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Motown’s blues don’t ring true in Cleveland Detroit’s economic woes aren’t felt as much here because of solid planning By JAY MILLER jmiller@crain.com
For decades, Cleveland has been yoked to Detroit. Both watched their economies erode as manufacturing rusted; both watched as their residents fled to the suburbs and beyond.
EDITORIAL CARTOON: Mayor Frank
MCKINLEY WILEY
John Matricardi helps Elyria-based KS plan construction projects that range from docks to waterfront buildings.
Mergers building momentum As construction climbs back from wreck of recession, acquisitions are picking up By STAN BULLARD sbullard@crain.com
John Matricardi ran Matrix Engineering in Lakewood for 27 years before selling it recently to KS Associates. He now commutes to Elyria-based KS to build its new
coastal engineering group, but his work is the same: planning construction projects ranging from docks to waterfront buildings on Lake Erie and its tributaries. Mr. Matricardi said he had been trying to sell his niche firm for years — even before the most severe building
downturn since the Great Depression. He found his buyer thanks to a gradual revival of construction-related spending in Northeast Ohio and nationwide that has the industry’s many disciplines and vendors spreading their wings with acquisitions, mergers, new offices and even new products. It is a big switch from the constant shutdowns and consolidate-to-survive atmosphere of the most recent recession, which
roiled the construction field. Selling or merging as a business comes back — rather than digging in to make up for lost time, as typically happens in the construction industry after most downturns — is a hallmark so far of the tepid recovery. In Mr. Matricardi’s case, he started seeking a buyer because of his age. He is 61 and wants to work five more years before he retires.
Jackson meets Nero, who has advice from Detroit. Page 8 But now, with Detroit facing bankruptcy, Cleveland isn’t sharing its neighbor’s unwanted attention over its finances — even though both cities have struggled with the same challenges, including housing foreclosures and a declining income tax base. Why has Cleveland been able to avoid the fiscal crisis now facing Detroit and threatening other cities such as Chicago and Cincinnati? See CLEVELAND Page 6
INSIDE
See MERGERS Page 7
PD delivering bad news to small businesses Some advertisers could be stung by paper’s reduced home delivery By JAY MILLER jmiller@crain.com
30
Daniel Ungar is a small Plain Dealer advertiser. But he sees big
problems ahead. The owner of Mar-Lou Shoes in Lyndhurst has no plans to abandon the daily newspaper when it drops home delivery on Mondays, Tues-
days and Thursdays starting next week. But that change, he says, “opens up a can of worms.” Mar-Lou is a general shoe store, but since his father, Henry, and
mother, Marcia Lou, opened their first store in 1958, it has had a focus on shoes for big and tall women — a generally older audience that still reads print newspapers. Mar-Lou typically runs small ads in The Plain Dealer, sometimes two columns
Huge things happening Little Tikes Co. executive vice president Thomas W. Richmond — shown with his son, Enzo — attributes much of the company’s growth to the fact it is manufacturing more of its toys in Hudson. PAGE 3
See PD Page 9
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SPECIAL SECTION
FINANCE Bankruptcies are down, but some experts are skeptical the trend will continue ■ Pages 11-16 PLUS: ADVISER ■ RETIREMENT CONTRIBUTIONS ■ & MORE
Entire contents © 2013 by Crain Communications Inc. Vol. 34, No. 30
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COMING NEXT WEEK Valuable members of any team Crain’s special section this week will highlight some of the many human resource professionals in the area who are always available to lend a helping hand. There will be profiles of recipients and finalists, who also will be recognized at an awards gala on Aug. 13.
REGULAR FEATURES Classified ....................21 Editorial ........................8 From the Publisher ........8 Going Places ...............10
Letter............................8 Reporters’ Notebook....22 The Week ....................22 What’s New..................22
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QUALITY IS JOB ONE Pay raises for U.S. employees are inching up, according to the Mercer consulting firm. Mercer’s newest survey results show that the average raise in base pay is expected to be 2.9% in 2014, rising modestly from 2.8% in 2013 and 2.7% in 2012 and 2011. But it pays to be good at what you do, as projected increases are considerably higher for top performers than for average workers. Here’s a look at average base pay increases for employees as ranked by their performance:
Employee ranking Highest-rated
Pct. of work force
Avg. pay increases
7%
4.6%
Next highest-rated
30%
3.5%
Middle-rated
54%
2.6%
Low-rated
7%
0.9%
Lowest-rated
2%
0.2%
â– Source: Mercer 2013-14 U.S. Compensation Planning Survey; www.mercer.com
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Gotham King nine have new lender
THE WEEK IN QUOTES “There are a lot of people owning architectural, engineering and construction companies who are baby boomers and reaching their retirement years. If they have not had the chance to successfully transition internally, now is the time to sell.”
Lone Star Funds affiliate also is seeking approval for Sterling Building downtown; unclear what effect will be
— Herbert Cannon, president of AEC Management Solutions of Matawan, N.J., a consultancy to building-related businesses. Page One
By STAN BULLARD sbullard@crain.com
After buying the distressed debt at a drastic discount, an affiliate of Dallas-based Lone Star Funds is serving as the new lender in a pending foreclosure case for the nine east suburban office buildings owned by Gotham King Fee LLC. The Lone Star affiliate also is seeking approval in a different Cuyahoga County Court of Common Pleas foreclosure case to assume the lender’s place in the pending disposition of the Sterling Building in downtown Cleveland. How the changes will shape the court actions and the fate of 1 million square feet of Northeast Ohio offices so far is not clear from court filings, and experts say the results could vary widely. One case involves nine prime office buildings that Gotham King Fee purchased in 2007 from Duke Realty Corp. with a $132 million loan. The other concerns an $8 million loan that Sterling Telecom LLC, an investor group led by Beachwood-based office owner and operator Mark Munsell, obtained on the five-story building at 1221 Euclid Ave. “There’s a new sheriff in town,” said Alec Pacella, managing partner of the Beachwoodbased NAI Daus realty brokerage. “Ultimately, it may bring these properties closer to getting new owners.” Carl Dyczek, a Walter Haverfield LLP partner who frequently represents banks and institutional lenders in commercial financings and workouts, said it’s hard to say buying the mortgages outstanding at a bargain rate might make the lender more inclined to resolve the case quickly. “There is no rule of thumb on this,” he said. “It depends on the objective of the lenders and how much of a return they want to obtain for their investors,” Mr. Dyczek added. “The orders to the asset manager may be, ‘Get as much as you can.’ But it depends on how much push back there is from the borrowers. It also depends on whether or not the lenders want to be the property owners.” The note sale may have a more direct bearing on the office market than who owns the property. David Browning, managing director of CBRE Group Inc.’s Cleveland office and receiver on the Gotham King portfolio, said leasing may pick up now because the note sale by Orix Capital Markets, the original Gotham King Fee See LENDER Page 20
“If you’re a car dealer, you’re already used to (advertising on) Saturday, and you’re probably going to be OK. But if you’re an insurance agency, when do you reach people when you’re not open on the weekends?” — Clarke Smith, chief strategy officer for Brandmuscle. Page One
JANET CENTURY
Little Tikes Co. executive Thomas M. Richmond and his son, Enzo, are shown at the company’s Hudson plant.
LITTLE TIKES IS MAKING H BIG CLIMB
By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com
Hudson toy maker has grown by increasing production in U.S.
udson toy maker Little Tikes Co. has seen growth in recent years, and it’s growth that executive vice president and worldwide general manager Thomas M. Richmond attributes in large part to the company’s decision to manufacture more of its toys at its Northeast Ohio plant instead of overseas. When Little Tikes started out more See TIKES Page 20
INSIGHT
Law schools are bulking up from health care Affordable Care Act increases need for attorneys who specialize in field; Akron is latest to devote center to it By TIMOTHY MAGAW tmagaw@crain.com
Despite what’s been characterized as a persistently tough job market for attorneys, new-
3
ly minted lawyers with a background in health care could have an easier time landing a job given the rapidly evolving regulatory environment brought on by the federal health care overhaul.
As such, law schools — many of which have weathered sustained enrollment challenges in the face of poor job prospects for their graduates — are, in a sense, going to medical school to fill that ballooning need for health care attorneys. And given Northeast Ohio’s reputation as a health care powerhouse, the region’s law schools suggest it would be foolish not to flex their medical muscles. See LAW Page 21
“If there were an uptick in interest rates, then I think you would see a lot of companies (that) would be experiencing difficulties with their cash flows and probably need restructuring. This low interest rate environment that we’re in obviously isn’t going to last forever.” — Alan Lepene, partner, Thompson Hine LLP. Page 11
“I think it’s terrible public policy because professionals … have always been liable for negligence. I don’t see why they should not be liable for negligence and avoid claims of clients and patients by setting up an irrevocable trust over which they have control.” — Leon Gabinet, the Coleman T. Burke Professor of Law in the Case Western Reserve University School of Law. Page 14
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“I don’t know many people that don’t feel intimidated before, during and after their first CrossFit workout,� says Larry Crooks, coowner and coach at CTOWN CrossFit on Columbus Road in Cleveland’s Flats. For a new member with limited athletic experience, a CrossFit box — as the spartan workout spaces are called — could resemble a torture chamber full of pull-up bars, kettle bells and 300-pound tires. However, a growing community of CrossFit enthusiasts — which takes in 37 locations in Northeast Ohio — is shelling out significant dollars to subject themselves to the anguish a minimum of three times a week. Monthly membership to a CrossFit box costs anywhere from $85 to more than $130, a seemingly high figure compared with a YMCA or recreation center membership, which can range in price from $22 to $50 a month. But CrossFitters don’t seem to mind the additional expense. “I have people come in and say, ‘Why is this so expensive?’ and I have others come in and say, ‘This is so cheap, I just ditched my personal trainer!’� said Aaron Shaffer, owner of CrossFit CLE at 2218 Superior Ave. in Cleveland. Mr. Shaffer said a CrossFit membership is a happy medium between a franchise gym or community recreation center that offers no instruction, and the services of a personal trainer, which can cost as much as $60 per hour. For the additional cost, members of a CrossFit box receive ongoing supervision and education on the equipment. “Most people have no idea what they’re doing when they’re working out,� said Patrick Flannery, owner and trainer at Great Lakes CrossFit at 5075 Taylor Drive in Bedford Heights. Mr. Flannery said most people try to copy what they see in magazines and on television, or follow what other people are doing. The small group instruction found in a CrossFit class ensures participants are doing each exercise correctly, which elicits results, Mr. Flannery said. The results are what keep people coming back for more. “The simple fact is that if you commit yourself to working hard, show up regularly and eat a sensible diet, it’s almost impossible to not achieve results,� Mr. Crooks said.
A way of life Although CrossFit was not recognized in the American College of Sports Medicine’s Worldwide Survey of Fitness Trends for 2013, Annie Spencer, communication and public information manager at the Indianapolis office said that bodyweight training makes its debut on
CONTRIBUTED PHOTO
CTOWN CrossFit is located on Columbus Road in the Flats. the list at No. 3. Used in CrossFit classes, bodyweight training puts less emphasis on equipment and more focus on resistance workouts using one’s own weight. The survey asked 29,630 health and fitness professionals to rank 37 potential trends on a Likert scale of likelihood to be a lasting trend. The survey defines trends as a general development or reappearing change in the way people are behaving. A fad, however, is taken up enthusiastically, but only for a short time period. “It’s definitely a trend,� said Yuri Feito, assistant professor in the Department of Exercise Science and Sports Management at Kennesaw State University in Georgia. Dr. Feito, a member of the American College of Sports Medicine, said national coverage of the CrossFit games is pushing people to give it a try, and many are embracing it. Though a healthier body is the goal, one of the biggest factors bringing people back to CrossFit locations is their sense of community, which outsiders often perceive to be slightly cult-like. Morgan Oberle, an internal medicine doctor currently training in sports medicine, has been doing CrossFit for 13 months at CrossFit CLE. Dr. Oberle always has been a fitness-motivated individual — she was a Division I college cheerleader and a runner— but CrossFit is an entirely new experience for her. She had seen the CrossFit games on TV and had always been interested but intimidated. “I thought these people were crazy waking up at 5:30 a.m. to go to the gym,� she said. But a friend brought her along to a class and Dr. Oberle found the workout fun, but challenging. “It’s easy to judge what you don’t understand,� she said. Now that she is part of the CrossFit community, it has become a lifestyle and support system for her everyday health.
Remembering ‘Murph’ Although CrossFit is not a franchise, and each box has its own individual business plan, all coaches and owners must earn at least level one certification from the CrossFit headquarters in Santa Cruz, Calif. CrossFit coaches are uniformly trained in various locations by traveling training staff. Once they sign a licensing agreement stating that
CrossFit owns the brand trademark, and they pay an annual licensing fee, they are free to run their gym as they wish. The licensing fee costs box owners from $500 to $3,000 a year, depending on when they were grandfathered in to the program — the earlier the entry, the lower the cost — said Jimi Letchford, brand chief for CrossFit headquarters. The annual licensing fee also gives box owners access to a risk retention group to defend against litigation, he said. Other than that, box owners have fairly free reign. “Each CrossFit gym can be run in very different ways, but there are very measurable, certain and defined workouts,� said Mr. Shaffer of CrossFit CLE. These benchmark workouts are named for storms and anything else that leaves a participant incapacitated and uncomfortable, or for fallen military heroes. For example, one of the most widely recognized and most challenging CrossFit benchmarks is the “Murph� named in the memory of Navy Lt. Michael Murphy who was killed June 28, 2005, in Afghanistan. This workout calls for a one mile run, followed by 100 pull-ups, 200 push-ups and 300 squats, polished off with one more mile of running. The workout can be scaled depending on the fitness level of the athlete, but CrossFit suggests that if participants have access to a 20pound vest or body armor, they should don it during the challenge.
Nothing fancy The differences between boxes start as early as the opening day. Many owners decide to start small, with just 10 members working out in a garage, park or small industrial space. Without the expense of a full-size gym, the only things left to pay for are equipment and certification costs, which total $15,000 to $20,000 for a box that accommodates classes of about 10. “It’s definitely less than owning a typical gym,â€? Mr. Crooks said, in part because CrossFit bypasses fancy machines. Mr. Crooks considers a successful box to have 100 to 200 members. “Most people that get into it don’t say, ‘Oh this is going to be a great way to make a lot of money,’â€? Mr. Crooks said. He said the owners are former CrossFitters and coaches driven by love of the lifestyle. â–
Volume 34, Number 30 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 2013 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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Union-backed group criticizes Airmall’s work But Hopkins director says firm that oversees airport concessions has done well, and per-passenger revenue continues to increase By JAY MILLER jmiller@crain.com
A labor union-backed research group has called into question the effectiveness of a key supplier at Cleveland Hopkins International Airport. But airport director Ricky Smith believes Airmall USA, the firm that oversees food and beverage and retail concessions at Cleveland Hopkins, is doing a good job. The Airport Group, a research affiliate of Unite Here, a union that represents 30,000 airport workers at 76 airports, recently released a four-page report that claimed that Airmall has not met its projections for per-passenger spending and has unjustifiably sought to reduce its rent obligation to the city of Cleveland. The union, which does not represent Cleveland Hopkins workers, presented its findings earlier this month to Cleveland City Council. The Airport Group’s report recommends that the city change the way it contracts for concession services when Airmall’s 10-year contract to oversee concourse operations expires in 2018. The union broadly opposes the way Airmall operates at airports.
Airmall subcontracts individual concourse space to operators such as Best Buy, Cinnabon, Hudson News or Subway, which do their hiring individually. This structure, called the developer model, makes it more expensive and more difficult for the union to organize workers, since it must negotiate with operators of individual restaurants and shops that tend to dislike the presence of a union. The previous Cleveland Hopkins operator, HMSHost Corp., operated the stands itself as a franchise or director-operator of the various restaurants and shops. HMSHost’s union and nonunion employees might be shifted from storefront to storefront since all were operated by their employer. The industry calls this the master concessionaire model.
Developing situation However, airports are shifting to the developer model, said Bruce Boudreau, a director in the aviation practice of the LeighFisher consultancy in San Francisco. “Airports like developers because developers have better programs,” he said. “Developers can help airports operate more efficiently.”
