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Lawmakers still leery of Kent plan to finance fix Some fear precedent of academic building fee By TIMOTHY MAGAW tmagaw@crain.com
Some of the lawmakers who must give Kent State University the final OK to borrow $210 million for a slew of campus upgrades aren’t sold yet on the school’s proposal to finance the construction plan with a new student fee at a time when the cost of higher education continues to escalate. Gaining approval from the State Controlling Board, an oversight body made up of six legislators and an appointee of the governor, is the last of many hurdles Kent State must overcome before proceeding with a $250 million renovation and construction plan on its main campus in Kent. All parties involved agree the renovations are needed as the university has more than $300 million in deferred maintenance. But coming to a consensus on how to pay for the plan is proving trickier than anticipated. Approving the Lefton measure, lawmakers said, could open the floodgates for other state universities to impose steep fee hikes for capital investments — something Kent State president Lester Lefton isn’t convinced would happen. Such fees typically are imposed for buildings such as stadiums or student unions, but not for academic buildings, as Kent State proposes. “Converting student fees on this scale to capital improvements is problematic,” said state Sen. Tom Sawyer, a Democrat on the controlling board who represents Kent State’s district. “To run a policy change of this magnitude through the controlling board is, by itself, a concern for a number on the board.” Kent State had planned to go to market with the bond sale this summer
AN EASIER WAY TO PAY Small businesses, nonprofits — even the Girl Scouts — find mobile credit card readers make their lives simpler By CHUCK SODER csoder@crain.com
D
on Larson loves taking credit card payments on his smart phone. Loves it. “It’s a frickin’ godsend. It really is,” he said. Mr. Larson is one of many area small business owners who recently have started taking credit card payments with smart phones and tablet computers such as the iPad. Nonprofits do it, too. For instance,
not only does Mr. Larson use Intuit Inc.’s GoPayment system when providing business consulting services to his clients, but the Gorilla Group, an entrepreneurship organization he helps run, uses a product called the Square to take payments from people who attend its monthly events. Neither system is much better than the other, said Mr. Larson, who is managing partner of consulting firm MCF Industries in Cleveland. However, for businesses and organizations that don’t move large See PAY Page 9
Team NEO broadens board, eyes consensus Expected role with JobsOhio fuels expanded representation By JAY MILLER jmiller@crain.com
Anticipating new responsibilities that will be thrust upon it by Gov. John Kasich’s administration, Team NEO is doubling the size of its board of trustees as it anticipates a need to build broad consensus for a regional economic development strategy it must present to JobsOhio, the governor’s nascent job-creation nonprofit. The state today, Aug. 29, is expected to announce formally that Team NEO, the business attraction group created by the region’s major chambers of commerce, will be the Northeast Ohio regional partner for JobsOhio. In that role it will be the agent for the state’s many business incentive programs, the place where mayors and INSIDE: A closer look businesses with expansion at the new board plans in 18 counties go to members. Page 5 seek state tax credits, startup grants and low-interest loans. “This is making Team NEO more a hub, a confederation, for the major economic development groups” in the region, said Team NEO chief executive Tom Waltermire in an meeting with Crain’s editors and reporters last week. “Team NEO will be the interface with JobsOhio and the community. It will not be making investment decisions (for JobsOhio), but it will be deciding on projects that JobsOhio should go after.” Expanding the board, he said, will give Team NEO greater ability to bring the entire region together as JobsOhio asks Team NEO to come up with a regional economic strategy that will guide JobsOhio in the allocation of its investment dollars, tax credits and other business incentives. See BOARD Page 5
INSIDE Growth on the menu As demand for its frozen products grows, longtime Cleveland resident Orlando Baking Co. is bolstering its presence in new and existing markets and eventually plans to expand its facility. John Anthony Read more about the company’s Orlando plans on Page 6.
35
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SPECIAL SECTION
PHILANTHROPY Cleveland Sight Center, InfoCision Corp. team to provide training for visually impaired ■ Page 13 PLUS: NONPROFIT M&A ACTIVITY ■ FOUNDATIONS ■ & MORE
Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 35
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WE’RE IN A CRANKY MOOD
ALSO INSIDE
Ohioans are among the most unhappy people in the United States, according to the latest Gallup-Healthways Well-Being Index. The index, which runs on a scale of 0 to 100, is based on surveys with Americans in six areas: life evaluation, emotional health, work environment, physical health, healthy behaviors and access to basic necessities. The average score nationwide for the January-June period this year was 66.4, down from 66.8 in the like period a year ago. Here are the top and bottom five states for 2011: HAL STATA
Archer Awards reception coverage Read about the winners and view photos from the event, held Aug. 17 to honor the area’s top human resources professionals. Page 8
REGULAR FEATURES Best of the Blogs ..........19 Big Issue ......................11 Classified .....................18 Editorial .......................10 From the Publisher .......10
AUGUST 29 - SEPTEMBER 4, 2011
Going Places ................12 Letters .........................10 Reporters’ Notebook ....19 The Week.....................19 What’s New ..................19
State
Index score
Hawaii
71.1
West Virginia
62.4
North Dakota
70.5
Kentucky
63.0
Alaska
69.4
Mississippi
63.6
Nebraska
68.4
Ohio
64.4
Minnesota
68.3
Louisiana
64.6
SOURCE: WWW.WELL-BEINGINDEX.COM
State
Index score
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Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Robert C. Adams: Group vice president technology, circulation, manufacturing Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-2912, or email to customerservice@crainscleveland.com, or call 877-812-1588 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777. Reprints: Call 1-800-290-5460 Ext. 125 Audit Bureau of Circulation
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More companies plan pay hikes in 2012 By DAVID PRIZINSKY clbfreelancer@crain.com
But, modest 2.8% average increase lags cost of living index
More Northeast Ohio employers are planning worker pay hikes in 2012 as they continue to dig out of a prolonged economic slump, according to the annual compensation survey conducted by the Employers Resource Council. The survey participants that plan raises during the next 12 months are projecting hikes that average 2.8% across all five job classifications
included in the survey. Raises will range from a high of 3% for executives to 2.5% for unionized production workers. Although the size of the raises is slightly smaller than last year’s projections, fewer companies are saying this year they won’t hike anyone’s pay, which indicates a continuing decline in the number of organizations that have resorted
to pay freezes in a tough business climate. For example, there will be no pay hikes for executives at 19% of the companies surveyed this year, a drop from 23% in the year-ago survey. This number peaked at 51% in 2009, two years into the recent recession. The same trend applies for most of the other four job categories in the survey.
“The results this year are more positive,” said Katie Talerico, survey manager for ERC, a group for human resources professionals that is based in Mayfield Village. Ms. Talerico said another pocket of strength was a greater number of companies and organizations that planned hikes of more than 3%. For example, 56% of companies said executives would receive increases
THE WEEK IN QUOTES
Middlefield Banc Corp. may assert more clout
— Sue Majzun, product sales manager for Girl Scouts of Northeast Ohio, which is using Intuit’s GoPayment system to sell cookies. Page One
Investors see chance for strategic buys
“The Midwest has had its hits, but isn’t making big swings like other parts of the country.”
By MICHELLE PARK mpark@crain.com
— Chip Headley, president and chief investment officer of Orlando, Fla.-based mini-warehouse chain StorKwik. Page 9
— Cheryl Garcia, a participant in the InfoCision/Cleveland Sight Center call center training program. Page 13
“Really smart companies know when they really need to (participate in workplace fundraising). They want to retain top talent, and it’s easier to support local causes than to market or advertise.” — Amy Pausche, Leukemia and Lymphoma Society’s Northern Ohio chapter. Page 16
“There is nothing we would not consider doing. But (a food challenge) is probably more my speed than a tattoo.” — Mike Tomon, vice president of sales and service for the Cleveland Cavaliers. Page 17
See ERC Page 18
INSIGHT
“A lot of customers just don’t carry money anymore.”
“Having a job, it gives me a sense of I’m doing something for myself. It helps me to feel better about me.”
of more than 3%, compared with 48% in last year’s survey. ERC said 129 organizations participated in the survey. Of these, 54% were manufacturing companies, 26% were non-manufacturing and 20% were nonprofits. The majority of the participants, 54%, had from 51 to 200 employees. The survey participants were based in Cuyahoga, Lake and Summit counties. Manufacturers such as Talan Products Inc. in Cleveland and Astro
JANET CENTURY
“Our biggest challenge is finding more people,” says Neil Gloger, CEO of Euclid-based InterGroup International, which recycles plastics and converts them to flakes or pellets that can be used to make plastic products.
PLASTICS RECYCLER WRAPPED UP IN GROWTH Euclid’s InterGroup International to expand operations as demand for its repurposed materials escalates By DAN SHINGLER dshingler@crain.com
N
ortheast Ohio long has known, even before Dustin Hoffman did, that fortunes could be made in plastics. And it’s still true — enough so that Euclid-based InterGroup International almost has tripled its annual revenues in each of the last three years and is looking for a 200,000-square-foot building in which to expand in order to accommodate its growth. The difference is that InterGroup is on the opposite end of the production process from the one referred to in the Dustin Hoffman flick, “The Graduate.” See RECYCLE Page 17
If a private equity investor’s plan pans out, Middlefield Banc Corp. could triple in size over the next half decade as it becomes a vehicle to acquire other Ohio banks and as it grows its existing operations. Bank Opportunity Fund, an affiliate of Hovde Private Equity Advisors LLC in Washington, D.C., has agreed to buy $9.45 million of newly issued Middlefield Banc common stock in a deal that positions it to be the company’s largest shareholder. The way Eric D. Hovde sees it, there’s opportunity to build the company into a “meaningful franchise.” Mr. Hovde, chief investment officer of the Bank Opportunity Fund’s investment adviser, envisions dramatic growth for the business, which currently consists of Middlefield Banking Co. in Middlefield and Emerald Bank in Dublin, a suburb of Columbus. He would like to build Middlefield Banc over the next five years from a company with $640 million in assets into one totaling $1.5 billion to $2 billion in assets. The plan, he said, is to expand in and around Geauga County, which is Middlefield’s home, and the Columbus area. “We think there will be numerous acquisition opportunities,” Mr. Hovde said, referring to community banks and potential transactions assisted by the Federal Deposit Insurance Corp. “We have institutions that we would like to talk to,” he said, though he declined to identify them. Growth of existing operations also will be supported by the capital provided, as it should enable Middlefield Banc’s subsidiaries to lend as other banks struggle, Mr. Hovde said.
Valuing Midwestern values Bank Opportunity Fund aims See BANK Page 17
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Relocation may be on horizon for Warrensville Hts. marketing firm Marcus Thomas mum on plans to move within city By STAN BULLARD sbullard@crain.com
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The Marcus Thomas LLC marketing firm may be packing up its employees — and their dogs — to move to a new building rising less than a mile from its Warrensville Heights home. The integrated public relations, advertising, interactive and research firm isn’t talking about the move. Neither is Greg Geis, a principal of Hemingway Development Co., which last week started putting up a wall for a new 40,000-square-foot building at its Hemingway on Richmond Business Park in Warrensville Heights. The structure is one of two buildings of similar size that Hemingway is constructing at the business park, which is on the site of the former St. Jude Church. Due to a lackluster economy and tepid real estate market, such midsize commercial office buildings are a rarity. Word of Marcus Thomas’ planned exit comes from its current landlord, Jonathan Berns, a principal in ORG Properties, which has housed Marcus Thomas since 2002 at 24685 Emery Road at Highland Business Park. “We hate to lose them, but at least they’re not going to Chicago,” Mr. Berns said. “We didn’t have expansion room for them to add another 20,000 square feet to their current office. We were also unsuccessful with plans for a new building at
APARTMENT BUILDING OWNERS
STAN BULLARD
Hemingway Development Co. is constructing two office buildings, one of which is shown here, at its Hemingway on Richmond Business Park in Warrensville Heights. Marcus Thomas’ landlord says that the firm is exiting its current location in that city and is pursuing space at another new building in the park. Interstate Commerce Center, so they’ve leased with Geis.” Marcus Thomas has 121 employees at its current, 26,400-square-foot office. Its 10-year lease expires next year, Mr. Berns said. “We’d like to keep them, but it’s the same thing as wanting to keep your kids in the same size clothes,” Mr. Berns said. “They outgrow them.” Todd Morgano, director of public relations at Marcus Thomas, said in a phone interview last Thursday, Aug. 25, that company officials “have nothing to say at this time.” He said parties other than just Marcus Thomas need “to be comfortable” with the plans before they become official. Hemingway’s Mr. Geis responded to phone calls from Crain’s with an email saying he would not discuss the buildings due to client confidentiality issues. The Geis Cos. development outfit serves as the contractor for sister company Hemingway’s developments. The sizes of the two buildings rising near Richmond Road are disclosed in minutes of the eastern suburb’s June 22 Planning Commission meeting, when the plans received city approvals. Greg Seifert, Geis Cos. vice president of construction and design, declined to identify the tenants in detail to the Planning Commission, though he said one is a “marketing firm with about 120 employees” and the other is an educational institution.
