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Laid-off workers sue CEO of Votem

READY FOR PRIME TIME

By Jeremy Nobile jnobile@crain.com @JeremyNobile

In his first nationally televised night game, quarterback Baker Mayfield led an unlikely 21-17 comeback against the New York Jets. (Jason Miller/Getty Images)

Rejuvenated Browns are poised to make the most of their local media deals By Kevin Kleps kkleps@crain.com @KevinKleps

Since Micki Byrnes was promoted to president and general manager of WKYC late in 2014, the Cleveland Browns have played one game on a Sunday or Monday night. This season, the Browns have four games scheduled for prime time, and three will be on WKYC, Cleveland’s NBC affiliate. “It’s good for the team and it’s

good for the town. I’m just so excited,” Byrnes said. wThe Browns’ timing is particularly good, and it’s not just because the organization is eager to reward its fans after two decades of mostly terrible results. The team, multiple sources have told Crain’s, is entering the final season of two notable media rights deals. One is a contract with WEWS that gives Cleveland’s ABC affiliate rights to the Browns’ preseason games and other shoulder programming, and the other is a unique radio deal that was struck with Good Karma Broadcasting and

CBS Radio (now Entercom Communications Corp.) in 2013. The deal with WEWS, which started in 2015, was for five years, with the Browns holding an opByrnes tion that could “roll it over another two years,” News 5 Cleveland vice president and general manager Steve Weinstein said. With the Browns coming off their best season in 11 years and expected to be an annual playoff threat with the likes of Baker Mayfield and Odell Beckham Jr., Weinstein and others with whom Crain’s spoke anticipate that the team will entertain bids for programming that is highlighted by four preseason contests. “We understand and value that relationship every day. And we would like to continue it,” Weinstein said of the Browns deal. SEE BROWNS, PAGE 24

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Browns in prime time: By the numbers 11: Prime-time appearances in the last 10 seasons 4: Prime-time appearances in 2019 2: “Monday Night Football” appearances by the Browns from 2009-18 2: Browns “Monday Night Football” games scheduled for 2019 0: “Sunday Night Football” showings for the Browns in the last 10 years 1: Browns “Sunday Night Football” games scheduled for 2019 9: Times the Browns were scheduled for a national-TV window from 2012-18 — two above the league minimum 74: Times the Dallas Cowboys were scheduled for a national-TV window from 2012-18 7: Times the Browns are slated to play in a national-TV window in 2019 Note: The national-TV windows are prime-time games, plus the 4:25 p.m. contests that are shared by CBS and Fox, along with the Thanksgiving games.

It’s been a tough few months for Votem Corp., the Cleveland tech startup focused on online and mobile election services that also has been working on a blockchain-based voting platform. Now, Votem CEO Pete Martin — who abruptly laid off the startup’s staff of 60 to 70 people between January and February, but maintains the company is still Martin operational and servicing clients — is facing a class-action lawsuit over unpaid wages. A complaint filed last month in California’s San Diego County by a group of former Votem employees accuses the company of failing to pay wages owed to workers; failing to provide a 60-day notice of termination; and failing to be transparent with staff about the company’s financial health. The number of putative members of the class exceed 60, according to the complaint The plaintiffs, represented by John Landay of Landay Roberts LLP, have requested a jury trial as they look to collect unpaid wages, interest, statutory damages and attorney’s fees. The case is filed in California because that’s where dozens of Votem employees were working upon the October acquisition of Everyone Counts (EC) of La Jolla, Calif. Per the complaint: “Pete Martin was well aware that the Votem EC’s financial health was dire. On one occasion, Pete Martin borrowed money, on behalf of Votem EC, from one of the company’s officers to cover payroll and on another occasion, borrowed money, on behalf of Votem EC from a high-interest lender to make payroll.” SEE VOTEM, PAGE 22

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Convention center aims to ease space squeeze By Jay Miller jmiller@crain.com @millerjh

The operator of the Huntington Convention Center of Cleveland and the Global Center for Health Innovation is looking for ways to overcome a shortage of meeting rooms and to ease a difficult parking situation to help it win a larger share of conventions and meetings looking for a Midwest home. Those were among the key issues focused on at a recent retreat of board members of the Cuyahoga County Convention Facilities Development Corp. (CCCFDC), the county agency that oversees the county-owned facilities, and discussed at the CCCFDC’s recent board of directors meeting on May 9. George Hillow, CCCFDC’s executive director, said in an interview in his office at the Global Center that the complex suffers from a shortage of meeting rooms compared with other convention centers in the region. The Huntington Center has less space than the five competing convention centers Hillow considers its peers in the region — in Columbus, Detroit, Indianapolis, Nashville and Pittsburgh. But he thinks that meeting space is the center's greatest deficit. “We just have 30 meeting rooms,” Hillow said. “We probably need to double that.” The competing centers have between 51 and 89 meeting spaces. Hillow said some conventions

The operator of the Huntington Convention Center of Cleveland is hoping to ease a difficult parking situation and a shortage of meeting rooms at the facility so that it can attract more conventions. (David Kordalski)

have needed to use all of the meeting rooms in the convention center, the Global Center and in the Hilton Cleveland Hotel that is connected to the convention center. Huntington’s sales staff can bolster that meeting room number by pointing meeting planners to space available below Public Auditorium, which has a connection to the convention center, but that presents its own problem. At present, groups that want to come to the convention center must separately negotiate with the city of

“We get such great marks from people when they come here and see it. But the only criticism we do get is sometimes on parking.” — George Hillow, Cuyahoga County Convention Facilities Development Corp. executive director

Cleveland to book the meeting rooms and the larger spaces at the 97-year-old complex that includes 15 meeting rooms as well as a 10,000-seat auditorium, the 3,000seat Cleveland Music Hall and 600seat Little Theater. “What we’re trying to do is establish a working relationship (with the city) so that we can hold ourselves out to have the additional square footage available to people,” Hillow said. “We’re trying to figure out how to speed up the process and see if we can’t offer it as a package.”

Hillow said CCCFDC would consider renovating the meeting rooms under Public Auditorium. Dan Williams, spokesman for Cleveland Mayor Frank Jackson, declined to comment on the issue since the city has not had any discussions with the CCCFDC about collaboration. David Gilbert, president and CEO of the Greater Cleveland Sports Commission and of Destination Cleveland, the tourism marketer, thinks the convention center is well run and is a “beautiful space.” More meeting rooms, and even more exhibit space, would be better, though he knows that adding space is not in the cards. “If there was more space we could try to bring to town larger meetings and conventions,” he said. “But I will say the meeting space is one that could be lower-hanging fruit. I would like to see meeting planners have an easier time working with the convention center and the city. It wouldn’t be a secret to say that having to deal with two times everything is not as easy as one, and that that can make a difference to the customer, to the meeting planner.” As for the parking issue, that’s one that has been known and shrugged off since the complex was in its planning stages. Planners realized that there was neither space nor money to build an attached parking structure and they also assumed that since a convention center attracts out-oftowners, most would be arriving through the airport and stay at hotels within walking distance. SEE CENTER, PAGE 8

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Ohio City, Tremont apartments push up land prices By Stan Bullard sbullard@crain.com @CrainRltyWriter

The apartment-crazed Ohio City and Tremont development scene has reached an unexpected pace. The rash of recent deals has pushed land prices for sites suitable for such projects to the lower rung of those in downtown Cleveland, long the region’s high-water mark. That’s the upshot of a just-released study by Newmark Knight Frank of the more than a half-dozen recent or pending deals in the two neighborhoods just west of the Cuyahoga River from downtown Cleveland. Terry Coyne, an NKF vice chairman who shared the firm’s research study, said, “The going rate for (apartment-potential) land in Ohio City and Tremont is $1 million an acre.” That’s also the price per acre that the Parking REIT of Las Vegas paid on a per-acre basis for the 300car surface parking lot at 1200 W. Ninth St. in the downtown Warehouse District. However, other parts of downtown far outstrip it. For example, the ground under the proposed nuCLEus retail-apartment-office complex at East Fourth Street and Prospect Avenue is valued at more than $9 million an acre in documents that Stark Enterprises of Cleveland and partner J-Dek Investments of Solon filed for a pending $12 million city loan for the $300 million proposed project. Even so, the prices achieved in the long-suffering neighborhoods now commonly seen as beacons for redevelopment are show-stoppers. The going price NKF discussed also isn’t the highest price in the study. That was the January purchase of Market Square Shopping Center near the West Side Market by Chicago-based Harbor Bay Advisors for a price that amounts to $2 million an acre. That deal involves razing the 20-year-old strip center for two proposed 11-floor towers — one for offices, the other for apartments. The $1 million-an-acre land price also is the figure used by Cuyahoga County’s appraisal for its search for a buyer for the site of its bridge garage at West 25th Street between St. Malachi Catholic Church and the Veterans Memorial Bridge in Ohio City. However, that figure already has been surpassed by four bidders vying for the site in the county’s pending (and still private under state sunshine laws that cloak real estate deals) offering. However, real estate developer Chad Kertesz of Cleveland said he was part of a group that submitted a bid of $3.4 million for the 2-acre county site, which is home to a 1964-vintage building smaller than 10,000 square feet in size. The county and its agent, Allegro Realty Investors, have informed his group they have accepted a higher bid and are negotiating with another party. Kertesz said he’s not upset over being passed over for the site. He said he and his investor-partners have other projects in the planning stages. He and his partners also have reason to celebrate because last Monday, May 13, they sold the 11-suite Columbus Roads Lofts, at 2019 Columbus Road, for $2.13 million to an Oakland, Calif.-based investor. The investor used the names Columbus Road Lofts and Fred’s Investments Ohio LLC for the purchase, county records show. The suites, installed in 2017 in a

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small commercial building dating from 1911, garnered a value of $212,000 a unit, an eye-popping price in Northeast Ohio for a rehabilitated rental property. Coyne The quarter-acre site also garnered an imputed value of $933,000 per acre, based on the property’s sale price. However, that is for an admittedly small developed property, not an untouched one. The NKF study was produced for Coyne by Frank Camardo, an NKF associate director, and Nate Hoover, an NKF research coordinator. Ca-

mardo said he does not believe the marked for apartment-zoned land in Cleveland is overheated, because more land and building redevelopment deals are continuing to be made. Coyne said he is surprised by the run-up in Ohio City prices. When the Chagrin Falls-based Snavely Group acquired eight properties for its The Quarter mixed-use project on the west side of West 25th Street at Detroit, it paid $818,000 an acre just three years ago. Tom McNair, executive director of Ohio City Inc., said he has not seen the NKF study, but the staff at the local development corporation has been watching the sale prices jump in the area. “We don’t view it as something

that is going to end the investment around here,” McNair said. “One thing we’re cognizant of is that as people pay more and more for land, they have higher expectations for what they will get out of the land. We are trying to grow smartly, but Ohio City can’t solve all the world’s problems. Even if developers pay more for land, that does not mean we should allow them to do things outside the zoning code.” In other words, the building heights will need to be constrained by the city’s zoning code, which permits some areas, such the county’s bridge garage site and Market Square to be no more than 11 stories. Other parts of the neighborhoods, including sections of Detroit and Lorain Avenue west of West 25th, are one-third

that size. That’s in keeping with nearby residential districts that are limited to two-story houses immediately behind the commercial districts. McNair said the real estate development is producing positive benefits, but it’s also having a negative one in that it’s increasing property values of long-term residents with limited incomes. That is why Ohio City Inc. and Tremont West Development Corp. have asked the city to review its tax abatement policy. A measure to order a study of the tax abatement policy is pending before Cleveland City Council. Asked if the soaring land prices should curtail tax abatements granted by the city, Coyne answered, “That’s beyond our capacity to answer.”

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China tariffs add new layer of hurdles to trade landscape By Rachel Abbey McCafferty rmccafferty@crain.com @ramccafferty

The tariffs levied against China by President Donald Trump have gotten a lot of attention in recent weeks, but for many U.S. manufacturers, the increased tariffs will just further complicate an already complex situation. The government has a lot of ways to try to level the playing field when it thinks foreign companies are flooding the market with imports or charging too little for the imports they’re selling. There are the widespread tariffs like those Trump recently enacted against China, and there are the more targeted countervailing and anti-dumping duties on particular products put in place by the government. These measures are designed to help domestic manufacturers making those products. And they often do. But there are also unintended consequences that can hurt U.S. manufacturers further down the supply chain. For example, when a product that most manufacturers use as a raw material — like steel — is the one being protected, that tends to raise costs for those end users. Right now, industries that use steel and aluminum or quartz as a raw material are facing tariff pressure. Read on for a look at how that has affected their businesses, for good or ill.

Metals Industries that use metal as their raw material are facing a “complicated and convoluted” system, said Bill Adler, president and CEO at Stripmatic Products Inc. in Cuyahoga Heights.

There are the tariffs against China; the steel and aluminum tariffs enacted in 2018; the new, in-process NAFTA agreement known as the United States-Mexico-Canada Agreement; and more. “There’s a lot of moving targets,” Adler said. For example, the industry is waiting to see whether steel and aluminum would be excluded from tariffs in the USMCA, which still has to be ratified by the participating countries. Adler thinks the idea of U.S. steel production captures attention, even though there are far fewer jobs in that field than in the industries that make goods using steel as a raw material. “I wish that the steel lobbyists and our politicians, or the administrations, realized that when you’re imposing import tariffs to help steel, you’re effectively damaging their domestic customer base,” Adler said. And when tariffs go into place, costs tend to go up not just for imports, but also for domestic-made raw materials. Adler said about 95% of the steel Stripmatic Products uses already is made in the U.S. But the market pricing drives up costs on the domestic steel prices as imported steel prices rise. Stripmatic Products has seen significant revenue growth, but factors like the tariffs and a tight employment market are cutting into the company’s profitability, Adler said. For K-J Fasteners Inc. in Eastlake, the tariffs have applied to both the raw materials it uses and to some of the finished products it sells, said Kirk Stonebrook, director of strategic growth. K-J Fasteners manufacturers products in house and distributes domestic and imported parts. That

means the company sees direct and indirect cost increases. “We’ve been hurt more than helped,” Stonebrook said. And he’s had a difficult time passing costs onto customers. The industry was stagnant from about 2008 to 2015, and Stonebrook thinks customers got used to prices being essentially frozen. Since he hasn’t been able to rise prices to match the increases he has faced, Stonebrook has seen his margins erode in the past year-anda-half, despite a strong economy. On the other hand, as the cost of materials has increased, tooling component and fastener maker Jergens Inc. has been able to pass those costs onto customers, said company president Jack Schron Jr. But Cleveland-based Jergens is a manufacturer with worldwide distribution, and some of its electronics products have gotten caught up in the retaliatory tariffs. The additional cost there also got passed on to consumers, but Schron said it hasn’t had much of an impact on sales. On the plus side, some of Jergens’ lower technology products are getting “knocked off” by Chinese companies, and if they fall under the tariffs, that could help prevent dumping, Schron said.

