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VOL. 36, NO. 39
SEPTEMBER 28 - OCTOBER 4, 2015
Business of Life:
35th Anniversary
Who to Watch: Manufacturing industry faces challenges — P. 15-21
Car Condos
Auto enthusiast builds collectors paradise
COLUMN: Crain’s new look — P.10
P. 22-23
CLEVELAND BUSINESS
A lifeline for local care Funding infusions from larger systems keep centers running BY TIMOTHY MAGAW F or more than two decades in Akron, the spirited competition for health care dollars and physician allegiance sat squarely between the city’s stalwart health systems, Akron General and Summa. Contentious at times, sure, but health care insiders say the competition never quite reached the fever pitch as what unfolded 40 miles north between the Cleveland Clinic and University Hospitals. Much was due to the limited geography with which Summa and Akron General were working. But as regional boundaries blur and the financial realities set in of operating a smaller system in the wake of federal health care reform, the state’s mega-systems — and not just those headquartered in Cleveland — have slowly crept into the Akron market. And with their flags, of course, come lots of money. HealthSpan Partners, a non-religious auxiliary of Cincinnati-based Mercy Health, pumped $250 million in Summa when it purchased a minority stake in the health SEE LIFELINE, PAGE 8
ACE REPORT: NEO update Job numbers bounce back in August — P. 14
Cavs’ wide reach could be lucrative Team’s international popularity has resulted in overseas biz overtures BY KEVIN KLEPS kkleps@crain.com @KevinKleps
With the world’s best player on a roster complemented by standouts from Australia, Brazil, Canada and Russia, the Cleveland Cavaliers truly are global players. This season, the Cavs, with the help of two branding agencies, are poised to turn their international reach into lucrative partnerships. To get there, they have to navigate the NBA’s long-standing restrictions on marketing outside a 75-mile radius of Quicken Loans Arena. The Cavs, especially since the return of LeBron James, have done
plenty of big business in Northeast Ohio. In 2015, however, they have focused some of their efforts on Australia, China, Russia, Thailand and other countries in which their research shows they have a sizable audience. “We have a finite number of seats in the building, 20,562. We have a finite number of suites,” said Cavs senior vice president and chief revenue officer Brad Sims. “The only way you can move the needle there ultimately is with pricing. But with partnerships, I like to say there’s infinite opportunity. It really comes down to how creative you can get.” The Cavs have taken that part of their game to a different level for the
SEE CAVS, PAGE 12
NEO law schools’ enrollment falling
ROBERT NEUBECKER
Smaller class sizes have become the norm BY JEREMY NOBILE jnobile@crain.com @JeremyNobile
Entire contents © 2015 by Crain Communications Inc.
Northeast Ohio’s law schools continue to see enrollments dwindle compared with the levels seen just a few years ago, but school officials and industry experts are hopeful the trend may soon turn around.
The consensus is the overall situation, here and nationwide, is worrisome, but not dire — yet. Data from the University of Akron School of Law, Cleveland-Marshall College of Law and Case Western Reserve University School of Law show that enrollments at those schools are down 3% to 6% from last year. More striking, though, are the decreases over the last several years. Since 2010, total enrollment has
Get the dish on local manufacturing, plus her favorite dining spots and fall activities.
SEE LAW SCHOOLS, PAGE 25
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Small Business Matters i Want more information and resources on this week's topics, ideas and events? Go to www.cose.org/smallbizmatters.
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52 TIPS FOR YOUR BUSINESS
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CRAIN’S CLEVELAND BUSINESS z SEPTEMBER 28 - OCTOBER 4, 2015 z PAGE 3
BY DAN SHINGLER
O
HILTON
Hilton heads into the home stretch
n the heels of a long, fairly dry and very productive summer construction season, the exterior of the Hilton Convention Center Hotel in downtown Cleveland is nearing completion. The interior rooms don’t yet have the luster they’ll be showing off next year, but the shell and frame of the building are nearly done, and topping off ceremonies are planned for Thursday, Oct. 1. It’s already a gleaming major feature on the Cleveland skyline. “It’s an exciting time,” said Teri Agosta, the general manager of the hotel. Of late, Agosta has been spending her time planning for the opening, hiring the first of the hotel’s 400 employees and giving tours to the media and others — all while dodging a myriad of construction workers and equipment. Concrete has been poured on the upper-most floors of the hotels, where guests will stay and a sky bar will offer patrons views of downtown, Lake Erie — and just about anything one could want to see within about 10 miles of the city center. Agosta thinks the views, a major selling point for the hotel, are among the best in the city. Crews are working hard to complete the floors above the 32nd story, which mostly will house the building’s mechanical systems. The building’s blue glass exterior façade is largely in place, giving the building its near-final appearance, and a bright white accent light will run up one side of the building, Agosta said, which shows off its angular design. Below, construction workers are beginning to build out major interior spaces, including the grand ballroom that likely will host events for the Republican National Convention next July 18-21, and a main bar that cantilevers out over the hotel’s lobby. So far, developers have told local officials that the $272 million project is coming in on time and on budget, which means it should be ready for its 2016 debut for the big convention. The hotel will connect with the adjacent Cleveland Convention Center and the Global Center for Health Innovation, beneath the hotel’s main floors. Guest rooms will occupy most of the building from the seventh to the 32nd floors, along with facilities like a gym and indoor pool, Agosta said. Ultimately, the hotel will have 600 rooms — and will be a jewel in the crown of the Hilton chain, she promises. Her work is cut out for her, though. The hotel has more than 375 people to hire before it opens next June, and then it will have only about a month to get its operations in order and rehearsed well enough to play a starring role at the center of one of the biggest events in Cleveland’s history. Agosta will have the facilities to pull if off, though. In addition to 28 floors of guest rooms in the main tower, the hotel’s base will include ballrooms — including the largest, which can be left “grand,” or separated into smaller rooms — along with the main bar, restaurant, lobby and retail space. All told, the hotel will have about 55,000 square feet of meeting space. Agosta also has the management chops needed for the task at hand. With more than 20 years of hotel management under her belt, she has managed major hotels and dealt with major hotel construction projects in the past. Her latest gig, before being named general manager of the Cleveland Hilton at the beginning of this year, was as general manager of the 574suite Pointe Hilton Squaw Peak Resort in Phoenix, where she also managed a $45 million renovation and opened a $2 million spa and health club.
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Northeast Ohio’s tech sector is a lot bigger than it was four years ago, judging by a survey conducted by OHTec. The number of local tech companies with more than 50 employees more than doubled. Same goes for the number of companies with more than $5 million in revenue. Those are some huge increases. So what’s going on here? The survey may not be perfect, but there are plenty of reasons to believe that the local tech industry really did grow substantially between 2010 and 2014, according to Brad Nellis, president of OHTec, which used to be called the Northeast Ohio Software Association. For one, more than 100 software companies and information technology service providers responded during both years. And the results clearly weren’t influenced by two or three companies, since so many categories and questions suggested that companies are getting larger. For instance, the percentage of respondents with between one and five employees plummeted from 32% to 20% (or 53% to 34% if you include solo entrepreneurs with no employees) between 2010 and 2014. By contrast, the percentage of companies with 26-100 employees nearly tripled, jumping from 8% to 22%. And 9% of respondents said they had more than 100 employees, up from 4%. The numbers make sense to Nellis for a few reasons.
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Volume 36, Number 39 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright Š 2015 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 212-210-0750 Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-9911, or email to customerservice@crainscleveland.com, or call 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777.
#ThanksObama What does Obamacare have to do with OHTec? The organization is part of the Council of Smaller Enterprises, so its members can buy health insurance through COSE. That benefit is no longer as compelling as it used to be, because Obamacare gave small businesses other ways to buy insurance. Plus, businesses with just one employee can no longer legally buy group coverage through COSE, president Steve Millard said. Thus, COSE’s overall membership declined after the law went into effect. The average size of companies belonging to COSE has increased, “but it has not been dramatic,� Millard added. For a moment, though, let’s assume that most of the growth described in OHTec’s survey is real. That scenario does pose a luxurious problem: Local tech companies, especially software developers, constantly talk about how hard it is to find talent. The problem is not isolated to Greater Cleveland, but the region’s tech industry still mainly consists of small businesses that often have a tough time recruiting against larger tech companies in other regions — and major corporations that have large tech departments right here in Northeast Ohio. Those local corporations are hiring, too. For instance, last month, at OHTec’s annual CIO Symposium, Nellis asked an audience of 150-or-so IT executives to raise their hands if they didn’t have any open positions. “One guy raised his hand. Literally, everybody in that room is hiring,� he said.
With new center, Tri-C ahead of curve BY RACHEL ABBEY MCCAFFERTY
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One, the first survey was taken only a few years after the real estate bubble burst, causing the economy to collapse. Since then the overall economy has been on the upswing. Plus, the tech sector is hot — and Apple and Google aren’t the only companies doing well. For instance, OHTec conducted separate quarterly surveys of local IT companies throughout the recession and the years that followed. Those numbers suggest that they started shaking off the doldrums in 2011. For instance, in the fourth quarter of 2009, 54% of respondents reported that they were “not hiring.� That figure had dropped to 26% by the first quarter of 2011, and it fell into the teens several times over the next few years. The list of local software developers that Crain’s publishes every year also shows consistent growth since 2010. Then there’s anecdotal evidence. Tech companies are constantly telling Nellis that they’re growing. “We knew that virtually everybody was hiring,� he said. But the survey may not be a perfect reflection of reality. For instance, two factors may have driven some of the smallest companies out of OHTec since 2010. Back then, the group had 930 members. It had roughly 700 members as of February of this year. Nellis believes the recession could have put some smaller companies out of business. OHTec also could have lost some of its smallest members because of The Patient Protection and Affordable Care Act, which was passed in 2010.
With its new humanities center, Cuyahoga Community College is striking out on a less-than-traditional path for a community college. Rather than just preparing students for a particular career, the programming at the Jack, Joseph and Morton Mandel Humanities Center will aim to shape Cleveland’s future leaders through collaborative learning and community research. The program was created by a $10 million gift — the largest ever for TriC — from the Jack, Joseph and Morton Mandel Foundation and the Mandel Supporting Foundations in March. The center itself, which will be located in a renovated building on Tri-C’s eastern campus in Highland Hills, will be dedicated this Tuesday, Sept. 29. The gift creates a permanent endowment for the center in the Cuyahoga Community College Foundation and establishes a chair for its dean. Tri-C’s foundation also will offer scholarships to students in the program’s Scholars Academy. The existence of such a comprehensive program at the community college level was surprising to groups like the American Association of Community Colleges and the Consortium of Humanities Centers and
Institutes when they were contacted by Crain’s. But Tri-C may just be on the cutting edge of a trend. This summer, the National Endowment for the Humanities announced a grant program specifically to support such efforts at two-year colleges. The Mandel Foundation has supported the humanities for years, said chairman Morton L. Mandel, giving examples of centers it’s supported in Boston and Jerusalem. “We want a more decent society,� he said. Students who attend more expensive universities are likely to be exposed to the history and values embedded in the humanities, Mandel said. And he thinks it’s unfair that others don’t. Most of the participants in this program will stay in Northeast Ohio, contributing to an overall better quality of life in the region. “Investing in the humanities, to us, is a strategic move,� Mandel said. “It’s not just a gift.� The college’s humanities programs have been “diffuse� in the past, but this gives the school the chance to combine its strengths in a coordinated way, said Tri-C president Alex Johnson. It also will give Tri-C a platform to examine issues such as economic improvement and educational attainment, while giving role to potential future leaders. He said the school’s first dean and endowed chair, Lauren Onkey, knows the community and the col-
lege well from her role as the Rock and Roll Hall of Fame and Museum’s vice president of education and public programs. Prior to that, Onkey taught at Ball State University in Indiana. Her hiring was announced in August, and she begins work on Monday, Sept. 28. Alan Rosskamm, CEO of charter school network Breakthrough Schools, was on the search committee for the center’s dean. He said the center will be “extraordinarily valuable� and will potentially meet a need no one else is addressing. Rosskamm said identifying potential leaders at a young age benefits the individuals and the community at large. Mary Hovanec, an associate professor and faculty chair of the Scholars Academy, said she thought it was healthy to see a push for broader education with critical thinking and cultural involvement. Curriculum planning for the academy is underway, and the first group of students is expected to start in January. Hovanec said students will have the chance to take courses infused with a leadership focus, in addition to hands-on work. And the program’s relationships with nonprofits, arts organizations and faith-based groups will be critical, Onkey said, as they will give students a “showcase� and “purpose� for their work. “It’s a real commitment to experiential learning,� Onkey said.
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The Week
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The courts won’t stop Steris Corp. from buying Synergy Health for $1.9 billion. U.S. District Court Judge Dan A. Polster in Cleveland on Sept. 24 denied the U.S. Federal Trade Commission’s request for a preliminary injunction, which would have at least temporarily stopped the merger — the biggest acquisition in Steris’ history. Thus, Mentor-based Steris plans to move ahead with an Oct. 2 shareholder vote on the merger. If the deal closes, Steris will technically become a British company, for tax purposes.
The tigers at Cleveland Metroparks Zoo will be in their new home next summer. The zoo on Sept. 24 officially broke ground on Tiger Passage, a new home for its two Amur (Siberian) tigers. Zoo officials said the $4.1 million exhibit will occupy the same footprint as the previous tiger exhibit, but will expand outward “to increase the size and complexity of the space available to the tigers.� As a result of better use of space, the new exhibit will be five times the size of the old moated, grotto-style exhibits. The Cleveland Zoological Society has committed $2.5 million to the exhibit’s cost.
POWER PLAYERS KeyCorp CEO Beth Mooney is the most powerful woman in banking, according to an annual ranking from American Banker that also included Akron-based FirstMerit Corp. vice chairman Sandy Pierce. Mooney is getting accustomed to this honor, since it’s the third straight year American Banker has put her at the top of the list. “She is one of just two female CEOs at a large U.S. banking company and, on her watch, Key has emerged as one of the industry’s best-performing regionals,� the publication wrote. FirstMerit’s Pierce is No. 24 on the list, which she has been on for two straight years.
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ON THE MOVE Fairmount Santrol of Chesterland, a provider of sand and sand-based products used by oil and gas exploration and production companies, is looking for a new chief financial officer. The company said Christopher L. Nagel will leave his position as CFO and executive vice president of finance effective Oct. 20 “to pursue an opportunity in the consumer products industry.� Fairmount Santrol said it has hired an executive search firm to help find a new CFO.
FLATS FORWARD Fairlawn-based Welty Building Co. likes the plan to convert a four-story building in the Flats, best known as the former home of Sammy’s restaurant, so much that it will move its Cleveland offices there. Welty said it plans to move its Cleveland office and its office furniture services subsidiary, called environments for business, to space on the first floor of the building, 1410 W. 10th St. Its Cleveland offices are currently at 515 Euclid Ave. Welty will expand to 6,400 square feet for its Cleveland offices and e4b showroom from 5,670 square feet on Euclid, and it will benefit from being able to gain efficiency as it builds the new space.
