Private Equity Suppliers Provide Lesson on Cash Flow Management

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NEWSPAPER www.crainsdetroit.com Vol.30,No.29 five neighborhoodsandunifydowntownMidtown. SeePages20-26 orrevive taken flightasanambitiousplanbytheIlitchfamily tocreate has RedWings What beganasaplantobuildnewhomefortheDetroit JULY 21–27,2014 lesson oncashflowmanagement Private equitysuppliersprovide that’s creatingmorecashanddeals. cash flowabovequarterlyearnings—amove has pushedpubliclytradedonestomanage private equityownershipamongsuppliers private equityinthemarket. ecuting deals,thankstoalessonlearnedfrom increased demand,expendingcapitalandex- North Americanpubliclyheldsuppliers Experts saythesuccessandprevalenceof Public automotivesuppliersaremeeting crainsdetroit.com/newbigthree FREE Webinar of AutomotiveIP? Who Controlsthe Future CRAIN’S DETROITBUSINESS B Y D USTIN W ALSH Thursday, July31 • Noon -1p.m. age cashdifferently. put pressureuponpublicsupplierstoman- petition fromprivateequity-ownedsuppliers advisory servicesatEY,saidincreasedcom- month. Young made, by5percent,accordingtothe into productionuntilasaleofproductis the lengthoftimebetweeninvestingadollar have decreasedthecashconversioncycle, “Over thelastfiveyears,NorthAmerica Peter Kingma,principalofworkingcapital Cash ontheRoad Sponsored content by: Powered by: See CashFlow,Page6 DENNIS ALLAINRENDERINGS $2 acopy;$59year study releasedthis Ernst & ® 20140721-NEWS--0002-NAT-CCI-CD_-- 7/18/2014 5:30 PM Page 1

Page 2 CRAIN’S DETROIT BUSINESS July 21, 2014

MICHIGAN BRIEFS Medical marijuana bills pass the Lansing State Journal reported. Paramount expects to open the state Senate committee Wolverine steps away from ‘green’ line, closes stores 58,000-square-foot building in Clin- A bill that would allow medical ton County’s Watertown Township marijuana dispensaries to operate Even as its profits grow, Wolverine Worldwide is ates a relatively small amount of revenue and profit as its central shipping and distribu- legally in the communities that planning to be a little less green. for Wolverine,” Grimes said in an MLive.com story. tion point, but will keep its produc- want them and a bill that would al- The Rockford-based footwear maker is ending its Patagonia has no plans to produce the shoe line tion facility near Cooley Law low patients to use edible forms of licensing agreement for Patagonia Footwear, part of in-house or with another contract, said Adam Fetch- School Stadium, with plans to add the drug were approved by a Sen- the Patagonia clothing and equipment line started by er, its global communications director. 20,000 more square feet next door. ate committee last week. fervent environmentalist and “green business” Wolverine embraced Patagonia’s environmentally Ⅲ Private equity investors put House Bills 4271 and 5104 are backer Yvon Chouinard. friendly ideals when the publicly traded company en- $6.7 billion into 50 Michigan-based meant to clarify the 2008 voter-ap- Wolverine announced the move last week, on the tered into the licensing agreement with Chouinard’s companies last year, according to proved law that opened the door same day it said it would close 140 stores, mostly California-based private firm in 2006. That meant do- the Washington, D.C-based Private for medical marijuana in the state. Stride Rite locations, in the next 18 months to in- nating 1 percent of profits — Chouinard’s “Earth tax” Equity Growth Capital Council, MiBiz Last year, the Supreme Court crease profitability. Patagonia’s final line for for using planetary resources — to environmental reported. Investments in the state banned dispensaries in the state, Wolverine will be this fall, CFO Don Grimes said. causes; designing more shoes with renewable, bi- in 2013 were fairly diverse, and pri- and since then dozens have been Patagonia wasn’t a money-maker for a company ogradable and recycled materials; and shrinking the vate equity investing remains in closed down by authorities. The that saw profits grow by 50 percent in the second quar- carbon footprint of its headquarters by using energy- good shape, said Bronwyn Bailey, bills now move to the Senate floor, ter. “Although a wonderful brand, Patagonia ... gener- efficient lights and biodegradable cafeteria utensils. council vice president of research. where Senate Majority Leader Ⅲ Michigan moved up 21 spots, Randy Richardville, R-Monroe, to No. 18, on a list of the most pro- and health expenses would con- of the largest distributors of tobac- Journal reported. Medbio said hir- business states and was