20140707-NEWS--1-NAT-CCI-CL_--
7/3/2014
1:56 PM
Page 1
$2.00/JULY 7 - 13, 2014
Employers are waiting on court for refunds Bureau of Workers’ Compensation’s appeal of lawsuit causing more delays Below, clockwise, are shirts being sold by Fresh Brewed Tees, CLE Clothing Co. and GV Art and Design.
M
ike Kubinski remembers when he and business partner Jeff Rees attempted to get a small business loan prior to launching CLE Clothing Co. in 2008 — during a recession. “Basically, they just laughed at us said, ‘You can’t do that now,’ ” Kubinski said. “As our tagline says, we literally built this company one T-shirt at a time.” That is a common theme in Cleveland. A year after CLE Clothing’s debut, Tony Madalone — who, as a basketball player at Ashland University once launched a vintage T-shirt company from his dorm — and Fresh Brewed Tees made their first online splash. Also in 2009, GV Art and Design — two years after making national news with its “One Town, One Team, One Dream” campaign featuring a Cleveland Cavaliers T-shirt, rap song and a YouTube video that has generated almost 2.7 million views — joined the party.
See T-SHIRT Page 21
27
FOTOLIA
By JAY MILLER jmiller@crain.com
The appeal to the Ohio Supreme Court by the Ohio Bureau of Workers’ Compensation of a lawsuit filed by employers continues to put in limbo potential refunds to 270,000 businesses — some of more than $1 million and many into six figures. Those are estimates from PayUsBackOhioBWC, an organization and website created by the plaintiff companies in a lawsuit seeking refunds of overpayments to the BWC. In May, the Eighth District Court of Appeals affirmed a 2013 decision by Cuyahoga County Common Pleas Court Judge Richard McMonagle that awarded the plaintiffs $859 million. However, the appeals court ordered the case back to McMonagle’s court for a recalculation of the refunds. The BWC on June 27 filed its intent to appeal. PayUsBackOhioBWC created the website to make employers aware of how much of a financial stake they have in the outcome of the case, San Allen Inc. v. Buehrer, and to generate support for a quick settlement of the case, a hope now dashed by BWC’s decision to appeal. (Stephen Buehrer is administrator of the BWC.) See REFUNDS Page 8
0
NEWSPAPER
74470 83781
7
INSURANCE
EMBRACING PETS Warrensville Heights company is growing rapidly by catering to a segment of the insurance industry that hasn’t reached the mainstream ■ Page 4
Entire contents © 2014 by Crain Communications Inc. Vol. 35, No. 27
20140707-NEWS--2-NAT-CCI-CL_--
2
7/3/2014
CRAIN’S CLEVELAND BUSINESS
1:56 PM
Page 1
WWW.CRAINSCLEVELAND.COM
JULY 7 - 13, 2014
Give your employees the duck. Anything else is just chicken. Almost 60 percent of employees wish their employers offered voluntary insurance1. The question is, who will you choose? You could opt for a voluntary option from your medical carrier, or you could offer coverage from the number one voluntary provider2: Aflac. There’s no direct cost to you for offering it, and getting started is as simple as adding a payroll deduction. That’s why business owners like you have chosen Aflac for nearly 60 years. It’s also why we’re so confident Aflac is the right partner for your business. You can bet the farm on it.
Call your local agent and visit aflac.com/business
Publisher: John Campanelli (jcampanelli@crain.com) Editor: Elizabeth McIntyre (emcintyre@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editor: Kevin Kleps (kkleps@crain.com) Sports 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 Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Art director: Rebecca R. Markovitz (rmarkovitz@crain.com) Events manager: Jessica Snyder (jdsnyder@crain.com) Special events coordinator: Kim Hill (kehill@crain.com) Marketing strategist : Michelle Sustar (msustar@crain.com) Advertising director: Nicole Mastrangelo (nmastrangelo@crain.com) Account executives: Dawn Donegan (ddonegan@crain.com) Andy Hollander (ahollander@crain.com) Lindsie Bowman (lbowman@crain.com) John Banks (jbanks@crain.com) Michael Jansen (mjansen@crain.com) Office coordinator: Denise Donaldson (ddonaldson@crain.com) Web Editor: Damon Sims (dpsims@crain.com) Digital strategy director: Nancy Hanus (nhanus@crain.com) 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) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com) Customer service/subscriptions 877-824-9373
Crain Communications Inc.
1
2013 Aflac WorkForces Report, a study conducted by Research Now on behalf of Aflac, January 7 – 24, 2013. 2 Eastbridge Consulting Group. U.S. Worksite/Voluntary Sales Report. Carrier Results for 2012. Avon, CT: April 2013. 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. Worldwide Headquarters | 1932 Wynnton Road | Columbus, GA 31999
Z131175
700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com
11/13
Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Chris Crain: Executive Vice President, Director of Strategic Operations KC Crain: Executive Vice President, Director of Corporate Operations Dave Kamis: Vice president/production & manufacturing Anthony DiPonio: Chief Information Officer Thomas Stevens : Chief financial Officer Mary Kramer: Group publisher G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996)
20140707-NEWS--3-NAT-CCI-CL_--
7/3/2014
1:57 PM
Page 1
Make a splash in your pool.
Make a splash in your neighborhood.
IS250 AWD PER MO LEASE $285 CLASSIC LEXUS 2014 24 Month lease requiring $3,995 Cash or Trade due at signing 7,500 miles per year and 25¢ charge per mile over. Plus tax, title, license and doc. fee. ALL WHEEL DRIVE - MSRP: $42,838 (St#9021053) In stock only.
And a few more refreshing offers.
LEXUS
$309
LEXUS NAV 2014 GS350 MONTHLY LEASE $437
24 Month lease requiring $3,995 Cash or Trade due at signing. 7,500 miles per year and 25¢ charge per mile over. Plus tax, title, license & doc. fee (MSRP: $45,515) (st#9020717) in-stock only
24 Month lease requiring $3,995 Cash or Trade due at signing. 7,500 miles per year and 25¢ charge per mile over. Plus tax, title, license & doc. fee (MSRP: $40,558) (st#9021082) in-stock only
24 Month lease requiring $3,995 Cash or Trade due at signing. 7,500 miles per year and 25¢ charge per mile over. Plus tax, title, license & doc. fee (MSRP: $56,848) (st#9020936) in-stock only
BMW 2014 X3 xDrive28i
BMW 2014 528i xDrive
BMW 2014 750Li xDrive
2014 RX350 FWD MONTHLY LEASE
MONTHLY LEASE
LEXUS
$294
2014 ES350 MONTHLY LEASE
$489
MONTHLY LEASE
AWD
$489
MONTHLY LEASE
$1099
36 Month lease requiring $3,995 Cash or Trade due at signing. 10,000 miles per year and 20¢ charge per mile over. Plus tax, title, license and doc. fee
36 Month lease requiring $3,995 Cash or Trade due at signing. 10,000 miles per year and 20¢ charge per mile over. Plus tax, title, license and doc. fee
36 Month lease requiring $3,995 Cash or Trade due at signing. 10,000 miles per year and 25¢ charge per mile over. Plus tax, title, license and doc. fee
CADILLAC AWD 2014 ATS MONTHLY LEASE $299
CADILLAC 2014 SRX
$319
CADILLAC AWD 2014 CTS MONTHLY LEASE $439
39 Month lease requiring $2,999 Cash or Trade due at signing. 10,000 miles per year and 25¢ charge per mile over. Plus tax, title, license and doc. fee (MSRP: $38,160 - ST#W11244) No Security dep. required.
39 Month lease requiring $2,999 Cash or Trade due at signing. 10,000 miles per year and 25¢ charge per mile over. Plus tax, title, license and doc. fee (MSRP: $38,430 - ST#W11175) No Security dep. required.
39 Month lease requiring $2,999 Cash orTrade due at signing. 10,000 miles per year and 25¢ charge per mile over. Plus tax, title, license and doc. fee (MSRP: $48,025 - ST#W11199) No Security dep. required.
2.0 TURBO
FWD
MONTHLY LEASE
2.0 TURBO
Save an extra $1,000 with LUXURY LEASE LOYALTY (NON-GM) - Trade-in not required OR, Save an extra $1,000 with GM LEASE LOYALTY - Trade-in not required.
Save an extra $1,000 with LUXURY LEASE LOYALTY (NON-GM) - Trade-in not required OR, Save an extra $1,000 with GM LEASE LOYALTY - Trade-in not required.
Save an extra $1,000 with LUXURY LEASE LOYALTY (NON-GM) - Trade-in not required OR, Save an extra $1,000 with GM LEASE LOYALTY - Trade-in not required.
Please call for complete list of qualifying vehicles and details.
Please call for complete list of qualifying vehicles and details.
Please call for complete list of qualifying vehicles and details.
LEXUS
BMW
CADILLAC
WILLOUGHBY HILLS 800 525 7594
WILLOUGHBY HILLS 888 439 8833
MENTOR 440 255 6955
CLASSIC DRIVECLASSIC.COM
Offers end 7/8/14
20140707-NEWS--4-NAT-CCI-CL_--
4
7/3/2014
2:27 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Embracing the animals
2013 NAIOP AWARD
Warrensville Heights company that provides pet insurance keeps growing
INDUSTRIAL INVESTMENT DEAL OF THE YEAR WINNER
By CHUCK SODER csoder@crain.com
500 S. BAILEY RD, N. JACKSON, OHIO
Newmark Grubb Knight Frank proudly recognizes Terry Coyne, recipient of the NAIOP Northern Ohio chapter’s Investment Transaction Award of Excellence, for the $8.45 million sale of this 209,835 SF modern distribution facility in North Jackson, Ohio. Visit
TerryCoyne.com
Visit
TerryCoyne.com Or Call Terry at
216.453.3001
1350 Euclid Ave, Ste. 300 Cleveland, Ohio 44115
TONS of new inventory Call (216) 200-4110 Make your best deal on used machine tools & industrial equipment
We Buy & Sell EVERYTHING! HGR Industrial Surplus, 20001 Euclid Ave., Euclid
McDonald Hopkins
BUSINESS HOUR An FBI brieďŹ ng on the Cyber Threat Data Privacy in a changing legislative landscape
Wednesday, July 16, 2014 Noon to 1:00 p.m. EDT – Business Hour Scan to register
McDonald Hopkins, 600 Superior Ave., Suite 2100 Downtown Cleveland
Register at mcdonaldhopkins.com or call: 216.348.5400.
McDonald Hopkins LLC 4VQFSJPS "WF &BTU 4VJUF $MFWFMBOE 0) t Carl J. Grassi, President Shawn M. Riley, Cleveland Managing Member $IJDBHP t $MFWFMBOE t $PMVNCVT t %FUSPJU t .JBNJ t 8FTU 1BMN #FBDI mcdonaldhopkins.com
JULY 7 - 13, 2014
Embrace Pet Insurance is no longer a cute little puppy. Now the company is more like a dog that just hit puberty — the kind that wants to play with bigger dogs, like Geico and USAA. That growth spurt pushed the fast-growing company to move into a bigger doghouse at the end of May. Much bigger. Embrace’s 56 employees — and their many dogs — don’t come close to filling the company’s new 13,500-square-foot headquarters in Warrensville Heights, next to Corporate College East. Embrace hadn’t yet completely filled its previous 5,000-square-foot headquarters in Beachwood, so why move into such a big office? Not only did the company get a good deal on the lease, but there’s reason to believe it will need a lot of space, according to CEO Laura Bennett. Pet insurance has yet to catch on in a big way in the United States, but you wouldn’t know it judging by Embrace’s growth. The company’s book of business grew by 50% in both 2012 and 2013, and it hired 19 people over the past 12 months. Plus, this year it started providing pet insurance for anyone who buys it through Geico, USAA and another large company that advertises nationally. Those partnerships don’t generate much revenue today, but they could have a huge impact on the company down the road, Bennett said. Especially if you ever see the Geico gecko on TV, telling a puppy about pet insurance. “If they put any of their marketing muscle into it ‌ it could become very significant,â€? Bennett said. Embrace could be making a profit by now. Instead, the company decided to continue spending more money than it makes — investments meant to help it grab a big piece of the wide-open pet insurance market before its competitors do. The company’s new majority owner is on board with that strategy. About a year ago, an investor from Toronto bought a majority stake in the business. Through a holding company called Beauvest (US) Inc., he bought out some of Embrace’s previous investors and put more than $1 million into the company’s cash reserves, Bennett said. She described him as a patient investor who used to work in the insurance industry. Both he and Embrace’s management team decided to pursue a long-term growth strategy instead of immediate profitability, she said. “Our investor and management as a group said, ‘We want to grow,’ â€? she said. Now the company is making in-
JANET CENTURY
Embrace Pet Insurance CEO Laura Bennett is shown at the company’s new 13,500-square-foot headquarters in Warrensville Heights — along with two of the many dogs that roam the space. vestments designed to help it become a bigger, more efficient business. The new headquarters is one such investment. The office, which had been completely empty, has high ceilings and huge windows that flood the office with natural light. Black steel fences — the kind a pet owner might use in his or her yard — run through the office. Employees can open the fence gates to let dogs move in and out of their cubicles. Embrace also has upgraded its data center and installed software designed to help customer information flow smoothly between departments. The company has invested in its human infrastructure, too. The new employees include veterinary representatives (vets sometimes recommend Embrace), people who process claims and online content marketing experts. For instance, Embrace just bought PetPlace.com and hired two employees who run the site, which features blog posts approved by veterinarians. The site already contains Embrace ads and will plug the company when appropriate, Bennett said.
Volume 35, Number 27 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright Š 2014 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
Howdy, partner The company might need all that new infrastructure if its effort to provide pet insurance through larger insurance companies pays off. USAA sees a lot of potential in the partnership, according to Rebecca Hirsch, spokeswoman for the financial services firm. Most of the company’s members — current and former military personnel, as well as their families — have at least one pet, Hirsch said. USAA liked that Embrace already offered a discount for military members, and that it was willing to offer another discount for USAA members, Hirsch said, adding that all USAA partner companies must meet “very high standardsâ€? for customer service. The financial services firm has sold about a hundred policies through Embrace since the partnership began on June 9. Plus, the announcement that USAA would offer pet insurance generated a big response on social media, Hirsch said. “It was just a crazy amount of likes and clicks on our website,â€? she said. â–
Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 482079911, or email to customerservice@crainscleveland.com, or call 877824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777.
20140707-NEWS--5-NAT-CCI-CL_--
7/3/2014
3:32 PM
Page 1
JULY 7 - 13, 2014
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
5
Philips’ problems ran deep FDA report details company’s quality control issues at its Highland Hts. plant By CHUCK SODER csoder@crain.com
Philips Healthcare’s previous attempts to fix its quality control system weren’t good enough. The inspection that drove Philips to temporarily stop building medical imaging systems at its Highland Heights plant revealed a series of quality control problems at a facility that has faced federal scrutiny for several years. For one, Philips failed to adequately address tens of thousands of complaints and defects related to its products, including one dating from 1994, according to an inspection report from the U.S. Food & Drug Administration. Philips — which says it has finished working through that backlog — also had done a poor job of controlling the quality of products it receives from suppliers, according to the report, which noted other problems as well. The sheer volume of issues laid out in the report suggests that Philips had serious quality control problems, according to two regulatory experts who read it. The FDA’s concerns appear to be valid, according to both Ray Ursick of REU Associates, a regulatory consulting firm in Mentor, and Rob Ngungu of the Austen BioInnovation Institute in Akron. “At the end of the day, complaints tell the story,” said Ngungu, director of regulatory affairs and product development strategy at the nonprofit institute. A previous FDA inspection conducted a few years ago pushed Philips to review more than four years worth of quality data in an effort to find customers complaints that weren’t properly labeled. See PHILIPS Page 7
43,319 Events that should have been classified as complaints from early 2007 to mid-2011, according to a Philips review
MCKINLEY WILEY
Tommy Fello, owner of Tommy’s in Cleveland Heights, is shown with an iPad that contains his catalog of allergy-containing ingredients and menu substitutions, along with the paper products he used to use to keep track of everything.
FREE COMES WITH A COST Menu items that don’t contain allergens are more pricey for businesses and consumers By KATHY AMES CARR clbfreelancer@crain.com
F
or more than four decades, Tommy’s in Cleveland Heights has offered items that accommodate customers with specific dietary needs, from vegan sandwiches to dairy-free waffles. But its catalog of allergy-containing ingredients and menu substitutions became so stuffed that restaurant owner Tommy Fello last year transitioned the critical reference material to an iPad. “It took 40 hours to punch in all that data, and my daughter is still adding new things,” Fello said. “You may know all your menu items like the back of your hand. But when you’re in the middle of a Saturday rush and someone’s wondering whether our Not Dogs have any gluten, it would take a lot of time looking through a fat notebook to double check that it doesn’t have even a smidgen of gluten.” The iPad facilitates a triple-check system that
includes cooks verifying the safety of ingredients and preparing orders properly. Gluten-free fries, for example, are submerged in a gluten-free fryer — the investment: $6,000 — and specially tagged to prevent cross-contamination. “People who have special orders wonder why the food sometimes takes longer, and it’s because there are so many extra steps involved to make sure the food is allergen-free,” said Fello, who estimates that special diet requests represent about 40% of orders. Indeed, the costs of making and serving dietary-specific foods are adding up for restaurants, in some cases eating into profit margins as the breadth of food allergies and intolerances becomes more complex. Some of those food costs, which can reach five times the cost of a standard item, are built into menu pricing. Tommy’s, for example, pays $2.50 more per pound for vegan cheese over a standard Muenster and passes along some of those costs to the customer. A vegan grilled cheese on a wheat pita is $3 higher than its basic
NOTHING TO SNEEZE AT The U.S. Food and Drug Administration in August 2013 issued a final rule targeting food manufacturers that established a federal definition for “gluten-free.” Foods that have a gluten limit equal to or less than 20 parts per million are considered gluten-free. The food industry’s compliance in proper product labeling takes effect this August. The FDA is urging restaurants that qualify their products as “gluten-free” to follow those same federal standards. ■ SOURCE: U.S. Food and Drug Administration toasted cheese counterpart. Ancillary costs, such as additional preparation, training and equipment, cannot always be absorbed. “I can’t eat all those costs, or I’d be out of business,” Fello said. “Catering to the many dietary restrictions of our customers has kept us in business, and they know we take it very seriously.” See COST Page 8
Recent buy bulks up Howard Hanna’s commercial arm Ostendorf-Morris acquisition could be just the start of company’s NE Ohio expansion By STAN BULLARD sbullard@crain.com
Even after buying the venerable Ostendorf-Morris Co. to expand its Hanna Chartwell commercial unit, Howard Hanna Real Estate Services is not done expanding into Northeast Ohio’s commercial real estate
market. Howard “Hoddy” Hanna III, chairman and CEO of Pittsburghbased Howard Hanna, said the company wants to add a unit focused on real estate services for retailers and a unit focused on finding commercial real estate mortgages.