Mr. Smith agrees with that assessment. “We wanted increased local participation, expansion of the number of concepts, street pricing and we wanted to grow the airport’s revenues,” he said. “They have achieved all of those measures.” The Airport Group disparaged the revenue generated at Cleveland Hopkins in its report, saying it was in the bottom quarter of 53 airports surveyed by Airport Revenue News magazine in 2011, at $7.31 per passenger. But that tops the $5.59 per passenger during HMSHost’s last year at Cleveland Hopkins. The city did agree to reduce Airmall’s rent guarantee from $4.5 million to $4 million for 2011. Mr. Smith said Airmall was allowed to pay less than the minimum guaranteed rent. He said the company invested several million dollars more than anticipated to renovate concourse shops because of the airport’s aging infrastructure. Mr. Smith said Airmall paid the city $4.5 million in 2012 and is obligated to pay an increasing minimum amount for the remainder of the contract. In an unsigned statement emailed by Airmall’s spokesman, the company said its share of a $25
“We wanted increased local participation, expansion of the number of concepts, street pricing and we wanted to grow the airport’s revenues. They have achieved all of those measures.” – Ricky Smith, director, Cleveland Hopkins International Airport, on Airmall million upgrade of concession operations at Cleveland Hopkins was $8 million, which was $3 million more than anticipated. The concession operators paid the bulk of the renovation costs. The statement also said that Airmall “remains committed to developing and managing a world-class concessions program at Cleveland Hopkins International Airport” and that “although passenger traffic has declined by as much as 20% since we took over in 2008, the program continues to generate more revenue for the city than the one that it replaced.”
More than magazines Because of the unique way airports are financed and operated, the more revenue an airport can generate from non-airline sources, the less the airlines pay to operate. That can
give an airport a competitive advantage when airlines make decisions about where to expand service. Mr. Smith also said the number of storefronts has grown by 25% to 55, and the number of employees has grown from 368 in 2006 to 700 today. In addition, he said, most shops are run by local owners or franchisees. Although the Airport Group initially contacted Crain’s Cleveland Business and emailed a copy of its four-page report, it did not respond to an email asking for responses to comments made by Mr. Smith or Airmall. An Airport Group researcher met several weeks ago with Cleveland City Councilman Martin Keane, chairman of the city council’s aviation and transportation committee. “My meetings were specific to Airmall at Cleveland Hopkins,” Mr. Keane said. “I don’t think there is an organizing effort at Cleveland Hopkins.” Unite Here has not had a presence at Cleveland Hopkins in nearly a decade, Mr. Keane said, when unionized workers at the airport split off from the national organization. However, it is currently in a heated organizing effort at Thurgood Marshall Baltimore Washington International Airport, where concessions are operated by Airmall, and the move here is seen as added pressure on the company to resolve the BWI situation. ■
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Cleveland: Longtime analyst praises city’s current, past finance directors continued from PAGE 1
The answer has several layers. Municipal finance experts point to three key differences between Detroit (as well as other cities in financial trouble) and Cleveland: strong and conservative financial management that grew out of Cleveland’s 1978 fiscal default; a more diverse regional economy; and an arm’slength relationship with its pension responsibilities. “There is no comparison whatsoever between the two cities,” said Kevin O’Brien, director of the Great Lakes Environmental Finance Center and a longtime public finance analyst. “Even at its worst, Cleveland wouldn’t be a Detroit. There is still a downside potential, but we don’t see much evidence of that because they’ve done a really good job.” The “they” Mr. O’Brien was referring to was Cleveland’s finance de-
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“I look at the finances of the city historically since Bill Reidy, and we’ve had great finance directors with the exception of one or two.” – Kevin O’Brien, director, Great Lakes Environmental Finance Center partment over several decades. Mr. O’Brien, a former public finance aide to the mayor of New York City, said the big change came after Cleveland defaulted on $14 million in debt in 1978 — the first American city to hit a financial bottom since the Great Depression — and George Voinovich replaced Dennis Kucinich as mayor in 1979. In turn, Mr. Voinovich appointed William Reidy, then a partner with the Coopers & Lybrand accounting firm, as finance director. Ever since, the city has conservatively budgeted and managed its money. “I look at the finances of the city historically since Bill Reidy, and we’ve had great finance directors with the exception of one or two,” Mr. O’Brien said. The city’s current finance director, Sharon Dumas, “has done a great job, better than anyone since Reidy,” he said.
Pension problems Tim Offtermatt, a senior vice president of public finance with the Cleveland office of investment firm Stifel, Nicolaus & Co. and a former Cleveland finance department official, added that Detroit’s financial trouble involves $18 billion in debt, including $9 billion in debt it used to cover pension obligations. Cleveland, by comparison, reported debt of only $2.4 billion in a recent financial statement. The city of Cleveland declined to make a finance department official available to comment for this story. Also unlike Detroit, Cleveland does not directly fund and manage its pension plans. Most Ohio cities’ pension plans — with Cincinnati as a notable exception — have been run for decades by two statewide pension plans, the Ohio Public Employees Retirement System and the Ohio Police & Fire Pension Fund.
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The Ohio funds have not survived the recession unscathed. Along with most public and private pension funds, it suffered a significant loss of investment value during the great recession. That has left it with a higher percentage of its future pension obligations unfunded than is considered desirable. But they are faring better than city-run plans. Mr. Offtermatt said that cities that control their own pension funds have used increased pension perks in labor negotiations when they couldn’t afford salary increases or would have needed a tax increase to satisfy municipal workers. “Let’s say a mayor says to his employees, ‘For the next three years, your salary doesn’t increase but we’ll give you 10% more in your pension.’ The public officials can say they’ve held the line on raises but they’ve potentially put the pension system at risk,” Mr. Offtermatt said. “That’s been done a lot.” Bond-rating agency Moody’s on July 15 downgraded a Cincinnati bond issue, citing budget concerns brought on offering city employees pension increases without at the same time increasing the city’s contribution to the pension plan.
Growth plan Jason Seligman, an assistant professor at the John Glenn School of Public Affairs at Ohio State University, believes that public sector pension plans are not the main issues. To him, the key reason Cleveland is not on the same financial path as Detroit is more fundamental. “The first, best answer is that Cleveland has a more diverse economy,” he said. Where Detroit, especially the city of Detroit proper, relied heavily on auto industry and auto supplier plants, Cleveland always had a more diverse manufacturing economy, including steel mills and machine tool makers and a strong business service sector. More recently, Dr. Seligman said, Cleveland has developed a culture that sought to nurture new businesses, which has led to strong health care, medical device and bioscience sectors. “The best answer is the ‘G’ word,” he said. “Growth.” ■
BUSINESS HOUR B A conversation with former Congressman Steve LaTourette: The political and policy landscape in Washington, D.C. Thursday, August 1, 2013 Noon to 1:00 p.m. EDT – Business Hour McDonald Hopkins, 600 Superior Ave., Suite 2100 Downtown Cleveland RSVP: mcdonaldhopkins.com or call: 216.348.5400 to register.
program ad close: Augustt 15 artwork due: Augu ust 22 To book your ad, contact: Nicole Mastrangelo
McDonald Hopkins LLC 600 Superior Ave., East, Suite 2100, Cleveland, OH 44114 • 216.348.5400 Carl J. Grassi, President Shawn M. Riley, Cleveland Managing Member Chicago • Cleveland • Columbus • Detroit • Miami • West Palm Beach
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Mergers: Recovery has resulted in more mergers within state continued from PAGE 1
Lynn Miggins, owner of KS, said she plans to add a young engineer or shift one of her staffers to work with Mr. Matricardi to become schooled in the type of civil engineering work associated with marine projects. KS was not in acquisition mode a few years ago because money was too tight, Ms. Miggins said, but did a deal now because business is growing again. The long and unprecedented decline in construction work left some firms and owners so wounded they are reluctant to rebuild and face another downturn. They hope to sell as other, typically larger firms offer buyouts. Herbert Cannon, president of AEC Management Solutions of Matawan, N.J., a consultancy to building-related businesses, said merger and acquisition activity among architecture, engineering and construction companies finally picked up last year after slowing in 2008 as projects went on hold or were scuttled. “No one wanted to acquire a sinking ship. They were focused on their own survival” Mr. Cannon said. “As bank credit has expanded and projects started moving, people have realized we have survived the worst,” he said. “There are also a lot of people owning architectural, engineering and construction companies who are baby boomers and reaching their retirement years. If they have not had the
chance to successfully transition internally, now is the time to sell.”
Everybody’s doing it The past few months have been filled with moves. Akron-based GPD Group acquired W.E. Stilson Consulting Engineers in Columbus last month and shifted Stilson’s employees to its own Columbus office. GPD said the combination brought it a firm that specialized in roadway, traffic, water and wastewater engineering. Those areas mesh with GPD’s engineering, planning and architectural practices for public works and public buildings, housing, and retail and commercial site development. Likewise, CT Consultants Inc. a comprehensive civil engineering firm in Mentor, in April merged with EG&G Inc., a multidisciplinary consultancy in Fairlawn known as a designer of downtown landscape improvements and community projects. Dave Wiles, CT president, said the merger allows CT to expand both geographically and in related services. CT last year acquired Floyd Browne Group, a Delaware, Ohio, civil engineering firm that provides water and wastewater engineering design services and provided entry to international markets. Before the downturn, most transactions were across state lines to diversify beyond local economies. But in the recovery,
Shore Drive, Sh Driive B Bath ath th $884,000 Jennifer Frantz, 330-836-9300
more mergers are within states such as Ohio, where firms are consolidating their positions and diversifying by geography or specialty, according to Morrissey Goodale LLC, a Newton, Mass., consultancy for architecture, engineering and construction firms. “Folks who traditionally worked with each other are becoming each other,” Mick Morrisey, managing principal of Morrissey Goodale, said. “The recession has prompted a sea change in this industry. It is pervasive in the minds of managers. They feel they have aged 10 years in the last five.” The KS Associates-Matrix Engineering deal fits the shared-work mantra, as Mr. Matricardi often hired land surveyors from KS for waterfront-related projects. Likewise, Atwell Group, a national firm providing land-related engineering services with a Solon office, in June merged with Universal Pegasus International, a Denver firm that provides electrical engineering services that complement Atwell’s wind and solar-related units. Bob Beaugrand, an Atwell partner who runs its Solon office, said such combinations allow companies to provide more services to existing clients. He noted conditions among some firms providing construction-related services are headturning. “Some are businesses in name only and not the substantial competitors of the past,” Mr. Beaugrand said.
Lookout L ookout k D Drive, riive Bainbridge Baiinb brid idge $1,320,000 Janice Carson, 216-831-9310
Expansion opportunities Other firms in the broad category of construction services or suppliers also are making moves. Construction News Corp., a 21year-old digital supplier of leads to building contractors based in Middleburg Heights, recently was acquired by Construction Journal, a Stuart, Fla.-based provider of similar services in 20 cities. Rich Weinstock, Construction Journal’s communications director, said the sale was a “family decision” by Construction News founder Arthur A. Blaicher II and his son, Arthur A. Blaicher III, who remains with the acquirer as a member of its executive team and manager of day-to-day operations here. The younger Mr. Blaicher declined comment. For Construction Journal, the acquisition’s logic was simple: With a few pen strokes, it gained customers in Ohio and Michigan in its plan to blanket the nation east of the Mississippi River. Mr. Weinstock said the new owner is upgrading the former firm’s technology and expanding personnel; it already hired two of seven people it plans to add to the 18-person staff here.
‘Just give me normal’ Countering the trend of construction materials suppliers such as lumber companies failing or closing stores the last few years, Omicron Granite, a Pompano Beach, Fla.-based supplier of gran-
ite and associated items to granite fabricators, opened a 24,000square-foot granite warehouse in Solon. Fred Cohen, Omicron president, said with 12 locations in Florida, he wants to add locations as the rebound gains strength. Atlanta was a natural next stop, but it has too much competition, so he opted for Cleveland, which has a handful of such suppliers. Mr. Cohen hired Chris Morrow, a friend of one of his general managers, to launch Omicron operations here six months ago with a methodical approach. To make contacts in the region, Mr. Morrow initially drove a van to the shops of granite fabricators to sell them tools and other products. With those relationships in place, Omicron opened the warehouse that Mr. Morrow now runs. A new hire operates the van and assists at the warehouse. “When everyone else was running away, I’ve tried to run toward the challenge and buy operators or take advantage of cheap warehouse rents,” Mr. Cohen said. Asked about the slow pace of homebuilding’s rebound, Mr. Cohen takes the long view that the country will need housing as its population grows and it forms new households Mr. Cohen dreams of adding other offices in Ohio, but has a modest take on the times. “I don’t need boom or bust,” Mr. Cohen said. “Just give me normal.
No one sells more high-end real estate than Howard Hanna.
In Northeastern Ohio, Howard Hanna sold more than half of the homes priced over $1 million in 2012. In addition, we sold six times the number of luxury homes as our nearest competitor.*
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Our professional REALTORS® with proven experience in the local market in conjunction with our Christie’s International Real Estate affiliation make us the obvious choice when selling high-end real estate. www.howardhanna.com
Bradley B radl dley Road, Road d W Westlake estl tlak ke $1,125,000 Kim Crane, 440-333-6500
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*Based on 2012 listed and sold units NEOHREX statistics January 1, 2012 through December 31, 2012. Statistics as of 6-20-13. (Information deemed reliable but not guaranteed.) If you are exclusively represented by another broker, kindly disregard this notice.
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PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Learn more
A
s the global economy gets more complicated, America needs to produce an evermore educated work force to remain competitive. And while our university system remains first-rate, higher education in this country is becoming increasingly difficult to afford for tens of thousands of students — and those who do make it through with a degree often are left with crushing debt. USA Today reported last week that the tuition sticker price at public four-year colleges is up 27% beyond overall inflation over the past five years. Including room and board, the average annual sticker price at public colleges is now nearly $18,000; it’s just under $40,000 for those attending private fouryear colleges. Those numbers contributed to an unfortunate milestone: total U.S. student loan debt recently crossed the $1 trillion mark. Financial realities are catching up with colleges nationwide. For instance, a new report from the National Student Clearinghouse Research Center found that after decades of growth, college enrollment nationally dropped 2.3% this spring from a year ago. That’s not a good trend line for advanced manufacturers, bioscience firms and other companies that rely on highly educated workers to drive growth in their businesses. Against that backdrop, we are encouraged by the outline of a plan from two Ohio lawmakers — state Reps. Mike Foley, D-Cleveland, and Robert F. Hagan, D-Youngstown — that seeks to make college more accessible and eliminate the burden of student loan debt. Their “Fair Deal for College Education” proposal would allow Ohioans to attend public four-year universities for free, then pay the state 3% of their income for 24 years to cover the cost of their education and to fund the program for future students. Reps. Foley and Hagan say the average Ohio student now graduates with more than $28,000 in student loan debt, which becomes a drag on the economy as they delay major purchases, such as buying a home. The Ohio proposal is based on a plan in Oregon called “Pay it Forward, Pay it Back,” which was approved earlier this month by that state’s legislature and is expected to be signed into law by Gov. John Kitzhaber. Oregon is taking a go-slow approach, according to media reports there, by planning the creation of a pilot program that would test the concept and figure out details such as how colleges would be compensated, and how the contract for student repayment would work. The Wall Street Journal says the state likely would borrow money to seed the fund, an amount that could exceed $9 billion. Beyond the initial cost, there are significant questions that would need to be addressed before Ohio should consider going down such a path. Among them: What are the payback terms for dropouts? And would the program attract students who don’t have a clear understanding of the impact on their future earnings? Nonetheless, we applaud the innovation at the heart of the proposal and hope legislators give it a legitimate look.
FROM THE PUBLISHER
Utica shale is anything but a bust look at it: Before the discovery of the Utit seems every time I turn on my ca shale, Ohio was producing only 13,000 computer, I’m reading about the barrels of oil per day. Utica shale “bust” from And other companies are inBloomberg or Reuters. The BRIAN vesting billions of dollars to stories all fixate on the lack of TUCKER build pipelines and fractionatoil production in Ohio’s early ing plants. Drillers are using wells, and the fact that some of Ohio steel tube, employing the companies that rushed in to Ohio truckers and road builders buy massive amounts of minerand having a real impact on the al rights are reversing course. state’s work force. What I haven’t read in most Bloomberg in April reported of these stories were comments that Chesapeake Energy Corp. from some of the same experts had offered some 94,000 Utica that Crain’s Dan Shingler quoted last acres for sale, but forgot the small point year in the wealth of reporting he has that would have lent perspective: The done on this subject, both for our newscompany has leased more than 1 million paper and our Shale magazine suppleacres in the Utica/Point Pleasant formament. tion. Very early on, this play was seen as a source of natural gas and natural gas liqThe fact is, as Cleveland State Univeruids like ethane, propane and butane, elsity’s Ned Hill told the audience at our ements key to the chemicals business. Shale Summit last February, we’re very Oil would be a plus, and some analysts early in this development. As is the case estimate that the Utica oil production with all energy plays, some will hit and will be up to 200,000 barrels a day by some will miss. But I’m betting that the 2017. companies pouring billions of dollars Certainly, that pales in comparison into new infrastructure are pretty conwith the big shale plays in North Dakota vinced there’s going to be a significant and Texas. But there’s another way to ROI for them in Ohio.