named the said he would vote against them in sume 32 percent of the $55 million co products throughout the Middle ing will be ongoing over three years. their current form. most improved state for 2014, ac- general fund, Earley said. East and Africa. ECIG said Man Ⅲ Spectrum Health Medical Group’s cording to a report from the Ameri- “If Flint were to go to bankrupt- FinCo Ltd., the investment arm of new East Beltline facility in Grand can Economic Development Institute Conflict over finances may send cy, that would highlight that this the Mansour Group, will provide it Rapids is to open today, but nearly and Pollina Corporate Real Estate Inc. legacy-cost problem has to be ad- up to $60 million of equity capital, 1,300 visitors got a sneak peak of the Ⅲ The Mackinac Bridge Authority Flint into bankruptcy, EM says dressed more globally,” said Eric with $20 million invested initially new $48 million medical center last delayed its next planned toll in- Flint may be Michigan’s second Scorsone, a Michigan State Universi- and an additional option to invest week following its ribbon cutting crease until at least 2016, keeping city (after Detroit, but you probably ty economist. “Flint’s at the fore- $40 million, the Grand Rapids and dedication, MLive reported. the rate at $4 for passenger vehi- knew that already) to plunge into front, but a lot of cities are on the Business Journal reported. Spectrum’s Integrated Care Cam- cles, The Associated Press report- bankruptcy unless retirees accept same train, and that train is head- Ⅲ Medbio, a contract manufactur- pus will combine several Grand ed. So your next trip to the U.P. cuts in health benefits that threaten ed for the cliff.” er for the medical device and Rapids-area offices under one roof will be a little cheaper for a while. to unravel a balanced budget, Emer- biotechnology industries, is plan- to provide care to patients. gency Manager Darnell Earley said ning a 20,000-square-foot expansion Ⅲ Citing growing sales, Lansing- Find business news from in a Bloomberg News story. MICH-CELLANEOUS to its 45,000-square-foot plant to add based roaster Paramount Coffee around the state at crainsdetroit The specter intensifies the con- Ⅲ E-cigarette maker Electronic up to 45 jobs in Cascade Charter plans to invest $3.5 million into lo- .com/crainsmichiganbusiness. flict over finances in Flint, which Cigarettes International Group of Township near Grand Rapids. The cal operations in part by opening a Sign up for the Crain’s Michi- twice has been under state control. Spring Lake signed an investment project will be a $3.39 million invest- new distribution center near Capital gan Morning e-newsletter at Without changes, retiree pension deal for up to $60 million with one ment, the Grand Rapids Business Region International Airport by Aug. 1, crainsdetroit.com/emailsignup.

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July 21, 2014 CRAIN’S DETROIT BUSINESS Page 3 Field & Focus: Health care Stream to open Taking the pulse of health “If you want a systems, Page 11 candidate, you store have to move very Oakland Mall quickly.” Company index These companies have significant mention in this 1st state site week’s Crain’s Detroit Business: BY SHERRI WELCH Beaumont Health System ...... 12 Blue Care Network ...... 14 CRAIN’S DETROIT BUSINESS Botsford Health Care ...... 12 GLENN TRIEST Robin Ankton, regional vice president at Robert Half International in Southfield, says companies trying to recruit Michigan’s penchant for out- Cascade Partners ...... 6 candidates for hot industries like accounting need to move fast because candidates are scooped up quickly. door activities is bringing yet an- Crittenton Hospital and Medical Center ...... 11 other national outdoor sporting d.Diversified Services ...... 3 goods store to the state. Deloitte ...... 7 Field & Stream is coming to a for- Detroit Downtown Development Authority . . . . 20, 26 mer Circuit City site at Oakland Detroit Economic Growth ...... 26 Mall in Troy and is expected to Detroit Pistons ...... 26 Numbers that count open in March. Detroit Red Wings ...... 20, 26 Field & Stream stores are owned Eastern Market ...... 4 by Pittsburgh-based Dick’s Sporting Field & Stream ...... 3 Goods (NYSE:DKS) and not affiliat- Garden City Hospital ...... 11 Demand for accountants brings rising salaries, signing bonuses ed with the magazine of the same Gibbs Planning Group ...... 29 name. The Oakland Mall site is Harley Ellis Devereaux ...... 29 Henry Ford Health System ...... 