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www.crainsdetroit.com Vol. 27, No. 39 SEPTEMBER 19 – 25, 2011 $2 a copy; $59 a year
©Entire contents copyright 2011 by Crain Communications Inc. All rights reserved Page 3 Tough work Health Alliance Plan eyes Healthier businesses self-funded insurance biz begins on Sphinx founder expands insurance bring back pay raises his dream with new nonprofits exchange Survey: Merit hikes at 3-year high, average 3% BY SHERRI WELCH Last December, when it was for the coming year. “We’re kind BY AMY LANE CRAIN’S DETROIT BUSINESS feeling more confident about the of gauging the economy and try- CAPITOL CORRESPONDENT economy, the staffing company ing to keep pace with what’s hap- Inside Like many companies, Kelly Ser- began layering them back in. pening with the economy.” The wheels are starting to move vices Inc. halted its merit increas- It has since reinstated its 401(k) The employee compensation on a new statewide health insur- es, 401(k) plan contributions, em- match, stock awards, employee an- picture is brightening, according Ann Arbor State Bank plans ance exchange, as outlined by Gov. ployee bonuses and stock awards nual bonuses and merit increases to a newly released American Soci- Rick Snyder last week in his leg- $50M in commercial loans, in 2009 because of the economy. effective July 1 for the 8,000 full- ety of Employers survey. islative message on health and Troy-based Kelly (Nasdaq: time employees at its headquar- Merit increases are at a three- Page 4 wellness. KELYA) intended to add the base ters and all its branch and regional year high, both in frequency and Legislation is expected to be in- pay increases and benefits back locations around the globe. in size, and the number of compa- troduced this week, likely in the in when the economy started to “Things are looking up,” said nies freezing employee pay has Michigan Senate, that will create a improve, said Jane Stehney, man- Stehney, who declined to give spe- framework to authorize the ex- ager of public relations. cific projections on pay increases See Raises, Page 28 change, which WOMEN will be called MI Health Market- place. The ex- TOWATCH change, which would be estab- lished as a non- profit, will serve individuals and Tiger deals deliver small business- es and is man- Hilfinger dated by nation- CEO’s off-field plays are big part of team’s on-field success 20ll al health care reform. The nonprofit would be gov- BY BILL SHEA eral weeks trying getting his team back to Sixteen who set the erned by a board that would be ap- CRAIN’S DETROIT BUSINESS the World Series. MORE TIGERS pointed by the governor and have Going into Friday’s game at Oakland, standard, from corporate the ability to appoint an executive Dave Dombrowski read the bestselling the Tigers were expected to wrap up their The deals: director. There also would be an baseball economics book Moneyball after it first American League Central Division Six key players to academia, Page 13 the Tigers advisory board that would include was published in 2003, title and would begin the best-of-five divi- signed – and representatives of small business, but he doesn’t know sion series playoff Sept. 30. two they This Just In consumers, insurance plan pro- whether he’ll have time Detroit’s return to the postseason is skipped, viders, agents and others. to see the Hollywood largely credited to personnel moves made Page 29 Other issues remain to be film adaptation that by Dombrowski, who also slashed $27 mil- Playoff Bills call for more Internet worked out: conflict-of-interest comes out this month. lion from the team’s player payroll by payoff: Nearly sellers to collect sales tax policies, funding and making sure That’s because the Opening Day to get it to about $107 million. $5M for each the technology of the exchange Detroit Tigers’ CEO, “Overall, the Tigers are improved — game played at Bills are expected to be in- works well. president and general nearly across the board — while cutting Comerica Park, troduced as early as Tuesday Crain’s spoke with the adminis- manager will be too Page 29 that would require more In- tration’s lead on the exchange — Dombrowski busy over the next sev- See Tigers, Page 29 ternet sellers to collect Mich- Steven Hilfinger, director of the igan’s sales tax. Michigan Department of Licensing and The legislation would be Regulatory Affairs — about what’s en- Recent acquisition Doug Fister pitches similar to a New York law visioned. Sept. 5 in a 4-2 win over the Cleveland that requires remote vendors Indians. that have “affiliate” relation- ships in the state to collect Q&A with Steven Hilfinger, Page 26 sales taxes on purchases made by residents of that state from that vendor. Examples include in-state COMING UP businesses that refer cus- Speaker: Steven Hilfinger will talk tomers to the Internet ven- more about Michigan’s proposed dor’s website or arrange- health information exchange at ments in which in-state Crain’s Oct. 20 Health Care Summit. For more information, see See This Just In, Page 2 www.crainsdetroit.com/events. NEWSPAPER
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ed today to announce the return Blue Cross had projected first- 2010 with a disclosed value of NOMINEES SOUGHT THIS JUST IN of automotive manufacturing op- year sales of 30,000. $29.4 billion. erations to its Detroit campus While Simply Blue products Suppliers accounted for 50 per- FOR REAL ESTATE AWARDS ■ From Page 1 through a space and employee are similar to other plans offered cent of the deals, mostly driven Crain’s is seeking nominees from leasing agreement with Android In- by Priority Health and Health Al- by market consolidation, the the real estate industry to be businesses sell products through dustries LLC. liance Plan of Michigan, Dunn said analysis noted. recognized for their work. the Internet company. Android is leasing about 70,000 the Blues’ decision to cut rates 5 Europe was the most active re- The deadline for nominations for A study commissioned by the square feet from Focus: Hope for percent to 20 percent compared gion in the deal space, represent- the Real Estate Excellence Awards Michigan Retailers Association and assembling headliners and sus- with older products have ap- ing 42 percent of global deal vol- has been extended to Sept. 27. released last week estimated that pension modules for the Chevrolet pealed to policyholders. About ume. However, deals in North Awards will be presented at the Michigan would see a $35.9 million Volt for delivery to the nearby Gen- 20,000 policies are from new cus- America represented 51 percent University of Michigan/Urban Land increase in sales and use tax rev- eral Motors Co. Hamtramck assem- tomers, he said. of the deal volume, led by foreign Institute Real Estate Forum Nov. 9 and 10 in Detroit, and winners will enue if a state remote vendor affili- Simply Blue offers four de- investment. bly plant. discuss the state of commercial ate law were to increase tax rev- Focus: Hope is leasing 18 em- ductible plans that range from — Dustin Walsh real estate at the event. enue as much as in New York. $500 to $2,500, with office co-pay- ployees — some them came The awards highlight leadership Overall, the Public Sector Consul- through its educational programs ments that range from $20 to $30. United Solar eyes World Cup and accomplishments in the real tants Inc. study estimated that — to Android. The Simply Blue Health Reim- estate community of metro Detroit, Michigan will lose out on an esti- “We’re also referring some of bursement Account has de- United Solar, a subsidiary of focusing on a person’s impact on mated $141.5 million in sales tax our students to their Warren op- ductibles that range from $1,000 Auburn Hills-based Energy Con- the industry. from electronic remote sales in eration,” said Kathy Moran, Focus: to $4,000. Co-pays are $30 for of- version Devices Inc. (Nasdaq: To nominate someone, please visit 2012. And an estimated $147.5 mil- Hope’s communications manag- fice visits. ENER), will embark on a project www.crainsdetroit.com/nominate lion will go uncollected from other er. “We hope that people in our — Jay Greene this month that could lead to in- or contact Senior Reporter Daniel remote vendors, such as catalog immediate neighborhood will be stalling solar systems on all the Duggan at [email protected] or (313) 446-0414. and mail-order companies. able to get jobs here, and … we’re M&A up in first half of 2011 soccer stadiums in Brazil that The retailers association wants looking for opportunities for peo- will be used in the 2014 World to rectify inequity between brick- ple who are in our educational While economic worries have Cup tournament. and-mortar retailers, which must programs.” stalled automotive merger and United Solar will provide an add on Michigan’s 6 percent sales — Sherri Welch acquisition activity going into array of solar laminates to pro- CORRECTION tax; and Internet, mail-order and the fall, deals were up during the duce 238 kilowatts of power at the first half of 2011. 