I
*** IT WAS SAD TO WATCH DETROIT file the largest municipal bankruptcy in U.S. history. Not only is our company headquartered there not far from Ford Field and the fabulous Eastern Market, but I began my Associated Press career in the Detroit bureau and really loved my time in the Motor City. Now I can only watch and wonder what might have happened if the city’s unions and elected leaders might have acted before the crisis forced them into bankruptcy. In Detroit, labor contracts often were influenced by what was done by the Big Three, and we all know what finally had to change with the United Auto Workers and GM, Ford and Chrysler. Faced with continuing job losses and an intense competition against the world’s carmakers that built new, stateof-the-art factories here, the UAW accepted concessions like two-tier wage structures that cut dramatically the salaries of new hires. They conceded because it was in the best interest of those union members who still had jobs. The city’s municipal workers never made it that far. ■
LETTER
Cleaner air is worth the extra effort
F
irstEnergy Corp. has announced that it will deactivate two additional coal-fired power plants, the most recent ones located in Pennsylvania. We are all sympathetic to anyone who is losing a job in this economy, and we urge FirstEnergy to work with employees and their representatives to ensure that all training and transition opportunities are extended to these whose jobs are at risk. According to a spokesperson, the utility is poised to invest significant resources to meet future environmental standards. We cannot lose sight of the measurable gains that will come as a result of stronger air pollution rules and
WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 441131230; Email: editor@crainscleveland.com
emission controls. These technology upgrades will result in FirstEnergy reducing its mercury emissions by 91% below 1990 levels and carbon emissions 20% to 30% below 1990 levels by 2020. Unchecked carbon emissions are leading to warmer temperatures and the more frequent bad ozone days that we’ve seen during the past summers. Nearly 200,000 Cuyahoga County resi-
dents are living with respiratory illness every day, including 28,000 children with asthma, and they are at risk for worsened health due to these bad air days. EPA air quality regulations and President Obama’s plan to reduce carbon pollution are designed to protect vulnerable families and children in the Cleveland area and across the country. That is not a benefit that can or should be lost when reading articles about moving to cleaner sources of energy. Barry Gottschalk President and CEO American Lung Association of the Midland States Louisville, Ky.
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PD: Larger companies might not feel as much of an impact continued from PAGE 1
wide by two inches deep, as it has for decades. “The Plain Dealer serves an audience, and that audience is a big part of our business,� he said. But Mr. Ungar isn’t sure where the hard-copy newspaper is headed. His ad contract for the coming year — and the rates Mar-Lou will pay — usually are negotiated in the second quarter of the year. But so far, he hasn’t been offered a new contract. A part of Mr. Ungar’s worry, and a worry for other small businesses that serve local markets, is that the newspaper — the ink-on-paper version, anyway — eventually will fade away. “If we want to reach a lot of people on any given day, where else can we do it?� he asked. “They’ve got us by the cojones.�
Start the experiment Advance Publications of New York is shuffling its deck of Cleveland properties. None of the familiar names — The Plain Dealer, the Sun group of weekly newspapers and Cleveland.com — will disappear. But how news and advertising find their way to readers of those products is expected to change dramatically . Most obviously, The Plain Dealer’s home delivery subscribers will not have a newspaper laid on their doorstep by a Plain Dealer contract carrier starting next Monday, Aug. 5, as the paper ends seven-day-aweek home delivery. It only will show up on Wednesdays, Fridays, Saturdays and Sundays. The paper will be available at newsstands and news boxes on days with no home delivery. The Sun newspaper still will be delivered on Thursdays. News industry analyst Ken Doctor of the Nieman Journalism Lab at Harvard University describes the Advance strategy, which is rolling out in other cities where Advance owns newspapers, as blowing up the enterprise and reassembling it into two pieces with separate newsgathering operations. One piece is a new company, Northeast Ohio Media Group, which launches Aug. 5. Northeast Ohio Media Group will operate the Sun chain, Cleveland.com and a
merged ad sales and marketing staff selling print and online advertising. The integrated sales staff is expected to be housed, according to sources, in the Plain Dealer Building on Superior Avenue. The other piece, the longstanding Plain Dealer Publishing Co., will put together the print edition of The Plain Dealer at the current newsroom on Superior Avenue from the stories that have been posted to Cleveland.com. Its newsroom will be staffed by unionized workers, members of The Newspaper Guild. Northeast Ohio Media Group will have a non-union editorial staff that it is assembling, but could include members of the current Plain Dealer reporting staff. Reporters there will write stories. Editors there will gather stories written by reporters from all the news operations and post them online as they are completed. The Northeast Ohio Media Group editorial operation will be housed either at the Cleveland.com headquarters in the Flats or at a new location.
Newsroom shuffle Beyond those scant details, upper management isn’t revealing its hand. For example, Harlan Spector, chair of the Plain Dealer unit of The Newspaper Guild, said all editorial staffers are going through training on new software that will be used to file their stories. That’s even though the company has announced it will reduce its editorial staff by as many as 60 people some time soon. Some of those people laid off may apply for jobs at Northeast Ohio Media Group. Andrea Hogben, who will be president of Northeast Ohio Media Group, did not respond to an emailed request from Crain’s for an interview on what the new company had planned. Instead, she replied with an email that focused on the business-side changes. “When we launch the Northeast Ohio Media Group on August 5th, the foundation of the team will be sales and marketing executives from Cleveland.com, The Plain Dealer and Sun News,� she wrote. “That integration of expertise, along with some very talented new hires, is paramount to our mission.�
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Little is known about how the news products will be marketed to advertisers. “They are going to be moving slowly,� said Jim Gagen, president of SynerG Media of Cleveland and a longtime local media buyer for advertising agencies. “It will take some time to resolve
Lost in the shuffle? But that evolution “will be a challenge� for small businesses, said Clarke Smith, chief strategy officer for Brandmuscle, a Chicago-based but Cleveland-founded marketing firm that focuses on local marketing campaigns. The end of seven-day home delivery, he said, “will definitely have a negative impact on small businesses. For our small business
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www.cbscuso.com
clients the newspaper is still an important advertising tool.â€? Mr. Smith said larger advertisers won’t feel the same impact. “If you’re a car dealer, you’re already used to (advertising on) Saturday, and you’re probably going to be OK,â€? he said. “But if you’re an insurance agency, when do you reach people when you’re not open on the weekends?â€? The Plain Dealer’s home delivery schedule favors supermarkets and other food advertisers that can continue to advertise on Wednesdays; entertainment venues and restaurants that will have the Friday paper; and auto dealers who want people to see what’s on sale before they go car shopping on Saturdays. But Sundays will be filled with colorful tabloid inserts, making it less hospitable for retailers, travel agents and anyone else who runs small black-and-white ads. “I’m very frightened,â€? said Mr. Ungar of Mar-Lou Shoes. “As much as we believe that people will go to Cleveland.com, I think the reality is otherwise. Generally, people will go to the nationally known news — Google, CNN, Yahoo, the big boys — or the television or radio station websites.â€? â–
The Solon Select is a distinguished group of more than 800 businesses that have chosen to locate in the City of Solon.
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itself,� Mr. Gagen said. “I think they would want to make it a comprehensive change.� In her email, Ms. Hogben acknowledged the importance of small advertisers. “We can only be successful if our local businesses are successful,� she wrote. “We’ve seen such a shift in the ways our local advertisers need to operate in the digital space, so we need to be absolute experts in that space.� Ms. Hogben added that the company is working on developing partnerships to boost digital access to what she called underserved populations. “This is an evolution of our business and we’re not afraid to make adjustments to the business strategy,� she wrote.
And thanks these real estate professionals for bringing new business to Solon:
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440-526-8700 jmokri@cbscuso.com
The email suggested that the business strategy is evolving. When The Plain Dealer announced on April 4 that it would end seven-day home delivery, the announcement said the paper would be delivered only three days a week — Wednesday, Friday and Sunday. That changed, Ms. Hogben wrote, after the company heard from auto dealers, who are large advertisers, “about the importance of Saturday home delivery.� “The response was loud and clear, so we adjusted the strategy,� she wrote. In her email, Ms. Hogben also wrote that the company is promoting what she described as existing “ ‘front page’ newsletters for advertisers looking to reach our audience 7 days a week — funeral homes, for example.�
Solon’s Got It!
Prime industrial, ofďŹ ce and retail sites at www.solonohio.org JUZ PG 4PMPO t #BJOCSJEHF 3PBE t 4PMPO 0IJP t $ 1FHHZ 8FJM %PSGNBO &DPOPNJD %FWFMPQNFOU .BOBHFS t pweil@solonohio.org
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GOING PLACES JOB CHANGES ARCHITECTURE RDL ARCHITECTS INC.: Jonathan Cana to senior project manager; Kevin Dreyfuss-Wells to senior designer; James Viviani to project manager; Vincent Sassano to project designer.
Roess
Tripodo
EDUCATION
president, equipment finance.
NORTHEAST OHIO MEDICAL UNIVERSITY: Denise Inman to director, integrated pharmaceutical medicine degree program; Heidi Terry to executive director, enrollment management.
SS&G: Courtney Ockenden to senior associate, entrepreneurial services group; Mario Ciclone to associate, tax; Steve Newton to associate, IT; Ilona Aronov to senior associate, tax.
ENGINEERING
SS&G HEALTHCARE: Desarae Simon to senior help desk staff; Kendra Gudakunst and Pamela Smith to billing specialists.
AUSTIN CO.: Erica Compton to BIM implementation manager; Ron Thieret to senior estimator; Jason Gergotz to senior electrical engineer; Jonathan Stewart to mechanical engineer; Roy Harmon to structural designer; Billiejo LaSage to design specialist II; Aaron Jones to project engineer; Mike Anthony to location analyst. TECHNICAL ASSURANCE INC.: Will Roess to vice president, corporate development; Carrie Ann Tripodo to office manager; Lisa Anselmo to coordinator, major corporate accounts; Chris Jasinski to director of engineering and enclosure commissioning.
HEALTH CARE AKRON GENERAL: Jim Armstrong to director of public relations and communications.
Anselmo
Jasinski
LEGAL LITTLER MENDELSON P.C.: Bradley A. Sherman to office managing shareholder, Cleveland. SUTTER O’CONNELL: Doug Miller to CFO; Tiffany Allison to associate.
SISTERS OF CHARITY HEALTH SYSTEM: Mark Yantek to executive director, Regina Health Center.
IVIDEO TECHNOLOGIES LLC: Kevin Soltzberg to account manager, Cleveland.
HOSPITALITY ALOFT HOTEL CLEVELAND/BEACHWOOD: John
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 daily e-newsletters: CrainsCleveland.com/register Newsletter schedule ■ Weekdays: Morning Roundup and daily headlines ■ Mondays: Real Estate Report ■ Tuesdays: Work Force Report ■ Wednesdays: Dealmaker Alert ■ Thursdays: Small Business Report ■ Fridays: Shale and Energy Report
AIR CHARTER SERVICE AIRCRAFT MANAGEMENT
Cleveland’s Premier Air Charter Service Serving Northeast Ohio with four Beechjets and a Hawker
www.FlySkyQuest.com • 216-362-9904
TRANSACTION REALTY: Philip Compton and Anitra Boyt to sales associates.
TECHNOLOGY
BOARDS CLEVELAND METROPOLITAN BAR FOUNDATION: Ginger F. Mlakar (Cleveland Foundation) to
Draeger
Miller
Susan R. Hurwitz to assistant secretary; Barbara Bellin Janovitz to treasurer; Harvey A. Siegel to assistant treasurer; Kenneth G. Hochman to immediate past chair.
BAR 25 LLC: Jeff Draeger to assistant general manager, Market Garden Brewery, McNulty’s Bier Markt, Bar Cento and Nano Brew Cleveland.
REAL ESTATE
GE CAPITAL CORPORATE FINANCE: Garrett Myers to vice
Wynshaw-Boris
Gaydos to general manager; Darlene Figlioli to director, sales.
CASE WESTERN RESERVE UNIVERSITY SCHOOL OF MEDICINE AND UNIVERSITY HOSPITALS CASE MEDICAL CENTER: Tony Wynshaw-Boris, M.D., to chair, Department of Genetics and Genome Sciences.
FINANCIAL SERVICE
Armstrong
Allison
Soltzberg
president; Thomas L. Feher to vice president; Drew T. Parobek to treasurer; Hugh E. McKay to vice president, endowment; Larry W. Zukerman to vice president, special events. MONTEFIORE: Steven S. Willensky to chair; Lawrence A. Mack to chair-elect; Ira S. Goffman, David B. Orlean and Ben Sheridan to vice chairs; June E. Taylor to secretary; Margo Vinney to assistant secretary; Idelle K. Wolf to treasurer; Bruce E. Cweiber to assistant treasurer; Andrew W. Hoffmann to immediate past chair. MONTEFIORE FOUNDATION: Andrew W. Hoffmann to chair; Jeffrey S. Davis, Robert A. Fuerst and Elaine J. Gilbert to vice chairs; Harriet L. Fader to secretary;
MONTEFIORE HOUSING CORP.: Robert M. Lustig to chair; David R. Hexter and Scott H. Polster to vice chairs; Daniel E. Rocker to secretary; Bradley Sherman to assistant secretary; Irv Berliner to treasurer; Alan B. Blumenthal to assistant treasurer; Ben Sheridan to immediate past chair. OHIO ASSOCIATION OF HEALTH UNDERWRITERS: Joe Blasco (Frank Agency Inc.) to president, Northeast chapter; Nancy Kuzenko (Anthem Blue Cross & Blue Shield) to president, Western Reserve chapter.
AWARDS ERNST & YOUNG: Gary Schuster (OMCO) received the 2013 Entrepreneur of the Year Northeast Ohio Award, distribution and manufacturing category.
Send information for Going Places to dhillyer@crain.com.
Ohio Aerospace Institute’s new partnership raises teaching bar By LAURA STRAUB clbintern@crain.com
The partnership that brings together the Ohio Aerospace Institute, a nonprofit in Cleveland that supports the state’s aerospace industry, and Embry-Riddle Aeronautical University’s Center for Aviation and Aerospace Leadership is a collaboration that OAI hopes will help new aeronautical education programs take flight in Northeast Ohio. The leadership center is a separate entity from Embry-Riddle’s academic programs that offer leadership development programs to individuals, teams and organizations in the aviation and aerospace industry and related fields. Plans for how the partnership between OAI and the leadership center will work here are still in their infancy, said OAI president and CEO Michael Heil. “The memorandum we just signed is the first step,” Mr. Heil said. The memorandum of understanding does not define a specific long-term goal but rather a visionary goal, said Robert E. Mansfield Jr., executive director of the Center for Aviation and Aerospace Leadership and a retired U.S. Air Force brigadier general. That visionary goal focuses on benefiting both entities and advancing the aeronautical industry as a whole. Gen. Mansfield plans to visit OAI to meet with Mr. Heil and OAI se-
nior staff. During this visit, the two parties will begin to work out details for both short- and long-term plans for the partnership. Areas that OAI could tap into could include the Center for Aviation and Aerospace Leadership’s distinguished speaker series, its STEM+M program — an initiative to build and put to use a national science, technology, engineering, mathematics and manufacturing database — as well as conferences, workshops and possibly a new Embry-Riddle branch campus. With the prestige Embry-Riddle carries in the field of aeronautics, Mr. Heil said, the partnership has the potential to bring high-profile speakers to the Cleveland area as early as this fall. Gen. Mansfield recognizes Embry-Riddle isn’t a household name for those not involved with aeronautics; however, he hopes increasing the reach of the distinguished speaker program will help change that situation. Gen. Mansfield also plans to visit Lorain County Community College to discuss a potential link with the leadership center. He said he wants to help community colleges cut costs by allowing them to share high-demand curricula through a network of community colleges and companies facilitated by the leadership center. “Our view is there is a potential to organize community colleges to train the (aviation) work force,” Gen. Mansfield said. Embry-Riddle
already has a relationship with Sinclair Community College in Dayton, which is the home of WrightPatterson Air Force Base. Besides its interaction with community colleges, Embry-Riddle has 24,000 students enrolled at two residential campuses — one in Daytona Beach, Fla., and the other in Prescott, Ariz. — and more than 150 regional and online branch campuses worldwide. In the long term, Mr. Heil said he hopes to bring a branch of EmbryRiddle to Northeast Ohio. “They have a presence in Dayton and Cincinnati, but in Cleveland they’re kind of starting from scratch,” he said. The presence of an Embry-Riddle location in the Cleveland area would mean visits from traveling Embry-Riddle instructors and adjunct local faculty as well as leveraging the university’s international prestige to secure regular guest appearances from industry leaders. “We think by establishing a relationship with them and establishing ties to their faculty, that can help us with work force development,” Mr. Heil said. This is not the first time Mr. Heil and Gen. Mansfield have worked together in the field of aeronautics. They both studied at the Air Force Institute of Technology and served together within the Aerospace States Association, an organization representing states’ interest in federal aerospace policy. ■
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11
FINANCE
INSIDE
16 ADVISER: PORTFOLIOS CAN GET PICK-ME-UP FROM POPULAR TOOL.
Fewer ‘flavors’ is recipe that lasts By limiting choices and adding perks, area businesses are boosting enrollment in retirement plans By DAVID PRIZINSKY clbfreelancer@crain.com
L
“We’re pretty bullish on the bankruptcy practice right now,” said Mr. Coffey, senior counsel. Why, when total bankruptcy filings fell by more than 14% between March 31, 2012, and March 31 of this year in both the Northern District of Ohio and the United States, and fell by double-digit percentages the year before that, are they bullish? “One thing that has depressed bankruptcy filings for businesses is a lack of financing,” Mr. Coffey said. There are a lot of companies that have loans, Mr. Coffey said, that they would have refinanced for better terms and rates were it not for the “virtual lockdown on
ocal companies and organizations are part of a national trend in that they are paying a good deal of attention to improving and maintaining the rates at which employees participate in their 401(k) plans. It’s no secret that participation rates and contribution levels have increased in importance as the result of the decline of the standard defined benefit pension plans and the increasing uncertainty of the longterm viability of the Social Security system, according to Janice Cackowski, a retirement specialist with Chapman and Chapman Inc. in Twinsburg, a benefit consulting firm. Experts say a reluctance to participate can stem from strained employee budgets, a lack of investment savvy, plan complexity and confusion and paralysis created by too many investment options. Behavioral economists have referred to the latter as a “Baskin-Robbins” approach that can overburden employees with too many choices. Some local employers, however, are finding that these impediments can be countered with education, generous matches, sound plan design and automatic enrollment with an opt-out option. And it’s a movement that’s seeing results nationwide. An emphasis on information and keeping options to a limited number has helped A-Brite Plating Co. in Cleveland to increase its participation rates. Christine Starkey, A-Brite comptroller, said one-on-one communications, provided by the firm’s Chapman and Chapman advisers, have been critical. A-Brite has 120 employees, and 78 are making contributions to the plan, according to Ms. Starkey. “In the January enrollment period there were 19 employees who became eligible and 18 enrolled,” she said. The exact participation rates were not immediately available because the company has had significant recent hiring.