Reginald Owens, director of economic development at Warrensville Heights, declined to comment on parties negotiating tax incentives with the suburb for the buildings because nothing has been introduced to the suburb’s City Council. “We will not comment on anything we have in the pipeline,” Mr. Owens said.
Existing space is scarce Robert Redmond, a managing director at the Cleveland office of the Mohr Partners brokerage, said it’s likely that Marcus Thomas couldn’t find existing, top-drawer space in the eastern suburbs, the tightest office market in the Cleveland suburbs. “The eastern suburbs are unusually tight for the economy we’re in,” Mr. Redmond said. “Virtually no large chunks of space over 30,000 square feet in size are available.” He said he recently had trouble finding 3,000 square feet of class A space for a tenant on Chagrin Boulevard. Online realty data provider CoStar estimates vacancy in the eastern suburbs at 10%. Marcus Thomas has been proud of its Warrensville Heights office over the years, often calling attention to a casual atmosphere resembling a living room to foster creativity and a setting where employees’ dogs are welcome. A stylized dog graces the firm’s introductory web page and is part of the company’s logo. ■
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Volume 32, Number 35 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2011 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. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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Board: Public officials to be involved continued from PAGE 1
The board additions, Mr. Waltermire said, “will provide the leadership to make that happen.” Unstated by Team NEO is the need for board members who are heavyweight leaders in communities throughout the region so that the private sector organization can win the acceptance of local public officials for an economic strategy that will affect where and how state incentives are invested. Six of the 13 new trustees have ties to organizations outside Cuyahoga County; that’s a mix that wouldn’t hurt as Team NEO looks to overcome the perception among some political leaders that it’s a Cleveland-centric body. Among the big names added to the Team NEO board are Virginia Albanese, president and CEO of FedEx Custom Critical Inc. and chairwoman of the Greater Akron Chamber of Commerce; Anthony Alexander, president and CEO of FirstEnergy Corp. and a board member of Akron Tomorrow; Mark Fleiner, CEO of Rolls-Royce Fuel Cell Systems and a board member of the Stark Development Board; and Paul Greig, chairman, president and CEO of FirstMerit Corp. and a board member of Akron Tomorrow. By design, the board includes no public officials, many of whom are privately, if not publicly, unsure of how this new structure will affect their ability to bring jobs to their communities. Only Akron Mayor Don Plusquellic
has made his concerns public. In an interview three weeks ago, he told Crain’s he would have preferred an organization that allowed his administration to work as the intermediary between growing businesses looking for financial help and the state incentive programs. But a key reason Gov. Kasich created JobsOhio as a nonprofit apart from government was to give it greater freedom and flexibility to deal with businesses that want to keep their business dealings private. Both Gov. Kasich and Mark Kvamme, the governor’s job creation point person, have said repeatedly that some companies have been reluctant to work with the state’s Department of Development because of concerns their dealings would become widely known.
Building bridges Though JobsOhio itself is still new and has yet to formulate clear guidelines for tailoring state assistance to specific regional needs, such as Northeast Ohio’s need to attract health care and engineering talent, Team NEO officials have said public officials and others with an interest in economic development will be involved in developing its regional strategy. “We believe that any effective regional strategy needs to have input and buy-in from public, private and philanthropic sectors, but the exact process for doing this is still to be determined,” said Jenny Febbo, Team NEO’s vice president of mar-
keting and communications. Ms. Febbo said Team NEO also will be blending two existing economic development strategy studies for how to improve the region’s prospects into whatever strategy it creates. Advance Northeast Ohio, an economic competitiveness agenda devised by the Fund for Our Economic Future in 2007, sets key goals for the region that include better educating and training the region’s work force, improving government collaboration, and expanding the role of minority- and female-owned business in the region’s economy. More recently, in collaboration with the Brookings Institution think tank, the Future Fund took that broad plan a step further. The Brookings Northeast Ohio Regional Business Plan highlights those business sectors that appear to have the most promise for growth in the region and suggests ways to develop its research base and entrepreneurship abilities in those areas.
In Tom he trusts Brad Whitehead, president of the Future Fund, said researchers who worked on those two studies listened carefully to the needs of public officials, and that he’s confident Team NEO will welcome public officials into its efforts to aid business. “Team NEO is talking about broad engagement in the execution of the work,” Mr. Whitehead said. Edward Hill, dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University
CRAIN’S CLEVELAND BUSINESS
5
COME ALONG FOR THE RIDE These are new members on the board of Team NEO, the regional business attraction group expected to be named today, Aug. 29, the Northeast Ohio regional partner for JobsOhio: ■ Virginia Albanese, president and CEO, FedEx Custom Critical Inc.; chairwoman of the board of the Greater Akron Chamber of Commerce ■ Anthony Alexander, president and CEO of FirstEnergy Corp.; member of the board of Akron Tomorrow ■ William Christopher, president and CEO of Lakeview Consulting Enterprises, retired executive vice president of Alcoa Inc.; chairman of the board of the Greater Cleveland Partnership ■ Lonnie Coleman, president and CEO of Coleman Spohn Corp.; member of Team NEO’s Minority Business Attraction Advisory Council ■ Dr. Achilles Demetriou, chief operating officer of University Hospitals; member of the board of BioEnterprise, the bioscience business development nonprofit ■ Mark Fleiner, CEO of Rolls-Royce
and a consultant on economic development issues, said keeping public officials at arm’s length in key parts of the negotiations with businesses looking for financial assistance is important and “the single hardest thing about economic development.” Nonetheless, he understands the concerns of public officials. “A board without public experience runs the danger of having complete private sector sensibilities
Fuel Cell Systems; board member of the Stark Development Board ■ Paul Greig, chairman, president and CEO of FirstMerit Corp.; member of the board of Akron Tomorrow ■ Henry Meyer, retired chairman of the board and CEO of KeyCorp; board member and immediate past chairman of the Greater Cleveland Partnership ■ Timothy Reynolds, president of Tribute Inc.; chairman of the board of NorTech, the technology economic development organization ■ Ed Roth, president and CEO of Aultman Health Foundation; chairman of the Stark Development Board ■ Robert Smith, president and CEO of Spero-Smith Investment Advisors; chairman of the ClevelandCuyahoga County Port Authority ■ Tom Strauss, president and CEO of Summa Health System; immediate past chairman of the Greater Akron Chamber of Commerce board ■ Mark Williams, executive vice president and director of strategic planning for KeyBank; vice chairman of entrepreneurial nonprofit JumpStart
which could lead (business) people to make inadvertent mistakes” when dealing with the public sector, Dr. Hill said. Yet Dr. Hill, too, is confident that Team NEO can bring the region’s varied interests together. “When Tom Waltermire gets done negotiating this, he can negotiate the peace in Libya and know he can have confidence doing it,” Dr. Hill said. ■
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Orlando cooks up growth into new markets Baker sees demand for its frozen line climb By KATHY AMES CARR kcarr@crain.com
The aroma of rising yeast and flour greet passersby as Orlando Baking Co. churns out thousands of rolls, buns and loaves per hour from its 200,000-square-foot headquarters on Cleveland’s near East Side. But bread isn’t the only thing on the rise at the fifth-generation business, which has expanded several times since it opened in Cleveland in 1904. The 360-employee company plans to take a larger bite out of existing and new markets as demand climbs for its line of frozen and fresh-baked starchy fare. “The bakery’s been our second home, and we’re happy to continue growing as a Cleveland company,” said John Anthony Orlando, executive vice president of operations. The bread producer, which was founded in 1872 in Castel di Sangro, Italy, produces more than 250 varieties of breads and distributes its products to restaurants, grocery stores and other retailers in Northeast Ohio and throughout the country. About 65% of its business is in supplying restaurants; the other 35% satisfies private label and retail accounts. It does not disclose sales. The company, which last year launched the nation’s first probiotic bread, is partnering with the Cleveland Clinic to unveil a revised version with no preservatives and less sugar, said co-president Chet “Sonny”
Orlando. Orlando Baking is set to roll out the product soon to local stores such as Heinen’s, Marc’s and Giant Eagle, and it will be denoted with the Clinic’s Go! healthy foods program, he said. “Then we’ll bring it out nationally,” Sonny Orlando said. “The probiotic bread has been a real success for us.”
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From one family to another The progress comes as no surprise to Jeff Heinen, whose family-owned Heinen’s grocery stores have had about a half-century relationship with the Orlando family. “As a family business, we’ve had mutual interest in growing and competing with large companies to be successful,” Mr. Heinen said. “We’ve grown with them, and it still boils down to the customer buying a highquality product. Our customers have benefitted from those products.” Orlando Baking in April secured a deal with IHOP restaurants to provide hamburger buns for that chain’s more than 1,500 stores nationwide, said John Anthony Orlando, and Bob Evans recently incorporated Orlando Baking’s Ciabatta bread into its market-fresh sandwiches. The bakery’s products also can be found in some local Walmart stores, but Orlando Baking is working to expand its presence in the retail giant. Despite its many and varied relationships, Orlando Baking hasn’t been immune from the economic doldrums that have plagued many
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John Anthony Orlando, Orlando Baking Co.’s executive vice president of operations, says the company is “happy to continue growing as a Cleveland company.” sectors, including the restaurant business, which slowed during the recession as consumers reined in spending. “We’re affected when the restaurants are affected” by a slowdown in business, John Anthony Orlando said.
Expansion opportunity on hold The company said it has helped manage though that slowdown with a more aggressive pursuit of its current accounts, which include the Buffalo Wild Wings and Hyde Park restaurants.To accommodate Orlando Baking’s planned market share growth, the company said it plans to expand its freezer and packaging facility by 30,000 square feet to 50,000 square feet. “Most of our fresh products are distributed throughout Northeast Ohio, but our frozen products output, which is 60% of our business, continues to grow,” John Anthony
Orlando said. “That means more customers are demanding that more inventory be on hand.” But plans for the Opportunity Corridor boulevard that would link Interstate 490 and the city’s University Circle neighborhood are holding up the expansion. The current corridor proposal slices through Orlando Baking’s parking lot on Grand Avenue, across the street from its headquarters. “It’s ideal to have the corridor running through our property, but not our parking lot,” said John Anthony Orlando, who is a member of the Opportunity Corridor’s steering committee. “We’re trying to work with the city (of Cleveland) and (the Ohio Department of Transportation) to move the corridor south of the parking lot. “We’d be ready to expand right now if we could,” he said. ■
The Centers for Medicare & Medicaid Services said it expects “hundreds” of health care providers to help test and develop four versions of bundled payment arrangements that the federal agency unveiled last week. The bundled payments initiative, authorized by the Patient Protection and Affordable Care Act, aims to encourage clinicians and hospitals to coordinate care, improve the quality of care and save money for Medicare, according to descriptions posted on the agency’s website. Many providers are expected to apply to participate in the voluntary initiative, despite the risk of losing Medicare funding if spending goals are not met, because they also may qualify for additional funding, according to agency officials. Three of the four models in the initiative will use a retrospective bundled payment arrangement under which the agency and providers set a target payment amount for a defined episode of care. That total target payment will be compared with the total payments at the end of the episode of care and providers will receive a share of any resulting savings. Another model would pay providers prospectively and allow them to choose the model of bundled payments that works best for them. ■ Rich Daly is a reporter with Modern Healthcare, a sister publication of Crain’s Cleveland Business.
Kent: Legislators cite danger in precedent continued from PAGE 1
and start renovations this fall. But the disagreement between Kent State officials and lawmakers has set the already-delayed plan back even further. “This has to happen eventually,” Dr. Lefton said. “It’s a matter of when. We’re not asking the state for money. It would be very different than if we said we needed $100 million from the state of Ohio.”