He said the company would prefer buying additional companies if suitable ones are available to building them from the ground up, but may do so if it can hire the right candidate to run them. Such additions underline Howard Hanna’s reason for acquiring Ostendorf-Morris Co.: to gain
strength in areas that its Chartwell unit was not strong and obtain additional clients to cross-sell Howard Hanna’s broad suite of real estate services, such as surveying and title work. Bill West, chairman of Ostendorf-Morris, noted that it has had commercial mortgage brokerage
and retail brokerage services in the past and believes they are natural growth areas for the combined firms. West said a willingness to pursue such opportunities was a major reason that Ostendorf-Morris agreed to be acquired by Howard Hanna, as it has the resources to expand the business. See HANNA Page 11
20140707-NEWS--6-NAT-CCI-CL_--
6
7/3/2014
1:58 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
1020 BOLIVAR RD., CLEVELAND, OHIO INCOME PRODUCING OFFICE BUILDING W/PARKING GARAGE • 144,676 SF • 51,169 SF Office Space Available • Direct access to I-90, I-71 and I-77 • Across from Progressive Field and Quicken Loans Arena seventy-fifth
75
Gregory B. West Rocco P. DiPuccio
anniversary
global commercial real estate services
216.861.7200 www.ostendorf-morris.com
Prime Location in Medina 6T )W ‡ 4992 Foote Rd.
Call for Info: 330-723-3637 x 2232
FOR SALE OR LEASE )RUPHU :HVW¿HOG %DQN ORFDWLRQ 7ZR VWRU\ VT IW IDFLOLW\ ZLWK GULYH WKUX LQ EDFN RI SURSHUW\ VW ÀRRU VHW XS DV UHWDLO EDQN EUDQFK QG ÀRRU LV RI¿FH VSDFH ZLWK LQWHUQDO VWDLU ZHOO 6WRUDJH DYDLODEOH LQ VHFXUHG VKDUHG ORZHU OHYHO /RFDWHG LQ RI¿FH FRPSOH[ EXLOW LQ 6HYHUDO H[LVWLQJ RFFXSDQWV LQFOXGLQJ DQ LQVXUDQFH DJHQF\ ODZ ¿UP RUDO VXUJHRQ ¿QDQFLDO SODQQHU DQG H[HFXWLYH UHFUXLWLQJ ¿UP
JULY 7 - 13, 2014
NE Ohio health care job growth slows By TIMOTHY MAGAW and JAY MILLER tmagaw@crain.com; jmiller@crain.com
Employment in Northeast Ohio’s health care sector has surged upward since the turn of the millennium, though it appears that growth has begun to slow, according to the latest quarterly report from Team Northeast Ohio, the regional business attraction nonprofit. Northeast Ohio is regarded across the country as a health care hub, and it’s no secret that the region’s health care sector — anchored by heavyweights like the Cleveland Clinic and University Hospitals — did much of the heavy lifting during the Great Recession as other sectors, like manufacturing, shed jobs. Today, Northeast Ohio’s health care sector employs almost 177,000 workers — an increase of about 20% from 2000’s numbers. Health care employment was relatively flat during the recession from about 2009 through 2011, but has climbed steadily since. Likewise, the local health care sector’s gross regional product, or GRP, grew steadily from 2000 until 2006, tapered off during the recession before ultimately recovering. Today, the GRP is nearly $14 billion, representing a 25%, or $3 billion, growth from 2000 until 2014. However, Jacob Duritsky, Team NEO’s managing director of research, said it’s clear that the rapid employment growth of the past 14 years has begun to slow.
That news shouldn’t be particularly surprising, considering hospitals and other medical institutions have been under increased pressure to reduce costs in the face of the Affordable Care Act. Just last year, the Clinic announced it would cut $330 million from its budget and offered early retirement packages to 3,000 employees — an offer nearly 700 employees accepted. Summa Health System and Akron General Health System also reduced their staffs within the last year. “By reducing excessive costs in health care, we end up damaging one of the strongest industries in the region,� said Mark Votruba, a Case Western Reserve associate professor who studies health care economics. Across the country, Votruba said he expects employment in the health care sector to grow, particularly as the system braces for an influx in newly insured patients under the Affordable Care Act. However, he expects the growth in Northeast Ohio to be tempered, considering the region already has a robust system in place — particularly in MetroHealth — for caring for the uninsured. Meanwhile, as regional health care employment has grown since 2000, so has research spending. Since 2000, total research expenditures by medical institutions and universities have increased from $370 million to $660 million in 2012, according to the most recent data compiled by Team NEO. “This is really the unique compo-
nent you can’t get elsewhere,� Duritsky said.
Overall, a mixed bag Team NEO’s report on overall employment was mixed. The total number of workers employed during the fourth quarter of 2013 rose slightly, one-half of 1%, increasing from 1,891,317 to 1,900,962. While that’s the 14th consecutive quarter of employment growth, the labor force still hasn’t recovered from the recession. “If you go back to the fourth quarter of 2007, when the recession officially started, (employment is) still below that point by about 100,000 workers,â€? Duritsky said. Team NEO reported 2,010,991 employed workers for the third quarter of 2007. Unemployment rose slightly, from 7.0% in the fourth quarter of 2012 to 7.1% in the like quarter of 2013. At the same time, unemployment nationally dropped from 7.5% to 6.7%. The drop in unemployment nationally was attributed by many economists to an increase in the number of people dropping out of the labor force. Team NEO also reported a steady increase in oil and gas drilling in the southern counties in its 18-county region. Northeast Ohio had 462 producing wells at the end of the second quarter of 2014, compared with 422 a year earlier More significantly, the number of well permits issued in the second quarter rose to 143, compared with 26 a year earlier and 64 in the first quarter of 2014. â–
Manufacturers keeping tabs on bank By RACHEL ABBEY McCAFFERTY rmcafferty@crain.com
D.C.-based debates over renewing the federal government’s Export-Import Bank could have ripple effects that reach Northeast Ohio companies. The Export-Import Bank provides services such as working capital guarantees and export credit insurance for U.S. exporters, as well as loans and loan guarantees for the foreign entities looking to buy from those companies, either directly or through partnerships with private financial firms. To some, the bank is a useful tool for manufacturers; to others, it’s a fund used to support select big businesses. And as the 80-year-old export credit agency is up for reauthorization in September, opposing interests have come to the surface. The program easily was renewed in 2012, but some conservative leaders — including House Financial Services Committee chairman Jeb Hensarling, R-Texas — have been calling for change this time around. In Ohio, the Export-Import Bank last year supported $290 million in exports, according to its website. One of those companies was Ashtabula’s Grand River Rubber & Plastics Co. The insurance component of the program has been helpful to Grand River Rubber in the past three years, said senior vice president Donald Chaplin. The rubber extruder does a fair amount of exporting to China, Chaplin said, but it wasn’t able to include those receivables in its borrowingbased line of credit in the past. That’s several hundred thousand dollars a month that the company couldn’t borrow against to reinvest. “It just limits your options,� Chaplin said.
Tool for exporting Through the Export-Import Bank,
those receivables are insured and added to the company’s line of credit. Chaplin said Grand River Rubber & Plastics has been able to complete three acquisitions in the past three years — two domestic and one international — that would have been more difficult to complete without that expanded borrowing base. If the bank isn’t reauthorized, Chaplin said the company would look into other options, but he’s hoping the government leaves it as is. Larger companies have access to other sources of capital, but the bank’s programs are helpful to small and medium-sized companies, like the 220-employee Grand River Rubber, he said. The bank’s programs also have been useful to Formtek Inc. in Warrensville Heights, said director of sales and marketing Jack Pennuto Jr., though he thinks the program has focused more on large transactions in recent years. Pennuto said the company has worked with foreign customers to help them get financing through the Export-Import Bank, which allows Formtek to sell in markets with more restrictive banking. Being able to offer financing is a “valuable tool� for U.S. companies that export products with large price tags, Pennuto said. Formtek is part of a larger group of companies that sells equipment to a variety of metal forming and processing industries. The National Association of Manufacturers has thrown its weight behind the bank, saying it helps keep the United States on a level playing field with other countries that offer export credit agencies, and it is leading a campaign for its reauthorization with the U.S. Chamber of Commerce. Linda Dempsey, vice president of international economic affairs at the association, noted that the bank’s programs aren’t exclusive, as they’re open to any exporter, and that the
funds come from users of the bank. “The critics miss some of the key points,� she said.
‘Slush fund’? But the program can sometimes appear to pick winners and losers. Conservative activist groups Club for Growth and Heritage Action for America have been vocal in their opposition to the bank. Dan Holler, communications director for Heritage Action, said the group sees the bank’s programs as subsidizing the exports of a few large companies. The Club for Growth’s spokesman, Barney Keller, went so far as to call it a “slush fund for corporate welfare.â€? Keller pointed to Clevelandbased Cliffs Natural Resources Inc. as a company that has pushed back against the bank in the past. In 2013, Cliffs put up a fight when the Export-Import Bank decided to back some financing for an Australian iron mine to which Caterpillar Inc. planned to sell equipment. Crain’s Chicago Business reported that Cliffs claimed the deal would harm the steel industry in the U.S. by lowering raw material costs for steelmakers in Asia and allowing them to sell their steel for less. Cliffs declined to talk to Crain’s for this article, but provided a statement calling for some changes at the bank. “Cliffs has raised serious concerns about the domestic economic impacts of Ex-Im Bank transactions in the iron ore industry,â€? Patricia Persico, director of global communications, said in an emailed statement. “While Cliffs does not advocate for the elimination of the Ex-Im Bank, we do believe that the U.S. Congress should take measures to require increased transparency of the Bank’s dealings and a more stringent economic impact analysis process to protect the interests of U.S. businesses and its workers.â€? â–
20140707-NEWS--7-NAT-CCI-CL_--
7/3/2014
3:23 PM
Page 1
JULY 7 - 13, 2014
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
7
Philips: Company says it’s been hard at work addressing issues continued from PAGE 5
Philips found 43,319 events that should have been classified as complaints during that period, from early 2007 to mid-2011. However, the company didn’t assess the complaints to see if it needed to take action to correct the problems or prevent similar ones, the report stated. Philips also had identified 51,667 software, hardware and process defects that had not been “closed� as of Nov. 6, 2013, including the one from 1994. Philips has been hard at work addressing problems inspectors identified, according to an email from company spokesman Mario Fante. The problems “have been largely addressed during and since the closing of the FDA inspection,� Fante stated. The four-month-long inspection ended on Jan. 28, 2014. “On-site teams have worked through the backlogs referred to in this observation, and we have upgraded our quality management system to prevent recurrence of similar backlogs,� he said in the email. Thus, Philips expects to go back to building medical imaging systems in Highland Heights in the third quarter of this year, Fante stated.
Flaws in the system The company’s inability to correct problems quickly caused flawed products to remain in use longer than they should have, according to the report. For instance, Philips initiated a recall in April 2013 after receiving a complaint related to one of its BrightView-brand nuclear imaging
51,667
179 of 511
Software, hardware and process defects that had not been “closed� as of Nov. 6, 2013, according to a review by Philips Healthcare
Six months after an April 2013 complaint related to one of its BrightView-brand nuclear imaging systems, Philips had yet to inspect 179 systems that potentially had “the same failure mode.�
systems. A broken ball screw caused a piece of the machine to fall. Philips said it received no report that anyone was harmed, but the company classified the event as one that had the potential to cause a death, according to the FDA report. Even so, six months later, Philips had yet to inspect 179 of 511 systems that potentially had “the same failure mode,� the report stated. Philips finished inspecting the rest of the systems “by mid-December 2013, per the planned schedule,� Fante stated. The eight-page inspection report cited that recall again while criticizing Philips’ supplier control program. Philips’ files lacked “documented evidence of supplier qualification and disqualification� related to a company that sold Philips a so-called gantry assembly that was involved in the recall. The FDA, which mailed the report to Crain’s, blacked out the supplier’s name. Philips also had ordered products from a handful of disqualified suppliers, according to the report, which said Philips needed better procedures to ensure such suppliers can’t keep selling parts to the company.
Risk and responsibility The two-page section about Philips’ supplier program also noted that the company “misclassified components into lower risk classifications, which results in reduced supplier controls.� It listed a handful of examples, including one that involved a customer complaint Philips received in April 2012. A patient table fell because a ball screw broke. Philips had classified the ball screw assembly as well as a vertical drive bearing as “moderate� risk components. Inspectors said the parts should have been classified as “critical,� which is two steps higher in terms of risk. The report also said Philips’ management should have been made aware of the backlog of product defects and other quality-related data. Ngungu, of the Austen BioInnovation Institute, said he thought the report should’ve come down harder on Philips’ management. It’s their responsibility to make sure they understand what’s going on with the company’s quality system, he said. “More importantly, management is charged with ensuring adequate resources to execute the quality
function. Such a serious backlog would suggest neglect of complaints (which I seriously doubt), or not enough resources to handle complaints, which appears likely,� he stated via email. Reached by phone at 12:50 p.m. on Thursday, July 3, Mario Fante of Philips didn’t call back to address that question in time for this story’s Thursday afternoon deadline.
Teamwork needed No particular issue in the report shocked Ngungu or Ursick, of REU Associates. But the issues raised are
important to fix, they said. It also didn’t look like the FDA was looking for problems for the sole purpose of piling on extra violations, according to Ursick. “Some of these do have an impact on the manufacturing of the product,â€? said Ursick, who provided regulatory consulting to Philips a few years ago. So will Philips be able to fix its quality control problems in a timely manner? It will be tough, but it’s possible, Ursick said. “If they have a good team in there, they might pull it off,â€? he said. â–
Earn More. Aim Higher.
12-Month M.B.A. Online or In-Class The DeVille School of Business
www.walsh.edu/mba
[
330.490.7406
STAY CONNECTED ■Crain’s on Twitter: @CrainsCleveland ■Crain’s on Facebook: Facebook.com/CrainsCleveland ■Crain’s on LinkedIn: linkedin.com/company/crain’s-cleveland-business ■Crain’s on Instagram: instagram.com/crainscleveland ■Crain’s daily e-newsletters: CrainsCleveland.com/register For a fun look at the week’s news, check out our Weekly Report webcast at CrainsCleveland.com.
Expertise Pays Off For more than 80 years, we have helped middle THYRL[ JVTWHUPLZ HJOPL]L Ă„UHUJPHS Z\JJLZZ
WHAT IGNITES YOU?
-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
NORTHEAST OHIO MEDICAL UNIVERSITYChanging Lives, Expanding Knowledge For more than 40 years, Northeast Ohio Medical University has been changing the lives of individuals in the region through the innovative teaching of tomorrow’s physicians, SKDUPDFLVWV SXEOLF KHDOWK RI¿ FLDOV and health care researchers. Dedicated to its mission of education, research and service, Northeast Ohio Medical University continues to improve the quality of health care and make a strong economic impact in Northeast Ohio and beyond.
neomed.edu
3L[ V\Y RUV^SLKNL L_WLYPLUJL HUK L_WLY[PZL IL HU HZZL[ [V `V\Y JVTWHU`ÂťZ VWLYH[PVUZ THUHNLTLU[ HUK ZOHYLOVSKLYZ
Cleveland | 216.363.0100 Canton | 330.966.9400 Elyria | 440.323.3200 Business Advisors and Certified Public Accountants
maloneynovotny.com
20140707-NEWS--8-NAT-CCI-CL_--
8
7/3/2014
2:40 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JULY 7 - 13, 2014
Cost: Profits take a hit Refunds: Lawsuit was filed in 2007 continued from PAGE 5
Fabio Salerno, chef/owner of TownHall in Ohio City and Lago in Cleveland’s Flats East Bank, aims to keep at 30% each menu item’s cost, although the labor and ingredient costs of a vegan or gluten-free item can climb to 50%. “So we may only make $5 on that $10 item,” he said. “We’ll take a hit on a specialty item and hope to make it up in volume. These ingredients keep skyrocketing as market demand rises. “The healthier the item is, the more expensive it is for us,” Salerno said.
Flour power According to a 2013 study released by the Centers for Disease Control and Prevention, nearly 15 million Americans have food allergies. The diagnosis among children increased 50% between 1997 and 2011, with milk, eggs, peanuts, tree nuts, soy, wheat, fish and shellfish producing about 90% of allergic reactions. The population that is affected by Celiac disease and gluten allergies still is infinitesimal — about 1% of the U.S. population, although about 30% of Americans say they are trying to avoid gluten, according to market research firm NPD Group. Consumers who don’t have food allergies or intolerances increasingly are shaving some of these reaction-triggering foods from their diets, which means restaurants that aren’t already building in alternative menu options will have to adjust, said Helen Rhynard, a Cleveland lawyer with a client base comprised primarily of caterers and food manufacturers. “Half of all U.S. adults has at least one chronic condition, and 20% of children are obese,” said Rhynard,
who also is a registered dietician. “All leading chronic conditions are diet-related. Even people who don’t have those conditions are taking notice and altering what they eat.” Dante Boccuzzi, chef and owner of Tremont-based Dante, Next Door and three other area restaurants, is one of those individuals. A years-long cough prompted the chef to seek the expertise of a holistic doctor, who diagnosed Boccuzzi a couple years ago with a list of food irritants, including gluten. “When you grow up on a Mediterranean diet that consists of a lot of pasta and tomato sauce, your body becomes oversaturated,” he said. “I eliminated flour from my diet for a while before slowly reintroducing it in smaller portions, and the symptoms went away.” As such, Boccuzzi said he chooses not to pass along to diners any additional costs affiliated with his gluten-free menu options, although pasta sans gluten is currently not among those choices. “The logistics would be too much at this point,” he said. Joe Horvath, co-chef at Toast Wine Bar, said the Detroit-Shoreway neighborhood eatery is able to subdue food costs tied to its vegetarian/vegan, gluten-free and paleo — or proteinand plant-focused — scratch offerings because much of those foodstuffs are sourced from its nearby urban garden and local farmers. But time is money. The eatery recently increased by $3 one of its latest vegan renditions, its most intricately made entrée since opening in 2013. The spelt n’ beans, at $21, is an effort of Amish sprouted hulled wheat, cranberry beans, squash, zucchini and local tofu whip. “It’s not just beans and grains,” Horvath said. “A lot of time and thought goes into making this dish.” ■
WE HELP BUSINESS AT THE HIGHEST LEVEL.
continued from PAGE 1
“Not necessarily surprised but certainly disappointed,” is how Gareth D. Vaughan characterized his response to the BWC’s plan. Vaughan is president of the Albert M. Higley Co., which could get a $277,000 refund. “It’s a big deal,” he said. A refund estimated at $627,000 is not such a big deal for Oberlin College, which has an annual operating budget of more than $170 million, said Mark Bates, associate vice president for finance. Bates said he found the college’s estimated refund on the website. Still, the college will make its claim when the time comes. “We’re not going to reject the settlement if it comes to pass,” Bates said. “But we haven’t been counting and spending it, either. We’ll just wait and see if things finalize.”