10, 11 BY VICKIE ELMER als both may expect multiple job been in for five or six years, since one of several Field & Stream stores in the works. Honigman Miller ...... 3 SPECIAL TO CRAIN’S DETROIT BUSINESS offers — sometimes before they the recession. Ilitch Holdings ...... 20 In its annual report for the fiscal officially start “It’s a candidate-short market. Loomis Sayles ...... 6 year ended Feb. 1, Dick’s said it he competition to hire to look for a If you want a candidate, you have McLaren Health Care ...... 12 plans to open about eight more CPAs in metro Detroit new job. to move very quickly,” said Robin Michigan Association of Health Plans ...... 14 stores this year. has heated up, and ac- “We have so Ankton, regional vice president Michigan Campaign Finance Network ...... 16 T Last week, it announced stores many openings, at Robert Half International, who counting professionals are in Michigan Department of Community Health ...... 14 it’s crazy,” said works from Southfield and over- in Columbus, Ohio, and Cary, Michigan Economic Development ...... 26 enough demand that in some Jennifer sees four Southeast Michigan of- N.C., both set to open Sept. 5. They Oakwood Healthcare ...... 12 instances, salaries are rising Killingback, an fices. Accounting “is very, very will join stores in Cranberry Olympia Development of Michigan ...... 20, 26 and sign-on bonuses are possi- executive re- hot,” she said, and sometimes Township and Erie, Pa.; and Cres- Plante Moran ...... 3 cent Springs, Ky. ble. cruiter with companies attempt to lure ac- Raise Michigan ...... 3 d.Diversified Ser- countants from their competition Dick’s Sporting Goods did not Robert Half International ...... 3 Killingback Some accounting firms, includ- vices who or another employer. return calls seeking comment. St. John Providence Health System ...... 13 ing Plante Moran, pay referral places accountants, and other The toughest jobs to fill, re- Through Oakland Mall’s prop- University of Michigan Hospitals ...... 13 bonuses to current staff of up to professional and administrative cruiters and accounting types erty manager, Chicago-based Ur- Valeo ...... 4 $5,000 to help lure a CPA, and oth- staff, at accounting firms and say, are tax managers and experi- ban Retail Properties LLC, the retail- Wright & Filippis ...... 10 ers use senior managers to wine auto suppliers. “We’ve had to be enced auditors, those with three er last week declined to comment Yeo & Yeo ...... 7 and dine top candidates, tour creative.” to five or more years of experi- on what it will invest to build the them around beautiful neighbor- Engineers are hard to find, ac- ence. Staff accountants and finan- 49,591-square-foot store or the hoods or take to sporting events. countants are hard to find, and cial analysts also are heavily number of jobs it is expected to The best new accounting grad- most of the candidates are being Department index uates and experienced profession- lured away from jobs they’ve See Accountants, Page 7 See Field & Stream, Page 5 BANKRUPTCIES ...... 5 CAPITOL BRIEFINGS...... 16 CLASSIFIED ADS ...... 19 KEITH CRAIN...... 8 LETTERS...... 8 Next battle in minimum wage fight looms in Lansing MARY KRAMER ...... 8 OPINION ...... 8 OTHER VOICES ...... 9 BY CHRIS GAUTZ ballot initiative put forward by measure, disagrees and will make valid signatures, and it filed about CAPITOL CORRESPONDENT Raise Michigan that would ask vot- its case in Lansing this week. 320,000. RUMBLINGS ...... 27 ers to amend the state’s minimum “The coalition wants this on the Those opposed to the ballot mea- WEEK ON THE WEB ...... 27 The fight over raising the mini- wage law and raise it eventually to ballot,” said Raise Michigan attor- sure want the board to deny its cer- mum wage in Michigan is not $10.10 an hour. ney Mark Brewer at Southfield- tification for the ballot, rather over, despite Gov. Rick Snyder Since the new law Snyder signed based Goodman Acker PC. than just consider whether there signing an increase into law in repeals the law the proposal is The Board of State Canvassers are sufficient signatures. May. seeking to amend, opponents say will meet at the Capitol on Thurs- The reasoning is spelled out in a That new law will raise the the ballot question has been ren- day to decide whether the Raise 160-page filing by attorneys John state’s minimum wage from $7.40 dered moot. Michigan ballot language collected Pirich and Andrea Hansen, with to $9.25 an hour by 2018. The law But Raise Michigan, the group of a sufficient number of signatures Detroit-based Honigman Miller was rushed through the Legisla- unions, nonprofits and liberal advo- to appear on the November ballot. ture in an attempt to pre-empt a cacy groups supportive of the ballot The group had to submit 258,088 See Minimum wage, Page 5