Fears of a precedent While Kent State maintains that its fees and tuition are lower than many other colleges and universities, lawmakers on both sides of the aisle aren’t eager to tack more charges on to students’ bills, particularly after the Legislature approved allowing colleges to hike tuition by 3.5%. “I believe if students have that kind of money, they should buy their own home or invest in Ohio some other way rather than invest in the mortgage of Kent State,” said state Rep. Chris Widener, a Springfield Republican serving on the controlling board. Lawmakers are concerned the new fee Kent State is advocating could set a dangerous precedent for special fees that other schools could follow, ultimately driving the cost of the state’s public colleges and universities even higher. “There are other universities that will come in with similar stories or examples that they should be
exempted as well,” said state Rep. Jay Hottinger, a Newark Republican also on the board. “We don’t operate in a vacuum. This is not just a Kent State issue.” Kent State faced similar pushback when the former head of the Ohio Board of Regents, Democrat Eric Fingerhut, stonewalled the proposal because of the fee, which the university would phase in over the next few years; it would add $20 per credit hour when fully implemented in fiscal 2016, which begins July 1, 2015. The university seemed to catch a break when Gov. John Kasich appointed Jim Petro, a Republican, to head the Board of Regents; Mr. Petro soon thereafter threw his support behind the proposal. A spokeswoman for Mr. Petro said he was still behind the proposal. Only one lawmaker on the controlling board — state. Rep Clayton Luckie, a Democrat from Dayton — told Crain’s he supported the measure, and only Rep. Widener said definitively that he would vote no. Republican state Rep. John Carey from Wellston wouldn’t comment, and state Sen. Shannon Jones, a Republican from Springboro, didn’t return repeated calls for comment.
Testing the water Discussions among lawmakers, the Kasich administration and Kent State officials are ongoing, as all interested parties want to ensure the proposal has enough support
before coming up for a vote. “I suggested to (Kent State officials) that they find out what level of support is out there, and if that request needs to be modified, it makes no sense to bring it forward,” said Randy Cole, whom Gov. Kasich appointed as president of the controlling board in March. Mr. Cole, who also has a vote, wouldn’t comment on whether he supported the proposal. Dr. Lefton said further delays could add to the cost of the construction initiative as buildings continue to deteriorate and the bond market becomes more challenging. Those additional dollars, Dr. Lefton said, would be added to the $75 million in interest costs the university already planned to stomach after Mr. Fingerhut blocked the proposal and a federal stimulus initiative known as the Build America Bonds program expired; that program would have lowered the university’s interest expenses on bonds issued for the construction effort. Dr. Lefton said the university could manage the debt if the new student fee wasn’t part of the construction plan, but ultimately investments in academic areas would suffer because the money would need to come from somewhere and the university already took a $13 million hit in the latest state budget. “(Lawmakers) want to keep quality high, but they can’t keep cutting the budget to the bone,” Dr. Lefton said. ■
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Elk & Elk pursuing claims of toning shoe injuries Omnipresent personal injury law firm debates benefits, says it has 14 clients who have suffered By MICHELLE PARK mpark@crain.com
Personal injury law firm Elk & Elk is pounding the electronic pavement in search of people who want to explore whether the makers of their toning shoes should foot the bill for injuries they say the shoes have caused. The Mayfield Heights firm has posted on its website a “toning shoe advisory” that states in bold type, “Call an Elk & Elk product defect lawyer if wellness shoes have damaged your well-being.” It also has publicized its search for injured consumers in television commercials. According to Elk & Elk attorney Jay Kelley, the firm already has 14 Ohio clients who’ve suffered what he called “significant injury,” namely fractures, because they wore the shoes. No lawsuits related to the toning shoes have been filed, though, and Mr. Kelley said he doesn’t anticipate litigation before late fall. According to Mr. Kelley, toning shoes, which are marketed as shoes that help wearers increase muscle tone and burn more calories, don’t do what shoemakers claim they do. Independent studies have found no evidence of added benefit to wearing toning shoes, Mr. Kelley said, citing a study by the American Council on Exercise. The council’s study tracked the exercise responses in subjects who walked on treadmills in traditional athletic shoes and toning shoes. The researchers found that none of the “popular” toning shoes they tested — Skechers Shape-ups, Reebok EasyTone and MBT — showed statistically significant increases in either exercise response or muscle activation. “There is simply no evidence to support the claims that these shoes will help wearers exercise more intensely, burn more calories or improve muscle strength and tone,” the study found. While he stopped short of calling the shoemakers liars, Mr. Kelley said he believes the products haven’t been tested adequately and that there’s a lack of warning for them. To him, the liability is in the instability the shoes create, which he says is leading to fractures and other injuries. And he isn’t talking about falls; rather, Mr. Kelley said, people are sustaining injuries because their gait is altered unnaturally, changing
in some cases their bodies’ alignment. “(Customers) are walking in the shoes the exact way that they’re supposed to be used, and they’re breaking bones,” Mr. Kelley said.
Companies respond In a prepared statement, Leonard Armato, president of Skechers Fitness Group, said: “While Skechers does not comment on pending litigation, the company is confident that Shapeups are safe. Skechers has not had an opportunity to review the plaintiff’s allegations, claims, or medical records. However, we can say that millions of people wear Shape-ups without experiencing what the
Claims for unemployment insurance rise with layoffs By STAFFING INDUSTRY ANALYSTS
Unsafe at any speed? One researcher for the American Council on Exercise study likewise voiced concern that extended wear of toning shoes may, “in some cases, potentially cause problems for those who may already be at risk for lowerextremity issues.” But a longer-term study would be required to evaluate that risk more fully, the researcher noted. Mr. Kelley isn’t waiting to render his opinion. “They put an unsafe product into the market,” he said. “I know their defense: Anybody can be injured exercising. But this is something that they’re selling as new technology. They’re not shy about these promises that they’re making in these commercials and advertisements.” Elk & Elk’s search began when it met its first client who alleged injury from the shoes. Asked if the firm’s search for others claiming similar injury is opportunistic, Mr. Kelley replied, “Don’t you think it’s an opportunistic marketing campaign by (the shoe makers)? “It’s very easy to convince people of things they want to believe,” he said. “We all want to believe that there is some magic remedy out there that will help us get in shape, live longer, live healthier.” Elk & Elk is not planning a classaction lawsuit. Should the firm go to court, it would file each complaint individually, though if there are enough cases around the country, they could be handled via multidistrict litigation, Mr. Kelley said. The company, Mr. Kelley said, is focused primarily on toning shoes sold by Skechers, though he declined to elaborate on why.
7
plaintiff alleges.” A Skechers spokeswoman said numerous studies have found that there are benefits to so-called rocker bottom shoes. Researchers, she said, have “found demonstrable fitness benefits from walking and standing in such shoes, as compared to flatbottomed athletic footwear, without noting any adverse safety or health consequences.” The Skechers spokeswoman also noted that the American Council on Exercise study was published by an
organization that certifies personal trainers, which she asserted would have a bias against a shoe that “helps you work out without going to the gym.” Joe Casagrande, president of MBT North America, said that without knowing the specifics of Elk & Elk’s claims, it’s “hard to have any response.” He also said MBT does not read the American Council on Exercise study as addressing the injury issue because none of the participants was reported to have sustained injury. ■
Initial claims for unemployment insurance caused by mass layoff events — where 50 or more workers are laid off from a single workplace — and the resulting initial claims for unemployment rose in July from June, the U.S. Bureau of Labor Statistics reported. On a seasonally adjusted basis, 145,000 initial claims for unemployment insurance related to mass layoffs were filed in July. That’s up 1.1%, or 1,556, from June and up 4.6% from July 2010. The number of mass layoff events also rose in July — to 1,579, which is a 3.1% increase from June and 3.3% increase from July 2010. The industry with the most initial claims for unemployment insurance resulting from mass layoffs in July was temporary help services, with 18,495, according to numbers that were not seasonally adjusted. ■
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2011 ARCHER AWARDS: ACHIEVEMENTS IN HUMAN RESOURCES
Crain’s honors people behind their people Crain’s Cleveland Business for the first time this year honored the region’s human resources professionals with its Archer Awards program. The winners of the 2011 Archer Awards were announced at an event Aug. 17 at LaCentre Conference and Banquet Facility in Westlake. The event was presented by Howard & O’Brien Associates and sponsored by Aon Hewitt, Pradco and Cleveland.com The honorees, selected by an outside panel of judges, were: ■ Human resources executive of the year, public company: Steve Becker, Sterling Jewelers Inc. ■ Human resources executive of the year, private company: Tina Myles, InfoCision Management Corp. ■ Human resources executive of the year, nonprofit: Michelle Meers, Playhouse Square Foundation ■ Innovation Award: Bill Busby,
US Endoscopy; Lori Hedrick, Marcus Thomas LLC; Zachary Simon, Eaton Corp.; and Patricia Stumpp, Invacare Corp. ■ Lifetime Achievement Award: Christopher Maurer, FirstMerit Bank ■ Rising star award, public: Leonora Yurichak, CBiz Inc. ■ Rising star award, private: Megan Busovicki, AdvoCare Group ■ Rising star award, nonprofit: Lauren Rudman, Greater Cleveland RTA ■ Citizenship award: Daniel Blain, Jewish Federation of Cleveland In all, 33 Archer Award finalists were selected, with judges taking into consideration a variety of qualities among nominees, including leadership, best practices, achievements and community involvement. For profiles of finalists and winners, go to www.crainscleveland .com/section/archer11.
HAL STATA PHOTOS
ABOVE LEFT: The winners and finalists gather on stage after being recognized. ABOVE RIGHT: Bob Becker from event sponsor Aon Hewitt addresses the crowd. RIGHT: Crain’s publisher Brian Tucker with PlayhouseSquare’s Michelle Meers — the winner in the human resources executive of the year/nonprofits category — and Lee Ann Howard and John O’Brien, of event title sponsor Howard & O’Brien Associates.
ABOVE: Laura Graham, Amanda Gower and Nancy McCarthy, of event sponsor Pradco. BELOW: Ricky D. Smith and April Harrison of the Cleveland Airport System.
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Pay: Technology ‘levels playing field’ Florida warehouse chain continued from PAGE 1
amounts of money, both the Square and GoPayment are far better than traditional payment processing systems, Mr. Larson said. “It is night and day,� he said. Among those taking payments on smart phones are artists, farmers, contractors and even Girl Scouts; their ranks include anyone who sells something but either can’t afford or would rather avoid costs associated with taking credit cards the traditional way, which often involves buying a card reader and paying multiple fees.
Hip to be Square With the Square, GoPayment and some other mobile payment systems, users receive a free card reader and then pay a percentage of each sale that they process through the system. For instance, with the Square — which as of Aug. 1 was used to process about $4 million in transactions per day — users pay a 2.75% fee on each transaction, and that’s it. Because Mr. Larson typically bills a consulting client after they meet, he rarely uses the GoPayment card reader, which plugs into the headphone jack of his Android. Instead, he types the client’s credit card number into the corresponding GoPayment software that he downloaded to the phone. Then the app gives him the option of sending a receipt via email or text. The Gorilla Group, which uses the Square system, takes payment at its monthly events, so the organization uses the card reader. The device has helped the group get people through the door faster, Mr. Larson said. Lori Paximadis, who is co-founder of Cleveland Handmade, said she knows of six or seven artists and craft makers who take credit cards using the Square. Ms. Paximadis, who makes handmade jewelry, is among them. She received a Square reader last October, right around the time when Square Inc., started by Twitter co-founder Jack Dorsey, made the device available to the general public. After a few test runs, Ms. Paximadis for the first time used the Square during a two-day show in Avon Lake this past July.
“(The Square) is stupid easy. I’m blown away by it, honestly.� – Lori Paximadis, co-founder, Cleveland Handmade “And it was awesome. It really was,� she said. The product hasn’t yet convinced Ms. Paximadis to abandon her account with ProPay, which has payment processing programs tailored for small businesses. Keeping the ProPay account, which requires Ms. Paximadis to pay an annual fee as well as fees on transactions, gives her a backup in case she ends up selling jewelry in a spot where her smart phone has trouble accessing the Internet. Still, using the Square is “stupid easy,� she said, noting that she no longer must enter sales data into her computer after each show. “I’m blown away by it, honestly,� she said. “It’s great technology, and it helps level the playing field a bit for small businesses.�
Security first ProPay also has a card reader that allows account holders to process payments via smart phones and the iPad, and other companies offer mobile payment systems, too. For instance, Ed and Adam Ellis, the electricians who own Castle Rock Electric LLC of Mayfield Heights, about a month ago started taking credit cards on their iPhones using a system made by Elavon Inc., a subsidiary of U.S. Bancorp. Although he prefers cash and checks, Ed Ellis said the VirtualMerchant Mobile system is easy to use and processes payments quickly. He also likes its security features. “We know right away if the card is good,� he said. Vendors affiliated with the North Union Farmers Market are starting to take payments on smart phones, but most of them are artisans, who tend to sell more expensive items than farmers, said Emma Anderson, general manager for the Clevelandbased nonprofit, which runs several farmers markets in Northeast Ohio. People buying food at farmers’ markets tend to bring enough cash to buy food items, which are less
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expensive than craft items and are less likely to be bought on impulse, she said. Still, “the vendors who are using it like it,� Ms. Anderson said. Even though the Prochko family sells vegetables at about four farmers’ markets in the region each week, they only might process one or two credit card transactions during that time via the Square, Kay Prochko said. Even so, the device has worked well, said Ms. Prochko, who helps run Covered Bridge Gardens LLC from the family farm in Ashtabula County. Plus, she said she believes consumers soon will expect to be able to use credit cards at farmers’ markets. “We want to be right there and be one of the people with it,� Ms. Prochko said.