See BANK Page 13
See FLAVORS Page 12
MCKINLEY WILEY
Thomas W. Coffey, senior counsel, specializes in bankruptcy for Tucker Ellis LLP in Cleveland, which is hiring another full-time bankruptcy attorney.
DIFFICULT TO BANK ON Bankruptcy filings are down, which means less related work, but some local experts believe trend won’t last By MICHELLE PARK mpark@crain.com
B
ankruptcy filings continue to drop locally and nationwide, prompting a number of law firms and companies to right-size their staffs or redirect their focus. Still, some anticipate the trend will begin to reverse itself within the year. Benesch, Friedlander, Coplan & Aronoff LLP eliminated two partner positions within its restructuring staff in recent months “in recognition of the fact that there have been changes to the legal restructuring market,” a spokeswoman confirmed last week. She said the group “remains strong with 13 professionals.” Nationally, making bigger headlines was the late-June announcement by New York-based Weil, Gotshal & Manges that it would let go of 60 associates and 110 support staffers and cut the pay of roughly 30 partners. The firm said it had been able to avoid layoffs after the economic downturn in large part because of its bankruptcy
BANKRUPTCY NUMBERS IN MOTION A look at the percent change in bankruptcy filings in a 12-month period ending on March 31 of a given year, compared to the same year-ago period:
Year
2013
2012
2011
2010
2009
Northern District of Ohio
-14.8
-19.3
-5.4
19
15.7
United States
-14.4
-13
2.6
27.4
33.3
■ Source: www.uscourts.gov and litigation work, but as that work winds down and as transaction activity remains at lower levels, it now must make adjustments in the “new normal.” Other firms say they haven’t made cuts but that attorneys have shifted to different types of work. In the meantime, a few are growing their headcounts because they expect bankruptcies and related work to rise. Thomas W. Coffey’s firm, Tucker Ellis LLP in Cleveland, is hiring another full-time bankruptcy attorney, which will bring the practice to two full-timers, including him. He expects the firm will make one or two additional hires in the near term.
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JULY 29 - AUGUST 4, 2013
Flavors: Effective plans can allow for on-time retirement continued from PAGE 11
She said the company limits its investment options to 15 for the sake of simplicity.
31 flavors only works for ice cream Chapman and Chapman’s Ms. Cackowski said it is a good idea to avoid the “Baskin-Robbins” approach. A study completed recently by the Vanguard Center for Retirement Research and Columbia University claimed that every 10 new investment choices cuts participation rates by 2%. David M. Kulchar, executive vice president and director of retirement plan services at Oswald Financial Inc. in Cleveland, agrees that too many choices affect participation. He said that “22 options may be the maximum in most cases.” Mr. Kulchar said companies want their employee investment plans to do well for obvious — and not too obvious — reasons. A good plan that is well designed can lead to good morale, more cash for the worker, a competitive advantage in recruiting, improved worker productivity and higher employee retention. “It also allows older workers to retire on time and as planned,” said Mr. Kulchar, adding that this gives management flexibility in controlling staffing. Companies seeking more participation also can be aided by another common tool used by benefit planners to increase participation: automatic enrollment with an optout option. Medical Mutual of Ohio in Cleveland enjoys a participation rate of about 80%, according to Seleah Ramsey, a senior benefit consultant at the insurance company, which has long used the automatic enrollment tool to achieve that rate. Medical Mutual has about 2,600 employees. However, automatic enrollment is coupled with an orientation session for all new employees at which the plan is explained. Ms. Ramsey said her company matches 100% of an employee’s contribution up to 3% of the individual’s salary. If the employee wants to contribute more than 3%, Medical Mutual will make a 50% match on
the additional money up to 5%. Management tools such as automatic enrollment can help increase participation but at the Ohio Aerospace Institute in Brook Park a 95% participation rate is largely attributed to the organization’s culture. The OAI sees no need for automatic enrollment. Tony H. Smith Jr., vice president of finance and operations, said the OAI is made up of scientists and researchers, who are generally sophisticated when it comes to understanding the intricacies of investing. “They (OAI employees) also know that free money is good,” said Mr. Smith. The OAI, which employs 70, matches 100% of an employee contribution up to 4% of the employee’s salary. Mr. Smith said that OAI also uses the services of a third-party investment adviser to assist the employees.
On the upswing Plan participation rates across the country appear to be increasing, according to industry experts. Indeed, a report this month from Aon Hewitt, of Lincolnshire, Ill., shows that employee participation in company defined contribution plans is at an all-time high and plan balances have reached pre-recession levels. According to the study, 78% of employees participated in a defined contribution plan in 2012, up from 75% in 2011 and 68% in 2002. Aon Hewitt attributed the increase in participation to the fact that 59% of employers automatically enroll employees, compared to 34% in 2007; automatic enrollment results in a participation rate of 81%, nearly 20 percentage points higher than without automatic enrollment. Bank of America Merrill Lynch’s new quarterly 401(k) scorecard also indicated participation rates have been fluctuating but are now trending in the right direction. Company officials said that the rates may vary from 75% to 70% participation, with the 75% being the strongest point. Just a few years ago, the participation rate at these firms was 50%, according to the officials. ■
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Bank: Fewer loans during recession means less debt for companies continued from PAGE 11
credit” that occurred in 2008, 2009 and part of 2010, so “there’s really some demand for reorganization and for taking debt off of people’s balance sheets.” “Every time it’s down for a while, it generally comes back with a vengeance,” he said of bankruptcies. “We think filings have been depressed because financing has not been available, and my colleagues and I think that it’s very likely that there’s going to be an increase now in financing … and in filings. We have banks that, for a long time, kept money on the sidelines. We think there is a lot of money waiting to go into loans.”
Nothing lasts forever The U.S. District Court Northern District of Ohio holds court in Cleveland, Akron, Toledo and Youngstown. In the three months that ended March 31, 2013, business bankruptcy filings in the district totaled 100, down 42% from the 173 filed in the three months ending March 31, 2012, and down nearly 64% from the recent peak of 275 filed in the quarter that ended March 31, 2010. Nonbusiness filings fell, too, but less steeply: In the first quarter of this year, they totaled 5,875 in the Northern District of Ohio, down 12% from 6,699 in the three months ending March 31, 2012, and down 34% from 8,943 in the quarter that ended March 31, 2010. Tucker Ellis’ Mr. Coffey also pointed to rising interest rates as another potential driver of bankruptcies, as increased rates make debt loads more burdensome. “Low interest rates … enable a lot of companies to operate and to survive,” agreed Alan Lepene, a partner who leads the business restructuring, creditors’ rights and bankruptcy practice of Thompson Hine LLP in Cleveland. “If there were an uptick in interest rates, then I think you would see a lot of companies (that) would be experiencing difficulties with their cash flows and probably need restructuring,” he added. “This low interest rate environment that we’re in obviously isn’t going to last forever.” Alan C. Hochheiser, the managing partner of the bankruptcy unit for Weltman, Weinberg & Reis Co. LPA in Brooklyn Heights, also an- Hochheiser ticipates an increase in filings because this October marks eight years since a change in 2005 made bankruptcy law more stringent and drove an influx. The change made it so debtors could discharge debts every eight years, and he suspects some of those who filed bankruptcy in 2005 will become repeat filers this year. “Is it going to be a tremendous surge in bankruptcy filings? Absolutely not,” Mr. Hochheiser said. “Are we going to see them pick up a little bit? I think so, in October.” Mr. Hochhesier also predicts that as more foreclosed properties proceed to sale, consumers will file Chapter 13 bankruptcies, which allow people with regular income to save their homes and pay debts over time. For the time being, however,
Weltman Weinberg, which represents creditors primarily in consumer bankruptcy cases, has increased its commercial case work. It also is marketing to ensure its existing clients know the other legal needs it can handle for them, such as hardship discharge cases brought by people with student loans, Mr. Hochheiser said.
Stretching the skill set There are those who do not expect the increase in bankruptcies that others do. Fewer loans were made following the recession, and that means companies have less debt that could cause them to encounter difficulties, said Daniel A. DeMarco, partner and co-chair of the
creditors’ rights, reorganization and bankruptcy practice of Hahn Loeser & Parks LLP, a Cleveland law firm. Nancy Terrill doesn’t expect commercial bankruptcies to fall much more, but she’s not expecting an increase either. Given how expensive Chapter 11 can be, many companies have opted in recent years to just dissolve or pursue receivership, she and others noted. Plus, the recession weeded out the weak companies, so many companies today are “pretty healthy” and “not highly leveraged,” Ms. Terrill said, a managing director for Inglewood Associates LLC, a virtual turnaround firm. “The companies that were going
to fail from this recession have failed,” she said. In a move that’s helped stave off changes to its 10-person staff, Inglewood began in the last year seeking to work with companies that aren’t in financial distress, but that could use help optimizing their value, Ms. Terrill said. The firm’s website was tweaked to reflect the new offering, she noted. “It takes our same skill set and utilizes it in a different direction for meeting a need in the marketplace,” she said. The decline in bankruptcy-related activity was one consideration for another turnaround consulting firm, The Parkland Group Inc., when it merged a year ago into SS&G and formed SS&G Parkland
Consulting LLC, an SS&G spokeswoman said. However, she said greater cross-selling opportunities and access to more resources were greater drivers of the deal. As the economy improves, Michael D. Zaverton, an attorney with Walter Haverfield LLP, expects filings to continue to decline, though he anticipates still seeing activity for some sectors, among them health care and retail, which faces stiff competition online. He also noted that more bankruptcies are being filed in districts in New York or Delaware, which is considered to be more “debtorfriendly.” As that happens, lawyers here stand to see less work, he asserted. ■
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Ohio is getting national attention for legacy trusts Legislation puts state in spotlight by allowing domestic asset protection By KIMBERLY BONVISSUTO clbfreelancer@crain.com
T
hanks to a change in law this spring, Ohio quickly is becoming a model program throughout the country for setting up legacy trusts, according to Northeast Ohio estate planning experts, who see both positives and negatives to the new tool. The Ohio Legacy Trust Act — the highlight of the Ohio Asset Management Modernization Act — brings Ohio into the competitive realm of wealth management by permitting domestic asset protection trusts. These irrevocable trusts allow individuals to protect a portion of their assets from being taxed or seized by creditors. Fran Mitchell Schaul, senior counsel at Calfee, Halter & Griswold LLP in Cleveland, said the big deal about a legacy trust is that the person who establishes it — the transferor or grantor — also can be
the beneficiary of the trust while at the same time protecting those assets from creditors. “This is the first time in Ohio that this has been able to be done by a person with their own assets for themselves as a beneficiary,� Ms. Schaul said. “Ohio is in the national spotlight for this.� The first domestic asset protection trusts were established in Alaska and Delaware in 1997. Ms. Schaul said Ohio’s statute gives trust companies, residents, attorneys, financial advisers and accountants a real competitive edge. “Ohio has taken the best features of other statutes and improved upon them,� she said. For example, typical domestic asset protection trusts contain exceptions as to how far the statutes can apply. Legacy trusts cannot protect against a claim of court-ordered alimony or the division of marital property for a current or prior spouse. Ohio’s statute, however, was
drafted to exclude spouses if it is set up prior to marriage. That, Ms. Schaul said, opens the door for some very powerful prenuptial planning. David W. Woodburn, a partner in Buckingham, Doolittle & Burroughs LLP’s Akron office, added that legacy trusts funded prior to a marriage avoid the stigma that goes along with a prenuptial agreement. “In the right situation, it might be the perfect alternative to a prenup,� Mr. Woodburn said.
Asset attraction The impact of Ohio Legacy Trusts on the state could mean tax revenues, job opportunities and the possibility of attracting assets from out-of-state residents, which would be managed by Ohio institutions and individuals who meet the qualifications of a trustee. “The beautiful thing about these trusts is the transferor is able to retain significant rights and benefits,� said Cheryl A. D’Amico, a partner in Calfee’s estate planning group. “It offers a significant amount of flexibility regarding the use and availability of trust assets.�
NEO
The
Dealmaker
This fall, Crain’s Cleveland Business will publish a special editorial feature dedicated to the people and forces driving the region’s dealmaking.