32,000 seat Estadio de Pituacu in Ⅲ In the Health Care Hero story catalog sellers, which do not. Simply Blue is Blue Cross’ about Robert Levine on Page 34 of The bills will be sponsored by In the first six months of the Salvador, a project that is sched- year, 303 deals closed globally uled to be completed in Decem- the Sept. 12 edition, guided relax- state Reps. Eileen Kowall, R-White fastest-growing PPO product ation should have been described Lake Township, and Jim Ananich, with a disclosed value of $18.8 bil- ber. Blue Cross Blue Shield of Michi- as using deep breathing and relax- D-Flint, said Tom Scott, senior vice lion, according to the latest The construction manager is a gan’s Simply Blue, a suite of high- analysis by PricewaterhouseCoop- Gehr- ation. Also, somatic functional president of communications for Brazilian company named deductible PPO products for ers’ automotive transaction ser- licher Ecoluz Solar do Brasil, which therapy should have been de- the retailers association. smaller companies, has enrolled vices practice in Detroit. plans to bid for solar projects at scribed as using simple move- — Amy Lane 125,000 members since January, The 2011 deals are a stark con- all 12 World Cup venues. The ments to release tight muscles. making it the Blues’ fastest-grow- trast from the first six months of Brazilian government has pro- Levine is director of the Henry Ford Auto supplier to set up shop ing PPO product in years, said 2010, which saw only 150 M&A mised all the stadiums will gener- Center for Integrative Wellness. In ad- John Dunn, the Blues vice presi- deals worth $1.6 billion — the ate solar power by the time the dition, the center received $380,000 on Focus: Hope campus dent of middle- and small-group lowest deal value in five years. games take place. for a pilot project from Blue Cross Nonprofit Focus: Hope is expect- sales. There were a total of 521 deals in — Tom Henderson Blue Shield of Michigan. An incor- rect funding figure was used in the story.
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September 19, 2011 CRAIN’S DETROIT BUSINESS Page 3
Second Stage Extra HAP wants slice “You have to take Choosing suppliers: When something you risk takers are the safe pick, really believe in and Page 9 of self-funded scrape and scrap as you build it.” Aaron Dworkin, insurance biz Sphinx Organization Inc.
BY JAY GREENE fully insured arrangement. AARON ECKELS CRAIN’S DETROIT BUSINESS Blue Cross controls more than 70 percent of the health insurance Company index Blue Cross Blue Shield of Michigan market in Michigan, with more has a new competitor in the ad- than 4.35 million covered lives. These organizations appear in this week’s Crain’s ministrative services organization That’s down 100,000 from 2010, Dworkin widens reach Detroit Business: business line: Health Alliance Plan of mostly a result of declines in group American Society of Employers ...... 1 Michigan. plans because of the economy. The Ann Arbor State Bank ...... 4 HAP is in the final stages of sign- Blues cover 5.6 million nationally. Apex Organization ...... 3 ing a contract with Grand Rapids- Other health insurers that offer BAE Systems ...... 25 with 2 new nonprofits Bank of Ann Arbor ...... 4 based Administration third-party ad- Systems Research ministration Bank of Michigan ...... 4 Corp., which does We did an contracts with Billhighway ...... 9, 10 business as ASR “ employers in- Founder of Sphinx targets Blue Cross Blue Shield of Michigan ...... 3 Health Benefits, a analysis, clude Aetna, Chrysler Group ...... 16 for-profit compa- Cigna and Priori- diversity, social entrepreneurs Continental Automotive Systems ...... 28 ny, to conduct and there ty Health, which Detroit Media Partnership ...... 18 claims process- has offices in Detroit Tigers ...... 1 BY SHERRI WELCH … you have to take something ing, billing and is a Grand Rapids Domino’s Pizza ...... 21, 28 CRAIN’S DETROIT BUSINESS you really believe in and scrape customer service. and Farm- Duo-Gard Industries ...... 9 That will allow tremendous ington Hills. and scrap as you build it,” said As the Sphinx Organization Inc. Essential Bodywear ...... 11 the Detroit-based Jim Scoggin, Dworkin, who was named a prepares to enter its 15th year, Force Protection ...... 25 health insurer to market co-owner, of Champion of Change in Arts Ed- founder Aaron FordDirect ...... 15 grow its self-in- Troy-based ucation by the White House last sured business need. Great Lakes Em- Dworkin could month. General Dynamics Land Systems ...... 25 significantly, said ” ployee Benefit rest on his lau- “If you’re persistent, you can General Motors ...... 13 Mary Ann Tournoux, Mary Ann Tournoux, Health Alliance Services Inc., rels, given the build it into a sustainable enter- Great Lakes Employee Benefit Services ...... 3 organization’s HAP’s chief market- Plan of Michigan said a HAP-ASR prise that in the end makes a real Harper Associates ...... 28 success in ing officer. combination difference in the world.” Health Alliance Plan ...... 3 bringing more “We did an analysis, and there is will provide a strong alternative for After having some success in Henry Ford Health System ...... 20, 25 black and Lati- a tremendous market need” in businesses and much-needed compe- increasing diversity in classical Kelly Services ...... 1 no musicians Southeast Michigan, Tournoux tition for Blue Cross. music, Dworkin is taking aim at Loomis Sayles ...... 28 into classical said. “In the nine-county area, 39 “We are excited about it. It the fields of science, technology, Macomb-Oakland University Incubator ...... 25 music and percent (of employees) are in self- opens up a very viable option for engineering, math and architec- McCann North America ...... 21 American or- UP FOR GRANT funded programs.” middle-market to large groups that ture. McNaughton-McKay Electric ...... 10 chestras. Tournoux said HAP thinks want to self-fund,” Scoggin said. Wello founder: He seeded a new nonprofit, But he isn’t Michigan Dept. of Community Health ...... 17 health care reform is creating a “As a consumer, I don’t want to Dworkin TV Apex Organization Inc., in 2009 with resting. Michigan Dept. of Licensing & Regulatory Affairs . . . 26 greater incentive for companies see this state evolve into a single- show could help a portion of the $500,000 “genius He continues Michigan Economic Development ...... 7 with more than 100 employees to payer system, and that’s what is get WaterWheel grant” he received four years ear- to devote the rolling, Page 27 Michigan Economic Growth Authority ...... 7 self-fund health benefit costs to save happening with the Blues. We lier from the Chicago-based John bulk of his time Michigan Strategic Fund ...... 7 money, increase efficiency and al- need competition, and HAP with D. and Catherine T. MacArthur Foun- to Sphinx, but part of his energy is Midtown Detroit Inc...... 20 low more flexible plan designs. ASR now offers a real strong op- dation and personal investments going into two new nonprofit en- Midwest Health Plan ...... 25 Companies self-fund their health tion to the Blues.” that together total tens of thou- deavors as well — one to bring Navistar Defense ...... 25 benefit costs by paying for claims Blue Cross declined to comment. sands of dollars, he said. that same diversity to the sci- OnStar ...... 16 through a third-party administra- While HAP has only one client “I come from a family of scien- ences and architecture and a sec- Serafina Arts ...... 