HOME RUN August was the strongest month for home sales in 10 years, according to the Ohio Association of Realtors. OAR reported the sale of 14,056 units statewide in August, an increase of 11% from 12,669 in August 2014. It is a big benchmark in the region’s long, slow recovery from the housing bust. Sales in Northeast Ohio were similarly brisk in August, increasing 10.9% to 4,910 sold listings this August from 4,426 in August 2014, the Northern Ohio Regional Multiple Listing Service reported for the 18 counties in the Northeast Ohio Real Estate Exchange service area.
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FirstMerit Bank made a statement last week when it secured the naming rights for what’s to be dubbed the FirstMerit Convention Center of Cleveland. The Akron-based bank’s name will remain on the convention center for the next 20 years for a deal valued at more than $10 million, according to a tentative agreement with the county. City and county officials last week hailed the partnership for its anticipated impact on the region. The roughly $400,000 FirstMerit will pay through each year of the deal (it all adds up to about $10.3 million in total with adjustments for inflation) will be used to enhance development on the lakefront and the malls surrounding the convention center, said Cleveland Mayor Frank Jackson at a Sept. 21 news conference announcing the deal. The legislation was given its first reading at council on Tuesday, Sept. 22, but hasn’t been formally adopted. “What we’re really talking about with this convention center is tourism. Anytime we can find someone to invest dollars in tourism, it’s an exciting time,” said Phil Craig, executive director for the Ohio Association of Convention & Visitor Bureaus. “How that comes is less important than what is done with the revenue. When Cleveland invests and finds investors in facilities like this, it’s really good for the entire state of Ohio.” The county originally approached FirstMerit about the deal while looking for partners. While it’s not the first time a bank has worked its name onto a prominent convention center, Craig still calls it a “visionary” move by Cuyahoga County and a model for attracting private investment that “should be praised and, hopefully, followed.” For FirstMerit, the deal should establish a new degree of brand awareness in a region the bank clearly has plenty of room to grow in. FirstMerit CEO Paul Greig said the
bank has about 500 employees, a $2.2 billion book of loans and $3.4 billion in deposits in the Cleveland MSA. So while the perception with some customers here may be that FirstMerit is an Akron bank, the $25.3 billion-asset institution is very much a part of the regional fabric. However, figures from the Federal Deposit Insurance Corp. show that in Cuyahoga County proper, FirstMerit has a depositor market share of just 3%. Naturally, plugging the FirstMerit name onto one fof the region’s most prominent building projects in recent years will increase the likelihood of the brand resonating with an untapped customer base. “I think it’s an indication that they want to be as big as anyone else who’s in Cleveland,” said Ken Marblestone, a Cleveland-based managing director for investment bank Cascade Partners LLC and former president of Ohio and Michigan markets for RBS Citizens Financial Group. “This bank thinks about the Cleveland market well enough that they’re putting their name on it. That’s quite a statement.”
Strike up the brand The $425 million, county-owned structure opened in June 2013. Formerly known simply as the Cleveland Convention Center, the venue drew an estimated 177,000 people to 228 events last year, creating an economic impact of $111 million, according to data from the center. “For us to be able to align ourselves with the county and the city in this way with a state-of-the-art facility is, in the long run, really priceless for us from a branding standpoint,” said Julie Tutkovics, FirstMerit executive vice president and chief marketing officer. Cleveland’s convention center is particularly well positioned for attention, whether offering the spotlight, literally, or basking in it. With the Republican National Convention coming to town next summer,
marketing through the facility itself instantly hits a national audience. “It’s really a terrific move,” said Keith Mabee, group president for corporate communications and investor relations for Cleveland public relations firm Falls Communications. “With the RNC being hosted there by Cleveland, they’re going to get not only domestic and nationwide attention, but global exposure,” Mabee said. “In terms of intangibles, this sounds like a great opportunity for them from a marketing perspective.” The Cleveland convention center marks FirstMerit’s fourth title sponsorship in total, but the first in its home state. The other locations include FirstMerit Bank Pavilion at Northerly Island and FirstMerit Bank Stadium Club at U.S. Cellular Field, which are both in Chicago, plus FirstMerit Bank Event Park in Saginaw, Mich. With regard to timing, the announcement comes a little less than a year from the Republican convention itself. Yet, it’s possible FirstMerit has other plans in store for this region that could follow this particularly high-profile deal. “They may no be ready to unveil everything they have in planning for the future,” Mabee said, speculating what might come next. “They may have acquisitions — there is a lot of consolidation going on. They may have an opportunity to expand in the Midwest. What is your strategy for the next three to five years? Where does this investment add additional value? Those are the kinds of things we would ask them (regarding a deal like this).” “There’s probably more we’re going to hear from FirstMerit out in the future, and they may not share it all now. But they’re preparing the landscape to execute that strategy.”
HGR is driving industry awareness BY RACHEL ABBEY MCCAFFERTY rmccafferty@crain.com @RAMcCafferty
HGR Industrial Surplus wants to use some of its newly renovated space to educate customers about manufacturing and the maker movement. HGR last fall announced plans to renovate its 966,000-square-foot building at 20001 Euclid Ave. in Euclid, which it’s now calling the Nickel Plate Station, after the Nickel Plate Road railway line that ran through Euclid. The ownership behind the company bought the building in 2014, but had been leasing space there for years. It’s also home to the Euclid Sports Plant, and chief marketing officer
Matt Williams said the company would be looking for other tenants. While the $10 million to $12 million in renovations are underway, the company is hosting a dedication ceremony Oct. 1. The event will recognize local leaders who helped keep HGR in the community, as well as the Euclid High School robotics team for its achievements, according to a news release from the company. There also will be a customer appreciation sale throughout the day. One of the smaller upgrades that will be unveiled at the event is the manufacturing resource center, which the release said will give customers information about manufacturing and STEAM (science, technology, engineering, arts and mathematics) education. Williams said the area will be along a wall in
the customer lounge and will include materials curated by HGR. It might seem counterintuitive that a company that serves manufacturers would need to inform its customers about the industry. But the buyer and seller of industrial equipment sees more than just industrial customers. The company gets a lot of pedestrian traffic, as it’s an alternative place to buy tools than stores like Home Depot, as well as college students looking for gear or artists looking for something to upcycle, Williams said. “We believe that small efforts such as the one that HGR is taking — when multiplied across a region — can serve to increase the attractiveness of manufacturing as a career and will ultimately have an impact on the region’s economy,” Williams said in an email.
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Memphis firm is bringing 150 jobs to Independence BY STAN BULLARD sbullard@crain.com @CrainRltyWriter
Sedgwick Claims Management LLC, a global provider of technologyenabled claims and productivity management services, plans to establish a new operation in Independence that will add more than 150 jobs to the region. Lesley Gudehus, communications director for the Memphis, Tenn.based company, said Sedgwick is leasing about 24,000 square feet in Independence that can accommodate 154 seats. The operation will service a new Sedgwick client, the Avis Budget Group car rental company. Gudehus said last Thursday, Sept. 24, that she was not able to specify the location of the new operation or to provide additional details. However, David Browning, managing director of CBRE Group Inc.’s Cleveland office, confirmed Sedgwick has leased office space at Oak Tree Place, 6111 Oak Tree Blvd. CBRE represented Sedgwick as the tenant and the property owner, an affiliate of Time Equities Inc., a New York City-based real estate investment firm, in the transaction. Sedgwick will occupy about a floor and a half, or 35% of the 68,471square-foot building, according to CoStar, a real estate data provider. The building dates from 1979, CoStar reports.
Independence had been told it was competing with locations in Virginia and North Carolina for the operation, said Jeremy Rowan, Independence economic development coordinator. “We’re excited they are looking at our city,� Rowan said. Independence City Council on Sept. 8 approved an income tax incentive agreement with the call center operator, based on Sedgwick adding a payroll of about $7 million annually in the suburb. After employees work for a year, Independence would provide payments to the company from other city funds equal to 35% of the city income tax the workers paid. The two-year agreement would provide Sedgwick with about $100,000, Rowan said. However, he said, that figure will vary based on the actual number of people the firm hires over two years. Asked why the term for the agreement is so short, Rowan said, “We don’t give away more than we have to.� The transaction is an early win for Time Equities, which bought Oak Tree Place and five other office buildings in Independence and Seven Hills in February from Indianapolis-based Duke Realty Corp. for $20 million. Sedgwick already operates a unit that provides workers compensation claim services at Rock Run North, 5700 Lombardo Drive in Seven Hills. Time Equities also owns that building.
Who are the most connected people in Northeast Ohio and how do they rank? Crain’s Cleveland Business this year is celebrating 35 years of making connections by attempting to answer that question. On Oct. 26, we will publish a data-driven section, created in partnership with the New York-based technology company Relationship Science. The section will use information collected from Crain’s weekly lists to determine who has the most access based on their links to individuals, institutions and organizations. In a nutshell, this list lets the facts speak for themselves to create a picture of who knows whom — and how. And, trust us, there are some surprises. But you don’t have to wait until Oct. 26 to find out who made the list. Over the past several weeks, we have been releasing the list alphabetically, 20 names at a time. Below is the fourth installment: Steven W. Percy Michael B. Petras Jr. Sandra Pianalto Richard W. Pogue Larry Pollock Alfred M. Rankin Jr. Peter Raskind Albert B. Ratner Charles Horowitz Ratner James A. Ratner Ronald A. Ratner Robert H. Rawson Jr Deborah Z. Read Robert S. Reitman William R. Robertson Barbara S. Robinson Eric V. Roegner John M. Saada Jr. Donna M. Sciarappa Michael D. Siegal To see more, go to www.crainscleveland.com/ mostconnected, and stay tuned for the rankings on Oct. 26.
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system. Also, the Clinic injected $100 million into Akron General when it bought a minority stake, and once a full takeover is complete, the health care giant plans to invest about $30 million a year for the first four years. University Hospitals, albeit quietly, has acquired several Akron-area physician practices that had been on the prowl for suitors. And with the UH-branded white coats comes the financial backing and marketing prowess of a system on the rise. For the most part, health care experts say the outside money is a good thing. For one, it’ll mean increased and enhanced service lines. Take Akron General, which is getting a bigger and better emergency room — something that wouldn’t have been possible without the Clinic’s checkbook. The Clinic isn’t looking to gut Akron General and merely use it as a feeder for the mothership. What’s certain, however, is that these bulked-up hospitals will more than ever be vying for patients’ attention. And in many regards, the competition is as fierce as ever. “The competition is changing,” said Summa president and CEO Dr. Thomas Malone. “Providers are getting more aggressive. This is going to be a truly interesting journey. We’re talking it being a transformative journey.”
Summa sets the stage In many regards, Summa had outhustled Akron General over the last 15 years, and transformed itself into a true regional player. During that time — under the watch of its now-retired CEO, Thomas Strauss — Summa acquired Barberton Citizens Hospital, opened
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Akron Children’s Hospital acts almost like a Switzerland of sorts in the Akron area’s aggressively competitive health care landscape — and that doesn’t appear to be changing with the entrance of new players in the market. The pediatric health care provider has relationships, in some fashion, with all of the city’s health care providers. Akron Children’s operates neonatal intensive care units, for instance, at Akron General and Summa’s main outposts. It also has ties with Summa’s minority investor, Mercy Health, in the Youngstown area and collaborates with the Cleveland Clinic — Akron General’s soon-to-be owner — on heart care. “We don’t want to be arrogant,” said Bill Considine, Akron Children’s CEO since 1979. “We want to be good partners and collaborate with these megasystems.” Even Akron Children’s has gone beyond the city’s borders, having deepened its presence in the Mahoning Valley as well as in the Cleveland area through its ties with MetroHealth. “I think the lines have been blurred,” Considine said. “It is what it is. If we can stay focused on what our real mission is — providing service to families and being good steward of limited resources — we’ll be on the side of the angels.” — Timothy Magaw
a rehab hospital and started a joint venture hospital with Western Reserve Hospital Partners. Summa, too, benefitted from the publicity that came along with those deals. All the while Summa doubled in size, Akron General faced small-tononexistent operating margins. Complicating matters further, Akron General had four CEOs in as many years and struggled to maintain its footing in Summa’s shadow. The appointment of Dr. Thomas “Tim” Stover as CEO brought some muchneeded stability to the organization.
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However, even with major investments in key service lines like neurology, Akron General found it difficult to survive on its own. Summa eventually hit some growing pains, not unlike other midsize hospital systems around the country. Summa’s financial performance deteriorated in 2012, and system officials went on the prowl for an outside cash infusion. That $250 million investment ultimately came from HealthSpan and helped, in the short term, buoy the health system’s finances.
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Akron General, meanwhile, had hoped to make a splash while Summa was on the hunt for an outside investor, but even Akron General — a fiercely independent health system — eventually figured out it needed outside help. In 2013, Akron General was poised to be acquired through a joint venture of the Clinic and Community Health Systems, a large, forprofit health system based in Tennessee. That deal soured when the Clinic and CHS couldn’t come to terms over how the deal would be structured. The Clinic ultimately decided to move forward on its own. Last year, the Clinic bought a minority stake in Akron General, but just this summer, the health care giant exercised an option to take on full ownership of the Akron system. The deal should be signed off by the proper regulatory bodies in the coming months. Stover said his system’s burgeoning relationship
with the Clinic already has reaped dividends. The Clinic, for one, is helping the hospital system upgrade its electronic medical record system to Epic. The Clinic also installed one of its renowned cardiothoracic surgeons at Akron General and added other services. Group purchasing efforts have also saved Akron General more than $1 million. “We’re gaining a lot of traction in the community,” Stover said. “We’re already seeing a lift. I think it’s going to be even more of a lift once we’re a full member” of the Clinic system. Although Akron is a mere 45minute drive from Cleveland, it’s a world away in the eyes of many Akronites. Ever one for hyperbole, former Akron mayor Don Plusquellic once described the growing interest of the state’s health care behemoths in his city’s hospital systems as something that could turn Akron’s health care industry into a battlefield fit for the Civil War. “I do not want these outside national interests coming into Akron, the blue coats and the gray coats, with the result that we become a Gettysburg of health care,” he said during one public address in 2014. However, many health care observers say the out-of-town investments should be a positive for the Akron area. One of the main reasons smaller health care organizations like Akron General or Summa look for outside partners is because their size limits their ability to access
capital for facility upgrades and new technology. Moreover, the prestige of being owned or attached to a larger system should help them compete for younger and better-trained physicians. “From a patient perspective, what I’ve seen for a very long time was Summa had its own way in the Akron market because it was the better-heeled financial institution,” said Bill Ryan, president of the Center for Health Affairs, an advocacy group for local hospitals. “Now you’ve got General as a full participate of the Cleveland Clinic system … That really gives folks in Akron a legitimate choice where to get care.” UH’s interest in the Akron market hasn’t been quite as aggressive as the Clinic’s, but it’s hardly insignificant. For one, UH sees roughly 2,000 Summit County patients each year at its flagship Case Medical Center for their most-complex health care needs. It also has loose ties with Summa and its minority partner through a statewide collaborative known as Health Innovations Ohio. At present, UH boasts about 40 employed physicians in the Akron market. Also, UH recently invested $4 million to transform 35,000-squarefeet of office space in Akron’s neighboring suburb of Fairlawn into a new health center. UH officials say their presence in the Akron market is largely reactive, as the health system isn’t aggressively looking for physician practices to acquire. “We’re not out there trying to convince physicians to join the UH system,” said Paul Tait, UH’s chief strategic planning officer. “We’re responding to people calling us. Obviously, one of the things you’ve seen UH do, when we get a critical mass of physicians, we tend to aggregate
INDEPENDENT PHYSICIANS AREN’T THRILLED Not everyone is happy about the big boys coming to the Rubber City. There’s a small cadre of independent physicians trying to survive in Akron. Take Gary Pinta, a physician with the Pioneer Physicians Network who practices in Cuyahoga Falls. Pinta is the president of the newly formed Ohio Independent Collaborative, which is designed to allow the state’s independent docs to band together and compete with health care giants like the Cleveland Clinic and Mercy Health. “We’re at a point (in Akron) where both hospitals are more or less controlled by out-of-town health care systems,” Pinta said. “The family feeling is gone.” He added, “It’s like Walmart coming in versus the department store you had before. This is a people business — so you have to get to know the people. It’s not a commodity — at least we don’t want it to be.” Over the last few years, Akron’s
those physicians in a larger outpatient center. It makes sense to put all of them in one building.”