Getting to the heart of a new hospital THIS WEEK @ DMC’s $78 million Heart Hospital won’t officially open until month’s end, but reporter Jay Greene took a special walking WWW.CRAINSDETROIT.COM tour. Go along at crainsdetroit.com/section/blogJayGreene 20140721-NEWS--0004-NAT-CCI-CD_-- 7/18/2014 5:31 PM Page 1

Page 4 CRAIN’S DETROIT BUSINESS July 21, 2014 Valeo exec talks North American expansion, sales growth

French supplier Valeo basis, so we need to in- have a temporary office, and then And the lighting unit is generating we need to expand. SA is hiring hundreds of crease our presence in we will move to Sunnyvale (in Cal- similar growth in North America? engineers in North Amer- North America. ifornia). We will have nine people Correct. Valeo also opened a plant in On- ica and opening an office there. tario. in Silicon Valley. The How many engineers does The lighting display at your office in- We just opened a site in Alliston company expects espe- Valeo have in North America? Will Valeo invest in technology star- cludes a Cadillac Escalade. Is Valeo to assemble front-end modules. It’s cially strong sales growth Today, about 1,000, tups? getting North American contracts for linked to one customer, but there in lighting, powertrain which is 10 percent of our I can’t talk about acquisitions, LED headlights? are opportunities for growth. components and connect- (North American) em- although we are always open to po- Yes. The Cadillac has full LED ed-car technology. ployees. Our hiring target tential partnerships. We want to headlights. It reduces electricity Let’s return to HVAC. Is Valeo still Francoise Colpron, 43, for the next year is about be there to seek talent, in terms of consumption, and it’s also a piece North America’s biggest HVAC suppli- president of Valeo’s 200 people. We’ve rein- partnerships, suppliers and team of art. It’s a beautiful headlamp. er, behind Denso? North American opera- Q&A forced our HR team with members. So it’s really a little bit We don’t disclose our rank, but tion, spelled out her ex- full-time recruiters. And experimental. We are taking the Valeo’s North American sales last worldwide we are always the pansion plans in a June Francoise Colpron, we are using social me- pulse (of Silicon Valley) and we year rose 17 percent. Did that include biggest or second-biggest (in Va- 20 interview in Troy, Valeo dia, which is new for me. are trying to find opportunities. revenue generated by Ford’s HVAC oper- leo’s product segments). with Special Correspon- ation, which Valeo purchased in 2012? dent David Sedgwick. Which technologies are your top pri- Will Valeo’s Silicon Valley team fo- It was organic growth. We don’t Can you give us a progress report orities? cus on infotainment technology? count the HVAC operation (as part on Valeo’s HVAC joint venture with V. Valeo is developing new technology I would say it’s C02 emissions re- The person we are sending of North American sales), because Johnson Enterprises? for better fuel economy, lighting and duction, and also intuitive driving comes from that business group. we are a 49 percent owner of that We are very happy with the cockpit controls. Will you beef up (cockpit controls). Autonomous ve- So it can be connectivity or the hu- joint venture. partnership. North American R&D to support these hicles are a big topic, and also fuel man-machine interface, and it products? economy and powertrain compo- could be autonomous driving. So Valeo is growing nicely. Recently This year, the venture is moving We want to reinforce our R&D nents. Valeo expanded its Mexican plant. HVAC production from Ford’s plant in presence, so that we are not only a Valeo has four business groups: We doubled its size. That’s Plymouth Township to a new plant in global company with a European Valeo is opening an office in Silicon powertrain, thermal systems, driving where we make radars and sen- Romulus. How is that going? center, but also a local company. Valley this year, correct? assistance and lighting. Which is gen- sors, and maybe eventually more We’ve had staggered product We want to better serve our North We already have someone in erating the most growth in sales? complex systems. launches (in Romulus) since the American customers on a global place now. She is recruiting. We They are all growing faster than beginning of the year. the market. Our lighting group’s How close to full capacity are