Quartz In the countertop business, Minnesota-based Cambria has petitioned for a Department of Commerce and U.S. International Trade Commission investigation into quartz surface products from China and was granted that investigation, which is underway. The department has already found preliminary evidence of dumping

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Rocksolid Surfaces in Cleveland makes countertops from materials such as quartz, which is currently part of an ongoing trade case. (Rocksolid Surfaces photo)

and subsidizing in this case, and a final decision is expected in June, said Jared Wessel, a lawyer at Hogan Lovells in Washington, D.C., who’s working with the American Quartz Worker Coalition. The coalition is a group of companies that imports quartz products from China, as well as fabricators and distributors, whose businesses could be at risk if the department and the commission determine that China has been dumping — or selling it for less than its worth — and subsidizing quartz product in the U.S. The coalition is trying to argue that the Chinese products and the Cambria products, which tend to be higher end, don’t actually compete for the same market share. And, Wessel would argue that there aren’t enough U.S. producers to make up the difference. The preliminary decision means the government has already been able to start collecting cash deposits for the expected duties on imports —

and, in this case, to even collect some retroactive deposits for the 90 days prior, Wessel said. So while the industry waits for a final decision, the ripple effects have already begun. Chip Gleine is president of Crafted Surfaces and Stone in Bedford Heights, which was formed in March, when Gleine purchased the local Stoneworks at that location. The company focuses on fabrication and installation of stone products. Right now, he feels like his company is in a holding pattern, as construction projects that were planning on quartz wait to see the result of the trade case. Gleine doesn’t expect property owners to absorb higher costs by raising rents, so he fears his margins will get squeezed or that the business will leave his quartz market, and his company, altogether. And he’s already seen a delay and a shortage in the market of quartz products. There’s still high demand for quartz, but it’s begun to drop off as the preliminary duties went into

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place, said Anthony Fimiani, president of Firenza Stone in Eastlake. Firenza Stone is a family-owned, full-service kitchen and bath dealer, with a focus in countertops that it primarily fabricates on site. Some of the builder or commercial customers Firenza Stone works with had special pricing on quartz before the preliminary determination was made. The company has been able to negotiate a higher price with some of the them, but with others, Firenza OUR REGION HAS TALENT, Stone is losing money, Fimiani said. And when it came to residential BUT DOES IT ALIGN business, Firenza Stone has had to WITH IN-DEMAND JOBS? lay some installers off, going from about 46 employees to 39, Fimiani said. “We’ve never had to lay people off in 15 years, except for this year, which is a direct result of lost business, lost revenue, because of the quartz tariff,” Fimiani said. Still, the majority of what Firenza Stone offers is natural stone, and if the quartz duties officially go in place, he expects the market to swing that way. So it could be a benefit to SAVE THE DATE his business long-term, because The 2019 Aligning Opportunities report stone makes for higher margins. The impact of the preliminary duwill be released at an event July 17 ties have had on suppliers is the biggest effect J.B. Walsh, president of PREPARED BY Team NEO IN PARTNERSHIP WITH Delta Dental Rocksolid Surfaces in Cleveland, has seen on his business. He’s seen an increase in costs, though he’s trying to hold the costs that get passed to consumers steady. Visit aligningopportunities.teamneo.org for updates “It affects my business, too, because about the event and release of 2019 report there’s so much up in the air, the uncertainty and the volatility,” Walsh said. “So pricing is a problem right now. But the biggest influencer is actually the scarcity of the product.” But with the recently enacted Chinese tariffs, Walsh sees potential benefits. There are pre-fabricated products coming in from China that TeamNeo_1-6V_May_6-13-19.indd 1 compete with the countertop products Rocksolid Surfaces makes. He hopes a change in the cost of the imports will lead to more companies turning to U.S. companies like his. 10573 W. Pleasant Valley Rd, Parma, OH 44130

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AUGUST 6 - 12, 2018

CRAIN’S 2018

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People Analytics, KeyBank Aware that would-be and current employees must take priority, KeyBank has simplified its recruiting process and utilized data to reduce worker turnover. Key’s information-driven efforts were led by Amanda Cruz, digital recruiting and analytics consultant, and initiative development manager Jeannie Fanning, the nomination stated. By taking a collaborative approach backed by detailed research, Key’s HR organization cut attrition in the company’s contact center by half over the previous year, reduced the number of pages in its applications by 40%, and estimate that candidates will spend 20% to 50% less time in completing an application. According to the nomination, the team is also nearing completion of a candidate-centric Key career site redesign, providing additional trans-

parency around the information sought by applicants and eliminat eliminating corporate speak and complex navigation. Meanwhile, a comprehensive approach to “human capital” decision-making is at the core of Key’s People Analytics Community of Practice, a group of HR professionals who meet biweekly to discuss best practices in driving data-based HR decisions. “The predictive modeling approach is being adopted by other groups, from redefining onboarding for new hires, to streamlining the training modules that impact per performance, to prioritizing workload for compensation reviews,” the nomination stated. “Candidate ex experience work will result in more quality candidates in our recruiters’ pipelines and improve our employ-

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gan to focus more on engineering By DAN SHINGLER and less on producing common, low-priced parts like simple nuts. dshingler@crain.com “That’s a race to the bottom,” @DanShingler Melick said of the highly commodHudson-based Ramco Specialties itized realm of simple nuts and bolts, where foreign and domestic suppliis on an automotive roll. VOL. 39, NO. 16 April 16-22, 2018 Sponsored Content After building and moving into a ers most often compete primarily on 185,000-square-foot headquarters and price and the cheapest part wins. The company has found OEM more on engineering gan toitsfocus main plant a little over two years ago, By DAN SHINGLER and less their on big producing common, the company has increased its size automaker customers,and with Ramlow-priced parts like simple nuts. with the acquisition of Michigan-based suppliers, willing to work dshingler@crain.com co’s engineers earlier in“That’s their own a race to the bottom,” Copa Tool earlier this month. @DanShingler allows Melick saidthe of the highly commodGrowth in Ramco’s automotive design processes. That to offer fastening systems itized realm of simple nuts and bolts, business, by far its largest Hudson-based end market, company Ramco Specialties can be integrated intoforeign other and domestic suppliwhere is fueling it all, Jeff Melick, Ramco’s di- thatroll. is on an automotive which can themost entireoften au- compete primarily on rector of sales and marketing, Aftersaid. building parts, and moving intomake a ers manufacturing process the cheapest part wins. “This year, we’re up185,000-square-foot about 15%,” tomotive headquarters and price and Specialties’ 185,000-square-foot headquarters and main plant has andyears moreago, efficient. Plus, they Ramco The company has found its focus OEM more on engineering gan to Melick said, adding that theplant compamain a littlefaster over two of warehouse room, too. (Dan Shingler for Crain’s) DAN SHINGLER notBydepend wholly on price customers, to plentyand automaker and their less big on producing common, ny has been experiencing a similar hasdoincreased the company its size sales, Melick said.suppliers, willing to work with Ramlow-priced parts like simple nuts. growth rate since about 2008, when gain with the acquisition of Michigan-based dshingler@crain.com growing faster overall must be working, because while earlier co’s engineers in“That’s their than own a race todomestic the bottom,If ” the state’s automotive compait began focusing onCopa more Toolengiearlier thisItmonth. @DanShingler growth onlycommoddo nies as a whole can fare that well, it some other companiesdesign are alsoprocesses. find- production That allows theofrates Melick said the can highly neered products than a simple Growthnut. in Ramco’s automotive would be a good thing for Ohio, in two ways: They are either a bolts, growth inmarket, automotive, the induscompany to offersofastening systems itized realm of simple nutson and Copa Tool is a significant pickup business, by far itsing largest end Hudson-based Ramco Specialties which still has a huge automotive small where number of hotand products or asupplias is a whole has onroll. a downthat can be integrated into foreign other domestic for Ramco. Its $14 million in annual is fueling it all, Jefftry Melick, Ramco’s di-been on an automotive according to the Ohio number of products where a industry, trend, said Edward “Ned” Hill, parts, which can make the entireoften aumost compete primarily on sales will be added torector Ramco’s an-andward of sales marketing, Aftersaid. building and moving intolarger a ers few are picking upcheapest marketpart share. a well-known Ohio economist and tomotive manufacturing process price and the wins. Manufacturers’ Association. nual revenues of about $100 million. “This year, we’re up185,000-square-foot about 15%,” headquarters and Specialties’ 185,000-square-foot headquarters a huge partand main plant has Seeing that the overall Ramco tide bouncprofessor public administration faster and years moreago, efficient. Plus, they The company has is found its OEM“Auto supply remains Copa’s 40 employees bring Ramco’s Melick said, adding that theofcompamain plant a little over two warehouse room, too. (Dan Shingler for Crain’s) enormous manufacturing ing around dead to low plenty … theyof either and city regional atits size doplanning not depend wholly on price automaker customers, and their of bigOhio’s headcount to about ny 175 haspeople, been experiencing a similar the and company has increased sector. State data has shown increasgood boatwilling or have a RamOhio State University’s John gain sales, Melickhave said.asuppliers, toattached work with Melick said. growth rate sincethe about 2008, when with the acquisition of Michigan-based ing investment among all transpordecent boat to a good motor.” Glenn College of Public Affairs. growing faster than overall domestic If the state’s automotive compaIt must be working, because while co’s engineers earlier in their own The acquisition brings things that it began focusing onCopa more engiTool earlier this month. tation Ramco is not at allows least Asked whether Ramco or any sinproduction growth rates equipment can only do manufacturers, nies as a whole can fare that well, it some other companies are also find-unique, design processes. That the might be more important than just than neered products a simple nut.in Growth Ramco’s automotive and are jobeither growth been steady amongcompany Northeast supplicompany’s recent growth in aube a good thing for Ohio, soauto in two ways: They on ahas would ing growth inmarket, automotive, the industo Ohio offer fastening systems sales, too, such as increased CopamanuTool is agle significant pickup business, by far its largest end transportation equipment ers. Some report they are also other tomotive is annual due to Jeff a rising or has still has a huge automotive small number ofamong hot products or a which try as atide, whole onothers acan downthat be integrated into facturing capacity. While forRamco Ramco.traIts $14 million in is fueling it all, Melick, Ramco’s di-been manufacturers, employwell. just to a well-run boat, Hill hadtrend, a ready according to the Ohio number products wherepresently a industry, ward said Edward “Ned” Hill,canlarger parts, which make the entireofauditionally has focused sales on thewill female be added Ramco’s an- and rector of sales marketing, said.doing ing 125,000 OMA Association. Adler, president of Cuyahoga “It’smillion. the boat.” Manufacturers’ few are picking up over market share. Ohioans,” a well-known OhioBill economist and tomotive manufacturing process end of fasteners — nuts and related of answer: nual revenues about $100 “This year, we’re up about 15%,” Ramco Specialties’ 185,000-square-foot headquarters spokesman Augsburger Heights-based Products, Overall, domestic auto production “Autosaid. supply remains a huge partand main plant has that the overall tide is Ryan bouncprofessor public administration faster andStripmatic more Seeing efficient. Plus, they threaded assemblies Copa’s — Copa has 40 employees bring Ramco’s Melick said, adding that theofcompaplenty of warehouse room, for Crain’s) For… itsthey part, Ramco expects itstoo. re-(Dan Shingler also sells heavily thearound automohas been in apeople, slump, Hill said. He and notof Ohio’s enormous manufacturing dead to low either and city regional planning atintoing do not depend wholly on price high-volume screw machines headcountthat to about 175 ny has been experiencing a similar growth to continue and isState worktive industry, supplying a range data from Federal Reserve data has shown increashave a goodof boatcent or have attached a sector. the Ohio State University’s John gain sales, Melick said. can produce bolts and othersaid. small ed thatgrowth Melick ratethe since about 2008, when ing hard to earn its place supplying parts. He, too, said Bank of Louisthat shows thaton U.S. auto- engiing overall investment among all decent boat towhile a good motor.” If transporthe state’s automotive compagrowing faster than domestic Glenn College ofsmall, Public tubular Affairs. It must be working, because cur precision parts Ramco does curThe not acquisition brings things it St. began focusing more parts for up-and-coming vehicles, business is any good as of late. makers went from about tation equipment Ramco is not unique, at least nies as a whole can fare that well, it production growth rates can only do manufacturers, Asked whether Ramco or sinsome other companies are also findrently make, Melick said. might be more important than just making neered products than a simple nut. Melick said. Copa’s and on has “Stripmatic is at 15% over ourindus350,000 automobiles month be-pickup and are job either growth been steady among Northeast Ohioso auto supplibe a good thing for Ohio, in two ways: presence They a would company’s recent growth in auing growth inleast automotive, the And it never hurts tosales, havetoo, a pres presmanu such as increased manuCopa Tool is per agle significant added connections and around first-quarter and last year’s tween 2013 and tra2016 totomotive now making transportation equipment ers.been Some reportsmall they are also in still has a huge automotive number ofamong hot products or a which is to a rising or has try as tide, aforecast whole onothers a downence in the metropolitan Detroit tra facturing capacity. While Ramco for Ramco. Its $14 million in due annual Detroit should only of help, since where it presently sales,” Adler “The short-term abouton 250,000 units month. manufacturers, employdoing well. according to the Ohio a industry, larger number products just atowell-run Hill hadtrend, a said. ready ward said Edward “Ned” Hill, area, where Copa is based, alongside ditionally has focused thewill female sales be per added Ramco’sboat, anputs few Ramco toshare.Ohioans,” backlog through June looks prettypresident other words, company isthe boat.” over 125,000 OMA Association. Billeconomist Adler, of Cuyahoga Manufacturers’ are physically pickinging upcloser market “It’smillion. a well-known Ohio and domestic automakers end and ofmany of —In fasteners nuts andrevenues related ifofaanswer: nual about $100 many Seeing of itsProducts, big customers, hetide added. solid as well.” growing, they40 must be doing somespokesman Augsburger Heights-based Stripmatic “Autosaid. supply remains a huge part that the overall isRyan bouncOverall, domestic auto production professor of public administration their suppliers that arethreaded all potential assemblies — Copa has Copa’s employees bring Ramco’s “Ouring product development who said hisregional products most thingmachines right. For … its engipart, either Ramco expects itsenormous realso sells heavily at into the automoof Ohio’s manufacturing around dead low they has been in apeople, slump,Adler, Hilland said. He notcity and planning Ramco customers, he noted. high-volume screw thatto about headcount 175 neers have area very excited to able to theirState waytive into pickups, supplying a supplier is from a typically growth to continue and isState workindustry, range ofboatcent data has shown increasa good orbe have attached a sector. ed that data the Federal Reserve thefind Ohio University’s John Ramco hopes to bring bear itsbolts “How cantoproduce andMelick other small performs said. offer He, domestically SUVs and heavy commercial function of not which itofisSt.things suping hard to earn its place tubular too,boat saidto amanufactured ing supplying investment among all transpordecent good motor.” Bank Louis that shows that U.S. autoGlenn College ofsmall, Publictrucks, Affairs. parts. cus chief strength to Copa’sprecision existing cuscurvehicles parts Ramco does curThe acquisition brings engineered assemblies and compothinks new taxabout laws and a reduction plying and how those important vehicles went sell,” for up-and-coming vehicles, business is good as of late. equipment manufacturers, Ramco is notparts unique, at least tation makers making Asked whether Ramco or any sintomer base, Melickrently said.make, That Melick said. might be more thanfrom just nents quickly toour our Tier 1 automoof regulations are having a big posi-in Hill to said intoo, email corresponMelick said.suppliCopa’s presence “Stripmatic is at leastamong 15% over and job and growth has been steady Northeast Ohio auto 350,000 automobiles per beglemonth company’s recent growth auAf hurts strength is engineering, And he said. Afit never have a an pres pressales, such as increased manutive Melickadded said. connections tive impact sales. dence.facturing “An Detroit auto supplier that is 2016 and around forecast and year’s transportation equipment ers.last Some others report they are also inamong tween 2013 and totomotive now on making is duefirst-quarter to a rising tide, or customers,” be metropolitan ter the Great Recession, Ramco beence in the capacity. While Ramco traDetroit should only help, since it sales,” short-term manufacturers, presently employdoing well. about 250,000 units per just month. a well-run boat, HillAdler had asaid. ready“The area, where Copa is based, alongside ditionally has focused on the female puts Ramco physically to prettypresident ing closer over 125,000 Ohioans,” OMA Bill Adler, of Cuyahoga other company “It’sisthe backlog boat.” through June looks domestic automakers end and of many of —Innuts fasteners andwords, relatedif aanswer: Reprinted with permission from the Crain’s Cleveland Business. © 2018 CrainsomeCommunications Inc. All Rights reserved. many of itsProducts, big customers, he added. solidauto as well.” spokesman Ryan Augsburger said. Heights-based Stripmatic growing, must doing Overall, domestic production their suppliers that arethreaded all potential assemblies — they Copa has be Further duplication without permission is prohibited. Visit www.crainscleveland.com. #CC117 “Ourthe product development Adler, whoHe said his products For itsengipart, Ramco expects its realso sellsmost heavily into automothingmachines right. Hill said. notRamco customers, he noted. high-volume screw that has been in a slump, neers areavery excited to begrowth able to findReserve their waytive into industry, pickups, supplying to continue and is work workrange of cent a supplier is from a typically ed that data the Federal Ramco hopes to bring bear its bolts“How cantoproduce and other small performs offer domestically manufactured SUVs and heavy commercial trucks, ing hard to earn its place supplying small, tubular parts. He, too, said function of which vehicles it is supBank of St. Louis shows that U.S. autocus chief strength to Copa’sprecision existing cusparts Ramco does not curand compothinksmaking new taxabout laws and a reduction for up-and-coming vehicles, business is goodengineered as of late. assembliesparts plying and how those vehicles sell,” from makers went tomer base, Melick rently said.make, ThatMelick said. nents to our our Tier 1 automoof regulations arebehaving“Stripmatic a big posi- is at Melick said. Copa’s presence and leastquickly 15% over Hill to said in aan email350,000 corresponautomobiles per month Af hurts strength is engineering, he said. AfAnd it never have prestive customers,” Melickadded said. connections in and around tive impact sales. first-quarter forecast and last year’s dence. “An Detroit auto supplier is 2016 tween that 2013 and to nowon making be metropolitan ter the Great Recession, Ramco beence in the sales,” Adler said. “The short-term Detroit should only help, since it area, where Copa is based, alongside about 250,000 units per month. In other words, if a company is backlog through June looks pretty puts Ramco physically closer to domestic automakers and many of Reprinted with permission from the Crain’s Cleveland Business. © 2018 Crain Communications Inc. All Rights reserved. many of its big customers, he added. their suppliers that are all potential growing, they must be doing some- solid as well.” Further duplication without permission is prohibited. Visit www.crainscleveland.com. #CC117 “Our product development engiAdler, who said his products most thing right. Ramco customers, he noted. “How a supplier performs is a typically find their way into pickups, neers are very excited to be able to Ramco hopes to bring to bear its chief strength to Copa’s existing cus- function of which vehicles it is sup- SUVs and heavy commercial trucks, offer domestically manufactured tomer base, Melick said. That plying and how those vehicles sell,” thinks new tax laws and a reduction engineered assemblies and compoHill said in an email correspon- of regulations are having a big posi- nents quickly to our Tier 1 automoAf strength is engineering, he said. Aftive customers,” Melick said. ter the Great Recession, Ramco be- dence. “An auto supplier that is tive impact on sales.