Ohio’s flexible laws with respect to legacy trusts make it easy to integrate such trusts into a transferor’s overall estate plan. Transferor’s have the ability to remove a trustee and select a permissible successor, direct investments, receive distributions and change beneficiaries. The only down side to the act, as of now, appears to be for creditors. Ohio’s statute provides creditors few avenues by which to attack the trust, according to Susan Racey and Jeffry L. Weiler, estate planning attorneys with Tucker Ellis LLP in Cleveland. A creditor challenging a trust not only has to prove a fraudulent transfer, but must do so within 18 months of the transfer — the shortest statute of limitations among all states with domestic asset protection trusts. “The creditor rights section of the Ohio Bar is not thrilled with this chapter of the code,� Mr. Woodburn said. “It makes their job harder to collect on things.�
Not everyone’s a fan Kevin McKinnis, a third-year law student at Cleveland State University’s Marshall College of Law and managing editor of the Cleveland Law Review, drafted an article on the new statute that will run in the January 2014 issue. He said the negative implications of the statute won’t be fully known until it is tested in court, but he said there haven’t been too many challenges against asset protection trusts. And while the benefits to legacy trusts are numerous, estate planners say it’s just another tool in the planning toolbox. Planners say clients likely to benefit most from
legacy trusts are high net worth individuals, entrepreneurs with startup businesses and professionals with high liability exposure, such as physicians. “It’s a safety net for them to move funds into trusts and shelter assets and be confident they are protected at the end of the day,â€? Mr. Woodburn said. “It offers a high sense of security.â€? Leon Gabinet, the Coleman T. Burke Professor of Law in the Case Western Reserve University School of Law, said the act is a boon for people who are apt to be sued, but that doesn’t make it right. “I think it’s terrible public policy because professionals — people who hold themselves out to the public as professionals in a particular field, like law, medicine and accounting — have always been liable for negligence,â€? professor Gabinet said. “I don’t see why they should not be liable for negligence and avoid claims of clients and patients by setting up an irrevocable trust over which they have control.â€? Legacy trusts may be simple to set up, but the provisions of the trusts are complex. Anyone creating a legacy trust must remain solvent, Ms. Schaul said. Ohio legacy trusts arise within the larger context of the rules on fraudulent transfers. “Essentially, the Ohio Legacy trust, or DAPT, is a deliberate statutory narrowing and carving out of an exception that will not be caught by the fraudulent transfer rules,â€? she said. “But those rules provide important guidelines for how to establish them, how clients fund them and how they are operated.â€? â–
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New option could lessen burden of statements Framework is expected to reduce costs of preparing financial paperwork, but some experts doubt principles will be used often By MICHELLE PARK mpark@crain.com
A new financial reporting framework carries the potential of saving closely-held companies time and money in preparing financial statements for banks and other third-party users, but some accountants are skeptical that the framework will be used much, at least immediately. If, as some local accountants suspect, bankers prove slow or unwilling to accept statements that are prepared in this new way because they don’t conform with Generally Accepted Accounting Principles, companies are less likely to use the so-called Financial Reporting Framework for Smalland Medium-Sized Entities, local advisers say. Introduced last month by The American Institute of CPAs, the new option is intended for use by those companies that are closely held that do not have intentions of going public or have significant foreign operations, among other qualifiers. “Immediately, I would think the adoption’s going to be relatively low,� said Janice Paul-Canfield, a director with Walthall, Drake & Wallace LLP, an Independence accounting firm. “The credit market’s going to take a while to really understand this. A lot of the debt that already exists out there was written so that the bank is to receive financial statements prepared in accordance with GAAP. It’s what the bank’s always known. Making that change is always a little unsettling.� But if the change is made, Ms. Paul-Canfield and others say it will have its perks. “It definitely should cut down on the cost of preparing financial statements,� Ms. Paul-Canfield said, noting it can be “very expensive� to produce statements in accordance with GAAP. “I do believe that small and medium-size companies need some relief,� Ms. Paul-Canfield said. “They end up having to com-
ply with something (GAAP) that doesn’t add a lot of value for them in running their business ‌ but because it’s Generally Accepted Accounting Principles ‌ they have to do that.�
Alternative to the ‘nightmare’ Nine days following the new framework’s June 10 introduction, business advisory firm Skoda Minotti, announced in an e-blast: “The financial reporting nightmare is over!â€? “Businesses who have lamented the sometimes complex rules of GAAP now have an option to simplify their accounting and financial reporting,â€? the message read. “Why is it a nightmare? Because GAAP reporting can sometimes be really complex and can be costly when there are so many different types of rules that you have to follow,â€? said Jim Suttie, a principal with the Mayfield Village firm. “It gets very cumbersome.â€? Pat Piteo, a partner in the Akron office of accounting firm Cohen & Co., was one member of the task force who worked for roughly a year to write the Financial Reporting Framework for Small- and Medium-Sized Entities, which totals some 200 pages. “I am very passionate about giving small businesses an alternative for their financial reporting,â€? she said. “The Generally Accepted Accounting Principles is sort of one size fits all,â€? she said. “There’s been a lot of discussion ‌ handwringing about how much it costs for a small business to put together their financial reporting.â€? The AICPA’s framework doesn’t define a small or medium-size business based on total assets or revenue. Instead, it encourages use of the simplified framework by those entities that don’t require GAAP-based reports or financial statements. Those typically are private, for-profit companies that are owner-managed. The framework provides for the preparation of statements that report what a business owns, what it owes and its cash flow. Some of the
areas where it deviates from GAAP include the use of historical cost rather than fair value measurements, and not requiring business owners to consolidate separate, yet related, entities. Some business owners, for estate and tax purposes, will have one entity for the operating company and another that holds the real estate of a company, for example, and GAAP requires them to consolidate them, Ms. Piteo said. That requirement can be traced back to Enron and its practice of setting up separate entities its executives didn’t want reflected on its balance sheets, accountants said. “It (the new framework) saves the small business money in terms of the accounting personnel they have to have and what they pay their outside accountants,� Ms. Piteo said. “The other piece is relevance. They get a report with information that’s relevant to how they run their business.�
A big ‘if’ If bankers and other end users,
such as surety and insurance companies, take the time to understand what the new streamlined framework provides, Ms. PaulCanfield said there’s the potential for it to enable bankers to make better, sounder loans and to provide business owners a clearer picture of their company’s performance, without some of the “overkill� information. “If the financial statements were easier to understand, they might be better used,� she said. But there’s that “if.� Many seem unconvinced the framework will be embraced by all. For one, the recently introduced framework is non-GAAP and not considered “authoritative.� The American Institute of CPAs has no authority to require the use of it for small and medium-size companies. “The fact that it’s considered non-GAAP is going to be a stumbling block for this,� said Stanley J. Olejarski, a principal for Howard, Wershbale & Co., a Beachwood accounting firm. “I just don’t know how well it’s going to be received, quite honestly.� Plus, the Financial Accounting Standards Board finalized in mid-
July a framework that the Private Company Council and it will use for determining whether and under what circumstances it is appropriate to adjust financial reporting requirements for private companies following GAAP. Ms. Paul-Canfield suspects that what FASB does will be accepted more widely than the framework The American Institute of CPAs has introduced. Skoda Minotti’s Mr. Suttie expects most business owners won’t consider the use of the framework until year-end, but he’s at work “planting seedsâ€? and educating lenders about it now. For his part, Paul Carlin, executive vice president and chief lending officer of Ohio Commerce Bank in Beachwood, said he believes it’s a framework with which his bank can work. However, he acknowledged the bank is in the process of being acquired by Peoples Bank out of Marietta and that its current loan documents require statements in accordance with GAAP. “We believe that it (the new framework) would accurately reflect the financial condition of the great majority of our type of client,â€? Mr. Carlin said. â–
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This partnership has perks MLPs can give your portfolio a boost, but do have some risks
A
s interest rates have remained historically low, investors have increasingly turned to alternative investments that have the potential to provide an income stream to their portfolios. One such popular tool is the Master Limited Partnership, or MLP. The term MLP often is used interchangeably with PTP, or Publicly Traded Partnerships; however, MLPs are actually a subset of PTPs that includes LPs and LLCs that operate active businesses, generally tied to energy or infrastructure. The National Association of Publicly Traded Partnerships reports that, as of Dec. 31, 2012, there were roughly 120 MLPs trading with a market capitalization of more than $400 billion. Approximately 30 new MLPs have come to market in just the past two years.
ROBVELOTTA
ADVISER
Tax efficient At its surface, investing in an MLP is no different than investing in any public security. MLPs trade on the listed exchanges, have tickers, and can be bought and sold like stocks. The main difference of an MLP is its efficient tax structure. While most publicly traded companies are structured as corporations, which are subject to a double layer of tax on earnings and any dividends, MLPS are structured as partnerships. Income is reported on the tax return of the investor, and distributions are considered return of capital, to the extent of the investor’s basis in the partnership.
So, there is no double taxation.
Tax complexity There is, however, a significant level of tax compliance complexity associated with directly investing in MLPs. Investors must track their tax basis in the partnership, consider Passive Activity Loss rules, address potential state tax exposure and a variety of other issues. Additionally, IRAs, foundations and other tax-exempt or tax-deferred investors must consider the potential Unrelated Business Income Tax on MLP income. To avoid the complexity of dealing with multiple federal and state tax filings, structures exist to “block” the tax compliance burden, namely through the use of a corporate investor in the underlying MLP. In these cases, the investor invests in the corporation that directly owns the MLP.
Other options for MLP exposure On a more widespread basis, the blocker concept has been used by several MLP funds that have been established as open-end funds, closed-end funds or exchange-traded funds to block the tax compliance difficulties on a full portfolio of MLP holdings. Generally, these funds are very similar to other funds that do not invest in MLPs. Due to limitations under the tax rules, a fund can generally only invest up to 25% of its assets in MLPs to qualify as
a regulated investment company and avoid a corporate level tax. As a result, funds that invest substantially all of its assets in MLPs are required to be taxed as corporations and accrue tax liabilities associated with unrealized gains on their MLP investments. These tax liabilities impact the net asset value of these funds and can cause these funds to underperform their indexes in appreciating markets. Another option that investors have in getting exposure to MLPs is through the use of Exchanged Trade Notes. Exchanged Trade Notes avoid the performance drag of the corporate tax liability associated with MLP funds and allows an investor to track a specific index. But it carries one very significant risk — the credit risk of the issuer. Exchanged Trade Notes are unsecured debt issued by a financial institution and does not reflect actual holdings of underlying equity positions. Instead, it is debt of the financial institution and is generally not secured by any other property. Accordingly, the credit worthiness of the issuer is a primary consideration. While many investors may minimize the credit risk associated with ETNs as they are generally issued by some of the largest financial institutions, one only needs to recall the financial crisis of a few years ago to realize the inherit risks of holding debt. New investment products introduced to the market over the past several years have come into play to address the interest in MLP investments and the tax benefits they provide. When investing in an MLP or any investment product, always consult your investment and tax advisers. ■ Rob Velotta is certified public accountant and a tax partner with Cohen Fund Audit Services.
Stratos is growing by backing advisers in need of a hand By MICHELLE PARK mpark@crain.com
J
eff Concepción founded Stratos Wealth Partners Ltd. in Solon with the idea of providing back-office functions, such as technology and compliance services, that would attract independent advisers who want to retain their books of business but also want to leverage the capabilities of a larger firm. The concept appears to be working. “We’ve grown extraordinarily quickly — much more so than I would have anticipated,” Mr. Concepción said. The number of advisers Stratos serves today stands at about 160, more than double the 71 at the close of 2010. The advisers are independent contractors of Stratos, not employees. Most use the Stratos name, though others have retained whatever firm name they had. Support staff in Solon also has increased to 37 as of July, up from 22 in June 2011 and 11 in January 2010. Mr. Concepción opened the firm’s first offices in 2009 in Ohio and Pennsylvania. At present, advisers tied to Stratos have offices in 15 states, with more in the pipeline, Mr. Concepción said. It’s added five — the most in any one year — in 2013, and also opened two offices in Hudson and Westlake in the past two years. Advisers who join Stratos either pay for their own space and support staff and earn roughly 80% of the revenues they generate, or they have Stratos cover their back-office costs and earn roughly 60% of the revenues they generate, Mr. Concepción said. The percentage varies, though, based on how much they produce; Stratos takes a smaller percentage from top producers, Mr. Concepción said. Kurt Ringenbach says the cost is worth it. He left behind his own practice, Ringenbach Financial Partners in Cleveland Heights, to work under the Stratos name in November 2011. “I was beginning to feel that there was too much administrative work,” said Mr. Ringenbach, a partner and wealth adviser with Stratos. In the 18 months since Mr. Ringenbach joined, he has grown his assets under management by 35%, he said, and his profitability has improved. “I couldn’t grow like that and add the extra revenue … if I didn’t have the extra time and expertise around me,” he said. ■
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
17
100 LARGEST NORTHEAST OHIO EMPLOYERS RANKED BY FULL-TIME EQUIVALENT LOCAL EMPLOYEES(1) Full-time equivalent local employees Rank
Company Address Phone/Website
6/30/2013
6/30/2012
% change
Total number of employees in Ohio Type of business
Top local executive Title
1
Cleveland Clinic 9500 Euclid Ave., Cleveland 44195 (216) 444-2200/www.clevelandclinic.org
33,514
33,000
1.6%
33,547
Health care provider
Delos M. "Toby" Cosgrove, M.D. president, CEO
2
University Hospitals 11100 Euclid Ave., Cleveland 44106 (216) 844-1000/www.uhhospitals.org
15,668
15,123
3.6%
15,668
Nationally recognized, integrated health care system comprised of hospitals and outpatient health centers
Thomas F. Zenty III CEO
3
U.S. Office of Personnel Management 1900 E St., NW, Washington 20415 (202) 606-1800/www.opm.gov
14,810
14,839
(0.2%)
50,061
Federal government
C. Frank Figliuzzi chair, Cleveland Federal Executive Board
4
Group Management Services Inc. 3296 Columbia Road, Suite 101, Richfield 44286 (330) 659-0100/www.groupmgmt.com
8,113
7,403
9.6%
NA
Professional employer organization
Michael Kahoe president
5
State of Ohio 30 E. Broad St., Columbus 43215 (614) 466-2000/www.ohio.gov
8,074
8,210
(1.7%)
48,342
State government
John R. Kasich governor
6
Progressive Corp. 6300 Wilson Mills Road, Mayfield Village 44143 (440) 461-5000/www.progressive.com
7,895
8,766
(9.9%)
8,705
Insurance and financial company
Glenn M. Renwick president, CEO
7
Cuyahoga County 1219 Ontario St., Cleveland 44113 (216) 443-7220/www.cuyahogacounty.us
7,544
7,638
(1.2%)
7,544
County government
Edward FitzGerald county executive
8
U.S. Postal Service 2200 Orange Ave., Cleveland 44101 (800) 275-8777/www.usps.com
7,258
7,565
(4.1%)
11,300
U.S. postal service
Melvin J. Anderson acting district manager, Northern Ohio District
9
City of Cleveland 601 Lakeside Ave., Cleveland 44114 (216) 664-2406/www.city.cleveland.oh.us
6,825
7,061
(3.3%)
6,825
Municipal government
Frank G. Jackson mayor
10
General Motors Co. P.O. Box 33170, Detroit 48232-5170 (313) 556-5000/www.gm.com
6,000
6,000
0.0%
9,000
Automotive manufacturing
Robert Parcell, plant manager, Lordstown; Al McLaughlin, plant manager, Parma
11
KeyCorp 127 Public Square, Cleveland 44114 (216) 689-6300/www.key.com
5,532
5,983
(7.5%)
6,522
Bank holding company
Beth E. Mooney chairman, CEO
12
MetroHealth System 2500 MetroHealth Drive, Cleveland 44109 (216) 778-7800/www.metrohealth.org
5,396
5,238
3.0%
5,396
Health care provider
Akram Boutros, M.D. president, CEO
13
Kent State University P.O. Box 5190, Kent 44242 (330) 672-3000/www.kent.edu
5,257
5,026
4.6%
5,615
Higher education
Lester A. Lefton president
14
FirstEnergy Corp. 76 S. Main St., Akron 44308 (800) 736-3402/www.firstenergycorp.com
5,252
5,349
(1.8%)
7,369
Electric utility holding company
Anthony J. Alexander president, CEO
15
Case Western Reserve University 10900 Euclid Ave., Cleveland 44106 (216) 368-2000/www.case.edu
4,543
4,636
(2.0%)
4,543
Higher education
Barbara R. Snyder president
16
The Timken Co. 1835 Dueber Ave., S.W., Canton 44706 (330) 438-3000/www.timken.com
4,525
4,850
(6.7%)
5,000
A global company that engineers, manufactures and markets mechanical components and high-performance steel
James W. Griffith president, CEO
17
Aultman Health Foundation 2600 Sixth St. S.W., Canton 44710 (330) 452-9911/www.aultman.org
4,084
3,754
8.8%
4,112
Health care
Edward J. Roth III president, CEO
18
Akron General Health System 400 Wabash Ave., Akron 44307 (330) 344-6000/www.akrongeneral.org
3,803
3,972
(4.3%)
3,803
Integrated health care delivery system
Dr. Thomas (Tim) L. Stover president, CEO
19
Swagelok Co. 29500 Solon Road, Solon 44139 (440) 248-4600/www.swagelok.com
3,800
3,686
3.1%
3,800
Designer and manufacturer of industrial fluid Arthur F. Anton system components president, CEO
20
Akron Children's Hospital One Perkins Square, Akron 44308 (330) 543-1000/www.akronchildrens.org
3,757
3,621
3.8%
3,757
Pediatric health system
William H. Considine president, CEO
21
Sherwin-Williams Co. 101 W. Prospect Ave., Cleveland 44115 (216) 566-2000/www.sherwin-williams.com
3,365
3,137
7.3%
4,065
Coatings and related products
Christopher M. Connor chairman, CEO
22
Summit County 175 S. Main St., Akron 44308 (330) 643-2500/www.co.summit.oh.us
3,312
3,358
(1.4%)
3,312
County government
Russell M. Pry county executive
23
Ford Motor Co.(2) One American Road, Dearborn 48126 (800) 392-3673/www.ford.com
3,172
3,282
(3.4%)
5,584
Automobile manufacturer
NA
24
Akron Public Schools 70 N. Broadway, Akron 44308 (330) 761-1661/www.akronschools.com
3,137
3,118
0.6%
3,137
Public school district
David W. James superintendent
25
Goodyear Tire & Rubber Co. 200 Innovation Way, Akron 44316 (330) 796-2121/www.goodyear.com
3,000
3,000
0.0%
NA
Tire manufacturer
Richard J. Kramer chairman, president, CEO
26
Lincoln Electric Co. 22801 St. Clair Ave., Cleveland 44117 (216) 481-8100/www.lincolnelectric.com
2,793
2,706
3.2%
2,793
Designer, developer and manufacturer of arc welding products
John M. Stropki, executive chairman Christopher L. Mapes, president, CEO
27
University of Akron 302 Buchtel Common, Akron 44325 (330) 972-7111/www.uakron.edu
2,622
2,627
(0.2%)
2,622
Higher education
Luis M. Proenza president
28
UPS 4300 E. 68th St., Cleveland 44105 (216) 641-3027/www.ups.com
2,577
3,168
(18.7%)
9,926
Parcel delivery
Dwayne Meeks president, UPS Great Lakes District
29
Caesars Entertainment (Horseshoe Casino Cleveland, ThistleDown Racino) 100 Public Square, Cleveland 44113 (216) 297-4777, (216) 662-8600/www.horseshoecleveland.com, www.thistledown.com
2,302
1,619
42.2%
NA
Horseshoe Casino Cleveland and ThistleDown Racino are part of Caesars Entertainment Co.