27 tor that processes the claims. These with 3,400 employees under a self- tists — my mother and father ond to support social entrepre- Sphere Trending ...... 11 and other companies also some- funded contract, Tournoux said were both neuroscientists, and neurs like himself. times contract with health mainte- several other companies have my brother is a cellular biologist Sphinx Organization ...... 3 nance organizations for health ben- “I definitely have a sense of The Ideal Group ...... 14 efits for a set monthly fee under a See HAP, Page 25 déjà vu from Sphinx’s early years See Dworkin, Page 27 Trott & Trott ...... 17 U.S. Army Tacom ...... 25 UM Ross School of Business ...... 14 United Road Services ...... 18 Walbridge Aldinger ...... 28 Wayne County Airport Authority ...... 15 Macomb crafts growth plan for defense amid cutbacks Wello ...... 27 WSU School of Medicine ...... 19 BY CHAD HALCOM team, you don’t hire the coach, pleted by the joint defense task lege by the New Economy Initiative CRAIN’S DETROIT BUSINESS then expect he’ll pick up a couple force that the county convened for Southeast Michigan. of good players and immediately with the cities of Sterling Heights Hackel said he is also meeting Macomb County Executive you start winning. You will proba- and Warren. with Sterling Heights officials Mark Hackel still backs develop- bly lose a couple more (games) be- The task force — made up of managing the Macomb-Oakland Uni- Department index ing a national branding and mar- fore the new strategy gets a chance business owners, executives, elect- versity Incubator as well as owner- keting strategy to retain jobs and to work,” Hackel said. “Building ed officials and military leaders as- President Ron Lamparter of the BANKRUPTCIES ...... 4 attract defense industry invest- an industry is the same way, and sembled this year to cultivate the Defense Corridor/Center for Collabo- BUSINESS DIARY ...... 23 ment to the county, which could as you implement the training, the economic development potential ration and Synergy about ways to re- CALENDAR ...... 24 shed more than 1,000 such jobs by team begins to get better.” in the defense industry — is com- cruit new startups and tenant CAPITOL BRIEFINGS...... 7 year’s end compared with the year Hackel said the county expects pleting a strategy report with help businesses to those facilities. An before he took office. to gain direction soon on a defense from a $428,000 planning grant CLASSIFIED ADS ...... 25 “When you’re building a football strategy from a report to be com- awarded to Macomb Community Col- See Macomb, Page 25 KEITH CRAIN...... 6 MARY KRAMER ...... 6 OPINION ...... 6 Crain's on SBAM radio “Buy Michigan” Second Stage Workshop PEOPLE ...... 22 A Crain’s workshop Thursday will look at the Pure THIS WEEK @ Listen to Publisher Mary Kramer and Web RUMBLINGS ...... 30 Editor Gary Anglebrandt on SBAM’s online Michigan Connect plan. The MEDC’s Mike Finney is WWW.CRAINSDETROIT.COM radio show last week, crainsdetroit.com keynote speaker. Details: crainsdetroit.com/events STAGE TWO STRATEGIES ...... 11 WEEK ON THE WEB ...... 30 20110919-NEWS--0004-NAT-CCI-CD_-- 9/16/2011 5:30 PM Page 1
Page 4 CRAIN’S DETROIT BUSINESS September 19, 2011 Ann Arbor State Bank raises $5M,
Average net sales for the top quartile of stores* plans $50M in commercial loans Other Battery Franchises BY TOM HENDERSON list of about 50 would-be investors Bank of Michigan, said the fundrais- CRAIN’S DETROIT BUSINESS when he started the fundraising. ing is good news for area bankers. Can’t Say That! He said 92 eventually made com- His bank, which is 51 percent Ann Arbor State Bank is expected mitments, which averaged about owned by the struggling Capitol Join the nation’s largest and fastest growing battery and to announce today that it has fin- $55,000 at $30 a share. Bancorp Inc. of Lansing, is raising light bulb franchise with over 465 locations in 46 states ished a private stock offering of “We’ll leverage that money out capital, too. 16.8% increase in all store net sales* $5 million — which it plans to at a 10-to-1 ratio, which allows us Sarafa, however, said the Ann Opened 138 stores in the last 3 years leverage into $50 million in new to do another $50 million in com- Arbor fundraising should be Specializes in battery & light bulb solutions commercial lending. mercial lending,” said Broucek. viewed in context, that it was for a Since the recession began, some Includes both retail and business to business revenue streams “That will have a big impact in the bank in a city that avoided much area banks have been able to raise local community.” of the recession woes. 23 years experience in a growing industry money from existing shareholders “It’s nice to see a local competi- “When will the banking indus- to stay afloat, but raising new tor raise some additional capital to try in Southeast Michigan be at- rounds of money from new share- support future growth opportuni- tractive enough to outside in- holders has been rare. In April, Visit our website or call us for more information ties,” said Tim Marshall, the presi- vestors without loss-sharing Clarkston State Bank raised $8 mil- dent and CEO at Broucek’s former arrangements with the FDIC or BatteriesPlus.com/Franchising 1.866.687.1109 lion in new capital, $3 million from bank. Marshall said his bank will passing the hat around the board- *Net sales average of $1,365,289 is based on the net sales average for the 95 stores that represent the top 25% of all 383 stores open during the entire 2010 calendar year. Of those 95 its board of directors and $5 mil- stores, 34 stores (or 36% of the 95 stores in the top quartile) met or exceed the net sales average (or 9% of the 383 stores open during the entire 2010 calendar year). All store net revenue be able to expand its loan opera- room?” he asked. increase of 16.8% is based upon 2010 sales for all stores open as of 12/31/10 vs 2009 sales for all stores open as of 12/31/09. Of the 443 stores included, 149 (or 34% of the 443 stores) lion from two outside investors. met or exceeded the store net sales increase. There is no assurance that you will do as well. (See Item 19 of our FDD for further details.) tions, too, funded not with exter- The reference to the Federal De- The bank began the offering in nal capital but with internal posit Insurance Corp. was about in- early August with a minimum tar- growth, having grown its assets by vestments by Talmer Bank of Troy get of $4 million and hit $5 million nearly $70 million for the 12 and Level One Bank of Farmington in three weeks. It continued to re- months that ended June 30 to Hills in banks shut by regulators. ceive commitments from would-be $706 million. Tom Henderson: (313) 446-0337, shareholders, with the round Michael Sarafa, president and [email protected]. Twitter: eventually being oversubscribed CEO of Farmington Hills-based @tomhenderson2 at $6.5 million. William Broucek, the bank’s chairman and CEO, said he TAKE YOUR EVENT TO A wanted to allow more share- Championship holders to par- ticipate and will reduce the num- Level ber of shares they can buy so as not to exceed the $5 million Broucek target. “We’ve had a lot of demand for shares since we opened, but none were available,” said Broucek, who launched the bank in January 2009 with a capitalization of $12 million. Broucek co-founded the Bank of Ann Arbor in 1995, retired from the bank in 2005 and, bored by retire- ment, decided to form another Meeting & Event Spaces at Olympia Entertainment Venues bank. Given the timing of its Call For Details 313-471-3333 launch, during the recession, the Special.Events@Olympia Entertainment.com bank has largely avoided the loan write-offs that have plagued other community banks. Those write- offs were largely commercial loans based on prerecession valuations on properties that soon were un- derwater. Mission Exceptional! Broucek said he had a waiting Would you describe your ANKRUPTCIES law firm as exceptional? B The following businesses filed for It could happen. chapter 7 or 11 protection in U.S. Bankruptcy Court in Detroit Sept. 9-15. We are on a mission to provide Under Chapter 11, a company files for exceptional legal services to every client. reorganization. Chapter 7 involves to- tal liquidation.
