Education: Oberlin-LCCC partnership offers students a broader experience. PAGE 6
SOURCE LUNCH Meet Cheryl Stephens, CEO of the East Akron Neighborhood Development Corp. PAGE 19
CRAINSCLEVELAND.COM I DECEMBER 9, 2019
SPORTS BUSINESS
OPEN FOR BUSINESS?
Deal with Indians minority investor shows Dolans are open to someone else taking over the team, provided the fit is good | BY KEVIN KLEPS
Recent MLB team buys Eight MLB teams have been sold in the last 10 years. A look at how the teams were valued in the transactions, along with the April 2019 franchise values, according to Forbes: Team, club value, year sold
Kansas City Royals, $1 billion, 2019 Miami Marlins, $1.2 billion, 2017 Seattle Mariners, $1.4 billion, 2016 San Diego Padres, $800 million, 2012 Los Angeles Dodgers, $2 billion, 2012 Houston Astros, $465 million, 2011 Texas Rangers, $593 million, 2010 Chicago Cubs, $700 million, 2009 SOURCES: FORBES AND PUBLISHED REPORTS
2019 value
$1.025 billion $1 billion $1.6 billion $1.4 billion $3.3 billion $1.8 billion $1.7 billion $3.1 billion
Sherman, MLB commissioner Rob Manfred confirmed last month, had a deal with the Dolans that eventually would have led to Sherman becoming the franchise’s controlling partner. Sherman That path wasn’t realized because Sherman couldn’t pass up a chance to purchase the Royals, who play in a city in which the new owner founded a pair of energy businesses. Sherman’s stake in the Tribe — which, according to sources, is in the 30% range — has been placed in a trust and will be controlled by an independent trustee. A source with knowledge of the situation told Crain’s that when, or if, that stake is sold, it will not include the rights that were given to Sherman — which would have led to a controlling interest in the Indians. It’s possible, the source said, that Paul Dolan could agree to a similar deal with another investor in the future, but the source doesn’t believe that is currently under consideration.
JONATHAN SLOANE/GETTY IMAGES
I
n a statement that congratulated Cleveland Indians minority investor John Sherman for getting approved as the new owner of the Kansas City Royals on Nov. 21, Tribe chairman and CEO Paul Dolan said the club’s “operational approach” wouldn’t change. In a way, though, it already had. Yes, the Indians, as Dolan said that day, will continue their pursuit of a World Series championship and keep trying to create a quality fan experience. But Sherman — a 64-year-old Kansas City entrepreneur — represented something different for the Dolans. He was someone they trusted with the future of the baseball team they purchased in 2000.
See INDIANS on Page 17
CRAIN’S GRAPHIC
GOVERNMENT
‘Safety pays dividends’ Ohio’s BWC gets employees back to work fast, but an aging workforce and increasing costs loom BY KIM PALMER
At the end of Stephanie McCloud’s first year as CEO of the Ohio Bureau of Workers’ Compensation, the organization refunded $1.5 billion, or an average of 88% of premium amounts, to its member employers, who represent 242,000 public and private employees in the state. This year’s dividends mark the fifth time
McCloud
since 2013 that the agency has returned $1 billion or more to employers. The 2019 rebates are the result of strong returns from the BWC’s $27.5 billion investment fund, which had a good year. “At the end of fiscal year 2018, we were collecting $535 million less in premiums than in 2010. This includes $423 million less for private employers and $112 million less for public employers,” McCloud
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said. “This was achieved by reducing average rates for private employers by 35% and for public employers by nearly 34%.” These rebates and premium reductions are a result of complex calculations done annually by the BWC staff. “We rebalance every single year — our earnings, our premiums, our costs, what claims cost and is there medical inflation,” said McCloud, who returned to BWC as
CEO in January after working as a staff attorney at the agency in the late 1990s. Claims are down dramatically, to 85,000 in 2018 from 260,00 in 2000. McCloud said that’s partly the result of fundamental changes in the production methods and culture of manufacturing, one of the state’s largest industry sectors. See BWC on Page 6
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TECHNOLOGY
OhioX aims to catalyze tech industry's struggling growth New nonprofit association aims to promote and support innovation in technology BBY JEREMY NOBILE
Beyond a decent biotech industry and a handful of standout startups, Ohio generally has struggled to attract, grow and retain tech-focused companies and the people building them. That’s where OhioX wants to step in. Launching officially on Monday, Dec. 9, OhioX is the state’s first nonprofit association designed to promote and support technology, innovation and all that encompasses in the business sector. Such an initiative comes at a pivotal time not just for the state overall but for Northeast Ohio in particular, where the bulk of the group’s organizers are based and where initiatives to spur regional economic growth through tech-based enterprises often feel somewhat mismatched with the reality of the support ecosystem here. “As more and more people had similar ideas of what can we do to unite Ohio and those people who are interested in and committed to growing the Ohio economy through technology and innovation, we sensed an opportunity for a really powerful role for a nonprofit organization such as this,” said Chris Berry, OhioX president. “It’s all about uniting people, and how we promote and share ideas and connect companies.” Organizers include Berry and co-
Berry
Gritzan
Why it’s needed
Small tech companies like Squirrels LLC in North Canton, which focuses on developing wireless screen-mirroring software, fall into a “no-man’s land” for investment. | CONTRIBUTED
founders Jessica Gritzan, chief operating officer of North Canton’s Squirrels LLC; David Croft, an attorney with Meyers Roman Friedberg & Lewis who works with startup companies and specializes in blockchain; and Ari Lewis, a co-founder of Grasshopper Capital, a venture capital firm now investing in blockchain-focused companies that originally slanted more toward cryptocurrency when it launched in 2017. Lewis, a young but outspoken critic of the region’s shortcomings in its support of the tech industry, recently
moved back to Cleveland — where he now authors the Cleveland Tech newsletter — from New York to launch tech consultancy Green Block Group earlier this year with Berry, an Akron native stationed in Columbus who’s worked under John Boehner and in the state treasury office for Josh Mandel. Through writing the tech newsletter and working on Green Block, Lewis said he came to realize how fragmented the tech ecosystem is here and the role that something along the lines of OhioX could play in that.
There’s a curious duality at play when it comes to the tech industry in this region, which underscores the need for something like OhioX. On one hand, there are bits and pieces that show potential for a booming tech industry here. Not least of these is the low cost of operating a business here compared to the tech centers of the coasts, and the general quality of life that comes with a comparatively cheaper cost of living in the Midwest. Ohio also is the 24th-most innovative state in America, according to Bloomberg’s 2019 State Innovation Index. Combine those factors with the fact that, according to a spring survey by Brunswick Group, twofifths of people ages 18-34 living in San Francisco and working in the tech field reported plans to leave Silicon Valley in the next 12 months — possibly because of deteriorating
quality of life, according to another survey, and high costs — and there’s a sense that markets like this could pick up those workers and entrepreneurs. That’s all the more significant when considering Flashstarts Inc., the 7-year-old startup business accelerator and micro venture capital firm, last week announced it will change its focus to consulting and advisory as it sees a slowdown in startup activity nationwide. That decline is even greater in Northeast Ohio, according to CEO Charles Stack, suggesting better promotion of the state as hospitable ground for startups could make more of an impact. On the other hand — while not discounting the impact and support networks of groups like JumpStart Inc., BioEnterprise and MAGNET, among others — Ohio often fumbles when it comes to living up to its potential in the tech sector. Initiatives like the one surrounding Blockland, which dreams of a Cleveland tech mecca, sometimes feel mismatched with reality when considering the region’s struggles to grow and retain new tech companies. That can be be chalked up to any number of nuanced reasons — a shortage of general support and motivated investors among them. See OHIOX on Page 18
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2 | CRAIN’S CLEVELAND BUSINESS | December 9, 2019
BUSINESS DEVELOPMENT
ELITE could be quality add to NEO investment efforts BBY KIM PALMER
The announcement that United Kingdom-based ELITE, a business development firm that combines education, mentoring and access to funding to help midmarket companies generate growth, will put its new Americas headquarters in downtown Cleveland positions the city to serve as an access point for international investment. “Cleveland gives us a fantastic footprint to other cities,” said Thomas Tyler, ELITE’s director and global head of business development, and soonto-be head of its Cleveland office. ELITE, a subsidiary of the London Stock Exchange Group, will help small and midsize businesses grow and facilitate Cleveland’s access to global capital, according to economic development groups JobsOhio and Greater Cleveland Partnership. ELITE has 400 advisers and investors in 45 countries and over the last seven years has worked with 1,300 midmarket businesses, with revenues ranging from $5 million to $500 million. “We are looking for those businesses that are looking to progress as quickly and efficiently as they can,” Tyler said. “It is about the ambition of the owner. We want to work with ambitious owners.” Former Ohio Gov. John Kasich and JobsOhio recruited the company during a trip to London in April 2017 that culminated in ELITE conducting a pilot program in Southeast Ohio. Tyler called the result “a real marriage of ambition to grow and support middle market companies.” It’s a natural assumption that, when looking for a headquarters, a global business would be drawn to huge cities like New York or Chicago. But Tyler insisted that the strength of the business community in Cleveland, which he described as “relentlessly positive,” and the strength of organizations like GCP and JobsOhio, sold the city. “He is getting calls from Cleveland companies already. He was slammed all day,” said Deb Janik, senior vice president, real estate and business development, at GCP. Tyler agreed, saying, “I’m losing count of the number of meetings with business leaders that are not just being generous with their time but interested in engaging with us in support of Cleveland. “When we looked at where we should be focusing our attention in the U.S., the data suggest that the highest concentration of middle-market concentration is in the Midwest and Texas,” he added. “We know that there are 1 million SMEs (small-to-medium enterprises) in Ohio. It is more relevant and more obvious to be close to those businesses.” A year ago, 10 Southeast Ohio companies were selected for ELITE’s 12month pilot program. Luar Romero, chief financial officer of Jackie O’s Brewery, which has a production facility and two retail locations near Ohio University, was part of the class. It included businesses from the health care, manufacturing and construction sectors. Romero said that over the year, the group met for two days every three months to learn about preparing their businesses for the next stage of growth and becoming more attractive to potential investors. Romero said he gained insight into how to structure his company’s financial operations to keep generating growth.
After the initial educational element of the program, businesses are able to access and possibly raise capital from the ELITE funding platform, or look to expand their business in other ways. “Now we know what our options are. Now we know how to raise capital and we can keep moving ahead on our plans for growth and expansion,” Romero said. “That is why the London Stock Exchange part of it is brilliant — there is a possibility for global investment.” The needs of each company are different, said Valentina Isakina, managing director of JobsOhio, and the ELITE program addresses those needs with services that only large companies traditionally could afford. “A lot of midmarket businesses discover the right solution, or the right path, through trial and error over time,” she noted. “They don’t necessarily have access to best-in-class consulting resources or advisory services, or the ability to engage in capital markets.” ELITE offers a one- to two-year program for a set fee, in the range of $25,000 to $35,000. It provides at least 100 hours of skill-building, including instruction on business operations, risk management and governance, followed by networking and help with accessing capital for investment. The Cleveland headquarters announcement was made in October at ELITE’s annual conference in London, where attendees were served Jackie O’s beer and a second Ohio pilot program, with the Stark County Minority Business Association (SCMBA) in Canton, was announced. Leonard Stevens, CEO of SCMBA, said local business owners are excited about the prospect of working with ELITE. A meeting in November brought a lot of attention, he said. “We only gave the businesses three or four days to come in, so we could give them more information about the ELITE program,” Stevens said. “We were expecting about 12 to 16 businesses, and we had 40 business show up saying that they were interested in being part of the program.” The 12-month program will begin in February and will include a mentorship component and modules taught by business experts. Stevens said SCMBA businesses mostly fall in the revenue range starting around $3 million, a bit less than the companies with which ELITE typically works, so ELITE is tweaking the program for smaller businesses. “The good thing about ELITE is they baseline your revenue and your company. They have a track record, so they can see if they have increased your baseline,” Stevens said. “The other thing they do is that at the graduation, after you have received your certificate, they put you in touch with stakeholders that are investors (with) capital to invest in your business.” There has been no final decision yet on the exact location for the Cleveland headquarters. ELITE has announced that an estimated 40 employees will work out of the office, generating $5 million in payroll annually. The company also said its annual international conference, called Global ELITE Day, will take place in Cleveland in 2020, the first time the event will be held outside Europe. Kim Palmer: kpalmer@crain.com, (216) 771-5384
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In a switch from national chains shutting stores in Northeast Ohio, Ross Dress for Less is entering the region as part of its Ohio expansion program. Ross Dress for Less is owned by Dublin, Calif.-based Ross Stores Inc., which operates 1,550 stores across the nation and describes itself as the largest off-price apparel and home goods chain in the United States. A Ross spokeswoman, who preferred not to be identified by name, said in an email to Crain’s Cleveland Business that the company plans to expand in the region as part of its move into Northeast Ohio but declined to say how many stores it might open here. The company on Oct. 28 opened its first Northeast Ohio store at The Plaza at Chapel Hill, 230 Howe Ave. in Cuyahoga Falls. Insiders say additional stores are in the works in Brooklyn and Mentor. Ross said it declines to comment on locations of individual stores until they are about to open. It has four Ohio stores open after entering the state 11 months ago. Arrival of the chain, ubiquitous in some other parts of the country, is welcome news in the region’s hardhit retail real estate sector. “It’s a good tenant to be adding to the market,” said Tony Visconsi, retail managing director of Hanna Commercial’s Cleveland office. “There are a lot of shopping center owners in negotiations with them as we speak.” Keith Hamulak, a vice president in the retail unit at CBRE’s Cleveland office, said, “It will be good for the consumer to bring another retailer into the market, especially in the apparel space.” Ross Dress for Less is likely to add at least nine more stores in the Cleve-
Ross Dress for Less storefronts will be popping up at multiple Northeast Ohio shopping centers. | COSTAR
land and Akron areas, and perhaps more, Visconsi estimated, to cover key shopping districts here. That many stores also are needed to ensure it has enough scale to justify regional TV advertising buys. However, Visconsi said Ross Dress for Less stores often are located closer together than those of other retailers. The Ross Stores spokeswoman said locations are determined by demographics and an analysis of how each location is doing, but declined to specify a geographic service area for each store. The company is also known for offering local stores merchandising flexibility. At The Plaza at Chapel Hill, the addition of Northeast Ohio’s first Ross Dress for Less store allowed shopping center owner ShopOne Centers REIT Inc. of New York City to fill a vacant former OfficeMax store, according to Bob Dake, executive vice president of leasing at ShopOne. “They’re a great brand and have a great product offering,” Dake said. The Ross Dress for Less lease and other retailers landed recently by ShopOne have hiked occupancy of the center to more than 80%. Dake said he believed ShopOne’s relationship with Ross Dress for Less in other markets helped it win the store for its Cuyahoga Falls plaza.