Marcus Glover senior vice president, general manager
29
Greater Cleveland Regional Transit Authority 1240 W. Sixth St., Cleveland 44113 (216) 566-5100/www.riderta.com
2,302
2,307
(0.2%)
2,302
Public transportation
Joseph A. Calabrese CEO, general manager, secretary/ treasurer
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JULY 29 - AUGUST 4, 2013
100 LARGEST NORTHEAST OHIO EMPLOYERS RANKED BY FULL-TIME EQUIVALENT LOCAL EMPLOYEES(1) Full-time equivalent local employees Rank
Company Address Phone/Website
6/30/2013
6/30/2012
% change
Total number of employees in Ohio Type of business
31
Parker Hannifin Corp. 6035 Parkland Blvd., Cleveland 44124 (216) 896-3000/www.parker.com
2,300
2,282
0.8%
3,640
32
Huntington National Bank 200 Public Square, Cleveland 44114 (800) 480-2265/www.huntington.com
2,276
2,122
7.3%
33
United 5300 Riverside Drive, Cleveland 44135 (216) 501-5170/www.continental.com
2,267
1,954
34
Lake Health 7590 Auburn Road, Concord Township 44077 (440) 375-8100/www.lakehealth.org
2,217
35
Babcock & Wilcox Co. 20 S. Van Buren Ave. and 91 Stirling Ave., Barberton 44203 (330) 753-4511/www.babcock.com
36
Top local executive Title
Fluid power systems, electromechanical controls
Donald E. Washkewicz chairman, president, CEO
NA
Financial services
Daniel P. Walsh Jr. president, Greater Cleveland region
16.0%
NA
Airline
Rich Lisser managing director
2,217
0.0%
2,217
Hospital
Cynthia Moore-Hardy president, CEO
2,200
2,200
0.0%
2,600
Engineering, manufacturing and construction services for nuclear, renewable, fossil power and industrial customers
J. Randall Data president, COO, Babcock & Wilcox Power Generation Group Inc.
Cuyahoga Community College 700 Carnegie Ave., Cleveland 44115 (800) 954-8742/www.tri-c.edu
2,193
2,342
(6.4%)
2,193
Higher education
Alex Johnson president
37
Lubrizol Corp. 29400 Lakeland Blvd., Wickliffe 44092 (440) 943-4200/www.lubrizol.com
2,131
2,082
2.4%
2,192
Specialty chemical company
James L. Hambrick chairman, president, CEO
38
ArcelorMittal 3060 Eggers Ave., Cleveland 44105 (216) 429-6000/www.arcelormittal.com
2,125
2,050
3.7%
3,006
Steel manufacturer
Eric Hauge vice president, general manager, ArcelorMittal Cleveland
39
Mercy Medical Center 1320 Mercy Drive N.W., Canton 44708 (330) 489-1000/www.cantonmercy.org
2,065
1,892
9.1%
2,065
Health care provider
Thomas E. Cecconi president, CEO
40
Time Warner Cable 530 S. Main St., Suite 1751, Akron 44311 (330) 572-4020/www.timewarnercable.com
2,013
2,164
(7.0%)
2,013
Provider of video, high-speed data and voice John H. Higgins Jr. services in the United States area vice president of operations
41
Nestle Prepared Foods Co., a division of Nestle USA 30003 Bainbridge Road, Solon 44139 (440) 349-5757/www.nestleusa.com
1,978
1,917
3.2%
2,498
Manufacturer of Stouffer's and Lean Cuisine Frank Higgins prepared foods, Buitoni pasta and sauce, president, CEO, Hot Pockets and Lean Pockets Nestle Prepared Foods
42
Eaton 1000 Eaton Blvd., Cleveland 44122 (440) 523-5000/www.eaton.com
1,923
1,863
3.2%
3,226
Electrical, hydraulic, aerospace, truck and automotive products
Alexander M. Cutler chairman, CEO, president
43
Diebold Inc. 5995 Mayfair Road, North Canton 44720 (330) 490-4000/www.diebold.com
1,918
2,074
(7.5%)
2,041
A global leader in providing innovative selfservice technology, security systems and related services
Andy W. Mattes president, CEO
44
Rockwell Automation Inc. 1 Allen-Bradley Drive, Mayfield Heights 44124 (440) 646-5000/www.rockwellautomation.com
1,902
1,921
(1.0%)
2,009
Global provider of industrial automation control and information solutions
Frank Kulaszewicz senior vice president, architecture and software
45
Medical Mutual of Ohio 2060 E. Ninth St., Cleveland 44115 (216) 687-7000/www.medmutual.com
1,900
1,950
(2.6%)
2,400
Mutual company providing health and life insurance, dental, vision products and TPA services
Rick A. Chiricosta president, CEO, chairman
46
Discount Drug Mart Inc. 211 Commerce Drive, Medina 44256 (330) 725-2340/www.discount-drugmart.com
1,851
1,592
16.3%
2,750
Retail drugstore
Don Boodjeh, CEO Parviz Boodjeh chairman
47
JPMorgan Chase & Co. 1300 E. Ninth St., Cleveland 44114 (877) 302-4273 /www.chase.com
1,834
1,968
(6.8%)
1,834
Financial services
James R. Geuther, regional president and head, commercial banking business, NE Ohio
48
Southwest General 18697 Bagley Road, Middleburg Heights 44130 (440) 816-8000/www.swgeneral.com
1,809
1,750
3.4%
1,809
Private, not-for-profit 354-bed top 100 hospital with a 90-year history
Thomas A. Selden president, CEO
49
Lorain County 226 Middle Ave., Elyria 44035 (440) 329-5000/www.loraincounty.com
1,795
1,795
0.0%
1,795
County government
Board of Commissioners
50
City of Akron 166 S. High St., Akron 44308 (330) 375-2330/www.akronohio.gov
1,730
1,736
(0.3%)
1,730
Municipal government
Donald L. Plusquellic mayor
51
Republic Steel 2633 Eighth St., NE, Canton 44704 (800) 232-7157/www.republicsteel.com
1,720
1,784
(3.6%)
1,720
Manufacturer of special bar quality steel
Jaime Vigil president, CEO
52
PPG Industries Inc. One PPG Place, Pittsburgh 15272 (412) 434-3131/www.ppg.com
1,650
1,000
65.0%
2,400
Coatings and speciality products company
Keith Schneider plant manager
53
Hyland Software Inc. 28500 Clemens Road, Westlake 44145 (440) 788-5000/www.hyland.com
1,633
1,066
53.2%
1,238
Independent software vendor; developer of Bill Priemer the OnBase enterprise content management president, CEO software suite
54
Mercy 3700 Kolbe Road, Lorain 44053 (440) 960-4000/www.mercyonline.org
1,630
1,638
(0.5%)
1,630
Health care provider
Edwin M. Oley president, CEO
55
EMH Healthcare 630 E. River St., Elyria 44035 (440) 329-7500/www.emh-healthcare.org
1,611
1,666
(3.3%)
1,611
Health care provider
Donald Sheldon, M.D. president, CEO
56
Kaiser Permanente 1001 Lakeside Ave., Suite 1200, Cleveland 44114 (800) 524-7371/www.kp.org
1,600
1,770
(9.6%)
1,600
Health care provider and insurance company
Patricia D. Kennedy-Scott regional president
57
Parma City School District 5311 Longwood Ave., Parma 44134 (440) 842-5300/www.parmacityschools.org
1,550
1,517
2.2%
1,550
Public school system
Jeffrey Graham superintendent
58
Fred W. Albrecht Grocery Co. 2700 Gilchrist Road, Akron 44305 (330) 733-2263/www.acmestores.com
1,541
1,515
1.7%
1,541
Retail grocery and pharmacy stores
Steve Albrecht president
59
Bridgestone Americas Inc. 10 E. Firestone Blvd, Akron 44317 (330) 379-7000/www.bridgestoneamericas.com
1,508
1,532
(1.6%)
2,284
Tire manufacturer
Hank Hara, chief technology officer, Bridgestone Americas Tire Operations
60
Cleveland State University 2121 Euclid Ave., Cleveland 44115 (216) 687-2000/www.csuohio.edu
1,483
1,494
(0.7%)
1,483
Higher education
Ronald M. Berkman president
RESEARCHED BY Deborah W. Hillyer
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19
Full-time equivalent local employees
Rank
Company Address Phone/Website
6/30/2013
6/30/2012
% change
Total number of employees in Ohio Type of business
Top local executive Title
61
Safeguard Properties Management LLC 7887 Safeguard Circle, Valley View 44125 (216) 739-2900/www.safeguardproperties.com
1,478
1,074
37.6%
1,478
Inspection and maintenance of defaulted and foreclosed properties nationally
Alan Jaffa CEO
62
Westfield Insurance One Park Circle, Westfield Center 44251 (330) 887-0101/www.westfieldgrp.com
1,465
1,501
(2.4%)
1,693
Insurance, banking and related financial services
James Clay chairman, CEO Westfield Group Leader
63
Dominion East Ohio 1201 E. 55th St., Cleveland 44103 (800) 362-7557/www.dom.com
1,456
1,425
2.2%
1,567
Natural gas distribution
Scott C. Miller vice president, general manager
64
Lake County 105 Main St., Painesville 44077 (440) 350-2745/www.lakecountyohio.org
1,441
1,456
(1.0%)
1,441
County government
Board of Commissioners
65
Parma Community General Hospital 7007 Powers Blvd., Parma 44129 (440) 743-3000/www.parmahospital.org
1,440
1,471
(2.1%)
1,440
Hospital
Terrence G. Deis president, CEO
66
Scott Fetzer Co. 28800 Clemens Road, Westlake 44145 (440) 892-3000/www.scottfetzer.com
1,313
1,313
0.0%
1,683
Diversified manufacturer
Bob McBride, president, CEO Kenneth J. Semelsberger chairman
67
Avery Dennison(3) 8080 Norton Parkway, Mentor 44060 (440) 534-6000/www.averydennison.com
1,307
1,685
(22.4%)
2,028
Manufacturer of pressure sensitive paper, A. Nolan film and foil, graphic materials and specialty Donald president, Materials Group tapes
68
Allstate Insurance Co. 75 Executive Parkway, Hudson 44237 (330) 656-6000/www.allstate.com
1,271
1,190
6.8%
1,535
Financial services and insurance
Rob Hair director
69
Ernst & Young LLP 925 Euclid Ave., Suite 1300, Cleveland 44115 (216) 861-5000/www.ey.com
1,262
1,257
0.4%
1,803
Assurance, advisory, tax and transaction advisory services
C. Lee Thomas, managing partner, Cleveland; Edward T. Eliopoulos, managing partner, Akron
70
Jo-Ann Stores Inc. 5555 Darrow Road, Hudson 44236 (330) 656-2600/www.joann.com
1,235
1,509
(18.2%)
1,439
Fabric and craft retailer
Travis Smith CEO, president
71
Alcoa 1600 Harvard Ave., Cleveland 44105 (216) 641-3600/www.alcoa.com
1,203
1,353
(11.1%)
1,203
Aluminum forgings for aerospace, automotive and commercial transportation markets
Eric Roegner, COO, Alcoa Investment Castings, Forgings and Extrusions; president, Alcoa Defense Tim Myers, president, Alcoa Wheel and Transportation Products
72
Luk USA LLC 3401 Old Airport Road, Wooster 44691 (330) 264-4383/www.schaeffler.us
1,186
1,000
18.6%
NA
Clutch systems and torque converters for the automotive industry
Marc McGrath president
73
Oberlin College 101 N. Professor St., Oberlin 44074 (440) 775-8400/www.oberlin.edu
1,162
1,166
(0.3%)
1,162
Higher education
Marvin Krislov president
74
Shearer's Foods LLC 100 Lincoln Way, Massillon 44646 (330) 834-4300/www.shearers.com
1,120
1,005
11.4%
1,120
Manufacturer of snack foods
CJ Fraleigh CEO
75
Invacare Corp. One Invacare Way, Elyria 44035 (440) 329-6000/www.invacare.com
1,100
1,297
(15.2%)
NA
76
Cuyahoga County Board of Developmental Disabilities 1275 Lakeside Ave. East, Cleveland 44114 (216) 241-8230/www.cuyahogabdd.org
1,099
1,172
(6.2%)
1,099
Vocational, residential, educational and therapeutic support services for children and adults with developmental disabilities
Kelly M. Petty superintendent, CEO
77
GE Lighting (unit of GE Home & Business Solutions) 1975 Noble Road, East Cleveland 44112 (216) 266-2222/www.gelighting.com
1,080
1,095
(1.4%)
2,004
A global manufacturer and marketer of lighting products
Maryrose T. Sylvester president, CEO GE Lighting
78
Philips Healthcare 595 Miner Road, Highland Heights 44143 (440) 483-3000/www.philips.com/healthcare
1,064
1,132
(6.0%)
1,246
Manufacturer of medical diagnostic equipment
Gene Saragnese, executive vice president; CEO, Imaging Systems; Dominic Smith, general manager, computed tomography and Cleveland site
79
Medina County 144 N. Broadway St., Medina 44256 (330) 723-3641/www.co.medina.oh.us
1,048
1,047
0.1%
1,048
County government
Board of Commissioners
80
Newell Rubbermaid 3200 Gilchrist Road, Mogadore 44260 (330) 784-7141/www.newellrubbermaid.com
1,000
800
25.0%
1,200
Global marketer of consumer and commercial products
JB Broadous director, Ohio operations
81
Ohio Savings Bank, A Division of New York Community Bank 1801 E. Ninth St., Cleveland 44114 (216) 588-4100/www.mynycb.com
986
978
0.8%
986
Financial institution/bank
Jon K. Baymiller president, CEO NYCB Mortgage Co. LLC
82
Dave's Supermarkets 5300 Richmond Road, Bedford Heights 44146 (216) 763-3200/www.davesmarkets.com
985
1,010
(2.5%)
985
Supermarkets
Daniel Saltzman president
83
Mentor Public Schools 6451 Center St., Mentor 44060 (440) 255-4444/www.mentorschools.net
961
961
0.0%
961
Public school district
Matthew Miller superintendent
84
Willoughby-Eastlake City Schools 37047 Ridge Road, Willoughby 44094 (440) 956-5000/www.weschools.org
944
940
0.4%
944
Public school district
Stephen Thompson superintendent
85
Robinson Memorial Hospital 6847 N. Chestnut St., Ravenna 44266 (330) 297-0811/www.robinsonmemorial.org
938
1,095
(14.3%)
938
117-staffed-bed hospital
Stephen Colecchi president, CEO
86
Portage County 449 S. Meridian St., Ravenna 44266 (330) 297-3600/www.co.portage.oh.us
934
983
(5.0%)
934
County government
Board of Commissioners
87
Saint Gobain Corp. 750 E. Swedesford Road, Valley Forge 19482 (610) 341-7000/www.saint-gobain-corporation.com
933
904
3.2%
1,005
Construction products, high-performance materials, glass containers
John Crowe president, CEO
88
Geauga County 470 Center St., Chardon 44024 (440) 285-2222/www.co.geauga.oh.us
931
938
(0.7%)
931
County government
Board of Commissioners
89
Menorah Park Center for Senior Living 27100 Cedar Road, Beachwood 44122 (216) 831-6500/www.menorahpark.org
919
841
9.3%
919
Full continuum of care for seniors including residential and community services
Steven Raichilson executive director
Medical devices for the home and long-term Gerald B. Blouch care markets president, CEO
RESEARCHED BY Deborah W. Hillyer
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JULY 29 - AUGUST 4, 2013
100 LARGEST NORTHEAST OHIO EMPLOYERS RANKED BY FULL-TIME EQUIVALENT LOCAL EMPLOYEES(1) Full-time equivalent local employees Rank
Company Address Phone/Website
90
Total number of employees in Ohio Type of business
6/30/2013
6/30/2012
% change
PolyOne Corp. 33587 Walker Road, Avon Lake 44012 (440) 930-1000/www.polyone.com
889
904
(1.7%)
1,130
91
St. Vincent Charity Medical Center 2351 E. 22nd St., Cleveland 44115 (216) 861-6200/www.stvincentcharity.com
862
869
(0.8%)
862
92
RPM International Inc. 2628 Pearl Road, Medina 44258 (330) 273-5090/www.rpminc.com
857
877
(2.3%)
1,020
93
Third Federal Savings & Loan 7007 Broadway Ave., Cleveland 44105 (216) 441-6000/www.thirdfederal.com
848
777
9.1%
94
Pepsi Beverages Co. 1999 Enterprise Parkway, Twinsburg 44087 (330) 963-5300/NA
837
1,041
95
Fifth Third Bank 600 Superior Ave. E, Cleveland 44114 (216) 274-5300/www.53.com
834
96
Federal Reserve Bank of Cleveland 1455 E. Sixth St., Cleveland 44114 (216) 579-2000/www.clevelandfed.org
97
Top local executive Title
Provider of specialized polymer materials, services and solutions
Stephen D. Newlin chairman, president, CEO
Health care provider
David F. Perse, M.D. president, CEO
Specialty coatings for industrial and consumer markets
Frank C. Sullivan chairman, CEO
896
Savings and loan
Marc A. Stefanski chairman, president, CEO
(19.6%)
NA
Manufacturer, seller and distributor of PepsiCo beverages
Dan Hungerman vice president
690
20.9%
NA
Diversified financial services company
Jerry Kelsheimer president, CEO, Fifth Third Bank, Northeastern Ohio
804
826
(2.7%)
946
U.S. central bank
Sandra Pianalto president, CEO
Hospice of the Western Reserve 17876 St. Clair Ave., Cleveland 44110 (800) 707-8922/www.hospicewr.org
801
816
(1.8%)
801
Hospice
William E. Finn CEO
98
Myers Industries Inc. 1293 S. Main St., Akron 44301 (330) 253-5592/www.myersindustries.com
795
798
(0.4%)
967
Polymer and metal products; equipment for John C. Orr tire service president, CEO
99
Forest City Enterprises Inc. 50 Public Square, Suite 1100, Cleveland 44113 (216) 621-6060/www.forestcity.net
740
771
(4.0%)
759
Owner and developer of real estate
Charles A. Ratner, chairman David J. LaRue president, CEO
100
Lakewood City School District 1470 Warren Road, Lakewood 44107 (216) 529-4092/www.lakewoodcityschools.org
717
726
(1.2%)
717
Public school system
Jeffrey Patterson superintendent
Source: PNC and Steris Corp do not report local employees. American Greetings declined to report 2013 numbers. Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Companies from the 2012 list that did not report employee numbers by deadline are Giant Eagle, Cleveland Metropolitan School District, Summa Health System. (2) Information is from corporate.ford.com. (3) The numbers listed for June 31, 2013 (both local and Ohio) are as of March 31, 2013.