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Page 6 CRAIN’S DETROIT BUSINESS September 19, 2011 OPINION MARY KRAMER BMI database must Can ed reform bridge divides? When taking office in Rhee whose first name children in Detroit have voted — the Michigan House in used to be “embattled.”) by sending their children to public 2006, former Oakland For his work in the charter schools in search of some- County commissioner Legislature, Crain’s se- thing better. safeguard privacy Tim Melton had his lected Melton as one of Charters aren’t the silver bullet. sights set on being ap- our “40 under 40” But unless we stop failing children ichigan may become the first state in the country to pointed to the economic achievers for 2010. It — in Detroit and throughout the require physicians to chart the body mass index of development committee. will be interesting to country, in cities, suburbs and children under 18 years of age. He got assigned to ed- watch him promote small towns — we don’t have M ucation instead. Rhee’s agenda as an ex- much of an economic future. Gov. Rick Snyder’s proposal to do so last week ruffled some Lucky for him. Lucky perienced lawmaker. Good luck to Tim Melton. libertarian-minded feathers. for Michigan. Rhee told The Wall But the proposal is true to the governor’s “nerd” roots and Melton eventually Street Journal the agen- Mea culpa his pledge for a data-driven administration. He wants real data chaired the House Edu- da includes lobbying to help set policy to deal with what many health experts deem cation Committee and worked with for mayoral control of schools to In scheduling the annual his Republican counterpart in the concentrate authority, and ending Crain’s House Party, our events a public health epidemic. And in just a cursory online search, Senate, Wayne Kuipers from Hol- the use of seniority as the yardstick team used a calendar that clearly estimates of the percentage of children who fit the definition of land, to enact in protecting teachers from layoffs. labeled Sept. 29 as the start of the obese ranged from 12 percent to 17 percent. important edu- On his Facebook page, Melton Jewish high holiday Rosh Under Snyder’s plan, physicians would log a child’s BMI — cation reforms, wrote: “Education reform should Hashanah. But as readers have re- using a formula based on height and weight — into the state’s including grad- know no partisan boundaries, and minded us, it actually starts at ing teachers on in my new position, I will help sundown the night before — exact- 13-year-old database created to track immunization records. whether chil- form coalitions for change around ly when we’ve planned this year’s Is this government as nanny? Privacy issues must be ad- dren actually the country that cut across the old House Party. We apologize for this dressed. learned in their divides.” unfortunate scheduling conflict — But public health officials are applauding and some em- classrooms. I wonder if he can start with De- and we will consult online calen- ployers are, too. Like smoking, obesity has been linked to seri- Late last troit. There is a chronic percep- dars that record specific religious month, and in tion among some community ac- observances for all faiths as we Melton ous, chronic conditions such as heart disease, stroke, diabetes his third term tivists here that until the state plan our events in 2012. and some forms of cancer. Tax dollars funding Medicaid and representing his hometown of Pon- intervened, DPS was doing fine fi- Medicare pay the tab for millions of Americans whose health tiac (and neighboring Auburn nancially. All Detroit needs is its Mary Kramer is publisher of is compromised by obesity. Hills), Melton announced he was own duly elected school board — Crain's Detroit Business. Catch her Employers pay, too, through plans that cover family mem- joining StudentsFirst, the Califor- or so the thinking goes. The prob- take on business news at 6:10 a.m. nia advocacy group created by lems started when the state Mondays on the Paul W. Smith show bers. Overweight kids have more medical problems and miss Michelle Rhee, the former chancel- “robbed” Detroiters of their votes on WJR AM 760 and in her blog at more school days; that means employees often miss work, too. lor of Washington, D.C., public for an elected school board. www.crainsdetroit.com/kramer. What happened to personal responsibility, you might ask? schools. (Yes, the same Michelle But parents of more than 50,000 E-mail her at [email protected]. Good question. Ultimately, the solution to the sky-high increases in health care costs rests in part on the ability of people to take responsibil- ity for what they can control, whether they are uninsured, cov- ered by Medicaid/Medicare or covered by an employer’s plan. TALK ON THE WEB The key with Snyder’s plan is how the data will be used. From www.crainsdetroit.com comes more competitive. As long as Re: Chevrolet’s Tiger Stadium offer Reader responses to stories and Sports stars align in Motown the unions are in charge, taxpayers In 2029, when those same base- blogs that appeared on Crain’s will be denied school-of-choice solu- ball players are 25 years old, they Web site. Comments may be tions like vouchers. We know Detroit is Hockey Town. can visit that still-empty lot with edited for length and clarity. Michael Lowry But this fall, it will be a Tiger Town and Lions Town, too. their own children and volunteer With all three pro sports being played in downtown De- to finally fix it up. Maybe then, Re: Printing license tabs online someone will see the light. But that’s Hurray for common sense. I have troit, fans are having the rare treat of seeing the baseball fran- Wasn’t one of the original pur- doubtful. found most state agencies … to be chise win a division title — and maybe a World Series berth. poses for no-fault insurance an ef- John Galt full of incompetent, disrespectful fort to reduce the number of law- Meanwhile, the start of a winning season for the Lions just and arrogant employees. suits? How much more insurance will as baseball hits October playoffs will bring more excitement Re: Medicaid costs could rise $30M Bob Prudhomme than a generation can remember. I have to carry to protect myself in first year if no-fault bill is approved from the lawsuits? Re: Lutz to help Durant campaign When it comes to the Lions and the Tigers, Detroit fans Without no-fault insurance in Mynsbem An 80-year-old auto guy helping have learned to be wary of hope. this state, our Medicaid will with- Re: Bill would stop schools a 62-year-old guy who looks 80 try But with names like Miguel Cabrera, Justin Verlander, out a doubt be stressed even far- to convince 20-somethings to vote Victor Martinez, Calvin Johnson, Matt Stafford and ther than it currently is. If it’s not from deducting union dues against a 57-year-old guy. Just Ndamukong Suh populating the diamond and the gridiron, De- broken, leave it alone. We will never improve our pub- great. troit seems poised for a competitive autumn. angelwings lic education system until it be- troyresident KEITH CRAIN: We are only as strong as the weakest link Last week, I was lucky enough be shared by all of the ing applied to the weak In many European countries, be very easy for the United States to spend some time in Germany for countries locked to- countries is quite the prime minister or chancellor is to be drawn into Europe’s difficul- the biennial auto show in Frank- gether by that curren- strong. not elected by direct vote but by ties — even more than we are furt. cy. I can’t help but think the party that wins the majority of now. Needless to say, there were lots Almost everyone that if we were part of seats in parliament or the elected Our treasury secretary will be of conversations about cars and re- feels that the common the EEC, we would be chambers. in Europe this week. He has urged membering 9-11. market and currency, told in no uncertain But that doesn’t seem to matter. leaders to act more forcefully on But what really surprised me eliminating duties and terms that we will have The economy is bad, and nobody the debt crisis. Even though he was just how much of an economic tariffs, were good ideas. to change the way we is happy with their leaders — re- says it’s Europe’s problem, it mess the European Economic But when there is a are running our federal gardless of how they were select- seems hard to believe we’ll be able Community is in these days. problem with one coun- government, or else. ed. to sit on the sidelines. I doubt that when they formed try, they all have to ral- I also learned on this Make no mistake: Europe, along As if we don’t have enough prob- the common market and ended up ly around and put the trip that there’s general with the rest of the world, has seri- lems here, it looks like we’re going with the European Euro currency squeeze on that nation to clean up unhappiness with top elected offi- ous financial problems that won’t to have to continue to keep a close that anyone realized that the grief its act for the good of the rest. cials among Europeans I spoke go away soon. eye on Europe. Its problems could of a few member countries would And the amount of pressure be- with. Unless we’re careful, it would become ours very easily. 20110919-NEWS--0007-NAT-CCI-CD_-- 9/16/2011 5:31 PM Page 1