Acquisition helps keep Ramco on growth track

PROMOTE.

5/10/19 2:44 PM

Why not?

Reprinted with permission from the Crain’s Cleveland Business. © 2018 Crain Communications Inc. All Rights reserved. Further duplication without permission is prohibited. Visit www.crainscleveland.com. #CC117

PRODUCED BY:

P004_05_CL_20190520.indd 5

Laura Picariello, Reprints Sales Manager Phone: (732) 723-0569 • Fax (888) 299-2205 Email: lpicariello@crain.com

5/17/19 2:09 PM

PA G E 6

M AY 2 0 - 2 6 , 2 019 |

CRAINâ€™S CLEVELAND BUSINESS

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Principals of ExchangeBase, a technology company that operates an online platform for oil and gas companies to trade equipment and a related consulting company, liked the five-floor building the company occupies in downtown Rocky River so much that they bought it. Through EXB Bridge LLC, the executives formed an investment group to acquire the Bridge Building, 18500 Lake Road, on May 7, according to Cuyahoga County land records. The seller was John D. Spielberger, the operator of JDS Properties who owns a portfolio of shopping centers and a half-dozen commercial buildings with storefronts on Old Detroit Road in Rocky River, the suburbâ€™s historic downtown. The Bridge Building is a landmark in its own right despite the office structureâ€™s construction date of 1989, for the nearly 35,000-squarefoot building was constructed on a stub of the 1910-vintage Detroit-Rocky River Bridge, which connected the suburb with Lakewood over the Rocky River valley. Most of the old bridge was removed by demolition in 1980 when it was replaced by a new bridge. However, a section of the old bridge was retained for future development, which Cleveland-based developer John Ferchill made a reality. Brian Donahue, ExchangeBase managing director of corporate affairs, confirmed in a phone interview that a related investor group acquired the property, which overlooks the Rocky River, the Cleveland Metroparks and Lake Erie. The company occupies about half of the structure and will maintain it as a multitenant office building, Donahue said. He said ExchangeBase â€œprefers to fly below the radarâ€? and declined to discuss its operations. Spielberger, whose JDS Properties operates out of downtown Rocky River, briefly offered the structure for sale in 2017 with an asking price of $4.6 million, according to CoStar, the online commercial real estate database. He did not return three

The Bridge Building, 18500 Lake Road, takes its name from its location on a stub of the old Detroit-Rocky River Bridge which once spanned the valley between Rocky River and Lakewood. (Stan Bullard)

calls to discuss the sale of the structure he had owned for 19 years. The property has a market value of $2.5 million for property tax purposes, although the deed for the most recent transaction does not disclose a sale price. EXB Bridge took out a $3.56 million mortgage from Indiana, Pa.-based First Commonwealth Bank to finance the transaction, according to county records. The building is fully leased, according to CoStar. The building rests on three of the old bridgeâ€™s unreinforced concrete arches. It is designed so that its windows fill some of the buildingâ€™s old arches. Other windows have round tops to honor the design of the old span. Thomas Jelepis, managing director of real estate at the Independence-based Agency Professionals brokerage, handled leasing of the

structure for several years on behalf of JDS. â€œThe views there are off the charts,â€? Jelepis said in a phone interview. â€œOverlooking the river and several marinas is the main thing but it also has views of the city and Lake Erie.â€? Through the years, he said, the office building has benefited from the resurgence of downtown Rocky River, including restaurants and retail shops in buildings that JDS Properties owns nearby. The website of ExchangeBase said it operates a platform that allows oil and gas companies to trade assets such as access to pipeline, drilling equipment and oil rigs, as well as another company that helps companies untangle distressed assets, from selling refineries to former military bases and helping banks with trouble real estate.

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CRAIN’S CLEVELAND BUSINESS

M AY 2 0 - 2 6 , 2 019

PA G E 7

Forming corporate ties to preserve more land By Lydia Coutré lcoutre@crain.com @LydiaCoutre

The Western Reserve Land Conservancy has tapped into corporate partnerships to help preserve more land in Northeast Ohio. To date, the nonprofit has permanently preserved about 56,000 acres of land through acquisitions, donations and conservation easements. Recently, it worked with HomeGoods, a division of The TJX Cos., in Lordstown to conserve 132 acres of forest habitat in Trumbull County. “If you don’t engage with corporations in your community, to me you’re missing out on a massive amount of energy and resources that can be going to improve the community,” said Rich Cochran, president and CEO of the conservancy. When Cochran was hired as the first employee of the conservancy in 1996, it had preserved less than 400 acres of land, he said. Since then,it has increased its capacity to preserve more and more land every year. In 2006, it merged with seven small land conservancies and has merged with several others since. The conservancy today is the result of 13 mergers. What started as an all-volunteer organization with a footprint largely on the east side of Cleveland has grown to a nonprofit covering 18 counties in Northeast Ohio. “Eventually we got to 56,000 acres, which is amazing considering the national park isn’t even half that large,” Cochran said. “We’ve kind of added two additional national park holdings to the region in the last 20 years, which is great. We’d like to add a couple more.” In early May, the conservancy announced that it had worked collaboratively with HomeGoods to develop a plan to preserve streams and wet-

The Western Reserve Land Conservancy worked with HomeGoods, a division of The TJX Cos., in Lordstown on the conservation of 132 acres of forest habitat in Trumbull County. (Contributed photo)

lands on the property, following environmental mitigation guidance from the Ohio EPA and the Army Corps of Engineers. Though HomeGoods could have received its regulatory approval with a conservation easement on just 5 to 10 acres of restored habitat, the company committed to 132 acres of conservation, said Alex Czayka, senior vice president for conservation transactions for the conservancy. “Part of that was to satisfy some of the voices in the community to prove that they were willing to put more land than necessary by law into this conservation easement to act as a buffer to the neighboring communities,” he said. “That’s unique with the corporations we’ve worked with on this type of mitigation project. Typically, they’re doing only what they’re required to do by law. So this is interesting and obviously in favor of conservation and the community which

is great for the community.” Western Reserve Land Conservancy also is working with the Arconic Foundation in a partnership to transform the former Henninger landfill in the Old Brooklyn neighborhood into a public park. Arconic has donated more than $60,000 to help with the transformation of this 25-acre space, Cochran said, noting that the founda-

tion can get a tax deduction for that. The hope is to open the park, which will be managed by Cleveland Metroparks, by next year, pending raising another $100,000. The conservancy already has raised $1.5 million. In another partnership, the conservancy worked with Dominion Energy to launch the Watershed Mini Grant Program in 2015 to support

organizations working to protect and improve land around rivers, lakes and streams throughout Ohio. “We’re really proud to work with these grassroots organizations that they wouldn’t otherwise be able to do these small projects without the funding that we’re able to provide in the partnership with Western Reserve Land Conservancy,” said Ben Kroeck, senior philanthropy coordinator for Dominion Energy. Since its inception, the program has awarded more than $142,000 to 38 watershed groups across the state. “The way the conservancy works is that they build partnership across the continuum: they build partnerships with local government, they build partnerships with businesses, they build partnerships with nonprofits,” Kroeck said. “They’re very savvy in the type of the work that they go after and the partnerships that they build.” The conservancy also partners with corporations for volunteer opportunities like river cleanups and tree plantings. Corporations are, of course, made up of people who live in and love their communities, Cochran said. “Engaging those residents through their companies with whom they work I think adds a lot of resources to our mission,” he said.

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PA G E 8

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CRAIN’S CLEVELAND BUSINESS

CENTER

CONTINUED FROM PAGE 2

But, Hillow said, many conventions are booked for statewide or regional groups and enough attendees drive to Cleveland to make the lack of attached parking a problem at times. “We get such great marks from people when they come here and see it,” Hillow said. “But the only criticism we do get is sometimes on parking.” CCCFDC has used shuttle buses to bring convention attendees to the building from the spacious municipal parking lot north of East Ninth Street. But Hillow acknowledges that’s not a good solution, and he’s hopeful his agency can find a way to ease the problem. “We could have enough parking if it was managed better,” he said, noting that the 1,000-space Huntington Parking Garage, now used by county employees and the Hilton Cleveland Downtown hotel, could be available if an efficient booking system could be installed. “If we brought technology in and we were managing each space better we would have better utilization of spaces around” the center, Hillow said. A report from the Global Center also was promising. Aram Nerpouni, president and

CEO of BioEnterprise Corp., which manages the center, said 71% of the space in the Global Center is occupied by 20 tenants with interested tenants for another 19% of the space in the 235,000-squarefoot building in the pipeline. The building, home to only five fulltime employees in December 2017, now has 70 people working there, including 20 BioEnterprise employees, and Nerpouni is optimistic it will hit 150 employees by the end of 2019. The center was built to be a showroom for medical equipment sellers — the Medical Mart — but when that concept didn’t attract tenants, the building struggled to find a successful reason for its existence. Former Cuyahoga County Executive Ed FitzGerald decided to make it a health science “innovation center” and changed the name to match. As a result, it’s still a work in progress. BioEnterprise has operated the center since early 2018, focusing it on being an incubator for health science and health information technology businesses. Now, Nerpouni said, there is a growing level of programming going on using both tenant spaces as well as the building’s meeting space. “So now, more often than not, when you get on the elevator, you’re not alone,” he said. “You’re there with an entrepreneur or an investor

or a tenant in the building talking about what’s happening next.” John Paganini, founder and CEO of IoT Directions, an internet consulting firm and a former employee of the Healthcare Information and Management Systems Society (HIMSS) Innovation Center — a major tenant at the Global Center — believes the building is on the upswing. “The model has changed and it would make sense for a lot of businesses to have an office there,” said Paganini, whose business has its offices in Terminal Tower but who remains on the board of the HIMSS center. “For me, it’s a comfortable facility.” The CCCFDC board of directors also heard about first-quarter 2019 financials, which showed that net operating losses are slightly above budget — a loss of $1.31 million against a budgeted loss of $1.28 million. That’s on revenue of $1.78 million and expenses of $3.09 million. Like most publicly operated convention centers, the Cleveland operation has from its inception been considered a loss leader, with rates set to attract conventions that will fill hotels and restaurants, not show a profit. And, the CCCFDC staff reported, the buildings hosted 53 events that attracted 97,886 people who bought 19,300 hotel rooms in the first quarter.

