 31, 2014. Team Koehler NEO chairman James R. Clay said Koehler’s “vast leadership experience and business acumen make him perfectly suited to take on this critical leadership role at Team NEO.” Koehler has more than two decades of experience in corporate banking. Most recently, he led KeyBank’s Community Bank as president. He has also held positions with J.P. Morgan & Co. and Oxford Venture Corp.

The right chemistry: OM Group Inc., a metal-based chemistry firm in Cleveland, agreed to be acquired by funds managed by affiliates of New York-based Apollo Global Management for $34 per share in cash, in a deal that values the company at just over $1 billion. In turn, OM Group said Platform Specialty Products of West Palm Beach, Fla., will acquire OM’s Electronic Chemicals and Photomasks businesses from the Apollo funds for a total of $365 million in cash. Following the transactions, the Apollo funds will own OM Group’s Magnetic Technologies, Battery Technologies and Advanced Organics businesses.

Interest from California: A private equity firm agreed to buy MRI Software — one of the biggest software companies in Northeast Ohio. GI Partners of San Francisco plans to acquire the Solon-based real estate software company from Vista Equity Partners. MRI has grown a lot under Vista’s watch. The company has added about 130 positions in Northeast Ohio since 2010, when Vista bought it from Intuit, a Silicon Valley software firm. MRI employed 334 people in Northeast Ohio as of Jan. 1, making it the secondlargest software company in the region, in terms of local employment. Quite some support: The Cleveland Foundation secured a $23 million gift — the thirdlargest in its 101-year history — from the estate of Beverly and Al Higley Jr. The gift will become part of the Higley Fund at foundation. With this financial commitment, the Higley Fund’s assets now hover at more than $35 million, making it the largest supporting organization at the foundation. Supporting organizations are separate nonprofits that operate in conjunction with the foundation. The lease they can do: Westlake-based TravelCenters of America LLC signed agreements with Hospitality Properties Trust for sale leaseback transactions for 30 travel centers totaling about $397 million. Under the agreements, TravelCenters also will buy from Newton, Mass.based Hospitality Properties five travel centers now leased by TravelCenters and subleased to TA franchisees, for about $45 million. TravelCenters’ net proceeds of about $352 million are expected to produce gains on sales for financial reporting purposes of about $137 million. Proceeds “are expected to be used to fund TA’s on-going expansion program,” TravelCenters said.

OnBase strategy: Hyland Software is about to receive nearly $900 million in fresh capital. The private equity firm that controls Hyland plans to invest another $715 million into the company, and they’re pushing it to take on another $180 million in debt — increasing its debt load to record levels. In the process, Hyland technically will get a new owner: Thoma Bravo plans to move the company out of an old fund and into a new one. That could be a sign that Thoma Bravo wants to hold onto the Westlake-based company — which makes an enterprise content management software product called OnBase — for the foreseeable future.

CRAIN’S CLEVELAND BUSINESS

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

They’re all in for a truly meaningful cause A battle is unfolding to see whether the Cleveland Cavaliers or the Golden State Warriors are the better basketball team, but another spirited competition is emerging between the Rust Belt and the San Francisco Bay area. Nonprofits from Cleveland and the Bay area are squaring off to see whose fans are more generous. For one, the Society of St. Vincent de Paul Cleveland and the St. Vincent de Paul Society of Alameda County are going head-to-head to see who can raise the most cash through their websites to benefit their respective community’s most vulnerable populations. The executive director of the organization that raises fewer dollars has agreed to wear the opposing team’s jersey and post a congratulatory video on Facebook. Moreover, the Greater Cleveland Food Bank has been challenged by Alameda County Community Food Bank to see which organization can raise the most funds. As of Friday morning, June 5, the Alameda food bank had raised just more than $7,000 and the Cleveland food bank had raised just shy of $650. Donations, too, can be made on the organizations’ websites. “As LeBron James will tell you, in Northeast Ohio, everything is earned, nothing is given,” Cleveland food bank president and CEO Kristin Warzocha said in a video accepting the challenge. “We work hard for what we have. LeBron accepted the challenge and he came home, and our team has worked incredibly hard. You know the Cavs

fans are going to work really hard as well to help us raise money and fight hunger in Northeast Ohio.” — Timothy Magaw