The stores typically occupy 18,000 to 22,000 square feet of selling space, according to a November 2019 investor presentation on its website. It also desires co-tenancy with retailers such as Target. The company does not disclose how many staffers it hires per store, the spokeswoman said. In addition to women’s apparel, Ross Dress for Less also stocks clothes for men and children, shoes, home goods and fashion accessories. It sells name brands at 20% to 60% discounts from comparable department and specialty store prices. Ross said as many as 75% of its shoppers are female and are buying for the entire family. Ross currently operates Dress for Less stores in 39 states, the District of Columbia and Guam, and believes it can sustain 3,000 stores across the country to make it a national retailer. Part of its strategy, according to the investor presentation, is to move into the void left by closings of other retailers, which have been epidemic, due in part to the rise of online retailing that has emptied the familiar Charming Charlie, Avenue and, soon, the last of the DressBarn stores in the region. Although Ross Dress for Less is a new name here, it is part of the offprice category that so far has stood up in the face of Amazon and online retailers, although the category seems filled with stores that are plain and similar on their interior. TJX Cos. of Framingham, Mass., has a total of 4,550 stores in the U.S. and overseas ,divided among seven brands. The largest of its chains is the T.J. Maxx brand, with 1,219 stores nationwide. Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter
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4 | CRAIN’S CLEVELAND BUSINESS | DECEMBER 9, 2019
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HEALTH CARE
Medicaid shortfalls help drive community benefit growth BBY LYDIA COUTRÉ
From research and education to subsidized health services and outreach programs, to the growing gap between the cost of caring for Medicaid patients and the reimbursements hospitals receive, Northeast Ohio’s health systems report that they are providing an increasing amount of community benefit to the region. Every year, nonprofit hospitals must report to the Internal Revenue Service their community benefit, a tool that helps measure the value hospitals deliver as tax-exempt institutions. “It’s important for us to let the community know what we are providing to them, as they are essentially forgoing tax revenues because we are tax-exempt,” said Kelly Linson, vice president and chief accounting officer at Southwest General Health Center. “So there’s definitely a value proposition there for the community, and it’s important for them to know, as well as important for us to tell them what we’re providing in community benefit.” The available community benefit reports in the region show growth in that value proposition. Cleveland Clinic’s overall community benefit, which includes its operations in Ohio, Nevada and Florida, reached $1.04 billion, a record high for the system. The growth is in part attributable to the system adding hospitals. University Hospitals’ benefit grew by 17.8% to a total of $383 million.
Anderson
Williams
Akron Children’s Hospital’s community benefit grew by 25.6% to $167.1 million. Southwest General’s grew by 11.7% to $21.3 million. Summa Health and Lake Health have not yet released their 2018 reports. MetroHealth, because it is a public health system, is not required to report its community benefit totals, as the other nonprofit health systems are. “There’s the legal requirement to the IRS to provide the 990 report each year, but I think primarily the overriding benefit is that this is a way hospitals are able to demonstrate their commitment of their mission within the communities they serve,” said Lisa Anderson, senior vice president at the Center for Health Affairs, a nonprofit advocate for Northeast Ohio hospitals. Community benefit reports include several categories: charity care or financial assistance, Medicaid shortfall, research, education, subsidized health services and community health improvement. Across the board, Medicaid shortfall accounts for the largest piece of each
system’s benefit. With reimbursement rates below the amount it costs for hospitals to care for Medicaid patients — and inflation on costs widening that gap — hospitals spend a significant amount of money covering that shortfall. “Rates have been relatively stagnant for Medicaid for years, but our cost structure continues to deal with inflation — inflation on supplies, pharmaceuticals, all of those items,” said Steven Glass, chief financial officer for the Clinic. “So when you have your reimbursement that’s flat but your inflation on cost continues to grow, even beyond the growth of services to that Medicaid population, just for those that we regularly serve, the shortfall is going to grow.” At UH, the growth in Medicaid shortfall was a major driver in the system’s overall community benefit growth. “About half of our community benefit is invested in the amount that we essentially provide care beyond the costs or the payments that Medicaid actually pays us for that care, so that continues to grow in our system,” said Heidi Gartland, vice president of government and community relations for UH. Community benefit also includes charity care or financial assistance — free or discounted care. The Clinic provided $130.7 million in that category; UH provided $47 million. When Ohio expanded Medicaid several years ago, hospitals saw a shift from charity care to Medicaid shortfall dollars.
“Since those volumes have leveled out years ago, we’ve continually seen a growth in the overall financial assistance and charity care,” Glass said. “And I think a lot of that just has to do with the economics of Northeast Ohio but also the challenges people feel out there from those individuals that are below the poverty level.” Research and education are both key parts of the missions at UH and the Clinic, leaders say. The Clinic’s community benefit grew in both categories year over year. At UH, its education/training piece grew while its research piece remained flat. Though Gartland noted that its overall research grew between 2017 and 2018, but the system also brought in more grants, which don’t count toward the community benefit investment. For some programs that run at a loss, such as behavioral health or obstetrics, hospitals subsidize those services, which is another piece of the community benefit. Also measured are outreach programs in the community, such as educating residents about their health. Factors in the market can attribute to some of the annual shifts in community benefit. For instance, Linson, of Southwest General, noted that its maternity program is growing after other hospitals in the area opted to discontinue their maternity services. The increase in volumes and births between 2017 and 2018 contributed to the Medicaid shortfall growth.
Bernett L. Williams, vice president of external affairs at Akron Children’s Hospital, noted that the hospital has worked in recent years to more accurately capture all of its community benefit, training employees on what does and doesn’t count for the report. “It’s not necessarily that we’re doing more in all of those areas — in some cases, we are — but what is the case is that we are doing a better job of tracking and reporting what we’re doing,” she said. “The message that we communicate to our workforce here is we’re never encouraging people to do more community benefit for sake of community benefit and reporting. We say we just need to capture the things that we’re doing.” It’s important for all of the hospital’s stakeholders (families, funding partners, employees, health departments, governmental entities, etc.) to understand how the hospital is investing in the community, Williams said. In addition to an important metric in how hospitals are serving their surrounding communities, the community benefit is also a key way to demonstrate the value hospitals provide as nonprofit organizations. “So in addition to making sure that we serve our communities, it’s also making sure that everybody understands the value we return to the community in return for being a notfor-profit organization,” Glass said. Lydia Coutré: lcoutre@crain.com, (216) 771-5228, @LydiaCoutre
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EDUCATION
Oberlin and LCCC connect across campuses
Partnership gathers two very different institutions, with hope that more pairings are on way BBY RACHEL ABBEY MCCAFFERTY
A new collaboration aims to give Oberlin College and Conservatory students more hands-on learning opportunities and Lorain County Community College students a broader historical or social context for their more applied education. The 4D Liberal Arts project brings together the private, liberal arts college and the public, two-year community college, as well as faculty and students from different academic disciplines. That opens up a variety of benefits beyond the project’s initial scope, from building stronger transfer relationships between the Lorain County schools to training faculty in new technology. The project is starting small, but the hope is that it serves as a pilot for future partnerships between Oberlin and LCCC, said Laura Baudot, associate dean at Oberlin’s College of Arts and Sciences. This initial partnership is between the Oberlin Center for Convergence, or StudiOC, and the Campana Center for Ideation and Invention at Lorain County Community College. The Campana Center’s Fab Lab features a variety of equipment, from 3D printers to computer numerical control (CNC) machines. StudiOC is a cross-disciplinary program at Oberlin that aims to tackle broad topics, such as makerspaces or surveillance, in a variety of ways. The institutions applied for and received a small — approximately $7,000 — Multi-Institutional Innovation grant from Washington, D.C.based Bringing Theory to Practice in early 2019, Baudot said. Participating faculty met in May and August, and the programs they planned got underway for students this fall. The grant application makes it clear that both the Campana Center and StudiOC aim to prepare students for a future full of rapid change, though in different ways. While the Campana Center has its foundation in technology, StudiOC is based in the liberal arts.
BWC
From Page 1
“There has been some reduction in manual manufacturing, advancement in technology and a stronger safety culture,” McCloud said. “It is a cultural shift that we worked hard to do over the last 10 years. Sometimes these checks back raise the awareness. Safety pays dividends.” And indeed, workplaces are safer. According to BWC data, Ohio averaged 2.7 injuries per 100 workers in 2017, lower than the national average of 3.1 injuries per 100 workers. Advances in technologies such as CNC machining — the manufacturing process that uses preprogrammed computer software to move factory tools, in what was once a physically intensive and at times dangerous industry — have made work significantly safer. Jack Schron, president of Jergens Inc., a 77-year-old company that makes vises and other tools and tool components, embraces safety culture by sending his employees to training and applying for BWC safety equipment grants. “What people don’t realize is that these things (grants) are included in
For LCCC students, the collaboration adds a broader context to the technologies they’re learning to use, said Kelly Zelesnik, dean of engineering, business and information technologies. “I think that’s really important going forward for our students and for us as we create applied technology programming, because technology is
changing so rapidly,” Zelesnik said. It’s important that students have the ability to see the big picture and to see where technology is going in that kind of fast-paced environment, she added. The interdisciplinary approach the project is taking is important to that goal, too. Even if a student is training for a specific job in a two-year de-
gree, they should be able to see the broader connections between disciplines, said Brenda Pongracz, dean of arts and humanities at Lorain County Community College. Today’s students are likely to switch jobs throughout their careers, and that kind of mindset will help them in the future. LCCC wants to make sure it’s exposing students to more than just their field of study, Pongracz said. That kind of interdisciplinary work is beneficial for faculty, too, but it can be difficult to find the time to do it, noted Abby Aresty, technical director and lecturer in Oberlin’s Technology in Music and Related Arts department. This project structures that work within faculty members' existing teaching load, giving them the chance to learn more about different technologies. Aresty said the goal isn’t for them to become experts, but to open up ideas about what’s possible across disciplines. Aresty took students to the Fab Lab after reading about design and disability and gave them the chance to create their own imaginary prosthetic listening devices. Another project in the partnership included creating and sending postcards between students, revisiting an older form of communication and production in the age of social media, Baudot said. Yet another combines the work being done with virtual reality in a Lorain County Community College animation class with a dance class at Oberlin. “So people are taking this in the directions that work with their own research and teaching,” Baudot said. In Aresty’s experience, the Fab Lab visit exposed Oberlin students to that resource, but also to another campus that’s only about 30 minutes away. There’s “incredible work” happening at both institutions, she said, and this project serves to break down barriers and bring the faculty and students at both schools together. “Our students are all going to grad-
your bill, but most people don’t take advantage of it. They are just sitting there waiting for you to ask, so we went ahead and asked,” said Schron, who is also a member of the Cuyahoga County Council (District 6). He said Jergens applied for and received funds for a ventilation system that removes contaminated air from the grinding equipment work area. “That was $24,000, which we put in 25% and they put in the other 75%,” he explained. With the help from another BWC grant, Schron installed cranes that lift heavy steel bars to increase efficiency and cut down on repetitive injury. “Frankly, 20 years ago, you would cringe when you open the letter and wonder what your premium will look like. This whole model has been flipped in these last 10 to 15 years. It is almost like self-insurance,” Schron said. Technology advances and cultural shifts that have decreased injuries in the last decade have, unfortunately, coincided with rampant opioid abuse, and McCloud has made the crisis a big focus of BWC programs. In June, BWC’s board of directors announced the agency no longer would pay for Oxycontin or generic
sustained-release oxycodone tablets for workers who suffer on-the-job injuries. “We are encouraging injured workers to discuss with their physicians other effective painkillers on our formulary and to explore nonmedication treatment options for chronic pain,” McCloud said. Centers for Disease Control and Prevention data show the opioid crisis has reduced the labor force participation rate statewide, and an Ohio State University report found opioid addiction, abuse and overdose deaths cost the state up to $8.8 billion annually. In November, BWC rolled out a no-cost, drug-disposal program that uses products that destroy opioids when activated in leftover pills, liquids and patches. The BWC also will reimburse pre-employment and random drug testing and provide training to help companies better manage employees in recovery. While the number of new claims has dropped significantly, the state’s population, and specifically the manufacturing workforce, is getting older. According to the Ohio Department of Aging, the state has 2.5 million residents over the age of 60, and that population is growing more than
20 times faster than the overall population. In just 12 years, Ohio will have nine counties where more than one out of every three residents are seniors. “We are starting to see an uptick in claims. We are reviewing what is causing it and one of the hypotheses is an aging workforce,” McCloud said. “Falling down at the age of 17 is different than falling down at 70. A lot of people are working longer and the workforce continues to age.” Meanwhile, legislation that would require the BWC to fund first responders’ post-traumatic stress disorder (PTSD) claims for a year, even when no physical injury is involved, was introduced in the Ohio House in June. Tom Patton, the sponsor of House Bill 308, said he believes that a workplace injury, even one you cannot see, is the responsibility of the BWC, and that advances in diagnosis and treatment mean PTSD can be treated in three to four doctor visits. “The average person will see one to three horrendous things in their lives. The average first responder sees 10 in a month,” he said. Opponents have pushed back on the legislation, concerned it will flood BWC with expensive claims. A
During Oberlin College’s StudiOC course cluster Recasting Innovation, students create full or partial body or face casts in plaster and use materials from Lorain County Community College’s Fab Lab. | MICHAEL HARTMAN
uate out into the world, and I think they bring with them the experiences they have in these institutional settings,” Aresty said. “And for those experiences to be broadened by interactions with folks who are not coming from the same institutional experience or same hometown — all these different things — for people to meet people who are not specifically like them can only be really powerful and beneficial toward their broader education.” Getting students and faculty thinking about the differences and commonalities between their institutions is another goal of the partnership, Baudot said. Oberlin’s student body tends to come from the east and west coasts; LCCC’s students are from the region. There are also often differences in age and in whether they commute or live on campus. The whole experience of higher education can be very different for the two populations, Baudot noted. A project like this can give them the chance to have a dialogue and start to understand and listen to one another. Additionally, helping Lorain County Community College students feel welcome on Oberlin’s campus can help dispel the idea that it or its students are elitist, Baudot said. That could lead to more LCCC students deciding to transfer and continue their studies at Oberlin. “It’s important that we demonstrate how much we want to learn from the community and how much we want to share with the community,” she said. Zelesnik said the two institutions have applied for additional funding, but they plan to continue with the work regardless. The project is starting small, but could grow into a “phenomenal relationship” for students and faculty at both schools, she said.