September 19, 2011 CRAIN’S DETROIT BUSINESS Page 7 Out with the old incentives, in with the new LANSING — With the U.S. and Canada. Michi- “The investment community is Quackenbush said the commis- Comings & goings Oct. 1 start of the fiscal gan utilities were among one constituent here, but I’m sion “will have lots of dockets open year, the state’s new $100 Capitol the 80 companies he has aware that (there are) many, many where there will be lots of posi- ■ Lance Binoniemi, executive di- million pot of economic Briefings been covering. constituents,” he said in an inter- tions taken by different parties. rector of the Michigan Licensed Bev- development incentives Quackenbush said hav- view with Crain’s last week. I’m going to be very open. I’m very erage Association, has been named is official. ing an understanding of Quackenbush is slated to leave interested to hear all sides of the vice president of government rela- But the state isn’t done the investment communi- UBS on Oct. 14 and start at the PSC issues.” tions at the Michigan Infrastructure handing out dying tax ty is important in his on Oct. 17, and between now and Quackenbush will have a and Transportation Association. credits. new role, but he also then he plans to spend time becom- $113,000 salary and replace Orji- ■ Jennifer Hoff, former director of The Michigan Economic brings perspective from ing familiar with the commission. akor Isiogu, who will continue to communications for the Michigan Growth Authority board his early years, holding Asked whether Snyder asked him serve on the three-member com- Republican Party, has been named will continue to meet as senior financial analyst to delve into any particular areas, mission as a member. grassroots action coordinator for needed through the end roles with the Illinois Com- Quackenbush said it’s “an open A chartered financial analyst, of the year to approve Amy Lane merce Commission. slate at this point. He knows my Quackenbush holds a bachelor’s the Michigan Chamber of Commerce. previous commitments His background also background; he knows I have a busi- degree in business economics from ■ Lisa Dedden Cooper, aide to made to projects that have been in includes managing Sprint Nextel ness background, some investment Calvin College and a master’s de- then-U.S. Rep. Mark Schauer, D- the Michigan Economic Development Corp.’s treasury department and lo- community background. … He said gree in finance from Michigan State Battle Creek, has become advoca- Corp.’s pipeline. cal telecom division. be fair and balanced, and go to it.” University. cy manager for AARP Michigan. The MEGA tax credits and those for brownfield redevelopment and historic preservation are among those being eliminated in the state’s switch to a new tax system. They’re being replaced by the Michigan Business Development Program and Michigan Communi- ty Revitalization Program, initia- tives that will have a combined $100 million in the upcoming fiscal year to offer in incentives. The new programs will provide grants, loans and other assistance. The Michigan Strategic Fund ap- proved program guidelines in Au- gust, but bills authorizing the pro- grams are still on the move in the Legislature. Senate Bills 566-568, for the com- munity revitalization program, were approved last week by a Sen- ate committee and are on the Sen- ate floor, while SB 556, for the business development program, and companion SB 644 are expect- ed to move out of committee this week. All five bills may clear the Senate this week and go to the House. The MEDC doesn’t know when the first deal under the new incen- tive programs will go to the Strate- gic Fund board for approval, but it probably won’t be until November or December, said Kathleen Fagan, MEDC communications specialist. With both new programs, the Strategic Fund board will approve all support for projects of $1 million or more. In the smaller cases, two of the Strategic Fund board delegates will approve the support. The state hopes to have an appli- cation process for the new pro- grams ready by the Oct. 26 Strate- gic Fund board meeting. As for the soon-to-be-gone tax credits, the MEDC has several pro- jects that have outstanding com- If you have an opportunity, we’re ready. We’re ready to help mitments for MEGA and brown- field credits, and those still could be you achieve that next level of success, just like all the businesses addressed in MEGA board meet- we’ve extended nearly 10 billion dollars to so far this year. And ings this year. All outstanding commitments we plan to lend another 28 billion dollars in the year to come. not acted on will die Dec. 31. We also support local businesses with financial solutions and New PSC chairman services that can improve productivity and, ultimately, help them John Quackenbush started his achieve success. Find out how we can help you drive results at career as a staffer in a state agency 53.com/drivingresults or call 1-877-804-2091. regulating utilities. Now he’s re- turning to that arena as the chief regulator. Gov. Rick Snyder last week tapped the UBS Global Asset Manage- ment executive to chair the Michi- gan Public Service Commission. Republican Quackenbush, 52, has been managing director and se- Loans subject to credit review and approval. Rates may vary based on credit qualifications. Fifth Third Bank, Member FDIC. Equal Housing Lender. nior investment analyst in the UBS Chicago office, responsible for eq- uity research of the transportation, utilities and coal industries in the dbpagead.qxp 7/29/2011 4:17 PM Page 1
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September 19, 2011 CRAIN’S DETROIT BUSINESS Page 9 Extra
growing small businesses A CONVERSATION WITH Partners Vince Thomas, Billhighway
Billhighway on road to growth with passion Vincent Thomas started Automated Payment Highway Inc., which does business as Billhighway, as a college student in 1999 as a response to a Entrepreneurs seeking suppliers find risk takers are the safe choice need: to get him and his roommates at Eastern Michigan University to pay BY GARY ANGLEBRANDT as those used at bus stops, smoking shel- their bills on time. CRAIN’S DETROIT BUSINESS NOTABLE DUO-GARD PROJECTS ters and walkways. Billhighway links an organization’s When working on a new product, Miller Ⅲ Since 2008, Duo-Gard Industries Inc. bank account with its payments and uo-Gard Industries Inc. started in 1984, has supplied 90 percent of the translucent looks for other businesses that have a sim- accounting systems. The basis of that making specialty window panels for canopies for Wal-Mart supercenters. ilar appreciation for innovation and system proved to be a fit for D retrofitting old factories. change — ones he feels have maintained Ⅲ At Livestrong Sporting Park, stadium for organizations with a member or donor In recent years, the manufacturer of ar- the Kansas City Wizards soccer team, Duo- their entrepreneurial spirit and under- base such as professional associations chitectural products has branched into Gard supplied 70,000 square feet of stand the potential for the product. If he and community nonprofits. What making walls illuminated by a special translucent canopy that projects over the finds he is doing too much explaining, it started as a simple spreadsheet and LED gel, bicycle shelters and, as of this stands. portends supplier relationship troubles shared bank account for Thomas and year, solar canopies. Ⅲ Duo-Gard provided its IllumaWall for a down the road: If the people at the busi- his buddies has developed into a 50- The result of the new-product push? meditation room on the television show ness need a lot of explaining once, they’re employee company based in Troy that Fifty percent growth in revenue