A foggy crystal ball It’s still unclear at this point what health care will look like in Akron in five, 10 or 20 years. Summa, for one, is in the process of evaluating its own facility needs. The size and scope of its community hospitals in Wadsworth and Barberton, for instance, are changing dramatically. As for Akron General, the Clinic will no doubt add its touch. Renderings for Akron General Medical Center’s new emergency room indicate the space will boast the same crisp, white façade the Clinic’s hospitals have become know for.
remaining independent docs had operated largely in the background, as it was usually the city’s hospital systems grabbing the headlines. However, over the last few weeks, they’ve been making plenty of noise; first, with the launch of the Ohio Independent Collaborative and most recently with the renewed legal squabble between Summa and Western Reserve Hospital Partners, a group of Akron-area physician investors that co-own Western Reserve Hospital in Cuyahoga Falls with Summa. However, before the Summa-Western Reserve issues’ reared their heads, Dr. Robert Kent, the independent doc who leads Western Reserve Hospital, told Crain’s the hospital was performing well. On average, he said the hospital was 85% full every day. “We don’t worry about the politics across a big, billion-dollar system,” Kent said. “That’s not our job. Our job is to take care of patients.” — Timothy Magaw
Hospitals across the country are eyeing new population health initiatives — efforts that will certainly spur more narrow-network insurance offerings. That means Akronarea employers will more than ever be forced to choose between Akron General — or, eventually the Clinic — and Summa health systems. In the most basic sense, population health efforts, like accountable care organizations, are designed to band together groups of providers to care for distinct patient populations. “At the end of the day, we have to create a health care model that keeps patients out of the hospital, improves quality and reduces cost,” Malone said. The tipping point in the community will be the trade-off of choice for care coordination.”
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Opinion PAGE 10
SEPTEMBER 28 - OCTOBER 4, 2015
From the Art Director
What did you do to my newspaper?!
Editorial
No on Issue 3 Forgive us for feeling a sense of déjà vu about Issue 3, coming to a ballot near you this fall. Just six years ago, Ohio voters faced a similar issue, with the same number attached. You might remember that Issue 3. Voters approved it, creating a constitutionally sanctioned monopoly that gave operators the right to casino licenses for a fixed price. Let’s look at it in business terms. If you are promised one thing and you get something far less, do you consider that a good deal? The Associated Press did some reporting on this. In October 2009, a month before the November election, the Ohio Department of Taxation estimated that the state could generate $470 million to $643 million in annual tax revenue once four casinos were running. Voters bought it. But in 2014, the total tax collected from casino revenue was just $267.5 million. They didn’t get what they voted for. Fast-forward to 2015, and we’re facing another Issue 3. This one would create a constitutionally sanctioned oligopoly that would give 10 investors the exclusive right to grow and sell marijuana in the state. ResponsibleOhio, the group behind the constitutional amendment to legalize marijuana, has come promising annual tax revenue of $554 million once the industry has been established. Others have crunched the numbers and said it’s widely optimistic. Forgive us if we’re not wowed by the promised windfall. It should come as no surprise that just as we did back in 2009, we are urging voters to oppose Issue 3 this fall. Let’s make this clear: We are not opposed to legaliz-
ing marijuana. It should only be done, though, after a thorough discussion and understanding of what’s best for the state and all of its residents, not just the financial backers who stand to get the most financial gain. Some issues to consider: What’s the rush? If Issue 3 is passed, Ohio would become the fifth state in the country to legalize recreational use — and the first to go from an outright ban on marijuana to allowing its recreational use without first legalizing the substance for medical purposes. If this is a road Ohio chooses to go down, first approve medical marijuana before introducing recreational use. Create an open market that allows growers to compete, rather than the pay-to-play model ResponsibleOhio has offered up. The state must get the highest tax rate it can. ResponsibleOhio estimates the effective tax rate would be about 23%. Compare that to two other states that have legalized marijuana. The total tax rate in Colorado is about 30%, depending on local taxes, and the total effective tax rate in Washington is 44%. If Ohio is going to do this, why leave money on the table? Wait until better marijuana testing methods are available to scientifically measure impairment. This will help to address safety concerns in the workplace and on roadways. Let’s not fall for the false promises of another Issue 3, Ohio. Let’s get it right in 2015, and vote no on Issue 3.
PUBLISHER: John Campanelli (jcampanelli@crain.com) EDITOR: Elizabeth McIntyre (emcintyre@crain.com)
CLEVELAND BUSINESS
MANAGING EDITOR: Scott Suttell (ssuttell@crain.com)
Most of you have no idea who I am. And, really, that is OK. As an art director, I believe that when design is working well, it fades and lets the content do the talking. To an extent, the same goes for designers. You don’t often see our name in the paper, yet we touch everything you read each week. But, as you may have noticed, your paper looks a little different today. And I thought it might help to introduce myself, so you can better understand how I approached the task of redesigning a publication we all enjoy and trust. At the risk of alienating our readership from the start, I grew up in Pittsburgh and went to school for journalism there (I can hear the groans already, but give me a chance!). I thought I wanted to be a writer, but soon fell in love with the way typograRebecca R. phy and images could also tell powerMarkovitz ful stories, and found myself drawn to visual journalism and news design. After college, I spent seven years working as an art director at The Wall Street Journal before moving to Cleveland to join the Crain’s team. When I started here in December 2013, it was with the knowledge that a redesign was on the horizon — and the idea was akin to handing candy to a toddler. My first six months at Crain’s Cleveland Business were spent taking a step back and evaluating how things were done. Then, we cleaned house. We embraced what was working and ditched what made us look dated. (Goodbye red bullets at the end of stories!) Then, with a clean slate in front of us, we started to think about how we could modernize and enrich the publication. What I hope you will find in our redesign is a focus on the reader experience — a commitment to engaging layouts, varied story formats and strong visual journalism. We will provide a layered look at topics, with strong photography and data breakdowns. There is a clear emphasis on navigation and we invested in new fonts that are clean, modern and engaging — words that defined our vision through this entire process. The reader experience was at the forefront of every decision we made, and I hope it shows. This was not change for change’s sake — things that worked well (like our bodycopy) were left alone, and things that could be improved upon were prototyped until I was seeing them in my dreams (nightmares?). But a successful redesign is rarely only a visual endeavor. As you already know, and I have come to learn, Cleveland is full of amazing people. Part of this redesign looked at how we could get more of their stories onto our pages. Starting with this issue, you will be introduced to our new section, Business of Life. We will show you what people are passionate about, and what they are spending money on. We will take them to lunch, pick their brains, and share what we find. It is going to be a lot of fun. Some of you will have questions, and many of you will have opinions. I’m here and would love to hear what you think. I could go on about this process for hours. It is not a project we have taken on lightly, and I am proud of what we have built. We are committing to taking visual risks. We will present the news in engaging ways. We might even to try to wow you every so often. But all of those design ideals will be used to elevate our in-depth and unique coverage of Northeast Ohio’s business community. Because when the design is working, it lets the content shine. And, boy, do we have great content for you.
WRITE US: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH., 44113, or by emailing letters@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.
SOUND OFF: Send a Personal VIew for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.
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DEPTH AND STRENGTH SETS US APART FROM THE REST.
Web Talk Re: Sale of Skylight Office Tower I am glad that there are organizations like Hertz that see the great potential in downtown Cleveland’s future. I know that there are many little guys like me that believe it is absolutely a great investment and want to be part of this future growth. While I understand why Forest City is doing this, it is unfortunate that this very significant home-grown entity is obviously pulling out. Forest City and the original families involved have done so much for this city, and I, for one, am grateful. — Neil Dick
Re: Naming rights for convention center No wonder my bank fees are so high if FirstMerit has $10.3 million to name a building. — Tony Price
Re: Rise of daily fantasy sports sites Lets see, online gambling is illegal, online poker is illegal, sports betting is legal? I’m not quite understanding that one. — Tony Price
Re: MetroHealth taking over urgent care centers Makes perfect sense. MetroHealth is in the business of providing quality healthcare to everyone in the region, regardless of their ability to pay. This is just another way to reach the communities they serve. — Kimberly Primm
Re: NCAA attendance mandates What wasn’t mentioned in Crain’s Sept. 14 story on Kent State and the University of Akron is that attendance is declining across the board at all programs. Ohio State and other wealthy programs are the exception, even among Power Five conference schools. This trend is merely exacerbated in the MAC. Some of it is lousy football, and some of it is apathy, but even schools with solid Saturday attendance struggle in part because of the pact with the TV devil the league signed for games to be aired on Tuesdays and Thursdays on ESPN. Feeding that TV maw costs a ton of attendees because few alumni can make a midweek trip, the weather is often frigid and students are busy with classwork. The MAC gets more exposure and ESPN fills up its many networks with live and inexpensive “MACtion” programming, but most fans are effectively forced to miss 2-3 home games every single year. — Craig Ihms
Re: Welty Building Co. moving to the Flats Thank God the name Sammy’s will finally be removed from that building. They hurt so many people. — Thaddeus Kusek
Personal View
Trumping the media
Go Bucks!
BY GINGER CASEY It’s hard to believe now, but when Donald Trump announced his candidacy for the presidency back in June, he reportedly had to pay people to attend. He has now grown to be the most popular Republican presidential contender, filling stadiums and drawing non-stop coverage with his headline-grabbing comments. How did this happen? And why now? While Trump has built a multitude of companies bearing his name, his greatest achievement may be in how he has trumped the media at its own game. The simple truth is that the more outrageous Trump is, the more everyone will cover him because his rantings translate into ratings — which in turn, translate into money. Unlike other candidates, he doesn’t even have to be on camera for an interview; FOX, CNN, NBC, et al., salivate at the chance to just talk to him on the phone, hoping for another shocking quote that they can play over and over again to keep viewers tuned in. Newspapers hope incessant coverage of “the Donald” will translate into online page views, which also translate into dollars. In short, everyone in media is getting rich from Donald Trump, even those who profess to loathe him. Many have referred to him as a clown, but it has become pretty clear that Trump is the ringmaster and not the clown, cleverly stage-managing and calling the shots on the nightly news and within the party. Trump is making them money — and he knows it. The CNN GOP debate was the network’s highest-rated program ever, and it was mostly due to the beige-haired elephant standing center stage. Trump has become the Frankenstein monster of the GOP, stitched together with the extreme views of birthers, tea partiers and frustrated voters. His messages resonate with the deep discontent, anger and polarization that exists in our country. Like the poor creature who Victor Frankenstein raised from the dead, Trump has broken out of the GOP lab and now is trampling the countryside, but instead of taking up pitchforks against him, people are flocking to hear him, impressed with his blunt talk and wild promises. The media now wrings its hands, claiming they’re only covering Trump because he is making headlines. But they take no responsibility for creating him with their incessant money-driven coverage, they take no responsibility for conditioning the appetite of a public that is now gorging on political sugar, devoid of any substance. As for the GOP, they need Trump’s voters and his growing political power, so they are cagy about their criticism of him, and for that he mocks them, laughing all the way to the bank. He gloats when he calls them out for their hypocrisy, pulling the dirty curtain back on how campaigns raise money in exchange for favors, bragging that he had candidates dancing like marionettes when they came to him for support. If the other candidates criticize him, Trump immediately responds with a castrating comment — showing what a dirty fighter he really is. For example, few know that Rand Paul wears hearing aids, but Trump apparently does. When Paul criticized Trump’s position on health care during the first GOP debate, Trump responded by accusing Paul of not being able to hear what was being said. Take another look at that moment and you’ll see the pain flicker across Paul’s face as Trump’s gut-kicking salvo hits, marking a new low in personal political attacks. Fox News has long been Trump’s unofficial PR firm, but we’ve seen that when Fox News anchors offend him, Trump picks up the phone and calls CNN, which would break away from the second coming to go live with him. If they are too hard on him, the next call is to NBC. He shows up at news conferences and sneers at the journalists, insulting them with crude and condescending comments, belligerently pointing out how much money their employers are making by covering him in this ongoing dance of dollar driven dysfunction. Ka-ching, ka-ching, ka-ching. Say it again, Mr. Trump — a little louder this time, and can we have an exclusive on that? Casey is an Emmy-award winning journalist who lives in Bratenahl.
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2015-16 season. When the Cavaliers host the Minnesota Timberwolves on Jan. 25, they will celebrate Australia Day at The Q. The country that is home to backup point guard Matthew Dellavedova and was the birthplace of All-Star Kyrie Irving will be finishing up breakfast when the Cavs and Timberwolves tip off. Dan Migala, whose Chicagobased Property Consulting Group is working with the Cavs on establishing partnerships with Australian companies, expects “Thanksgiving-like viewership” for a game that will be televised throughout the country. Two weeks after the Aussies are celebrated at The Q, the Cavs will ring in the Chinese New Year with another Monday night game, a Feb. 8 matchup against the Sacramento Kings. The Cavs requested home nights on both dates, and the NBA, which has marketed its league outside the U.S. better than any other, obliged. “They’re extremely unique,” Migala said of the Cavs. “They’re thinking globally, and that’s money that’s brought into the Cleveland economy.”