Legislative Service Commission analysis this year estimated costs would increase by $44 million to cover PTSD claims from the state’s 30,000 first responders. Robert Brundrett, director of public policy at the Ohio Manufacturers’ Association, said if mental health claims are allowed for one industry, they should be available to all. “In manufacturing, there is an increased chance of injury when you are working with hard equipment, but we can tell when you have a physical injury in the workplace and can take care of that immediately. It is much harder to determine a mental injury and if it came from the work place or something else entirely,” Brundrett said. McCloud said she hopes the agency continues to be able to pay back employers and fund safety programs, but rising medical costs and a possible economic slowdown would mean less in investment earnings and more claim payouts. “It is wonderful to return money to employers. That is fantastic. But we just want to get workers back at night to their home the same way they left the house, and that is a much better story than getting money back,” she said.
Rachel Abbey McCafferty: (216) 771-5379, rmccafferty@crain.com
6 | CRAIN’S CLEVELAND BUSINESS | December 9, 2019
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PERSONAL VIEW
Could measuring local government performance make a difference? RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS
BBY JAMES M. TRUTKO
EDITORIAL
Looking up
D
ecember’s a time of so many tasks that an important one — a little reflection on what has transpired over the last 12 months — can get lost. Before 2019 slips into history, we wanted to highlight some developments that give us reason for optimism about Northeast Ohio. This isn’t to ignore the challenges facing the region or to suggest we’ve solved all our troubles. Far from it. But Northeast Ohioans have a tendency to downplay good things happening here, and our hope is to underscore this truth: Things can get better. A case in point is last week’s announcement by General Motors and Korea’s LG Corp. that they’ll invest a combined $2.3 billion in a joint venture to build a battery-cell factory near Lordstown, where GM last spring shuttered a vehicle assembly plant that had employed 4,000 workers. The battery plant is projected to employ about 1,100, likely at wages lower than at the old Lordstown plant. But it’s a huge investment that positions Northeast Ohio as a player in the development of electric vehicles — a space automakers seem eager to direct their money. “What you’re hearing IT’S NOT OFTEN THAT from GM is a commitment NORTHEAST OHIO, AND to electric vehicles … beTHE MAHONING VALLEY cause we think that’s the future,” said the automakIN PARTICULAR, ARE A er’s CEO, Mary Barra. It’s not often that Northeast BIG PART OF WHERE Ohio, and the Mahoning THINGS ARE GOING, Valley in particular, are a big part of where things are RATHER THAN WHERE going, rather than where THEY’VE BEEN. WE LIKE they’ve been. We like the sound of that. THE SOUND OF THAT. Here are other developments that have the region looking up: ``Cleveland-Cliffs Inc.’s $1.1 billion acquisition last week of AK Steel is an anomaly among big-company deals, since it’s one where the Cleveland company retains the headquarters and appears poised to be a winner on the jobs front. We in the media — ourselves included — pay a lot of attention to job losses,
but this kind of employment win is important, and it’s a signal that Cleveland still has juice as a corporate headquarters city. ``Cleveland’s designation early this year as a Say Yes to Education community is helping expand opportunities for students in the Cleveland Metropolitan School District. The Say Yes program provides students with key support services and, most dramatically, scholarships toward postsecondary education. The benefits of opening these doors are immediate for the students and longer-term for a region that needs to retain talented young people to build up the future workforce. ``Just before Thanksgiving, Cleveland Mayor Frank Jackson proposed a $5 million investment for what’s called the Lead Safe Home Fund. Cleveland.com reported that Cleveland’s commitment, along with $2 million from the state and a total of $3.1 million pledged by the George Gund, Mt. Sinai Healthcare and St. Luke’s foundations, would bring total investment in the fund to $10.1 million. The website noted that the Lead Safe Cleveland Coalition estimates it will cost $99 million over five years “to support a massive effort to inspect and remediate older rental homes in the city at risk for poisoning children.” The start is significant. We hope civic-minded corporate partners follow suit. ``Internet service provider Everstream is spending $300 million to expand its network throughout Northeast Ohio and other Midwestern regions. A spokesperson said the Cleveland company plans to lay new fiber-optic cable in “every county from Lorain to Youngstown and as far south as Canton” — a vital development in keeping the region economically competitive. ``Among other good things, Amazon is finding new life for old shopping centers, and Cleveland is surpassed in the Midwest only by Minneapolis and Chicago as a place for investment in health care companies, according to a BioEnterprise report from March. There are still a couple weeks where more good things could happen. On Tuesday, Dec. 10, for instance, backers of City Block, a proposed revamping of Tower City as a home for startups, plan to announce more details. And would it be too much to hope that Sherwin-Williams could announce a new downtown Cleveland headquarters before the calendar turns to 2020?
Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com) Managing Editor: Scott Suttell (ssuttell@crain.com) Contact Crain’s: 216-522-1383 Read Crain’s online: crainscleveland.com
If recent local elections are a guide, how well local governments are actually delivering services doesn’t seem to matter much in Cleveland-area politics. Most city of Cleveland and Cuyahoga County voters seem satisfied with political anecdotes rather than data, and they rely largely on party affiliation and name recognition to decide how to vote. As a result, local elections have a predictable Trutko is an outcome: Democrats with the longest economist and tenure and best name recognition usu- market research ally win, regardless of their competence professional. The lifelong in governance. In theory, the chief executive, usually Cuyahoga the county executive or city mayor, is re- County resident sponsible for the delivery of government lives in Rocky services and the legislative bodies are River and can be responsible for monitoring the cost and reached at quality of services. Local media and civ- jmtrutko@ ic organizations are expected to digest gmail.com. what’s happening and inform the public. The ideal voter is then able to base his or her vote on the effective delivery of public services. Unfortunately, actual comparative data on public services show the theory isn’t working well in metropolitan Cleveland. A 2018 study by WalletHub ranked Cleveland “IN GOD WE TRUST; as 141st (out of 150 U.S. cities) in its list of “Best- & Worst-Run ALL OTHERS MUST Cities in America.” In terms of BRING DATA.” comparative cost, a recent ——W. Edward Deming, study from the Greater Cleve- statistician land Partnership confirmed that local taxes were substantially higher than other regional competitors. Maintaining transportation networks is a key government responsibility. A study by TRIP, a national transportation research group, ranked metropolitan road conditions near Cleveland as the worst among Ohio’s large cities and substantially below the national median. Cleveland Hopkins International Airport, an important economic development asset, was ranked 43rd in The Points Guy’s rating of the top 50 U.S. airports. J.D. Power recently confirmed the airport’s poor operation, ranking it 16th of 17 medium-sized North American airports. A famous politician once said, “Elections have consequences.” In Cuyahoga County, the “consequence” of absence of performance data is that no politician is ever held accountable at election time for delivering government services effectively and efficiently. Ultimately, if voters do not punish politicians for government ineptitude, the “consequence” for the community is poor quality and relatively expensive public services and the area is less attractive to entrepreneurs and migrants. What metropolitan Cleveland needs is a widely available scoreboard that summarizes how well government is delivering public services, compared to other communities. Like the scoreboard at an Indians, Browns or Cavs game, the public needs to know whether “our team” is winning or losing and whether the coach needs to be fired or given a longer contract.
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.
See TRUTKO on Page 9
Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.
8 | CRAIN’S CLEVELAND BUSINESS | December 9, 2019
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OPINION
New decade, new Partner PERSONAL VIEW
Analysis: Cleveland-Cliffs’ ‘whatever’ cheers AK Steel’s bondholders BBY LIAM DENNING/BLOOMBERG OPINION
An otherwise fairly unremarkable Tuesday morning, Dec. 3, thankfully delivered one of the more memorable answers on an M&A call. Lourenco Goncalves, CEO of Cleveland-Cliffs Inc., was asked a sensible question about the risks around transfer pricing in the just-announced acquisition of AK Steel Corp., to which he delivered this bracing dose of honesty: It’s our company after we close, so we can do whatever we want at the end of the day. Except, of course, the “our” there includes the investors who own Cliffs. Some of them didn’t really agree with the spirit of Goncalves’s take. By midmorning in New York, Cliffs shares were down more than 12%, all but wiping out the premium AK Steel’s own shareholders were being offered in the all-stock deal. Indeed, the immediate winners here aren’t the shareholders of either company, but rather AK Steel’s bondholders. That question about transfer pricing was aimed at one of the main stated rationales for the deal: namely, that combining Cliffs’ iron-ore pellets business with AK Steel’s furnaces would boost the latter’s margins per ton. But that’s the age-old fallacy of vertical integration: Favorable pricing from one part of the merged business to another may optically boost profitability for one, but that comes at the expense of the other. To be fair, Goncalves went on to say people shouldn’t expect Cliffs to cross-subsidize in that way. Unfortunately, the market’s reaction suggests investors may be focused more on the “we can do whatever we want” bit. With the long-term benefits of vertical integration questionable, this deal looks more like an alloy of defensiveness and opportunism. AK Steel is under pressure on two fronts. First, almost two-thirds of its sales are tied to the automotive industry. That is a great business for any steelmaker — except when U.S. auto sales look set to plateau or decline and major overseas markets such as China are struggling already. Steel prices have dropped sharply from the tariff-induced highs of 2018. Second, the continued shift in market share toward electric-arc furnaces using recycled steel represents a structural problem for traditional producers such as AK Steel. This is also why Cliffs is investing in facili-
TRUTKO
From Page 8
The major problem in developing a public scoreboard is that it is difficult to do a dashboard that is interesting and meaningful to the public. Much data is available, but tables of numbers are typically boring or confusing to the public and they don’t have meaning unless they’re simplified and put in context without transparent bias. A government scoreboard should begin with the two largest and most important local government entities, the city of Cleveland and Cuyahoga County, and compare them to similar Midwestern governments. The basis of comparison should generally be annualized rates of change covering the post-recession period since 2010. The scoreboard should have a simple, standardized format with limited explanatory text. Supplementary data should be available online for those with more specific interests. It should be designed to work in print, laptop or phone formats. The scoreboard should be linked to the area’s existing media networks so that it is effectively transmitted to as much of the public as possible. A public sector scoreboard should concentrate specifically on metrics that show how well the local governments are accomplishing their main goals at a reasonable cost — achieving economic development success,
ties producing more hot-briquetted iron, which targets arc furnaces. Wen Li, an analyst at CreditSights, points out that AK Steel’s leverage — net debt of 3.7 times adjusted Ebitda at the end of September —remained elevated even when steel pricing was good, and was likely to rise as automotive contracts get reset at lower prices. In buying AK Steel, therefore, Cliffs provides support — including refinancing of near-term debt maturities — to a major customer that accounted for a quarter of its product revenue in 2018. Hence, even as Cliffs’ stock plunged and AK Steel’s battered stock ticked up a little “IT’S OUR on Tuesday morning, the tarCOMPANY AFTER get’s bondholders were WE CLOSE, SO WE high-fiving. The opportunist aspect of CAN DO the deal reflects AK Steel’s pricing. Cliffs has a literal WHATEVER WE moat in the form of its posiWANT AT THE tioning in the Great Lakes END OF THE DAY.” region, shielding it from foreign competition. However, ——Lourenco it also limits growth prosGoncalves, CEO of pects; consensus forecasts Cleveland-Cliffs Inc. imply earnings per share will fall almost 30% in 2020 and by 2022 will be merely flat with 2019’s level. Even if AK Steel’s vertical integration is of dubious benefit, it offers the possibility of cutting costs to boost the bottom line. At $120 million a year, the touted savings target equates to just under 40% of AK Steel’s trailing selling, general and administrative expenses, which seems like a reasonable target. Taxed, it would also boost pro-forma net income by 16%, all else equal. With the exchange ratio having halved since the start of 2018, that may have been too tempting for Cliffs to pass up. As it stands, against the notional $800 million or so of present value associated with such potential savings, almost $300 million has been wiped off the value of Cliffs’ stock. It doesn’t help that two commodity producers announced a surprise deal just as we are undergoing yet another trade tantrum. Neither does the questionable vertical-integration story. This will ultimately all come down to how much cost can really be cut. On that front, at least, investors will hope management does whatever it takes.