at the “Extreme Makeover: Home Edition” in probably going to need it every time a serves 3,500 organizations. Canton Township-based company — from 2006, working with Virginia Tech. change or new idea comes up later. In June, Ernst & Young named Thomas an Entrepreneur of the Year $10 million in 2008 to $15 million last year. “There are certain business cultures for the Michigan and Northwest Ohio Coming up with ideas for these diverse heating costs, many factories had hur- that are basically there to sell product X,Y region. Crain’s Web Editor Gary products has been only half the battle. riedly bricked up their windows. But that and Z for price X,Y and Z,” Miller said. Anglebrandt spoke with Thomas. Equally important, said President David left the spaces dark and even less pleasant “We’re looking for some cultural capaci- Miller, has been finding suppliers that to work in. ty. Without that, we’re not interested.” What growth plans are under way at want to work on new products — ones Duo-Gard (then named Michigan Ener- In one situation, Duo-Gard had a deal to Billhighway? How do we get our that have maintained an entrepreneurial gy Control) developed a cellular polycar- supply a modified version of its polycar- platform out to more and more culture that keeps them chasing growth bonate panel that could replace glass win- bonate panels to the Livestrong Sporting organizations? We decided that for outside usual channels. Also key have dows. They are composed of translucent Park, a soccer stadium that opened in our program to be used by as many been connections with universities that Kansas City this sum- groups as possible, let’s go find cells that prevent heat passage in the same partners that already have a huge proved valuable in developing fresh way double-paned home windows do. mer. The modifica- number of clients. Let’s tie into their ideas. If it seems like solar canopies and LED tion required find- system and go back to them and sell Miller said growth at Duo-Gard, which walls filled with Nanogel (the brand name ing a supplier our services, too. has about 60 employees, never would of a special gel made by one of Duo-Gard’s who could build a have happened were it not for these like- suppliers) are a stretch for a business stronger version What funding route did you take minded suppliers and outside resources. rooted in 1980s factories, Miller doesn’t of the panels. when you started and how much did mind. If a potential supplier for these (Duo-Gard owns that cost? I borrowed ($40,000) from products doesn’t get what he’s trying to friends and relatives. ... It was kind of Matching spirit do, Miller moves on. See Suppliers, pieced together — $5,000 here, Miller’s father started Page 10 $10,000 here. I ran up my credit “You can’t sit around and wait for cards to do a lot of it. I wanted to go Duo-Gard as an indirect re- someone,” he said. my own route with funding formally sponse to the 1970s oil Other Duo-Gard products in- because I didn’t know what crises. To save on clude transit shelters such Billhighway even would be or could be yet. I knew the model was going to change. I didn’t want to sell some Duo-Gard Industries investor on model A, knowing it was Inc. President David going to transform itself into versions Miller, with a sample B, C, D, all the way down the line. of cellular polycarbonate Have you been approached to sell the insulated window business? Yes, we have had a lot of panels, wants interested parties. I’d say for the last suppliers that share five years, I’ve gotten interested parties his company’s to reach out, but the last two, two-and-a- entrepreneurial half, every week someone is calling. spirit. “Without that, we’re not Is there something you’d recommend interested,” he others to avoid? I think I waited too said. long to bring in what I would call the right people. You spend $30,000 on someone when maybe you should spend $70,000. It’s hard to make that $70,000 commitment, but you save the money in the long run when you get the right, better, maybe more expensive person. BOB CHASE 20110919-NEWS--0010-NAT-CCI-CD_-- 9/16/2011 10:14 AM Page 1
Page 10 CRAIN’S DETROIT BUSINESS September 19, 2011 Second Stage Extra Suppliers: Risk-taking suppliers are entrepreneurs’ safe choice ■ From Page 9 the proprietary rights to its panels partners together. You don’t have electronic components including tute for Supply Management and has Solar Decathlon in Washington, but outsources the production.) the resources to bring products to solar panels, has 700 employees worked for companies manufac- D.C., an event held by the U.S. De- Of the $1.4 million Duo-Gard market on your own,” Miller said. and has been in business for 101 turing a wide range of industrial partment of Energy in which teams was to receive for the deal, $600,000 This year’s project has been the years. Decades ago, the company products. Borders Group Inc. are challenged to come up with in- would go to the supplier that could launch of solar canopies that in- decided that it should look for brought him on as director of pur- novations for solar-powered hous- make the modification. That’s a corporate photovoltaic compo- ways to combine and customize chasing a year ago to try to help es. Virginia Tech invited Miller and big deal in the world of polycar- nents and can be connected to the the components it distributes to the book retailer through its trou- representatives to help students bonate materials, Miller said. electrical grid. There are two main meet customer needs. It formed a bles before it filed for Chapter 11 compete in the event by bringing Yet of the three suppliers he con- product lines: one for general shel- special task force, and three years bankruptcy in February. in materials and know-how. tacted, only one was interested. ter use and one large enough for ago formed a subset within that Welsh said getting the wrong Although Miller just as well One of the others, the head of housing electric vehicles. The ve- team to look for renewable energy- supplier leads to long-term prob- could have spent the time working North American operations for the hicle canopies have a charging sta- opportunities, said Mark Ferda, lems. The trick is sifting through in the office, the participation company, wouldn’t consider it at tion that can be hooked up to the account manager for the team. suppliers that aren’t up to the task. proved to be more than a fun time. all. The contact at the other com- automobile or to the grid. “We were looking to sell solar “Some suppliers won’t want to It was this event that led to Il- pany went to the top and was In pursuing suppliers of elec- products as more than just a com- take the risk, may not have the ca- lumaWall, a wall that uses a spe- turned down. Those companies tronic components, Miller found a modity,” Ferda said. “A lot of peo- pacity, the materials, the research cial gel to fill the cells of Duo- chose to play it safe, Miller said, largely passive response when it ple are out there selling a solar and development,” he said. “You Gard’s polycarbonate panels and and rather than spend time trying came to new product development. panel as a distributor. We look for have to understand their needs as then charges the gel with LED volt- to persuade them to do otherwise, “They want to hand us a opportunities to create products well as your own.” age. The wall allows sunlight to he moved on. “The others took a brochure and say, ‘Here’s what that allow additional sales for our The ideal, he said, is to end up pass through during the day and more commodity approach, not an kind of performance you can ex- customer — Duo-Gard — and at with relationships where the cus- changes colors at night. Duo-Gard entrepreneurial approach,” he pect. Good luck,’ ” he said of some the same time increase our sales of tomer and suppliers act as one supplied the structural material, said. “They just didn’t have the of the companies he encountered. solar panels.” unit competing against others. while Cabot Corp. of Boston (culture) in place.” Miller was looking for a compa- McNaughton-McKay saw a po- Getting the right supplier from the brought the Nanogel (a brand David Corbliss is director of ny whose entrepreneurial spirit tential market for the canopies at start and having a cultural under- name it has since changed to Lu- sales and marketing at Galina USA matched his. He found Mc- car dealerships and store chains, standing means new innovations, mira) and Color Kinetics of Burling- LLC, the Janesville, Wis.