Closing in on a first During the NBA Finals last June, the Cavs announced they had hired ESP Properties and Property Consulting Group “to help maximize the franchise brand outside North America.” PCG is focused entirely on Australia, which has the largest total of NBA League Pass downloads outside the United States. ESP Properties, a division of London advertising and public relations
giant WPP, is shopping the Cavs’ brand in Europe, Asia, the Middle East and South America. Migala, PCG’s co-founder and chief innovations officer, said the work began months earlier, and a crucial moment happened when he was in Melbourne, where Irving was born. “I was walking by a Foot Locker, and there were Kyrie and Delly jerseys everywhere,” Migala said. “This was pre-Delly in the Finals and cult status. It was a Tuesday in January.” Migala said the store’s employees told him the jerseys were one of their best sellers, so he took pictures and texted them to Sims and Cavs CEO Len Komoroski. “That was the moment of truth where we hit the go button,” Migala said. Sims said the Cavs’ international emphasis “is selling rights and inventory that is within our current marketing territory.” The talks “tend to go outside of that because of the interest level (in the Cavs), and that’s where we have to work closely with the NBA. “That’s been kind of the feelingout process,” he added. NBA rules prevent teams from using their brand marks outside a 75mile radius of their headquarters. The policy was put in place decades ago to prevent clubs from doing business in another team’s market. The Cavs are hoping some of the restrictions will be relaxed within the next year, Sims said. But doing a deal in Columbus or Cincinnati is much different than Australia and China, which is why the Cavs and NBA International have been working hand-in-hand.
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INTERNATIONAL SENSATIONS During a one-year period beginning July 1, 2014, 31% of the traffic to Cavs.com came from outside the United States — a 137% year-over-year increase. In the 2013-14 season, 21% of the visitors to the team’s website were from outside the U.S. MOST FREQUENT INTERNATIONAL VISITORS TO CAVS.COM CAME FROM:
ISRAEL, AT 175%, HAD THE LARGEST YEAR-OVER-YEAR INCREASE IN VISITS TO CAVS.COM, FOLLOWED BY THE PHILIPPINES (155%) AND CANADA (134%).
The Philippines, Canada, Israel, Australia, the United Kingdom, Brazil, France and Germany.
69% OF THE CAVS’ FACEBOOK AUDIENCE RESIDES OUTSIDE THE U.S. THE TOP VISITORS ARE FROM THE PHILIPPINES, AUSTRALIA, ISRAEL, THE U.K. AND FRANCE. WHAT’S GOING ON DOWN UNDER?
SINCE THE CAVS’ NEW APP DEBUTED PRIOR TO THE 2014-15 SEASON:
Australia ranks second to the U.S. in NBA League Pass subscribers. A whopping 93% of the Australian League Pass audience is between the ages of 18 and 44. Almost half (46%) are ages 25 to 34, 25% are 35-44, and 22% are 18-24.
15% of the iOS downloads have come from outside the U.S., led by Australia, and 13.5% of the Android downloads have been international. The Philippines paced the latter category.
The Aussie League Pass audience is almost entirely male — 98%. It has an average household income of $77,562.
A MUCH MORE SIGNIFICANT PORTION OF THE CAVS’ TWITTER AUDIENCE, 63%, IS BASED IN THE U.S. THE TEAM’S 37% INTERNATIONAL SHARE IS LED BY THE PHILIPPINES AND THE U.K., WHICH COMBINE TO ACCOUNT FOR 12% OF THE INTERNATIONAL TWITTER AUDIENCE. Sources: Cleveland Cavaliers, Property Consulting Group; Photo: iStock
Sims said other NBA teams have established international partnerships, but only for “team-controlled” assets such as in-arena signage and digital and social media sales that fall within the club’s marketing area. The organization’s chief revenue officer said the Cavs are hoping to become the first club to strike a deal in conjunction with NBA International “that would allow a partner to activate” the team-controlled assets, plus use the wine and gold brand in their home country. “This is all theoretical until we can actually get a deal done — one that works for the partner, for the NBA and for the Cavs,” Sims said. “It’s tricky. I think we are very close with our first, but still may be a few weeks out to close.”
‘It’s a win-win’ Migala said discussions with “brand decision makers and research companies” in Australia have shown that the Cavs are the country’s most popular NBA team. The data they’ve compiled is attractive to potential partners — an audience of League Pass consumers that is almost entirely age 44 and under (93%). Nearly half (46%) of the Australian League Pass subscribers are between 25 and 34. In a one-year span that started on July 1, 2014, the Cavs’ website generated more than 1.3 million page views in Australia, and visitors spent an average of 7.2 minutes on the team’s online home. The PCG co-founder said discussions with prospective partners are “educational.” They begin by laying out possibilities and explaining how
the NBA territory rules work. “It’s very innovative,” Migala said. “It’s not, ‘Here’s the box, here’s what the sign looks like, here’s what we want you to pay for the box,’ and then we haggle over the price. This is a very collaborative process.” The Cavs will have unique in-arena elements during the Australia
Day game, and PCG is attempting to sell a partnership to pair with each promotion, in addition to signage that will be visible to the Aussies watching James, Irving and Dellavedova on TV. “There is a short, medium, long component to this,” Migala said. “The NBA is focusing on emerging
markets. They really want to support the Cavs’ efforts to develop this emerging market.” The Cavs’ digital channels get a heavy amount of traffic — 31% to Cavs.com, for instance — from outside the U.S. International traffic on the Cavs’ website increased 137% during the 2014-15 season. Mike Conley, the team’s vice president of digital, said 69% of the Cavs’ considerable Facebook audience resides outside the U.S. (compared to 37% on Twitter), and 69% of that group lists English as their primary language, which creates “immediate opportunity” to market the team’s brand “without translation services.” During the NBA Finals, Sims told the Sports Business Journal that the Cavs expect to have six seven-figure partnerships in 2015-16. By going well outside their market, that number could expand. “Hopefully, the ideas grow in a pie, right? It’s companies that they’re not really calling on,” he said of the NBA, “so all of a sudden we’re putting a warm lead on their plate and saying, ‘This company is interested, so let’s have a conversation and get a deal done together. You can get a deal for NBA Australia and we’ll get a deal for the Cavs, and it’s a win-win.’ ”
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Region bounces back in August
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Northeast Ohio’s summer of discontent in the job market came to a halt in August, according to the latest Ahola Crain’s Employment (ACE) Report. The region added 1,953 jobs on a seasonally adjusted basis last month, which broke a streak of three months in which the ACE Report found job losses that were progressively steep — 307 in May, 1,397 in June and 2,809 in July, after revisions. The ACE Report found that the Cleveland-Akron region, at 1,164,017 jobs in August, has gained 10,352 jobs in the private sector since August 2014, an increase of 0.9%. Over the same time, though, private-sector employment in the United States grew at a 2.4% rate, according to Cleveland Heights economist Jack Kleinhenz, who created the ACE model. In Ohio, private-sector employment has grown at a 1% rate since August 2014, Kleinhenz reported. August’s jobs gains in Northeast Ohio came almost entirely in the service-producing sector, which added 1,868 jobs. Goods-producing sectors of the economy added 85 jobs from the previous month. The ACE Report is based on payroll data from The Ahola Corp., a Brecksville payroll and human capital management firm, and by Kleinhenz’s analysis of other economic indicators, including construction data and retail sales. Kleinhenz said August’s total private nonfarm employment of 1,164,017 in Northeast Ohio was ahead of the three-month average and slightly below the six-month average, “suggesting that regional monthly employment has stepped up from last’s month apparent temporary plateau.� In analyzing the numbers from August and the rest of the summer, Kleinhenz said the weaker pace of gains in goods-producing jobs in Northeast Ohio “may reflect significant headwinds challenging manufacturing firms, ranging from foreign competition from the stronger dollar, to reduced crude oil prices (and) weak export markets abroad.� He noted that the Federal Reserve reported a decline in national manufacturing production of 0.5% in August. That was the third decline in that number in four months. Service-producing employment in Northeast Ohio, Kleinhenz said, “is in line with national business activity.� All told, he said, “The regional economy shows a mixed picture expanding at a slight pace. No matter the cause, on balance, the economy appears stable and growing.� But Kleinhenz added, “I am hoping for some acceleration in the near future.� The ACE Report’s findings of a stronger Northeast Ohio job market in August were consistent with data from the state. Ohio’s unemployment rate fell to a 14-year low of 4.7% in August from 5% in July as the state added 14,600 jobs for the month. The Ohio Department of Job and Family Services on Sept. 18 reported that nonfarm wage and salary employment rose to 5,411,100 last month from a revised 5,396,500 in July. The number of workers unemployed in Ohio in August was 265,000, down 21,000 from 286,000 in July, according to the state data. In August 2014, the state’s unemployment rate was 5.4%. Ohio’s unemployment rate is lower than the national rate, which was 5.1% in August. — Scott Suttell
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Focus
WHO TO WATCH: MANUFACTURING Manufacturing in Northeast Ohio is far from dead, though it is facing new challenges. The sector has taken on a different form, particularly as emerging technologies have transformed what is produced in the Rust Belt. The workforce also is evolving, as baby boomers inch into retirement, and companies struggle to find qualified workers in an era where young people tend to flock toward white-collar jobs. In addition, regional manufacturers aren’t only facing competition from companies on American soil, but others around the globe. But one thing is clear: Northeast Ohio is still good at making things. As such, there are several individuals helping redefine manufacturing in the region. They create, they teach, they advocate. These are just some of the ones to watch.
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WHO TO WATCH: MANUFACTURING Tracy Al bers, president, Rapid Prototype & Manufacturing (rp+m) Tracy Albers is a scientist disguised as a business person — and she’s pretty darn good at being both. That’s a good thing, too. In her current role, Albers has to be both a visionary company president, while also keeping her company, rp+m, focused on the right technologies for its future success in one of manufacturing’s most talked-about and up-and-coming fields: additive manufacturing. Also known as 3D printing, additive manufacturing uses advanced equipment to produce complex parts by building, or printing them, one layer at a time. Early on, the technology was mostly limited to making fairly simple parts out of plastic. Now it has advanced to that point that complex parts can be made from an ever-expanding universe of materials “Our biggest customers are the aerospace industry, followed by automotive,” Albers said. The idea for the company came from Matt Hlavin, who is the owner and CEO of the plastic injection molding company Thogus Products in Avon Lake. Thogus was using 3D printing as a way to produce one-off parts and demonstration pieces for customers, but Hlavin soon saw far more potential for the technology. He formed rp+m and named Albers president in January 2015. Hlavin hired
If you weren’t working in the manufacturing sector, what would you be doing and why? “I’d probably still be in technology in one way or another — the part of manufacturing that I like is coming up with a solution when a solution doesn’t exist. … But if I was not in manufacturing I would probably be in education.” Albers from Independence-based Graftech International, where she had spent nine years in research and development and became manager of advanced materials. “Tracy has the unique balance between experience, intelligence, compassion and discipline that is needed to drive a small business like rp+m to the next level,” Hlavin said. “Tracy’s past experience with Graftech is unique, because she grew in the R&D business to a senior leadership position.” Hlavin said Albers is compassionate, and values everyone in her 15-person company — from senior management to the latest new hire — but she also is able to think critically and make decisions. “She embraces empowerment and brings a very strategic mindset to rp+m,” Hlavin said. Albers understands her business like few
company presidents can. Her company’s mission is to select and develop new materials for use in 3D printing and then turn them into new products for customers. It doesn’t hurt that she has a Ph.D. in physical chemistry. Yeah, she concedes, she has a nerdish streak. “People always give me that look: ‘You’re in physical chemistry? I hated that class!’” she jokes. But she was also a musician and athlete, and still tries to keep her tennis game in good shape after playing in both high school and college. Her new role is different than any she’s had in the past, though. For one thing, it’s more scary, she says — she is, after all, ultimately responsible for the company’s success. But she’s loving it. And she’s particularly happy she found such a great opportunity to advance in Northeast Ohio, where she hoped to remain with her husband, Joshua, and their children, Cooper and Elise. “I was definitely looking to take on more of a leadership role,” Albers said. “And, for this, Cleveland is a great place to be,” she added, noting that many area universities and other institutions, from Cleveland to Youngstown, are leading the world in 3D printing technology. — Dan Shingler The fourth and final “Who to Watch” section of 2015, “Who to Watch in Marketing and Creativity,” is scheduled for publication Dec. 7. It will highlight up-and-comers and innovators in the marketing, advertising and public relations fields. If you think you know who will be among those leading Northeast Ohio’s creative space in the future, drop an email to sections editor Timothy Magaw, tmagaw@crain.com, or call 216-771-5359. There are no hard and fast requirements for this section, other than that the candidate needs to exhibit the kind of potential that makes him or her someone to watch in the marketing and creativity sector. We’re looking for those individuals who might fly under the radar now but could disrupt their fields — for the better — in the future. Send your suggestions no later than noon on Monday, Nov. 2. Please include the person’s name, position and a paragraph explaining why he or she stands out.
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George Bilokonsky executive director, Youth Technology Academy, Cuyahoga Community College For the last few decades, Cleveland’s industrial sector has been undergoing a slow transition from traditional manufacturing to production of precision parts and other advanced materials — an effort designed to keep Northeast Ohio competitive in a global marketplace. However, re-launching the region as a center of high-tech industrialization requires a technical workforce willing and able to take on the challenges of a new economy, said George Bilokonsky, executive director of Cuyahoga Community College’s Youth Technology Academy. Bilokonsky, who founded the TriC venture 13 years ago, develops project-based programming for more than 950 Cleveland Metropolitan School District students at 18 high schools. Participants learn critical jobs skills while gleaning the team-building philosophies needed to succeed in a collaborative environment. “We’re training the innovators of the future,” Bilokonsky said. “Manufacturing is not one person running a machine, but someone who can understand a project from design to construction.” Bilokonsky’s students learn entrylevel computer-aided design, programming languages and other skills meant to spark their interest in STEM-related fields. Engineering and math competencies, meanwhile, are mixed into a robotics curriculum that allows students to build their own bots for use in national competitions. “To them, they’re having fun; for us, it’s keeping current with trends in the industry,” he said. The number of students in the program — which focuses primarily on Cleveland schools — is expected to be about 2,000 by next summer. The academy added Avon Lake schools this year, reaching attendees through face-to-face course instruction as well as online learning. Funded in part by grants from the National Science Foundation, the tech-centric enterprise has graduated 95% of its participants, with 86% of grads moving on to some form of post-secondary education. Though the academy does not track post-graduation employment figures, Bilokonsky is confident his students are adequately prepared for the next wave of high-tech occupations. “Kids need an opportunity to learn about the technology that’s out there,” he said. “Without training, they wouldn’t have a chance for these jobs.” Bilokonsky, a former history teacher in Cleveland schools, has a master’s degree in technology curriculum development and a professional background that includes work for a telecommunications firm and a manufacturing industry economic nonprofit. “George knows firsthand what works best to engage students in their own education is to provide them with hands-on, project-based experiences,” said academy director Mary Kay Bitterman. “His excitement about technology and the abilities of the students to achieve great things is contagious.”