That was then … The appeal means the employers will have to wait for the case to be decided by the seven justices before they can collect. It can take several years for an appeal to the Supreme Court to be heard and decided. “Their decision (to appeal) is yet another slap in the face to Ohio job creators,” said Earl Stein, of lead plaintiff San Allen Inc., in a statement. “The BWC has repeatedly admitted it overcharged over 250,000 employers $860 million, yet rather than working to help them they have decided to continue to hurt them.” San Allen is the corporate name for Corky and Lenny’s, a wellknown Woodmere delicatessen, and one of the original seven companies that filed the lawsuit in 2007. PayUsBackOhioBWC lists San Allen as being in line for a refund of $36,872. The ultimate size of the refunds may be altered as the litigation continues. In a brief statement on June 27 announcing the appeal, BWC spokeswoman Melissa Vince said the bureau believes the issue should be put to rest. “This case was originally filed in 2007 and, as the plaintiffs themselves have said, is about BWC policies that were developed more than
a decade ago under previous administrations,” the release said. “The policies in place at BWC today approach these issues very differently, and we look forward to putting this issue behind us.”
In reserve The original suit did not dispute that BWC could create discounted rates for groups. Groups were created by chambers of commerce and other business groups and claims were managed by third-party administrators.
“We’re not going to reject the settlement if it comes to pass. But we haven’t been counting and spending it, either. We’ll just wait and see if things finalize.” – Mark Bates associate vice president for finance, Oberlin College In the San Allen case, attorneys for the plaintiff class argued that employers that qualified for membership in groups received workers’ comp premium discounts of as much as 90%. They said excessively high rates charged to plaintiff companies subsidized the group-rating discount, which went to companies with no injury claims against them, usually for five years. The amount of refund companies are in line for was set in 2012 by McMonagle, and the amounts range from a few dollars to more than $1 million. Columbus Steel Castings of Columbus is set for the largest refund, according to the PayUsBackOhioBWC website: $1,383,508.96. Although the appeals court in large measure agreed with the plaintiffs, it did order the case back to the trial court to adjust some of the refund amounts. If the Supreme Court rejects the bureau’s appeal, the cost of the settlement should not have a serious impact on the BWC’s finances. Because of the success of its investments, the bureau last year rebated $1 billion to employers, after
HOW BAD IS THAT LEAK?
When a company has a problem that gets kicked upstairs, upstairs kicks it to us.
net assets topped $8 billion. Gov. John Kasich said at the time the rebate was designed to boost the state’s economy. Kasich At the same time, the bureau said it had set aside a reserve to cover the cost of the settlement.
Who’s getting hosed? The BWC’s memorandum of appeal to the Supreme Court argues that the lower courts misinterpreted state law that established how the bureau can set rates and that those courts should not have made San Allen a class-action case, which turned a small group of plaintiffs into a class of 270,000. Thomas Pitts, an Akron attorney who served a three-year term on the BWC’s board of directors from 2008 to 2011, supports the lower court rulings. “I think it’s the correct decision,” he said. “I think the BWC appealed because they’re hoping a Republican-dominated Supreme Court that is favorable to the employer community might take a different look at it or that the Supreme Court might do what the court of appeals did and reduce the size of the verdict.” Pitts, who represents employees making workers’ compensation claims, pointed out that the BWC began to rebalance premiums between group and non-group employers during his term on the board. “Marsha Ryan (then bureau director) saw that non-group employers were really getting hosed, is what it came down to,” he said. “They were paying a disproportionately larger share of the system than group-rated people.” He said that rate disparity pushed employers in groups to fight worker claims. “Group-rated employers would object to legitimate claims because they were so afraid of being tossed out of a group and losing their incredible discounts,” he said. “It made for a very adversarial and uncomfortable environment.” ■
CRAIN’S BLOGS Get the latest from our editors and reporters, including: ■ Editor’s Choice: Managing editor Scott Suttell rounds up news and views about business, and stories of interest in Northeast Ohio. Weekdays ■ Sports Biz: Assistant editor Kevin Kleps writes about the Browns, Cavaliers, Indians and much more. Weekdays
Higher standards make better lawyers.® For more information, visit vorys.com. Vorys, Sater, Seymour and Pease LLP 1375 East Ninth Street 2100 One Cleveland Center Cleveland, Ohio 44114 106 South Main Street Suite 1100 Akron, Ohio 44308
Keep your assets safe by taking the time to ensure that problems at the top of your building are not damaging your bottom line.
■ Health Care: Reporter Timothy Magaw breaks down the latest news about the region’s hospitals. Tuesdays
Carey Roofing Corp. has eliminated asset damage due to a leaking roof with practical solutions since 1946.
■ What’s Cooking: Twice per month, freelance reporter Kathy Ames Carr has morsels on the local restaurant scene.
CAREY
Roofing Corp.
216 • 881 • 1999 www.careyroofing.com founded in 1946
MEMBER: National Roofing Contractors Association
GO TO: CrainsCleveland.com/ section/blogs
20140707-NEWS--9-NAT-CCI-CL_--
7/2/2014
2:38 PM
Page 1
JULY 7 - 13, 2014
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
9
Merger helps Precision Dialogue take off locally Since partnership with Chicago company, Northeast Ohio office has grown quite a bit By CHUCK SODER csoder@crain.com
Precision Dialogue is based in Chicago, but its Northeast Ohio office has grown so fast that it would now rank as one of the five largest marketing firms in the region. The company keeps scooping up office space in Westlake in an effort to make room for its ever-expanding staff. The direct marketing firm has 121 local employees, up from 44 in 2009. That makes Precision Dialogue roughly the same size as Warrensville Heights-based Marcus Thomas, which last year placed fourth on a Crain’s list that ranked the region’s largest marketing firms by employment. Oddly enough, most of that growth took place after the company ceased to be a locally based business: In 2010, Kirtland Capital Partners in Beachwood acquired Metrics Marketing Group of Westlake, a digitally focused direct marketing firm. Soon thereafter, Metrics Marketing merged with a direct mail company in Chicago called Northwest Mailing Service. The combined company is based out of Chicago, which remains the company’s biggest office. It employs about 225 people, including CEO Tom Ragen. So why has the local division of Precision Dialogue grown so fast? For one, synergies from the merger — which allowed the combined company to target its marketing efforts to specific individuals, be they online or offline — have helped the entire business grow, according to Dan Rose, one of three Precision Dialogue partners based in Westlake. About 25% of the company’s revenue now comes from work done by multiple offices, Rose said, declining to provide dollar figures.
“Each and every piece that comes off of the press looks different, because it’s been customized for you and you and you.” – Dan Rose partner, Precision Dialogue, on marketing materials the company sends in the mail For instance, if a marketing email bounces, now Precision Dialogue can send that person marketing materials via the U.S. Postal Service. And that piece of mail is probably going to be more customized than it would have been before the merger, thanks to the combined company’s digital analytics expertise. “Each and every piece that comes off of the press looks different, because it’s been customized for you and you and you,” Rose said.
Lab work Precision Dialogue’s local operations were growing before the merger. In 2009, the company started helping clients study how people interact with their websites, advertisements and marketing materials. Then, in 2010, it opened its socalled Precision Experience Lab,
Company can track how you feel while viewing websites
which now offers infrared eyetracking technology and sensors that can read people’s emotions (read more about that in the sidebar next to this story). During its first year or so, the lab was used for about one study per month. How things have changed: Revenue from the lab has grown 10-fold since 2009, according to data from the lab’s leader, Cathleen Zapata. The lab is sometimes booked every day for a week straight, and sometimes the lab team will conduct four or five studies in one day, Zapata said. Some studies are done in the lab, and some are conducted at retail stores or other locations. The lab now employs 16 people, up from five two years ago, said Zapata, whose title is chief experience officer. “And we’re still looking to hire,” she said.
Stretching out Not that Precision Dialogue has room for many new employees. There is little room to spare in the main building on the southeast corner of Westpoint Parkway and Corporate Way. Same goes for the lab, on the northeast corner. The lack of space became even more apparent in May, when Precision Dialogue acquired Opinion Centers America, which helps other organizations conduct focus group studies and surveys. When the company’s six employees moved to Westlake, four of them had to squeeze into a Precision Dialogue “office” that had been a conference room. That group should be able to stretch their legs soon. By August, Precision Dialogue plans to take extra space in a third building on the west side of Westpoint Parkway. The company, which uses about 22,000 square feet today, also plans to take over the rest of the building that houses the Precision Experience Lab, adding 2,100 square feet of space. So will Precision Dialogue keep growing in Westlake? The company expects to hire another six people by the end of October. Rose said the business also is looking for more acquisitions. However, some deals may not always result in more people being relocated to the Westlake offices: For instance, in 2012 the company acquired Hub Marketing Solutions, but the marketing data management company’s 11 employees remain in Boston. Even at its current size, however, Precision Dialogue can compete with some of the best digital marketing companies that focus on targeting specific customers, Rose said. He cited a report Forrester Research published in late 2012: The research and advisory firm ranked 13 businesses that it described as “customer engagement agencies.” Precision Dialogue is much smaller than most of the other companies, but it still landed in the middle of the pack, earning a “Strong Performer” ranking. “We’re playing with the big boys on a global stage,” Rose said. ■
CONTRIBUTED PHOTOS
Precision Dialogue’s eye-tracking technology can analyze a person’s brainwaves as he or she views a website. BOTTOM: Lauren Daniels, Precision’s interaction management coordinator, wears the company’s EEG headset.
Ever been frustrated while navigating a shoddy website? Precision Dialogue can’t feel your pain. But the company can measure it. The business, which specializes in direct marketing, has spent the past five years helping clients conduct focus group studies and analyze how people interact with their websites, advertisements and marketing materials. In 2010, it installed eye-tracking technology that can tell what you’re looking at. Maybe it’s the face of the person in a picture or the big bold headline next to the image. And this year, Precision Dialogue went a step further: Now study participants can wear a headset covered in sensors that analyze their brainwaves, as if they were getting an EEG (electroencephalogram) at a hospital. That data indicates whether you’re excited, calm, frustrated or bored. It also can be used to analyze frowns, smirks and other facial expressions. It’s unclear how much demand there is for the technology yet, but Precision Dialogue partner Dan Rose said he thinks it’ll be popular. “We already are placing a bet that this is absolutely where the market is going to be,” he said. — Chuck Soder
WHETHER YOU’RE AT THE OFFICE OR ON THE GO, COX BUSINESS KEEPS YOUR BUSINESS RUNNING. BUSINESS INTERNET 15 AND VOICE • Internet speeds up to 15 Mbps • 20+ calling features • Unlimited nationwide long distance on one line
$ ~
79
99 mo*
~
TWO PHONE LINES
CALL OR VISIT TODAY
866-791-2688 | COXBUSINESS.COM
*Offer ends 8/31/14. Available to new commercial subscribers of Cox Business InternetSM 15 (max. 15/5 Mbps) and Cox Business VoiceManagerSM Office with unlimited nationwide long distance plus a VoiceManager Utility line (long distance not included). Prices based on the first 12 months of a 2-year service term. Monthly service fee increases to $89.99 for months 13-24. A maximum number of 10 VoiceManager Office lines are eligible for the advertised offer. Unlimited plan is limited to direct-dialed domestic calls only and is not available for use with non-switched circuit calling, auto-dialers, call center applications and certain switching applications. Prices exclude equipment, installation, taxes, and fees, unless indicated. Next day installation is subject to availability and may require expedite fees. Speed not guaranteed. Actual speeds may vary. Rates and bandwidth options vary and are subject to change. Discounts are not valid in combination with or in addition to other promotions and cannot be applied to any other Cox account. Phone modem provided by Cox, requires electricity, and has battery backup. Access to E911 may not be available during extended power outage or if modem is moved or inoperable. Speed claim based on Cox Business Internet 150 Mbps service vs. basic 1.5 Mbps DSL. Services not available in all areas. 30-day satisfaction guarantee limited to refund of standard installation/activation fees and the first month’s recurring service and equipment fees (and equipment purchase fees if purchased from Cox) for the newly subscribed services only. Excludes all other costs and charges. Refund must be claimed within 30 days of service activation. Other restrictions apply. © 2014 Cox Communications, Inc. All rights reserved.
20140707-NEWS--10-NAT-CCI-CL_--
10
7/2/2014
4:25 PM
CRAIN’S CLEVELAND BUSINESS
Page 1
WWW.CRAINSCLEVELAND.COM
JULY 7 - 13, 2014
PUBLISHER:
John Campanelli (jcampanelli@crain.com) EDITOR:
Elizabeth McIntyre (emcintyre@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Much to learn
O
n July 1, Ohio welcomed the incoming class of new leaders at its public universities. These new presidents will be steering their schools in the choppy waters in which higher education finds itself today: ■ Scott Scarborough at the University of Akron; ■ Beverly Warren at Kent State; ■ Michael Drake at Ohio State; and ■ Jim Tressel at Youngstown State.
All will spend their initial days learning the names and faces — from faculty and staff to board members and students — and the culture at their respective institutions. And once that brief honeymoon is over, all four college presidents will face similar challenges: tightening budgets and declining enrollments; decreasing state funding and rising tuition costs; and below-average college-degree attainment rates and increasing student debt. In case the challenges weren’t apparent enough, the U.S. Department of Education underscored them the day before these new leaders took the helm with the release of its list of the most and least expensive colleges in the country. Ohio did not fare well. In fact, five of Ohio’s state universities landed in the nationwide Top 25 of public, four-year colleges with the highest net price. Miami University topped the list, with a net price of $24,674. Young people in this state wanting to contribute to a robust 21st century economy may find themselves priced out of the colleges specifically established to provide the education they need. Those who borrow enough to attend might find themselves laden with debt, in many cases without a degree to show for it. That has to change. A year ago, U.S. Secretary of Education Arne Duncan declared that higher education was at a crossroads: “All three of these core challenges to higher education — high prices, low completion rates, and too little accountability — are each difficult problems on their own. But in reality they are that much more difficult to address, because they are interrelated and cannot be dealt with piecemeal or by the federal government alone. They can only be addressed through shared responsibility, tough-minded collaboration, and collective action.” And as these new presidents come to that crossroad, they must take Duncan’s words to heart. Accept the responsibility, collaborate and act collectively to ensure that students in Ohio can afford to attend these state-supported institutions and that the financial commitment and hard work pays off with a marketable degree. It may sound like a lot to ask of freshmen, but failure risks our future well beyond the college campus.
FROM THE PUBLISHER
From Dallas to Cleveland, with love H about the fire on the Cuyaarold Gaar, the new JOHN hoga River.” CEO of Apple Growth It was only when he made Partners, has a huge CAMPANELLI the move to Northeast Ohio, framed photograph in his packing and unpacking the home office in Akron. It’s a print, that he made the conbeautiful image that peers nection: The Cuyahoga River down a mini forest canyon, his friends mentioned was the over a moss-covered cliff, same river that carved the valthrough trees and beyond unley in his spectacular photo. til the forest blends into a fine One place, two images. mist that summer hikers long We all know that for many to encounter. people who haven’t been Local nature lovers will auhere, the image of Cleveland is still one tomatically recognize the place: the of rust, dirt and flames on the water. Ledges in the Cuyahoga Valley National Only when folks visit or move here do Park. they realize that we are really more Captivated by the image, Gaar and his about that second image — more color, wife bought the print 20 years ago when more depth, more life, more beauty. they lived in Dallas. They put it on their Over the last year, Gaar has lived the wall and admired the scene without transformation. thinking much about Northeast Ohio. “When I got up here, I was absolutely Gaar, who lived in Dallas more than 50 amazed at a number of things. One was years, had never visited Ohio until he the natural beauty of the area … the park pursued the Apple Growth opportunity systems, the Cuyahoga Valley National in 2013. Park, and the support they receive,” he “I had no concept of Ohio,” he says. says. “In Dallas, there aren’t many “When I mentioned to a few close friends shared living spaces. People live in their that I was considering moving to the back yards or their houses. Here, there Cleveland-Akron area, one or two of are parks, green spaces, and biking and them would go back to the ’70s and talk
hiking trails. You just don’t have that in Dallas. They just don’t exist.” Beyond the beauty, Gaar loves our region’s cost of living (everything from real estate to gym memberships are a fraction of Dallas prices) and our quality of life, from culture and dining to simply driving. (“Here, as far as I’m concerned, traffic doesn’t exist,” he says with a laugh.) “I tell people I think it’s one of the best-kept secrets in the United States.” So what about the Dallas vs. Cleveland competition for the 2016 Republican National Convention? Gaar was a top exec with the Dallas Morning News in 1984, when delegates in Big D nominated Ronald Reagan for a second term. He knows what a convention would mean to each city. “In Dallas, I don’t know that there’s going to be a long-term economic benefit from having another convention there,” he said. “There will be a shortterm benefit. But I think in Cleveland, there are secrets to be told here that may not get told unless you have a focus that a convention will bring to the city.” Greater Clevelanders know those secrets, and we know that in this competition with Dallas, we’ve already won. ■
TALK ON THE WEB Re: Browns’ Fan Advisory Board ■ The Browns’ work to upgrade food, service, the scoreboards, etc., is all nice, but winning will solve all problems. Browns players have to not be so comfortable; they need to be 1,000% focused on winning and improving, not parties. The players need to know how much suffering we endure and how tired we are, even though we still buy tickets and support them. — Bay Area Browns Backers ■ Since StubHub is in direct competition with TicketMaster and the league-approved “NFL TicketExchange,” I will never understand why this new brain trust at the team continues to engage with StubHub. So many fans have been ripped off and duped through this. — Guest
Reader responses to stories and blogs that appeared on: www.crainscleveland.com
■ As long as Verizon doesn’t work at FirstEnergy Stadium, I will stay away. Time to update the Wi-Fi or tower. — Jamie O ■ Believe it or not, Jamie O, people used to spend the entire day without a phone attached to their hands. You’re wasting a seat that a real fan could use. Please, just stay away. — Rob
Re: Cleveland’s industrial real estate market ■ We lose sight that as an old manufacturing center, creating many biotech or biomed startups doesn’t consume much
space, nor does it result in hiring many people. Nothing against the importance of these industries, but we also have to focus on what made this region great and how to do it again. Let’s combine the best of the old with the best of the new: more jobs and recreating a strong urban middle class. — Neil Dick
Re: Music Box Supper Club ■ Congratulations to Mike and Colleen Miller. (They’re opening Music Box, a two-story supper club, in August on the West Bank of the Flats.) There is a great line of entertainment set up already. This is nice leverage for the other activities going on in that area. — Vince Adamus
20140707-NEWS--11-NAT-CCI-CL_--
7/2/2014
1:33 PM
Page 1
JULY 7 - 13, 2014
Hanna: Dean of Cleveland commercial brokerages could be ideal complement continued from PAGE 5
Although Hoddy Hanna said he would start retail or mortgage brokerage operations “tomorrow� if it found the right partner or candidate, the deal to buy 75-year-old Ostendorf-Morris was not put together quickly. The companies first discussed combining in October 2013 — the same month that Howard Hanna completed its acquisition of Cleveland-based Chartwell Group. That move started the firm’s foray into the commercial market in Ohio under the direction of Howard “Hoby� Hanna IV, the Hoby Hanna Cleveland-based president of Howard Hanna Midwest. “We will not rush,� said Hoby Hanna, as the Hannas like to know the character of people they are joining in business.