-based Naughton-McKay Electric Co. of he said. Matching the two compa- and cost-cutting measures will oc- ton, Mass., (since purchased by company that makes the struc- Madison Heights, which now sup- nies made sense because they cur naturally. Philips Solid-State Lighting Solutions) tured polycarbonate materials plies the charging unit and solar could hit each other’s customer “If you have to explain every supplied the LED technology. Duo-Gard sought. Corbliss said panels for the canopies. bases while taking advantage of time, you’re wasting money. It’s Although Virginia Tech was the there are only about six companies The company, it turned out, had each company’s area of expertise. not efficient,” Welsh said. original integrator behind the in the world that make these mate- created a team just for finding pho- “We were able to bring access Vince Thomas, CEO of Billhigh- product, the university allowed rials, and most of them are larger tovoltaic product opportunities. and expertise within the area of so- way in Troy, also this year em- Duo-Gard to commercialize the than Galina USA and unwilling to “They had formed an entrepre- lar applications and charging sta- barked on a new strategy that re- product — no strings attached. consider modifications. neurial group within their compa- tions. They brought the customer quired making deals with other Duo-Gard, as controller of the pri- “It’s a cookie-cutter business for ny,” Miller said. network as well as expertise to businesses. His company’s soft- mary structure of the product, them,” Corbliss said. “We’ll say, McNaughton-McKay offered en- provide physical structure which ware links nonprofit associations’ would be the main integrator and ‘Let’s take a look at it. If we can gineers and upfront work to get we don’t have,” Ferda said. bank accounts with their payment continue using the other two com- make it work, let’s make it work.’ ” the canopies launched. Steven Welsh has more than 20 and accounting systems. panies as suppliers. Miller said because small busi- “They saw enough value in what years of experience working with The strategy involves tying his Many business owners might nesses have limited resources, we’re doing to make an investment purchasing and supply chain man- software into systems already consider that sort of activity to be finding suppliers that bring tech- in what we’re doing. A lot of sup- agement issues. He teaches MBA used by organizations that are not a luxury, but Miller said it’s about nical expertise is critical, he said. pliers won’t do that,” he said. courses at Lawrence Technological Billhighway customers. That keeping the entrepreneurial sense “The key is getting the right McNaughton-McKay distributes University, is a member of the Insti- meant reaching out to the makers of exploration that led to the for- of those systems, companies he mation of the business. calls channel partners. “We’ve had a lot of value and re- He has a bulleted list of charac- turn from working on those teristics that define what a good homes,” he said. “Even though it’s potential channel partner looks considered a charitable contribu- like, including the company’s tion, it’s an investment.” available resources, how it makes The company has picked up $3 decisions and whether it has done million in sales from IllumaWall. revenue-sharing deals before. Miller also participated in Solar “We’re big on weekly or month- Decathlons in 2007 and 2009. The ly phone calls,” Thomas said. “If participation gave Miller more they don’t take those calls serious- product ideas, such as bicycle shel- ly, if on them there’s the fine take- ters, that have driven growth, and away that they don’t follow up on, led to connections with suppliers we don’t think it’s a good cultural and academics that came in handy fit for us. ... If they don’t want to in developing new products. communicate at that high of a lev- “In areas where you’re redefin- el, our belief is that a lot of balls ing performances (of materials), Audit Oversight. will be dropped.” you need to have resources out Investor Protection. And like Duo-Gard, if the com- there that allow you to get that pany in question doesn’t see the real-life data,” Miller said. potential, there’s not much use in At the PCAOB... twisting arms, he said. Your role is critical. Your influence is far reaching. “You have to walk away,” Growth ahead Thomas said. The solar canopy project is ex- The Public Company Accounting Oversight Board is looking for dynamic people opportunities available Miller tries to stay a step ahead pected to drive up revenue $2 mil- to fill dynamic roles. We have throughout the United by keeping his company engaged lion to $3 million this year, and the States for experienced CPAs, Chartered Accountants and attorneys in Inspections, with the outside world, on the company projects revenue to hit Enforcement, Standards, International Affairs, and Research & Analysis. lookout for others with ideas and up to $18 million. CPAs AND CHARTERED ACCOUNTANTS knowledge. Miller’s latest project is develop- Minimum of 4 to 8 years of recent experience auditing public companies, depending on “We have relationships with ing solar photo cells that will allow the position suppliers even when we don’t need solar power-generating compo- ATTORNEYS to be supplied,” he said. nents to be integrated directly into At least 10 years of progressively responsible experience with a law firm, corporation, more architectural applications, government agency or regulatory body, or combination thereof, related to accounting, instead of adding them to rooftops public auditing or SEC financial reporting matters Staying interested, curious or lawns. Another key ingredient in devel- He is working with university Submit your resume to [email protected] oping product ideas at Duo-Gard is connections to make it happen. or log on to www.pcaobus.org/careers for more details a sense of entrepreneurial fun. The technology isn’t ready, but One activity Miller found to be when it is, Miller said he will seek valuable for his company had very out suppliers that get it and walk little to do with day-to-day opera- away from those that don’t. tions. Some business owners Gary Anglebrandt: (313) 446- The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports. It is also charged with overseeing the audits of broker-dealer compliance reports under federal securities laws to promote might even view it as frivolous. 1621, [email protected]. investor protection. The PCAOB is an equal opportunity employer dedicated to establishing a diverse workforce. In 2005, he participated in the Twitter: @anglebrandt 20110919-NEWS--0011-NAT-CCI-CD_-- 9/16/2011 10:12 AM Page 1
September 19, 2011 CRAIN’S DETROIT BUSINESS Page 11 Second Stage Extra
Risks and considerations: Cubitt more than anything to make sure Yashinsky, who studies how StageTwo Strategies said the biggest challenge with the we could pay all the vendors,” Cu- consumer, technology, retail and inventory change was cash flow. bitt said. design trends affect future prod- A look at problem-solving “We had to be able to make sure Expert opinion: Susan Yashinsky, ucts and services, said marketing by growing companies. we could bring in the new prod- macrotrend forecaster with the new products online buys time to ucts at the same time we were pay- Waterford Township-based retail sell off existing inventory. Essential Bodywear LLC ing for the old product,” Cubitt consulting firm Sphere Trending, “Ten years ago, you wouldn’t Location: Commerce Township said. “There were a couple months said one way to assist an invento- have had the luxury to sell inven- Description: Direct seller of inti- where we were paying numerous ry transition is to use social me- tory down as you’re flowing new mate apparel vendors, even some we were no dia, which can create a history of product in and exiting the old,” President: Marcia Cubitt Cubitt Charlick longer doing business with.” customer acceptance for new she said. CEO: Carrie Charlick To remove the old product and products and make it easier to — Ellen Mitchell Founded: 2003 “Representatives don’t carry all get reps on board with universal switch over. Employees: 14 full-time-equiva- the products, they carry a fit kit of sizing, and to make sure they had “With the new technology tools lent employees and 350 indepen- samples from size 32A to 44H,” Cu- adequate cash flow, Cubitt and available, you can create buzz for If your company has overcome a dent salespeople bitt said. “Before, every style had