Teaching an underprivileged student eager to develop Cleveland’s economy through technology is Bilokonsky’s joy — one that inspires him to take his program to even greater heights. “There’s a transformation taking place where freshmen come in having no idea how to build a robot, and now they’re making robots that do amazing things,” Bilokonsky said. “That inspires me to keep going as well.” — Douglas J. Guth
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If you weren’t working in the manufacturing sector, what would you be doing and why? “Relating new technologies to students and encouraging the pursuit of higher education is my passion, so clearly directing a STEM institute or delivering groceries using a fleet of drones sounds like an exciting gig.”
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Antoinette ‘Toni’ Noday-Krager executive director, Alliance for Working Together Foundation When Antoinette “Toni” NodayKrager was looking for a change of pace at work, the former nurse wanted to find a way to still give back. At the end of June, Noday-Krager became the first executive director of the Mentor-based Alliance for Working Together Foundation, a nonprofit that promotes careers in manufacturing. Noday-Krager said her husband, Josh Krager, had heard the Alliance for Working Together was looking for an executive director and encouraged her to apply. Krager works at Fredon Corp. in Mentor, and both he and NodayKrager had been involved with the AWT’s RoboBots competition for students in years past. And, she said, her husband pointed out that she has the skills to make a project succeed. In her years in health care, NodayKrager spearheaded projects such as the spine, orthopedic and surgical center at St. John Medical Center in Westlake and the bariatric surgery, metabolic and nutrition center at University Hospitals Geauga Medical Center. Roger Sustar, CEO of Fredon and chairman of the AWT Foundation, said it’s good for the group to have someone permanent in NodayKrager’s spot. “She’s really brought a lot of energy,” said Sustar, noting that it’s “contagious.” Noday-Krager said her first few months at AWT have been a “positive whirlwind.” As she’s met with the organization’s board and its members, she said she’s been most impressed by their passion. Manufacturers need
If you weren’t working in the manufacturing sector, what would you be doing and why? “I’d be promoting my husband’s side business, EyeSpy Designs,” Noday-Krager said. She said her husband, Josh Krager, has been making functional art, like motorcycles, his entire life. Aside from helping promote his work, she said she would build a foster kennel for dogs in her backyard. to attract younger generations to the industry to replace the retiring baby boomers, and the people she’s met with are willing to do whatever it takes to make that happen, she said. In the short-term, Noday-Krager plans to increase communication between members and bring engagement to the forefront. Longer term, she wants to raise the awareness of all that AWT does outside of just the RoboBots competition. “We also have other spokes to our wheel,” she said. Noday-Krager’s giving nature carries through outside of work. When she’s not reading or spending time outside, she’s committed to fostering puppies from a local pound, caring for them until they can be transferred to a local facility for adoption. She said it can be hard to let go once she gets to know them, but she likes knowing that she’s given an animal a chance at a good home. “It’s very rewarding,” NodayKrager said. — Rachel Abbey McCafferty
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WHO TO WATCH: MANUFACTURING Larry E. Fulton, president, LEFCO Worthington When Larry E. Fulton started his career, he was sure of one thing: He wanted to run his own business. “I always knew I wanted to be an entrepreneur,” Fulton said. “I just didn’t know exactly what I wanted to do.” Today, Fulton is the president of LEFCO Worthington, a maker of custom crates in Cleveland. However, he didn’t get his start in manufacturing. He started his career at KeyCorp, where he helped companies restructure their debt obligations. He went on to work for the Small Business Administration, Marconi Communications and ultimately Alcoa Inc., where he earned some managerial experience. But in 2003, at just 33 years old, Fulton bought pallet company DP Products in Middlefield and transformed it into LEFCO Pallet & Crate. The changes came quickly. He relocated the business to Cleveland about six months after the purchase. In 2004, he expanded the business, buying a division of International Container Systems in Cleveland and becoming LEFCO Industries. Around 2007, he sold about half of the business to Columbus-based Worthington Industries, creating the joint venture LEFCO Worthington. But in 2012, Fulton bought out Worthington and became the sole owner of the company. The changes weren’t just window dressing. Fulton moved the company out of the wooden palletbusiness with which he started, and pursued more specialized wood crates instead. He said he wanted something less easily duplicated and more attuned to customers’ specific needs. Today, LEFCO Worthington has about 25 employees, and he continues to invest in the business. For example, this past January, LEFCO added a bundle cut saw, which allows the company to cut many pieces of wood at once. Still, the assembly process for the crates requires a lot of hands-on work. Fulton said many of the employees used to be Amish, but he has reinvested in the local employee base in recent years, and most are now from the Cleveland area. Fulton relates well to his employees and is interested in making sure they know their work is appreciated, said Steven Newman, president of Newman and Co. CPAs. Newman serves as an accountant and adviser for LEFCO. He got to know Fulton after working for a mutual client with Fulton’s wife, who is an attorney.
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If you weren’t working in the manufacturing sector, what would you be doing and why? “I think I would probably still be an entrepreneur,” Fulton said. “Definitely.” Fulton said if not manufacturing, he would probably pursue something in the business services industry, where the margins would be a bit better and employees would be easier to find. Newman said Fulton has an “analytical mind,” and that he’s always working on increasing the profitable areas of the business, investing in new equipment or dropping less advantageous products. That flexibility makes Fulton a viable entrepreneur. “He adapts well,” he said. — Rachel Abbey McCafferty
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WHO TO WATCH: MANUFACTURING John Wittine, president, Alliance Industrial Solutions Victor Ing, vice president of business development, Alliance Industrial Solutions They had been working at competing firms, but after developing a mutual admiration for one another, Victor Ing and John Wittine found a way to become business partners. And now, they’re helping manufacturers with their complex hiring needs. In fact, Ing said it’s a lot like “online dating meets staffing.” Wittine and Ing are part of Alliance Industrial Solutions, an Independence-based company that specializes in handling the staffing needs for manufacturing, warehouse and distribution companies. Among his many responsibilities, as president, Wittine is involved with onboarding large accounts and training and mentoring Alliance’s own staff. Ing, Alliance’s vice president of business development, assesses companies’ needs, then hands them off to Wittine to craft a plan and run the operation for the client. There’s no shortage of staffing companies, but Alliance’s big differentiator is that it has specialized in the manufacturing
space. The company also boasts some highlevel technology, including what Ing characterized as one of the country’s largest databases of video interviews of candidates. Alliance provides all job candidates the opportunity to interview from home through an app that works on smartphones or computers. Alliance records the interview and sends them to clients throughout Northeast Ohio. “We’re asking behavioral, open-ended questions about their experiences and work history,” Wittine said. “It’s a huge sell for the candidate and the client. Clients want to watch a video interview, look at the skill sets and make assessments, and bring people in to interview.” Wittine got his start in the business as a high school graduate working at UPS in Middleburg Heights. He loaded trucks for six months before moving into a management role overseeing union employees. “I got into the distribution, blue-collar
manufacturing world as an 18-year-old,” he said, adding he joined Alliance in 2006 when an opportunity opened on the staffing side. “It was exposure to more than one environment,” he added, “I was working with plant managers on process plans and labor forecasts to help solve their problems.” Ing was in the industry for 20 years when an opportunity to work with Wittine at Alliance opened up. It might be a staffing firm, but Alliance has introduced several manufacturing methods into its own processes — specifically the idea of an assembly line. “We have a true assembly line process where we have a group of people who source candidates, a group who do phone interviews, a group who do video interviews. At the end of the assembly line are account managers who work with clients,” Ing said. He added, “We adopted this from our clients. One person in manufacturing doesn’t do it all.” — Kimberly Bonvissuto
If you weren’t working in manufacturing (or staffing), what would you be doing and why? Ing: “I’d still be in some sort of technology industry. I love technology and being on the cutting edge.”
Wittine: “I brew my own beer, so I’d probably start a microbrewery. It’s kind of manufacturing, too.”
Jason McIntire, manufacturing engineer, Technoform Glass Insulation
“I would probably be in the construction industry — that’s where the majority of my experience initially started. I like seeing things built.”
Jason McIntire must have been born as an engineer given how often he asks the question “why?” At least that’s how his supervisor at Technoform Glass Insulation describes him. Today, McIntire leads the company’s raw material procurement team for stainless steel, and also works in several other facets of the business. Of note, early in his career McIntire led a team that implemented a process resulting in a major reduction of the company’s scrap rate. “His growth and support of Technoform’s philosophies and principles has marked him as a great example of what an individual is capable of in this type of entrepreneurial organization,” said Joseph McGreal, production team manager at Technoform, which makes hybrid rigid warm edge spacers for windows that are designed to limit the amount of en-
ergy lost. However, McIntire’s road to Technoform, which has a plant in Twinsburg, was a winding one. During his first year at the University of Akron, McIntire watched with the rest of the country on Sept. 11, 2001, as the Twin Towers fell. His family’s military roots run deep, so McIntire signed up for the U.S. Army and eventually found himself working in combat engineering. When he returned to college five years later to complete his degree, he started working for a civil engineer in the construction industry, where he performed demolition, building and finishing, earning certification as a finish carpenter. McIntire found his way to Technoform Glass Insulation through an internship in 2008 and was offered a job upon graduation in 2009. “I have a desire to learn about the materials we use — what’s available
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in the market and how to bring it into the company to keep evolving and improving.” McIntire said. McIntire also serves on the company’s internal audit team, quality team and process mapping team and is working on his green belt certification in Lean Six Sigma. He also participates in the company’s wellness committee. Last summer, he was a team captain at the company’s Global World Cup event in Italy, a friendly sports competition among Technoform’s divisions from around the world. McGreal said McIntire has a passion for engineering, which shows in his push to bring interns to Technoform from the University of Akron. It’s actions like those that make him “an invaluable resource and a great pleasure to work with,” McGreal said. — Kimberly Bonvissuto
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Jay Schabel, CEO, RES Polyflow Michael Dungan, director of sales and marketing, RES Polyflow Given that Americans are so programmed to recycle plastics, it’s easy to assume all of the soda bottles and yogurt containers in our blue bins will one day resurface — perhaps as an Adirondack chair or even fleece gloves. The reality is only about 9% of plastic waste is recovered for recycling, according to the U.S. Environmental Protection Agency. Yes, some don’t make it into recycling bins in the first place, but recovery rates are disappointing even for those that do because of difficulties processing and sorting. And, plastics that can’t be recycled are sent to landfills. A fledgling Northeast Ohio company wants to change that. Three-year-old RES Polyflow is commercializing a technology that can produce crude oil from hard-to-recycle plastics. The company’s stand-alone thermal-deconstruction vessels are designed to convert “co-mingled, low-value plastics into high-value, marketable blend stocks” without excessive handling, sorting or cleaning, according to Michael Dungan, the company’s director of sales and marketing. Dungan said the company currently can produce ultra-low sulfur diesel and gasoline blends, not only diverting plastics from landfills but doing so with a lighter carbon footprint than other plastic conversion processes, such as incineration. To date, RES Polyflow has raised $9 million in funding, including a $1 million grant through the Ohio Third Frontier program that bankrolled the construction and operation of a successful pilot unit in North Perry. The pilot vessel, now offline, soon will become part of a larger commercial demonstration site where companies — such as recyclers with a market need for those difficult-to-recycle plastics — can see the technology in action. RES Polyflow CEO Jay Schabel said the company is finalizing the search for a site that will bring in about 10 tons of plastics per day and produce 17 million gallons of transportation fuel per year. RES Polyflow will own and operate the site, which will be located either in Ohio or Indiana. It is securing con-
If you weren’t working in the manufacturing sector, what would you be doing and why? Schabel: “I would probably be donating my time in the 503(c) charitable sector. That’s a passion of mine: giving back.”
Dungan: “I would be working in a startup that was focused on innovating how the waste stream was managed.”
tracts both to divert landfill-bound plastics to the facility and to sell its oil blends to petroleum producers. Dungan anticipates the site will be up and running by 2017. Bill Hagstrand, senior director of cluster acceleration for the economic development organization Team NEO and a consultant to the company, said that while RES Polyflow is a young company, it’s a misnomer to call it “developmental stage” because the technology is well established. He cites studies from the American Chemistry Council that find plastics-to-oil is positioned as an industry to create about 40,000 jobs and contribute some $9 billion to the U.S. economic output. Current U.S. demand could support 600 units, according to the council. “RES Polyflow could capture a big chunk of that,” Hagstrand said. “There are three dimensions to their performance — financial, of course, but they also have an environmental and social focus. In other words: profits, people and the planet.” — Judy Stringer
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Business of Life
Building a custom crib for your other baby By Dan Shingler If you own something, and love it so much that you actually talk to it, usually addressing it as “baby,” chances are good it’s a car. Chances also are good you spend a lot of time with it. Let’s make one more assumption, because what’s a metaphor unless you take it too far? If you’re this kind of person, and especially if you’re fairly wealthy, there’s a decent chance that one baby is not going to be enough. You’ll still love Baby 1, which is why you won’t get rid of her, or it, and then you’ll have two. Or maybe three — or a dozen. Boy, does Jeff Badger want to meet you. Badger, a gearhead and car-afflicted person himself, is counting on Northeast Ohio having enough car lovers — with collections worthy of hanging out with — to fill his new project: luxury car condominiums. He’s purchased the former Al Koran Shriners building in Middleburg Heights and for months has been busy converting it into what he calls “luxury car condominiums.” Eventually, Badger hopes to fill 200,000 square feet with Jaguars, Ferraris, Porsches, American muscle cars and other high-end vehicles, along with accompanying garages and comfortable spaces built by their owners. It’s a concept that’s catching on in other parts of the country, including the Midwest. There are several such facilities in Minneapolis, one in Detroit, and others in places like Phoenix, New York, San Jose and Kansas City. “What these guys are looking for is a bigger, badder man cave,” said KC Crain, executive vice president of Crain Communications and publisher of Automotive News and Autoweek, among others. Crain said he’s seen similar concepts sell successfully, including one near his home in Detroit that already has sold out its first phase. A growing number of highend car collectors are turning to them as places not only to store but to show off their cars, he said. “To be able to have, for six figures, a place to store your cars, I can see that as being pretty attractive to this audience,” Crain said. “If you don’t have room in your house and you don’t have room in your garage, this is a great alternative.” So far, Badger’s experience seems to prove the point. He has sold out all eight units of Phase I of the project, which entails the existing building of about 40,000 square feet. Badger said he also has sold most of the 24 units for Phase II.
Jeff Badger is building a place local car collectors can call their very own.