RESEARCHED BY Deborah W. Hillyer
Tikes: Hudson operation recently Lender: Bitter fights ahead received $3 million tech upgrade continued from PAGE 3
continued from PAGE 3
than 40 years ago making toys for young children, everything was made in the U.S. However, some production was moved to China in the ’80s and ’90s when that country’s manufacturing sector began to take off, he said. “Now, the wheel is kind of coming full circle,” Mr. Richmond said. The company started in recent years to bring the production of some of its toys, like the 2-in-1 Snug ’n Secure Swing, back to the Hudson plant. It’s also been creating new toys, like a low-cost slide for toddlers, which have been intended from the start to be produced in Northeast Ohio. The Made in the USA initiative makes economic sense, because it’s not just about salaries in China versus salaries in the United States, Mr. Richmond said. Indeed, energy costs are up globally; input costs for materials like plastic resin and natural gas are lower in the United States; and the cost of shipping from China back to the U.S. is high. Not to mention, there is an “enormous amount” of logistics costs in Little Tikes production when it’s done overseas, he said.
Growing in more ways than one To account for the moves, as well as an improving economy, Little Tikes has added nearly 50 permanent employees and some temporary employees in the past two
years, Mr. Richmond said. The company currently has about 800 permanent and temporary employees in Hudson, which is its only U.S. manufacturing site, he said. And those employees have been kept as busy as ever, as the company has continued to introduce new products into the market, at a rate of about 60 new toys per year. “We are constantly refreshing and adding and changing and adapting,” Mr. Richmond said. Scott Paul, president of the Alliance for American Manufacturing, said while it’s relatively easy to find U.S.-made artisan toys, it’s more of a struggle to find mass-produced toys like those from Little Tikes made in the United States. Mr. Paul said in addition to a “surge in interest” in favor of U.S.made products, recent recalls of toys made overseas have created a perception problem. Both are developments that have made Little Tikes’ work shift back to the Hudson plan even more effective, he said. Little Tikes has invested regularly in the Hudson plant, Mr. Richmond said, including $3 million spent recently on new injection molding technology. The machinery should start to arrive in September and be ready by mid-2014. And while Mr. Richmond declined to share annual revenue, he said it has steadily gone up since the recession hit in 2008.
Hudson pride Little Tikes is one of the larger companies in Hudson, said Chuck Wiedie, economic development director for the city, and it has been a good corporate citizen for decades. Mr. Wiedie said the city and the state worked hard to keep Little Tikes in Hudson when the company was purchased by Van Nuys, Calif.-based MGA Entertainment in 2006, a decision that Mr. Richmond said had value. The biggest benefit to staying in Hudson was retaining the decades of experience its senior-most employees had, Mr. Richmond said. “You just don’t find that in America, not these days anyway,” he said. He said he also appreciated being in a technology and plasticsrich area, noting that he had recently met with someone pitching a new kind of material. That sort of spontaneous interaction wouldn’t happen as easily if the company’s headquarters was 1,500 miles away. The region’s shale gas boom also could eventually offer a long-term competitive advantage for the U.S., he said, as the long-term prospect for natural gas and the plastic produced from it are on a downward cost trend. The company hasn’t seen a direct benefit from the shale play, but he said it bodes well for the future of the economy and the region. ■
lender, had prompted some delay in signing leases with new tenants. With the new lender in place, the properties may start gaining a larger share of the region’s rejuvenated office leasing action. A New York-based spokesman for Lone Star declined comment. Lone Star is a financial firm that has been seeking to extract value from distressed debt since the savings-andloan crisis of the 1980s.
No good things in this big package The local loans went into a larger securitized mortgage deal. The losses to investors who bought bonds from a securitized mortgage deal now known as “LBUBS2007-C2” appear draconian after a July 3 sale by Orix Capital Markets, a Dallas firm that provides special servicing for distressed mortgages and invests in distressed properties. A July 18 report in Treppwire, a newsletter reporting goings-on in the mortgage securities market, headlined the sale as “Epic Losses Hammer 2007 Deal.” Treppwire reported that the $132 million loan on the east suburban portfolio was cut by 58% to $78 million in the transaction. The loan was part of $310 million in losses from 21 separate loans and various classes of bonds within the package received pay downs or a percentage of unpaid interest in the sales. The smaller Sterling deal garnered no specific mention. This deal spread far from Northeast Ohio. A report by Fitch Ratings, the New York-based credit rating service, said the loans were part of a portfolio of pooled loans and spe-
cial servicing rights totaling $3.5 billion that Orix sold for $2 billion. Edward Smith, vice chairman of Orix, said in an interview with Crain’s Cleveland Business that Orix sold the package that includes the Northeast Ohio loans to take advantage of strong investor interest while the potential of rising interest rates motivated potential buyers in the marketplace. However, Fitch is less sanguine about the deal. Fitch on July 22 downgraded nine classes of the loan package to “D” — as in “default” — because of a writedown in principal, from a variety of “CCC” and “C” ratings on classes of debt that indicated the service expected a default. Court records in both cases show the property owners are not giving up their holdings without bitter fights. In the Sterling case, no trial date is set due to appeals filed by Mr. Munsell’s attorneys contesting Orix’s ability to file the foreclosure. In the Gotham King case, which includes a multitude of bitterly disputed motions, a pretrial is scheduled in November. Charles Ishay, the principal of New York-based Gotham Realty Holdings, did not return two calls and an email. Donald King, the Beachwood-based realty broker who orchestrated the multimilliondollar sale to Gotham from Duke, no longer operates the properties. CBRE Group Inc. was named the receiver for them last year. Mr. Browning acknowledged one of his company’s units, CBRE Note Sale Advisors, worked on the deal. Mr. Munsell did not return two calls about the foreclosure case. ■
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
21
Law: Rapidly changing environment stresses value of education continued from PAGE 3
“It seems like every week we get a new report talking about the robust job market for people who have a background in health care.” What makes UA’s program special, according to those involved, is its focus on the legal issues swirling around population health, a growing policy area centered on transitioning health care from simply caring for the sick to keeping large groups of people healthy. A large piece of the program will be geared toward helping students in the health law field keep up with the scientific and technological changes, most of which outpace
The University of Akron, for instance, is the latest Northeast Ohio law school to create a center dedicated to training the next generation of health care attorneys. This summer, the university officially launched its Public Health Law & Science Center and health care law certificate program. “Lawyers and companies are just now catching up with regulations written five years ago, then there’s the Affordable Care Act,” said Katharine Van Tassel, a professor who joined UA last year to develop and ultimately lead the new center.
Contact: Phone: Fax: E-mail:
Denise Donaldson (216) 522-1383 (216) 694-4264 DDonaldson@crain.com
the evolution of the laws and regulations that govern the field. “This is going to require societywide policy changes, and lawyers are right at the intersection of practice and policy,” said Elizabeth A. Reilly, UA’s interim law school dean. “That means the lawyers have to play a critical role in translating all of that into a viable public policy.” The Cleveland-Marshall College of Law, meanwhile, launched its own center — the Center for Health Law & Policy — about three years ago and has since steadily grown the program, according to its dean, Craig M. Boise. Just last year, for in-
stance, the center launched a certificate in health care compliance. “I think one of the ideas here is to capitalize on one of the needs in the field of law where the job prospects have not been the best over the last several years,” Mr. Boise said. Mr. Boise noted that given the incredibly fast-paced health care environment, all sorts of professionals — not just lawyers or lawyers in training — might need legal education, which is something on which Marshall’s health care center hopes to capitalize with its certificate programs. Case Western Reserve Universi-
REAL ESTATE
ty, which is home to one of the most respected medical schools in the country, is no stranger to health care legal education. The university in the early 1950s launched its Law-Medicine Center, which it claims is the oldest law schoolbased center for the study of legal medicine and health law in the United States. “As you can imagine, given all the developments in changes and medicine and how we regulate and pay for it, it’s been a major area of academic interest,” said Maxwell J. Mehlman, who has served as the center’s director since the mid-1980s. ■
Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card
AUCTION Presented by:
CHARTWELL AUCTIONS | AUG 22
Premier Sponsor:
COMMERCIAL / INDUSTRIAL / OFFICE / LAND / RESIDENTIAL
ALL PROPERTIES OFFERED ABSOLUTE OR WITH BELOW MARKET PUBLISHED RESERVE PRICES! 1 Former Goodwill Headquarters
5
2295 E. 55th St. Cleveland, OH 44103 59,000 SF Office/Warehouse/Storefront
6600 W. 130th St., Middleburg Hts., OH 44130 60,000 SF Operating Fitness Center
Omni Fitness Club
2013 Honoree & ticket info: OFFERED ABSOLUTE, REGARDLESS OF PRICE!
Suggested Opening Bid: $50,000 3-Stories on 2+ acres, new HVAC, 9’12’ ceilings, 7 docks, 2 elevators, fully sprinklered, cafeteria w/kitchen equipment, cameras/security system. Tons of parking. 1 Mile North of I-77 & E 55th interchange. On-Site Inspections: Tues., July 30, Aug. 6 & 13, 10:00 am - 12:00 Noon.
2
CrainsCleveland.com/HRLeaders
OFFERED ABSOLUTE, REGARDLESS OF PRICE!
Suggested Opening Bid: $100,000 3-Story fitness center on 5.35 acres. All equipment & memberships could be available. Unlimited possibilities for the building and site. Zoned: General Business. High traffic area near corner of Pearl Rd. & 130th. On-Site Inspections: Thurs., Aug. 1, 8, 15, 1:00 pm - 3:00 pm.
6
Former KFC Restaurant
Co-Presented by:
Networking Sponsor: tworking Spons
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In partnership with:
563 Bronson St., Medina, OH 44256
135,000 SF Ind./Warehouse/Distribution
OFFERED ABSOLUTE, REGARDLESS OF PRICE!
Suggested Opening Bid: $50,000 Metal & masonry construction with 132,000 SF fully sprinklered industrial space, 3,000 SF office & 13,600 SF lower level storage. 7.24 acre site w/100+ car prkg. 18’-26’ ceilings, 11 docks & 3 drive-ins, rail siding w/2 doors. Minutes from I-71, SR-18, I-76, I-271 & I-80. On-Site Inspections: Wed., July 31, Aug. 7 & 14, 10:00 am - 12:00 Noon.
3
Receiver Ordered Sale!
20950 Center Ridge Rd., Rocky River, OH 44116
40,212 SF Office / Retail
OFFERED WITH A PUBLISHED RESERVE OF ONLY: $97,350 3-Story plus full walk-out lower level on 2/3 acres. Perfect opportunity for general/med, offices or retail use. Directly across street from a 474,000 SF power retail center. Highly desirable retail/office/location. Minutes from I-90 & I-271. On-Site Inspections: Thurs., Aug. 1, 8 & 15, 10:00 am - 12:00 Noon.
4
Former Rose Lounge
BUSINESS SERVICES 22301 Rockside Rd., Bedford, OH 44146
OFFERED WITH A PUBLISHED RESERVE OF ONLY: $85,000 Lender directed sale, 3,066 SF, partially equipped w/drive-thru, seating for 40+ & parking for 22+. high traffic area next to Walmart & zoned B-3. On-Site Inspections: Tues., Aug 6 & 13, 2:30 - 4:00 pm.
7
CLASSIFIED
4415 Lee Road, Cleveland, OH 44128 (NE Corner of Lee & S. Miles Rd.)
National Online Professional Foodservice Distributor w/ local store.
OFFERED ABSOLUTE, REGARDLESS OF PRICE!
Retail/Wholesale since 1994. Owners to retire.
Suggested Opening Bid: $46,500 12,895 SF on 2.72 acres. Corporate seller directs sale w/built-in financing! Zoned for car salvage, repair & storage. 36,000 SF additional land usage of railroad rite-of-way. On-Site Inspections: Thurs., Aug 8 & 15 & Tues., Aug. 20 from 2:30 - 4:00 pm.
8
2.85 Acre Development Site with Mixed-Use Zoning
216-381-5540 leave message
Highly-automated. Profit $275,000. Ask $850K.
B2B Marcom Agency for Sale Owner is retiring. Contact:
Don Dreisig - 330-492-6294
creativedirector@gmail.com
Service Business in Stark County
Crain’s Executive Recruiter
Engle Road, Middleburg Hts., OH 44130
OFFERED ABSOLUTE, REGARDLESS OF PRICE!
Suggested Opening Bid: $22,500 4,300 SF multi-purpose bldg. on 0.50 acres. Contents removed & bldg. is ready for renovation. 40+ parking spaces, zoned I-1, industrial. SELLER FINANCING BEING OFFERED! On-Site Inspections: Wed., Aug 7, 14 & 21, 2:30 - 4:00 pm.
High traffic area near Bagley/Engle Road intersection & great visibility from I-71. Prime location for office, hotel & more.
9 10 Acres Adjacent to Eastland Mall, Columbus, OH 43232
OFFERED ABSOLUTE, REGARDLESS OF PRICE!
Suggested Opening Bid: $10,000 Prime commercial location near wellestablished mall. Tenants include: Macy’s, Sears, JC Pennys, Champs, Vitamin World. High traffic area with great demos. Minutes from I-270.
ATTENTION INVESTORS & HOME BUYERS:
Also included in this sale are 6 houses in Shaker Hts./Brunswick/Medina, 12 Houses in Youngstown / Campbell and 3 Home Sites
For Brochure & Terms of Sale, Call:
www.ChartwellAuctions.com 216-360-0009 Chartwell Group, LLC / Chartwell Auctions, LLC OH Auctioneers - Michael E. Berland, Gordon J. Greene & Mac Biggar Mark S. Abood, OH Real Estate Salesperson
Used in Stock Rigid rack, 42 x 12 ft. 8” (150) 500 Beams, 108 x 4.5 Also Decking. Also have 3-wheel electronic clarks (10) . Show me the money. 216-641-STYS – since 1962
BUSINESS SERVICE OWNERS! Submit your business card and promote your service.