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ensuring safety and justice, providing quality infrastructure and delivering effective human services and education. A scoreboard will communicate the burden of government most effectively when costs are also stated on a per household or per capita basis. For example, the average person will find it easier to grasp a $1.7 billion Cuyahoga County budget when it is presented as $3,200 per household. To strengthen credibility and reduce perceived bias, the focus should be on what the data shows about the quality of public services without much commentary on causes, broad societal issues or policy implications. Others in the public arena can and should debate how things happened or what should be done to improve the situation. The scoreboard should tell the public whether the area has “winning or losing” public services. The presence of an effective, well-publicized local government scoreboard is a “necessary, but not sufficient” condition for a successful community. Local government needs to provide an environment that allows individuals and businesses to grow and prosper. The primary benefit of transparent government performance data is that it provides a timely and rational basis for voters to determine if local government is succeeding or failing and to vote accordingly. To paraphrase an old saying, “You can lead a voter to data, but you can’t make them think.” But a well-designed public scoreboard would improve the community dialogue and be an important first step toward better public services. December 9, 2019 | CRAIN’S CLEVELAND BUSINESS | 9
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VOSS ON THE MOVE New space in 2020 will help Voss Industries meet demands of the aerospace and defense industries PAGE 13
MIDDLE MARKET
CONTRIBUTED PHOTOGRAPHS
FRANCHISE PLAYERS
VIO Med Spa, which began eight years ago as Skin Deep Medi Spa in Strongsville, plans to open 16 Northeast Ohio locations over the next five years.
Pepper Pike serial franchisees find new role in VIO Med Spa rollout with age-defying spas BY JUDY STRINGER
S
achin and Hetal Patel are no strangers to the franchising game. The couple own and operate Orangetheory Fitness studios in Solon and Hudson and the newly opened Namaste Nail Sanctuary in Solon, in addition to investments in hotels and franchised Subway restaurants. Now, the Patels are assuming a new role in the regional rollout of the VIO (pronounced “VEE-oh”) Med Spa business.
As area developers, they will grow the franchised brand in Cleveland, Columbus and Toledo. The couple are set to open their own VIO spa in Solon early next year and will support franchisees of two other forthcoming locations: Fairlawn and Avon, which are expected to come online next spring and summer, respectively. In all, 16 Northeast Ohio locations are planned over the next five years. Nationally, a dozen VIO Med Spa locations are targeted to open by the end of 2019, with a total of 50 locations planned to open by the end of 2020. “We are excited to take on a bigger role,” Hetal said. “We’ve always been committed to developing and leading our own team. As area developers, we get the opportunity to develop an entire region and be that support for other franchise owners.”
The VIO Med Spa concept focuses on nonivasive skin care and body management, with locations targeting well-to-do suburban communities.
Sachin said they found the VIO concept appealing because it aligns well with the couple’s other beauty and wellness businesses, is backed
by leadership responsible for fastgrowing brands like Orangetheory and Massage Envy and “was in our back yard.”
Stanoszek said the new franWhile VIO now calls Boca Raton, Fla., home, the lifestyle company chised med spas will fall within the started eight years ago as Skin Deep 1,800- to 2,000-square-foot range. Medi Spa in Strongsville. Founder Like the Strongsville site, they are Joe Stanoszek initially offered laser ideally located in shopping plazas, tattoo and hair removal, but quickly adjacent to upscale lifestyle centers added age-defying services such as and other beauty and wellness facials, injectable fillers like Botox businesses that draw from well-toand body-sculpting treatments to do suburban communities. “As many as 80% of our business the service menu. Locally, those services were too expen- “AS AREA DEVELOPERS, WE GET THE sive for most consumers, Stanoszek said, and OPPORTUNITY TO DEVELOP AN ENTIRE often were only offered REGION AND BE THAT SUPPORT FOR through doctor’s offices. And although Ideal Im- OTHER FRANCHISE OWNERS.” age had become synon- — Hetal Patel, co-owner of VIO Med Spa ymous with hair removal, there was not yet a national is repeat customers,” he said. Along with Botox and other fillers, leader in skin rejuvenation. After watching his business grow, the franchises offer Coolsculpting, a Stanoszek brought on investors, in- variety of popular facials like plascluding Jerome Kern (of Orangethe- ma-rich protein (PRP) and Hyory and Massage Envy), and part- dra-Facials, microneedling and hair nered with Apex Franchise restoration. Customers can buy the Development Group to create a services à la carte — HydraFacials, franchise concept focused on the for example, run about $200 a pop — noninvasive skin care and body or, Hetal said, they can purchase management market. As part of the $149-per-month memberships that new business model, Stanoszek’s give them access to one monthly fa2,600-square-foot flagship “med cial and discounts on other services spa” — just one mile from South- and skin-care products. Park Mall — transitioned into a corporate location. See FRANCHISE on Page 13
10 | CRAIN’S CLEVELAND BUSINESS | DECEMBER 9, 2019
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FOCUS | MIDDLE MARKET | TAX TIPS
Taking a fresh look at the state of tax residency BY CARL GRASSI
One of the more controversial provisions in the 2017 federal tax overhaul capped the federal income tax deduction for state and local taxes at $10,000 for most taxpayers. Residents of high-taxing states such as New York, New Jersey and California faced the biggest impact from the new rule. With high-profile figures including President Trump and financier Carl Icahn recently announcing plans to move to Florida from New York and New Jersey, respectively, many are wondering whether the new tax law may cause a migration from high-taxing jurisdictions. It's too soon to tell if that will happen, and people move for many nontax reasons, but as the calendar draws to a close, now is a good time to revisit the rules for establishing out-of-state residency for Ohio income tax purposes.
Why does residency matter? Ohio residents must pay state income tax on their income earned anywhere in the world, subject to credits for taxes paid elsewhere. Non-Ohio residents, by contrast, pay Ohio taxes only on their income earned or received in Ohio. Such nonresident income subject to Ohio tax includes wages earned in Ohio, business income generated through pass-through entities operating in Ohio, and income from Ohio real estate holdings. Establishing non-Ohio residency may therefore have a big impact for some individuals with investment income and wages and other income earned outside Ohio.
How is residency determined? A taxpayer’s “domicile” determines their state of residence for Ohio income tax purposes. Reduced to its essence, the legal concept of domicile requires two factors: namely, a residence in a particular place for some period of time and intent to stay there permanently or indefinitely. The domicile concept can be difficult to pin down. To alleviate some confusion, the Ohio General Assembly enacted a “bright-line statute” in 2006, as recently amended in 2017 to clear up some questions raised in an Ohio court decision. The statute now provides that individuals are presumed to be non-Ohio residents if they satisfy all of the following criteria and timely file a statement with the Tax Department attesting to it: The individual had fewer than 213 “contact periods” with the State of Ohio during the tax year. A contact period with Ohio occurs where an individual spends portions of two consecutive days in Ohio, generally an overnight stay. The individual had at least one
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abode outside the state during the entire tax year for which they did not claim a federal depreciation deduction under I.R.C. § 167. The individual did not hold a val- Grassi is a id Ohio driver's li- member of cense or identifi- McDonald cation card at any Hopkins LLC. time during the tax year. The individual did not receive the benefit of an Ohio homestead exemption for their primary residence real property tax purposes for that tax year. The individual did not receive an out-of-state tuition discount based on residency for attending an Ohio institution of higher education during that tax year.
What is a statement of nonresidency? Individuals must file the statement of nonresidency with the Tax Department to be presumptively non-Ohio residents. The failure to file the statement of nonresidency (generally by Oct. 15, following the close of the tax year) shifts the burden to the individual to show that they are indeed a non-Ohio resident. Former Ohio residents who now live out-of-state may find the nonresidency statement rule surprising if they otherwise satisfy the outlined criteria for non-Ohio residency. But careful recordkeeping can alleviate any concerns. Nonresident individuals who do not file the statement, for whatever reason, would be wise to carefully maintain their records to show their non-Ohio residency status. It's also important to bear in mind that the statement of nonresidency process does not apply for the tax year in which an individual changes their domicile to or from Ohio. Such individuals are domiciled in Ohio for a portion of the year and carry the burden to keep records showing that they are non-Ohio residents during another portion of the tax year.
MEET YOUR TARGET AUDIENCE WITHOUT EVER LEAVING THE OFFICE. MORE INFORMATION: Megan Lemke • mlemke@crain.com
Establishing residency elsewhere Ohio residents planning to move their permanent residence to another state should be careful to satisfy all the criteria listed above and properly file the statement of nonresidency. These individuals should also take steps to establish another domicile in a location outside Ohio where they have their permanent residence. Everyone’s situation is different, so if reducing taxes is part of your reason for a change of residency, be sure to work through the numbers and confirm that you can meet all the necessary criteria. DECEMBER 9, 2019 | CRAIN’S CLEVELAND BUSINESS | 11
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FOCUS | MIDDLE MARKET | ADVISER
A hands-on model for training and upskilling workers At times, disruption in an industry can be essential to survival BY DUSTIN PEUGEOT
Fact: All trades are desperate for skilled and dedicated professionals. In the automotive sector, for example, with 50% of auto mechanics retiring in the next decade, the need for trained technicians is paramount. To make matters worse, fewer people are entering and staying in that industry than ever before. Meanwhile, the Ubers and Amazons of our delivery-to-your-door-crazed society are pushing the number of vehicles on the road domestically to an unprecedented 300 million — and all of those vehicles need regular service and maintenance. Some faulty assumptions about the workforce and the industry: Millennials don’t want to work. Being successful requires spending years incurring debt to earn a college degree. There’s no money to be made as an automotive or collision-repair technician. Questions worth asking: What is the automotive repair industry doing to cope with the impending avalanche of cars that need to be fixed in a timely manner? With so many auto tech jobs available, why aren’t aspiring mechanics
flocking to the industry? Why are current technicians defecting from the trade instead of advancing their careers? It’s important to note that, ac- Peugeot is the cording to Auto- CEO and motive News, half co-founder of of entry-level the Matrix Trade technicians hired Institute in from traditional Beachwood. postsecondary automotive programs defect from the industry within just two years. What’s worse, the publication found that the typical veteran technician would not recommend his career to a friend. Why is the current model not working? Managers know training is needed, but they simply don’t have the time or resources to grow young technicians. In a customer-facing environment, it’s not possible to instill the theory and supervised hands-on training and repetition needed for young techs to learn troubleshooting and efficiency. Simply put, productive technicians can’t also be professional trainers. Nor do they have a
THE REALITY IS THAT THE TRADITIONAL TRAINING MODEL NEEDS A FACELIFT. MOST TRADE SCHOOLS WASTE STUDENTS’ TIME AND MONEY WHILE SETTING UNREALISTIC EXPECTATIONS OF WHAT THE JOB WILL LOOK LIKE. focused curriculum designed to instill growth and efficiency in the next generation of techs while maintaining peak productivity in a shop that is already low on manpower. Part of the solution is to prioritize retention of current automotive technicians over recruiting new ones. A quick Google search will result in a seemingly unlimited number of articles noting that millennials place the most value on being part of a workplace culture that promotes growth and teamwork. They want to be nurtured, valued and shown a clear path to leadership. This is why on-the-job-training in an
established dealership or automotive repair shop tends to offer more negatives than positives. What such businesses — and other industries in search of an influx of skilled tradespeople — need is access to a training partner that will simulate the speed and pressures of a live shop environment to produce techs who can enhance cash flow upon entry. Another aspect of the solution is having that partner recruiting and then training new workers in the exact same fashion as existing techs are trained and upskilled, so that both learn the same language and the same applications, ensuring that internal development is in harmony with new employee training and expectations. The reality is that the traditional training model needs a facelift. Most trade schools waste students’ time and money while setting unrealistic expectations of what the job will look like. We know traditional learning isn’t for everyone, so there must be an option for the hands-on learner who wants to go from learning to earning in a short amount of time. There needs to be a quick transition for the 27-year-old parent who has bills to pay but wants to enter the
field and can’t wait two years to start bringing in paychecks. In order to appeal to the next generation of future auto technicians, or anyone looking to get into any similar trade, it is imperative that schooling be accelerated, hands-on and interactive. Today’s students need to be armed with the knowledge, tools, real repetitions and critical efficiency skills necessary to be instantly productive, which in turn makes them valuable and able to meet the critical demand for trade services. No matter the trade, it’s important for employers to search for training that will jolt their employees quickly with hands-on learning. The old model of textbooks and two-year degrees is not working. In its place, a 20-week training school that incorporates virtual, game-style learning and real-world applications is an attractive and attainable alternative. Such programs exist and their approach can teach the necessary job skills, quickly and efficiently, to skyrocket any aspiring tradesperson up the career ladder. Disrupting the way training has always been done may be what the auto sector and plenty of other industries need to do to survive today’s tumult and push into the future.