Sales are cooking The ability to take credit cards has meant increased sales for Girl Scout troops in Northeast Ohio, said Sue Majzun, product sales manager for Girl Scouts of Northeast Ohio. This spring, 150 of the 2,700 troops in the 18 counties served by the organization used Intuit’s GoPayment system to sell cookies, Ms. Majzun said. Those who did saw sales increase by 13%, on average — making the system well worth the fee the organization paid on each transaction, she said. The device was particularly useful at booths located outside grocery stores and other community locations, though a few troops did use the device when making door-to-door sales. Now the organization plans to choose a mobile payment system that all 2,700 troops will be able to use next year, Ms. Majzun said. “A lot of customers just don’t carry money anymore,â€? she said. â–
opens doors to NE Ohio U-Store-It reduces Cleveland footprint in deal By STAN BULLARD sbullard@crain.com
StorKwik, a mini-warehouse chain from Orlando, Fla., is a new entry in the Northeast Ohio market after buying 10 properties in the region as part of an 18-property, $43.5 million acquisition from U-Store-It Inc. The other eight properties are in Indianapolis. Chip Headley, president and chief investment officer of StorKwik parent Flagship Investment Properties Inc., said the Sun Belt company likes the Midwest as a contrarian play. “The Midwest has had its hits, but isn’t making big swings like other parts of the country,� Mr. Headley said. In the sale, Wayne, Pa.-based UStore-it said it had sold all five of its Canton locations and reduced its exposure to the Cleveland area by 30% in terms of square footage. The five U-Store-It locations StorKwik acquired in the Cleveland market are in Cuyahoga and Lake counties, according to the company’s website. Publicly traded U-Store-It said it shed the units to redeploy capital to more attractive growth markets. Mr. Headley said StorKwik as a smaller chain can focus closely on its operations and can make improvements to them quickly to increase revenues. Prior to the U-Store-It deal, StorKwik had 11 properties in Florida and California. U-Store-It has 437 units after the sales.
Mr. Headley declined comment when he was asked if revenues and staff morale at the former U-StoreIt properties had flagged because of the company’s corporate headquarters move from Cleveland in 2008 and the litigious 2007 separation of management under Dean Jernigan, its CEO, from the Amsdell family of Middleburg Heights that had built the company and taken it public. “I know both (Mr. Jernigan) and (Robert) Amsdell,â€? Mr. Headley said. Mr. Headley declined to say how Flagship financed its acquisition. However, private equity group Kayne Anderson Real Estate Advisors LLC of Armonk, N.Y., said it participated in the U-Store-It deal with Flagship as part of a plan to diversify from prior reliance on offcampus student housing projects. StorKwik shelled out $10.75 million for the five Cleveland-area properties in the Crain’s circulation area, according to land records in Cuyahoga and Lake counties. Public records show StorKwik through KAF Properties Ohio I LLC paid between $1.4 million and $2.7 million for individual properties in Cuyahoga and Lake counties, according to deeds recorded Aug. 16. The five former U-Store-It locations that now are in the StorKwik fold are the two Euclid locations, 1500 Brush Road and 23640 Lakeland Boulevard, and properties in Mentor, 6784 Hopkins Road; Perry, 4736 North Ridge Road; and Willoughby, 38255 St. Clair Ave. â–
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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
Not so fast
T
he Ohio Turnpike is a valuable east-west corridor that plays a vital role in keeping the wheels of commerce moving in the Buckeye State. We do not want to see it put into private hands under Gov. John Kasich, who seems insistent on turning this key transportation link into a pile of cash. We opposed the idea of leasing the turnpike when it was raised in 2009 by Gov. Kasich’s predecessor, Ted Strickland, as he struggled to balance the state’s 2010-11 budget. Nothing has changed to make the idea more palatable now. In our view, the turnpike fits the “if it ain’t broke, don’t fix it” category of asset. It is a well-maintained highway under the oversight of the Ohio Turnpike Commission. Would a private operator that’s conscious of its bottom line make the investments needed to keep the roadway up to acceptable standards? Maybe. Maybe not. And if it didn’t, would maintenance of the roadway suffer while the state sued the operator to perform as it should? And what of the economic development role the turnpike has played in fostering business retention and expansion along the corridor? When Umberto Fedeli, head of The Fedeli Group insurance brokerage in Independence, was chairman of the Ohio Turnpike Commission, he proudly would tell the story of how the commission created a turnpike interchange at Archbold, in western Ohio, in order to meet the transportation needs of Sauder Woodworking Co., the big maker of readyto-assemble furniture that’s headquartered there. The commission also invested during Mr. Fedeli’s tenure in two exits at Lordstown to make access easy to and from the giant General Motors plant in that eastern Ohio town. It’s impossible to know how great a role the Lordstown exits have played in the survival of the assembly plant through all of GM’s struggles. Would it be the production home today of one of GM’s most popular vehicles, the Chevy Cruze, without the exits? Perhaps. But it hasn’t hurt that suppliers don’t need to take convoluted routes to truck their goods into the plant or that GM readily can move finished product out. Would a private operator be attuned to the transportation needs of key businesses along the route so that opportunities to aid them by investing in the roadway wouldn’t be lost? We somehow think not. Gov. Kasich nonetheless continues to push the concept of leasing the turnpike as a way to unlock a stream of dollars from what he calls “an asset that is severely underutilized.” “For Ohio to sit on an unused asset makes as much sense as a company sitting on an unused asset,” the governor recently told The Plain Dealer. There are two flaws in that argument. First, as we’ve cited above, the turnpike isn’t an asset that is unused. Second, once a company sells an asset, it is freed of future effects on its business should the buyer prove to be a poor steward of that asset. Ohio doesn’t have the luxury of avoiding any adverse effects from leasing of the Ohio Turnpike. As our Jay Miller reported in July, Indiana’s experience with leasing its turnpike hasn’t been great. Why risk repeating it in Ohio?
FROM THE PUBLISHER
Change won’t alleviate airline hassles
A
You know the type I mean: a woman irlines, a part of the American with a suitcase, the matching “carry-on” economy that touches nearly stuffed to the breaking point and a purse every business executive and that could hold the contents of my office owner, are in the news again, in desk. Or the guy who lugs that same a quirky mix of ways. suitcase, coupled with a just-as-jammed United Airlines, which is the new carry-on and an overstuffed bag from name for the company that has operated a the (fill in a retailer name) shop at their hub here for so long (Continental), said vacation spot. recently it will make physical Couldn’t the airlines simply changes to its aircraft to help BRIAN give us a break on the baggage passengers. TUCKER fees? Apparently, the company Absent that, could they make plans to retrofit some of its sure that those of us with one, planes to increase the space in simple “carry-on” bag not get the overhead bins, something squeezed out by those who that probably will delight the need a U-Haul? business road warriors who **** can’t risk losing their bags or AND SPEAKING OF the wasting time at baggage airlines, how about the Obama carousels for a one- or two-night administration’s mishandling of Boeing trip. Co.’s plans to build planes at a second Anything that the airlines can do to location, in South Carolina? Building the help business folks these days is long-overdue Dreamliner for its airline welcome, including this “bigger-bin” customers is critical for Boeing, which plan. The only problem I have is that it wanted a second factory in the U.S. to increases the chances for people to handle demand. knock me in the head with their third Yes, the fact that Boeing built the plant carry-on bag.
in the South, in a right-to-work state, does reflect the reality that its massive factory complex in the Seattle area has been the regular target of contract-time strikes by its union. But Boeing didn’t plan to eliminate jobs there; the company wanted to meet its customers’ demand and ensure a flow of some product in the case of a future work stoppage. The National Labor Relations Board, with Obama appointees, filed a complaint in April against Boeing, a company that didn’t move its jobs overseas, like so many other manufacturers. Boeing is adding jobs, and apparently their “sin” is that they haven’t been adding all of them in a location that can produce gobs of more union dues dollars. But the company is creating jobs in a state plagued with high unemployment, and has added 2,000 workers at its base in Seattle since it decided to build a second plant in the South. This president desperately needs to be a jobs creator; the action by the NLRB won’t help much. ■
LETTERS
Veritix, clients limit fans’ ability to resell ■ Crain’s Aug. 8, Page 3 story, “Cleveland firm Veritix scores big in sporting event sales, plans to up the ante,” misrepresented the Fan Freedom Project’s criticism of Flash Seats and significantly understated the inconvenience (and, some might argue, the deceptive marketing) that Veritix and its clients impose on consumers. The Fan Freedom Project does not just view Veritix and the Flash Seats resale platform as an “incomplete solution.” Veritix and its clients make it challenging for fans to give away or sell the tickets they have purchased by locking them into the Flash Seats platform and controlling the resale prices that selling fans are permitted to display to purchasing fans. Requiring Cavaliers tickets resellers to post resale prices that are anything
close to face value prices that were paid prior to LeBron James’ departure is misleading, unfair to sellers who simply want to recoup some of their money, and frustrating to fans seeking to purchase at fair market prices. Fans believe they own their tickets and they have the right to choose how to transfer or re-sell them, including to choose the sales platform and the proposed sale price. Until Veritix and its clients allow fans these choices, they might as well be Ticketmaster. Jon Potter President Fan Freedom Project
LaTourette protects lakes ■ The Cleveland-Cuyahoga County Port
Authority applauds Congressman Steve LaTourette for his recent stand to protect jobs and commerce on the Great Lakes. Rep. LaTourette successfully championed an amendment to the U.S. Environmental Protection Agency’s budget that would penalize any Great Lakes state that seeks to impose unworkable ballast water regulations on commercial vessels. The amendment is targeted at regulations adopted by the state of New York, which if left unchanged, will choke off commerce to Ohio’s Great Lakes ports. In late 2008, the New York Department of Environmental Conservation stepped into the complex role of trying to regulate domestic and international maritime commerce. State environmental regulators sought to prevent the spread of See LETTERS Page 11
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THE BIG ISSUE Do you think a college degree today is worth the ever-rising cost it takes to earn one? SUSAN GALLAGHER
NANCY ZOLLER
Rocky River
It depends where you go to college and what you major in.
Lyndhurst
Within certain circumstances some of the degrees are worth it, but overall I feel at this point that college degrees are more costly than they should be for what you get out of it.
MICHAEL STEVENS
TONY DIPIETRO
Westlake
Yes, because there so many people out there competing, if you have no degree you’re at a disadvantage. Any piece of education that you can get to enhance your employability is a benefit.
Brecksville
Overall yes, but in view of the changes going on in our country today, you better be very specialized in your field.
➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.