Perfect pairings Ironically, the O-Mers were the ones most impressed by the Hannas as they pursued a deal. A key meeting was over dinner Feb. 18 at Valerio’s restaurant in Cleveland’s Little Italy, Hoby Hanna said. During that session, the Hannas and O-M principals worked out general parameters for the deal and decided buying OstendorfMorris was a good thing. Hoby Hanna was at that meeting, although he had slipped earlier that day and suffered what he later learned was a concussion. Geoff Coyle, Ostendorf-Morris managing partner, said Hoby Hanna’s making the session convinced the O-M team of his passion and commitment to expanding the commercial side of the business. After observers get over the shock of hearing about the dean of Cleveland commercial brokerages being acquired by a residential — rather than a heavyweight national com-
GET DAILY NEWS ALERTS FROM CRAIN’S Register for free email alerts and receive: ■The Morning Roundup ■Breaking news alerts ■Daily headlines ■Dealmaker Alert: Published Wednesday. ■Health Care Report: Published Tuesday. ■Manufacturing Report: Published every other Wednesday. ■Real Estate Report: Published Monday. ■Small Business Report: Published Thursday. ■Shale and Energy Report: Published Friday.
SIGN UP NOW AT: CrainsCleveland.com/register
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
mercial — brokerage, they point to ways the companies will complement one another. Dyann Davison, owner of the Cleveland-based Davison & Co. brokerage, said she can see the advantages in the combination. “It is going to be good for both entities,� Davison said. “Chartwell brings local relationships. OM brings the corporate services piece and connections to the blue blood line of business. Coyle handles (Willoughby-based developer and apartment developer) K&D Group’s work. And they gain Hanna’s connections for commercial work.� Hoby Hanna said he prized OM’s property management business and skills, and its corporate services unit, a natural fit for Howard Hanna’s residential corporate relocation practice. That unit has corporations as its clients as it finds homes for corporate transfers or new hires.
“O-M used to be the real estate company in town. They had all the listings, all the property management. They were the big player.� – Dyann Davison owner, Davison & Co. brokerage, on Ostendorf-Morris R.M. “Mac� Biggar, chief operating officer of Hanna Chartwell, said O-M’s strength in property management will help Chartwell get more receivership work from courts and compete for major downtown building assignments. O-M’s corporate services unit will expand its corporate work and enable it to offer appraisals that are important to gaining banking assignments.
Building off a legacy Although Howard Hanna trumpeted the brokerage staff it gains by combining the two commercial firms to field a total of 60 agents,
David Browning, managing director of CBRE’s Cleveland-based unit with 50 agents, pooh-poohed the significance of agent head counts. “They are in a different market space than we are,â€? Browning said, referring to Hanna Chartwell and Browning O-M as providers to the middle market of companies, which his firm serves, but is not CBRE’s core corporate and institutional business. Aligning with a residential real estate company, albeit one with 5,700 sales associates in 169 offices in eight states, is seen as a sign of OM’s diminished influence after a decade that included a broken prior merger with Colliers Macaulay Nicolls Inc. and exits by former associates who launched or expanded competing brokerages, including Chartwell. “O-M used to be the real estate company in town,â€? Davison said. “They had all the listings, all the property management. They were the big player.â€? Likewise, Browning recalled that when he came to Northeast Ohio in 1987 to run CBRE’s 2-year-old Cleveland office, Ostendorf-Morris was the dominant firm. Although Howard Hanna has not said what will happen to the O-M name, Browning said it has been so influential and shaped the careers of so many of the region’s professionals he would hate to see it disappear. O-M’s luster dating from 1939 is not lost on Howard Hanna. Speaking with O-M execs before the June 25 news conference when Howard Hanna announced the acquisition at its Cleveland office, Peter Sukernek, manager of Howard Hanna Commercial in Pittsburgh, remembered visiting Cleveland from Pittsburgh and learning as a young man that Ostendorf-Morris was the city’s prominent firm. â–
11
FOR SALE OR LEASE
Outstanding Retail/Showroom/Event Venue 877 W Main St., Smithville, OH 44677
t 0WFS 4' PG BUUSBDUJWF TIPXSPPN TQBDF PO UXP MFWFMT -PXFS MFWFM DBSQFUFE 6QQFS MFWFM IBSEXPPE t 4' PG XBSFIPVTF TIPQ TQBDF POF TUPSZ XJUI PWFSIFBE EPPS
t #VJMU JO XJUI FYQPTFE SVTUJD CBSO CFBNT BT QBSU PG UIF TUSVDUVSF t "EKBDFOU QPQVMBS SFTUBVSBOU BOE SFUBJM TIPQT ESBX USBĂłD t -PDBUFE JO DBNQVT MJLF TFUUJOH PO TUBUF SPVUF BU FEHF PG B TNBMM WJMMBHF
Ronald Midcap II - 216.839.2019 Larry T. Shirer - 330.201.1116 HannaChartwell.com
EXCLUSIVE SPONSOR of the
PLAYHOUSE SQUARE
SUMMER MOVIE SERIES AT U.S. BANK PLAZA
JULY to SEPTEMBER beginning at dusk For the movie list and event information, go to
elkandelk.com/playhousesquare
6105 Parkland Boulevard, MayďŹ eld Heights, OH 44124 1.800.ELK.OHIO | elkandelk.com
20140707-NEWS--12-NAT-CCI-CL_--
12
7/2/2014
1:25 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JULY 7 - 13, 2014
Preferred Compounding to double capacity in Mexico 66,000-square-foot plant will add speed mixer and in-line gear pump strainer By MIKE McNULTY Rubber & Plastics News
A wholly owned subsidiary of Barberton-based Preferred Compounding Corp. plans to expand its capabilities and double capacity at the company’s plant in central Mexico by the first quarter of 2015. Preferred Compounding de Mexico said it will add a Farrel F-270 Tangential variable speed mixer and an in-line gear pump strainer at the San Luis Potosi, Mexico, facility. Financial details were not disclosed. Preferred will install the gear pump strainer first, and installation of the mixer should be complete by early 2015, according to Scott Lieberman, general manager of Preferred Compounding de Lieberman Mexico. It’s aiming to complete the project in the first quarter of 2015. Once in place, the second F-270 mixer, with an average batch load of about 500 pounds, will double the company’s capacity of 25 million gross pounds per year. Lieberman said the current 66,000-square-foot plant can accommodate the additional mixer without physical expansion.
CONTRIBUTED PHOTO
Preferred Compounding de Mexico’s 66,000-square-foot plan can accomodate its new purchases without physical expansion. Preferred’s work force at the Mexican factory has been growing steadily during the last year. It has 45 employees, up from 23 in January 2013, which for the time being is large enough to handle the new machinery and extra capacity, a spokesman said. Its expansion announcement came 16 months after the company commissioned its first F-270 Farrel mixer at the San Luis Potosi plant and two years after the compounder purchased the Mexican operation from Iacp Jevsa of Barcelona, Spain, in July 2012. The new F-270 mixer will have the same rotor configurations and controls as the current mixer at the
San Louis Potosi facility and another one the firm operates at its Huntington, Tenn., plant, Lieberman said. “We expected to add another compounding line sometime in the future, but our rapid growth in Mexico is enabling us to move forward now,” he said. He said the capacity expansion “provides additional throughput, local redundancy and enhanced capabilities to our customers in Mexico.” Its latest additions and expansion should take care of the company’s near- and mid-term needs, Lieberman said. “The long term is harder to pre-
However, Preferred Compounding de Mexico provides custom compounds and services primarily to the Mexican operations of U.S., Asian and European parts manufacturers. Lieberman said all of Preferred’s plants are doing well. “We continue to grow at all sites,” he said, and the company has received positive response from customers to the continuing improvements in quality and service at its facilities. ■
“We continue to grow at all sites.” – Scott Lieberman general manager, Preferred Compounding de Mexico dict, but we will always be willing to invest to keep ahead of the growth of our business,” he said. “All of this is for compounds delivered in Mexico.” It does not ship to the United States from Mexico. Preferred Compounding supplies U.S. companies from its Huntington; Tallapoosa, Ga.; Fruithurst, Ala.; and Barberton facilities.
McNulty is a senior reporter at Rubber & Plastics News, a sister publication of Crain’s Cleveland Business.
Outdated lighting is
costing you a fortune.
T H E AR T O F P R OBL EM S OL VI NG
Say Farewell To Maintenance
Providing creative legal solutions for tax & wealth matters
Contact Us To Schedule Your Facility Audit Consultation
440.829.4299 davidgaking@midwestlightinggroup.com
f in
The Tax & Wealth Attorneys of
Energy Savings Up To 70% Maintenance Free Benefits FirstEnergy Rebates Sustainable Solutions Complete Turnkey Process
Estate and Wealth Management Planning | Business and Individual Taxation | Counseling and Succession Planning for Closely Owned Businesses | Asset Protection Planning | Retirement Plan
Jennifer R. Hallos, Robert S. Horbaly, James A. Mackey, Lacie L. O’Daire, Jennifer A. Savage, Scott E. Swartz, Gary A. Zwick
Implementation and Compliance | Probate and Trust Administration | IRS and Tax Court Controversies Cleveland | 216.781.1212 | walterhav.com
MIDWEST LIGHTING GROUP Cleveland’s Premier Lighting Solution www.midwestlightinggroup.com
20140707-NEWS--13-NAT-CCI-CL_--
7/2/2014
2:46 PM
Page 1
JULY 7 - 13, 2014
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
13
GOING PLACES JOB CHANGES CONSTRUCTION JMAX ENTERPRISES: Joseph Cahill to director of operations.
EDUCATION CLEVELAND STATE UNIVERSITY: Ernest Yarbrough to vice president, student affairs; Clare Rahm to associate vice president, student affairs.
Sosnowski
Francis
Oshins
Riczko
We Solve Problems. Effectively. Efficiently. Consistently.
ENGINEERING AUSTIN CO.: John C. Sosnowski to director of preconstruction services; Steven J. Francis to manager of architecture and engineering; David K. Oshins to senior project manager; Charles H. Albertone to manager of continuous improvement.
McGann
Hudak
Latkovich
Barragate
440-571-7777
FINANCIAL SERVICE
We are a different kind of business law firm. Learn about us at www.gertsburglaw.com, or call us to discuss your legal matter.
BOENNING & SCATTERGOOD INC.: Rick Jones to senior vice president, fixed income sales. TRINITY PENSION CONSULTANTS: Lucas Benson to defined benefit compliance specialist.
HEALTH CARE PRIORITY HOME HEALTH CARE INC.: Theressa Forstein to client service representative.
INSURANCE WESTFIELD INSURANCE: Elizabeth Riczko to group underwriting leader.
LEGAL BROUSE MCDOWELL: Mark E. Krohn to partner. CALFEE, HALTER & GRISWOLD LLP: Joshua A. Friedman to associate. DINN, HOCHMAN & POTTER LLC: Aaron M. Minc to of counsel. ROETZEL & ANDRESS LPA: Christopher J. Bondra to associate.
NONPROFIT GREATER CLEVELAND PARTNERSHIP: Marty McGann to senior vice president, government advocacy. VOCATIONAL GUIDANCE SERVICES: James C. Hudak to senior vice president, operations; Michael T. Latkovich to senior vice president, rehabilitation services;
36 South Fr anklin Street Chagrin Falls
Lamb
Ross
Susie Barragate to vice president, human resources and Lorain County Rehabilitation Services; Laura Lamb to vice president, vocational preparation; Adam R. Ross to vice president, development.
REAL ESTATE TRANSACTION REALTY: Najah Zaaeed, Ray Porrello and Laura Lewis to sales associates.
SPORTS CLEVELAND CAVALIERS: Dionna Widder to vice president, ticket sales and services.
BOARDS CLEVELAND METROPOLITAN BAR ASSOCIATION: Bruce G. Hearey (Ogletree, Deakins, Nash, Smoak & Stewart P.C.) to president; Anne Owings Ford to president-elect; Richard D. Manoloff, Sonali B. Wilson and Darrell A. Clay to vice presidents; Joseph N. Gross to treasurer; David R. Watson to secretary.
Standley
Roller
Steven D. Standley (University Hospitals of Cleveland) received the 2014 Homer C. Wadsworth Award. CLEVELAND METROPOLITAN BAR ASSOCIATION: Jacqueline Johnson (Office of the Federal Public Defender) and Hugh Stanley (Tucker Ellis) received the Honorable William K. Thomas Professionalism Award; Pamela Daiker-Middaugh (Cleveland-Marshall College of Law) received the Justice for All Volunteer of the Year Award; Elizabeth Niehaus and Sergeant John Smiddy (Cleveland Metropolitan Housing Authority K9 Unit) received the Liberty Bell Award; Joseph Frolik received the Community Partner Award; Jonathan Leiken (Diebold Inc.) received the President’s Award. INTERNATIONAL SOCIETY OF BARRISTERS: Jan L. Roller (Davis and Young) to Fellow. OHIO STATE UNIVERSITY: Barrie G. Galvin (Galvin Therapy Center) received the Distinguished Alumnus Award for Outstanding Lifetime Achievement from the Division of Occupational Therapy.
Do you know your lender? Cooperative Business Services and Community First Credit Union offer you ORFDO ÀQDQFLQJ \RX FDQ WUXVW
Jonathan Mokri ‡ ‡
440.526.8700 jmokri@cbscuso.com ‡ www.cbscuso.com ‡
Aggressive Financing up to $10,000,000! Commercial Real Estate Financing (Owner Occupied or Investment)
3XUFKDVH RU 5HĂ€QDQFH PDFKLQHU\ equipment or other capital assets SBA 7(a) and SBA 504 loans (10% down)
Providing Commercial Loan Financing in Partnership with Area Credit Unions SM
AWARDS CLEVELAND FOUNDATION:
Send information for Going Places to dhillyer@crain.com.
New theater features eclectic lineup The lights have gone on at The Nightlight Cinema, a new theater in downtown Akron that’s focusing on independent films by modern filmmakers and retro classics restored for the big screen. The one-screen, 50-seat theater is at 30 N. High St. in a bustling area of downtown Akron near the Akron Art Museum, Rubber City Clothing and a growing number of bars and restaurants. The Nightlight opened to the public last Tuesday, July 1, with a film from a favorite son: Akron native Jim Jarmusch’s “Only Lovers Left Alive,� a romantic vampire drama set in Detroit and Tangier and featuring an indie film dream cast of Tom Hiddleston, Tilda Swinton and Mia Wasikowska. Other films running this month offer similarly intriguing choices: A remastered version of the Beatles’ “A Hard Day’s Night;� “Night Moves,� a drama from director Kel-
ly Reichardt that stars Jesse Eisenberg, Dakota Fanning and Peter Sarsgaard as activists who plot to blow up a dam; “Snowpiercer,� the first English-language film from Korean director Bong Joon-ho, a postapocalyptic story about the last surviving humans on a perpetually traveling train; and “Life Itself,� a documentary about late film critic Roger Ebert. Nonprofit organization Akron Film+Pixel, which has organized the Akron Film+Pixel Festival and more than 100 other film-related events in the Akron area, operates The Nightlight. Steve Felix, director of Akron Film+Pixel, said the organization long has wanted to create a space in Akron to show the types of films that typically play in Northeast Ohio only at Cleveland venues such as the Cedar Lee Theatre and Cinematheque. He said the “strong re-
sponse� to specialty films shown at the Akron Art Museum and other venues convinced the organization there was a market for the types of fare being scheduled at The Nightlight. In early 2013, Felix said, the organization began to look seriously at opening a theater. After scouting a few locations, it settled on a 2,100square-foot building on High Street. “We think it’s a great location to draw people from around the area,� he said. The theater was made possible by a $120,000 grant from the John S. and James L. Knight Foundation, as well as funding from the GAR Foundation, the Margaret Clark Morgan Foundation and the Akron-Summit Convention and Visitors Bureau. A $12,000 Kickstarter campaign to make the theater a reality did considerably better than the goal, raising $21,060. — Scott Suttell
It’s All About Relationships
MONEY MARKET SAVINGS SPECIAL 0.75% Annual Percentage Yield Introductory Rate Minimum Balance: $10,000 (Opening Deposit)
Guaranteed for 6 Months Contact One of Our Branches Today! Fairlawn 3009 Smith Rd. Suite 100 Fairlawn, OH 44333 330-666-7979
Columbus 7000 N. High St. Worthington, OH 43085 614-334-7979
After 6 Months-Rates are subject to change without notice; Introductory Rate applies to New Deposits Only ** Penalty for account closure within 90 days of account opening may apply ** Monthly service fees may apply for balances less than $5,000 which may reduce earnings
MEMBER FDIC
20140707-NEWS--14-NAT-CCI-CL_--
7/2/2014
1:26 PM
Page 1
We’re proud to help drive growth for Cleveland businesses. baml.com/growth
The power of global connections™ “Bank of America Merrill Lynch” is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and members of SIPC, and, in other jurisdictions, by locally registered entities. Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured • May Lose Value • Are Not Bank Guaranteed. THE POWER OF GLOBAL CONNECTIONS is a trademark of Bank of America Corporation, registered in the U.S. Patent and Trademark Office. ©2014 Bank of America Corporation 06-14-0205
20140707-NEWS--15-NAT-CCI-CL_--
7/2/2014
1:45 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
JULY 7 - 13, 2014
15
SUCCESSION PLANNING Plotting the next step and beyond Preparing to exit a business is not easy, but thorough consideration is essential to protect value, continuity By KATHY AMES CARR clbfreelancer@crain.com
T
he Great Recession’s economic storm submerged many business owners’ plans to retire and sail off into the sunset. Thanks to a rebounding economy, those individuals and future retirees are encountering a brighter selling environment and are mobilizing plans to make their grand exit. Unfortunately, most of those privately held business owners haven’t properly articulated their succession strategies. “A lot of people put off business succession planning until the last minute,” said Bob Nemeth, principal of Independencebased Apple Growth Partners. “I’ve seen valuations really go down because a plan wasn’t in place. Ideally, they should start the process about five years before they retire.” According to the Cleveland-based Exit Planning Institute, two-thirds of privately held businesses are not familiar with their exit options, and 83% have no written transition plan. Perhaps those figures will ebb, as succession planners say they expect the current flurry of activity in business succession planning to continue amid the expected exodus of baby boomers leaving the work force or selling their companies. According to the Pew Research Center, 10,000 baby boomers will reach age 65 each day for the next 19 years. “What’s happening is that all these baby boomers owning businesses have to figure out what to do,” Nemeth said. The current economy presents an ideal environment in which to transition leadership, as buyers flush with cash are courting businesses with rebounding valuations and healthy earnings, wealth planners say. “Now that the economy has improved, the baby boomers are ready to sell,” Nemeth said.