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FOCUS | MIDDLE MARKET
Voss Industries prepares to take wing
Veteran aerospace manufacturer invests in new technologies and a new home BBY MARY VANAC
FRANCHISE
From Page 10
The Patels declined to provide anticipated revenue, but med spas average about $1.5 million in annual sales with something like a 29% margin, according to American Med Spa Association or AmSpa. AmSpa founder and director Alex Thiersch said the association tracks “free-standing” med spas, or those businesses that offer “noninvasive medical aesthetics” outside of a clinical setting. The space currently is dominated by boutique “ma-andpop” shops, he said. AmSpa’s 2019 “State of the Industry” report estimated that 83% of the country’s 5,431 med spas are single locations. Thiersch noted that regulatory differences between states — such as rules that require physician ownership and/ or oversight — make it more tedious to franchise these types of business. Still, he added, with the industry fast approaching a total value of $10 billion, all kinds of investors are eyeing the market. “It’s doubled in the last five years, and we anticipate doubling again by 2022-23,” Thiersch said. “So, yes, we’ve seen some franchise models emerge, but also private equity and hedge funds and big institutional money that are looking to buy up med spas and find ways they can expand them and roll them up.” Stanoszek said he believes VIO is ear-
Voss plans to complete its move into this former Eaton Aeroquip plant in Berea, empty since 2016, in the first half of 2020. | MICHAEL VON GLAHN/CRAIN’S CLEVELAND BUSINESS
“We are rapidly investing in new technologies, engineers and our overall business,” Callan said in an email. Voss Industries is one of eight divisions of Consolidated Aerospace Manufacturing, better known as CAM, of Brea, Calif. CAM acquired Voss in 2014 for an undisclosed amount, explained Gary Deinert, human resources director for Voss. Earlier this year, CAM also acquired Prikos & Becker, an Illinois supplier of fabricated heat shields for airplane landing-gear wheels and brakes. “CAM is an acquirer of high-quality companies, and we expect to add several additional companies in the near future,” Callan said. Voss is a “world-class innovator of highly engineered machined and metal formed products providing customers unique solutions in the areas of retention, pneumatic, fluid and thermal management,” he added. Deinert defined the company’s products in a simpler way: “We make the stuff that holds the airplane together,” he said, smiling. For instance, Voss produces parts for the temperature-control and de-icing systems in most commercial airliners, said Todd Maruna, vice president of sales and marketing. Among the company’s customers are Boeing and Air-
bus, the world’s two largest commercial aircraft manufacturers. While Voss does not disclose annual revenues, the company is targeting $500 million in a five-year strategic growth plan that will include expanding its current 300-plus workforce. The company, which ranks either first or second in its wide-ranging markets, also doesn't talk about its competitors, but Eaton and Clampco are two other aerospace clamp-makers in Northeast Ohio, noted John Sankovic, president and CEO of the Ohio Aerospace Institute. Being a supplier to the growing aerospace and defense industries is a big part of the growth at Voss Industries and several other manufacturers in Northeast Ohio. “Cleveland has a strong legacy of making components for aerospace,” said Sankovic, who came to the institute about a year ago after a 31-year career at NASA Glenn Research Center, most recently as chief technologist and director of the Office of Technology Incubation and Innovation. A lot of partnership opportunities exist among aerospace suppliers in the region, he added. “Right now, they work very much to their main suppliers, but we’re trying to create an environment to get them to work together.”
ly enough to the party that it has a pretty good chance of becoming one — if not the — de facto brand regionally and even nationally. As for the Patels, they are betting Americans’ growing obsession with looking good and feeling good
will drive VIO’s growth the same way it has fueled Orangetheory’s success. “Right now, a lot of people are looking to get back that self-confidence and that youthful factor through better skin care and self-care,” Hetal said.
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In Ohio, aerospace industry growth is reflected in “a big push” for propulsion and control system technologies. For instance, aircraft-makers are replacing the pneumatic and hydraulic control systems in their engines with electrical systems. Like the evolution that yielded hybrid automobiles, a similar shift is occurring among aviation companies. “We’re looking at the increased electrification of planes with highly efficient motors and gas turbines,” Sankovic said. Voss and its sister companies are prepared to innovate with their customers. The company was named a Most Innovative Supplier by Spirit AeroSystems this year. Growth at Voss and other Northeast Ohio aerospace suppliers also depends on hiring skilled workers to make their highly engineered parts. “I talked to one manufacturer in Lake County, and they said that if you brought us 500 machinists today, they and the colleagues at their sister companies could employ them all,” the aerospace institute’s Sankovic said. Jessica Westropp, senior manager of youth workforce development at Manufacturing Works, has worked for two years to place Max S. Hayes High School students in internships at Voss Industries. “Their HR department is phenomenal for partnering with us,” said Westropp, who also has coordinated student tours and shadowing experiences at Voss. Westropp said she and her colleagues look for industry partners that value their employees, have a well-defined career path for workers. and pay a living wage.
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Voss Industries LLC is in an enviable position among Northeast Ohio manufacturers: Its sales, workforce and largest customer segment are all expected to grow well into the future. And now, so is the company’s footprint. The maker of highly engineered machined and metal-formed products is moving to a 16-acre, one-floor manufacturing facility in Berea from its four-floor, landlocked birthplace on Cleveland’s near West Side. “We are rapidly growing, both organically and inorganically, leveraging the strength of our end-market segments and ability to deliver value together with our customers,” said James Callan, president of Voss Industries, in an emailed response. Some employees may be nostalgic about leaving the building at 2168 W. 25th St. where William Voss founded his heavy-duty clamp and V-band coupling company in 1957. Others are looking forward to moving to 1000 W. Bagley Road, which is being renovated to accommodate new, state-of-the-art manufacturing equipment and to move products from one workstation to the next efficiently — while also offering room for expansion. The move, already begun, is expected to be completed in 2020. Berea is providing an income tax incentive to Voss Industries as it brings more than 300 workers and a payroll of $11 million a year to the city. Voss also is receiving revitalization and economic development grants from JobsOhio, Ohio’s private economic development organization. Voss is investing $11.6 million in its relocation project, which includes buying, renovating and equipping the Bagley Road property, according to JobsOhio.
Of the five markets in the aerospace industry, commercial aviation is growing the fastest, causing the largest order backlogs for local manufacturers, Sankovic said. “I visit manufacturers in Northeast Ohio,” he explained. “They’ve got order books into 2024 for making parts.” Aircraft platforms last about 40 years, he added. The global commercial aircraft market is expected to reach $209 billion by 2022, growing at a compound annual rate of 5.8% from 2016 to 2022, according to a report by Allied Market Research. A growing number of air passengers, increasing tourism and economic development worldwide, and demands for environmentally friendly, fuel-efficient aircraft are driving aircraft-makers, the market research firm said. A more recent analysis by Mordor Intelligence forecasts compound annual growth of 3.3% for the aircraft market through 2024. “The growth in air travel, especially in the emerging economies, is expected to remain as the key driver for the market growth during the forecast period,” Mordor Intelligence stated. Meanwhile, the grounding of the Boeing 737MAX aircraft family fleet after two fatal crashes and the slowing of global economic growth due to multiple trade wars remain key concerns for airline companies and likely will impact cargo business and passenger traffic, according to a third market research firm, Research and Markets. According to Callan, Voss Industries has “secured long-term supply contracts with multiple global suppliers to mitigate risk of trade issues, leveraging the spend of all CAM divisions.”
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THANK YOU!
Crain’s Celebration of 20 in their 20s and 40 under 40 was a one-stop destination to rub elbows with the community’s best and brightest up-and-coming professionals. On Nov. 25, the Cleveland Museum of Art was filled with Northeast Ohio’s leaders and decision makers, ready to celebrate the 2019 classes of 20 in their 20s and 40 under 40. Crain’s would again like to congratulate the honorees on their success and contributions to the region. We would also like to extend a very special thank you to all our sponsors and partners who made this event possible.