Here’s a fellow with an impressive career Falls Communications executive Keith Mabee is entering some rarified air as a NIRI Fellow, the highest industry recognition given by the National Investor Relations Institute. Mabee, the Cleveland firm’s group president of corporate communications and investor relations, will receive his Fellow recognition on Tuesday, June 16, in Chicago. NIRI, which launched the program in 2013, elects no more than five Fellows each year. Mabee is one of only 20 executives to receive the honor to date, and he’s the first to be named from Northeast Ohio. “Keith is the rarest of professionals who is not only superb at his craft but also has turned being a trusted advisor to C-suite executives into a true art form,” said Rob Falls, president and CEO of Falls Communications, in a statement. “We are thrilled that NIRI has recognized his many contributions to the field by including him in this elite group.” NIRI says its Fellows Recognition Program honors living organization members “who epitomize the leadership, integrity, involvement and contributions of investor relations professionals. These individuals have made significant contributions to the betterment of the profession and NIRI throughout their careers.” — Scott Suttell

WHAT’S NEW

BEST OF THE BLOGS

COMPANY: Post-Up Stand, Maple Heights PRODUCT: Line of sidewalk and yard signs

Excerpts from recent blog entries on CrainsCleveland.com.

The largeformat printing company, which specializes in trade show displays and promotional signage, is going small with its latest product. Post-Up Stand recently unveiled a sidewalk and yard signs line to augment its outdoor display offerings. The company, founded in 2004, said the custom-printed signs enable it to expand its reach to other fields to include political campaigns and the real estate industry. The new display stands consist of doublesided sidewalk signs, including what it calls a “Signicade” design, as well as yard signs with an H-stake frame style. The displays can be updated with the purchase of replacement signs — a feature catering to industries such as restaurants and retail stores that regularly change their promotional message. The sidewalk and yard signs use materials including corrugated plastic, aluminum and PVC. Post-Up Stand said the products were made possible by the company’s newly acquired HP Scitex FB700 printer, which “incorporates UV lights and a multiple media load into the printing process to provide a consistent printed output.” For information, visit www.postupstand.com. Send information about new products to managing editor Scott Suttell at ssuttell@crain.com.

Quite the groomsman Cleveland Browns linebacker Karlos Dansby’s talents extend well beyond the gridiron. CNNMoney.com profiled Dansby, 34, and business partner Chris Butler, 35, who “want to corner the market for men’s highend grooming products and services.” From the story: Together they invested $250,000 and launched a men’s-only salon — Butler’s Grooming Club — in their hometown of Birmingham, Ala., in 2009. The idea was to create a “man cave where guys can get away and be comfortable among their own,” said Dansby. “They can relax, drink, play pool and get a haircut, shave, manicure, facial, even get waxed.” Today the salon takes walk-in customers and also has 300 members who pay $90 a month for grooming packages and unlimited shoe shines. Like a lot of successful entrepreneurs, Dansby and Butler sought to identify an opening in the market. When Butler floated the idea of a men’s grooming salon, “I knew he was on to something,” Dansby told CNNMoney.com. Since the opening of the salon, they partnered with Saks Fifth Avenue to open a Butler Grooming inside of the Saks store in Birmingham. Late last year, they launched a line of men’s products called Montez Renault. “Football is my passion, but so is skincare,” Dansby said. “I’m making time for both.”

Fear strikes out Remember when some people worried that the Federal Reserve’s bond buys would lead to runaway inflation? Those fears were “misguided and have proven incorrect,” according to new

Leiden Cabinet’s talking about generational change Leiden Cabinet Co. of Twinsburg has been sold, but employees shouldn’t expect any big changes. The new owners? The company’s former vice president and CFO, Melissa Hale, and vice president of operations, Mike Hopp. Hale and Hopp have been “instrumental” in growing the cabinetry and store fixtures maker in recent years, said former president and CEO Tom Leiden. Leiden, who was a third-generation owner, will continue to work with the company as a consultant. Hale and Hopp have helped develop the culture at Leiden Cabinet, Leiden said, and discussions about the transition began about five years ago. “I consider them the fourth generation,” Leiden said. Both Hale and Hopp said they came to the company after years of experience in the industry and saw opportunity for growth at Leiden Cabinet. And it certainly has grown. In 2004, there were 35 employees, Hopp said. Today, there are 130 to 140. The company has two locations in Twinsburg and one in Strasburg, Ohio. The leadership transition was announced to employees on Tuesday, June 2, Hale said. Hopp and Hale now share the title of president and owner. Terms of the acquisition were not disclosed. Going forward, Hopp said the company is looking to grow modestly and find ways to operate more efficiently. — Rachel Abbey McCafferty