OFFERED WITH A PUBLISHED RESERVE OF ONLY: $100,000 3219 Copley Rd., Copley, OH 44321
FOR SALE
BUSINESSES FOR SALE
Director of Business Development Saint Martin de Porres High School The Corporate Work Study Program Director of Business Development position is responsible for the direct sales and business development of all Corporate Work Study Partner Organizations. The primary sales responsibility is seeking new partner organizations to provide work-study jobs to the students. The position reports to the Vice President, Corporate Work Study Department. Interested candidates may send resume and cover letter to Anne Holko at careers@stmdphs.org
To find out more, contact Denise Donaldson at 216.522.1383 To place your Crain’s Cleveland Business Executive Recruiter ad Call Denise Donaldson at 216-522-1383
20130729-NEWS--22-NAT-CCI-CL_--
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7/26/2013
1:42 PM
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JULY 29 - AUGUST 4, 2013
THEINSIDER
THEWEEK JULY 22 – 28 The big story: Gov. John Kasich is making good on a plan to use Ohio Turnpike revenue to strengthen the state’s transportation infrastructure. In Cleveland, he announced his intention to spend $1.2 billion on 11 projects in the sevencounty region over the next four years. The Northeast Ohio expenditures are part of a plan to spend $3 billion statewide on 41 road and bridge projects. At the top of the list was $334 million for Cleveland’s Opportunity Corridor, a road that would link University Circle with the stub of I-490 that ends at East 55th Street. The projects were approved July 25 by the independent Transportation Review Advisory Council. Generous gift:
Summa Health System in Akron received the largest donation in its history — a $4 million gift from Richard M. Hamlin, a well-known Akron-area builder and developer, and his wife, Yvonne. The gift will support the construction of a hybrid cardiovascular operating room at Summa Akron City Hospital. The room will serve as a traditional operating room but also as a cardiac catheterization lab. The lab will allow Summa’s cardiovascular experts to perform some procedures for heart patients previously only available outside the Akron area. Construction on the suite is expected to begin this fall and finished by spring 2014.
Still in the lead: Cleveland health care startups attracted more investments in the first half of 2013 than those in any other Midwestern city, though the dollars pumped into the companies here and elsewhere was down from the like period of last year, according to the latest BioEnterprise Midwest Healthcare Venture Investment Report. The report found that 27 Cleveland health care startups attracted $79.1 million in investments during the first six months of this year. The No. 2 Midwestern market, Minneapolis, saw 45 companies attract $69.3 million. In Cleveland and most other cities, the first-half 2013 numbers were lower than 2012’s first six months. In the first half of 2012, 34 Cleveland health care startups attracted $104.1 million in investments.
Off target: Arrow Electronics Inc. is closing a center in Solon and laying off more than 50 employees. The Englewood, Colo.-based company will permanently close the Systems Integration Value Added Center at 28600 Fountain Parkway in Solon as of Nov. 15. Fifty-four people will be laid off, the majority of whom are listed as warehouse associates. Arrow has two other Solon locations that will not see layoffs. The job losses are expected to begin on Sept. 27.
Sand
dollars: Fairmount Minerals, a Chesterland-based producer of industrial sand, agreed to acquire almost all of Texas-based FTS International’s sand mining operations, resincoating plants and distribution terminals. The acquisition, which is scheduled to be completed by the end of the third quarter, “significantly increases the operational and logistical capabilities” for Fairmount Minerals’ Santrol unit. Terms of the deal were not disclosed. Santrol is a producer of Northern White sand.
Back in the game: Associated Estates Realty Corp. acquired the 388-unit Doral West apartment complex in Doral, Fla. John Shannon, AEC senior vice president for operations, said the acquisition is the first by the real estate investment trust in almost a year. Doral West dates from 1998. It has two- and three-story, garden-style buildings and is located near almost 83 million square feet of commercial space. Richmond Heights-based Associated Estates also said it will complete a renovation of the complex started by the seller and will upgrade the property’s common areas.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
He’s more than a bit intrigued ■ Nowadays, David Pearl takes funny money seriously. David’s Grill & Bar in downtown Cleveland is one of the first — if not the first — local restaurant to accept Bitcoins, a form of digital currency. Two years ago, one of his regular customers, Pearl Monty Wesolowski, said he should think about accepting Bitcoins. Mr. Pearl didn’t think much of it … until their value started to skyrocket this past spring. As of last Friday, July 26, Bitcoins were selling for about $96 each. That’s well below the $266 peak in April, but well above the $2 they sold for in November 2011. “Really? I couldn’t have thought to buy Bitcoins then?” Mr. Pearl said with a laugh. Mr. Wesolowski — who works in the North Point Tower on Lakeside Avenue, where the restaurant is located — has been testing out the system for a few weeks by making purchases with a free smart phone app called Blockchain. The restaurant processes the orders with an iPad, through a vendor called BitPay. Visa and MasterCard aren’t involved. Mr. Wesolowski is an integration partner with BitPay, so he gets part of the 1% fee that goes to the vendor after each purchase. But his main reason for wanting the restaurant to take Bitcoins is that he’s “hopeless-
ly obsessed” with the digital currency. Few companies accept it today, but Mr. Wesolowski is hoping it catches on. He likes the fact that it can be used around the world and that it isn’t tied to the banking system. “This could do to the banking industry what email did to the post office,” he said. Mr. Pearl said Bitcoins could prove to be a good investment — the key word being “could.” “A year ago, it was so cheap,” he said. “Now it’s a hundred bucks for a Bitcoin. Who knows where it could be in three to four years?” Then he paused. “It could be nothing,” he said with a laugh. — Chuck Soder
This is kind of a big deal in the advertising world ■ Cleveland advertising and digital marketing firm Brokaw Inc. was honored in big — make that small — way last week when it was named Small Agency of the Year for Agency Culture by Advertising Age, a sister publication of Crain’s Cleveland Business. Brokaw announced in a news release that it will be keeping with the “small” theme to thank its supporters and employees. The firm is sending tiny boxes of chocolates made by the stars of TLC’s former reality show “Little Chocolatiers” to its clients, and it will host a short celebration with its team at Johnny’s Little Bar in Cleveland, complete with 7-ounce Miller High Life and “a very small toast.” Not bad for a company that says it is
WHAT’S NEW
BEST OF THE BLOGS
COMPANY: Eaton Corp., Cleveland PRODUCT: FloWash Filter Carts
Excerpts from recent blog entries on CrainsCleveland.com.
The diversified industrial manufacturer says it can save industrial users time and money with its new, portable FloWash filtration products. The filtration carts “clean and revitalize industrial fluids anytime, anywhere in the shop floor helping businesses maintain fluid cleanliness, improve fluid performance, and reduce their amount of waste and disposal costs,” according to Eaton. “Many of the costs associated with clean industrial fluids go toward disposal,” says Rick Jacobs, president of Eaton’s filtration division. “As a result, it made sense to develop a mobile, easy-to-use system that could clean coolant, oil, water, and many other industrial fluids for reuse.” The FloWash Filter Carts are flexible systems that operate in-line or as stand-alone mobile units. The FloWash Industrial Filter Cart operates with Eaton’s Model 30R and Model 72 strainers to pre-filter incoming contaminated liquid. Each cart is designed to fit customers’ specific needs. For information, visit www.eaton.com/filtration.
Send information about new products to managing editor Scott Suttell at ssuttell@crain.com.
They know their way around ■ Bloomberg profiled two Jones Day attorneys — one based in Los Angeles, the other in Cleveland — who will play a big role in the future of Detroit. The Jones Day partners, Bruce Bennett, 54, and David Heiman, 68, are in charge of Detroit’s day-to-day legal strategy, which for the next four months will focus on defending Gov. Rick Snyder’s decision to file Detroit’s $18 billion bankruptcy. “The two have been working out of the spotlight, which so far has been trained on the governor and Kevyn Orr, who was a partner at Jones Day when Snyder named him as Detroit’s emergency manager in March,” Bloomberg reported. However, “the focus may shift to Bennett, Heiman and the rest of their legal team” going forward, the news service says. Mr. Heiman is the case manager; Mr. Bennett leads the litigation and debt-restructuring efforts. Mr. Bennett has experience in big municipal bankruptcy. Bloomberg said that when Orange County, Calif., filed what was then the biggest U.S. municipal bankruptcy, Mr. Bennett “developed a strategy that quickly returned cash to other government agencies that had money in the investment pool. … That decision helped prevent smaller agencies from following Orange County into bankruptcy.” Cleveland-based Mr. Heiman is a senior figure in U.S. bankruptcy circles, “a dean of the national bankruptcy bar,” one lawyer said. “He’s very polished.” Bloomberg noted he has handled corporate restructurings, including the bankruptcies of Federated De-
known for its “quirky sense of humor.” “Don’t let our silly, little celebration fool you — this really is a huge honor,” said Gregg Brokaw, managing partner at Brokaw. — Rachel Abbey McCafferty
Akron-area food trucks want their selling space ■ Some local operators have formed the Greater Akron Food Truck Coalition to advocate collectively for changes in legislation that would allow for the operation of food trucks in that city. Some Akron-area restaurants and the Downtown Akron Partnership have pushed back against opening up the city’s streets to food trucks, arguing they would hurt brickand-mortar eateries, said Jeffrey Winer, president of the coalition and owner of The Orange Truk. “Akron has a unique opportunity to pass legislation that embraces the food truck revolution instead of rejecting us and driving it out of town,” Mr. Winer said. The coalition met two weeks ago with the Institute for Justice, a national public interest and civil liberties law firm, which on July 23 sent a statement to Akron City Council urging leaders to lift restrictions on the mobile eateries. “Food trucks put people to work, create opportunities for self-sufficiency and enrich the communities in which they operate,” the statement read. Akron City Council in June formed a committee to study the impact on food trucks in other cities. — Kathy Ames Carr
partment Stores and automaker Chrysler LLC. All his cases have prepared him for his latest job, Mr. Heiman said in an email to Bloomberg. “I do like Michigan, and Detroit, so maybe Chrysler helped in that respect,” he said. “What really prepares is being on a great, cause-oriented team.” Mr. Heiman, who grew up in Cincinnati and got his law degree from the University of Cincinnati, founded Jones Day’s bankruptcy division in 1984.
Reed all about it ■ Forest City Washington, the D.C. arm of Cleveland-based Forest City Enterprises, is one of three contenders for a project to turn 67 acres of the former Walter Reed army hospital into a mixed-use neighborhood, according to The Washington Post. Forest City has big-ticket experience in D.C., having worked on The Yards in the city’s Southeast district and Waterfront Station in the Southwest district. “Of everything on the competing companies’ résumés, Forest City’s 42-acre Yards project probably best resembles Walter Reed,” The Post said. “Through a partnership with the federal government, the company is turning former Navy industrial land into 2,800 housing units, 1.8 million square feet of office space and 400,000 square feet of retail, including a Harris Teeter grocery store.” The Yards is far from complete, “so adding Walter Reed would give the company two colossal projects to complete at once, but Forest City Enterprises has assets of $10.6 billion — a stockpile that should be big enough to serve them for the long haul,” according to the story. One observer told the newspaper, “They’ve got a really wide scope of geography that they cover but also a wide scope of programs that they cover — everything from office to retail to residential. That clearly fits with what the city is looking for at Walter Reed.”
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JUST HOW MUCH LUXURY WERE YOU THINKING? Porsche of North Olmsted
Mercedes-Benz of North Olmsted
569
$
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Lease for $599/month.
Per month lease for 36 months. $4,414 due at signing.
599 24
($3,050 down payment, $795 acquisition fee, $569 first payment)
$
$54,400 MSRP, 7-Speed Automatic Transmission, Premium 1 Package: Rear View Camera, mbrace2™, COMAND® w/Navigation and Voice Control, iPod®/MP3 Media Interface, SiriusXM® Radio w/ 6 Mos. Service, Power Rear-Window Sunshade, 18” AMG® Wheels, Sport Package, harman/kardon® Logic 7® Surround Sound System, Heated Front Seats
/ MONTH MTHS
$1,494 due at signing Excludes tax, title and doc fee. No security deposit required.*
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A Part of Collection Auto Group 28400 Lorain Road, North Olmsted, Ohio 44070
Mercedes-Benz of North Olmsted
855-218-1288
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28450 Lorain Road . 888-450-8064 . www.mbohio.com *Financing or leasing through Mercedes-Benz Financial is subject to tier one credit approval. 2014 E350 – 36 months, 10,000 miles per year. 25¢ per mile thereafter. $4,414 due at signing. Doc fee, tax and title additional. No security deposit. In-stock units only or while supplies last. Lease offers expire 7/31/13. Available to qualified customers only. © Mercedes-Benz USA, LLC.
$599 per month for 24 months at 5,000 miles per year, .30¢ per mile after 10,000 miles, $1,494 due at signing (First payment $599, acq. fee $895 and $0 cash down). Tax, title and doc fee additional. Payment or upfront fees do not include sales or county tax. Financing is subject to credit approval. Stock# PD114760. MSRP $57,385. Security deposit waived. Offer good through 7/31/13. ©2013 Porsche Cars North America, Inc. Porsche recommends seat belt usage and observance of all traffic laws at all times. Vehicle shown includes optional equipment available at additional cost.
Maserati of Cleveland
Come Celebrate the Grand Opening of our New Showroom and Service Center! THE ALL NEW 2014 MASERATI QUATTROPORTE IS HERE. Come in today for a test drive.
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*$795 Acq fee. $250 Documentation fee, Security Deposit, DMV fees & Sales Tax due at signing. Based on 10,000 miles/year with $0.60 for each additional mile. Qualified S Tier buyers through Ally Financial. Offer is only good while supplies last. Ad must be present at arrival to dealership and before the write up of a deal. Offer nontransferable. Offer can be canceled at anytime without notice by dealer. Vehicle image for illustration purpose. Offer expires 7/31/2013
WHERE ABOVE AND BE YOND COMES STANDARD.
www.collectionautogroup.com
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THE ALL-NEW 2013 320i xDRIVE Well-equipped including features such as Automatic Transmission, Bluetooth, Moonroof, Comfort Access keyless entry, Power front seats with driver seat memory, Satellite radio, with 1 year subscription, Auto-dimming interior and exterior mirrors, Storage package, Universal garagedoor, opener, Lumbar support. Lease From:
$
/ 36 mo. * 289 mo.
BMW Cleveland
6135 Kruse Dr. • Solon • 1-866-210-6710 www.BMWCleveland.com
BMW Cleveland
* Due at delivery $289 First payment, $3,015 Down payment, $725 Acquisition fee, $0 Security Deposit and *$500 Loyalty Cash. Based on MSRP of $39,725.00. Vehicle may need to be ordered. Total Lease payments are $10,404.00. Excludes tax, title, license and registration fees. Program available to qualifi ed customers and not everyone will qualify. Subject to credit approval. 30K total miles allowed. Contact BMW Cleveland for details. Dealer contribution may affect terms. *$500 Loyalty Cash available for returning BMW customers only. 1Which ever comes fi rst. For complete details on BMW Ultimate Service ® visit bmwusa.com/ultimateservice. © 2013 BMW of North America, LLC. The BMW name, model names and logo are registered trademarks.
BMWCleveland.com 440-542-0600
The Ultimate Driving Machine®
RANGE ROVER EVOQUE
120 AWARDS AND COUNTING. A JOURNEY 65 YEARS IN THE MAKING.
2014 Jaguar F Type S Lease for $999 x 48 months with $5,995 down plus bank, doc and license fees and local taxes at delivery. 6137 KRUSE DR., SOLON (440) 542-0601 www.jaguarcleveland.com
$399 PER MONTH FOR 36 MONTH LEASE
*
$2,995 DOWN, BANK FEE, DOC FEE, PLATES. $4,455 DUE AT DELIVERY PLUS TAX
LAND ROVER SOLON
CLEVELAND
6137 KRUSE DR., SOLON • 1-866-210-6707 www.landroversolon.net
* 48 month lease/10,000 miles per year. $5,995 cap reduction plus first payment, bank fee, doc and plates. $7,795 total due at delivery cash or trade plus tax. With tier 1 credit thru Jaguar Financial Services. Good until 7/30/13. Stock #J01970.
* Lease rates shown for 2013 Range Rover Evoque to qualified buyers through US Bank. $2,995 down plus bank fee, doc fee, license fees and tax. Total due at delivery $4,455 plus local taxes. Actual rates and terms may vary. All amounts shown are estimates, retailer sets actual amounts. Lessee responsible for insurance, maintenance, excess wear and excess mileage over 40,000 miles at $0.30 /mile. Based on MSRP of $42,040 (including destination and delivery). Lessee has the option to purchase vehicle at lease end at price negotiated with retailer at signing. For special lease terms, take new vehicle delivery from retailer stock by 7/31/13. Termination fee may apply. See your Land Rover Retailer or call 1-800-FIND-4WD for qualifications and complete details. ©2013 Jaguar Land Rover North America, LLC.
6135 Kruse Dr. • Solon • (440) 542-0600 • www.DavisAutomotive.com