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Bigger family business list shows more female managers Family-Owned Business list: To see the top family-run businesses in Northeast Ohio, turn to Page 23.

By Chuck Soder csoder@crain.com @ChuckSoder

The companies on our Family-Owned Businesses list are still mostly run by male family members. But there are more local family businesses being run by female family members than we realized when we published this list two years ago. Fifty-three female family members hold management positions at the 84 companies on the full digital version of the list. They account for 23.2% of all family members in management. That figure was just 16.6% when we produced this list two years ago. But don’t go thinking that the companies on the list two years ago started promoting female family members into management. The number of female family members in management has changed much for the 51 companies that were on the list in both 2017 and 2019. The increase was almost entirely from the 33 companies that were not on the list two years ago (the digital version is easily the biggest edition of the Family-Owned Businesses list we’ve ever produced). Granted, four of those new companies might not have been on this list had we not previously recruited them for our Women-Owned Business Directory. But a few of the other companies that are recent additions to the list also have multiple female family members in management, such as Vitamix at No. 15 and The Technology House at No. 60.

As for the list ... This year’s list is once again topped by Minute Men at No. 1 and Area Temps at No. 2. Those companies are staffing firms, as is The Reserves Network at No. 9. The vast majority of their employees work on behalf of other employers. When you factor out staffing firms, the companies on the list had a total of 24,553 full-time equivalent employees as of March 1, up 2.6% from the previous year. Forty-six of them posted increases and 22 reported decreases (the others submitted the same figure for both years). The company that posted the biggest employment increase was Great Lakes Cheese of Hiram at No. 11, which added about 100 full-time equivalent local employees over the past year. The company told us that it hired people in both its corporate office and its local plant because of the volume of business coming through that plant.

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Pentagon rips TransDigm for price ‘gouging’ Bloomberg

TransDigm Group Inc. of Cleveland is “gouging our taxpayers” with spare parts markups that were as high as 4,451% from 2015 through 2017 as it repeatedly declined to provide backup data on costs, according to a Pentagon official. “Once TransDigm refused to provide the requested cost data” for at least 15 parts during those years, “our contracting officers were left with the limited options” of either buying the parts without receiving the information or “not buying the parts needed to meet mission requirements,” Kevin Fahey, assistant defense secretary for acquisition, said in a statement submitted Wednesday, May 15, to a House committee. “Is what TransDigm is doing illegal? No,” Fahey said. “Do I consider gouging our taxpayers for excessive costs immoral and unconscionable in the face of getting our warfighters what they need to fight? Yes.” Fahey commented as Rep. Elijah Cummings, chairman of the House Committee on Oversight and Reform, released a memo and convened the hearing on the parts charges and whether the Defense Department needs new authority to press contractors on their cost and profit calculations. The Pentagon faces potentially even greater markups, including more than 9,400% for a half-inch metal pin that could cost the government $4,361, under a new contract signed in July 2018 with TransDigm, Bloomberg News reported on Tuesday, May 14.

The Pentagon says Cleveland-based TransDigm’s pricing tactics are “immoral and unconscionable.” (Wikimedia Commons/David B. Gleanson)

“(T)he fairness and reasonableness of prices that the DoD pays for commercial items is determined by market prices generated in the commercial marketplace.” — Kevin Stein, TransDigm CEO

TransDigm fell as much as 4.7% on Wednesday, the biggest intraday decline since Dec. 27. “One former company official told us that TransDigm overcharging the Pentagon was like taking candy from a baby,” said Representative Ro Khanna, a California Democrat who said the Oversight committee’s staff talked to such officials and to whistle-blowers as

part of its inquiry into the company. Fahey, who reports to Ellen Lord, the Pentagon’s acquisitions chief, set out steps the Defense Department is taking after a February report by the department’s inspector general that outlined a pattern of TransDigm refusing to provide cost data for parts and asserted that excessive markups were routine.

TransDigm’s response TransDigm CEO Kevin Stein said in his prepared statement to the committee that the Pentagon’s inspector general “did not audit or (to use the colloquial term) ‘investigate’ TransDigm.” “Rather, it audited the procurement practices of the Defense Logistics Agency and other government buying agencies” and “in doing so, the IG found that TransDigm did

nothing in contravention of the federal acquisition laws and regulations with respect to its pricing.” Stein said Cleveland-based TransDigm is primarily a commercial supplier, “not a traditional defense contractor.” Federal acquisition regulations require that contracting officers buy products and services at “fair and reasonable” prices. “But, as a general proposition, the fairness and reasonableness of prices that the DoD pays for commercial items is determined by market prices generated in the commercial marketplace,” he said. Steps being taken by the Pentagon, according to Fahey, include setting up an intra-department system to share the names of companies refusing to provide data and reviewing existing regulations and legislation for potential changes to strengthen tools to gather data. Fahey said in his statement that TransDigm is a “bad actor” that “has built its long-term business strategy on buying exclusive licenses or entire companies that manufacture military-unique, high-demand, low-value parts for DoD weapons systems and then drastically increasing the price of those parts.” TransDigm has acquired more than $1 billion in sales from solesource after-market parts suppliers in recent years and now has more than 101 subsidiaries that have allowed it to own or exclusively license more than 2,500 spare parts for military aircraft, Fahey said. From Oct. 1, 2014 through April 11, 2019, the Pentagon executed 4,697 contract actions with TransDigm and

its subsidiaries valued at $634.7 million. Of those contracts, 28% were sole-source transactions totaling $273 million, figures that “are extremely bothersome,” Fahey said. The inspector general’s report in February generated a flurry of congressional interest, with officials from the Pentagon and the Defense Logistics Agency providing briefings to Cummings’s staff, those of the House Armed Services Committee and Senator Charles Grassley. Information included detailed breakdowns of TransDigm contracts and pictures of spare parts with allegedly excessive profits. The underlying debate is over laws and acquisition regulations that hamstring Pentagon contracting officers from demanding backup data on parts contracts. Legislation from the Federal Acquisition Streamlining Act of 1994 to recent defense policy bills sought to encourage commercial contractors to conduct business with the military by freeing them from providing information that could be competitively sensitive and onerous to collect, according to the inspector general’s report. After the May 15 hearing, Fahey, the Pentagon official, said in an interview that it’s too late for the Defense Department to write its own proposed legislation bolstering its authority to demand backup data in time for inclusion in the fiscal 2020 defense policy bill. But he said that “working with the members, if we can come up with a legislative proposal that would get at this issue, we would be supportive of it.”

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CRAIN’S CLEVELAND BUSINESS

Opinion Personal View

Changing the entrepreneurial climate in metro Cleveland By James M. Trutko

Editorial

Reporting for duties You’ve been enlisted in a trade skirmish with China that could develop into a full-blown war. The Trump administration this month increased tariffs to 25% from 10% on about $200 billion worth of Chinese imports, which, combined with China’s retaliation on about $60 billion in U.S. goods, is expected to raise prices on consumer products including clothing, furniture and electronics. “Increased tariffs lead to increased prices,” the chief financial officer of Walmart said last week, stating the obvious that, based on President Donald Trump’s Twitter posts, might not be so obvious. An article in this week’s print edition by Crain’s manufacturing reporter Rachel Abbey McCafferty looks at how the tariffs are rippling through industries that are significant in Northeast Ohio, including metal fabrication and toolmaking. Bloomberg noted that the bulked-up U.S. tariffs on Chinese products “have already set in motion a profound shift in global supply chains that won’t be easily reversed. That threatens to accelerate the departure of manufacturers that already are reeling from rising labor and other costs.” Industrial states in the Midwest typically are the biggest losers when trade tensions increase and tariffs start to rise. It’s difficult to gauge, precisely, how much of an impact the new tariffs might have on labor markets, although one anti-tariff organization, the Trade Partnership Worldwide, recently estimated that the 25% duties could lead to 29,000 job losses in Ohio if they last for a significant period of time. So the stakes, obviously, are high. Are these tariffs worth the risk? We’re advocates of free trade and generally aren’t fans of imposing duties that hinder the movement of goods and the delivery of services. It must be noted, though, that China truly is a bad actor in the international trade system. It steals intellectual property, doesn’t make it easy for other countries to gain access to its markets, and heavily subsidizes its own industries, all while

continuing to repress its own citizens. Our trade relationship with China absolutely needs a reset. Additionally, the China tariffs imposed since shortly after Trump took office have had little impact on our labor markets, with some exceptions, most prominently in farming, an area in which Ohio is a major player. Existing tariffs may not yet have achieved the administration’s goal of remaking relations with China, but neither have they crashed the economy. But things feel different now. We’re entering a more aggressive period in this trade battle, and companies in Northeast Ohio and all over the country are going to have to get creative in controlling costs to minimize the fallout. This would be a good time for manufacturers, and nonprofit organizations that assist them, to explore ways to shift supply chains and reshore at least some operations. We also hope that both of Ohio’s U.S. senators — Democrat Sherrod Brown, who works constructively with Trump administration officials on trade issues, and Republican Rob Portman, the former U.S. Trade Representative — use their expertise to push the White House to take a more collaborative approach on trade with China. (The president, as he often does, has been going it alone and has isolated the U.S. in an area where there should have been cooperation with other countries — something like the Trans-Pacific Partnership, which the administration mistakenly abandoned.) Brown and fellow Democrats, as well as Portman and other Republicans looking out for the good of the country and not just their party, also should advance the argument that now is the time for the U.S. government to step up investment in higher education and research and development, so we can maintain an edge in aerospace, robotics and other technology-driven industries. Tariffs might bring the Chinese to the table to make a trade deal, but they won’t do anything to help our country continue to make progress in building a stronger economy.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

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For at least the past 20 years, most economic development plans in metropolitan Cleveland have included the idea of stimulating entrepreneurial development of small firms, especially high technology ones. Tens of millions of nonprofit and public dollars have been invested in an attempt to spark local small business growth by organizations like Team NEO, the Greater Cleveland Partnership and COSE, the Fund for Our Economic Future, JumpStart, BioEnterprise, Magnet, the Cleveland Foundation, the Burton T. Morgan Foundation and others. These organizations have provided direct services to entrepreneurs and encouraged an additional network of other organizations set up to counsel entrepreneurs, provide referrals and offer educational programs. The network includes the state of Ohio’s Small Business Development Centers (SBDC), SCORE, privately funded Business Advisers of Cleveland (BAC), LaunchHouse and others. BAC’s Cleveland Business Advice calendar shows these organizations are offering more than 40 educational programs targeted at entrepreneurs most months. This doesn’t include programs offered by Cleveland State University, Cuyahoga Community College and other educational institutions. Nobody faults local organizations for encouraging entrepreneurship: It embodies the concept of economic opportunity for the average person and is the holy grail of economic development. But what’s the result of two decades of sustained effort by community leaders and nonprofit organizations to stimulate entrepreneurship? If one looks at the data, this massive community effort aimed at stimulating entrepreneurship in metropolitan Cleveland has largely been unsuccessful. Back in 2001, the Bureau of Labor Statistics said the five-county metropolitan Cleveland had about 56,000 private businesses. By 2010, the number of private businesses had dropped below 54,000 and there’s been virtually no growth in the number of business establishments during the national economic rebound. That entrepreneurial weakness is confirmed in the Kauffman Indicators of Entrepreneurship data, traditionally recognized as the gold standard for evaluating metropolitan economic climates. Out of the nation’s top 40 metropolitan areas, metropolitan Cleveland is 39th in the percentage of employer firms less than 1 year old, 38th in the percentage of adult business owners, 33rd in the percentage of adults becoming entrepreneurs each month and 35th in the percentage of employment growth in startups after five years. It’s time for community nonprofit and business leaders to re-examine and revise their strategies to fix metropolitan Cleveland’s poor entrepreneurial climate. The unfortunate reality is that entrepreneurial businesses are just hard to start and it’s doubly hard to succeed and grow if the environment is not very supportive. Metropolitan Cleveland lacks some advantages that favor rapid growth in entrepreneurial businesses, such as a strong base in several current technologies or rapid population growth that comes from favorable weather or the good fortune of being a state capital and university center. At the same time, metro Cleveland has positive attributes, such as a large, diversified economy and desirable recreational and cultural assets that make the area affordable and the city livable. Why are other areas with similar attributes doing better in creating entrepreneurial businesses? SEE TRUTKO, PAGE 11

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 ClevEdit@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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The major problem afflicting metropolitan Cleveland’s entrepreneurial climate is expensive but poor governance in its core county and central city. The Greater Cleveland Partnership recently documented the fact that Cuyahoga County’s tax burden is over 10% higher than other comparable regional cities. The premium tax burden might be more tolerable if the area had superior public services, but the area suffers from poor-quality public services and infrastructure, schools that fail to produce a good labor force and visible deterioration in the core city. Furthermore, large areas of the county and the city of Cleveland are essentially off-limits for entrepreneurial initiatives because of crime. Cuyahoga County has about one-eighth of all crime in the state of Ohio. The city of Cleveland has a crime rate over two times the state rate. Unfortunately, community leaders have not had effective strategies to overcome core governance problems that handicap entrepreneurial activity. Community nonprofit and business leaders have been content to work with amiable political mediocrities and have not decisively worked to support capable political leadership or prevent the re-establishment of cronyism and corruption. Community leaders are timid because they see little benefit in offending certain winners of noncompetitive elections or in calling out the incompetence of long-tenured bureaucrats. It’s really very simple: There’s no improvement in government performance because there’s no turnover in government officials who can’t do the job. Poor government services result in a poor entrepreneurial environment which limits job creation and economic opportunities in metro Cleveland. Community leaders need to focus on reforms that will bring competent new leadership in Cuyahoga County and the city of Cleveland, apply performance and financial metrics to government services to monitor improvement and control costs, focus on safety to

increase areas of economic opportunity, and build on areas entrepreneurial success that depend on private, ● Premium Warehouse local investment. Space An agenda must start with supporting additional ● Local Cartage, county government reforms, such as nonpartisan primaries and county office term limits to establish combrokerage & supply petitive elections and bring in new leadership. It’s imchain fulfillment portant to identify new leaders with real management ● Pick & Pack, skills who can improve government performance and efficiency. expedite & To monitor whether local government is improving de-vanning services and operating efficiently, community leaders should Certified to handle any create an independent watchdog organization to anaproduct regardless of size, lyze government operations and publicize results. The field of industry or scope. area’s newspapers and other media have limited capacity for the detailed research needed to monitor government performance and limited readership Call now to discuss your reach to publicize the results. warehousing and logistics needs! Cuyahoga County and the city of Cleveland have 216.378.7100 ● Bedford, OH ● www.candorlogistics.com failed miserably at managing the county jail and maintaining public safety. Community leaders should support a comprehensive community “safety” plan to reform courts and safety forces with the goal of making metro Cleveland one of safest areas in the county. Improved public safety will increase the number of geographical areas available for entrepreneurial investCandor Logistics Ad-4-8.indd 1 ment and distribute benefits more widely throughout the community. Finally, community leaders should complement existing support for technologically oriented business with stronger strategies to build on local success and investment in the food, leisure and recreational sectors. Typically, these sectors offer more immediate opportunities for minority/female entrepreneurs and for low-skilled labor. These sectors have been successful locally without much government support or intervention and probably could grow faster with improved community safety services and integration with convention and attraction strategies.