First steps Sellers typically opt for a family member succession, employee takeover or an outright sale to an investor. Before outlining a strategy can even begin, the business owner needs to articulate his or her personal objectives and the goals of the business and then work with succession-focused professionals — such as attorneys, insurance agents and financial planners — to structure the plan. “We help them spell out current facts, including cash flow, valuing business and where this succession strategy would put them financially now, five years down the road, or even 20 years down the road,” said Zachary Abrams, wealth management manager for Shaker Heights-based Capital Advisors. Even though business owners may feel like a son or daughter is the logical beneficiary, wealth planners say that a proper evaluation may yield a different outcome. “It can be uncomfortable, but an assessment of the business may reveal that a son or daughter is not the next logical leader,” said Abrams, who noted that lack of communication with children befalls many a business owner up until crunch time. Ambiguity surrounding an owner’s next steps also has consequences for the leaders on deck. “I’m working with a lot of next-generation business clients, and a lot of the challenges they are facing is that they’re not sure what their future role will be because mom and dad haven’t communicated with them,” Abrams said. “I had a friend who left his family business because he couldn’t get that conversation started, and the risk was too great surrounding his future.”
The price of selling Once owners determine their succession strategy, they next should seek an independent valuation of their company. About 56% of privately held business owners feel they have a good idea what their business is worth, yet only 18% have had a formal valuation in the last two years, according to the Exit Planning Institute, an international membership organization of exit planning professionals. “The main purpose of succession planning is not just to give away the business, but to increase its value,” said Nemeth of Apple Growth Partners. “If you want to sell it in five years, you’ll want its value to rise.” See SUCCESSION Page 17
MCKINLEY WILEY
CASE STUDY NO. 1:
EMPLOYEE PURCHASE argaret Judd first learned of the possibility that she could buy Executive Arrangements Inc. from her boss about five years before the change in ownership actually happened. She was 35 years old when then-owner Flo Pollack was thinking of relinquishing herself from the job candidate attraction firm she had grown since co-founding it in 1978. “I had been working there for almost 10 years in sales, and had never thought about being a business owner when (Pollack) approached me,” Judd said. “But I knew the business inside and out, so it made sense.” A formal succession plan once Judd reached age 40 had yet to be announced, so Judd, who consid-
M
ered forming her own competing firm, carefully reiterated interest in buying the business that helps entice job candidates on behalf of Cleveland companies and hospitals. “I felt that buying an existing business in a niche market that has a gold reputation in town made the most sense,” said Judd, who now is the firm’s president. “That’s when the serious negotiations began.” Pollack enlisted a business adviser, and Judd recruited a mergers and acquisitions attorney to help with the transition, which took nearly one year. “My attorney helped me do the due diligence and determine a reasonable purchase price based on the See PURCHASE Page 16
20140707-NEWS--16-NAT-CCI-CL_--
16
7/2/2014
2:01 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JULY 7 - 13, 2014
Purchase Tax & Business Advice When You Need It! Discover a wealth of tax and business knowledge online - from the experts at Meaden & Moore.
Access Tax and Business Knowledge at:
meadenmoore.com & click “blog” -orscan the code
Local Touch, Global Reach To speak to a professional, call 216.241.3272
continued from PAGE 15
company’s value,” Judd said. “It took about four or five meetings to come up with a number.” The final purchase price was higher than what she offered, and less than what Pollack expected to receive, or the mark of a “winwin” compromise, Judd said. Judd recalls her attorney’s advice before that closing meeting. “She told me she would kick me under the table if I started to speak because these meetings can get emotional,” Judd said. “She must’ve kicked me 17 times.” Despite the personal attachment, Pollack said Judd was “absolutely the right fit” for the business, and continues to extol her work since the acquisition. What Pollack learned from the experience, however, was that she should’ve begun the process more than a year in advance. “There’s just so much involved; it really is a process and a lot to think about,” Pollack said. Since that change in ownership in 2004, Judd relocated the business from Beachwood into a smaller suite in Cleveland Heights, which enables her 26 employees to work remotely and puts the business closer to its two main clients, University Hospitals and the Cleveland Clinic. “We shrunk our overhead by 25% pretty quickly,” Judd said. — Kathy Ames Carr
Protecting Your Company.
Preserving Your Vision.
Succession planning, life insurance and business solutions.
www.oswaldcompanies.com Jeffrey Wasserman | 216.367.5990 | jwasserman@oswaldcompanies.com
CASE STUDY NO. 2:
COMPANY SALE ason Kucharski (pictured) wasn’t actively looking to build his business beyond his physical therapy practice, Total Joint Rehab in North Ridgeville, until he learned in fall 2013 of an opportunity to acquire a similar practice on Cleveland’s East Side. Michael Lepp, a client of their mutual billing company, was planning to shutter his long-standing eponymous physical therapy business in Mayfield Village and retire to North Carolina. “Mike and I met a couple times, and we determined we had similar goals about how we like to treat patients,” Kucharski said. “Once I performed my due diligence and determined the deal was viable, we hammered out the details on a one-page document. “We could’ve sealed the deal with a handshake and a check,” Kucharski said. But legal intricacies delayed the sale, which meant Kucharski and Lepp had to reduce their transition period from five months to six weeks. “Once attorneys and the bank became involved, we had this ironclad 33-page agreement,” Kucharski said. “We were shooting for the sale to be complete in the beginning of the year, but it didn’t close until March 31. My schedule was pretty crunched during those couple weeks of transition.” Here’s one lesson learned:
J
When Kucharski purchased the business — now called Mayfield Physical Therapy — he purchased its tax ID and national identification provider numbers, which help third-party payers and insurance companies identify the business. “Looking back, I should’ve applied for new numbers and it would’ve been a much quicker process,” he said. “Private insurance companies were fumbling all over trying to figure (the transition) out.” With the ownership change complete, Kucharski said he is retrofitting Mayfield Physical Therapy’s space to a more open-air treatment environment and adding exercise equipment, as well as managing both practices’ growth. “I’m turning my focus to growing the businesses, rather than just running them,” he said. Lepp said he couldn’t be more pleased with the sale’s timing and new leadership in place, though, in retrospect, he said he should’ve allowed more lead time before initiating his departure. “There are things you don’t think about, like the different ways you can buy a company. In our case, Jason purchased my business’s stock,” Lepp said. “In the end, it all worked out. I know the business I had for 32 years is carrying on with someone who’s taking good care of my former patients.” — Kathy Ames Carr
20140707-NEWS--17-NAT-CCI-CL_--
7/2/2014
2:07 PM
Page 1
JULY 7 - 13, 2014
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
CASE STUDY NO. 3:
ate Bilski started working full time for her father’s financial aid analysis business when she graduated in 1988 from Baldwin-Wallace College. She and her father, Maclin Richardson, were the only two employees, aside from a parttimer. Her brother, Matt Richardson, later took on a leading role in handling new business and sales as the company grew. When Bilski was 29 years old, the siblings decided it was time to step up the fast-growing operation. “I was young and hungry, and eager to continue to grow the company. My father was on his way out, and I was on my way up,” said Bilski, president and majority owner of Westlakebased Private School Aid Service, which helps both parents and universities determine a student’s financial aid eligibility. The family employees attended a seminar conducted by Cohen & Co., a Cleveland-based
K
KEEPING IT IN THE FAMILY
accounting firm, on how to execute the sale of the family business and generate a short-term income stream for Maclin’s retirement. “We had a graduated stepdown plan for five years, in which he would stay on in a consulting role,” Bilski said. “But my dad was wintering in Florida a lot, and not working as much as we’d thought.” The step-down plan materialized into a 10-year transition that involved slowly reducing Maclin’s annual salary, so that he wouldn’t experience such a drastic reduction in income. The business issued to him its last payment in 2005, the year during which Maclin passed away. Meanwhile, the second-generation family business has grown exponentially since initial succession talks commenced. Private School Aid Service now employs 100 and works with more than 3,000 educational institutions to determine which applicants have the
greatest need for financial aid. “We really dove into growing sales with a small budget,” Bilski said. “My real focus when I took over was the organizational structure.” She established a more efficient way of managing the paperwork by lumping employees into specific departments, like data entry, customer service or document coding and reviewing. The company also is developing a tuition collection service. “We were able to be more efficient so we could closely focus on and grow our customer base,” she said. Matt and Bilski aren’t quite ready for the next-gen succession plan, though Bilski sees potential in her middle child, an incoming sophomore at Miami University, as a future company leader. “He hasn’t expressed interest at this point, but I didn’t express interest either in taking over until I graduated college,” she said. — Kathy Ames Carr
Succession continued from PAGE 15
For some, cash from the sale of a business may be the departing owner’s main source of retirement income, or he or she may want to distribute the proceeds in a child’s trust account. For others, their primary motivation for maximizing the company’s value is to ensure its longevity. “They put their heart, soul and sweat into the business, and want to see the next owner carry on that legacy,” said J.P. English, wealth planner and vice president of Cleveland-based Key Private Bank. Don Kuehn, former owner of Broadview Heights-based Warwick Communications, recalls weighing the decision of accepting an outside investor’s offer versus the chance to sell his second-generation business to existing employees who didn’t have cash up front. “The more I talked to the outside company, the more I realized I wanted my business to be run by my employees, who I knew would take care of my customers,” he said. Kuehn’s decision has apparently paid off, as the 36-employee firm that provides communications services to businesses has increased sales about 24%, despite an ownership transition that occurred during the depths of the recession. “We always say that writing a check for a company is one thing, but being responsible for 30-some families is another,” said Heidi Murphy, a principal and vice president of finance. “We’re really vested in this business.” Other succession plan building blocks involve taxes, though owners shouldn’t allow those costs to steer their strategies, said Neil Waxman, managing director of Capital Advisors. Virtually everyone is impacted by the income tax, although the amount varies greatly depending on whether the sale is structured as an asset sale (where the assets of the company are sold to the buyer) or a stock sale (where stock in the com-
pany is sold), said English, of Key Private Bank. Asset sales typically produce much more ordinary income, while stock sales typically produce lowertaxed capital gains. Some family succession plans opt for an installment sale to spread the sale proceeds over a number of years, and therefore reduce the tax burden. “But you have to rely on that note being paid over time,” English said. “That usually means the seller stays in the business in some capacity to monitor the company’s performance and cash flow.”
“The two biggest mistakes a business owner makes in succession planning is moving too quickly and waiting too long.” – Neil Waxman managing director, Capital Advisors Even if retirement is a distant target, succession specialists suggest that the operator have an outside advisory board, with a leader that could step in if necessary. For added security, the business should have a buy-sell agreement, which dictates how ownership would be transferred. A life insurance policy benefitting a surviving business partner should have a value making it possible to buy out a co-owner, should an unexpected illness or death occur. Otherwise, shares passed to family members who have voting privileges but aren’t a part of the business creates turmoil and risk. These landmines can be avoided if a plan is in place, wealth planners emphasize. “The two biggest mistakes a business owner makes in succession planning is moving too quickly and waiting too long,” Waxman said. “Succession planning is not a project, it’s a process.”
$
,
YOUR WEALTH IS ABOUT MORE THAN DOLLARS AND CENTS. IT’S ALSO ABOUT KEEPING THE FAMILY BUSINESS IN THE FAMILY. That’s why Fifth Third Private Bank Advisors want to know about more than just your assets. Asking about your family, passions and the legacy you want to create helps us design a personalized plan specifically tailored to accomplish your goals. Put our more than 100 years of curiosity to work for you. And the family business. Learn more at 53.com/legacy.
Deposit and credit products provided by Fifth Third Bank. Member FDIC.
Equal Housing Lender.
Fifth Third Private Bank is a division of Fifth Third Bank offering banking, investment and insurance products and services. Fifth Third Bancorp provides access to investments and investment services through various subsidiaries, including Fifth Third Securities. Fifth Third Securities is the trade name used by Fifth Third Securities, Inc., member FINRA/SIPC, a registered broker-dealer and registered investment advisor. Registration does not imply a certain level of skill or training. Investments, investment services and insurance: Are Not FDIC Insured - Offer No Bank Guarantee - May Lose Value Are Not Insured By Any Federal Government Agency - Are Not A Deposit Insurance products made available through Fifth Third Insurance Agency, Inc. © Fifth Third Bank 2014.
17
20140707-NEWS--18-NAT-CCI-CL_--
18
7/2/2014
2:32 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JULY 7 - 13, 2014
Not on track? Advice for playing catch-up F
or most entrepreneurs, the primary focus throughout the business lifecycle is on the dayto-day operations — ensuring you, your team and your company continues to thrive. Oftentimes, the thought of selling your business is far from your mind.
MARKTEPPER
pare the business and make it ironclad for a proper sale. Before going on the market, put all financials in order, the proper team in place and make sure the business’s offerings are appropriately valued to yield the highest profit. Though a smart long-term strategy, it is all too easy to procrastinate on the exit planning process when focusing on running the business. If this sounds familiar, there are a few strategies to help jumpstart the sales process.
Here are five tips for playing exit planning catch-up:
ADVISER In the perfect scenario, business owners will start planning their exit from the first day they open. Assembling an exit plan early on is ideal because it allows ample time to pre-
■ Find a certified financial planning professional or CPA with exit experience The sales process can be long and arduous and it is important that the professional advisers you bring in for counsel are intimately
involved in the process. Your CFP and CPA will need to work in conjunction with one another, but will also contribute individually to the end game. Selecting professionals who have overseen exits before will be invaluable when making tough and time-sensitive decisions. ■ Get an open-market valuation Starting later in the game means there is less time to strategically boost your company’s value over the short-term. Securing a proper valuation gives you an idea of what your company and all of its corresponding assets are worth in the market — and to potential buyers. This will help you in vetting offers and understanding whether now is the best time to sell. ■ Hire a chief operating officer Hiring additional C-suite person-
Do you know a General or In-House Counsel professional who is
raising the bar?
nel will automatically increase your company’s value in the eyes of a potential buyer. Likely a buyer will incorporate you for a fixed period of time before taking over entirely, and acquirers need to know that you are not the only person with the “secret sauce.” Adding a COO or other high-level executive shows others are pivotal to the day-to-day operations and the business can be successful without you on board. If you’re working on an abbreviated timeline, the best bet is to hire a seasoned COO who has experience in overseeing companies during the acquisition stage. ■ Perform a pre-sale financial audit As soon as you decide to sell or receive an offer to purchase your company, you must conduct an audit on your business’s finances. Any acquirer is going to want — and be entitled to — a thorough review of your finances, so taking this step preemptively will help avoid any surprises down the line. Knowing your financial health and status helps reduce risk.
■ Know what you want to do postsale When the decision to sell is last minute, it is likely you have not given much thought to what you want your life to look like after you sell the business.
S GENERAL AND IN-HOUSE COUNSEL
SEMINAR AWARDS &
N O M I N AT E TO DAY CrainsCleveland.com/GeneralCounsel OR CONTACT KIM HILL AT KEHILL@CRAIN.COM
D E AD LI N E - AU G U S T 2 4 vip sponsor
Tepper, a certified financial planner, is president and founder of Strategic Wealth Partners in Independence, a comprehensive wealth management firm that specializes in planning for small business owners. Tepper is the author of the book “Walk Away Wealthy: The Entrepreneur’s ExitPlanning Playbook,” to be published July 2014.
Strategy should span all levels of a business By LEE CHILCOTE clbfreelancer@crain.com
premier sponsor
Now with a potential sale on the table, it is important to take a step back and think carefully about how you want to spend your time. Removing yourself from the business’s daily operations will be a different experience and may take some adjustment as you get used to life after sale. There are many things you can do — charitable work, starting a new business, spending more time with family. The review process must also extend to your financial life after sale, too. Will you live off your profits? If so, the purchase price is even more important than before. Be sure the exit planning avenue you take meets your short- and long-term goals. Exit planning doesn’t have to be a painful process — even if you’re starting late. The most important thing to do is get the process started. Taking these initial steps can set you up for a smoother exit planning process and more lucrative sale. ■
in partnership with
mall business owners and their employees wear a lot of hats, and there’s often not a lot of time to sit down and map out a succession plan for individuals in key roles. Yet, to be successful, small business experts and company owners say that it’s necessary to look past the CEO and engage in succession planning at all levels of the company. “A lot of times a founder or entrepreneur may be carrying the business on their backs, and through sheer will they make it all work,” says Jeanne Coughlin of Rocky River-based Coughlin Group, who helps small businesses develop succession plans. “When you get into a succession situation, you need to have the systems in place to make it sustainable.” This is especially important in light of demographic changes. Baby boomers are retiring at a rapid rate, and it can be hard to find enough skilled younger workers to replace them. In order to be ready for the turnover of key employees who carry a lot of institutional knowledge, businesses must constantly cultivate leadership. “It’s important because it’s at our doorstep,” says Brian Broadbent, president and CEO of BVU: The Center for Nonprofit Excellence, who has helped many nonprofits create succession plans. “Businesses and organizations really need to focus on leadership development,
and be thoughtful about how people are going to step up.” The tools exist to help small businesses create succession plans at all levels. Through identifying key roles, cross-training employees, fostering leadership development opportunities and being transparent and communicative about the process, they can ensure a smooth transition when succession happens.