research from the Federal Reserve Bank of Cleveland. In response to the deep recession and financial crisis in 2007-09, The Wall Street Journal noted, “the Fed cut short-term interest rates to near zero and undertook three programs of large-scale purchases of mortgage and Treasury bonds,” known as quantitative easing. “Such measures caused an unprecedented increase in the Fed’s balance sheet and led some to fear that high inflation would soon follow,” wrote economist Mehmet Pasaogullari in the Cleveland Fed’s latest Economic Commentary. “Historical data for various measures of expected inflation did not provide any support for those fears. In addition, a look at the past six years shows that these fears have not materialized.” The central bank’s balance sheet now totals about $4.5 trillion, more than five times its pre-recession levels, according to The Journal. “Yet U.S. inflation has remained stubbornly below the Fed’s 2% target for just about three years, frustrating officials who believed consumer prices would firm up more as the labor market improves,” the paper said.

Now hear this Laura Kepley, artistic director of the Cleveland Play House, the winner of this year’s regional Tony Award, is a special guest on the bi-weekly Offscript podcast, a discussion led by editors of American Theatre. Here’s how the podcast — quite effectively — teased the interview: She describes how she reacted when she heard the announcement (hint: it involves a burrito), the sticky subject of theatrical succession, why Cleveland is the next big arts town and where to find a good craft beer in Cleveland — helpful advice given that our TCG (Theatre Communications Group) conference will be held there in a few weeks. How can you not take a listen to that?

20150608-NEWS--28-NAT-CCI-CL_--

6/5/2015

11:26 AM

Page 1

SUMMIT PRESENTED BY

AWARDS PRESENTED BY

WOMEN OF NOTE SUMMIT & AWARDS

VIDEO SPONSOR

COMMUNITY PARTNER

THURSDAY, JULY 23 t ". 1. CLEVELAND CONVENTION CENTER

This event is not about being â€œtalked at.â€? Itâ€™s about talking together.

EVENT EMCEE Dee Perry, ideastream

Join us for the inaugural Women of Note Summit presented by the Cleveland Foundationâ€“ a canâ€™t miss morning of cross-generational learning, sharing experiences, and creating new ideas through interactive table facilitation and dialogue with women from all over Greater Cleveland. Our unique Ignite conversations will ignite new ways of thinking about the future for women in our community.

IGNITE SPEAKERS 1

â€œSupporting Women in Entrepreneurshipâ€?

Jodi Berg CEO, Vitamix

Margot Copeland EVP, Director of Corporate Diversity & Philanthropy, KeyBank Reka Barabas Director, Bad Girl Ventures

â€œNavigating a Male-Dominated Work Environmentâ€?

Ashley Basile Oeken Executive Director, Engage! Cleveland

Geri Presti EVP, General Counsel, Secretary, Forest City Enterprises

â€œCan You Have It All? The Reality of Women in the Working Worldâ€? Teresa Metcalf Beasley Partner, Calfee Halter & Griswold ShelBy Beasley Freshman, DePaul University ShelLynn Beasley Junior, The Laurel School

â€œLeadership and the Next Generationâ€? Robyn Minter Smyers Partner-In-Charge, Thompson Hine LLP

Mel McGee Founder & CEO, We Can Code It, Founder, imageNation

â€œGiving Back & Engaging with Your Communityâ€?

Nichelle McCall CEO, Bold Guidance

â€œEqual Say. Equal Rights. Equal Pay.â€? Sally Gries Chairperson & CEO, Gries Financial LLC

Michelle Park Lazette Writer, Federal Reserve Bank of Cleveland

Following the Summit, join us in the afternoon as we celebrate our 2015 Women of Note honorees at an awards luncheon presented by CBIZ. Tiered ticket pricing is available for both programs at CrainsCleveland.com/WON *G ZPV IBWF RVFTUJPOT SFHBSEJOH QVSDIBTJOH UJDLFUT DPOUBDU ,JN )JMM BU LFIJMM!DSBJO DPN t