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DELTA DENTAL AND TEAM NEO TEAM UP FOR TALENT By WILLIAM KOEHLER and MARGARET TRIMER

“Help Wanted.” “Now Hiring.” “Immediate Openings.”

I cannot find workers with the right skills; I cannot keep my workers; and my workers struggle to get to work on time.

The signs planted in front of businesses throughout Northeast Ohio tell the story of thousands of life-sustaining jobs that go unfilled due to a crippling misalignment between the folks looking for goodpaying jobs and the employers looking to fill critical vacancies.

The good news is that, together, we can fix this problem.

It’s a costly problem. The struggle to grow, recruit and retain a skilled and reliable workforce has the potential to keep our region on the sidelines of the nation’s economic boom.

We took a significant step forward this month when dozens of educators and business leaders gathered for a manufacturing forum at the Vitamix Warehouse and Distribution Center, a prime location for the discussion, since Vitamix is seeing the talent issue firsthand. In the past three months, this company with strong family roots and desirable benefits, is struggling with finding assembly employees who want to work.

When you bring businesses together from across the 18 counties of Northeast Ohio as Delta Dental and Team NEO recently did at Vitamix’s Strongsville location, you hear a common story:

Tackling these workforce issues will require focus. We will need to educate, retrain, provide experiential learning, teach soft skills, think creatively about benefits, and find ways to be more inclusive. It will take alignment and accountability among providers across the education, talent and economic development networks.

They aren’t complaining; they are innovating. Among other things, Vitamix’s HR team developed new recruiting strategies that dispel the myth that entry level manufacturing jobs are dead ends. “We are changing the message from an assembly job to the beginning of a career. We support this with a robust tuition reimbursement program, internal promotions and cross training opportunities including our hourly positions,” said Jodi Berg, CEO of Vitamix.

COLLECTIVE EFFORT The forum, a collaboration between Team NEO, a nonprofit business organization focused on regional economic development, and Delta Dental of Ohio, one of the largest dental benefit providers in the state, was one of three industry-specific conversations that will be held this spring. The forums address the gap between jobs available and the supply of workers in manufacturing, IT and health care. They will inform the conclusions of the muchanticipated 2019 Aligning Opportunities report, to be released at a launch event in July. The report, originally debuted in 2015, addresses the critical mismatch between the supply of and demand for talent in Northeast Ohio. It provides a neutral analysis, common set of data and a benchmark from which we can measure our progress over time.

Organizations and initiatives such as ConxusNEO, Workforce Connect Manufacturing (MAGNET and Greater Cleveland Partnership), College Now and Towards Employment have been relying on tools such as Team NEO’s Aligning Opportunities report to develop effective long-term workforce solutions. Educators, particularly K-12, also play an important role in preparing the workforce of tomorrow.

“The struggle to grow, recruit and retain a skilled and reliable workforce has the potential to keep our region on the sidelines of the nation’s economic boom.” “You can’t be what you can’t see,” said Yvonne Culver of Akron Public Schools, stressing the importance of her district’s Essential Experiences program, which engages students as early as pre-kindergarten in career paths through interactive trips. “If students go on a trip to the zoo, they aren’t just going to the zoo. They are learning about what it takes to become a veterinarian … they are learning about all the jobs it takes to run a zoo.” The program presents students with all the possibilities their future holds and looking at the three E’s, whether it’s enlistment, enrollment or employment. Northeast Ohio has the potential to grow, recruit and retain a strong, nimble and competitive workforce. Join the movement. Attend the next forum, focused on the IT industry on May 23 at Hyland Software. Email smartis@teamneo.org for details. William Koehler, a former KeyBank executive, is president of Team NEO; Margaret Trimer, former CEO of Junior Achievement of Southeastern Michigan, is in charge of culture, communications and community affairs for Delta Dental of Michigan, Ohio, and Indiana.

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This advertising-supported feature is produced by Crain’s Content Studio-Cleveland, the marketing storytelling arm of Crain’s Cleveland Business. The Crain’s Cleveland Business newsroom is not involved in creating Crain’s Content Studio content.

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A formal response by the defendants had not been filed with the court as of Friday, May 17. But Martin said the suit will be fought. “The lawsuit filed in California primarily relates to wages owed to our former employees in California, all of whom we are committed to paying what is lawfully owed to them. Other claims were made that we believe are completely without merit,” said Martin in an emailed statement, noting that what he would comment on is limited because of the pending litigation. “Votem is a company that is and has always been committed, by policy and ethical obligations, to do the right thing for its employees, shareholders, partners, and customers,” he continued. “As we have intended all along, we expect to be able to com-

CRAIN’S CLEVELAND BUSINESS

pensate all our terminated employees what is owed to them rendering the primary claim in the lawsuit moot. Aside from ensuring that all our former employees are properly paid, we intend to defend the lawsuit vigorously for any other claims if pursued subsequent to such payment.”

Troubled acquisition Martin, who according to at least one past bio, generated an average return to investors of 14-times invested capital in four prior startup exits, envisions Votem revolutionizing the voting process through a blockchain-powered platform. He told Crain’s in 2018 of a goal for processing 1 billion votes through its platforms by 2025. California company EC, founded in 1997 by Lori Steele Contorer, was struggling ahead of the Votem deal, said Jud Neer, who worked at the company for nearly five years before

joining Votem in the acquisition, where he was named chief architect. EC was burning through millions in cash on pursuits that didn’t pan out. Neer said Contorer — who, according to a bio for San Diego Venture Group, is the “world’s top expert in election modernization” — was pushed out in 2017 in light of that as the company and its board refocused efforts on its core products for voter registration and mobile voting services. Two paths forward emerged: Win other big contracts, install a new CEO and forge ahead; or find someone to acquire them. The latter occurred. “Around January or February 2018, it was looking like the company would not be viable long term on its own,” Neer said. “We felt the two products we were working on were good, we had solid clients and felt there could be a future with that. It was just looking for a sort of infusion of new leadership and money to

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make that happen.” Trying to keep from splitting up its two core businesses and staff, EC wanted an acquirer that would take both. Votem was the only interested suitor. But there were concerns among staff, Neer said. Votem was young and a fraction of the size of the company it was buying. The engineering team was skeptical about the blockchain approach. And Votem had no experience with voter registration side of the elections business. “So there were some concerns of do they really know what they’re getting into with all this? But we were cautiously optimistic,” Neer said.

‘The plan was just flawed’ EC was required to trim staff before the asset sale to Votem would go through, which Neer acknowledges from a purely business perspective may have made sense because the “cold,

hard truth was we had too much staff for what our products were bringing in.” About 25%-30% of staff were laid off, resulting in the roughly 50 who were brought on to Votem with the deal. Neer said investors, convinced a merger was the best path forward, paid the released employees some severance. Neer described Martin as a “charismatic leader” who was “cut from the same cloth” as EC’s prior CEO, Contorer. Both were go-getter-type tech visionaries with auspicious goals. But Martin had little experience with the elections industry outside of Votem, which Neer said left some employees feeling skeptical. “This is a very slow industry,” Neer said. “It takes a lot of time for change to happen, and you have to hand hold your customer every step of the way. It’s an industry founded and based on earning trust over time, trust that’s easily lost and hard to earn. And there’s just not a lot of money in it.” The EC deal was apparently a bigger bite than Votem could chew, which Neer said became apparent as staff became familiar with the company. The Votem product “wasn’t nearly as mature as we thought,” Neer said. There were cool ideas, but they just weren’t built out. “The idea is that EC would accelerate all that, that what might take five years might take one with a bigger team,” Neer said. “But you can’t rush this industry.” Plus, the capital apparently wasn’t there to support the combined company as many employees felt they were led to believe. That’s an important element of the class-action lawsuit. The complaint claims that Martin fraudulently misrepresented the financial well-being of Votem in weekly teleconferences with staff in which he allegedly asserted the company had “at least a six-month financial runway.” The last of those conferences was reportedly held on Feb. 8, “days before the (Votem EC) closed its doors,” according to court filings. “It’s not like we got into this and had a major failure in engineering or security and that’s why it didn’t succeed,” Neer said. “The plan was just flawed.”

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P022_CL_20190520.indd 22

Votem is currently in a period of restructuring and recapitalization, Martin said. Since the February layoffs, the company sold its voter registration business acquired with EC to Missouri electronic poll book provider KNOWiNK to generate funds and reduce expenses. Martin said Votem’s core business of online voting continues to operate with services currently being provided to both existing and new customers. He said Votem is working on online elections for the “local” Emmy Awards, completed some recent elections involving Deloitte Southeast Asia and Doctors of BC, respectively, and is actively supporting “public sector customers such as the D.C. board of elections and more.” He added that the company is still working out of its downtown Cleveland office and has a “significant remote workforce,” though he declined to put a number on that. Some former employees, clearly jilted, are skeptical Votem can forge ahead from here. “He’s doomed,” said a laid-off employee who wished to remain anonymous. “There is no possible way, with Pete Martin at the helm, that anyone ought to ever trust Votem again.” Despite the struggles, Martin is hopeful. “Votem is in active discussions with its stockholders and others regarding a funding plan to support the company’s future growth, which we remain optimistic about despite the recent setback,” he said.

5/17/19 2:37 PM

CRAIN’S CLEVELAND BUSINESS

M AY 2 0 - 2 6 , 2 019

PA G E 2 3

THE LIST

Family-Owned Businesses

Ranked by local full-time equivalent employees COMPANY

LOCAL STAFF 2019/ FIRST-GENERATION 2018 (1) OWNER

BUSINESS DESCRIPTION

TOP LOCAL EXECUTIVE

Minute Men Cos., Cleveland (216) 426-9675/minutemenhr.com

37,215 (2) 38,825

Sam Lucarelli

1967

Human resource company specializing in staffing, PEO, workers' compensation

Jay Lucarelli, CEO

Area Temps Inc., Independence (866) 995-5627/areatemps.com

8,000 (2) 8,000

Raymond A. Castelluccio

1987

Staffing firm specializing in manufacturing and clerical placement

Kent J. Castelluccio, president, CEO

Discount Drug Mart Inc., Medina (330) 725-2340/discount-drugmart.com

2,290 2,159

Parviz Boodjeh

1968

Regional drug store chain

Don Boodjeh, CEO

Ganley Auto Group, Brecksville (440) 584-8202/ganleyauto.com

1,830 1,773

Thomas D. Ganley

1968

Auto dealership group offering sales, service, repair, insurance and financing

Kenneth G. Ganley, president, CEO

InfoCision Management Corp., Akron (330) 668-1400/infocision.com

1,700 1,700

Gary Taylor

1982

Direct marketing company with inbound/outbound call center services

Craig Taylor, CEO Karen Taylor, board chair

Fred W. Albrecht Grocery Co., Akron (330) 733-2263/acmestores.com

1,450 1,465

Frederick Wilhelm Albrecht

1891

Retail grocery and pharmacy stores

F. Nicholas Albrecht, president

Sprenger Health Care Systems, Lorain (440) 989-5200/sprengerhealthcare.com

1,220 1,108

Grace Sprenger

1959

Developer, owner and operator of senior living communities providing a full continuum of care

Nicole Sprenger, CEO Michael Sprenger, COO

Covelli Enterprises Inc., Warren (330) 856-3176/covelli.com

1,000 1,000

Albert Covelli

1978

Panera Bread, O’Charley's and Dairy Queen franchisee

Sam Covelli, CEO

The Reserves Network Inc., Fairview Park (866) 876-2020/trnstaffing.com

842 (2) 997

Don Stallard

1984

Provider of staffing services to the office, industrial, professional and technical markets

Neil Stallard, CEO

Dave's Supermarkets, Bedford Heights (216) 763-3200/davesmarkets.com

819 870

Alex Saltzman

1935

Grocery

Daniel Saltzman, president

Great Lakes Cheese, Hiram (440) 834-2500/greatlakescheese.com

750 650

Hans Epprecht

1958

Manufacturer and packager of natural and processed cheese

Dan Zagzebski, president, CEO

DiGeronimo Companies, Independence (216) 446-3500/digeronimocompanies.com

703 618

Sam DiGeronimo

1956

National construction services and real estate development family of companies

Victor DiGeronimo Jr., CEO Anthony DiGeronimo, president, Precision Environmental, Precision ProCut

Spitzer Management Inc., Elyria (440) 323-4671/spitzer.com

700 700

George G. Spitzer

1904

Automotive retail, real estate development, marina management

Alan Spitzer, chairman, CEO

Sandridge Food Corp., Medina (330) 725-2348/sandridge.com

676 667

Vincent R. Sandridge

1960

Fresh food manufacturer offering deli salads, soups and sauces

Mark D. Sandridge, chairman, CEO

668 697

William G. “Papa” Barnard

1921

Manufacturer of high-performance blending equipment for home and commercial use

Jodi L. Berg, president, CEO

THIS YEAR

Olmsted Township 15 Vitamix, (800) 848-2649/vitamix.com THE LIST

Family-Owned Businesses

YEAR FOUNDED

YOUR BUSINESS IS OUR BUSINESS

Ranked by local full-time equivalent employees

Contact Jon Ruple + jruple@maloneynovotny.com + 216.363.0100

COMPANY

LOCAL STAFF 2019/ FIRST-GENERATION 2018 (1) OWNER

BUSINESS DESCRIPTION

TOP LOCAL EXECUTIVE

East Manufacturing Corp., Randolph (330) 325-9921/eastmfg.com

575 573

Howard Booher

1968

Manufacturer of all-aluminum semi-highway truck trailers, including dump, platform and refuse

David J. de Poincy, president, COO

Janitorial Services Inc. (JSI), Cuyahoga Heights (216) 341-8601/jsijanitorial.com

509 504

Ronald Martinez Sr.