The cost is $125 to $150 per square foot, depending on the unit, and each space is 24 or 30 feet wide, and 30 feet long, for a cost of between $90,000 and $135,000 per unit. But some buyers are combining two or more units — and most will spend more outfitting their spaces than they do buying them, Badger predicts. That’ll be a low bar to reach, too, if the cost of the cars is included. “We’ll probably end up with $40 (million) to $50 million worth of assets (primarily cars) on campus,” Badger said. Bill Feth signed up. The retired business owner from Richfield only has one car that might be worthy of the space — a Porsche 911 — but he’s planning ahead. “The reason this whole concept makes sense is there are
garages and storage units everywhere rented by guys for their cars,” Feth said. “If people can find a place to put a car, where they’re with other guys who like cars, in an enthusiast’s environment with security, that makes life a lot easier.” When he moves into his space, probably sometime next year, Feth will probably let a friend store some cars there, but ultimately Feth seems destined to own more Porsches. He’s had 11 so far, after all. “Her greatest fear is that I’ll buy more,” Feth said, motioning to his wife, Karen, who was pretending not to listen from the kitchen of their home. “But I think I want one with a stick (shift),” he added, smiling.
EMPOWERING NORTHEAST OHIO BU
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WWW.CRAINSCLEVELAND.COM
Clockwise from top, a rendering of the completed Club Motor Estates property and architectural plans of units that are currently under construction. The unit at left belongs to Badger and is modeled after a street in England, and will feature a working pub and a gas station facade with a cobblestone street. PHOTOS: REBECCA R. MARKOVITZ RENDERING: CONTRIBUTED
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BUSINESS OF LIFE
Source Lunch It’s clear that Allison Grealis is passionate about helping people make connections. She has plenty of opportunities to do just that as the president of Women in Manufacturing and as vice president of membership and association services at the Precision Metalforming Association, both based in Independence. Women in Manufacturing started as part of the PMA in 2011; it became its own 501(c)6 national trade association in March of this year. The group aims to support women who work in the industry, battling stereotypes with its “Hear Her Story” campaign on its blog and hosting events through its regional chapters. The group recently received a $100,000 grant from the GE Foundation to support its regional and national programming. It will also fund continuing education opportunities for the women in manufacturing it serves.
Allison Grealis MANUFACTURING
— Rachel Abbey McCafferty
You’re responsible for starting Women in Manufacturing. Were there any challenges you weren’t anticipating that you had to overcome? Launching Women in Manufacturing was exciting and such a learning experience. I have never led a startup, and some of the biggest challenges we faced as we formed was deciding what to tackle first and prioritizing tasks. We soon realized we couldn’t be everything to everyone and had to stay focused on our mission and who we serve. You have two main hats that you wear at work as the vice president of membership and association services at the Precision Metalforming Association and as the president of Women in Manufacturing. How do you balance those roles? Thankfully, my two roles are very complementary, and both organizations have benefited from the role I hold in each organization. While the member communities may be a bit different, they are all in the same sector and face many of the same challenges.
Your background isn’t in manufacturing. What surprised you about the industry? What surprised me is how modern present-day manufacturing is and how rewarding careers in this field are. Manufacturing thrives on real talent — people who are capable of constant problem solving and creative thinking to find better solutions for customers and consumers. What do you think the future holds for manufacturing in Northeast Ohio? I believe manufacturing has a bright future in Northeast Ohio. This region is rich with manufacturing companies of all sizes and their capabilities are nationally and internationally competitive. The key to future success is going to be securing new workers, especially from often overlooked groups like women and young people. How has manufacturing changed since you first started working with the PMA? In the years since I first started working with PMA, manufacturing has transformed into an industry driven by technology. Manufacturing now requires completely different and high-tech skills. It’s important to spread the word about the opportunities available in manufacturing. That’s part of WiM’s mission.
What’s been the most interesting thing you’ve seen while visiting one of the organizations’ member companies? I have gotten to see many amazing things being made during my past 15 years in manufacturing. Just last week I was in Connecticut visiting manufacturers and toured Acme Wire Products, which is the largest U.S. manufacturer of lacrosse facemasks, and Whelen, the largest producer of emergency vehicle lights and sirens. Most of us don’t think about where the things we use daily come from, and I have loved getting to see firsthand many of these items as they’re made. What advice would you give to a young woman who wants to pursue manufacturing as a career? First, I would tell her that she’s making a great choice! Our own research shows that women who are currently working in manufacturing are very pleased with their careers. Secondly, I would encourage her to take the time to develop a network of advisers and supporters and find and maintain mentors. I would also suggest that she embrace any opportunities to learn and to expand her education and to be open to taking risks and exploring opportunities that could advance and enrich her career. And, if she wanted help with any of those things, I’d tell her to join WiM!
FIVE THINGS: HOBBIES
Reading, listening to music, playing tennis and running.
BEST DINING SPOTS
Grealis prefers a homecooked meal, but when she decides to go out, she said Wine Bar in Rocky River is a favorite for its great food and good atmosphere. She also is impressed by Bomba. She likes supporting local spots instead of chains.
FAVORITE ALBUM Chet Faker’s “Built on Glass.”
FAVORITE LISTENS
LUNCH SPOT Taza 1400 W. 6th St., Cleveland (216) 274-1170 www.mytaza.com
The meal
The Nerdist podcast with Chris Hardwick and the Time Crisis with Ezra Koenig radio show.
Falafel roll and fries with iced green tea; Vegetarian combo and veggie plate with sparkling water
FALL MUSTS
The vibe
Grealis said she goes apple picking at Miller Orchards in Amherst every year with her family. She also likes visiting Ohio Mart at Stan Hywet Hall in Akron.
A cozy Lebanese restaurant with a variety of appetizer and entree options
The bill $33.37
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LAW SCHOOLS CONTINUED FROM PAGE 1
dropped about 36% and 39% at Case Western Reserve and ClevelandMarshall, respectively, and 16% at Akron. National enrollment figures are compiled and analyzed by the American Bar Association, but those numbers aren’t released until later in the fall. However, the numbers here are comparable with the squeeze being felt at schools nationwide. According to the ABA, both parttime and full-time J.D. enrollment dipped almost 7% last year from 2013. Last year’s enrollment was 17.5% lower than the historic high reached in 2010. Meanwhile, firstyear enrollment dipped last year by 4.4% at 52,488 students, its lowest since 1973, when there were 50 fewer law schools in existence. Here are this fall’s total and firstyear enrollment figures for J.D. programs: z Akron: 428/147 z Case Western: 383/124 z Cleveland-Marshall: 393/109 Data from the Law School Admissions Council shows the droves of reductions in law school applicants is beginning to reset. As of last month, there were 53,548 applicants, which is a decrease of only 2% from 2014.
“We believe the applicant/application situation is already leveling off, but the enrollments are another matter,� said Wendy Margolis, director of communications for the nonprofit LSAC. “There are many schools that did not cut their class sizes and others that did.�
years past is, expectedly, common today. It’s a change some believe is here to stay, but that’s not necessarily a bad thing. “We’ve been able to have more sections of courses with smaller class sizes,� Boise said. “It’s one of the positive sides of what’s pretty universally viewed as a bleak situation.� While both Cleveland law schools saw first-year enrollments drop this year, the Akron law school reported
“We’ve been able to have more sections of courses with smaller class sizes. It’s one of the positive sides of what’s pretty universally viewed as a bleak situation.� — Craig Boise, dean, Cleveland-Marshall College of Law Craig Boise, dean of the ClevelandMarshall College of Law, said, “We’re hoping to see if this is bottoming out. But my view of this is we’re going to be in a holding pattern for a while. We’re going to have to get used to having smaller classes.� In an emailed statement, Case Western Reserve deans Jessica Berg and Michael Scharf added, “We already were considering a smaller class size, in part because of the highly experiential nature of the new curriculum we were developing required hands-on learning.� Smaller class sizes compared with
growth of more than 20% in new students in the J.D. program. Dean Matthew Wilson believes that’s not an anomaly, adding he expects that needle to remain in the black going forward. It’s worth noting that softened admissions standards can help get more students in the door, and Akron’s is the lowest of schools here by a slim margin. The median overall GPA is 3.25 at Akron, 3.39 at Cleveland-Marshall and 3.43 at Case Western Reserve. The concern is that lower standards could impact the school in the long run through criteria the school
itself is evaluated on, like bar passage rates, which can affect placement on the annual U.S. News & World Report school rankings. “Almost every� law school has “less impressive� credentials today, said William Henderson, a professor of law at Indiana University Maurer School of Law whose research specializes in legal education and the legal labor market. It’s considered the culprit behind mean, multi-state bar exam scores in 2015 hitting their lowest levels since 1988. And Henderson cautions law schools from softening their criteria too much lest those values continue to fall. “There was a slight dip in LSAT (scores) and a slight dip in GPAs,� Wilson said, adding, “I would not dismiss that concern,� regarding the impact of softened standards. “We’re not going to dip much,� Wilson said. “We’re confident everyone we take in is going to pass the bar.� To Akron’s credit, the school performed best of all law schools in the state for first-time bar exam takers this past February with an 83% passage rate. On that exam, ClevelandMarshall and Case each had firsttime passage rates of 64% and 50%. There is some belt-tightening that comes with reduced budgets stemming from smaller classes. While faculty is being gradually reduced through retirements, no schools have reported any deliberate, sweeping cuts to staff or programs.
FIRMS SHARE IN BLAME The evolution of the legal industry is creating a tighter job market for new attorneys, which is pushing down enrollment in the country’s law schools. But as an industry, firms also are partly to blame, argues William Henderson, a professor of law at Indiana University Maurer School of Law whose research specializes in legal education and the legal labor market. Productivity of lawyers is not keeping pace with the economy, so lawyers are becoming more expensive over time, Henderson said. Many Big Law firms maintain staffs of expensive senior lawyers and trim junior lawyers from projects to cut costs — or simply stop hiring young people — achieving savings by trimming the ranks of less experienced (and cheaper) attorneys. This affects the job market and does nothing to encourage lawyers to work differently or innovatively, Henderson said. That propagates a system that’s still incredibly expensive for middle-class people, which in turn impacts society’s access to legal help. “Law needs to go down a road where we can be better, cheaper, faster. But no one noticed this until the corporations complained back in 2008,� Henderson said. “But the real issue is that legal services have gotten too expensive for ordinary citizens, not corporations. If there are not great leaps forward, the people who consume legal services will be priced out of the market.�
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SHANE WYNN
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A Downtown Domino Effect Filling the business district’s streets and cafés starts with filling empty buildings By JUDY STRINGER If it sounds cliché to say “Akron is at a crossroads,” try this one on for size: “If you build it, they will come.” No, the latter is no less trite, but it does appear that the Rubber City is in a position where – with the right set of visionaries, developers and financers – the reclamation of empty or underutilized properties could very well reposition the downtown district as vibrant place to – forgive this last cliché – “live, work and play.”
Overall, office-space vacancy in Akron’s central business district hovers somewhere between 12% and 20%, depending on who’s doing the tracking. The city’s economic development office and the Greater Akron Chamber of Commerce peg vacancies at around 12%. Real estate advisory firm CBRE quotes a more conservative 20.5%. Either way, Akron appears to be keeping pace with the thriving office markets of Cleveland, which has about 18% vacancy, and SEE DOWNTOWN, PAGE A14
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AKRON From the Publisher
TELLING THE STORIES OF AKRON BUSINESS Welcome to the first-ever print edition of Crain’s Akron Business. You, the members of the Greater Akron business community, already know this: The encyclopedia of Akron business is no paperback; its volumes could take up a library shelf. The people, businesses and innovations from Akron have changed — and are still changing — the world. America’s road trip from 19th-century startup to 20th-century
industrial power was made on Akron’s tires. Research at Buchtel College (now the University of Akron) helped create synthetic rubber and win a world war for freedom. Today, the tradition of innovation, productivity and entrepreneurship continues with a renaissance that promises to last for decades. The business community in Akron is smart, loyal and collaborative. It deserves a strong source of
business news that matches its strength as an economic power. That’s where we come in. We want Crain’s Akron Business to be Greater Akron’s unmatched source of business news and information. It starts today, with this publication you are holding. Thank you for joining us as we take up the responsibility of continuing to tell Akron’s amazing business story. — John Campanelli, Publisher
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ow, when and where shoppers go to the grocery store has changed dramatically in the past two decades, and not just in the Akron area, but nationwide. The Akron-Canton market has, however, seen huge growth in the number of grocery store options dotting the landscape of late. This recent evolution of the local grocery store scene has included the arrival of Mustard Seed Market at Akron’s Highland Square neighborhood, and plans for a Whole Foods Market at West Point Market’s West Market Street location — where the family-run grocery and gourmet food market has operated for the past 80 years. Also on tap is Hattie Larlham’s Hattie’s Food Hub, a local-farm-toconsumer fresh produce exchange inside a planned 4,400-square-foot facility on Douglas Street. David Livingston, managing partner at Milwaukee-based supermarket analysis firm DJL Research, said this rapid evolution is not likely to change anytime soon. Growth in the grocery business has been a “moving target,” with market volatility always playing a role, he said. In that sense at least, current trends are in many ways no different, Livingston said. “Some (stores) will no doubt fall off like Tops and Sparkle did,” he said.
What’s changed? The difference lately, according to Livingston and grocers, is why these SEE GROCERY, PAGE A10
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AKRON
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SGS Tool Co. of Munroe Falls has made some big changes this year that are helping the company become more technologically advanced and giving it room to grow. The company moved into its new research and development center in Munroe Falls in December and into its new end mill plant in Cuyahoga Falls in January. SGS constructed the end mill plant from the ground up, and the R&D center is an addition to an existing building. Those two projects cost about $9 million, according to Gary P. Miller, director of training and occupational development. SGS also is in the midst of renovating its drill plant. The new end mill plant gives SGS about 68,000 square feet of space, compared to the 42,000 square feet available at the old building, Miller said. The plant, which produces carbide cutting tools, has 66 six-axis CNC machines, with room for 100. “We’re a global company, and we needed room for expansion over there,” Miller said. Today, SGS owns four buildings along Marc Drive in Cuyahoga Falls, one of which it rents out, plus 13 additional acres that can accommodate future growth, Miller said. The privately held company, which
SGS’ end mill plant in Cuyahoga Falls. (Contributed photo) doesn’t share its annual revenue, has about 250 employees in Ohio and Indiana, plus 20 to 30 employees at a plant in England. The company also has sales engineers across the country and distribution centers in Europe, China and Russia. President and CEO Tom Haag said customers haven’t been demanding the company grow in terms of capacity or volume, but they have driven a push toward higher-quality technology in the past 15 or so years. SGS’ recent in-
vestments will help customers improve the cutting and finishing of their products, Haag said. COO Jeff Burton added that the new R&D center is “critical” to the organization in terms of designing and testing products. Haag said that SGS also uses the center to educate sales people and as a resolution center for end-user issues. SGS invests a lot in its workers, too. Miller said every associate must take 50 hours of training for continuous growth, and the company provides computers for on-site training. Since SGS started running lean, leadership wanted to bring training to employees rather than send them off site. Part of Miller’s job is to help employees identify their next step within the company. He noted that everyone in upper management, including himself, had moved up the leadership ladder. “Everybody started out pushing a broom here,” Miller said. “You earn your way up.” The company also worked with local teachers to dispel the idea that manufacturing is a dirty industry. Modern manufacturing is clean and safe, he said. SGS plans to participate in Manufacturing Day this year by hosting more than 100 students from Cuyahoga Falls. And in the past, SGS has taken on three high school interns who are now company employees.