PRESENTING SPONSOR:
SUPPORTING SPONSORS:
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TECHNOLOGY PARTNER
THE LIST
Nonprofits
Ranked by 2019 expenses EXPENSES 2019 2018 (MILLIONS)
TOTAL REVENUE 2017 (MILLIONS)
INCOME FROM PRIVATE SUPPORT
INCOME FOR PROGRAM SERVICES
2018 FUND BALANCE (THOUSANDS) PURPOSE OF ORGANIZATION
1
Christian Healthcare Ministries Inc. 127 Hazelwood Ave., Barberton 44203 800-791-6225/chministries.org
$528.8 (1) $413.7
$444.7
100%
98%
$149,910
To glorify God, show Christian love and experience God's presence as Christians share each others' medical bills
Jim Detwiler Joe Emert, interim executive vice presidents
2
Jewish Federation of Cleveland 25701 Science Park Drive, Cleveland 44122 216-593-2900/jewishcleveland.org
$110 $110.4
$113.3
NA
90%
$401,104.1
To allocate funds to social service and educational agencies in Cleveland and worldwide
Erika Rudin-Luria, president
3
Catholic Charities, Diocese of Cleveland 7911 Detroit Ave., Cleveland 44102 216-334-2900/ccdocle.org
$98 (1) $100.6
$102.7
26%
98%
$110,131.5
To respond to the health and human service needs and social concerns for the people of the Diocese of Cleveland
Patrick Gareau, president, CEO
4
Playhouse Square Foundation 1501 Euclid Ave., Suite 200, Cleveland 44115 216-771-4444/playhousesquare.org
$93.2 $69.7
$94.6
98%
82%
$192,068.1
To operate the performing arts center and help restore and develop the Playhouse Square district
Gina Vernaci, president, CEO
5
Greater Cleveland Food Bank 15500 S. Waterloo Road, Cleveland 44110 216-738-2265/greaterclevelandfoodbank.org
$91.6 $89.8
$88.4
62%
97%
$6,449.4
To ensure that everyone in our communities has the nutritious food they need every day
Kristin Warzocha, president, CEO
6
Menorah Park 27100 Cedar Road, Beachwood 44122 216-831-6500/MenorahPark.org
$82.2 $81.9
$80.6
100%
93%
$26,163
To provide health care on both a residential and outpatient basis
Jim Newbrough, CEO
7
Hospice of the Western Reserve Inc. 17876 St. Clair Ave., Cleveland 44110 800-707-8922/hospicewr.org
$79.6 (1) $90.7
$91.8
5%
94%
$70,457.4
To provide palliative end-of-life care, caregiver support and bereavement services
William E. Finn, president, CEO
8
OhioGuidestone 434 Eastland Road, Berea 44017 440-234-2006/ohioguidestone.org
$75.5 $67.6
$74.1
96%
87%
$29,408.2
Providing behavioral health services to help individuals achieve lifelong success
Richard R. Frank, president, CEO
9
Signature Health Inc. 7232 Justin Way, Mentor 44060 440-953-9999/shinc.org
$70.2 (1) $64.2
$67.8
0%
87%
$10,967.4
To end health disparities in our community
Jonathan Lee, CEO
10
The Cleveland Museum of Art 11150 East Blvd., Cleveland 44106 216-421-7340/clevelandart.org
$67.5 $64.8
$63.8
53%
79%
$1,011,671.5
To provide art representing the highest aesthetic achievement of individuals and civilizations
William M. Griswold, director, CEO
11
Western Reserve Area Agency on Aging 1700 E. 13th St., Suite 114, Cleveland 44114 216-621-0303/areaagingsolutions.org
$67 (1) $67.3
$68.1
26%
92%
$5,169.3
To provide choices for people to live independently
E. Douglas Beach, CEO
12
Volunteers of America Ohio & Indiana 8225 Brecksville Road, Suite 206, Cleveland 44141 440-717-1500/voago.org
$62 $44.8
$46.1
42%
82%
$40,925
To promote self-sufficiency for the homeless, veterans and others; to care for the elderly and disabled
John von Arx III, president, CEO
13
The Centers for Families and Children & Circle Health Services 4500 Euclid Ave., Cleveland 44103 216-432-7200/thecentersohio.org
$59.1 (1) $67.2
$62.6
9%
82%
$40,914.5
To provide life-changing and innovative health, work, and family services
Joseph Liszak, interim president, CEO
14
Oriana House Inc. P.O. Box 1501, Akron 44309 330-535-8116/orianahouse.org
$58.4 (1) $54.5
$52.9
NA
NA
($11,739)
Community corrections programs and chemical dependency treatment
James J. Lawrence, president, CEO
15
Coleman Professional Services 5982 Rhodes Road, Kent 44240 330-673-1347/colemanservices.org
$58 $58
$58
3%
88%
$14,791.3
Behavioral health, crisis, addiction, employment and residential services across Ohio
Nelson W. Burns, president, CEO
16
The Musical Arts Association (The Cleveland Orchestra) 11001 Euclid Ave., Cleveland 44106 216-231-7300/clevelandorchestra.com
$57.8 $57
$62
45%
83%
$217,201.5
To inspire and enrich lives through extraordinary musical experiences
AndrĂŠ Gremillet, president, CEO
17
Judson Services, Inc. 2181 Ambleside Drive, Cleveland 44106 216-791-2004/judsonsmartliving.org
$49.2 (1) $47.8
$46.3
90%
88%
$19,092.2
A not-for-profit senior living organization serving Northern Ohio
Kendra J. Urdzik, president, CEO
18
Hattie Larlham 9772 Diagonal Road, Mantua 44255 800-233-8611/hattielarlham.org
$48 (1) $47
$51
100%
91%
$11,400
To provide care for children and adults with developmental disabilities in Northeast and Central Ohio
Stephen Colecchi, CEO
19
Montefiore 1 David N. Myers Parkway, Beachwood 44122 216-360-9080/montefiorecare.org
$42.7 $42.2
$40.9
53%
84%
$27,921.5
To provide health care and wellness services to aging seniors
Seth Vilensky, president, CEO
20
Positive Education Program 3100 Euclid Ave., Cleveland 44115 216-361-4400/pepcleve.org
$40.1 $42.7
$43.1
18%
89%
$28,244.5
To help troubled and troubling children learn and grow
Habeebah R. Grimes, CEO
21
Goodwill Industries of Greater Cleveland and East Central Ohio 408 9th St. S.W., Canton 44707 800-942-3577/goodwillgoodskills.org
$38 (1) $33.2
$33.4
93%
88%
$14,230.7
Vocational and educational training
Anne Richards, president, CEO
22
Eliza Jennings 26376 John Road, Olmsted Township 44138 216-226-5000/elizajennings.org
$34.1 $35
$38
86%
85%
NA
To offer a spectrum of services and choices for aging well
Richard M. Boyson Jr., president, CEO
23
Emerald Development & Economic Network (EDEN) Inc. 7812 Madison Ave., Cleveland 44102 216-961-9690/edeninc.org
$33.2 (1) $31.8
$35.9
3%
84%
$24,424.8
To provide housing solutions to people facing the challenges of housing insecurities and homelessness
Elaine Gimmel, executive director
24
United Way of Greater Cleveland 1331 Euclid Ave., Cleveland 44115 216-436-2100/unitedwaycleveland.org
$32 $42.1
$37.9
92%
80%
$18,272
To invest in solutions to address diversity, inclusion and poverty
August A. Napoli Jr., president, CEO
25
Jennings 10204 Granger Road, Garfield Heights 44125 216-581-2900/jenningscenter.org
$31.2 (1) $26.3
$25.1
98%
93%
$16,613.7
To provide residences, services and compassionate care to adults over 55
Allison Q. Salopeck, president, CEO
26
CHN Housing Partners (formerly the Cleveland Housing Network) 2999 Payne Ave., Room 306, Cleveland 44114 216-574-7100/chnhousingparters.org
$29.6 (1) $33.6
$33.8
NA
NA
$24,961
To develop affordable housing in Cleveland communities with a special emphasis on meeting the needs of families in poverty
Kevin J. Nowak, executive director
RANK ORGANIZATION
TOP LOCAL EXECUTIVE
RESEARCHED BY CHUCK SODER: CSODER@CRAIN.COM
Get 68 nonprofits and additional executives in Excel format. Become a Data Member: CrainsCleveland.com/data This list includes 501(c)3 nonprofits. Colleges, foundations and hospitals were excluded. Information is supplied by the organizations. Send feedback to Chuck Soder: csoder@crain.com (1) Projected; tax year ends Dec. 31
December 9, 2019 | CRAIN’S CLEVELAND BUSINESS | 15
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AKRON DEVELOPMENT
Akron’s Martin House boutique hotel on track for 2020 launch Former Martin Center on the UA campus will begin dining operations next year, with rooms available in 2021 BBY DAN SHINGLER
With plans firmed up and financing nearly finalized, Akron and its eponymous university are closer to getting a new boutique hotel that backers say will reactivate an important part of campus while giving the school and city some much-needed high-end lodging. The slated conversion of the former University Club and Martin Center into the Martin House hotel also will put a little money into the University of Akron’s coffers from an initial lease payment and, if all goes as planned, with ongoing income from the hotel’s profits. “We’re moving along. I hate to say this, because I have no wood to knock on in this car, but we’re on schedule,” said Tom Chema, chairman of Cleveland’s Gateway Group. Gateway is partnering with Paran Management, also of Cleveland, to do the project for about $20 million, according to the two entities. By “on schedule,” Chema means he and Paran CEO Joseph Shafran expect to close on financing and begin construction early in 2020, with some of the hotel open by the end of next year and rooms available by early 2021. “We’re hoping that in about a year from now, for the holiday season, we’ll have some of the restaurants and catering operations going. Then, in February (2021), we’ll do a soft opening and start opening some of the hotel rooms. By May, we should be fully operational,” Chema said. Chema, the optimist largely responsible for building downtown Cleveland’s Gateway District that includes the venues for the Cavaliers and Indi-
This rendering depicts the completed Martin House hotel. The project, which includes additions to the existing Martin Center building on the University of Akron’s campus, will bring high-end lodging to the university and the city. | CONTRIBUTED RENDERING
ans, said he’s confident enough that financing is effectively done to begin hiring contractors. Chema said they’ll begin demolition work as soon as the end of this month and could begin construction as soon as January. Shafran, a self-described adherent of caution, said he’s more confident saying construction will begin sometime in the first quarter. But then he’s been chasing the project and trying to get the university and others to buy into it for quite a long time. “I’ve been working on this for 13 years!” Shafran said. Built in 1918, the Martin Center was opened as a private club for faculty, alumni and others, mostly wealthy backers of the university. It opened in a day when nearly every university had such an institution. But, like many private clubs, Martin declined over the decades. It was taken over by the university’s develop-
ment foundation in 1978 and finally closed in 2013. Chema, Shafran and University of Akron vice president of finance and administration Nathan Mortimer said they’re eager to begin the project because there’s much work to do. Chema said building out the new hotel will require a total redo of the existing 35,000 square feet of the facility. That will house the hotel’s restaurant, a coffee shop, banquet and ballrooms, lobby, other common areas and administrative functions, along with 11 to 13 guest rooms, Chema said. For the remaining 60 rooms, the building is getting a 25,000-squarefoot addition, he said. Cleveland’s Dimit Architects have done preliminary designs of the building, which show modern, spacious guest rooms and dining rooms, bars and restaurants that bring the
building’s clubby feel into the 21st century with sleek designs awash in natural light. The planned interiors lean heavily on leather, wood and other earth-toned surfaces. Backers think they can create a showplace that will attract more than out-of-town executives and academics visiting the university or downtown businesses. “It’s got a very nice ballroom, and I think we’ll get a lot of weddings and events there,” Chema predicted. A major reason for doing the development, Chema and Shafran said, is because the university and the city need a high-end hotel to accommodate visitors. Neither the campus nor downtown Akron have one now, the closest thing being a Courtyard by Marriott just to the north of downtown Akron on Furnace Street. Another boutique hotel is planned for downtown: Akron Developer Tony
BancOhio until 1984, when National City bought them.
MORE ONLINE: Check out more of our interview with Kevin Thompson at crainscleveland.com.
Troppe’s jazz-themed BLU-tique, which is under construction on South Main Street. That project is a year behind schedule. For the university, the hotel represents a chance to turn an unused property that had become little more than an annual maintenance expense back into an important part of campus. It will also bring the school a little money, Mortimer said. That will come in the form of a lumpsum lease payment of $450,000 to secure the land for 40 years. Then, Gateway and Paran will own the building and hotel business, along with the University of Akron Foundation as a minority shareholder, Mortimer said. Assuming the hotel is profitable, the university will get a small share of those profits, but that’s not the chief reason the school is behind the project. The building sits on one of the campus’ prettiest sites on Fir Hill, Mortimer noted. It’s on the urban campus’ best tree-lined streets and near the 28room Victorian mansion that is the historic Hower House Museum. The university hopes Paran will pull off something in Akron akin to the Glidden House in Cleveland, which it also developed and which is considered by many to be the city’s leading boutique hotel and a pride of the University Circle neighborhood. “We think they’re going to bring a similar gem down here to Akron,” Mortimer said. “They’ve got a very aggressive timeline once they get going. It’s aggressive but doable, and if anyone can pull it out, I think that’s two of the people who can do it.” Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler
Q&A
Kevin Thompson PNC Bank regional president, Akron Kevin Thompson is a veritable Akron institution, having spent four decades of his career there. He’ll leave big shoes to fill next spring when he hands the reins to a new regional president for PNC Bank, Joseph Luckring — someone who also has deep ties to the Akron-Canton region. Thompson, 66, worked for a couple other banks through the years, officially joining PNC through its storied acquisition of National City Bank during the financial crisis. He has deep expertise not just in banking, but about the Akron community. Crain’s caught up with Thompson as he reflected on his career after all these years, the industry and the Rubber City itself. — Jeremy Nobile ``You’ve got a pretty long history in Summit County, right? I actually grew up in Tallmadge, where I became a city councilman at 23. My best friend was elected to finance director at that time, too, and he had just turned 22. It’s a great community. But besides two years with the Federal Reserve Bank of Cleveland, where I worked in the treasury services department, I’ve always worked in the same building in Akron.
``How did you land your first job in a traditional bank after the Fed? It was New Year’s Eve day 1976 when I walked into the building, which was BancOhio Bancorp at the time. They were looking for people on the corporate banking side. I was in the credit department about a year, then got to start working with some small business clients. By the mid-1980s, I was handling some of the larger relationships with
``Was banking something that interested you early on? I grew up in a wonderful blue-collar family. I didn’t even really know what a bank did as a kid. But I had an undergrad in economics and business, and just started interviewing with different people when I landed at the Fed. ``What comes to mind when you think about how the industry has changed over the years? One of the biggest changes was regulation back in the early 1980s with the Monetary Control Act. Before that, you could only deposit money in a county you were doing business in. Interstate banking changed then, so that was a big thing. But when technology came, that’s when things really started to change. I make this analogy a lot: In the ’50s and ’60s, we made drive-up windows. In the ’70s and ’80s, we created drive-up ATMs, then 24-hour banking in the ’90s. In the 2000s, we created online banking. And now, we’re going into mobile banking. Besides that, we’ve gone from 15,000 banks to now
6,000. How regulations have changed to allow that is also a big thing. ``We can’t talk about such a long career with PNC without touching on the National City deal, particularly since that’s where you came from. How did that come together from your perspective? So here’s what I can say about that: National City was a phenomenal company and a very important leader in the Akron market. When the financial crisis hit in 2006, 2007, I’ve got to be honest, I was a little surprised they started having issues, which were primarily around the mortgage business at the time. As we got into 2008, it became apparent something was going to happen with National City either getting purchased or getting TARP money. Then one day you wake up in October 2008 and we were purchased by PNC. ``After that deal, PNC grew to not just the largest bank in the Cleveland-Ak-
ron region, but in Ohio. The bank is still a major player here, but it has lost some ground to competitors. With that in mind, how would you describe the competitive landscape today? The banking sector has always been competitive. I can’t talk about competitors, only what we’ve done in this market. We grow the business every year on the retail side as well as the corporate side. But clients don’t like turnover. And I haven’t hired anyone outside the company in 16 years — we hire within. ``Has the industry itself changed much over time, perhaps due to the proliferation of technology? Tech is indeed a driver. We think about that and how you keep clients safe with cybersecurity every day now. In terms of treasury management, a client could have a scanner on their desk now to make deposits right there without going into a branch. What hasn’t changed is that clients, especially on the corporate side, want the bank to know their business. See THOMPSON on Page 17
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CRAIN’S CLEVELAND BUSINESS
AKRON
From Page 1
TPC threads together buys, sales growth to double size
So the Indians — much to the chagrin of those who criticize the Dolans for not spending enough, and to the delight of those who admire the calm, competent manner in which they operate the franchise — aren’t for sale. But the Sherman situation shows that the family that has run the Indians for two decades is open to the possibility of someone else taking over, provided the fit is good.