COMING UP
LETTERS continued from PAGE 10
non-native aquatic species in the ballast water in commercial vessels. Ballast water is critical to maintaining safety and stability. Unfortunately, when water is pumped into ballast tanks, small aquatic organisms can be swept up at the same time and transported outside their natural habitat. The shipping industry concedes the role it unintentionally plays in the movement of species and is working cooperatively to solve the problem. Under existing federal law, all ships must exchange ballast water while at sea in an effort to flush organisms from ballast tanks. This practice also helps kill any fresh water organisms by dousing them with salt water. To add further protections, the United Nations’ International Maritime Organization worked with scientists and maritime interests to craft a treaty in 2004 that would require all ship owners to install environmental technology to clean ballast water to a specific quality standard. Twenty-eight countries accounting for more than a quarter of the cargo shipped worldwide have signed on. While the treaty hasn’t yet entered into force, signatory countries are complying. We support the International Maritime Organiza-
tion’s approach — which has proven effective — and note that the U.S. Coast Guard is expected to issue regulations later this year to legally implement it. This issue is also being addressed in a coordinated and comprehensive manner by the bi-national Ballast Water Working Group, which includes U.S. and Canadian government agencies on both sides of the border. The Working Group’s most recent annual report shows that in 2010, 100% of international vessels bound for the St. Lawrence Seaway were inspected, with more than 94% meeting regulations. In cases where the requirements are not met, the tanks are sealed and inspected again when vessels exit the seaway to verify that they were not emptied. Given New York’s unworkable regulations, it is important to recognize that stringent rules such as those that govern the Great Lakes St. Lawrence Seaway System have shown success. Indeed, since 2006, there has been no new establishment of an aquatic invasive species in the Great Lakes. While many state governments (including Ohio) have incorporated the International Maritime Organization ballast water treatment standard in their environmental regulations, New York chose to go to an
“ Now we’re the ones with the ball, we’re the ones who carry it over the line, and it’s the other guys who are looking confused about why they didn’t win the game.” Brad Ohlemacher President Elyria Manufacturing Corp. 65 employees
unjustified extreme. With no scientific research to support its position, New York put in place rules requiring ballast water to be cleaned to a standard 100 times more stringent than that established by the International Maritime Organization. But no technology exists to achieve such a standard. A recent report from the EPA’s Science Advisory Board underscored that point, concluding that such a standard would be impractical to verify based on currently available testing methods. Yet New York’s deadline to comply with these unworkable rules is Aug. 1, 2013. To our disbelief, the state of New York not only seeks to regulate commerce to New York ports, but also ships merely passing through New York on their way to ports in
Bentleyville
other states as well as Canada. For this reason, shipping traffic to and from Ohio, Michigan, Indiana, Illinois, Wisconsin, Minnesota, New Jersey, Pennsylvania, Ontario and Quebec could all be severely curtailed. The International Maritime Organization standard protects the environment with a realistic approach that still allows for commerce and jobs to flourish. New York should harmonize its ballast water regulations with neighboring states and international standards. Doing so will protect the Ohio’s commerce and that of the entire Great Lakes region. William D. Friedman President and CEO Cleveland-Cuyahoga County Port Authority
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Nursing home kicks off $8M project East Side provider focuses on capacity for rehab services, adds to private rooms By TIMOTHY MAGAW tmagaw@crain.com
The Slovene Home for the Aged, a nursing home on the border of Cleveland and Euclid, has broken ground on an $8.1 million renovation and construction project to expand its rehabilitation capabilities and its number of private rooms. “We’ve been seeing the demand for more short-term and rehabilitation services for a while, but for a while now we’ve also been hearing a lot from our families about the need for private rooms,” Slovene Home administrator Jeff Sas said. The home, which saw its last big upgrade in 1982, has 150 beds, none of which are private. After the addition and renovation project that’s slated to be finished next May, the home will boast the same number of beds, but there will be 88 private rooms and 31 shared rooms. Also,
Slovene Home will build a rehabilitation suite. The project includes a 42,600square-foot addition that creates a new, 66-bed wing for the home, which sits on Neff Road just off East 185th Street on the city’s East Side. The project also will include renovating a 22-bed wing built in the 1960s. The majority, or about 63%, of Slovene Home’s residents are on Medicaid; about 30% are on Medicare and the rest are private payers. As the home offers more rehabilitation services, Mr. Sas said he expects to boost its take of dollars from Medicare, which traditionally has been a more stable reimbursement source than Medicaid. “Medicaid is a very difficult payer,” he said. “We lose money per day — as does every nursing home — so you try to use private pay and Medicare to offset some of those losses.” Mr. Sas noted, however, that declining Medicaid reimbursement rates weren’t the primary driver toward offering more rehabilitation services. That shift stems from the growing need for such care, he said. When Gov. John Kasich presented his budget to the Legislature last
spring, many nursing homes around the state cried foul because of the likelihood of steep Medicaid cuts. However, Mr. Sas said Slovene Home has been able to manage its costs carefully without layoffs to its 260-member staff and has been able to proceed with the building project, which has been financed through private donations to the nursing home’s foundation. Slovene Home is in the second part of a three-phase construction project. The first phase cost $1.4 million and included relocating parking to the north side of the home and constructing a new entrance canopy. Mr. Sas said officials at the nursing home will discuss next month the scope of the project’s final phase; it likely will include renovating some, if not most, of the interior of the existing building. “You have to make your facility attractive. We’ve always been a home that provided excellent quality care,” Mr. Sas said. “The generation we’re taking care of now … accommodations have always been second. It’s been the care first. The generation coming down, I think they’re a little more demanding about the environment and amenities.” ■
AUGUST 29 - SEPTEMBER 4, 2011
GOING PLACES JOB CHANGES AUTOMOTIVE BEACHWOOD BUICK GMC: Mike Cargile to sales consultant.
EDUCATION BEAUMONT SCHOOL: Denice Teeples to assistant principal; Kara Metcalf to co-director of admissions and enrollment.
Whittey
Lewis
Hinkel
Dertouzos
Scheiman
Johnson
Horvat
Laskey
Snyder
CLEVELAND INSTITUTE OF ART: Chris Whittey to vice president, academic and faculty affairs. NORTHEAST OHIO MEDICAL UNIVERSITY: Timothy R. Ulbrich to director of pharmacy resident education, College of Pharmacy.
FINANCIAL SERVICE GRANT THORNTON LLP: Chad Davies to partner. LINCOLN FINANCIAL ADVISORS CORP.: Jeremy DiTullio to managing principal. SKODA MINOTTI: Patrick O. Mullin, Richard Z. Cruickshank Jr., Timothy A. Heikkila and Brian Rosenfelt to principals; Amy J. Gibson and Randall P. Bosley to senior managers; Jeremy M. Long, Dennis Murphy Jr. and Joseph D. Yusz to managers; Patrick Walsh, Michael R. Iosue and Michael Gross to senior staff; Bob Goricki to online marketing manager; Linda Bagley to senior accountant.
HEALTH CARE CLEVELAND CLINIC: Dr. Thomas L. Tulisiak to president, Medina Hospital. METROHEALTH: Daniel Lewis to chief administrative officer. PSYCHOLOGICAL & BEHAVIORAL CONSULTANTS: Rebecca Cirino, D.O. to medical staff.
LEGAL KADISH, HINKEL & WEIBEL: Daniel P. Hinkel to associate. NICOLA, GUDBRANSON & COOPER LLC: Nicholas J. Dertouzos and Becky M. Scheiman to members. SCHNEIDER, SMELTZ, RANNEY & LAFOND: Gregory C. Johnson to associate.
MANUFACTURING HDT GLOBAL: Jason Chamberlain to president, CEO.
MARKETING LINEAR CREATIVE LLC: Jeffrey Lang to project manager.
NONPROFIT
ROGERS CO.: Katie Snyder to special event coordinator. SAFEGUARD PROPERTIES: Scott Wilson to vice president, property preservation; Amitha Rao to director, enterprise information management; Dennis Hoye to corporate controller; Adam Szczesniak to director, infrastructure services. TORCH GROUP: Lee Steinbock to project coordinator; Joshua Lapine to associate recruiter.
BOARDS MONTEFIORE: Steven S. Willensky to chair; Patricia M. Inglis, June E. Taylor and Bruce E. Cweiber to vice chairs; Margo Vinney to secretary; David B. Orlean to assistant secretary; Gerald P. Weinstein to treasurer; Idelle K. Wolf to assistant treasurer; Andrew W. Hoffmann to immediate past chair; Rhoda Seifert to auxiliary president. MONTEFIORE FOUNDATION: Andrew W. Hoffmann to chair; Susan R. Hurwitz to vice chair; Harriet L. Fader to secretary; Mark A. Mintz to assistant secretary; Phillip S. Sims to treasurer; Jeffrey S. Davis to assistant treasurer; Kenneth G. Hochman to immediate past chair. MONTEFIORE HOUSING CORP.: Ben D. Sheridan to chair; Robert M. Lustig, Daniel E. Rocker DDS and Bradley Sherman to vice chairs; Scott H. Polster to secretary; David R. Hexter to assistant secretary; Alan B. Blumenthal to treasurer; Harvey A. Siegel to assistant treasurer.
AMERICAN NATIONAL RED CROSS: Ronald Horvat to division fundraising vice president.
AWARDS
CLEVELAND FOUNDATION: Elizabeth McIntyre to public relations officer; Terry Pederson to writer and editor.
AMERICAN CULINARY FEDERATION: Mark Kent (University of Akron) was named a 2011 American Academy of Chefs Academy Fellow.
LINKING EMPLOYMENT, ABILITIES AND POTENTIAL: Julia Donovan to employment services director.
RECOVERY RESOURCES: Raymond J. Marvar (Tucker Ellis & West LLP) received the Community Challenge Exemplar Award.
LUTHERAN CHAPLAINCY SERVICE: Mark Laskey to executive director.
REAL ESTATE TRANSACTION REALTY: Dulcey Barr to sales associate.
SERVICE PATTIE GROUP: Hillary Henry to garden and property manager.
TRADE, ASSOCIATION AND BUSINESS PUBLICATIONS INTERNATIONAL: Lois A. Bowers (Medical Economics) received a special section Tabbie Award; Jeffrey Bendix (Medical Economics) received a features Tabbie Award.
Send information for Going Places to dhillyer@crain.com.
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13
PHILANTHROPY
15 CORPORATE FOUNDATIONS FLEX CHARITABLE MUSCLES.
Economic crunch fuels nonprofit M&A activity Glut of local organizations may lead to more mergers By CHUCK SODER csoder@crain.com
N JASON MILLER
Cheryl Garcia (above) and Dana Olesen (below) answer phones at the InfoCision call center training site in Cleveland Heights. So far, the Akron-based firm has hired 14 blind or visually impaired individuals through a job-training partnership with the Sight Center.
A POWERFUL VISION Akron-based InfoCision, Cleveland Sight Center training blind, visually impaired individuals to assume call center jobs By AMY ANN STOESSEL astoessel@crain.com
C
heryl Garcia just wants to contribute — but there are a lot of challenges standing in her way. “I think it’s hard for people to understand,” said the Elyria resident. “They don’t understand the limits involved.” Ms. Garcia has been legally blind since birth; in addition to having been born with cataracts, she has had several retinal detachments that ultimately have left her unable to see. “Having a job, it gives me a sense of I’m doing something for myself,” she said. “It helps me to feel better about me.” It’s an ambition that is a lot more realistic today thanks to a partnership between Akron-based InfoCision and the Cleveland Sight Center that is providing training and jobs for those who are blind or visually impaired. See VISION Page 14
onprofits are going to have to get used to what Teresa Schaffer calls the “new normal.” Over the past few years it has become much more common for nonprofits to merge or acquire other nonprofits, according to several professionals who work with nonprofits in Northeast Ohio. The past year has been particularly busy, said Ms. Schaffer, director of assurance services for accounting firm SS&G Financial Services Inc. Five of her nonprofit clients have merged or acquired other organizations since June 2010, said Ms. Schaffer, who works from SS&G’s Cleveland office. Though she isn’t expecting the rate of nonprofit M&A activity to keep increasing, she also doesn’t think it’ll drop anytime soon. After all, by working together, nonprofits often can save money on staffing, real estate and other expenses, all while extending their services, Ms. Schaffer said. “I do think there’s going to be a new normal in this industry,” she said. Nonprofits — sometimes led by their donors — are joining forces with other organizations because they see it as a way to get out of a tight spot: Donations are down, endowments are down and government grants are harder to get, but the need for services in many cases has increased. “The big donors are looking at organizations and saying, ‘You need to figure this out,’” Mr. Schaffer said.