1969

Commercial janitorial services

Ronald Martinez Jr., president

Car Parts Warehouse, Brook Park (216) 676-9304/carpartswarehouse.net

495 525

Tonino and Carmelina Di Fiore

1975

Warehouse distributor and retailer of auto parts

Tony G. Di Fiore, owner

Orlando Baking Co., Cleveland (216) 361-1872 /orlandobaking.com

400 372

Guistino Orlando

1872

Baker serving breads and rolls throughout Northeast Ohio and across the country

John A. Orlando, president, CEO

Famous Enterprises Inc., Akron (330) 762-9621/famous-supply.com

399 421

Hyman Blaushild

1933

Wholesale distributor of plumbing, HVAC, building and industrial products

Marc Blaushild, president, CEO

King Nut Cos., Solon (440) 248-8484/kingnut.com

378 360

Michael Kanan

1927

Purveyor of nuts and snacks

Martin Kanan, president, CEO

The K&D Group, Willoughby (440) 946-3600/kandd.com

351 345

Douglas E. Price III and Karen M. Paganini

1984

Owner and manager of 11,000 apartment units throughout Northeast Ohio

Karen M. Paganini, president, COO Douglas E. Price, CEO

Sirna & Sons Produce, Ravenna (330) 298-2222/sirnaandsonsproduce.com

338 298

Gaetano Sirna

1979

Food distributor

Tom Sirna, president Vince Sirna, vice president

The Cafaro Co., Niles (330) 747-2661/cafarocompany.com

300 300

William M. Cafaro

1949

Real estate development firm and shopping center owner and operator

William A. Cafaro Anthony M. Cafaro Jr., co-presidents

Foundation Software, Strongsville (800) 246-0800/foundationsoft.com

279 241

Fred J. Ode

1985

Provider of business software and services to the construction industry

Fred J. Ode, CEO, chairman, founder Mike Ode, president

New Horizons Baking Co., Norwalk (419) 663-6432/newhorizonsbaking.com

277 265

Tilmon F. Brown

1967

Commercial bakers

Trina J. Bediako, president Tilmon (Tim) F. Brown, CEO

Ross Environmental Services Inc. and affiliates, Elyria (440) 366-2000/rossenvironmental.com

259 252

Bob and Ada May Ross

1949

Hazardous and industrial waste management firm

William E. Cromling III Jon Cromling, co-owners

Majestic Steel USA Inc., Pepper Pike (800) 321-5590/majesticsteel.com

243 298

Dennis H. Leebow

1979

Steel service center; distributor and processor of flat rolled and cold rolled steel in North American steel market

Todd M. Leebow, president, CEO

Donley's Inc., Cleveland (216) 524-6800/donleyinc.com

210 223

Terry Donley

1941

Construction and concrete solutions provider

Malcolm M. Donley, president, CEO

Delta Systems, Streetsboro (330) 626-2811/deltasystemsinc.com

209 207

James A. Barry

1972

Designer and manufacturer of switches and electronic components for outdoor power equipment and neighboring markets

Elizabeth Barry, president, CEO

Angstrom Graphics, Cleveland (216) 271-5300/angstromgraphics.com

200 224

Wayne Angstrom

1917

Provider of print, direct mail, fulfillment, omnichannel and marketing solutions

Wayne Angstrom, chairman; David Neumann, president, CEO, Angstrom Graphics MW; Kristina Neumann, managing director

Jarrett, Orrville (330) 682-0099/gojarrett.com

195 162

W. Michael and Diane Jarrett

1999

Parent company for Jarrett Logistics Systems, PackShip, Jarrett Fleet Services, Zephyrs Fitness and Fortis Group LLC

W. Michael Jarrett, president, CEO

Q-Lab Corp., Westlake (440) 835-8700/q-lab.com

176 174

George Grossman

1956

Global provider of material durability testing products and test services

Doug Grossman, CEO

THIS YEAR

YEAR FOUNDED

RESEARCHED BY CHUCK SODER (CSODER@CRAIN.COM)

Get all 84 firms in Excel format and more executive names. Become a Data Member: CrainsCleveland.com/data Information is supplied by the companies. Send feedback to Chuck Soder: csoder@crain.com.

(1) Employment figures are full-time equivalent as of March 1. (2) This is a staffing firm; the vast majority of these employees work on behalf of other companies.

P023_CL_20190520.indd 23

5/17/19 2:40 PM

PA G E 2 4

M AY 2 0 - 2 6 , 2 019 |

CRAIN’S CLEVELAND BUSINESS

BROWNS

‘Beyond the business’

CONTINUED FROM PAGE 1

The News 5 VP and GM told Crain’s in 2015 that WEWS pays for the cost of producing the preseason games, and the station shares some of the advertising revenue with the Browns. If and when the Browns solicit bids for the preseason and shoulder programming, WKYC — which had the preseason rights from 2007-14 — is among the stations that will express its interest, Byrnes said. “We had a very long relationship with the team,” the WKYC president and GM said. “Channel 5 has done a great job, but I’d be lying if I said we didn’t want a shot to get them back.” WJW, which will air the Browns’ Thursday night game against the Pittsburgh Steelers on Nov. 14, also could want in on the action. “Fox 8 most certainly will benefit substantially from the select number of Browns games that will end up on Fox each year as part of our NFL on Fox deal, and we will always be interested and open to discuss Browns local TV rights as those opportunities present themselves,” said Kevin Salyer, WJW’s VP of programming and marketing. The Browns — like the local networks discussing advertising rates for team-related programming — will be negotiating from a position of power. And what the team does with its next radio deal could be intriguing, since the current one, which is entering its seventh season, was the first of its kind in the NFL. At the time, the Browns brought Cleveland’s two all-sports stations — ESPN Cleveland (WKNR-AM, 850) and The Fan (WKRK-FM, 92.3) — to-

The Browns’ last appearance on “Monday Night Football” was a wild 33-27 loss to the visiting Baltimore Ravens in 2015. The game was televised locally by WKYC. (Gregory Shamus/Getty Images)

gether for a deal that resulted in more than 1,000 annual hours of team programming and a three-way gameday broadcast that included WNCXFM, 98.5. The unique agreement expanded

“Cleveland Browns Daily” from one to two hours per day and resulted in the show, which airs on WKNR, being broadcast in a state-of-the-air studio that the Browns built at their headquarters in Berea.

A Browns broadcasting angle that has been solidified is WKYC’s May 14 announcement that it had secured the local rights for the Browns’ “Monday Night Football” appearances the next three years. WKYC, because it aired the Browns’ last “Monday Night Football” showing in 2015 (a wild 33-27 loss to the visiting Baltimore Ravens), had the right of first refusal, Byrnes said. The new deal, which runs through 2021, was negotiated with ESPN. Three of the Browns’ first five games this season will air on WKYC, including a Sept. 22 contest against the Los Angeles Rams at FirstEnergy Stadium that will be Cleveland’s first “Sunday Night Football” showing in 11 years. Ad sales for that game are split with NBC, Byrnes said. The deal WKYC negotiated with ESPN is similar, the station president said. “There are so many units to sell. We usually get a couple before (the game) and a couple after,” Byrnes said. The difference, she noted, is WKYC splits the rating with ESPN, since the Monday night audience in the Cleveland market is divided between the two networks. “For ‘Sunday Night Football,’ that rating is all ours,” Byrnes said. As a result, the cost of local spots for “Monday Night Football” aren’t as high as the Sunday night prices, but they’re “still healthy,” Byrnes said. With the Browns, who played 29 of their 32 games in 2016 and ’17 at 1 p.m., expected to be night owls for the foreseeable future, those ad dollars are getting divvied up more than they were during a 10-year stretch in

which the club had just 11 primetime appearances. WOIO, the local CBS affiliate, will air 11 Browns regular-season games. The station doesn’t get one of the team’s four prime-time contests, but its slate includes the regular-season opener against the Tennessee Titans and a pair of 4:25 p.m. games — road dates against the New England Patriots and Pittsburgh Steelers on Oct. 27 and Dec. 1, respectively — that figure to draw two of the largest audiences of the season. WOIO vice president and general manager Erik Schrader said the excitement for the 2019 season started to build as soon as the 2018 campaign ended, but the hysteria really picked up after the team traded for Beckham in March. Once the Browns acquired one of the game’s best wide receivers, WOIO “started hearing from clients and selling spots. It’s been extremely active from the day Odell Beckham showed up,” Schrader said. Byrnes, whose station is among the biggest local beneficiaries of the Browns’ prime-time prominence, said the Browns’ 2019 ratings will be “huge,” no matter the time slot. “We won’t double or triple the numbers, but it makes everyone feel so good about where we’re going,” the WKYC president said. “It’s almost not about deals or sponsors or anything else. It’s about what the city deserves and what the fans deserve. It goes beyond the business, truthfully.” Soon, though, that business, along with the local radio industry, will have a big-time free-agent-to-be in the Browns. “Finally, everything seems to be falling their way,” said Schrader, the WOIO VP and GM.

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Advertising Section

PEOPLE ON THEEMOVE PEOPLE ON THE MOV Advertising Section

ACCOUNTING

ARCHITECTURE

CONSTRUCTION

TAX Planning Group

AXT Company

Jane Pool hasIte volo ACCOUNTING officte mpossitatint volut fugiaec tibus, sumqui temposa AXT Company ndianti onserrumende Pool Jane se et doles doles cus, Salma Starlgn hasIte quaeceres erro quia volo officte volorehendam aut moloratem mpossitatint volut cus net aperibus dicta nem fugiaec tibus, sumqui ligenda nditis endantiaesed temposa ndianti quos doluptur sitatur onserrumende se et eproviduste volende riatum doles doles cus, verum expel ipicatenis quaeceres erro quia volorehendam aut moloratem doluptatiunt volupta quam, nem dicta ommolup tatur? Quiaeperi auda cus net aperibus ed pa cus in repudionem quamus et ligenda nditis endantiaes aut velluptam videlic ieniet quos doluptur sitatur riatum volende hariam vero cus, audit eproviduste optatquatem expla doluptatur verum expel ipicatenis autatqui dolori ut facepro doluptatiunt volupta quam, auda ommolup tatur? Quiaeperi quamus et pa cus in repudionem ieniet videlic aut velluptam ARCHITECTURE hariam vero cus, audit optatquatem expla doluptatur autatqui dolori ut facepro Davis Design

ARCHITECTURE

Franki Henry hasIte ACCOUNTING volo officte mpossitatint volut fugiaec tibus, sumqui Davis Design temposa ndianti Paul Jones hasIte onserrumende se et Frank Henry doles doles cus, quaeceres erro volo officte quia volorehendam aut mpossitatint volut moloratem cus net aperibus fugiaec tibus, dicta nem ligenda nditis sumqui temposa endantiaesed quos doluptur ndianti doles onserrumende se et doles sitatur eproviduste volende riatum verum expel ipicatenis cus, quaeceres erro quia volorehendam aut moloratemdoluptatiunt volupta quam, nem ommolup tatur? Quiaeperi auda cus net aperibus dicta ed pa cus in ligenda nditis endantiaes repudionem quos doluptur sitatur quamus et aut eproviduste volende riatum velluptam videlic verum expel ipicatenis ieniet hariam vero doluptatiunt volupta quam, auda cus, audit ommolup tatur? Quiaeperi quamus et pa cus in repudionem aut velluptam videlic ieniet audit ACCOUNTING cus, hariam vero optatquatem expla doluptatur autatqui dolori ut facepro Jon & Jon Co.

ARCHITECTURE

Carol Strong hasIte volo officteCONSTRUCTION ACCOUNTING mpossitatint volut fugiaec tibus, Jon & Jon Co. sumqui temposa Jenn Stone ndianti onserrumende se et Carol Strong hasIte doles doles cus, quaeceres erro volo officte quia volorehendam aut mpossitatint volut moloratem cus net aperibus fugiaec tibus, dicta nem ligenda nditis sumqui temposa et quos doluptur se endantiaesed ndianti onserrumende erro sitatur eproviduste volende doles doles cus, quaeceres riatum verum expel ipicatenis quia volorehendam aut doluptatiunt volupta quam, moloratem cus net aperibus ommolup tatur? Quiaeperi auda dicta nem ligenda nditis pa cus in repudionem quamus et endantiaesed quos doluptur aut velluptam videlic ieniet sitatur eproviduste volende hariam vero cus, audit riatum verum expel ipicatenis optatquatem expla doluptatur doluptatiunt volupta quam, autatqui auda dolori ut facepro Quiaeperi tatur? ommolup quamus et pa cus in repudionem aut velluptam videlic ieniet hariam vero cus, audit optatquatem expla doluptatur facepro autatqui dolori ut

P024_CL_20190520.indd 24

INSURANCE

LEGAL

BEST BUILD

LEGAL Russel Agency

JOHNSON LLP

CONSTRUC Salma Starlgn hasIte volo officte mpossitatint volut fugiaec tibus, sumqui Salma Starlgn temposa ndianti onserrumende se et doles doles cus, quaeceres erro quia volorehendam aut moloratem cus net aperibus dicta nem ligenda nditis endantiaesed quos doluptur sitatur eproviduste volende riatum verum expel ipicatenis doluptatiunt volupta quam, ommolup tatur? Quiaeperi auda pa cus in repudionem quamus et aut velluptam videlic ieniet hariam vero cus, audit optatquatem expla

Salma Starlgn hasIte volo officte mpossitatint volut Thompsom Paula fugiaec tibus, sumqui temposa ndianti onserrumende se et doles doles cus, quaeceres erro quia volorehendam aut moloratem cus net aperibus dicta nem ligenda nditis endantiaesed quos doluptur sitatur eproviduste volende riatum verum expel ipicatenis doluptatiunt volupta quam, ommolup tatur? Quiaeperi auda pa cus in repudionem quamus et aut velluptam videlic ieniet hariam vero cus, audit optatquatem expla doluptatur autatqui dolori ut facepro

Paula Thompsom hasIte volo officte mpossitatint volut John Smith fugiaec tibus, sumqui temposa ndianti onserrumende se et doles doles cus, quaeceres erro quia volorehendam aut moloratem cus net aperibus dicta nem ligenda nditis endantiaesed quos doluptur sitatur eproviduste volende riatum verum expel ipicatenis doluptatiunt volupta quam, ommolup tatur? Quiaeperi auda pa cus in repudionem quamus et aut velluptam videlic ieniet hariam vero cus, audit optatquatem expla doluptatur autatqui dolori ut facepro

John Smith hasIte volo officte mpossitatint volut fugiaec tibus, sumqui temposa ndianti onserrumende se et doles doles cus, quaeceres erro quia volorehendam aut moloratem cus net aperibus dicta nem ligenda nditis endantiaesed quos doluptur sitatur eproviduste volende riatum verum expel ipicatenis doluptatiunt volupta quam, ommolup tatur? Quiaeperi auda pa cus in repudionem quamus et aut velluptam videlic ieniet hariam vero cus, audit optatquatem expla doluptatur autatqui dolori ut facepro

ACCOUNTING

INSURANCE

LAW

LEGAL

Davis Inc.