CEO Jeff Crane was brought into TPC Wire & Cable Corp. in 2016 with a clear directive: Accelerate growth via acquisition and new sales. Three years into his leadership tenure, Crane appears to be fulfilling that mission — and doing it well. The Macedonia maker of ruggedized wire, cable and connectors has acquired five companies since Crane’s appointment, including four deals in the past 10 months. While he declined to disclose sales figures, Crane said revenue has doubled since 2015. In that same time period, employment surged from 165 to 380. And TPC intends to keep the ball rolling. “We think the funnel and the opportunities are such that we could keep up that pace,” Crane said, adding that there are enough acquisition targets in the North American market alone “to reasonably think we could double in size again in another three years.” TPC provides industrial wire and cable products used in harsh environments, such as high-temperature steel mills, and/or where the cost of failure is high, like missile defense systems. Much of the company’s acquisition strategy to date, according to Crane, has involved finding small and midsize businesses that share its product space but provide entry into new markets. The November 2018 purchase of Milrail Inc. of Quebec, for example, got TPC into rail applications. “We are taking what Milrail does primarily for Canadian rail transit customers, such as subway systems, and bringing that to a boarder base of U.S. customers through the resources that TPC has,” he said. Likewise, TPC acquired both Valencia, Calif.-based Cicoil LLC and Pittsburgh Wire and Cable in October. Those buys give TPC a foothold in aerospace and military end markets in the case of Cicoil and in industries like video inspection and mining in the case of Pittsburgh Wire and Cable. “Interestingly, Cicoil and the EZ Form (Cable Corp.) acquisition that we did in June do give us some unique manufacturing capabilities, so there is a little element of vertical integration that we accomplished
THOMPSON
From Page 16
``What’s something the region could do better? I think it’s for the better if we can continue to build a diverse workforce and help the area grow, which has been an issue in Northeast Ohio. But I’m very bullish on Akron. You got two major universities within a few miles of each other and smaller universities, a vibrant community college in Stark State. You now have some school systems looking at alternatives to college. We’re letting children have choices about good careers, chances to provide skilled labor — I think we’re on to something there. It won’t come without challenges, but I’m very optimistic about the future of Northeast Ohio.
with both of those acquisitions as well. But for the most part, what the core of the acquired companies do is similar to the core of what TPC does,” Crane said. The deal wave has increased the size of TPC’s footprint. Only one of its acquired businesses — Electra Cord Inc., formerly of Massillon — was folded into the Macedonia headquarters. Crane said the Valley View Road plant was expanded to 120,000 square feet in 2017 to accommodate Electra Cord’s production lines and staff. About 150 employees now work at the Macedonia site. The others have remained in place, meaning the company currently has operations on both U.S. coasts and in Canada and Mexico. It acquired Mexico City’s Enersave Wire & Cable shortly before Crane came aboard, and EZ Form is based in Hamden, Conn. TPC has limited distribution overseas, he said, but remains focused on North America, where it derives roughly 90% of its sales. Organic growth has been another component of TPC’s expansion efforts. Crane established a strategic account team early on to facilitate relationships with satellite locations of some of it largest customers. In some cases, the company would be doing really well on sales to one Ford assembly plant, for example, but not so hot in other plants. “That strategic account initiative is to help us learn what we do really well at one site and how we can replicate it at the other sites,” he said. Middle market investor Audax Group of Boston owns TPC. It bought the company in May 2015 from Pfingsten Partners LLC of Chicago for an undisclosed price. The investment group has a strong track record of aggressive add-on acquisition strategies. According to its website, Audax Private Equity has invested over $5 billion in 126 platforms and 774 add-on companies. Crane said TPC does “keep an eye out” for companies that it can integrate along its supply chain and distribution channels, but will primarily remain focused on targets that mirror its product expertise. Contact Judy Stringer: clbfreelancer@crain.com ``What’s on your post-retirement to-do list? Akron is my home, so I’m not going anywhere. I do have a place in Naples, Fla., I’ll be spending some time in. But this is my home. My brother and I started a family-run business 30 years ago: Jeff the Plumber. I’m trying to figure out how I’m going to fill 65 hours a week, and I’ll be helping out there a bit. But I’ve got lots I want to do. I’ll continue to advocate for early childhood education, which I get to do now through our Grow Up Great program. ``So, no plans to make Florida the permanent residence? I love being here. ... I think people are kind of realizing the Midwest has favorable housing, good infrastructure, parks, education, recreation, all those things.
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MANUFACTURING
BBY JUDY STRINGER
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MLB commissioner Rob Manfred, right, said Paul Dolan and the Indians’ ownership group had given John Sherman a path that would have led to the Kansas City entrepreneur becoming the Tribe’s controlling partner. Sherman instead purchased the Kansas City Royals. | CLEVELAND
A valuable ‘pathway’ Sherman became a minority partner in 2016, after the Indians enlisted the help of Allen & Co., a New York investment bank, to find an investor. His stake in the Tribe had gradually increased, sources told Crain’s, until then-Royals owner David Glass told Sherman the Royals were for sale and Sherman was Glass’ first choice to buy the team. Sherman’s group paid about $1 billion for the Royals, who were in the bottom five in MLB in attendance and, according to Forbes’ estimates, revenue. “The deal he got for the Royals is much better than the other Sherman got for the Marlins,” said Forbes executive editor Mike Ozanian, who is one of the leaders of the site’s evaluation of sports teams. Bruce Sherman (no relation to John) purchased the Miami Marlins for $1.2 billion in 2017. Prior to the Royals sale, the Marlins — at $1 billion, MLB’s least valuable team, according to Forbes — were the last big-league club that had been sold. Changes in ownership, though, have come at a faster pace than the sport’s conservative nature might suggest. Since Larry Dolan, via a family trust, purchased the Indians in 2000, 18 of the other 29 MLB teams have been sold. Four of the last five deals — sales of the Royals, Marlins, Seattle Mariners ($1.4 billion in 2016) and Los Angeles Dodgers ($2 billion in 2012) — have been 10-figure transactions. The latter group doesn’t include the New York Mets, who are negotiating a deal that would give minority investor Steve Cohen a controlling interest in the team, via a deal that, according to Bloomberg, would value the club at $2.6 billion. As the recent deals indicate, franchise values, boosted by lucrative media rights deals, continue to rise rapidly. Forbes estimated that the value of the Dodgers has increased by $1.3 billion in the seven years since the club was sold. The Houston Astros, sold for $465 million in 2011, have a projected value of $1.8 billion. The Chicago Cubs, sold a decade ago for $700 million, are estimated to be worth $3.1 billion. The Indians, according to Forbes’ estimates, are worth $1.15 billion, or $827 million more than the Dolans paid for the club. Considering the purchase price of the Royals — who play in baseball’s third-smallest market, with 909,420 TV homes, according to Nielsen — the Tribe projection seems accurate, if not a bit low. The Cleveland-Akron-Canton market has 1,399,470 TV homes, which ranks 19th in the U.S., but the Indians trail 22 big-league clubs, including the Toronto Blue Jays, the only Canadian club. Ozanian said if the Dolans were to change course and put the Indians on the block, the move “would put an actual benchmark on what a midmarket team is worth.”
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INDIANS
The Indians aren’t likely to be put up for the highest bidder, however. Instead, they could have a new minority investor — or even an investment fund, since baseball recently approved a policy that allows Wall Street firms, college endowments and other investment vehicles to purchase a stake in a team. The policy, Bloomberg reported, is MLB’s answer to the struggles limited partners sometimes face when it’s time to sell their shares in a team. Those stakes, because there isn’t a controlling interest, sell at a discount — often as much as 30%, Bloomberg reported. Sherman’s share of the Indians seems to fit that description, since, a source said, it wouldn’t include the possibility of future control. “If you have a pathway to ownership, you’ll pay more than if you’re just going to be a limited partner,” said Ozanian, Forbes’ executive editor.
Big decisions ahead Larry Dolan — whose brother, Charles, is a Cleveland native who founded Cablevision and whose family owns the New York Knicks and New York Rangers — purchased the Indians after unsuccessful bids to buy the Cleveland Browns and Cincinnati Reds. The 88-year-old retired attorney and his wife, Eva, have six kids. Paul, 61, is the oldest, and his siblings include Matt, a 54-year-old Ohio state senator. Paul Dolan was named the Indians’ president in 2004 and was approved by MLB as the Tribe’s controlling owner in 2013. He has overseen a franchise that finished a win shy of a World Series championship in 2016 and has averaged 95 wins the last four seasons.
The Tribe, though, is at a critical juncture, as it must decide whether to ride out Francisco Lindor’s contract, which has two more seasons of club control, or trade the face of the franchise while the shortstop’s value is at its peak. The Indians also are entering the final four years of their lease at Progressive Field, which, after 26 seasons, is still regarded as one of the best ballparks in MLB. In July, Cuyahoga County Council was told by budget adviser Trevor McAleer that increasing the county’s tax on hotel stays would be helpful for upcoming lease negotiations with the Indians, since some of the funds could be used for possible upgrades to Progressive Field. Todd Greathouse, the executive director of Gateway Economic Development Corp., the nonprofit in charge of the ballpark and Rocket Mortgage FieldHouse, told Crain’s via email that “a lease extension is an important goal for Gateway, and I expect there will be an update at the next Gateway board meeting.” Greathouse didn’t provide any other details, and the November board meeting didn’t hint at a lease extension — nor did it include any mention of significant ballpark upgrades. Gateway’s next gathering is scheduled for Feb. 12. By then, the Indians will be 10 days away from their first spring training game, and soon another season will bring playoff expectations. It’s unclear if the Tribe will have a new minority investor at that point, but that potential transaction became more intriguing after it was revealed how significant Sherman’s stake actually was. Kevin Kleps: kkleps@crain.com, (216) 771-5256, @KevinKleps
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December 9, 2019 | CRAIN’S CLEVELAND BUSINESS | 17
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OHIOX
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PEOPLE ON THE MOVE
From Page 2
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. ACCOUNTING
CONSTRUCTION
HEALTH CARE
NONPROFITS
Apple Growth Partners
Donley’s Interiors Group
The MetroHealth Foundation
Apple Growth Partners (AGP), award-winning accounting and business advisory firm, announced a newly created leadership role in response to the firm’s rapid growth over the past three years. Jeff Stinson, CFA, MBA, will join the firm as the director of strategic core services. With more than 20 years of leadership, strategic planning, and operational expertise, Stinson brings a wealth of experience in the recently established position.
Andy Lesnick has been promoted to Director of Donley’s Interiors Group. In his 11 years at Donley’s, Andy has played an integral role on some of our most complex projects including Cleveland Public Square and the recently opened Cleveland Clinic/Case Western Reserve University Samson Pavilion. His recent work includes renovations for Cleveland Clinic and Cleveland Institute of Art. Andy will oversee operations of the business unit which focuses on interior renovation and special projects.
Miguel de Gracia has joined the Board of Directors of The MetroHealth Foundation, which raises philanthropic support for The MetroHealth System. Miguel was appointed CEO of Root Candles in 2017. Prior to that, he held executive and leadership positions at Gibson Innovations (Global Philips Consumer Electronics) and SC Johnson & Son, Inc.
United Way of Greater Cleveland
Rea & Associates Paul Gregory, CPA, a principal in Rea & Associates’ Amherst office was promoted to shareholder Nov. 1. He brings 24 years of experience to the role. Paul is responsible for managing the office and servicing clients in the areas of business consulting, tax planning, reviews, and compilations. He earned his bachelor’s degree in accounting from Baldwin Wallace College. He’s a member of the Ohio Society of CPAs and the American Institute of CPAs. Paul resides in Grafton with his wife and two boys.
CONSTRUCTION
Donley’s Interiors Group We are also pleased to announce that Billy Painter has been promoted to Project Manager for Donley’s Interiors Group. Since joining Donley’s in 2018, Billy has worked on renovations for Bellwether Enterprise, Parker Hannifin, Benesch, Cleveland Clinic, Case Western Reserve University, and MOCA, as well as WKYC’s Transmitter Building Addition.
ACCOUNTING
Rea & Associates Luke Lucas, CPA, was promoted to senior manager at Rea & Associates Nov. 1. He sits in the firm’s Cleveland office where he serves clients as a member of Rea’s state and local tax team. Luke earned his bachelor’s degree in accounting from the University of Akron. He’s a member of the Ohio Society of CPAs, the American Institute of CPAs, College Now Greater Cleveland and the Greater Cleveland Habitat for Humanity’s Young Professional Committee. Luke resides in Sagamore Hills.
NONPROFITS HEALTH CARE
The MetroHealth Foundation
ACCOUNTING
LEGAL
Bonezzi Switzer Polito & Hupp Co. L.P.A. BSPH Co. L.P.A. congratulates Madison L. Leanza on passing the Ohio Bar and joining BSPH as an Associate. Madison graduated from ClevelandMarshall College of Law in May 2019. Prior to joining BSPH, Madison was a judicial extern for Judge Deena R. Calabrese of the Cuyahoga County Court of Common Pleas and with the Cuyahoga County Prosecutor’s Major Trial Unit. She will practice in the areas of Medical Malpractice and Nursing Home Defense. For more information, visit www.bsphlaw.com.