Leading the charge Among the donors accelerating the trend locally is a group of 18 foundations called the Funders Collaborative. In April, eight area nonprofits announced they would merge to become four — the result of a pilot project led by the Funders Collaborative. The collaborative — led by the Deaconess Community Foundation of Brooklyn, Ohio, and the Saint Luke’s Foundation of Cleveland — started the project in 2009 in response to the economy, said Denise San Antonio Zeman, president and CEO of Saint Luke’s. The collaborative held an educational workshop for 76 nonprofits, 17 of which received readiness assessments. From that group came the eight that participated in mergers. The goal of the pilot was not only to find a handful of nonprofits that could benefit by merging or acquiring other groups, but it also was to figure out how the collaborative could help nonprofits work together more in the future, Ms. Zeman said. For one, a professor at Case Western Reserve University is conducting a case See NONPROFITS Page 16
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Vision: Program boosts confidence continued from PAGE 13
While InfoCision and the Cleveland Sight Center informally have worked together on employment in the past, an agreement announced earlier this year is taking the relationship a step further. InfoCision not only contributed $50,000 toward the setup of a call center training site at the old Coventry Elementary School in Cleveland Heights (the Sight Center’s permanent location is under renovation), it has a goal in place to employ 25 people who are visually impaired by year’s end. In turn, the Sight Center is providing general call center and customer service training and ongoing employment support services. The program, intended to be an ongoing InfoCision recruiting source, additionally is receiving support from the Ohio Rehabilitation Services Commission. “The relationship got more formal,” said Jassen Tawil of the Sight Center. “In the past we were responding to help-wanted ads in the paper.” So far, 14 blind or visually impaired people have been hired by InfoCision through the partnership, and another five are in training. Once hired, participants can opt to work from home, which helps to eliminate transportation challenges, or at the call center. From InfoCision’s perspective, the partnership is an extension of a strategy already in place to hire individuals with disabilities — and it’s one that they say is just as beneficial to the more than 4,000employee teleservices company.
“We are hiring tremendously talented individuals,” said Steve Brubaker, InfoCision’s chief of staff.
‘Culture shock’ As part of the program, the Sight Center recommends potential candidates for employment to InfoCision, drawing from among those who complete the organization’s general online call center training, a program that includes customer service fundamentals. Those who are hired by InfoCision then receive further training at the new Cleveland Heights location, which has 19 stations and is set up like one of the company’s call centers. There, they are educated in InfoCision procedures, receive Sight Center support and are further familiarized with adaptive technology. “It takes some time to acclimate,” said Ms. Garcia, who now works for InfoCision as part of the company’s Work at Home program. A dual headset is used by call center workers who are blind or have low vision. The script that normally would be read from visual cues on a computer screen is instead dictated in one ear, while the caller on the line is heard by the worker in their other ear. For Ms. Garcia and others, it can be a jarring experience transitioning into the work force. “It been a little bit of a culture shock for me,” she said of the work and more rigorous schedule. The Sight Center’s Mr. Tawil said the issues faced by clients can run the gamut, from adjusting to
basic work concepts, like being on time, to disability benefit reductions due to increased earnings. “It’s actually very emotionally trying for some of our clients,” said Mr. Tawil, who is director of the STORER Center, which works with the call center and other Sight Center assistive technology programs. To help with those hurdles, the Sight Center’s services are ongoing and available for an unlimited time — a support model that Mr. Tawil stressed is fairly unique. For example, he said there is continual contact with the new hire within the first several weeks of employment. “While they’re here, we’re really helping them transition back into the work force,” Mr. Tawil said.
Educate, employ, empower Steven M. Friedman, the Sight Center’s executive director, said the partnership comes at the perfect time in that it is particularly difficult to find a job these days. And that’s especially true for those who are blind and visually impaired, who experience 30% to 60% unemployment rates, according to Dr. Friedman. “We educate, we employ, we empower. The hardest thing we do is employ,” he said. “To us, (a job is) the culmination of what it means to empower a client to meet their full potential.” Dana Olesen, a 28-year-old from Cleveland who has been blind since birth, said for him the program is an opportunity and a stepping stone. “I enjoy it … it can take a lot out of you, but what job doesn’t?” he said. ■
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A rendering of the renovated Cleveland Sight Center lobby
Sight center renovation to improve accessibility By AMY ANN STOESSEL astoessel@crain.com
T
he Cleveland Sight Center is in the midst of a $9.8 million renovation project, transforming its building on East 101st Street. Steven M. Friedman, the center’s executive director, said the overhaul is intended to increase the center’s capacity, change the culture of the organization and improve the center’s access. For one, the center’s 120 staff members will be moved and consolidated to an open secondfloor work space, while all client services will be transferred to the first floor, with the more popular ones located near the entrance . “We’re going to eliminate the confusion,” said Dr. Friedman of the building that houses education, rehabilitation, vision screening, recreation and employment services, as well as a retail shop and seven apartments. The Sight Center building is a conglomeration of three additions, the first portion built in the 1960s and two additions constructed in the 1970s. As such, services were scattered throughout the building — creating a challenging environ-
ment for those with no vision or low vision. Straight lines in hallways will be emphasized and textures used to help clients identify different areas of the building based on the feel of a cane on the floor. A specially designed handrail will help users distinguish locations on the first floor. However, “our clients told us not to go overboard” with assistive techniques, Dr. Friedman said. That’s because the goal of the Sight Center is to teach those who are blind or visually impaired how to function in the “real world.” Annually, about 10,000 people are served by the organization, with about 2,500 receiving services in the building. The project is being funded through what Dr. Friedman called a “very successful” fundraising campaign, which already has netted $9 million. The Sight Center moved out of its building in June, transferring to two temporary locations in Cleveland Heights. The hope is that construction will be complete in time for the Sight Center to return to its permanent home in May 2012. “It’s part of the transformation of the Sight Center,” Dr. Friedman said. “The building is just a vehicle for us to improve our services.” ■
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PHILANTHROPY
Corporate foundations a source of charitable strength By DAN SHINGLER dshingler@crain.com
I
t ain’t easy giving money away. OK, maybe that part is easy, not to mention rewarding. But the job of running a corporate charitable foundation is a tough one — especially in an environment where investment returns are unpredictable, and often down, while the need for giving seems to only increase like clockwork. “Needs ebb and flow with the economy,” said Theresa Carter, president of Omnova Solutions Foundation in Fairlawn. “But it’s scary at this point, and we’re continuing to see the need growing. We’re hopeful that it changes.” It’s a situation that would discourage many. It seems only to drive some of the more dedicated people at foundations that have been created by local companies, though. Sure, it’s a tough environment, Ms. Carter conceded. “That’s why it’s more important than ever for foundations and corporations to figure out how they can support the community — even when there are finite dollars available,” she said. Corporate foundations operate much like independent entities, such as the Cleveland Foundation. They tend to focus on serving underprivileged individuals and families, as well as on education initiatives — and to some extent they admit the latter emphasis is self-serving in that they need better-educated local citizens who can become good employees. But corporate foundations may have some advantages over their independent counterparts. For one, they have a close affiliation with a corporation, and that can provide a source of additional funding in some cases, should they need it. And, perhaps more importantly, they tend to have buy-in from the corporation’s senior officers, which means they have expert managers, investors, marketers and financial planners at their disposal. Most foundations these days are finding that their endowments have dwindled in recent years, mostly because of investment losses and sometimes because the foundations have relaxed their own rules that would have in the past kept them from giving away some of their endowments’ principal. Foundations don’t like to touch their endowments — the object is to give from the proceeds of their investments while still growing the endowments enough that the foundations can operate in perpetuity. But in today’s climate, some are making an exception to the rule. “We’ve made a conscious decision as a board to tap into our endowment, so we can continue our support, and then work longer term to build the endowment back up,” said Karen Lerchbacher, grants manager for the Lubrizol Foundation in Wickliffe. But the Lubrizol Foundation has an advantage not all other corporate foundations — and fewer, if any, independent foundations — could even dream of: a corporate sponsor willing to replenish the coffers. In the last three years, Lubrizol Corp. has pumped an additional $17.5 million into its foundation to shore up its operation and maintain its ability to provide funding.
The company put $7.5 million into the foundation in 2009, another $5 million in 2010 and has put in another $5 million so far this year, Ms. Lerchbacher said. Without those contributions, the foundation would be broke if it had not curtailed its giving. Lubrizol Foundation president Dave Enzerra said it currently has an endowment of about $17 million, down from a peak of about $21.5 million at the end of 2000.
Painful realities Omnova Solutions Foundation’s Ms. Carter said her endowment also
is smaller than it once was. Today, it stands at $25 million, down from about $38 million at its peak in 1999. That decline was caused by investment losses — and it is indicative of the dilemma most foundations face, namely that when the economy slumps, needs rise as assets fall in value. “We are an endowed foundation, so it’s strictly market driven and when the economy started to decline, that’s when our assets started to drop. But we’re optimistic because now it’s starting to come back,” Ms. Carter said. But, like most foundations in a
similar situation, Ms. Carter’s has had to cut back on its giving in order to protect its endowment and ensure that it can continue to provide funding going forward. It currently gives about $1.6 million in gifts each year, based on its 2010 and 2011 endowment totals, but that number used to be up to about $2 million, Ms. Carter said. As for the nonprofits receiving support, they’ve had to adjust their expectations, but they say corporate foundations still are critical and reliable sources of funding. “Like many human service nonprofits, we are finding less support
of corporate foundations for sponsoring fundraising events,” Lutheran Metropolitan Ministry president Carol Fredrich told Crain’s via email. “However, some corporate foundations are targeting their financial support to very specific community needs, such as schoolaged youth in the inner city, or increasing self sufficiency of the poor.” Meanwhile, she said, while some have cut back, others have increased their support for specific programs and initiatives, she said. “So while the support may come from fewer corporate foundations, the support we receive has a much greater impact upon the continued success of specific programs. And that has community impact,” Ms. Fredrich said. ■
Fairmount Minerals would like to extend a sincere thank you to all our valued Partners in Business/Partners in Community who participated in and supported the 2011 Bill Conway Founders Charity Golf Classic. Your generous support of this event is a tribute to Mr. Conway's legacy of community investment and will touch many lives through the fund recipient, United Way Services of Geauga County. This event was held on August 2, 2011 at the beautiful Sand Ridge Golf Club in Chardon, Ohio. We extend a special thank you to the following leading sponsors: PARTNER SPONSOR
SIGNATURE SPONSORS
COMMUNITY LEADERS
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PHILANTHROPY
Workplace fundraising yields many benefits By JOEL HAMMOND jmhammond@crain.com
A
my Pausche loves to hear why companies participate in workplace fundraising campaigns to benefit her charity, the Leukemia and Lymphoma Society’s Northern Ohio chapter. And more often these days, the group’s executive director says, she hears that — in addition to the obvious assistance provided to those less fortunate — companies see reciprocal value in providing the opportunity for philanthropy to their employees. “Really smart companies know when they really need to (participate in workplace fundraising),� Ms. Pausche said. “They want to retain top talent, and it’s easier to support local causes than to market or advertise.� Those themes were echoed by area nonprofits and the companies that organize for them. And it’s why Ms. Pausche believes giving has grown in recent years, despite the economic turmoil surrounding many participating
companies and their respective employees. She reports that participants in the nonprofit’s “Team in Training� corporate program are up 11% year over year, while the Northern Ohio chapter’s revenues raised grew 10%. Numbers from Cone, a Bostonbased brand marketing specialist, back up those assertions: In its 2010 Cause Evolution Study, Cone reported that 90% of consumers — or 278 million people, the company estimates — want companies to tell them the ways they are supporting causes. Also, Cone found that 41% of Americans reported buying a product because it was associated with a cause or issue in the last year, double the number since Cone first measured in 1993.
Success, but struggles The American Cancer Society also hasn’t suffered through this recession, said Leanne Schepner, the regional director of corporate relations for Ohio and Pennsylvania. She said the group has continued to have “great success� with its
workplace giving campaigns, and repeated the same reasons as Ms. Pausche. The cancer society’s resilience includes a hefty donation from employees of Lubrizol Corp., a specialty chemicals producer based in Wickliffe that was honored Aug. 20 at the society’s “Cattle Baron’s Ball� for the $33,000 it raised for the Relay for Life. That’s not to say it isn’t still a struggle for charities to bring new corporations into the fold. The United Way of Greater Cleveland — which in March announced it met its $40.1 million goal after a late push — makes “thousands� of office visits conducted by staff members and volunteers, according to Michael Benz, its president and CEO. The United Way will announce this Thursday morning, Sept. 1, its goal for the 2011-12 campaign. Each summer it starts with a “pacesetter� campaign, through which some companies start their campaigns in late June or early July and end them at the end of September. Mr. Benz also said the United Way’s local staff of about 100,
Nonprofits: Relationships key part of mergers continued from PAGE 13
study on the effort to document the lessons that can be drawn from it, Ms. Zeman said. Plus, the Tides Foundation, which has offices in San Francisco and New York, is doing another study to see
whether there is enough demand in Northeast Ohio to warrant starting a center that would provide backoffice services to multiple area nonprofits, she said. The nonprofit sector in Northeast Ohio in particular is ripe for
mergers, acquisitions and other deep partnerships, given the sheer number of nonprofits in the region, Ms. Zeman said. “Our nonprofit infrastructure was built for a much larger population than we have today,� she said.