Va- global sales grew 20 percent last leo’s North American plants running? Any final thoughts? year. So that’s a nice increase. We don’t disclose our capacity I think it’s really important to plant by plant. We still have oppor- attract the best possible talent. We tunities to expand. We’ve expand- have world-class benefits, compen- NO ed not only our Mexican plant, but sation, training and skills develop- almost every other site. We added ment. It’s also interesting to join a 500,000 square feet of production company that is growing. Valeo Weather, hiccups floor space. We made sure that our means, “I am doing well.” PAIN. put Eastern Market plants are not landlocked, in case From Automotive News YOUR project behind The exceptionally cold and snowy winter pushed street and infrastructure repairs in Eastern GAIN. Market into summer – prime months for restaurants and retail- Recession resistant franchise ers in the district. Precast is the only solution for BlastPain signature laser therapy system Now, the work is further behind schedule due to unforeseen prob- Dramatic pain elimination parking decks. No side effects, no drugs and no injections lems involving sewers, power lines and natural gas feeds. 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July 21, 2014 CRAIN’S DETROIT BUSINESS Page 5 Field & Stream: Troy is a prime location for its first Mich. store ■ From Page 3 create. community and customers located ment services contractor that does on the state’s west side in gan to be a perfect fit for our busi- Dick’s/Field & Stream hasn’t within the region, he said. plan review for the city of Troy. Grandville, adding to its first ness.” told Troy officials how much it is Its site in the city also “has fabu- The Troy Planning Commission ap- Michigan store in Dundee. The chain’s Michigan stores are investing to build the new store or lous visibility, and that’s a huge proved the preliminary site plan And St. Paul, Minn.-based Gan- doing very well, with recent full- how many jobs they believe it will thing,” Lapin said. for the store in late June. Con- der Mountain Co. Inc. operates 13 scale remodeling completed or on- create, said Glenn Lapin, econom- The new store will be on the east struction is expected to begin in stores in Michigan, including going in several markets, Myers ic development specialist for Troy. side of I-75 north of 14 Mile Road August, Featherstone said. three in Southeast Michigan, in said. No local incentives are on the on an outlot owned by Oakland Field & Stream may not yet be Novi, Taylor and Utica —where its Gander Mountain has seen “no- table. Mall. It will offer outdoor equip- talking about the new store, but first store in the state opened 20 table growth” companywide and One of the outdoor retailer’s ment, accessories and services for it’s already seeking a store manag- years ago. opened or announced 20 new Pennsylvania stores created about hunting, fishing, archery, camp- er through a job posting on its web- “It’s no secret that Michigan is stores across the country for 2014, 130 jobs when it opened last ing and other outdoor activities. site at fieldandstreamshop.com. an outdoors paradise, where tradi- he said. month, he said. In preparation for construction, The number of outdoor gear re- tions like hunting, fishing, hiking, “While at this time we have not “Field & Stream has a huge fol- the mall took down a former Circuit tailers in Michigan has increased boating, archery and other pur- announced any new stores in lowing and will have a great pres- City building on the site in late in recent years. suits are handed down from gener- Michigan, we expect more new ence in the Oakland Mall area and spring. Sidney, Neb.-based Cabela’s ation to generation,” said Jess My- store announcements soon,” My- along I-75,” Lapin said. It’s currently installing sewers (NYSE:CAB) last year opened a ers, a spokesman for Gander ers said. The retailer’s decision to locate and utilities, said Paul Feather- scaled-down location, Cabela’s Mountain. Sherri Welch: (313) 446-1694, its first Michigan store in Troy ston, chief building official at Outpost, in Kochville Township “From Marquette to our metro [email protected]. Twitter: @sher- speaks to the strong local business Safebuilt Inc., a building depart- near Saginaw, and a full-size store Detroit stores, we’ve found Michi- riwelch