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Local companies build around civic pride BY ZACHARY WOZNAK Local clothing businesses like The Social Dept. and Rubber City Clothing have hawked shirts featuring the battle cries and in-jokes of Akronites for a few years, but now two more companies are seeing the value of products that promote Akron pride. Norka Sparkling Beverages, a revival of an Akron carbonated beverage brand that shut its doors in 1962, hit shelves in February. And the Knight Foundation awarded $52,000 to Unbox Akron, a monthly service that curates items from around Akron and ships them to subscribers. The service hopes to ship its first box next month. These companies are doing more than just stamping “made in Akron” on their products. The products themselves promote the city. Chris Horne, who won the Knight Cities Challenge grant for Unbox in April, started the service as an additional revenue stream and companion project to his magazine the Devil Strip. He said he doesn’t think a service like his could have existed 10 years ago. “People have told me this is a radically different city,” said Horne, who moved to Akron from Macon, Ga., in 2013. Unbox’s chief curator, Roger Riddle, said the city is “on an upturn.”
Unbox Akron and Norka Sparking Beverages are products with strong ties to the Akron identity. (Contributed photos) He pointed to economic progress in Akron and the identity that neighborhoods like Highland Square have started to develop. “There’s the opportunity for more small businesses to open up, more places for people to go,” Riddle said. “That’s the kind of stuff we really want to get involved with and help push along.” Riddle said that environment is
perfect for attracting the dedicated Akronites that Unbox needs to survive. The service aims to send subscribers items from Akron that encourage them to get involved in the community. Riddle wants the first box to be a surprise, so he wouldn’t get into specifics about what’s inside. But he has spoken with area small businesses, artists and musicians about con-
tributing to the project. The $35-permonth box will have roughly $70 worth of products in it. Greg Kiskadden, who co-owns Rubber City Clothing with Keeven White, said companies like his and Unbox are experiencing “a snowball effect.” People have pride for their city, and the products are an outlet to express it. And having that outlet only enhances hometown pride, he
said. Rubber City’s High Street location stocks only Akron-related gear. The company started in 2004 as a project of four Firestone High School students. They sold the company to Ed Gaffney Jr. in 2006. Kiskadden and White, who head the marketing agency Whitespace Creative, purchased the store last year after recogSEE PRIDE, PAGE A16
From left: Jerome Learson, Health Information Management; Aaron Frye, Nursing; Karen Echelberger, Reflections Breast Health Center; Renee Cox, LifeStyles; Darsean King, Environmental Services
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Partnerships let Stark State focus on health care BY BETH THOMAS HERTZ Stark State College’s mission is to give its students an affordable education that will prepare them for today’s jobs — and with many of those jobs being in the medical sector, the school’s recent increase in partnerships to offer health care programming just makes sense, according to president Para Jones. “Our mission is more in demand now than ever,” said Jones, a Stark County native who has been president of the college since 2012 and has spent more than two decades in different roles at Stark State. “Students, parents, working people and companies are all looking for access to quality programs that can align with the jobs that exist today. “That is where we really excel, and our partnerships mean everything to us.” Stark State announced this month that it is teaming with Akron Children’s Hospital to provide state-tested nursing assistant (STNA) programs using the stimulation training facilities at Austen BioInnovation Institute in downtown Akron. Stark State has offered respiratory therapy training at the ABIA facility for several years. The students who complete the STNA program with Akron Children’s typically will go to work in
long-term care facilities. In June, Stark State and NEOMED agreed to expand their 15-year relationship, exploring ways to prepare more students for health care jobs. The partnership between these two institutions originated when NEOMED began to provide human cadavers for Stark State’s anatomy and physiology classes. Jones said that although Stark State has many partnerships that focus on manufacturing and information technology, allied health programs are a big area of growth and need in the region right now, which is why they are in the news. “We are a workforce-driven institution that believes in meeting the current needs of the community, to best deploy our graduates in rewarding, high-demand careers,” Jones said, citing employment projections from OhioMeansJobs, the U.S. Bureau of Labor Statistics and others that show that the demand for health care workers will continue to increase, particularly as baby boomers age. Health care is not a new realm for the North Canton school, which has 13,000 part-time and full-time students. It has provided associate degrees in allied health and nursing for more than three decades, with more programs in health sciences than any
college or university in the area, Jones said. The large number of health care institutions in the area serves to increase that demand. “We are very fortunate in Northeast Ohio to have a rich health care sector with many large, high-quality hospitals. “These facilities employ our graduates and provide the clinical sites where they complete practical experience in their respective fields while still in college,” she said. Jones wasn’t able to give exact enrollment projections for the new programs or how many new faculty might be hired to meet the student needs. “Our goal at this point is not necessarily centered on a specific enrollment number, but rather on meeting the needs of students and health care in our region,” she said. Jones said Stark State will continue to watch the changing regional health care industry and the resulting workforce needs, and add programs and faculty to keep up with demand.
Expanding options Stark State’s partnerships are an integral part to the school’s curriculum, Jones said. One example is Stark State’s
pharmacy program with NEOMED. Through this program, students can earn an associate of science degree in two years and then be admitted directly into the four-year pharmacy doctoral program at NEOMED. Most students enter NEOMED’S doctoral program only after completing a four-year bachelor degree program elsewhere, meaning they take eight years to complete their education instead of the six that are required of students who start at Stark State. “I find these students to be incredibly prepared and passionate, and they are able to shorten the time to their degree,” Charles Taylor, vice president of academic affairs and dean of the College of Pharmacy at NEOMED, said of Stark State grads. “It’s also great for us, because it creates a pipeline of the best and brightest students coming to us and gets the community access to wonderfully prepared pharmacists in a much shorter time period.” NEOMED bills itself as a community-based university, meaning part of its mission is to put its graduates back into the region to serve the local community. At Akron Children’s, CEO Bill Considine sees the pluses of its partnership with Stark State.
“There are real efficiencies one can gain through learning from one another and not replicating resources,” he said. “Instead of (Stark State) having to put together a simulation center, we have one of the best simulation centers around through the Austen center. … The kinds of things we do together, we could never get done as an individual entity.” Considine said Akron Children’s hopes to expand its educational partnerships with Stark State, especially around ABIA, but also in other areas that tie in with its clinical programs. He also noted that Stark State is considering adding a satellite site in Summit County, possibly paired with ABIA. “We support that vision,” he said. Matching students with jobs is one prong of Stark State’s mission; the other prong is affordability, and that’s what school officials hope these programs can give future allied health workers. The school’s tuition is among the lowest in the region, at $153.60 per credit hour. By comparison, Kent State University’s credit-hour fee is $456 for in-state students and $818 for out of state. The University of Akron is $453.29 for in-state and $778.76 for out of state.
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changes are taking place. The answer, in a word, is customers. Healthy lifestyle choices and the economy, Livingston said, have become the new guides by which independent and chain grocers are searching for their niche. When West Point Market founder Harold Vernon’s son, Russ Vernon, took the business into the specialty and gourmet foods market in 1962, the already quarter-century-old neighborhood grocery store became a forerunner, in part, to what the grocery scene, locally and nationally, has become. Third-generation owner Rick Vernon said West Point Market, like any business, markets to its core customer first — that theoretic 20% of shoppers that buys 80% of a store’s products. Fortunately for West Point Market — which plans to downsize from its 25,000-square-foot store to a roughly 10,000-square-foot space by 2016 — shoppers are gravitating more toward niche groceries. And it is not because of what stores have to offer, he said, but because of changing shopping habits. “Mostly it’s customer-driven, and I think it has been a shift with the younger generation — the millennials,” Vernon said. “They tend to shop at more than one store; they don’t mind driving to two to three stores at one time for specialty things you can only get in one place.” At the same time, Vernon said, technology has given rise to more delivery services for everyday household items. “But this generation will spend $40
on a bottle of champagne,” he said. “They feel there is a value in their ‘affordable luxuries,’ and that is part of what we are and will always be.” This has, in general, led to grocers trying more than ever to better differentiate themselves in the market. Livingston goes so far as to call it a matter of business survival. “You still have conventional stores, but you now have more, instead, of these stores serving different segments of the market,” he said. “And they have done this to survive.”
Niche stores a small share Market share information, Livingston said, is largely proprietary and usually “costs a lot” to obtain. Suffice it to say, though, the big stores of a decade ago are increasingly being forced to share the market with smaller, niche shopping options. A 2015 National Public Radio study, for instance, found that traditional grocers are increasingly losing market share — as much as 15% in the past decade — to smaller markets, convenience stores, farmers markets and even dollar stores. Still, according to University of Akron marketing profession William Baker, the big stores still dominate the market, and he expects they will continue to do so into the foreseeable future. “It is an important niche, but I still would call it a niche,” he said of the growth of organic and locally sourced items at groceries such as Mustard Seed, West Point Market and Whole Foods. “The grocery business is almost a trillion-dollar
business, and the Whole Foods and Trader Joes represent less than 5%, about $50 billion of the market.” While such niche stores recently have seen larger yearly growth numbers than traditional groceries, Baker said, traditional groceries continue to make “significantly more investment” overall. “It’s like saying the economy of Brussels is growing faster, so therefore it is going to take over the United States’ economy,” Baker said. “People have a habit of going to the grocery store they are familiar with and the majority of people are going to continue to do their shopping there.”
The bigger competition Baker and Livingston agree that the greater concern for traditional groceries has been the growth of supercenters and warehouse clubs. “The Akron-Canton market has evolved a lot with extreme low-price club stores like Save-a-Lot and Aldi’s,” Livingston said. “Walmart led that charge. It expanded with supercenters throughout the country and grocers had to change or go out.” That, Baker said, could put a smaller grocer that loses just 5% of its business to a supercenter out of business. The market has a lot of moving parts, though. When value supercenters and club stores began competing with locally based Acme and regional titan Giant Eagle, the natural-food and specialty stores like Mustard Seed Market and high-end grocers, such as Cleveland-based Heinen’s, also began to make gains, Livingston said. A store’s survival, Livingston said,
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still comes down to sales per square foot — a scale based on a roughly $500-per-square-foot-per-year metric. “But the market has changed to where people want to be more frugal, because of the economy, but also people want to be healthier,” he said. “So health and economics are big factors.” Baker said that with healthier eating becoming more of a reality instead of just a catchphrase, as it was a decade ago, traditional grocers will continue to adjust. “I think you have and will continue to see more supermarkets adding fresh and prepared-food options,” he said. “The prepared-food movement started a decade or so ago, when you began to see more two-income families.” Dan Donovan, marketing manager, corporate communications for Giant Eagle, said that the Pittsburghbased company has explored numerous ways to improve the shopping experience in the 30 years it has been in the Akron area, confirming Baker’s point that the popularity of prepared food options have not gone unnoticed by the larger chains. “The introduction of our Market District concept to the community in November of 2013 continues to be very well received,” Donovan said of the stores combination of organic, specialty and locally sourced items. Whole Foods Mid-Atlantic Region spokeswoman Katie Malloy declined to comment, stating only that “given that we haven’t announced a target opening date for our store in Akron, we’re not in a position to speak to” questions about the competitive landscape of the region’s grocery store scene. Representatives from Mustard
Seed Market and Acme did not respond to requests for comment by deadline.
Yet another twist Even with all the competition, niche grocers like West Pointe Market keep an eye on other targets altogether. “We don’t worry about market share — we are not a huge corporation fighting the competition day in and day out,” Vernon said. “But we do have competition, with a restaurant on every corner.” Vernon said he sees the popularity of prepared food and convenience meals for families continuing to grow, along with “gourmet fast food,” such as Chipotle, gaining on traditional fast food chains. The secret to success and survival in the food and grocery business, he said, is not really a secret at all. “There is room enough for everybody and then some,” Vernon said. “If you have a quality product and customer service and you are passionate about your product, you’ll do fine. But a lot of times retailers lose sight of that.” And the continued growth of the “groceraunt” concept — a recently coined term for businesses that combine grocery stores with restaurant options, such as Mustard Seed Market — will continue, Livingston said. “The competition is making it better for the customer, and (shoppers) are no longer going to large convenience stores but rather to specialty stores,” Livingston said. “And there is no end to it. Look where we were 100 years ago. Things like technology are going to change shopping, and grocers are going to have to adapt.”
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AKRON ENTREPRENEURISM: Tobin Buckner
Crowdfunding can help local startups Tobin Buckner is JumpStart’s Akron entrepreneurial community manager and contributes a monthly column about entrepreneurism in the region.
We often talk about how hard it is to start a business and the difficulty Midwestern entrepreneurs have at attracting venture capital investment compared to their coastal counterparts. However, it’s also important to remember that in some ways it has never been easier for an entrepreneur to get started, no matter where they are located. Across the board, the cost of tech-
nology is falling rapidly. Pre-seed and seed capital is increasingly plentiful, and there are hundreds of high-quality business accelerators and entrepreneurial-support organizations all across the country when there were only a few dozen 10 years ago. Another major contributor to the increasing ease of entry for entrepreneurs is the rise of crowdfunding, a form of alternative financing that
allows entrepreneurs to raise a small amount of money from a large number of people typically using online platforms such as Kickstarter or Indiegogo. Combined with lowering costs of entry, the ability to raise seed money simply by starting your own online crowdfunding campaign has made entrepreneurship a truly viable option for people who may never before have thought of starting a
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business. Mathias Ellegiers is co-founder of Jaswig, an Akron startup that makes environmentally conscious standing desks for schools, homes and offices. Currently, Jaswig has raised nearly $45,000 on Kickstarter and is nearing its fundraising goal. According to Ellegiers, crowdfunding offers some very specific advantages for his startup. “A Kickstarter campaign can give you lots of media attention, and it’s amazing to see how many of your personal connections back you,” he said. “Even those who don’t back you spread the word, which really helps with brand awareness.” West Akron native Mary Hospodarsky also used crowdfunding for Sweet Mary’s, a “micro-bakery” that uses local ingredients and makes everything from scratch in small batches. The business started out in the kitchen of an Akron church then moved to the basement of a local restaurant. A recent Indiegogo campaign helped Hospodarsky raise funds she will use to open a permanent retail location in downtown Akron this fall. “I was very encouraged, both by how many people shared it and also who was able to open their wallets, which are obviously two different things,” she said. “I was also impressed with how quickly it spread. We raised about one-third of our total on the very first day. I admit, though, I underestimated how much work it would take to get the word out about the campaign. It ended up taking over my whole life for 25 days.” Both Hospodarsky and Ellegiers are well aware of the important role crowdfunding has played in their early success. They also have learned some valuable lessons that could help other entrepreneurs who are thinking about a crowdfunding campaign of their own. “It’s easy to get hooked on the numbers,” said Ellegiers. “Understand that it often starts fast at a high dollar amount, then flattens out. Also, your product is not going to sell itself; you have to work hard. Traditional networking and marketing rules don’t just go away with crowdfunding.” Hospodarsky added: “I probably would have shortened our campaign to two weeks if I were doing it over again. Also, you should set realistic fundraising goals. Indiegogo is nice because it allows for you to keep the funding even if you don’t reach 100% of your goal, but I think people are much more willing to back you when they see that you are close to your goal.” There’s no doubt that crowdfunding has become a powerful tool for entrepreneurs, and I expect it will only continue to grow and evolve. It won’t singlehandedly address the fact that the vast majority of venture capital still goes to the coasts. But it will make it easier for local entrepreneurs and small business owners to get started – and that is critically important to the long-term growth of our region.