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Jewish Federation OF CLEVELAND
which is a part of the pacesetter campaign, already is at 90% of its goal, though he acknowledges that group is a little keener on the benefits of donating. “Early indications are good,� Mr. Benz said. “What will happen? Who knows? We don’t give up the ship, though.� And despite the Leukemia and Lymphoma Society’s traction, Ms. Pausche said connections remain difficult to secure, forcing her staff to work that much harder. “It’s still hard to penetrate into companies,� she said. “We’ve found that once we connect with the right contact, our cause makes it easy for them to say yes. But it’s still difficult.� The charities also are contending with changing workplaces, said Kim Klein, a principal with Klein and Roth Consulting, an Oakland, Calif.based that helps organizations build strong fundraising programs. “With telecommuting and the demise of factories and other places where you could find large numbers of people you could ask all at once, it’s a tough time for these groups,� she said.
Sour and sweet Donna Sciarappa, a partner with the accounting firm McGladrey & Pullen LLP, also has seen an increase in M&A activity among nonprofits — a trend that she says is “definitely going to continue.� Though there are plenty of efficiencies nonprofits can gain by teaming up, there are plenty of potential pitfalls too, given that no two nonprofits are identical. To avoid them, the boards that lead the merging nonprofits have to make sure the organizations know each other well and agree on their goals before diving in too deep, said Ms. Sciarappa, who runs McGladrey & Pullen’s nonprofit and health care group in Ohio. Some nonprofits learn that lesson the hard way. After Cleveland Opera and Lyric Opera Cleveland merged to form Opera Cleveland in 2006, the combined group lost “a huge number� of subscribers, said Pauline Ramig, immediate past president of Opera Cleveland. That’s partly because there was little overlap between the audience for the more formal Cleveland Opera and fans of Lyric Opera,
How they do it Seeing campaigns as mutually beneficial, area companies get plenty creative when it comes time to raise funds. Cleveland law firm Taft Stettinius & Hollister LLP supports, among other causes, the United Way and the Legal Aid Society of Cleveland. Activities include transforming the second floor of its office at 200 Public Square into a mini-golf course, said Kathy Major, Taft’s manager of new business development and marketing. Hyland Software corporate giving specialist Lisa Johnson said the company conducts annual Harvest for Hunger and United Way campaigns — donations to each of which are growing, the latter by 50% through the campaign that ended in March — but also is nimble enough to conduct pop-up fundraising. Hyland has an office in Japan, and when a devastating earthquake struck that country in March, Hyland employees raised over $7,000 in a two-week span. “We see it as a way to boost morale among teams and employee relations,â€? Ms. Johnson said. “And we want to be a part of the Cleveland community and exercise corporate responsibility that makes us a more well-rounded company.â€? â–
which produced smaller, less expensive shows. Today, Opera Cleveland is on hiatus as it works on a plan for its future. Ms. Ramig encourages other nonprofits considering mergers to take the time to make sure the two groups will make a good fit. “Really have a look at some of the fundamental differences and consider how to overcome them,â€? she said. Mergers can work out for the best. Judith Peters, executive vice president of the Center for Families and Children, stresses the need for flexibility and taking the time for organizations to get to know one another. Ms. Peters was president and CEO of the West Side Ecumenical Ministry in 2006 when it acquired El Barrio, a smaller organization that focused mainly on helping people of Hispanic descent find jobs. She also was with the organization when it was later acquired by the Center for Families and Children as part of the pilot project led by the Funders Collaborative. “The more you know about each other, the better your decisions will be,â€? she said. â–
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Recycle: Industry keeps growing continued from PAGE 3
CARL MANTEAU
Jeff Bowler, the Lake Erie Monsters’ director of ticket sales, shows off his ambigram tattoo, which reads Cleveland (top) one way and Monsters (bottom) the other.
Monsters ticket executive inks deal with staff, then gets inked By JOEL HAMMOND jmhammond@crain.com
Cleveland sports teams inspire fans to do wacky things. Add another notch on the bizarre belt, only this time it’s an employee of the Lake Erie Monsters, the American Hockey League team that plays at Quicken Loans Arena and serves as a feeder to the NHL’s Colorado Avalanche. When the Monsters’ sales staff hit its new season ticket goal, Jeff Bowler — the team’s director of ticket sales — followed through on a promise: He’d get a Monsters-themed tattoo. And there was the 29-year-old Ohio City resident at Voodoo Monkey on West 25th Street, camera crew in tow, to get an ambigram — a single design that reads as more than one word depending on the viewer’s perspective — of “CLEVELAND” and “MONSTERS” tattooed down his side. It looked painful. It was painful, Mr. Bowler said in the video, which can be found at http://tinyurl.com/3u4n68p. The Monsters are celebrating their fifth anniversary this season, the first puck of
which drops Oct. 7. The team for the first time earned a playoff berth last season, and was sixth in the AHL in attendance, averaging 6,568, a 1.3% increase over the 2009-10 season. (Their sweater also appeared on TV Land’s smash hit “Hot in Cleveland.”) The Monsters’ sales staff met two new season ticket business goals for the coming 2011-12 season, and according to team spokeswoman Sarah Jamieson, the Monsters now rank among the 30-team AHL’s leaders in new business. Mike Tomon, the Cleveland Cavaliers’ vice president of sales and service since March 2009, said he generally offers more traditional incentives and often tailors them to individual employees. He said he’s never offered up his body in the name of sales growth, though if he were to get more creative, he’d consider a “Man vs. Food” type challenge, modeled after the popular Travel Channel show in which host Adam Richman takes on seemingly impossible eating tasks. (The show visited Melt Bar and Grilled in Lakewood last February.) “There is nothing we would not consider doing,” Mr. Tomon said. “But (a food challenge) is probably more my speed than a tattoo.” ■
InterGroup doesn’t make plastic, or even things out of plastic. Instead, it recycles the material. “All of this B.S. that the economy is slowing … business is booming,” InterGroup CEO Neil Gloger said. “We’re going to triple this year. Our biggest challenge is finding more people.” There are 75 employees at the company now. Most of them work in the main 130,000square-foot processing plant in Euclid, where plastic soda bottle labels, unused snack food bags and other post-industrial plastic items are heated, ground up and processed into flakes or pellets that can be used to make other plastic products. They can’t be used again for food items, but they can be used by injection molders and others that make parts for cars, appliances, lawn equipment or a myriad of other items. “We move it one or two steps down the food chain,” Mr. Gloger said of plastics he recycles. Between the main plant and eight smaller plants around the United States, Intergroup recycles about 15 million pounds of plastic a month, Mr. Gloger said. Since starting the company in 2005, annual revenues grew by 300% or more through 2010, when they were $7.5 million, he said. They won’t quite triple this year, but Mr. Gloger said he hopes to come close. “We did ($7.5 million) by June this year,” he said, noting that business in 2010 was accelerating faster than in 2011. Mr. Gloger said he intends to push the company’s growth rate further by buying other recycling operations or their assets.
Going Solo Mr. Gloger already has begun that process, as Intergroup bought the assets of a former Solo Cup plant in Springfield, Mo., on Aug. 10. Solo decided to get out of the recycling business at that plant and Mr. Gloger was only too happy to buy its equipment, including two repelletizing lines. The lines produce pellets that can be sold to injection molders and other plastics manufacturers. Those lines will be among seven Intergroup will install in the new plant, once it finds it, and Mr. Gloger said he is looking in a sevencounty area in and around Cuyahoga County that can house the operation. The new plant likely will bring his employment to at least 100 people, he said. The new plant will improve profitability, Mr. Gloger said, because he already is buying more scrap plastic than he can reprocess him-
self. That means he sells the scrap to other recyclers — at a profit, but not as big a profit as he would make reselling it as ready-to-use pellets or flakes. The key to Intergroup’s business, he said, is to provide scrap producers with the services they need and always to be ready to take what they have to sell. Those needs can be pretty specific, too. For example, the makers of those plastic labels for two-liter soda bottles, as well as other food packaging, require InterGroup to document that their material has been destroyed. They not only are concerned about getting paid for their scrap, Mr. Gloger said, but they also want to be sure that some counterfeiter is not using those labels to produce fake Dr Pepper or Fritos. For that reason and others, Mr. Gloger said, he sees no end in sight to his company’s growth. The plastics industry continues to grow bigger, concerns such as counterfeiting continue to rise and there is still a societal push for more recycling of plastics generally, he said. Plus, InterGroup is self-funding — it’s never had a money-losing year and its increasing sales and profits leave it well-positioned to finance more acquisitions, Mr. Gloger said.
Doing well by doing right He’s probably right, in terms of the plastic recycling industry still growing at least, said Julie McAlindon, vice president of marketing at polymer producer PolyOne Corp. in Avon Lake. “The trend certainly is clear. The amount we’ve recycled (as a society) in the past three years, especially post-consumer recycling, has increased quite a bit,” Ms. McAlindon said. Recycled plastics aren’t necessarily cheaper than those made from virgin feedstocks — they are sometimes more expensive — but customers still ask for them, Ms. McAlindon said. That’s often because they want to brag to their own consumer customers that their products contain recycled material, which often is a selling point today, Ms. McAlindon said. PolyOne works with customers to determine whether their products can take advantage of recycled content and how much can be used, then formulates a plastic resin for them based on the results. While it does not plan at present to get into the plastics recycling business itself, Ms. McAlindon said, PolyOne probably will be buying more recycled material going forward. “I expect that our customers will continue to have needs and increasing demands in that area,” Ms. McAlindon said. ■
Bank: Investors spot value in Midwest operations continued from PAGE 3
to make investments in up to a dozen banks over the next three years, with executives considering investments from California to Florida and “every place in between,” said Mr. Hovde, who has bought controlling and non-controlling interests in community banks since 1994. He currently is chairman of Sunwest Bank in California. Why Middlefield? For one, Mr. Hovde is from Wisconsin and appreciates Midwestern values, he said. He views Middlefield Banc’s “small middle America” community, and particularly the large Amish community, as loyal depositors and borrowers — different from some of the customers he deals with elsewhere who perpetrate fraud or simply stop paying. “We like Ohio,” he said. “I know everybody believes, ‘Let’s go to California, let’s go to Florida,’ but there’s a lot to be said for investing in the heartland.” Mr. Hovde and his team anticipate a resurgence in manufacturing
as the dollar continues to depreciate. Plus, Ohio appears to be becoming more business-friendly under Gov. John Kasich, he said. Middlefield Banc itself impressed, too, Mr. Hovde noted. “The company’s been very conservatively run, but yet, not hiding in a shell,” Mr. Hovde said. “We think we’ve found a good management team.” Including the investment by Bank Opportunity Fund, this latest sale of stock by Middlefield Banc is expected to raise $11.4 million and would bring the company’s total capital raised in 2011 to more than $12 million, said Jim Heslop, executive vice president and chief operating officer for the parent company and Middlefield Banking Co. The stock purchase agreement is subject to shareholder and regulatory approval. Middlefield Banc executives aim to close the transaction by the end of 2011. The added capital will help Middlefield Banc achieve its internal and external growth goals, said Thomas
G. Caldwell, president and CEO. “I think there are opportunities for … acquisitions in Ohio,” he said. “Do I know of any in particular right now? No. But I think as the industry goes through some further consolidation, we will be better positioned to take advantage of that.” The company has no targeted number of acquisitions, Mr. Caldwell said. It also aims to open branches in other communities, but Mr. Caldwell declined to say where. Someone affiliated with Bank Opportunity Fund, probably Mr. Hovde, will be appointed to the boards of the holding company and both subsidiary banks.
Community spirit Private equity investors such as Hovde are injecting capital into community banks more readily today than they did three or four years ago, said Robert L. Palmer, president and CEO of the Community Bankers Association of Ohio in Columbus, which represents the interests of Ohio’s 227 community banks.