Defining key roles Larry Fischer founded Clevelandbased Perspectus Architecture in part to get away from the succession problems that he’d encountered at other firms. Too many architecture firms fail to thrive after their founding partners leave. Years later, he’s now developed a body of expertise in defining critical roles and helping young talent in the firm to step into those roles. Fischer and partner Bill Ayars not only chose key leaders carefully, but also hired people at different levels of their careers. Staff members were offered mentoring opportunities and the chance to learn different aspects of the firm’s business through cross-training. “If you look at who we’ve brought into equity positions and future leadership roles, we’ve staggered them by about 15 years,” Fischer says. “That way, as one person leaves, there’s a staggering, and everybody’s not leaving at the same time.” See LEVELS Page 19
20140707-NEWS--19-NAT-CCI-CL_--
7/2/2014
2:34 PM
Page 1
JULY 7 - 13, 2014
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
19
Don’t overlook a plan for life after the exit By KIMBERLY BONVISSUTO clbfreelancer@crain.com
T
here is a lot of thought and planning that goes into creating and growing a successful business. That same attention to detail should also go into planning for the day you turn over the keys to someone else. Janice Cackowski, an associate wealth adviser with Strategic Wealth Partners in Independence and president-elect of the Financial Planning Association of Northeast Ohio, said some people are so focused on transferring their business that when it comes time to walk away, they suddenly find they have a lot of time and energy and nothing to channel it into. Mario Giganti, principal and senior adviser with Cornerstone Capital Advisors in Uniontown, said most business owners with whom he has dealt are thinking ahead one to three years. His starting point for any kind of succession plan is identifying what it will take to allow someone to forgo that paycheck and still live the lifestyle they desire. “There is a process we go
through to help them determine whether it’s feasible and whether they should or should not walk away,” Giganti said. “It depends on why they are leaving — because they are just done and want to invest no more time, they are tired of the rat race or is this a succession plan, that they are getting to a certain age they know it’s time to sell the business and move on.” Giganti also said he works personal and business elements into any succession conversation. On the personal side, he asks someone to visualize what life will be like not going into the business every day. If a significant other is involved, he suggests the two have a conversation about life after the business. “If a spouse is involved where the husband has been running the business for 35 to 40 years and now all of a sudden they will be home together 24 hours a day, that can cause a lot of stress on a personal relationship,” Giganti said.
‘What do I do now?’ From a business perspective, he said owners need to build a support team during the transition. Cus-
Levels: Build leadership continued from PAGE 18
The firm deliberately paired younger architects with mentors and identified individuals with a desire to move up and offered them a range of experiences. Perspectus also recently merged with HFP/Ambuske Architects, which had previously been located in Beachwood, and designed open offices that promote a culture of collaboration. Broadbent says firms should not only cross-train workers, but also have key employees make a list of their top job functions. That way, managers can analyze weaknesses and identify interim and long-term succession possibilities if and when an employee leaves. Companies and organizations should communicate their succession plans in writing.
Cultivating leadership Since small businesses tend to have flat organizational structures, cultivating leadership is essential. Succession planning is often less about defining key roles than creating a sense of shared purpose, argues Sarah Wilson Jones, owner of Phoenix Coffee, which has three Cleveland-area locations and a fourth store in the works. “Shared purpose makes it easier to be in alignment with each other’s activities,” she says. “It removes bottlenecks where there’s a ton of stuff going through one person.” Chad Schreibman of Alson Jewelers has worked in the fourth-generation Northeast Ohio family business since he was a kid. He didn’t take it for granted, and was grateful when his parents allowed him and his brother David to run the company. There were sometimes differences of opinion, but they were always handled privately. He tries to take the same approach when it comes to managing employ-
ees, allowing them to make their own decisions and take initiative when it comes to the customers. “Giving them autonomy makes them part of the family and management team from the get-go,” he says. “If you have that belief and philosophy from the top, it trickles down.”
“It’s about putting the systems and process in place to sustain profitability.”
tomers and clients, he said, need to identify with someone besides the owner so they are not lost when the owner leaves. T.J. McCallum, an associate professor of psychology at Case Western Reserve University, said entering a new stage in life can be scary, so it is helpful to have a sense of what comes next. “In my experience, some people are ready to relinquish the reins and are more mentally prepared for a different — often slower — pace,” McCallum said. “Others must find stimulating activities that essentially take the place of the activities they engaged in while running the business.” Cackowski said every business owner is different, but Type A personalities have an easier time walking away from their business because they already know what they will do tomorrow. Someone with a more laid-back personality, she said, typically doesn’t have the drive to go out and look for something else. “Type A’s knew 20 years before they sold the business what they would be doing,” she said. Paul E. Levy, an industrial organizational psychologist and chairman
All the time in the world Extra time is a big deal for business owners, Cackowski said, adding that a major trip planned immediately after walking away may provide that transition piece needed to move forward with the
next phase of life. “It’s very difficult for a business owner to get up and say I’m not going to work and my routine,” she said. “Create a new routine, whether you volunteer, work out or meet friends at the coffee shop.” For some, that new routine involves transitioning to a second career. Lori K. Long, a faculty fellow in the Center for Innovation and Growth at Baldwin Wallace University, said one of the main reasons people change careers is that they make their first career decisions at a young age, when they don’t know much about themselves or the world. “Some start businesses without a lot of thought about its life cycle or what it will turn out to be,” Long said. “Some decide they don’t want to work for themselves; they want the security of working for someone else. Or they want to reduce stress and the risks of having their own business.” Still others, she said are motivated and excited about the challenge of moving on to something else. “Once they’ve seen their business be a success, it motivates someone to move onto something different,” Long said. ■
VITAL SIGNS: CRAIN’S HEALTH CARE FORUM Health Care Savings at Every Step
HEALTH CARE FORUM
Thursday, Sept. 18 7AM - 1PM
Cleveland Convention Center “Checking the Pulse: A Conversation with NEO’s Health Care Leaders” - Akram Boutros, MD, President & CEO, The MetroHealth System - Delos M. “Toby” Cosgrove, MD, President & CEO, Cleveland Clinic - Terrence P. Kessler, President & CEO, The Sisters of Charity Health System - Thomas “Tim” Stover, MD, President & CEO, Akron General Health System - Thomas F. Zenty III, CEO, University Hospitals
– Jeanne Coughlin, Coughlin Group While employees may be reluctant to engage in succession planning because they’re happy where they are, Broadbent says it’s an essential part of fostering leadership. “You never know what will happen and you have to be ready,” he maintains. Coughlin says the most frequent complaint she hears from business owners is that they have trouble finding talent. Succession planning can alleviate this pain point, she says. There are plenty of challenges, of course, including the fact that most small businesses do not have human resources departments or dedicated staff to address these issues. “It’s about putting the systems and processes in place to sustain profitability,” she says. Fischer says to allow for at least a decade to plan for a succession of older leadership. Succession planning, like building a business, is a gradual process. He also suggests spending a great deal of time with individuals you’re recruiting from outside the firm, because while their skills and experience may be a fit, they may not fit the culture. “Make sure you really understand the person, because it is a close family,” he says. ■
of the Department of Psychology at the University of Akron, said people need to understand why their job, career or occupation is so important to them. While the financial impact is important, careers also offer a time structure to the day, the opportunity to use and develop new skills, social interactions, a sense of identity and a level of purpose. “You talk to folks who are retired and looking forward to coming and going and doing what they want,” Levy said. “But once they get into retirement they’ve lost that structure that mattered to them. For some of those folks, that’s a problem. “When folks are stepping out of a situation where they’ve been running a company, making decisions, typically getting those kinds of opportunities and benefits, there is potentially a struggle with what do I do now?”
Boutros
Cosgrove
Kessler
Stover
Zenty
“Health Care Address: One Year Later” J.B. Silvers, Ph.D. - John R. Mannix Medical Mutual of Ohio Professor of Health Care Finance - Professor of Epidemiology & Biostatistics – School of Medicine CWRU, Weatherhead School of Management
Silvers
Tickets & More Info:
CrainsCleveland.com/HCForum Or contact Kim Hill at 216-771-5182 or kehill@crain.com
PREMIER SPONSOR
MAJOR SPONSOR
MODERATING SPONSOR
MEDIA PARTNER
SUPPORTED BY
20140707-NEWS--20-NAT-CCI-CL_--
20
7/3/2014
12:27 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JULY 7 - 13, 2014
LARGEST OHIO PUBLIC COMPANIES RANKED BY MARKET VALUE
Company/Ticker symbol Headquarters Rank Phone/Website
Market cap 5-31-2014 (millions)
Business category
Top executive Title
Company/Ticker symbol Headquarters Rank Phone/Website
Market cap 5-31-2014 (millions)
Business category
Top executive Title
1
*& , * $ # &(; - 6/ < 6 , + + D )- )-- <) %#>E> 2#0=3 . =(00EE;AAA41&4 /,
>0 :0%4#
-?! <?6 6
F4 4 $ C ' )6, - 16 7) -<
31
Nordson Corp.7NDSN : 6A, ' ( )3 + 38' & !!,! .!!A/ *:$, A7===0)+2 3+)0 +(
,*,0:
); 8;2 2
% # ' 0 %'8+) -2 3% )8
2
,&%; 0EEE </- +@ 4 + @ + - %%0>> 2%%E3 #>=(#EEE;AAA4 </-4 /,
=# 0> 4E
-?! <?6 6
F+ B - 6 4 ?<+ 6 ' )6, - 16 7) -<
32
Owens Corning7OC ) = )3 +2)%)" 2&= ? +' + !96 * .!,*/ :! $ AAA7===0+= )3 +2)%)"0 +(
! :*0A
); 8;2 2
% # ' 0 # ( ) # %2( )
3
1$ *! % # ,*! &/ * &(;1 0 )@ 67) + D /+?, ?7 %=>0#(>=9> 2:0%3 90:(0EEE;AAA4 14 /,
>: E=.4>
<)+)<C
) '/+ 7 4 F*)-7 ' )6, - 16 7) -<
33
Vantiv Inc.7VNTV AA +< 2)+23 %'' 2%< %) %)) 8% ! :!* . ,9/ *AA$ : A7===0< )8%<0 +(
! :60:
%) ) % ' 3 2<% 3
# 2' 3 2; & 2 -2 3% )8
4
* , &% ,*&# -$ &*'(;
#=. 4 )- <4 )- + C %# %E 2%0.3 %>>(>0>0;AAA4, 6 <'/-1 <6/+ ?,4 /,
># EE4
- 6&C
6C 4 ,)-& 6 16 7) -<
34
MPLX LP7MPLX :AA 0 2 %) 80 %) ' ? ! !A .!,*/ 65:$6 AA7===0(-'>0 +(
! :: 0:
) 2"?
2? 0 (%)" 2 # %2( )
5
*& * &(; 0E0% )- <4 )- )-- <) %#>E> 2#0=3 9:>(%EEE;AAA4*6/& 64 /,
>% =>:40
< )+
4 / - C ?++
35
TFS Financial Corp.7TFSL 5AA5 2+ = ? B< 0 ' < ' ) !!,A .:,6/ !!,$6AAA7===08#%2 2 '0 +(
! A!*0A
%) ) % ' 3 2<% 3
2 B0 8 )3&% -2 3% )8
6
* !% # #, % (; 1 9EEE 6 )- + + ? +)- %=E09 2:0%3 9#9(#EEE;AAA4 6 )- +' +<'4 /,
>% E> 4%
+<' 6
/6& 4 66 << ' )6, -
36
Forest City Enterprises Inc.7FCE-A A ; '% 1; 2 ;%8 ,,AA ' < ' ) !!,,9 .:,6/ 6:,$6A6A7===0 +2 38 %8?0) 8
9 ,90:
' 38 8
# 2' 3 B0 8) 2 # %2( )4 <% 0 ; -2 3% )8
7
0)+ % (; 9 4 @ -<' <4 )- )-- <) %#>E> 2#0=3 #9.(9EEE;AAA4, C7)- 4 /,
>0 :: 4>
< )+
66C 4 ?- &6 ' )6, -
37
PolyOne Corp.7POL 99 5 '& 2 + B<+) & !!A,: .!!A/ *9A$,AAA7===0-+'?+) 0 +(
9 5550:
); 8;2 2
+ 28 0 88 23+) -2 3% )8
8
*/!% !##! $+ &(; 0E0 4 6/71 < F@ 4 + @ + - %%00# 2>0:3 #::(>EEE;AAA47' 6A)-4 /,
>E = .4
-?! <?6 6
'6)7</1' 6 4 /--/6 ' )6, -
38
Scotts Miracle-Gro Co.7SMG ,!,,, +883' =) + 2?3<%'' !9A!, .*95/ 6!!$AA,,7===03 +8830 +(
9 65!0A
); 8;2 2
%( " +2) # %2( )
9
#, * % (; %#EE /66 <4 /+ / %=:0#(%E%E 2%0.3 >%9(> EE;AAA4' 6 )<4 /,
0. =0%40
+ 7< < '/, 7 4 /7 )-@ 7<, -< <6?7<
39
Dana Holding Corp.7DAN 9*9* #)+'+"? 2%< ;( !9 95 .!,*/ 5$9AAA7===0 ) 0 +(
9 !5A06
); 8;2 2
+" 2 ++ -2 3% )8
10
*" * %%! % &*'(; :E=# 6*+ - +@ 4 + @ + - %%0>% 2>0:3 .:(=EEE;AAA41 6* 64 /,
0 :#04=
-?! <?6 6
/- + 4 7'* A) D ' )6, - 16 7) -<
40
Steris Corp.7STE *6A %3' ? + )8+2 !!A6A .!!A/ 9 !$:6AA7===038 2%30 +(
9 ,6:0!
); 8;2 2
'8 2 0 +3 2+;"# 20 -2 3% )8
11
! , !* % &*'; = /?-< )- 5? 6 + D )- )-- <) %#>:= 2 EE3 .9>(=E=E;AAA4#=4 /,
09 %: 4#
)- - ) + 7 6@) 7
@)- 4 < @) ' )6, -
41
FirstMerit Corp.7FMER 3 ' @ B&2+) !!9A .99A/ **6$69AA7===0 238( 2%80 +(
9 A 50:
%) ) % ' 3 2<% 3
;' 0 2 %" # %2( ) -2 3% )8
12
( * % + % (; '6 ),)< 6*A C /+?, ?7 %=>=> 2:0%3 %0#(9EEE;AAA4+),)< 6 - 74 /,
0: 9E04=
< )+
7+) 4 B- 6 ' )6, -
42
Wendy's Co.7WEN ) < #+( 3 +;' < 2 ; '%) !9A,5 .6,!/ 56!$9,AA7===0 +;8= ) ?30 +(
9 AA50*
38 ;2 )83
(%' 0 2+'% & -2 3% )8
13
*& * ++!. &*'(; :=EE )+7/- )++7 / C" + )++ & %%0%= 2%%E3 %:0(#EEE;AAA416/&6 77)@ 4 /,
0% 094.
-7?6 -
+ -- 4 -A) * ' )6, - 16 7) -<
43
Cedar Fair LP7FUN ) 2 +%)8 2%< ) ;3&? !! 5A$ : * .!,*/ 6:5$::997===0 2 %20 +(
: *A 09
B(;3 ( )8 - 2&3
88# = B0 ;%( 8 -2 3% )8
14
!*+, % * 0 &*'(; 9: 4 )- <4 F*6/- %%=E 2 EE3 9=:(=%E>;AAA4"67< - 6&C /614 /,
0% >E04=
<)+)<C
F-<'/-C 4 F+ B - 6 16 7) -<
44
Worthington Industries7WOR :AA ' %'3+) 2% " + +';( ;3 !9A .6,!/ !9 $9:,A7===0=+28#%)"8+)%) ;382% 30 +(
: 5*60
); 8;2 2
+#) 0 +)) '' # %2( )
15
0 &*'; 0>9 ? +) 5? 6 + @ + - %%00% 2>0:3 : .(:=EE;AAA4* C4 /,
0> E.>4%
)- - ) + 7 6@) 7
<' 4 //- C ' )6, -
45
Abercrombie & Fitch Co.7ANF 69A, %8 # 8# = B' )? !9A ! .6,!/ : 9$6 AA7===0 2 2+( % 0 +(
: 5660:
8 %'
% # ' 0 2% 3
16
( ( $- " * &(; - <6 A 66C - 66@)++ %%::9 2==E3 : >(=EEE;AAA47,? * 674 /,
-?! <?6 6
) ' 6 4 ,? * 6
46
Greif Inc.7GEF !: %)8 2 + ' = 2 !9A, .5!A/ !*$6AAA7===0"2 % 0 +(
: 5,606
); 8;2 2
<% 0 %3 # 2 -2 3% )8
17
* %+ ! $ *&-' % (; 0=E0 4 )-<' <4 ?)< =EEE + @ + - %%00% 2>0:3 9E:(>.=.;AAA4<6 -7 )&,4 /,
-?! <?6 6
4 ) '/+ 7 /A+ C ' )6, -
47
Big Lots Inc.7BIG 9AA #%''%-% + +';( ;3 !9:: .6,!/ :5 $6 AA7===0 %"'+830 +(
: !6 0A
8 %'
<% 0 (-%3% -2 3% )8
18
!% !%% ,! !% % ! # &*'(; :>EE 4 )+,/6 / )6" + %#E0%(#0%0 2#0=3 9E(>EEE;AAA4 )-"-4 /,
E0#4.