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Columbus, with about 15% vacancies and the built-in economic advantage of housing the state government, according to CBRE. What’s more, among Akron’s Class A properties – higher rent, higher demand – vacancy rates are “impressively low,” just north of 7%, said David Browning, managing director of CBRE’s Cleveland office. The downtown Akron office market, he added, has actually performed better than Cleveland’s over the past eight years. Still, there remains a troublesome stock of empty office buildings in the
heart of the city and – discounting student housing – few options for downtown living. That means while Akron enjoys a comfortable occupancy ratio among rentable buildings, its business district is far from the bustling urban core it could be. “We have to develop it, and then people are going to come to it,” said Brad Beckert, development engineering manager for the city of Akron.
A nice start Akron deputy planning director Adele Dorfner Roth estimates there
is currently 180,000 square feet of vacant space in seven to eight downtown buildings. About 100,000 square feet of the unoccupied space is located in the former Akron Savings and Loan, aka the Landmark Building, at the corner of South Main and Bowery streets. The 12-story building, like a handful of others on Main Street, has been subject of urban renewal interest for nearly a decade. Roth said plans to rehab much of the empty space in the district were placed on the back burner after the housing collapse in 2006 and subsequent fi-
nancial crisis and recovery. Rehab talks are heating up once again, and according to Greater Akron Chamber executive vice president Richard Rebadow, construction dumpsters could start arriving in the summer of 2016, if not sooner. “There are properties along the Main Street corridor that are being eyed for mixed-use development,” he said. “In next 12 to 18 months, we will see some movement along those lines.” The mixed-use plans often call for street-level store fronts with loft
apartments or townhomes above and are meant to attract young professionals or retiring baby boomers who want to be able to shop, dine and have access to arts and entertainment all within walking distance. “There is a demand for urban living,” Rebadow said, and these urban dwellers “want the downtown to be multiuse.” Akron has a “nice start,” he added, because a few multiuse developments have cropped up at its edges. In 2005, Joel Testa introduced the city’s first loft apartments, the highend Northside Lofts, nestled within the fledgling Northside arts and entertainment district. A decade later, Stu Lichter and Chris Semarjian are welcoming the first residents to their ambitious mixed-use redevelopment of the former Goodyear Tire & Rubber Co. campus in East Akron. And serial Akron developer Tony Troppe, who helped launch the Northside district, is in the midst of converting an empty tire factory on West North Street into 24 mid-market loft units perched above a coffee shop and restaurant. “It is just natural for people to want to live closer to urban centers, where they can work, where they can play,” Troppe said. “It’s all about walkability, connectivity to an urban environment.” In that respect, CBRE’s Browning said, Akron is wise to follow Cleveland’s proven formula. “The success in Cleveland has been to repurpose a bunch of obsolete and older office buildings into residential and hospitality,” he said. “And then you create that live, work, play environment that seems to be appealing to the millennial generation, and that starts fueling positive movement in the office market.”
Rehab addict The challenge for the central business district has been getting developers on board, according to Suzie Graham, president of the Downtown Akron Partnership. Some buildings are a harder sell than others because of the investment needed to make them inhabitable. Yet, Graham, like Browning and Rebadow, believes recent positive movement – FirstEnergy extending its lease at 76 South St. and the imminent opening of Northside Courtyard Marriott (the first new hotel built in the downtown Akron in decades), to name two – are swinging the pendulum in the district’s favor, in essence making the rehab investments not only more palatable, but downright attractive. “It’s really an opportunity to create our own sense of place,” Graham said. Troppe, for his part, is not waiting for others to take notice. Earlier this year, Ohio awarded the developer a $1.6 million historical preservation tax credit to convert the 90-year-old, eight-story United office building, located at 1 South Main St., into a boutique hotel with dining and conference spaces. The hotel project could be finished as early as 2016. “There is a limited building stock available for these conversions. We are doing our best to fix ’em all.”
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Local Manufacturing Day events aim to produce industry buzz Manufacturing Day, a national movement designed to highlight job opportunities in an industry facing a shortage of future workers, has been picking up steam in recent years. The annual event started in 2012 with 240 manufacturers, according to literature from national co-producers the Fabricators & Manufacturers Association International, the National Institute of Standards & Technology’s Hollings Manufacturing Extension Partnership, the Manufacturing Institute and the National Association of Manufacturers. Last year, there were nearly 1,700 events nationside.
Rachel Abbey McCafferty Manufacturing reporter
While the official day is celebrated on the first Friday in October — this year, that’s Oct. 2 — events are spread throughout the month. In my first year at Crain’s in 2013, I stopped by student plant tours and listened in on a discussion about women in the industry. Last year, Crain’s got in on the action and with Magnet hosted the first-ever [M]Power: Manufacturing Assembly. The inaugural [M]Power was an interesting look at the issues on manufacturers’ minds — such as sustainability and workforce development. This year, we’re bringing [M]Power to Akron on Sept. 30. Attendees at the half-day event at the John S. Knight Center will hear a keynote speech from Aleris Inc.’s new CEO, Sean Stack, and participate in informative workshops. The morning will wrap up with a panel discussion by area manufacturing leaders (I’ll be moderating, so let me know if there are any topics you’d like it to cover). But we’re certainly not the only company hosting Manufacturing Day events in the Akron area. Rob Felber, president of Felber PR & Marketing, is helping some of his clients, like Technoform Glass Insulation North America in Twinsburg, get involved with Manufacturing Day through a social media campaign. Technoform product manager Laura Woods said this is the first time the company has taken part in the day and that Technoform wanted to bring attention to the highly technical, well-paying jobs manufacturing can offer. Overall, manufacturing is an “underpromoted” industry, she said. On Nov. 6 at the Medina County Fairgrounds, the public can attend the Made in Medina County Manufacturing Expo. The event will showcase locally made products, because people often don’t realize that things they regularly use are made close to home, said Kimberly Marshall, economic development director for the city of Medina. “Sometimes people don’t know how much these companies give back to the community,” Marshall said.
The event costs $40 to attend breakfast and hear the keynote speech by Thomas Frey of the DaVinci Institute, a futurist think tank. Company exhibits will be free and open to the public from 11 a.m. to 2 p.m., according to the event’s website. And there are plenty of other events listed on the Manufacturing Day website for Ohio, including a
tour and job fair on Sept. 30 at Delta Systems Inc. in Streetsboro. This is the first year the company has held a public open house like this, plant manager Greg Schlechter said. Schlechter said the maker of switches and electronic controls always has open assembly positions, and officials thought this was a good opportunity to show the community that manufacturing was alive and well.
Reporter Rachel Abbey McCafferty dons a virtual welding helmet during last year’s [M]Power manufacturing event. (Joe Baron)
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AKRON
PRIDE
CONTINUED FROM PAGE A6
nizing the same upward momentum in the city that Riddle did. “[The city’s] really kicked it up a notch in the last decade,” Kiskadden said. “I saw this Rubber City Clothing as a fledgling brand that had a loyal following and a great product.” The Social Dept. founder Andy Taray called the shirts he screenprints in his Akron home his “passion project.” Taray also sees the growth in Akron and credits that with helping businesses like his. “Civic pride, ties to local growth,” Taray wrote in an email. “The more
local and unique offerings a town or city have, the more people seek it out.” But Michael Considine, who heads Norka Sparkling Beverages, doesn’t think his brand needed the same civic “upturn” that others did. Considine named older Akron companies — such as Swenson’s, Luigi’s and Thirsty Dog Brewing Co. — that have leveraged hometown pride to help grow their brands. He sees Norka adapting that tradition to craft soda. The soda company’s rebirth started in April 2014, when Considine
spotted the logo for the original Norka Sparkling Beverage in a mural at Canal Park. He had never heard of it. But now Considine sees Norka as a “vintage, iconic brand that had gone by the wayside,” and he is determined to bring it back. Considine served as vice president of operations and finance for Twinsburg-based Solvi Acquisition LLC when the firm acquired a number of beverage companies, including Bawls Guarana and Crunk Energy Drink. He learned just how important brand equity was in the beverage industry. “There is great value in a brand that identifies with consumers and establishes a loyal following,” Consi-
dine wrote in an email. “With Norka, there is such strong heritage to build on.”
Akronites and ex-pats When Angela Roloff, general manager of Rubber City Clothing, joined the company in 2009, sales were moving slowly. “We would go on for days when we wouldn’t sell anything,” Roloff said. “It was push, push, push.” Since then, sales for the shirts have skyrocketed 223%, Kiskadden said. The company has seen its sales grow about 20% annually. In the year since White and Kiskadden took over, Rubber City saw a 23%
Caring for our community, one child at a time. We treat every child who comes through our doors. That’s why we’re so grateful for community support. Thanks to our friends, donors and volunteers, we can continue to run the clinical, educational and research programs that help improve our children’s lives.
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sales growth. Kiskadden attributes these huge numbers to the uptick in the Akron identity and the company’s increased promotion and marketing. Rubber City sells most of its shirts out of its High Street store, where most customers are locals. It began online sales a few years ago, but traffic there has been slow. Its site might see a lot of purchases around the holidays, but Roloff estimated the website only makes up about 15% of total sales. Others have found a way to adapt a local company to a national market. The Social Dept. makes shirts for most major cities and regions but still bills itself as a Midwest operation. “Whether it’s business cards or on the website, we make it very apparent that we’re in what a lot of people would call ‘the middle of nowhere,’ ” Taray said. And even though Norka is Akron spelled backward, its appeal stretches beyond Northeast Ohio. Bottles are sold in five states, including California, where the craft soda craze is strong. By starting his company, Considine wanted to recreate that popularity in the Midwest. Norka’s first and biggest Akronarea retailer is the West Point Market, and the drinks do well in Columbus, where supermarket display cases tell the story of an “Akron icon coming back to life.” “People see it and they make the decision to buy local, support local,” Considine said. “That’s kind of been our strength so far.” He estimated that about 70% of sales are in Ohio, with the remaining 30% coming from California, Indiana, Pennsylvania and Oklahoma. With only seven months of sales reports, Considine said, the company is on track to sell between 5,000 and 6,000 24-bottle cases of the drink by the end of the year. Taray admits that his products that tout bigger cities — say, New York or San Francisco — see bigger sales than those promoting Akron. The Social Dept. has no storefront — the company relies on online business and sales at both local and national trade and craft shows. That makes sales numbers harder to pinpoint, but he estimated that its website sells as many as 400 shirts overall a month when demand is high in the summer. He did not have Akronspecific numbers. Taray explained that the growth of Akron’s identity is similar to bigger cities, just at a smaller scale. A more apt comparison, he said, might be thinking of Akron as similar to a neighborhood in a big city. “I think Akron can strive to be that, to be a small city that offers owners and shoppers the ability to build up the pride together,” he said. When Unbox Akron launches in a few weeks, its rollout will be cautious and calculated. Only 50 boxes will be shipped in the Akron area to a select list of recipients who have shown interest in the project. Five or six months after what Riddle calls a “beta round,” he hopes to open up the service to the public. Live events and a quarterly “ex-patriot” box for former Akronites are also in the works. “It’s not just a Groupon for Akron,” Riddle said. “It’s talking about the things that really make Akron special.” And pride in what makes Akron special is the fuel for these local companies.
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AKRON Leadership on Main
Getting smarter about transportation planning BY SANDY AUBURN A childhood love of maps helped Jason Segedy, director of the Akron Metropolitan Area Transportation Study, come to his profession. That love led Segedy to study in geography, urban planning and transportation planning. He shared his background and thoughts about taking a holistic approach to transportation planning at the Sept. 8 Leadership on Main Series at the Duck Club in Akron. Dan Rice, vice president of Leadership Akron Alumni Association and executive director of the Ohio & Erie Canalway Coalition, moderated the discussion. Segedy, who has worked in the transportation planning field for more than 20 years, holds a bachelor’s degree in geography from the University of Akron and a master’s degree in geography and transporta-
Editor’s note: In this feature, the Leadership Akron Alumni group provides a recap of the most recent event from its Leadership on Main series, which offers a monthly program featuring conversations with Akron’s civic and business leaders. tion planning from the University of North Carolina at Charlotte. Raised in Akron, Segedy returned to the area after living in North Carolina, where he was a research assistant with at the University of North Carolina Center for Interdisciplinary Transportation Studies. He joined AMATS in 1998 as a transportation planner. He assumed his current position in 2008. AMATS, funded by the federal gasoline tax, is tasked with regional transportation planning, allocating federal transportation funds and
serving as a forum for regional cooperation among local, state and federal officials. The agency covers Summit, Portage and a portion of Wayne counties. During the discussion, Segedy said the Ohio & Erie Canal is the reason Akron even exits. The city began as a transportation hub, a utilitarian purpose designed to make money — not exactly a planned community. Today, people look at communities differently, and a holistic perspective encourages folks to consider, “What goes on at Point A and Point B,” not just how to move people from one place to another, he said. Segedy said this reflects an awareness and respect for culture and place that can inform planning efforts in the midst of reduced resources and flat population growth. Akron cannot continue to build out more infrastructure, which will be
ohio’s energy experts
expensive to maintain, as the population base remains flat across the region. This means finding smarter ways to manage reduced resources and sometimes right-sizing the infrastructure to meet current needs, he said. An example of this is the change coming to the Akron innerbelt, specifically the dismantling of the northern end of the highway that cuts through downtown. How do we keep this area connected to people and the community? he asked. Segedy said he would define the project a success if “you could go there in 20 years and not know the road was ever there.” Asked about his leadership strategies, Segedy said an important element is “knowing what you don’t know.” This means stepping out of the planning world of efficiencies and cost-benefit analyses and actu-
ally navigating the routes that people need to travel. He did this in Montrose, he said, where trying to get around the area as a pedestrian or cyclist is an eyeopening experience and brings to light social equity issues of designing roadways only for drivers. Segedy said AMATS is working with the municipalities and state sources to improve the pedestrian experience there, including safer sidewalks and crosswalks that will improve accessibility and safety. He hopes an upcoming trip to Copenhagen, Denmark, where 50% of people commute by bicycle, will spur a different way of looking at transportation issues. Akron and Copenhagen are very different places, he said, but he hopes to come home with ideas that can empower citizens to shape transit responsively to Akron’s distinctive culture and sense of place.
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