Maria Burk has been promoted from Interim Director of United Way of Medina County to the Director of Community Engagement. Within her role, Burk will continue to advance partnerships, identify philanthropic investments and coordinate community-wide solutions to improve the lives of individuals living within Medina County.
United Way of Greater Cleveland Karen Perko has been appointed Director of Community Engagement at United Way Services of Geauga County to develop the organization’s integrated philanthropy and fundraising strategy, increase community engagement and invest in initiatives to serve people in need throughout Geauga County in the most meaningful and lasting ways.
Andy Jones has also joined the Board of Directors of The MetroHealth Foundation. Since 2010 Andy has served as CEO of MCPc, a Clevelandbased global data protection company with operations in Canada and the Netherlands.
HEALTH CARE RETAIL
The MetroHealth Foundation Ricardo León joins Mr. de Gracia and Mr. Jones on the Board of Directors of The MetroHealth Foundation. Since 2018 Ricardo has served as executive director of the Metro West Community Development Organization, where he leads a multifaceted team of community development practitioners offering a suite of services to three Cleveland near-west neighborhoods; Stockyards, Clark-Fulton, and Brooklyn Centre on Cleveland’s near West side.
ANNOUNCE
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Sweet Designs Chocolatier Carly Moran has been named General Manager of Sweet Designs Chocolatier in Lakewood. Since joining Sweet Designs in 2012, she has played an integral role in the continuing growth of the Sweet Designs retail store, corporate gift and online businesses. A graduate of Hillsdale College and the Culinary Institute at Oakland Community College, Carly has also led the development and launch of the Smart Bark organic chocolate product line.
For information: Debora Stein at dstein@crain.com or submit directly to CrainsCleveland.com/people-on-the-move Advertising Section
PEOPLE ON THE MOVE
Some founders, though, want more than just a check and may complain of a lack of wherewithal in the ecosystem here that goes beyond the vailability of capital. “Northeast Ohio money, it’s awful to say, but it’s dumb money,” Joel Clark, president and co-founder of Akron-based RVshare, a startup offering an online platform for peerto-peer RV rentals, told Crain’s in 2018. “No one Lewis who knows what they’re doing will take money from here. Old money around here doesn’t understand tech valuation. And even if someone is successful that takes old money from around here, there’s little chance they would see eye-to-eye from a valuation standpoint.”
Setting priorities OhioX said its priorities will be shaped by members as they come on board. (Berry said there will be a “progressive” membership model, which starts at $100 and goes as high as $5,000, with something at the higher level including sponsorship opportunities.) In regard to the organization, Gritzan said her mind is on education, noting she wants the group to work with schools and colleges on preparing students for the future workforce as it relates to tech. The hope is that could improve retention of talent and inspire new entrepreneurs. Promoting what various existing companies do within the business world and how they could work with one another could have impact as well. OhioX might be the missing conduit for that. The OhioX name was inspired by early talks about forming the group, during which folks like Berry would map out the regions of the state the group intended to connect, the result resembling an X. “(Squirrels) just celebrated our 11th anniversary, and probably 90% of the state doesn’t even know we’re here,” Gritzan said. “It’s frustrating.” Access to good capital is a struggle as well, she added, explaining how Squirrels — which focuses on developing wireless screen-mirroring software — falls into a “no-man’s land” for investment. She said the company is too profitable to draw lower-level investments but not profitable enough to attract larger ones. “We want to be able to connect with the right people instead of shooting darts in the dark and hoping we hit something,” Gritzan said. Croft agreed that financing is a complicated situation in this market. “Investors in this region want to give a little but take a lot and it almost chokes the company to death because of the terms they place on the investment,” he said. “You don’t find that on the coasts. Investors are more educated on how tech companies work (there).” From advocacy to education to serving as a liaison between startups, established business, investors, entrepreneurs and everyone in between, OhioX aims to become what it feels is a missing piece for growing a thriving tech industry in Ohio. “I think this is really needed in our area and long overdue,” Croft said. Jeremy Nobile: jnobile@crain.com, (216) 771-5362, @JeremyNobile
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SOURCE LUNCH
Cheryl Stephens
crainscleveland.com
“YOU CAN’T SAY IT’S DONE AND WALK AWAY.”
Publisher/editor Elizabeth McIntyre (216) 771-5358 or emcintyre@crain.com Group publisher Mary Kramer (313) 446-0399 or mkramer@crain.com Managing editor Scott Suttell (216) 771-5227 or ssuttell@crain.com Sections editor Michael von Glahn (216) 771-5359 or mvonglahn@crain.com Creative director David Kordalski (216) 771-5169 or dkordalski@crain.com Web editor Damon Sims (216) 771-5279 or dasims@crain.com Associate editor/Akron Sue Walton (330) 802-4615 or swalton@crain.com Assistant editor Kevin Kleps (216) 771-5256 or kkleps@crain.com Senior data editor Chuck Soder (216) 771-5374 or csoder@crain.com Editorial researcher William Lucey (216) 771-5243 or wlucey@crain.com Cartoonist Rich Williams
After laboring in economic development for decades with governments from the city of Cleveland to Cuyahoga County and others, Cheryl Stephens has arrived at a job as CEO of the East Akron Neighborhood Development Corp. — even if it means she had to go to Akron to win recognition for her years in the trenches. She is also the elected District 10 councilwoman on Cuyahoga County Council. Her district stretches from the east side of Cleveland’s lakefront to University Heights. At EANDC, she runs a nonprofit focused on affordable housing and neighborhood revitalization. It has a staff of 43 full-timers, an annual budget of $4 million and operates 800 units of housing. A self-described “Army brat,” although her father was career Air Force, Stephens lived in Japan, Germany and Spain before she was 16. She has a style that confidently combines a love of life with a serious get-it-done approach to business. When on the road in her red Jeep, she divides drive time between phone calls, National Public Radio or podcasts from The New York Times and Washington Post. We caught up with her at Tommy Fello’s landmark Coventry restaurant, Tommy’s. — Stan Bullard ``What’s new? The East Akron Neighborhood Development Corp. is holding the keys for the apartment building that will become the IPromise Village, the transitional home for families of students in the IPromise School that LeBron James and Graduate Hotels are developing. We’ll look out for the property as the project gets put together. We hope to play a part as it gets going. ``What brought you to Cleveland? How did you wind up in Cleveland Heights? A man, of course. The relationship didn’t last, but the relationship with Cleveland grew and lasted. I wound up living in Cleveland Heights because of my friendship with the late Barbara Boyd (a longtime politician in Cleveland Heights and a state rep). I had dinner there every Sunday starting as soon as I came to Cleveland. ``You’ve worked for Cuyahoga County, the Cuyahoga Land Bank and others. How did you wind up in economic development first with the state of Ohio and then with the city of Cleveland? My original plan was to get a little experience and then join the State Department. After I got training at the National Development Council (which provides training for professionals in economic and community development), I saw how all of these things worked together, with financing to help businesses serve people. Now, I see what I do as amazing. My first deal in Cleveland Heights was helping
Tommy and some other businesses buy this building. Now, when I come here I get to park in what people call “Cheryl’s garage,” which the city built to provide more parking and help stabilize businesses on the street.
economic development department.” He was very proud of what we were doing. I have great respect for Voinovich. He was hard-working. And he appreciated seeing people doing the work.
``What was it like to work in economic development for the city of Cleveland when George Voinovich was mayor? That was when Cleveland was known for winning more Urban Development Action Grants than any other single city. Once, we were working late on a weekend with a deadline looming for UDAGs. We were a group of 20-somethings with the radio blaring and pizza on a desk as dinner. Voinovich brought in some business fat cat and said, “This is my
``Do you ever get frustrated with how Cleveland’s problems never seem to get solved? I’d like to wave a magic wand and make the problems go away. But there is no magic wand. You have to make sure that people deliver on their promises. You have to continue to invest. Take the Coventry commercial district. You have to remember that you have to continue to invest. You can’t say it’s done and walk away. If you do, any community will fall flat. You need to develop a plan and stick with it.
THE STEPHENS FILE
LUNCH SPOT
Mentor The late Barbara Boyd. She fed me and gave me political advice.
Tommy’s 1824 Coventry Road, Cleveland Heights 216-321-7757
Bucket list goal I want to walk a piece of the Appalachian trail.
The meal Both had fries; one had a Quigley, Tommy’s five-cheese sandwich, the other a turkey burger. Drinks were hot tea and a Coke.
Favorite part of downtown Cleveland The downtown mall with its views of Lake Erie and the city’s skyline. Favorite music Rock and roll as well as rhythm and blues. I need to move when I hear music. Vacation spot None lately. But I love to visit our wonderful National Parks. I’ve hiked the Grand Canyon from top to bottom.
The vibe Stephens meets people who want to talk with her here on Saturdays. The bill $31.51 with tip
REPORTERS
``Did you always plan to run for elected office? How was it you made the jump from being a staffer to being a Cleveland Heights and then a Cuyahoga County councilwoman? I had worked on (Richard) Celeste’s gubernatorial campaigns, but never thought of running for office. When I was working at the Cuyahoga County Land Bank and found out how the water department in Cleveland Heights was being run, I decided to get involved. I couldn’t run for County Council while working for the land bank because it gets money from the county. I ran when I joined the East Akron Neighborhood Development Corp. It boils down to seeing things are not running as well as they could be. There are some bad guys in government. It’s too bad that most people don’t realize that public servants do what they do for the good of the community. ``As a councilwoman, you already served as mayor of Cleveland Heights when it was primarily a ceremonial position. Will you run for mayor under the new strong-mayor system? No. ``What would you be doing if you were not involved in elected office or public service in economic development? Voiceover artist. With a voice like this, what else?
NEW HOPE: Lordstown is getting more than 1,100 automotive jobs. General Motors is entering into a joint venture with South Korea’s LG Chem to mass-produce battery cells for its future electric vehicles at a plant that the company said the two will build on a greenfield site as part of a new
joint venture. The companies will invest up to a total of $2.3 billion in the project.
COME TOGETHER: Ulmer & Berne is rolling up the Cleveland-based boutique trial firm of Northeast Ohio litigator
Local sales manager Megan Norman, (216) 771-5182 or mnorman@crain.com Events manager Erin Bechler, (216) 771-5388 or ebechler@crain.com Integrated marketing manager Michelle Sustar, (216) 771-5371 or msustar@crain.com Managing editor custom/special projects Amy Ann Stoessel (216) 771-5155 or astoessel@crain.com Associate publisher/Director of advertising sales Lisa Rudy Senior account executives John Petty, Scott Carlson Account executives Laura Kulber Mintz, Loren Breen People on the Move manager Debora Stein, (917) 226-5470, dstein@crain.com Pre-press and digital production Craig L. Mackey Office coordinator Karen Friedman Media services manager Nicole Spell Billing YahNica Crawford Credit Thomas Hanovich Customer service and subscriptions: (877) 824-9373 or customerservice@crainscleveland.com Reprints: Laura Picariello (732) 723-0569 or lpicariello@crain.com
Steven Kaufman in what is likely the first full acquisition of another firm in Ulmer’s 111-year history. Ulmer, the ninth-largest law firm in Northeast Ohio by number of in-market attorneys, announced the acquisition of Kaufman & Co., effective Jan. 1. The Kaufman firm has 10 lawyers — all of whom are joining Ulmer, bringing its bench to approximately 170 lawyers.
The General Motors Lordstown Complex will produce battery cells for electric vehicles as part of a joint venture between GM and LG Chem. | ALLISON FARRAND/BLOOMBERG
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THE WEEK DEAL TIME: In a move to make Cleveland-Cliffs Inc. more vertically integrated, the Cleveland-based company agreed to buy West Chester, Ohiobased AK Steel Holding Corp. in a $1.1 billion deal. Lourenco Goncalves, chairman, president and CEO of Cliffs, will lead the expanded organization, which will continue to be headquartered on Public Square downtown. The companies expect the combination will produce about $120 million of annual cost savings.
Stan Bullard, senior reporter, Real estate/ construction. (216) 771-5228 or sbullard@crain.com Jay Miller, Government. (216) 771-5362 or jmiller@crain.com Rachel Abbey McCafferty, Manufacturing/energy/ education. (216) 771-5379 or rmccafferty@crain.com Jeremy Nobile, Finance/legal/beer/cannabis. (216) 771-5255 or jnobile@crain.com Kim Palmer, Government. (216) 771-5384 or kpalmer@crain.com Dan Shingler, Energy/steel/auto/Akron. (216) 771-5290 or dshingler@crain.com Lydia Coutré, Health care/nonprofits. (216) 771-5479 or lcoutre@crain.com
NEW APPROACH: Flashstarts Inc., a startup business accelerator and micro venture capital firm, is changing its focus. CEO Charles Stack said the Tower City operation, which has been devoted to building the next generation of Cleveland companies, will pivot to offering innovation consulting services. Stack said the move is a response to a slowdown in startups he has witnessed, especially in Northeast Ohio.
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 Chief Financial Officer Robert Recchia G.D. Crain Jr., Founder (1885-1973) Mrs. G.D. Crain Jr., Chairman (1911-1996) Editorial & Business Offices 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 (216) 522-1383 Volume 40, Number 49 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 (877) 824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax (313) 446-6777.
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