-7?6 -
< @ - 4 /'-7</16 7) -<
48
Lancaster Colony Corp.7LANC 95 0 2+ 80 +';( ;3 !9:, .6,!/ ::!$5,!,7===0' ) 38 2 +'+)?0 +(
: !!,0A
); 8;2 2
+#) 0 2' # 20 # %2( ) -2 3% )8
19
-%,!% ,&% % + * + % (; 1 %0 4 )&' <4 /+?, ?7 %=> 9 2:0%3 % E( =EE;AAA4'?-<)-&</-4 /,
9 :9=4%
)- - ) + 7 6@) 7
< 1' - 4 < )-/?6 ' )6, - 16 7) -<
49
Diebold Inc.7DBD ** ? %2 + +28# )8+) !!5:A .99A/ !*A$!AAA7===0 % +' 0 +(
: !:!09
); 8;2 2
B) 2 3 0 88 3 -2 3% )8
20
!%, + &*'(;
1 : EE )-< 7 /?+ @ 6 )- )-- <) %#>:>(#9=9 2#0=3 %#.(0>EE;AAA4 )-< 7( /614 /,
9 %::4%
-)!/6,78 ?7)- 77 7 6@) 7
/<< 4 6, 6
50
Cliffs Natural Resources Inc.7CLF :AA ; '% 1; 2 ;%8 99AA ' < ' ) !!,,! .:,6/ 6*!$ 5AA7===0 ' < ' ) $ '% 30 +(
: !A,0*
%)%)" ) ) 8;2 ' 2 3+;2 3
2? 0 '< 23+) -2 3% )8
21
,,# * &# & %, *% ,!&% # % (; 0.EE /+ 6)7 6*A C /+?, ?7 %=>%E 2:0%3 %= (%#00;AAA4,<4 /,
51
DSW Inc.7DSW ,A 2%< +';( ;3 !9:,* .6,!/ :95$5,AA 7===0 3=0 +(
: :6 09
8 %'
-?! <?6 6
+)@) 6 F4 )++)/+ 16 7) -<
% # ' 0 +) ' -2 3% )8
22
* , &*'(;
0EEEE --/@ <)/- 6)@ C</- %#=%> 2 ::3 #% ( =% ;AAA4< 6 < 4 /,
52
Convergys Corp.7CVG :A, 0 +;28# 80 %) %)) 8% ! :A: . ,9/ 5:9$5AAA7===0 +)< 2"?30 +(
: :,!0:
'-/+/&C
) ' + 4 / '+ 6 16 7) -<
;38+( 2 ( ) " ( )8 3+';8%+)3
B) 2 0 B? 23 -2 3% )8
23
&& 0 * !* - * &(;
>EE --/@ <)/- C F*6/- %%=0: 2==E3 9.:(>0>0;AAA4&// C 64 /,
: ##049
-?! <?6 6
) ' 6 4 6 , 6 ' )6, - 16 7) -<
53
Chart Industries Inc.7GTLS ) ) )%8? +2-+2 8 )82 20 ;%8 9AA 2 ' %"#83 !!,: .!!A/ 5 9$,!*A7===0 # 28%) ;382% 30 +(
: ,*A0!
); 8;2 2
(; ' 0 #+( 3 # %2( ) -2 3% )8
24
2$%! * % (;2 >E0 4 /?6<' <4 )- )-- <) %#>E> 2#0=3 90.(>:EE;AAA4/,-) 6 4 /,
: >.=40
+<' 6 7 6@) 7
/'- 4 /6*,
54
Applied Industrial Technologies Inc.7AIT , B--'% ' @ ' < ' ) !!,, .:,6/ !:6$!AAA7===0 --'% 0 +(
, * *0:
%382% ;8+2
%' B0 #2%(3# 2 -2 3% )8
25
&*'(; ==EE -< 616)7 6*A C 'A// %%0>> 2>0:3 9##(##EE;AAA4 64 /,
: >>E4E
+ 7< < -) + 4 ?6A)<D )-@ 7<, -< <6?7<
55
Cooper Tire & Rubber Co.7CTB 5A, %( B< 0 %) ' ? ! !A .!,*/ !:9$,9:,7===0 ++- 28%2 0 +(
, 5660
); 8;2 2
+? B2( 3 # %2( ) -2 3% )8
26
!$" % &(203; 0 =# ? 6 F@ 4 -</- %%9E: 2==E3 %= (=EEE;AAA4<),* -4 /,
# :E4E
-?! <?6 6
) ' 6 4 C+ 16 7) -<
56
Glimcher Realty Trust7GRT , A 0 2+ 80 +';( ;3 !9:, .6,!/ 6:,$*AAA7===0"'%( # 20 +(
, * 0*
' 38 8 % # ' 0 '%( # 2 %)< 38( )8 82;38 # %2( )
27
%, *% ,!&% # % (; >:> 6+ / )- %%># 2==E3 >9=(#E.E;AAA461,)- 4 /,
# 9= 4.
-?! <?6 6
6 -* 4 ?++)@ ' )6, -
57
Chemed Corp.7CHE : 0 % 8# 80 %) %)) 8% ! :A:$!5:6 . ,9/ 56:$6*AA7===0 # ( 0 +(
, !!0
'8# 2 4 2 - %2 ) ( %)8 ) )
<%) 0 ( 2 -2 3% )8
28
2/ %+ ##!%&!+ % (;2 - ) ' + A -7 C 66C7 ?6& %=##0 2#:93 ==:(#EEE;AAA4/()4 /,
# % #4%
-?! <?6 6
F+ <6/? * ' )6, -
58
The Andersons Inc.7ANDE ! A 0 ;33 ' 2%< ;( !9 95 .!,*/ *9$ A A7===0 ) 23+)3%) 0 +(
, !:60*
2( -2+ ; 83 2 8 %'
% # ' 0 B) 23+) # %2( )
29
!% &#% # ,*! &# !% + % (; 2 >> E0 <4 + )6 F@ 4 + @ + - %%009 2>0:3 % 0( 0EE;AAA4+)- /+- + <6) 4 /,
# =>04#
-?! <?6 6
'6)7</1' 6 4 1 7 ' )6, - 16 7) -<
59
GrafTech International Ltd.7GTI ,:*AA )+= + 2( !!,9A .:,6/ 656$:AAA7===0"2 8 #0 +(
, !,50
); 8;2 2
+ ' 0 =8#+2) -2 3% )8
30
1$ *! % !% % ! # *&-' % (;1 =E0 4 /?6<' <4 )- )-- <) %#>E> 2#0=3 =:.(#EEE;AAA4 !&)- 4 /,
-7?6 -
6+ 4 )- - 6 4
6 )& )- - 6 /(
7 /(16 7) -<7
60
Hyster-Yale Materials Handling Inc.7HY 5 ) 2 2++& 20 8 0 9AA ' < ' ) !!,:! .!!A/ ::*$ ,6 7===0#?38 2$? ' 0 +(
, !,!0
); 8;2 2
B' 2 0 )&%) 20 # %2( ) -2 3% )8
0E := 4# . . 94#
9 0#.4: : :>04
# >>:40
Numerical information provided by S&P Capital IQ, www.spcapitaliq.com. Market cap as of May 30, 2014. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. (1) Effective June 30, TimkenSteel Corp. formed as a spin off of Timken Co.
20140707-NEWS--21-NAT-CCI-CL_--
7/3/2014
1:58 PM
Page 1
JULY 7 - 13, 2014
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
21
T-shirt: ‘Friendly’ competition has been good for business continued from PAGE 1
Another Cleveland apparel business, iLTHY (“I Love the Hype”), started in 2009 and has made a name for itself with its unique collection of streetwear. Mark Venit, president of the Berlin, Md.-based Apparel Graphics Institute and author of “The Business of T-Shirts,” said about 20% of online apparel businesses fail in the year in which they launch. The four prominent Cleveland companies, all of which started during some of the worst economic times, don’t fit that mold. Each has succeeded, which Madalone attributes to the companies finding their niche in a crowded marketplace. “We’re all thriving, we’re all surviving, all of us are full-time,” Madalone said.
An industry ‘icon’ A study by IBISWorld, an Australian industry research firm with offices in New York and Los Angeles, estimated that revenues for the “online original design” T-shirt business would reach $68 million in 2014. The firm said the industry had an annual growth of 24.2% from 2009-14, and projects revenues will increase 27% per year through 2019. Venit said the industry — which he classifies as apparel, custom decorated apparel (clothing made specifically for business and organizations) and a “hybrid” of the two — is “recession resistant as a whole.” The author and entrepreneur said he hasn’t studied the Cleveland market specifically, but said Northeast Ohio is home to “one of the pioneers in the industry” in “Daffy” Dan Gray. Gray has been in business for 41 years. Between 1973 and ’78, Daffy Dan’s, which became a staple in the rock and roll industry, grew from one to 27 stores. All but “a couple” were in Northeast Ohio, Gray said. When the 1997 Indians clinched their second trip to the World Series in three years, Daffy Dan’s “sold 40,000 shirts in a like a night and a half,” Gray said. “He was cranking out millions,” Madalone said. “You would walk into his shop and he’d have 50 designs on the wall, and you would pick what you’d want and he’d do it right there. He’s an icon — a bigtime icon.” Gray says he’s “scaled back a lot” over the years. His lone remaining store, at 2101 Superior Ave., primarily is run by his employees, to whom he “gave the company, pretty much.” “It’s their gig,” Gray said. “They’ve been with me forever. I come in in the afternoons and help out. We do what we do. We run the business to be profitable. There are a million guys selling shirts out of their garages.” Those aren’t the words of an industry vet who is tired of seeing the relative newbies getting all of the attention. To Gray, it’s “the more, the merrier.” “They come and go, but I love all these young people coming in and doing their stuff,” he said.
REBECCA R. MARKOVITZ (FRESH BREWED); CONTRIBUTED (GV); KEVIN KLEPS (CLE CLOTHING)
LEFT: Fresh Brewed Tees chief operating officer Justin Jensen shows off a T-shirt prior to the Cleveland Indians’ home opener on April 4. CENTER: GV Art and Design founders George, left, and Greg Vlosich pose with Indians outfielder Michael Brantley, who is modeling his “Dr. Smooth” shirt. RIGHT: One of the many Cleveland pride shirts that is available at CLE Clothing Co.’s store at the corner of Euclid and East 4th Street. times more successful than anything else we’ve done, and it’s only a month in,” Madalone said. In early June, less than a month after the draft, sales of the Manziel shirt topped 5,000. But Fresh Brewed Tees is far from a one-hit wonder. Madalone, who chose being an entrepreneur over a career as a stockbroker after he graduated from Ashland, said that by June 1, the company in 2014 already had equaled its 2013 sales figures. Fresh Brewed Tees — which generates about 85% of its sales online and the other 15% with its impossibleto-miss truck — now has four fulltime staffers and two hourly workers, Madalone said. A year ago, it had one of each. Fresh Brewed, which has secured licenses with the players’ associations of the NFL and Major League Baseball, has found its niche in sports. “The more licensing we get, the more credibility we get from a nationwide perspective,” Madalone said. “It drives everything, even in the local market.”
Drawing up a winning plan Sports, combined with art, have always played prominent roles for George and Greg Vlosich. George’s Etch A Sketch drawings
have generated interest from the likes of Oprah Winfrey, LeBron James (whose amazing likeness Vlosich sketched in the popular YouTube video), George Brett, Sandy Alomar Jr. and many others. When GV Art and Design launched, George was working at an advertising agency and Greg was fewer than two years removed from graduating from Cleveland State, where he played basketball. “We pride ourselves on being completely different and original,” Greg Vlosich said. T-shirts, he said, “are kind of another canvas to create our artwork.” The duo — helped by their father, George, a veteran of the advertising industry who now works with his sons full-time — are known for their illustrative shirts. GV’s Goon Squad, Dr. Smooth and Birthplace of a Super Hero shirts are favorites of both fans and Cleveland Indians players — to the point that Fox Sports Ohio reporter Katie Witham told Greg Vlosich that the Tribe’s players won’t do an interview until they don their GV shirts. This year, GV expanded its reach by partnering with Pro Merch, an NFLPA-licensed company that was co-founded in 2011 by Luke Rodgers, brother of Green Bay Packers QB Aaron. George and Greg Vlosich are the company’s creative directors, and
soon the national brand’s NFL apparel will be available in 1,400 Targets nationwide. “I’m really proud that we’ve been able to do more designs than we’ve ever done in the last probably five years with this Pro Merch stuff, and not sacrifice the quality and the work that we do in Cleveland,” George Vlosich said. “We really want to make sure the Cleveland market is our home.” GV cemented those roots by opening its first store, located at 17411 Detroit Ave. in Lakewood, last August. The store has five full-time employees and seven part-timers, and it generates as many sales as its online counterpart. “That’s right where you want to be,” George said.
A ‘friendly competitiveness’ “We started back in 2008, and all the other ones followed shortly after,” CLE Clothing’s Kubinski said. His company, after its modest “one T-shirt at a time” beginnings, now has two stores. The first, Native Cleveland, opened in the Collinwood neighborhood in 2010 and is more “Cleveland and Northeast Ohio artists doing cool things,” Kubinski said. The signature store, CLE Clothing, debuted at the corner of Euclid
Every business needs an edge in today’s marketplace, and reducing turnover is one way to improve the bottom line.
A Veteran-Owned Small Business
Core Services Creditors’ Rights • Collections • Subrogation • Bankruptcy
Markets Served
Employer Based Training offers you the chance to select from qualified candidates and then pays the wages of the new hire while they complete their training so you can be sure you have made the right choice. Learn more about this practical approach to hiring by calling our office at 440-324-3588 or visit our website www.matureservices.org/crains
Business • Finance • Education • Government • Healthcare Driven by sports If you monitored social media in the days following the NFL draft, you likely were inundated with Browns fans posting pictures of themselves in Fresh Brewed Tees’ Johnny Manziel shirt. The shirt, which depicts the popular quarterback rubbing his fingers together in his trademark “money” pose, is “probably three to four
and East 4th Street on Black Friday in 2011. That was the same year Kubinski left his day job as a graphic designer. Now, the store, with its signature block CLE collection of Cleveland pride shirts, has at least 15 employees during its peak season. There are another three workers at Native Cleveland, two warehouse employees and a cart that can be found during the summer at Crocker Park. Kubinski said sales have “pretty much doubled” every year since 2008, and the store generates almost twice as many sales as CLE’s online shop. During its grand opening in 2011, CLE invited nine T-shirt companies — including Fresh Brewed, GV and iLTHY — to sell their products, along with “30 other artists and designers” from Northeast Ohio. “We wanted to breed a community and a friendly competitiveness,” Kubinski said. “We don’t want a cutthroat thing. Cleveland’s too small. It’s not worth doing that.” Fresh Brewed’s Madalone said he’s “pretty well versed on nationwide apparel, and there’s no other city in America that has what we have as far as small T-shirt companies that do a lot of local and city pride stuff.” Launched during a recession. Stronger than ever. Sounds like a T-shirt slogan. ■
Ethical, Professional, Excellent Service Please visit our website www.tmslaw.net
888-364-7072 25651 Detroit Rd, Suite 203, Westlake, OH 44145
Keeping pace with the changing needs of older adults since 1975.
Employment & Training Solutions Mature Services, Inc. is an equal opportunity employer and service provider with funding from the Ohio Department of Aging.
20140707-NEWS--22-NAT-CCI-CL_--
22
7/3/2014
3:32 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
Contact: Phone: Fax: E-mail:
WWW.CRAINSCLEVELAND.COM
JULY 7 - 13, 2014
REAL ESTATE
Denise Donaldson (216) 522-1383 (216) 694-4264 DDonaldson@crain.com
Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card
AUCTIONS
REAL ESTATE AUCTION / JULY 24
NE OHIO SUMMER PREMIER AUCTION ESTATE ORDERED SALE!
PIONEER WATERLAND & DRY FUN PARK
OUT-OF-STATE OWNER ORDERS IMMEDIATE SALE!
FORMER SHERATON FOUR POINTS
196-ROOM HOTEL, RESTAURANT & BANQUET CENTER. 10 MILES FROM OF DOWNTOWN CLEVELAND AT I-90 & EUCLID AVE. (EXIT 186)
KIKO PREMIER COMMERICAL AUCTION Attention Investors - Owner Occupants Two Commercial Buildings and Building Site W/Parking Lot To be sold separate – Just 1 mile West Of Route 8 Summit Co. - City Of Cuyahoga Falls Wyoga Lake Commons Properties to sell absolute on location to the highest bidder: 4183 WYOGA LAKE RD. CUYAHOGA FALLS, OHIO 44223.
10661 KILE RD., CHARDON, OH 44024
OFFERED WITH A PUBLISHED RESERVE PRICE OF ONLY $375,000! Well known for its scenic atmosphere and meticulously manicured grounds, this fully operating water/amusement park (open for the 2014 season) is centrally located on 74 acres. Pioneer’s entertainment complex features attractions including: 5 large water slides (6 stories high), lazy river innertube ride, 3-acre cement activity/swimming pool, a 6-acre natural lake with paddle boats, “kidsland� with 6 slides, playhouse and more. Also included is Grand Prix Go-Kart Supertrack , batting cages, golf driving cages, air-cannon shooting range, water cannon war zone, 18-hole miniature golf course, bankshot basketball course and sportsland basketball arcade. This is a great opportunity to acquire a turn-key business and includes a C1 & C2 liquor license. Ample source of water as land sits on underground springs. Also included are 100 camping sites with electricity & water. ON-SITE INSPECTION DATES & TIMES: WEDNESDAYS, 1:00 P.M. TO 3:00 P.M. JULY 2, 9, & 16
WEDNESDAY - JULY 16, 2014 - 12:30PM
28500 EUCLID AVE., WICKLIFFE, OH 44092
OFFERED WITH A PUBLISHED RESERVE PRICE OF ONLY $275,000!
196 Well Appointed Hotel Rooms (Kings, Queens, and Deluxe Suites), Indoor Swimming Pool, Fitness Center, 6,000 sq. ft. Ballroom/Conference Center, 4-Story Atrium, Restaurant, Bar, Game Room and more. Located on 5 acres. Great highway visibility with large “billboard� signage opportunities.
OFFERED WITH A PUBLISHED RESERVE PRICE OF ONLY $175,000!