And Mr. Palmer anticipates the industry will see it happen more often. Twice in the past 18 months, the association has been contacted by private equity firms that want to invest in the Ohio community banking market, Mr. Palmer said. He said that interest is rooted largely in the low bank failure rate in Ohio, where four institutions have failed since 2008, compared to dozens in states such as Georgia and Florida. One reason for what seems to be an increased interest in private equity investments is the investments are less expensive for banks than public stock offerings and provide access to more immediate capital, Mr. Palmer said. It’s expensive to do a public offering because of the disclosures, marketing and legal work required, he said, and there’s no assurance when a bank goes to market that it will raise the money it wants to, particularly now that people are cautious. Also, recent financial reform has made it harder for institutions, particularly community banks, to raise
capital locally, while regulators simultaneously are requiring banks to hold more capital, said Jeff Quayle, senior vice president and general counsel for the Ohio Bankers League. That said, Mr. Quayle thinks it’s too soon to call private equity infusions into community banks a trend. While he wouldn’t term private equity money universally good or bad, Mr. Quayle said, “I think it is fair to say that investors from New York, Chicago, London, may not have the same interest in local communities that local investors may, so it does change the dynamic.” Capital from any source, though, enables most banks to lend more locally, Mr. Quayle said. Mr. Hovde, who with his team has made controlling investments in 12 independent community banks and thrifts since 1994, said private equity investments in banks have picked up in recent years because more parties are interested now that bank valuations are down. Existing investors in a community bank can stand to benefit when such investments are made, Mr. Palmer said, because the private equity firms can bring another layer of oversight and expertise. ■
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to building and energy markets, said he is considering pay hikes in the 2% to 3% range if current conditions continue. He said the 65employee company has had a wage freeze in effect for the last few years but lifted it on the strength of increased sales, which this year will gain about 20%. The survey showed smaller companies enacted slightly greater pay hikes this year than did larger companies, and the projections for 2012 are consistent with this trend. Organizations with 50 or fewer workers
Manufacturing & Design in Eastlake reflect the employment issues outlined in the ERC survey. “We are starting to give a number of increases this year after a very dry spell over the past couple of years,� said Rich Peterson, vice president of business development at Astro. The company provides machining, plastic molding and other services and employs 275 workers. Steve Peplin, chief executive of Talan, a maker of steel stampings and aluminum extrusions that sells
Contact: Phone: Fax: E-mail:
expect to give raises that are onehalf percentage point greater than pay hikes at employers with 500 or more workers.
In line with national figures The projected 2012 increases fall somewhat short of the rise in the cost of living index, which the U.S. Bureau of Labor Statistics reported rose 3.6% in the 12-month period ended July 31. The index has been on the rise since last December, due in large part to the higher cost of gasoline and food.
The ERC survey results are similar to those published by WorldatWork, a global human resources information and consulting service with offices in Washington, D.C., and the Hay Group in New York. WorldatWork projected 2012 pay increases of 2.9% for hourly, salaried and executive jobs in the United States. Hay Group, a human resources information company, said on its website that projected median increases in 2012 will be 3% in all job categories. “More organizations are getting back into the salary budget increase game and several years of no to low salary increases,â€? the company stated. â–
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THEINSIDER
THEWEEK AUGUST 22 - 28 The big story: Timken Co. is considering an investment of $225 million at its Faircrest Steel Plant in Canton that would increase capacity and expand the product range of Timken alloy steel bars. The maker of bearings and steel said a ladle refiner and a new large-bloom continuous caster would be central to the investment, targeted to begin production in 2014. Timken said a team charged with developing a plan for moving the project forward is beginning discussions with suppliers and government officials.
The beat goes on: Cleveland HeartLab Inc. has secured an $18.4 million investment that will help the company expand its employee base, its product lineup and its physical footprint in Cleveland, said CEO Jake Orville. The company, which tests blood samples and other specimens to help doctors determine whether a patient is at risk of a heart attack or other cardiac problems, plans to find a new headquarters that is three times Orville bigger than the 7,000-squarefoot space it now occupies in the former Cleveland Clinic Innovations building on Carnegie Avenue.
Buttoning up the top job: There’s a new CEO at Jo-Ann Stores Inc. The fabric and craft retailer in Hudson said Travis Smith is succeeding Darrell Webb in the post. Jo-Ann said Mr. Webb will retain his position as its chairman of the board and will become the interim CEO of sporting goods retailer Sports Authority. Jo-Ann and Sports Authority both are owned by private equity firm Leonard Green & Partners L.P.
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Into sustainability? Then reuse this stuff ■ Consider yourself a member of the marketing team for Sustainable Cleveland 2019. Anyone who wants to promote an event or initiative related to sustainability now can download and use a host of logos created for the decade-long effort, which aims to reshape Cleveland into an eco-friendly city with a strong, eco-friendly economy. First, there’s the main logo, which features the words “Sustainable Cleveland 2019” with the tagline “Building an Economic Engine to Empower a Green City on a Blue Lake” next to a handful of colorful leaf-like shapes. Then there are logos for each “Celebration Year.” For instance, Sustainable Cleveland 2019 is trying to spark energy-efficiency initiatives this year, so the 2011 logo resembles a coiled, energyefficient light bulb. The logo for next year — the Year of Local Food — is an apple. You can’t do just anything with the logos, though. Check out the brand standards before downloading images, www.gcbl.org/2019/logos-and-brand-standards. Otherwise, have fun with them, said Rachel Downey, principal with Studio Graphique Inc. of Cleveland, which designed the logos with Little Jacket, which has offices in Cleveland and New York. Put them on websites, fliers, billboards, PowerPoint presentations, wherever. Maybe make some hats with the
■ A self-described serial entrepreneur on Aug. 11 filed a complaint in Lakewood Municipal Court to collect funds he says are owned to him by his former Lakewood employer, AGS Software Development Inc. Charles F. Birchall Jr. says the publishing software company that powers the web-based program used by Lakewood Observer and other local Observer newspapers owes him unpaid salary and expenses totaling $4,160.82 for the month of April 2011. Mr. Birchall said he was CEO of the firm for one month before he resigned because of “questionable accounting practices.” “I felt something was wrong, and I walked away. I’ve tried calling them for three months (to claim the money), but they won’t call me back,” he said. “It’s not about the money. It’s the principle.” But Lakewood Observer publisher Jim O’Bryan, who is named as a defendant along with AGS Software, of which Mr. O’Bryan is co-founder, said the company does not believe Mr. Birchall officially was an employee. He said “according to our records, Mr. Birchall
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The belt gets tighter: MetroHealth, the Cuyahoga County-subsidized health system, is staring down a $6.3 million operating loss, and the system is taking a number of steps — including a hiring freeze and cutting back on consulting contracts — to break even for the year. The system will challenge payers on reimbursement levels, reduce discretionary expenses not related to patient care and develop new outpatient service locations. MetroHealth attributes the financial difficulties in part to an estimated 9% increase in the number of uninsured and under-insured patients from across the county using the hospital.
City of the world: C. Lawrence Miller, the former vice president of human resources for Lubrizol Corp. in Wickliffe, was named to lead a new talent attraction program that will focus on bringing workers to Northeast Ohio. Global Cleveland will work to link immigrants already in the United States and Cleveland natives — socalled “boomerangers” — to an estimated 30,000 open and unfilled skilled jobs in the region. See what surfaces:
The University of Akron and Timken Co. signed an agreement that would allow them to combine their expertise in materials and surface engineering to accelerate technology development. Gary Doll, Timken’s chief technologist in tribology and next-generation materials, will lead a new lab that will be housed in the university’s College of Engineering. He also will serve as the newly established Timken Endowed Chair in Engineered Surfaces at the university.
Across the Midwest: SS&G Healthcare Services LLC, an Akron-based provider of health care consulting services, entered into a joint venture with Professional Business Consultants Inc. of Chicago. SS&G Healthcare said the new venture, SS&G Healthcare-Chicago LLC, will provide physician management and revenue cycle services to hospitals and physicians in Illinois, Wisconsin, Missouri, Iowa and northern Indiana.
light bulb logo to make it look like you have a bright idea, she said. Groups that use the logos — which already include the Cleveland Clinic and PNC — are “tying themselves to what will soon be a recognizable image,” Ms. Downey said. And Sustainable Cleveland 2019 gets attention. “I want to go viral,” she said. — Chuck Soder
Yes, but can you sue a turkey and swiss?
Excerpts from recent blog entries on CrainsCleveland.com.
COMPANY: SmartShopper Electronics LLC, Valley View PRODUCT: SmartShopper 301 The nature of shopping has changed a lot in the past few years, and so has the SmartShopper. SmartShopper Electronics just released the third generation of its voice-recognition grocery list organizer, a product introduced in 2007. The concept is the same: Push the record button, say the name of the item you want to add to the list (it comes preloaded with about 2,500 items recognized) and SmartShopper saves it for later printing. But the third-gen SmartShopper has made lots of improvements. Among them: ■ a smaller, more modern look ■ an upgrade that allows users to keep two lists at the same time ■ a new Samsung printer ■ longer battery life SmartShopper 301 also comes with a built-in kitchen timer and allows users to add or change categories and to arrange the order in which they print. For information, visit www.SmartShopper USA.com. Send information about new products to managing editor Scott Suttell at ssuttell@ crain.com.
Economists: There’s no quick fix for our economic woes ■ If it’s not obvious to you already, a Washington Post story based in part on data from a Federal Reserve Bank of Cleveland economist’s work concluded the economic recovery “is likely to be one of the most difficult and protracted in U.S. history.” The bad news: “If it follows the patterns of other similar crises, the recovery of the U.S. economy could take years.” Of the 11 U.S. recessions after World War II and before the most recent downturn, all but one were followed by recoveries that were more rapid than the decline, according to research by economists Michael D. Bordo of Rutgers and Joseph Haubrich of the Cleveland Fed. This one is different because it was a financial crisis that has left behind large amounts of private and public debt. In a forthcoming paper, Messrs. Bordo and Haubrich study the record of U.S. business cycles going back to 1882. They focus most of their interpretation of the recent recession on the housing market’s collapse. “This recession is the only one in U.S. history associated with a big housing bust nationwide,” Mr. Bordo told The Post. “We think that is a key reason why the economy is so slow — residential construction, consumer durables, that whole sector is moribund.”
Pretty fair work, if you can get it ■ The Fair Finance fraud case is lucrative business for a couple Northeast Ohio firms. The Indianapolis Business Journal reported that “most of the $1.8 million that Fair
resigned before (the AGS) board of directors ratified his contract.” He also defended the firm’s accounting practices, saying AGS is “completely solvent and the accounting practices are good.” In fact, he said, four more of the free, citizen-produced newspapers are set to launch, bringing to 11 the total number of Observer papers in the Cleveland market. “You can sue a ham sandwich in America,” he said. — Kathy Ames Carr
Now, for a sweet finish … ■ James Chaney runs sweetener maker Cleveland Syrup Co., and his son Jeff Chaney runs Crossroads Furniture Co. Their two different companies have shared the same space in Cleveland’s Slavic Village neighborhood since the younger Chaney launched the wholesale furniture business in 2003. Both needed room to grow, so the two kept their companies together. Through a corporation with references to their businesses, Refined & Reclined LLC, the Chaneys recently bought a 98,000-squarefoot building at 2200 E. Highland Road in Twinsburg for $2.18 million. The new building is triple the size of their Track Avenue location, said Jeff Kennedy, an industrial specialist at Grubb & Ellis Co. who represented Refined & Reclined in the transaction. Terry Coyne, a Grubb & Ellis executive vice president, represented the seller, 2200 Highland LLC. The asking price for the building, constructed in 1989 on nearly seven acres, was $2.45 million. — Stan Bullard
Finance trustee Brian Bash has recovered so far could go to attorneys and accountants working on the massive fraud case involving Indianapolis financier Tim Durham.” Mr. Bash’s Cleveland law firm, Baker Hostetler, “accounts for the largest part of about $1.7 million in professional fees, which were recently submitted for approval by U.S. bankruptcy court in northern Ohio,” according to the paper. (The fees cover 2010 expenses in the case against Mr. Durham, who bought Akron-based Fair Finance in 2002 and allegedly used it to orchestrate a huge Ponzi scheme.) The paper reported that Baker Hostetler “spent 4,516 hours on the case in 2010 and racked up $1.3 million in fees.” The firm’s rates averaged $299 per hour. Forensic accounting firm Howard L. Klein Co. in Beachwood submitted a bill for $298,156 for 1,327 hours of work, or an average rate of $224 per hour.
You can take the girl out of Cleveland … ■ The Wall Street Journal profiled Cleveland native and Hathaway Brown graduate Jenné Lombardo, who was named “fashion director” for the chic W Hotels chain. “Fashion directors aren’t common at hotels, but Ms. Lombardo’s job is more about making productive connections than about choosing clothes,” The Journal reported. “For the past year, she has challenged management company IMG’s iron grip on New York’s runway shows by hosting a stream of fashion-week events for the MAC & Milk alliance, a partnership of the cosmetics brand and the photography studio.” But Ms. Lombardo, 34, a mother of three, retains a Midwest sensibility. “We’re not fancy,” she says of her family. “We’re from Cleveland.”
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