SMITH GROUP

Moris Law LEGAL

George Group

INSURANCE Paul Jones hasIte volo officte mpossitatint volut fugiaec tibus, Don James sumqui temposa

Don James hasIte volo officte mpossitatint volut fugiaec tibus, Shela Time sumqui temposa ndianti onserrumende se et doles doles cus, quaeceres erro quia volorehendam aut moloratem cus net aperibus dicta nem ligenda nditis endantiaesed quos doluptur sitatur eproviduste volende riatum verum expel ipicatenis doluptatiunt volupta quam, ommolup tatur? Quiaeperi auda pa cus in repudionem quamus et aut velluptam videlic ieniet hariam vero cus, audit optatquatem expla doluptatur autatqui dolori ut facepro

Shela Time hasIte volo officte mpossitatint volut Yan Peter fugiaec tibus, sumqui temposa ndianti onserrumende se et doles doles cus, quaeceres erro quia volorehendam aut moloratem cus net aperibus dicta nem ligenda nditis endantiaesed quos doluptur sitatur eproviduste volende riatum verum expel ipicatenis doluptatiunt volupta quam, ommolup tatur? Quiaeperi auda pa cus in repudionem quamus et aut velluptam videlic ieniet hariam MORIS vero cus, LAW audit

Peter Yan hasIte volo officte mpossitatint volut fugiaec tibus, sumqui temposa ndianti onserrumende se et doles doles cus, quaeceres erro quia volorehendam aut moloratem cus net aperibus dicta nem ligenda nditis endantiaesed quos doluptur sitatur eproviduste volende riatum verum expel ipicatenis doluptatiunt volupta quam, ommolup tatur? Quiaeperi auda pa cus in repudionem quamus et aut velluptam videlic ieniet hariam vero cus, audit optatquatem expla doluptatur autatqui dolori ut facepro

CONSTRUCTION

INSURANCE

LEGAL

Ground Up

Marble Agency

Jenn StoneINSURANCE hasIte volo officte mpossitatint volut fugiaec tibus, sumqui Tina Bond temposa ndianti onserrumende se et doles doles cus, quaeceres erro quia volorehendam aut moloratem cus net aperibus dicta nem ligenda nditis endantiaesed quos doluptur sitatur eproviduste volende riatum verum expel ipicatenis doluptatiunt volupta quam, ommolup tatur? Quiaeperi auda pa cus in repudionem quamus et aut velluptam videlic ieniet hariam vero cus, audit optatquatem expla doluptatur autatqui dolori ut facepro

Tina Bond hasIte volo officte mpossitatint volut fugiaec tibus,Bella Jones sumqui temposa ndianti onserrumende se et doles doles cus, quaeceres erro quia volorehendam aut moloratem cus net aperibus dicta nem ligenda nditis endantiaesed quos doluptur sitatur eproviduste volende riatum verum expel ipicatenis doluptatiunt volupta quam, ommolup tatur? Quiaeperi auda pa cus in repudionem quamus et aut velluptam videlic ieniet hariam vero cus, audit optatquatem expla doluptatur autatqui dolori ut facepro

TION

AXTCO.

ndianti onserrumende se et doles doles cus, quaeceres erro quia volorehendam aut moloratem cus net aperibus dicta nem ligenda nditis endantiaesed quos doluptur sitatur eproviduste volende riatum verum expel ipicatenis doluptatiunt volupta quam, ommolup tatur? Quiaeperi auda pa cus in repudionem quamus et aut velluptam videlic ieniet hariam vero cus, audit optatquatem expla doluptatur autatqui dolori ut facepro

INSURANCE

LAW

LEGAL

Calla LLP

LEGAL

Bella Jones hasIte volo officte mpossitatint volut Michael Banks fugiaec tibus, sumqui temposa ndianti onserrumende se et doles doles cus, quaeceres erro quia volorehendam aut moloratem cus net aperibus dicta nem ligenda nditis endantiaesed quos doluptur sitatur eproviduste volende riatum verum expel ipicatenis doluptatiunt volupta quam, ommolup tatur? Quiaeperi auda pa cus in repudionem quamus et aut velluptam videlic ieniet hariam vero cus, audit optatquatem expla doluptatur autatqui dolori ut facepro

Singletree LLP Michael Banks hasIte volo officte mpossitatint volut fugiaec tibus, sumqui temposa ndianti onserrumende se et doles doles cus, quaeceres erro quia volorehendam aut moloratem cus net aperibus dicta nem ligenda nditis endantiaesed quos doluptur sitatur eproviduste volende riatum verum expel ipicatenis doluptatiunt volupta quam, ommolup tatur? Quiaeperi auda pa cus in repudionem quamus et aut velluptam videlic ieniet hariam vero cus, audit optatquatem expla doluptatur autatqui dolori ut facepro

Advertising Section

PEOPLE ON THE MOVE For more information, contact Debora Stein at dstein@crain.com CrainsCleveland.com/People-On-The-Move

autatqui dolori ut facepro

5/17/19 2:30 PM

CRAIN’S CLEVELAND BUSINESS

M AY 2 0 - 2 6 , 2 019 |

PA G E 2 5

AKRON

UA startup makes a tougher titanium By Dan Shingler dshingler@crain.com @DanShingler

A recent University of Akron doctoral graduate and his professor have made what they say is a major breakthrough in materials science that doesn’t involve polymers — for which the university is known — but titanium. Brandon Strahin, who just defended his dissertation on the technology, has come up with a method for coating titanium with a thin oxide layer that makes components made from the material tougher, able to withstand impact and even be self-lubricating, Strahin and Gary Doll, the UA’s Timken professor of surface engineering, said. Strahin and Doll have formed Precision Surface Science, with Strahin as majority owner. The company has three patents pending on its new technology. “We have a patent that covers the actual material, another that covers the process and another that covers a specific application,” Strahin said. The son of a Youngstown steelworker whose father taught him early that getting an education was easier than physical work, Strahin always has been interested in metals. Titanium is a metal that was once too expensive to use in most manufacturing applications. That’s changed in the past few decades, and titanium is now much more common. It’s stronger than steel at high temperatures and lighter, but it’s also soft and can be damaged more easily. Strahin’s technology solves much of that problem, he said, by putting a thin layer of a hard oxide on the outer surface of a titanium piece. The layer itself is basically a tarnish or similar to a patina that forms on copper when it oxidizes, except Strahin’s layer is engineered to give special wear-resistant characteristics. Others have tried this but have done it with methods using caustic chemicals, he said. Precision Surface’s method does not use them and doesn’t produce hazardous byproducts, Strahin said. Strahin’s process is surprisingly simple. He puts a titanium part in a special oven — a converted kiln capable of reaching temperatures of 600 to 800 degrees Celsius — and exposes the titanium to a mix of nitrogen and oxygen gas. That causes the surface of the metal to oxidize, leaving it covered with a black coating that is tougher than the titanium it protects and which looks better to some manufacturers, to boot. Precision Surface already is coating parts for customers in small batches and working with clients on research and development for possible licensing, Strahin said. But what he’s really hoping is to break into big industries such as automotive and medical devices. He originally thought the technology would appeal to aerospace companies, but ceramics and other new materials have replaced titanium in many applications there. Titanium has special advantages that could appeal to automakers and medical-device makers, Strahin said. That’s because it’s lightweight and because titanium does not tend to re-

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act with other substances, such as human tissue. “Titanium is actually considered to be one of the most biocompatible materials we know of,” Strahin said. Strahin He envisions even more potential in the transportation sector, where he said coated titanium components would be far lighter than steel and tougher than aluminum. That would mean that engines and wheels, with lighter parts, could turn more easily. “Our target is companies where it’s a game changer — like an increase in the efficiency of automotive engines. If an automaker uses titanium in an engine and that increases efficiency by 25%, that’s a game changer,” Strahin said. In the meantime, Strahin’s trying to determine whether he’ll need to bring in outside investors or shoestring his operation with revenue from small parts jobs and consulting work. He may have to decide soon, especially if he gets interest from a customer that needs large-scale projects, because he’ll need bigger equipment. “Right now, we have a few companies that are evaluating it for commercialization, and we have a company we’re working with on commercial research and development,” Strahin said. He’s also recently been in discussions with angel investors in and around Akron, he said. So far, the company’s outside funding has come in the form of $6,000 in grants from the National Science Foundation (NSF). Precision Surface also is hoping to get another $50,000 in NSF grants, Doll said. “For newer, bigger equipment, we’re talking about $500,000 or so … so outside investment is a real possibility,” Strahin said. At least some of those who have seen Strahin’s technology are impressed — including Dave Yothers, president of Redline Manufacturing Consultants in Lewis Center and a rep for eight manufacturers who produce metal parts in the U.S. and Canada. “Titanium is extremely strong, like stainless steel but half the weight. The kicker is it’s not hard,” Yothers said. “This basically puts an ultra-hard layer, sort of like an oxide layer, on the titanium at the same time it’s blackening it, and for my customers that’s very attractive.” Another plus is that the process does not significantly change the size of the treated piece. The company may need to move soon. It’s currently housed in an engineering building at UA but only until it’s on its own feet financially, Strahin said. On top of that, it will need a larger space in an industrial building to hold big equipment and conduct large-scale operations. Doll and Strahin currently are looking at potential sites, including in the Bounce Innovation Hub, but have not decided on one yet. They intend to stay in town, though. Strahin also is not stopping with titanium. He said he’s working on ways to produce a similar coating on aluminum and magnesium.

Guitar-pedal maker strikes a chord with global push By Judy Stringer clbfreelancer@crain.com

Earlier this month, Jamie Stillman and Julie Robbins, founders of Akron-based EarthQuaker Devices, flew to Washington, D.C., to accept an award for being named Exporter of the Year by the U.S. Small Business Administration. The Beltway, however, is just about the shortest distance the couple has gone in an impressive campaign to sell their handmade guitar pedals around the world. Stamps from China, South Korea, Australia and Japan dot their passports, and Stillman and Robbins soon will return to Japan for a five-city tour to promote EarthQuaker pedals, taking with them a cadre of Rubber City musicians. Robbins said international “matchmaking appointments” — arranged through the U.S. Department of Commerce’s Gold Key Service — have become so frequent, “we each had to get a second passport to send off with the [Gold Key Service] applications so we could travel on the first one.” EarthQuaker’s rise as worldwide exporter began in earnest about two years ago. Stillman, a guitarist and former tour manager for the Black Keys, started crafting and selling special-effects pedals out of his West Akron basement in 2005. Robbins left her job in banking to join him as fulltime CEO in 2011. Under Robbins’ leadership, EarthQuaker grew to a $3 million business by 2015, which included some sales in Europe. That year, the company renovated a two-story, 15,000-square-foot building on West Bowery Street where it currently houses about 50 employees who design, fabricate, test and market a line of 40 guitar pedals and special-effects devices. Come 2016, Robbins said, EarthQuaker was ready to expand its global footprint. She reached out to the Ohio Small Business Development Center Export Assistance Network at Cleveland State University’s Monte Ahuja College of Business, and over the next two years, Robbins availed herself of as many of the free or lowcost export programs as possible. The company, for instance, applied for and was granted a $12,500 subsidy from the state under the Ohio International Market Access Grant for Exporters. That money offset the costs of tailoring marketing content to foreign markets. EarthQuaker also got access, via the Ohio Export Internship Program, to a summer intern to help translate its marketing materials, social media and manuals into seven languages. The program pays 50% of the intern’s stipend. In addition, EarthQuaker participated in the Global Business Center’s nine-month GlobalTarget program, which provides monthly educational seminars on topics such as export logistics, international business regulations and trade finance. The program also pairs participants with mentors from larger companies that have experience exporting products, according to Nate Ward, director of the center, which is at CSU. GlobalTarget is a partnership between the university,

EarthQuaker Devices CEO Julie Robbins, surrounded by the guitar pedals, embarked on a concentrated effort to sell the products globally. (Shane Wynn for Crain’s)

the Ohio Export Assistance Network and the U.S. Commercial Service, the Commerce Department’s trade promotion arm. Ward and trade counselor Alex Simon, through their work with the Ohio Export Assistance Network, also guided EarthQuaker in the development of an international marketing strategy, which identified Japan and Germany as high-growth targets. The Akron couple also made use of the Commerce Department’s Gold Key “matchmaking” service, which facilitated face-to-face meetings with distributors in Shanghai; Seoul, South Korea; and Melbourne and Sydney, Australia. As a result of those trips, the company landed a contract with Yamaha’s Australian division with an opening order totaling $41,000. Stillman and Robbins, drawing from lessons learned in the GlobalTarget program, also were able to form a distribution relationship with Yamaha in Japan, opening the door for its most significant push into the Asian market. “One of the biggest things we

learned was that you can’t presume that you can take your American way of doing things and do it the same way everywhere,” Robbins said. “You need to learn how customs and culture are different in places and figure out how to adapt your approach to work with those differences.” Sometimes, the differences can provide opportunities. Robbins said EarthQuaker is partnering with Yamaha to bring local musical act Relaxer, which features Stillman and several EarthQuaker employees, and solo artist Lisa Bella Donna on a fivecity tour of Japan this month. The Akron musicians will share the stage at Yamaha dealerships with two Japanese acts in what Robbins called a “unique opportunity to elevate the EarthQuaker name in Japan.” “Business there is a lot more relationship-based, and what we are looking for is any opportunity to set ourselves apart from the bunch,” Robbins said. Early indications suggest the export focus is paying off. International sales have more than doubled in the past five years, according to data provided by the company, increasing from 21% of its total revenue in 2014 to 26% of its $5 million intake last year. Ward said EarthQuaker is an ideal fit for Export Assistance Network programming. Companies that tend to benefit the most, he added, are local manufacturers who produce “something that is unique and high-quality.” But what makes Robbins and her team especially shrewd, Ward said, is how they leveraged the programs and services as a whole rather than participating in just one or two aspects of the offerings. “They are kind of a super-user of basically everything the state has to offer, which is one reason I think they were such a great candidate to win the national award,” he said. “We want more companies that will do that. The programs are designed to work together. “They bought into that promise, and we are excited to see them succeed.”

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CRAIN’S CLEVELAND BUSINESS

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PEOPLE ON THE MOVE

To place your listing, visit www.crainscleveland.com/people-on-the-move or for more information, please call Debora Stein at (917) 226-5470 or email dstein@crain.com. BANKING

ENGINEERING & CONSULTING

FINANCIAL SERVICES

PROFESSIONAL SERVICES

S & T Bank

Karpinski Engineering

Smith Seckman Reid, Inc.