12,446 SF Industrial building with 1,400 SF Office Area on 1.05 Acres; Large lunchroom and breakroom; AC in most of building; Built in 1982; Masonry Construction; 3 Drive-ins; 1 Loading Dock with Levelator; 120AMP/480V/3-Phase Power; 50 Free Surface Spaces. ON-SITE INSPECTION DATES & TIMES: TUESDAYS, 9:00 A.M. TO 11:00 A.M. JULY 1, 8, & 15
20,720 SF COMMERCIAL OPPORTUNITY
OFFERED WITH A PUBLISHED RESERVE PRICE OF ONLY $45,000! 120 N. ELMWOOD AVE., MEDINA, OH 44256 Architecturally significant, 20,720 square foot building on 0.70 acres in downtown Medina. Just off the west end of Historic Medina Square, immediately adjacent to the City Administration Complex and the Medina Municipal Court Complex. Includes, meeting rooms, a full service theatre or concert venue, restrooms, kitchens, offices and much more. 18 parking spaces. Minutes from I-71 and SR 18 in Medina County, OH near Shopping, Dining, County Fairgrounds, Recreation Center, Parks and Downtown Medina Amenities. Currently Zoned C-2 Retail Office District, perfect for a variety of uses including general retail, office, theatre, banks, restaurants, cultural, religious, bed and breakfast and non-profit. ON-SITE INSPECTION DATES & TIMES: WEDNESDAYS, 10:00 A.M. TO 11:30 A.M. JULY 2, 9 & 16
AUCTIONEERS/REALTORS Lori Kiko 330.495.3617 or Brooks E. Ames 330.703.2732
NOTE HOLDER / OWNER DIRECTS IMMEDIATE SALE
ON-SITE INSPECTION DATES & TIMES: WEDNESDAYS, 1:00 P.M. TO 3:00 P.M. JULY 2, 9, & 16
MAGNIFICENT WAITE HILL ESTATE HOME
12,446 SF INDUSTRIAL BUILDING ONLY $14.00 PER SF
9330 PROGRESS PKWY., MENTOR, OH 44060
AUCTION NOTE: LOCATION LOCATION LOCATION – Check these properties out today! Log onto www.kikoauctions.com for pictures and full ad.
9450 METCALF ROAD., WAITE HILL, (CLEVELAND SUBURB), OH 44094
OFFERED WITH A PUBLISHED RESERVE PRICE OF ONLY $695,000! This spacious home is 16,000 SF and is nestled on 14.35 beautifully wooded & well-manicured acres in an exclusive Waite Hill location. Features include 25 rooms, 7 bedrooms, 7 full baths, 3 half baths, spacious Gourmet Kitchen with butler’s pantry, indoor swimming pool complex, gymnasium with basketball ct., 7-seat media room/ movie theatre, spacious outdoor “multi-roomed� patio areas with 3 dining areas, brick fireplace and pond. Originally built in 1956 with additions & upgrades in 1996 & complete renovation in 2003. OPEN HOUSE DATES & TIMES: SATURDAYS, 1:00 P.M. TO 3:00 P.M. JUNE 28, JULY 12 & 19
PRIME RESIDENTIAL DEVELOPMENT OPPORTUNITIES 31 CONTIGUOUS RESIDENTIAL LOTS TOTALING 7.55 AC
ONEIL BLVD. BETWEEN ELYRIA AVE. & LINCOLN BLVD., SHEFFIELD TOWNSHIP, LORAIN CO., OH.
OFFERED WITH A PUBLISHED RESERVE PRICE OF ONLY $25,000!
Wooded-Land Ready for Development. 31 contiguous Residential lots totaling 7.55+/- Acres. Zoned MR- Multi-Family Residential offering a developer a variety of options. All utilities available. OFF-SITE DUE-DILIGENCE SEMINAR: THURSDAY, JULY 10, 1:00 P.M.
CHAGRIN NORTH BUILDINGS 1, 2, 7 & 8 S/E/C SOM CENTER & CHARDON ROADS (SR 91 & US 6) WILLOUGHBY HILLS, OHIO OWNER / USER OR INVESTOR OPPORTUNITY ¡ BUY 1, SOME OR ALL 99,600 Total Square Feet on a Total of 6.36 Acres Up to 11,100 Contiguous Square Feet (Full Floor) Available for Owner / User Occupancy ¡ Commercial, Dental / Medical & Office Tenants ¡ Major Tenant Lake Hospital ¡ Restaurant / Bar On-Site ¡ Quick Access to I-90 & I-271
EHLE, MORRISON GROUP, LTD.
216/623-3888
List your Industrial, commercial or Retail Space Here! Crain’s Cleveland Business’ classifieds will help you fill that space.
Contact Denise Donaldson at 216.522-1383 DDonaldson@Crain.com
CLASSIFIED BUSINESS SERVICES C. W. JENNINGS INDUSTRIAL EXCHANGE Global Expansion Consulting Construction • Acquisitions Exporting • Financing
(855) 707-1944
FLYNN ENVIRONMENTAL UST REMOVALS • REMEDIATION DUE DILIGENCE INVESTIGATIONS
(800) 690-9409
49+ ACRES, WESTBROOK RD., TROTWOOD, OH
OFFERED WITH A PUBLISHED RESERVE PRICE OF ONLY $150,000!
Terrific location surrounded by successful residential developments. All utilities available. Located near I-70, just NW of Dayton, OH.
OFF-SITE DUE-DILIGENCE SEMINAR: THURSDAY, JULY 10, 1:00 P.M.
BUSINESS SERVICE OWNERS! Submit your business card to promote your service. To find out more, contact Denise Donaldson at 216.522.1383
For Brochure & Terms of Sale visit:
ChartwellAuctions.com or call (216) 360-0009 Hanna Chartwell / Chartwell Auctions Michael Berland & Mac Biggar, OH Auctioneers
REALTORS:
OFFICE/WAREHOUSE SPACE
ABSOLUTE AUCTION th
Now is a great time
Friday, July 18 at 12pm (Onsite)
to promote your
243,432Âąsf Warehouse on 63.36Âą Acres
Luxury Properties to high-end prospects. Call 216.522.1383 for more details
BUSINESSES FOR SALE
SE Ohio Restaurant Liquor License Heart of Shale Boom Cambridge area, Guernsey county. Thousands of oil & gas workers but I am retired in Cleveland. 70 seats inside, huge deck outside seats at least 100 more. Open now with great team. Over 120k recently invested in renovations and equipment. Only asking $179,900. www.ccfohio.com also facebook.
Sells regardless of price! NO MINIMUM!
4919 W Lakeshore Dr, Port Clinton, OH OHIO REAL ESTATE AUCTIONS
Crain’s Cleveland Business on-line @ CrainsCleveland.com
877-BID-OHIO OhioRealEstateAuctions.com
Buying a Business?
Call John 216-213-6201
DON’T FORGET:
$XFWLRQHHU %DUU\ %DNHU &$, $$5( &&,0 Barry@OhioRealEstateAuctions.com
Selling a Business? Ohio Business Brokers Assoc. WWW.OBBA.ORG Find hundreds of businesses. Find a good broker to help.
For all the latest business news...online
FOR SALE
CABINETS KITCHEN & BATH Locally Made ProMark Cabinets
(216) 453-3654
BUSINESS OPPORTUNITY OPPORTUNITY A wine and liquor importer with a gold-medal product looking for partners and marketing specialist. Send inquiry to ferro55@aol.com
20140707-NEWS--23-NAT-CCI-CL_--
7/3/2014
3:14 PM
Page 1
JULY 7 - 13, 2014
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
23
THEINSIDER
THEWEEK
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
JUNE 30 – JULY 6
When it comes to Twitter, these two are quick learners
The big story: The Charter One name is about to disappear from Ohio’s banking landscape. Providence, R.I.-based Citizens Financial Group Inc. said its Charter One branches in Ohio will be rebranded as Citizens Bank next year as part of a broader strategy to unify all its brands. Citizens said the change, which also will take place at Charter One branches in Michigan, “will result in a uniform Citizens Bank presence across the company’s 11-state retail footprint by mid-2015.” In the nine other states where it has branches, Citizens already uses the Citizens Bank brand. Citizens Financial bought the former Charter One Financial Inc. of Cleveland in 2004 but has kept the Charter One branding here.
■ The new presidents at Kent State University and University of Akron already are doing something their predecessors didn’t: maintain active Twitter accounts. Both University of Akron president Scott Scarborough and Kent State president Beverly Warren launched Twitter accounts last week during their first week on the job. Scarborough’s twitter feed (@PresScarborough) included his first “selfie” with students. Warren’s (@PresBWarren) included a picture of her and Ohio State football coach Urban Meyer at the Spire Institute in Geneva. Scarborough also tweeted a picture of the University of Akron rock climbing wall — the tallest in the state — but said he wasn’t up for a climb that day. “Maybe another time … not on my schedule,” he wrote. Former Kent State president Lester Lefton had a public Twitter account for a short period of time, though he ultimately deleted it. Former UA president Luis Proenza didn’t tweet (though he did have a bobblehead made in his honor, for what it’s worth). A handful of other Northeast Ohio college presidents tweet, including Cleveland State’s Ron Berkman (@PresBerkman), Youngstown State’s Jim Tressel (@JimTressel5) and Baldwin Wallace’s Bob Helmer (@BWPres). By a wide margin, Tressel — a former UA
Get it started: Forest City Enterprises Inc. and Greenland USA, a subsidiary of Shanghaibased Greenland Group Co., closed on a joint venture to develop Atlantic Yards, a 22-acre residential and commercial real estate project in Brooklyn, N.Y. The two companies in mid-December 2013 announced a definitive agreement for the joint venture. The joint venture covers both phase one and phase two of the project, including infrastructure, a permanent rail yard, a platform above the rail yard, future residential units and future commercial high-rise development. Not included are the Barclays Center and the first residential tower, B2 BKLYN.
Standard protocol: Weston Inc., a developer based in Warrensville Heights, bought the Standard Building in downtown Cleveland, for $3.9 million, according to county real estate records. The Plain Dealer reported that Weston was acquiring the 21-story building for an apartment conversion that could start next year. The Brotherhood of Locomotive Engineers, which owned the 1925-vintage Standard Building and maintains its national headquarters there, had it listed for sale for two years with the Hanna Chartwell real estate brokerage.
WHAT’S NEW
On the case: People who fashion themselves as experts on Cleveland’s most famous murder and trial have a new outlet for their interest. Cleveland-Marshall College of Law Library launched a publicly accessible website dedicated to the Dr. Sam Sheppard case. The site, called “The Sam Sheppard Case, 1954-2000,” contains documents and photographs from the criminal and civil litigation resulting from the murder of his wife, Marilyn Sheppard, on July 4, 1954. Sheppard was convicted of the murder in 1954, though a 1966 U.S. Supreme Court case overturned that verdict, and Sheppard later was acquitted during a retrial.
A musical foundation: The Cleveland Foundation’s latest gift to the community is music to Northeast Ohioans’ ears — literally. The foundation will provide free tickets to a July 20 Cleveland Orchestra performance at Blossom Music Center in Cuyahoga Falls. Up to 15,000 free tickets will be available for the event. The public will be able to reserve free lawn tickets through the foundation’s website starting at 10 a.m. on Monday, July 7.
Norwalk’s big victory is a loss for the Motor City ■ A big win for the city of Norwalk came at the expense of Detroit and probably a few other places. JobsOhio, the nonprofit that leads the state’s economic development efforts, last week announced that auto supplier Borgers USA Corp. will build a manufacturing operation in the Huron County city. “We often get this,” said Tom Waltermire, president of Team Northeast Ohio, a regional economic development nonprofit linked to JobsOhio that helped woo Borgers to Norwalk. “They say, ‘We want to be not too far from Detroit but we don’t want there.’ We’ve had that a few times.” Borgers USA is a subsidiary of Borgers AG, which has 21 locations, most in Germany. It has a logistics center in Vance, Ala. Ellen Heinz, executive director of Norwalk Economic Development Corp., said Borgers was one of the companies the city solicited after Janesville Acoustics announced nearly a year ago that it would close its Norwalk plant at the end of 2014. The closing is costing 300 workers their jobs. Both companies make similar fiber-based automotive parts. “The available work force from the plant closing was interesting to them,” Heinz said. “For any company, workforce and location are essential (criteria) and the fact of having
The living dead
COMPANY: GE Lighting, East Cleveland PRODUCT: Link GE Lighting is launching what it calls a “connected LED bulb” that lets consumers remotely control their home lighting and sync with other connected devices. Enabled by the new app called Wink, Link “eliminates the need for expensive add-ons typically associated with connected devices, making it an easy and cost-effective way for consumers to light up their smart homes,” GE Lighting says. The bulb is priced at $15 and is available for pre-order at HomeDepot.com. Link will be available in Home Depot stores beginning this fall. Link is available in three lighting applications: a 60-watt replacement soft white LED bulb, commonly used for general lighting in table and floor lamps; indoor soft white floodlight LED, installed as downlighting found in dining room, living room or other entertainment spaces; and indoor/outdoor-rated bright white spotlight LED, used for outdoor security or spotlight. GE Lighting says the Link LED bulbs help consumers save money, customize their “lighting experience” by easily adjusting brightness settings through the Wink app, and easily control lighting while on vacation or away from home.
an available, qualified and motivated workforce was in their decision-making process.” Both Heinz and Waltermire believe Norwalk was competing with a number of locations in Ohio, Indiana and Kentucky in what Waltermire described as a “bakeoff” earlier this year. “They visited four or five sites in one day,” Waltermire recalled. Borgers is expected to break ground in August on its new plant, which eventually will employ 230 people. — Jay Miller
Small businesses keep hiring momentum going ■ The CBIZ Small Business Employment Index, a barometer for hiring trends among companies with 300 or fewer employees, increased slightly in June. Narrow though the gain was, it represents the fourth straight month of an increase in the index. CBIZ Payroll Services, the unit of CBIZ Inc. that produces the index, said it was “only the third time in five years that the (index) has shown this level of sustained payroll growth.” The June gain was modest, at 0.27%, following a positive report of 1.57% in May, 1.25% in April and 1.01% in March. CBIZ said the index, known as SBEI, is not seasonally adjusted. “While geopolitical forces threaten to curtail an expanding equity market, improving labor data in multiple industries at home could be the foundational support needed to sustain true economic recovery,” said Philip Noftsinger, business unit president for CBIZ Payroll Services. — Scott Suttell
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
In the mood to buy:
Applied Industrial Technologies of Cleveland completed its previously announced acquisition of a Texas-based distributor of oil field supplies and services, as well as the acquisition of two foreign companies. Knox Oil Field Supply, based in San Angelo, Texas, has 140 employees and more than $100 million in annual sales. The purchase is expected to be accretive to earnings in fiscal year 2015. The industrial distributor also acquired Rodamientos y Derivados del Norte S.A. de C.V. of Mexico, and Great Southern Bearings and Northam Bearings of Australia.
vice president and Ohio State football coach — has the most followers with more than 58,800. — Timothy Magaw
■ Attention, lovers of real estate ruin porn: Photographer Seph Lawless has released a new book, “Black Friday,” that displays his photographs of malls in Ohio and Michigan. He told CNNMoney.com that the project is an “autopsy of America.” Recalling his visit to Rolling Acres Mall in Akron, he said, “The most bizarre was seeing gun shots all over one mall, (and) shattered glass skylights and store fronts.” CNNMoney.com reported that retail analysts “can’t say how many malls have failed. But they do know that only two new malls have been built” in the past eight years. Howard Davidowitz, chairman of retail consulting and investment banking firm Davidowitz & Associates, said he expects that half the nation’s 1,500 malls will fail in the next 20 years.
Power to the naysayers ■ Chief risk officers “are gaining power and multiplying in number across the U.S. banking industry as financial institutions bend to pressure from regulators to make their operations safer and simpler following the financial crisis that began in 2008,” according to a Wall Street Journal story that included comments from an executive at KeyCorp. The ultimate goal is to “reduce the likelihood of another round of catastrophic losses that could shake the financial system,” the newspaper said. In a June 25 report, the Office of the Comptroller of the Currency warned that “credit risk is now building after a period of improving credit quality and problem loan cleanup.” The Journal noted that Wells Fargo now has 2,300 employees in its core risk-management department, up from 1,700 two
years ago. In February, Goldman Sachs put its chief risk officer on the company’s management committee for the first time in Goldman’s 145-year history. And to keep a closer eye on banks, the Federal Reserve Bank of New York says it has about 45 examiners, about twice the pre-financial crisis level. Cleveland-based Key “has rewritten its compensation guidelines so that loan officers can lose a chunk of their bonus if they fall short of new risk-management standards,” The Journal reported. Before the financial crisis, bonuses were determined largely by profit goals. “Before, you threw something over the wall, and the risk managers said yes or no,” William Hartmann, Key’s chief risk officer, told the newspaper. “Now we’re more involved in the development of the strategy or the plan.” Partly as a result, KeyCorp “has sharply reduced its loan commitments for construction and real-estate development,” according to the story. “Bankers there also work harder to judge the overall riskiness of a borrower, instead of one project at a time.”
It’s good to recycle ■ The New York Times had flattering things to say about Cleveland in a story and slideshow that calls the town “a city repurposed.” “If there had to be a slogan to describe Cleveland as it is today, “what’s old is new again” would undoubtedly be it,” the newspaper said. “In the last few years, locals and businesses in this Midwest metropolis have been repurposing historic buildings from its heyday in the late 19th and early 20th centuries and turning them into restaurants, stores and draws for both residents and tourists.” Among the sites cited: upscale French restaurant Cowell & Hubbard, the Horseshoe Casino Cleveland, the Tudor Arms Hotel, the Greater Cleveland Aquarium and all of Ohio City/Hingetown.
20140707-NEWS--24-NAT-CCI-CL_--
7/3/2014
12:26 PM
Page 1
Š2014 Porsche Cars North America, Inc. Porsche recommends seat belt usage and observance of all traffic laws at all times. Porsche recommends four winter tires when driving in cold, snowy, or slippery conditions.
Any resemblance to the car of your dreams is purely intentional. It wears its heritage proudly on its sleeves. And fenders. And roofline. Introducing the Porsche Macan S. A 340-horsepower twin-turbo V6, PDK double-clutch transmission and active all-wheel drive with Porsche Traction Management for maximum grip in varying driving conditions. All standard. The Macan S is built around our defining belief that every drive should be unforgettable. And every car should be a sports car. Dream fulfillment begins with a test drive. Porsche. There is no substitute.
The new 2015 Macan S. Starting at $49,900.
Porsche of North Olmsted A Part of The Collection Auto Group 28400 Lorain Road, North Olmsted, Ohio 44070
855-384-0056
Open 24/7 at: www.clevelandporsche.com