a Charlick promoted “last chance” the new product online and start to tough challenge, other growing Revenue: $4 million in 2010; different fit, but now reps can fit a sales for the bras they would soon sell online,” Yashinsky said. “It businesses want to hear about it. $4.5 million projected for 2011 woman for whatever size she’s drop and introduced three new makes it an easier sell to then go to Contact Web Editor Gary Angle- Problem to be solved: When Cu- wearing and know it’s not going to styles. the retailer when you have a histo- brandt at ganglebrandt@crain bitt and Charlick started Essential change based on the style.” “We ran promotions and sales ry of online sales.” .com to share your story. Bodywear LLC in 2003, they sold oth- er companies’ products. The direct sales company enlisted a staff to sell the undergarments across the U.S., but the two soon became con- cerned with the costs associated with selling others’ products. “We were doing well, but we did- n’t have any profit margins,” Cu- bitt said. “There are costs involved with that extra layer of people there, and one of the most impor- tant things necessary with our What’s the business is to have our own pri- vate label.” Essential Bodywear’s sales staff recruits customers to host bra par- ties in their homes, much like Mary Kay or Tupperware parties. Cubitt and Charlick made a pri- connection vate-label deal with a garment manufacturer and began selling bras under the Essential Body- wear name in 2006, but they soon ran into other problems. Because Essential Bodywear of- fered so many different sizes and styles, representatives had to car- between ry dozens of bras to market the product. “Representatives carry samples rather than inventory, but they were still carrying too many bras to handle,” Cubitt said “Bras can be like shoes: You think you’re one 1,14 2 n u r s e s size, but you actually can wear a variety of sizes based on the styles.” Cubitt said because each bra size fit differently depending on the style, the factory they were working with had minimums for each bra produced that were cut- and 21area ting into their profits. They also had to place orders a minimum of six months in advance. “If we had a growth spurt and we sold out of product, which we did, we would have no way to get it until the next order came,” she h spitals? said. “It could take up to six months to get a product back in.” Solution: The two kept their eyes open and in 2010 were able to source a different factory of the Oakland Community College. Yes, OCC. Our nursing program is one of the largest, private-label manufacturer that most highly regarded in the country. Spanning two of our five campuses – Highland was able to meet their own inven- tory minimums and at the same Lakes and Southfield – we’ve graduated 1,142 nurses in the past five years, more than time allowed them to give final or- any other school, college or program in the state. In addition, our working agreements der numbers within 30 to 60 days rather than six to nine months. with 21 hospitals in southeastern Michigan mean we’re providing the region with a “We still need to place orders a few highly trained, vital source of health care professionals. Why place so much emphasis months in advance, but we can play with the numbers and can call on the health of our community? Because at OCC, community is our middle name. and add to an order if we need to,” Cubitt said. “We’re able to keep in- ventory numbers where they be- long and help projected growth.” To reduce the number of prod- ucts and lighten the load on repre- www.oaklandcc.edu sentatives, Cubitt and Charlick in- troduced universal sizing in January, where each size fits ex- actly the same no matter the style. DBpageAD.qxp 9/15/2011 2:13 PM Page 1
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September 19, 2011 CRAIN’S DETROIT BUSINESS Page 13
Profiles Mary Barra Senior vice president of global design, engineering and program management, General Motors Co., Page 13 Linzie Venegas Sales and marketing director, Barra Davis-Blake The Ideal Group, Page 14 Alison Davis-Blake Dean, University of Michigan WOMEN Ross School of Business, Page 14 Stacey Coopes GLENN TRIEST CEO, FordDirect, Page 15 GLENN TRIEST Turkia Awada Mullin TOWATCH Ford CEO, Wayne County Airport Authority, Page 15 Laura Soave Coopes CEO, Fiat brand North America, Chrysler Group LLC, Page 16 Linda Marshall President, OnStar LLC, Page 16 Olga Dazzo Director, Michigan Department of Community Health, Page 17 Marcy Ford McCann Mullin Schlichting (left) and Mosey Executive vice president, Trott & Trott PC, Page 17 20ll Joyce Jenereaux Sixteen President, Detroit Media Partnership, Page 18 who set the Kathleen McCann President, United Road Services Inc., Page 18 standard Judith Whittum-Hudson Professor of immunology and Soave from Whittum-Hudson Marshall microbiology, internal medicine and ophthalmology, Wayne State University School of Medicine, corporate Page 19 Susan Mosey to President, Midtown Detroit Inc., Page 20 academia Nancy Schlichting CEO, Henry Ford Health System, Page 20 Venegas GLENN TRIEST Dazzo Jenereaux Oswald Yolles Julia Oswald Vice president-strategy and insights, Domino’s Inc., Page 21 Barbara Yolles Mary Barra Executive vice president, chief growth officer, Senior vice president of global make sure that we are eliminating McCann North America, Page 21 design, engineering and program the complexity in our system to get management, General Motors Co., the product out with higher quality. Detroit We’re very much maintaining the Reason to watch: As the highest- importance of great design as well.” INFORUM TO HONOR ranking woman at a U.S. automaker, To manage these changes, Barra Barra is leading GM’s re-emergence is coordinating GM’s assets across WOMEN TO WATCH with new designs, including the several continents — which is prov- Sonic and Volt. ing to be her greatest challenge. Inforum and Crain’s Detroit “We make 8 million vehicles a Business will honor this year’s ary Barra, 49, has spent 31 year and each one the customer Women to Watch at Inforum’s years in the automotive gets into, we want them to say that Inner Circle event Dec. 7 at the M industry. In February, GM has the right styling, quality Townsend Hotel in Birmingham. she was promoted to lead GM’s de- and functionality,” she said. The Inner Circle event honors sign and engineering team — over- “That’s why we have to make sure Michigan’s top female executives seeing 30,000 employees with a we are working as one global team by giving them the chance to act as hosts to small groups of women budget of $15 billion. and leveraging the strength of our interested in hearing about their Barra took over the lead role of assets across the world effectively.” careers. Attendees will be able to GM’s product development with Biggest lesson learned in the past participate in these small-group an emphasis on downsizing its COURTESY OF GENERAL MOTORS CO. year: “You have to have the right discussions. platforms and “drastically reduc- Mary Barra, the highest-ranking female executive at General Motors Co., is in team. We should have spirited de- The event runs from 5:30-7:30 ing its capital footprint.” charge of 30,000 employees and a budget of $15 billion. bates. It’s critical to have a diverse p.m. Tickets are $55 for Inforum The goal? Get GM’s platform team with diverse thoughts and ex- members and $65 for footprint down to 14 in 2018 from platforms) in earnest in 2005-2006,” ther streamlining GM’s develop- periences.” nonmembers. 30 in 2010. GM is making this hap- she said. “Now that we’re done ment process, she must also con- If you could take a class on anything, For more information, visit pen by creating global platforms with the initial cycle, we’re focus- tend with design and quality. what would it be? “Golf. My 14-year- www.inforummichigan.org/events and simplifying its development ing on how to get more efficient.” “We’ve demonstrated we have a old son and 12-year-old daughter are /inner-circle-crains-women-watch. process, she said. However, while Barra is busy good vehicle development product learning. I wish I had better skills.” “We started this journey (global reducing redundancies and fur- process,” she said. “Now we want to — Dustin Walsh 20110919-NEWS--0014-NAT-CCI-CD_-- 9/16/2011 10:10 AM Page 1
Page 14 CRAIN’S DETROIT BUSINESS September 19, 2011 Women to Watch
Google has made Linzie Venegas part of a promotional tour because of her success in using Google AdWords.
GLENN TRIEST
Linzie Venegas