EdgePoint

S&T Bank is proud to announce the addition of Michael Kasmer as vice president, business banker serving the northeast Ohio market. Reporting out of the Bank’s Independence office, Michael will be responsible for pursuing new business partnerships throughout the Cleveland area. He brings more than 15 years of experience to this position, with a robust background in sales, financial analysis, and business banking relationship management.

Joe Hofstetter, PE, CEM, LEED AP and James Dudt, PE, LEED AP BD+C have been promoted to principals of Karpinski Hofstetter Engineering. Hofstetter is Director of Building Performance and Sustainability. He helps building owners get more value out of their building assets through energy, Dudt sustainability, and infrastructure improvements. Dudt is Director of Pittsburgh Operations, where he and his team provide engineering services for clients in the healthcare, higher education, corporate, and hospitality sectors. As principals, they join the leadership team for the 5-office, 125+ person firm. Learn more at www.karpinskieng.com.

After successfully serving healthcare and higher education clients in Cleveland and the Northeast Ohio area for the Dzienny better part of a decade, Smith Seckman Reid, Inc. (SSR) has formally committed to the area with the opening of an office. Lead by Senior Engineers Widowski Andy Dzienny (electrical) and Brian Widowski (mechanical), the office will continue to provide the high level of service that our clients have grown to expect and to provide NEO with a proven option for engineering and facilities consulting needs. This office will allow us to expand our engineering design service offerings to include technology and equipment planning, commissioning, sustainability, and other consulting services.

EdgePoint, a boutique investment banking firm located in Beachwood, Ohio, announced Steve Tardio has joined the firm as Managing Director. Steve will be responsible for advising the firm’s clients in mergers, acquisitions and financing transactions. Prior to EdgePoint, Steve spent over 20 years at HT Capital Advisors in New York, Chicago, and Cleveland. He will lead EdgePoint’s Consumer Practice Group with an emphasis on consumer products, food & beverage and printing & packaging industries.

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First Federal Lakewood Karen Mullen joins First Federal Lakewood’s Commercial Banking team as a Vice President, Commercial Banking Relationship Manager. Karen’s 16 years of experience in commercial banking and real estate lending will be a significant addition to the First Federal Lakewood team. Her expertise and passion for helping businesses will be a valuable asset as the bank’s commercial portfolio grows.

CONSTRUCTION

Turner Construction Company Construction executive Marty Burgwinkle was promoted to Vice President at Turner Construction Company. In his 44-year career, Marty has managed more than $2B of construction, leading notable building projects, including Quicken Loans Arena, Key Tower, Cleveland Convention Center, and Hilton Cleveland. During his 39 years at Turner, he has served in roles as chief estimator to project executive. He has mentored staff, developed exceptional teams, and maintained excellent client/partner relations. ANNOUNCE CAREER MILESTONES WITH

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ENGINEERING & CONSULTING

KS Associates, Inc. Robert Yin, P.E., joined KS Associates, Inc.’s Transportation Group as Bridge Group Leader. Robert brings 22 years of bridge engineering and transportation project management experience to KS. He specializes in the design, analysis, and inspection of complex and routine bridges, including railroad, curved steel girder, timber truss, bascule, covered, and suspension bridges. His technical proficiency and experience align with KS’s mission of delivering welldesigned, well-managed projects. ENGINEERING & CONSULTING

USA Firmware Gary Owen joins the USA Firmware team as CFO as they catapult forward, leveraging expertise in Firmware and IoT to turn smart ideas into smart products. Gary brings his vast financial expertise as well as his special knack for picking tech industry winners. Career highlights include leading a $120m IPO for Somera Communications and guiding Century Computer from near start-up to a $40m exit. Gary also devotes time to supporting non-profits in the community.

FINANCE

Stonehenge Capital Stonehenge Capital Company is pleased to announce the promotion of L’Quentus Thomas and Whitney LaNasa Thomas to Managing Directors. As Managing Director, Thomas will continue to manage and grow the operations of Stonehenge Community LaNasa Development, the firm’s national platform committed to investing in economically distressed communities and areas targeted for revitalization. In her new role, LaNasa will continue to develop and grow the Tax Credit Services business line across the country. LaNasa joined Stonehenge Capital in 2009 and under her leadership, the federal and state tax credit syndication practice grew as she developed a team of committed professionals who manage the lifecycle of incentive-based capital transactions.

HEALTH CARE

TECHNOLOGY

The Center for Health Affairs

MCPc

The Center for Health Affairs and its business affiliates CHAMPS Group Purchasing and CHAMPS Oncology announce Brian G. Lane as the organization’s new president and CEO. With deep roots in healthcare, Lane brings with him more than 20 years of experience in leadership roles, including his most recent position at Oracle as key account director for the U.S. Department of Health and Human Services. The Center and CHAMPS warmly welcome Lane to the organization and to Northeast Ohio.

MCPc, a global data protection company, is pleased to announce the promotion of Bryan Scheetz to Director of Healthcare Solutions. Bryan brings over two decades of health tech experience to his new role overseeing MCPc’s healthcare vertical. Bryan will focus on improving health systems’ cyber resiliency and developing strategies to achieve better organizational and patient outcomes through comprehensive security and sustainability programs via MCPc’s Chain of Custody Security Solutions Platform.

LEGAL

Ulmer & Berne LLP Mengxue Xie joins Ulmer as an associate in the firm’s Product Liability Practice Group, where she focuses on product liability litigation and the defense of pharmaceutical, medical device, and mass and toxic tort claims. She is experienced with civil litigation matters and assists with discovery, motion practice, and trial preparation. Mengxue received her undergraduate degree from China University of Political Science and Law, and her law degree from Case Western Reserve University School of Law.

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Laura Picariello Reprints Sales Manager lpicariello@crain.com (732) 723-0569

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Charlie Crowley

CLEVELAND BUSINESS

Managing director, Boenning & Scattergood Through Philadelphia-based investment bank Boenning & Scattergood, Akron native Charlie Crowley has worked on most of the bank acquisitions in Northeast Ohio since the last economic downturn. Crain’s sat down with Crowley, who works with a small team out of a Beachwood office he helped establish in 2013, to get his perspective on banking M&A this past decade and what trends in the banking sector could shape the market going forward. — Jeremy Nobile

The Crowley file As a native, what should people know about Akron? “People who haven’t been lately would be impressed with the downtown redevelopment and Highland Square.”

An Akron-related activity on his bucket list Riding in the Goodyear blimp

If you could have a drink with anyone alive or dead? “My father, Charles Sr., who went by Chuck. He died when I was 8.”

Lunch spot Scorpacciata Pasta Co. At The Van Aken District’s Market Hall; 3401 Tuttle Road, Shaker Heights 216-491-8800

The meal Both had the seared gnocchi with pears, Gorgonzola cream, Ohio pancetta and truffle oil, plus tangerine La Croix.

The vibe The Market Hall, which features a number of eateries, is a bright and bustling food court. There was an energetic vibe with kids playing games such as a giant Jenga. Perhaps a little loud for quiet conversation. Scorpacciata’s gnocchi is one of the more popular options, and rightfully so.

The bill $37.30 with tip

From a broad perspective, has banking M&A and the consolidation trend shaped the Northeast Ohio sector much in the past decade or so? Its been a steadily consolidating industry for a long time, certainly in the last 10 years. Going back to the recession, when National City and AmTrust and the old Ohio Savings went away, a number of banks in our region have sold. Really, just since 2012 there have been nine banks in Cleveland-Akron that have elected to sell. None of those deals (since 2012) involved banks that were in trouble, though. It really has changed the nature of our market. And our market is not unique in that, as a number of markets around the country have seen the same thing. Unfortunately, some of the smaller community banks felt they were treated a bit unfairly in terms of regulatory burdens in the aftermath of the recession, and that just made life more challenging for them. So, some have elected to leave for those reasons. But more often it’s driven by desires of their shareholders for liquidity, or when the bank had a management succession issue and the board elected to just find a partner. Was the recession the catalyst that spurred those deals? With our deals, since 2012, those banks weren’t really in trouble. Every bank has its own story for why a particular seller decided to sell, why the board thought it was worthwhile and why the buyer was interested. In some cases, the CEO was nearing retirement and the board viewed that as an opportune time to consider alternatives, which led them to think of how much they could sell their bank for. But that’s been going on for decades. Is it fair to say the rate of M&A

has slowed down a bit across the board? Just very recently there’s been a little bit of a slowdown as the market for bank stocks pulled back a little in the fourth quarter of last year over interest-rate concerns. But it will more or less pick up. We have been roughly at a pace of about 4% of bank charters per year going away through consolidation across the country. And there haven’t been many new banks starting up. Any observations on what makes the M&A trends in the past few years noteworthy? Is there anything special about how that’s all played out? Well, in the old days, banks would sell, get a good price and the executive and directors would find investors and start up another bank. Look at some of our banks that sold in more recent years, banks like Western Reserve in Medina, Ohio Commerce in Beachwood, Liberty Bank in Twinsburg and Beachwood. They were all startup de novo banks themselves. In previous periods, you might’ve seen a few of those go away, and then new banks pop back up. Ohio State Bank in Columbus is the only de novo bank formed in Ohio since the last downturn. So what’s the deal with so few new banks forming up? It’s just harder today. The regulatory burdens have been higher in terms of the capital you need to raise to get into the business, and the investment thesis has been more challenging for new banks trying to raise money. While the number of de novo banks has been virtually nothing lately, we’ve definitely seen new players come to the market. What’s driving them to this and the surrounding markets? You’ve got big markets like Columbus or Cleveland or Indianapolis with

relatively few small, locally based players. So that brings people from the outside because of the attractive nature of the market. A lot of banks have come through acquisitions or organic growth and they’re coming from smaller, less robust geographies like western Pennsylvania or Sandusky or Youngstown and gravitating to Cleveland-Akron. That makes sense and will continue. Coming out of the recession, interest rates were so low and banks in slightly less robust markets were very eager to get more loans on the books to earn a better interest-rate spread. So they were gravitating more toward major metro areas, like Cleveland, Columbus, Cincinnati, Indianapolis, etc. It’s not that everyone in western Pennsylvania said, “We have to get to Ohio.” But a lot of those banks were already in Pittsburgh and did well there. Cleveland is a similar banking market to Pittsburgh, so they figured they might do well here. Think we’ll see a pickup in new banks forming? We may see some, but it won’t be a huge number. From an investment standpoint, it’s easier to buy shares in an existing, public, profitable bank at a reasonable valuation. If you’re buying into a startup bank, it can have the best manager team and the market in the world, and the bank will still lose money for a couple of years, which makes this all the more challenging. That group in Columbus with Ohio State Bank had been very successful building up their de novo, pulling a team together for that opportunity. That kind of opportunity could present itself in Cleveland, but it’s challenging and may take a different form, like it might be an investor group buying a small bank or part of it in a different market, and opening some branches in Greater Cleveland or Akron.

700 W. St. Clair Ave., Suite 310 Cleveland, OH 44113-1230 Phone: (216) 522-1383 www.crainscleveland.com Twitter: @CrainsCleveland Publisher/editor Elizabeth McIntyre Group publisher Mary Kramer Managing editor Scott Suttell Sections editor Michael von Glahn Creative director David Kordalski Web editor Damon Sims Associate editor/Akron Sue Walton Assistant editor Kevin Kleps Senior reporter Stan Bullard, Real estate/construction Reporters Jay Miller, Government Dan Shingler, Energy/steel/auto/Akron Rachel McCafferty, Manufacturing/ energy/education Jeremy Nobile, Finance Lydia Coutré, Health care/nonprofits Senior data editor Chuck Soder Cartoonist Rich Williams Sales and Events coordinator Megan Lemke Integrated marketing manager Michelle Sustar Managing editor custom/special projects Amy Ann Stoessel Associate publisher/Director of advertising sales Lisa Rudy Senior account executives Dawn Donegan, John Petty Account executives Laura Kulber Mintz, Loren Breen People on the Move manager Debora Stein Office coordinator Denise Donaldson Pre-press and digital production Craig L. Mackey Media services manager Nicole Spell Billing YahNica Crawford Credit Thomas Hanovich Crain’s Cleveland Business is published by Crain Communications Inc.

Chairman Keith E. Crain Vice chairman Mary Kay Crain President KC Crain Senior executive VP Chris Crain Secretary Lexie Crain Armstrong CFO Robert Recchia G.D. Crain Jr., Founder (1885-1973) Mrs. G.D. Crain Jr., Chairman (1911-1996) Reprints: Laura Picariello, 732-723-0569 or lpicariello@crain.com Customer service and subscriptions: 877-824-9373 Volume 40, Number 20 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for the last week of December, at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2019 by Crain Communications Inc. Periodicals postage paid at Cleveland, OH, 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, MI 48207-2912. 1-877-824-9373. 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, MI, 48207-9911, or email to customerservice@crainscleveland.com, or call 877824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777.

THE WEEK Making a beeline for Cleveland The Cleveland Cavaliers, coming off a 19-win season, went to the college ranks to recruit their next head coach. John Beilein, 66, who has won at every level except the NBA, agreed to a five-year deal with the Cavs. Beilein spent the previous 12 seasons at the University of Michigan, compiling a 278-150 record (a .650 winning percentage) and leading the Wolverines to two appearances in the national championship game. His clubs won at least 23 games in seven of the last eight seasons. The day after the Beilein hiring was announced, the Cavs didn’t strike it rich in the NBA draft lottery on May 14. Cleveland, which had the league’s second-worst record, ended up with the fifth overall pick.

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New to the team Jodi Berg, the president and CEO of Vitamix, is the new chair of the board of directors of business development organization Team Northeast Ohio. She replaces Robert Smith, the market leader of the Cleveland office of wealth management firm Cerity Partners, who recently was named chair of JobsOhio, the nonprofit that leads the state’s economic development efforts. Team NEO also appointed Glenn Richardson, a managing director of JobsOhio, to its board.

Come together John Beilein, who led Michigan to two appearances in the national championship game, signed a five-year contract to be the Cleveland Cavaliers’ next head coach. (Jamie Squire/Getty Images)

Innovest Global is consolidating its industrial operations into one location in Bedford. The move will both expand manufacturing capacity and

create financial and operational efficiencies for the diversified industrials company. Innovest has been making curtainwalls at two locations in Cleveland since acquiring that business in December 2018. The new building is about 193,000 square feet and used to house a Walmart Supercenter.

One step closer The Lake Erie Energy Development Corp. reached an agreement with the staff of the Ohio Power Siting Board on the construction and operation of LEEDCo’s Icebreaker Wind energy project. If approved by the board later this year, LEEDCo’s six-turbine, 3.45-megawatt Icebreaker Wind project would be the first freshwater offshore wind energy installation in North America.

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