Minimum wage: Battle over pay to resume in Lansing this week ■ From Page 3 Schwartz and Cohn LLP. responsibility to review the peti- group was formed on the day Raise well as most business groups, op- tration to come up with the law They argue that the board must tions for sufficient signatures. Michigan submitted its signatures posed the ballot measure to in- Snyder eventually signed that deny certification, because by It’s possible the board, made up to the state and is headquartered crease the minimum wage, be- raises the wage for tipped work- putting it on the ballot, voters of two Democrats and two Republi- at the office of the Lansing-based cause it did so not just for hourly ers from $2.65 an hour to $3.52 by would be asked to amend a law cans, could deadlock on the issue. Michigan Restaurant Association, workers, but would also raise it to 2018. that no longer exists. Then, both sides would be off to which opposes the ballot initia- $10.10 an hour for tipped workers. The law was approved by an Snyder signed the lesser mini- court to fight it out. tive. That would devastate restau- overwhelming bipartisan majori- mum wage increase into law less Pirich and Hansen made their A message seeking comment rants in Michigan, the state’s ty in the House and Senate. than 24 hours before Raise Michi- filing with the canvassers board from the restaurant association restaurant association has said. Chris Gautz: (517) 403-4403, gan turned in its signatures to on behalf of a group called People was not returned. It worked with Republican law- [email protected]. Twitter: place its larger increase on the bal- Protecting Michigan Jobs. That The restaurant association, as makers and the Snyder adminis- @chrisgautz lot. Brewer said the issue is not moot and that he has “sound legal reasoning” to make his case, but he declined to elaborate. Brewer will be at Thursday’s meeting to make his case and said the board should certify the ballot question so long as there are enough valid signatures. He argues the board is only supposed to look at whether there are enough valid signatures, but Pirich and Hansen argue in their filing that there is precedent that gives the board the ability to factor in other issues, such as the validi- ty of the ballot initiative itself. Longtime attorney and campaign law expert Richard McLel- lan, who has served as an adviser to several previous Republican Did you kknow?? governors, told Crain’s in May that all the Board of Canvassers The Health Care industry drives 1/6 of the U.S. economy. can do is decide if there are enough valid signatures. The ® board does not make value judg- ments, he said. TCF Bank in Michigan has lent over $100 million to Whether any of these legal argu- ments will be considered by the health care related businesses. canvassers board Thursday is unknown. Department of State spokesman Did you know that TCF Bank®: Fred Woodhams said the department’s view is that it is the board’s s Has health care banking experts on its team? s Is committed to growing its loan portfolio in the health care segment? s Finances medical practices? s Finances long term care projects? BANKRUPTCIES s Finances the senior-living industry? The following business filed for protection in U.S. Bankruptcy Court in De- troit July 10-17. Under Chapter 11, a To learn more, contact: company files for reorganization. Chapter 7 involves total liquidation. Janet Pasco at 248-740-1622 or [email protected] Lakeside Divisions Inc., 1990 Bagley St., Detroit; voluntary Chapter 11. As- sets and liabilities not available. — Natalie Broda ©2012 TCF National Bank. Member FDIC. www.tcfbank.com 20140721-NEWS--0006-NAT-CCI-CD_-- 7/18/20147:14PMPage1

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firm field Hillsofficeofinvestment portfolio managerintheBloom- activity, saidDavidSowerby, perform mergerandacquisition ganizations’ abilitytosuccessfully longer timelineisalsoboostingor- throughout anorganizationona cash flow.” logistics, etc.toimprovelong-term improvements throughprocesses, held) companiesarenowdriving said. “Sophisticated(publicly vate equitydiscourse,”Kingma pliers. cess ofprivateequity-ownedsup- have sincelearnedfromthesuc- managing thebalancesheet,but stand managingthebenefitof many executivesdidn’tunder- from $407.4millionin2012. tures to$417.8millionlastyear BorgWarner Inc lion in2012.AuburnHills-based 2013 to$735millionfrom$623mil- creased capitalexpendituresin TRW AutomotiveHoldingsCorp. tools, etc.” tant fornewinvestments, said. “Cashflowisreallyimpor- for themstrategically,”Kothari stronger workingcapitalworks figure hasgrownfrom7percent in according totheEYstudy. This smaller suppliersinthemarket, cycle was30percentquickerthan auto suppliers’cashconversion well. peers inthebasehaven’tfaredas for largersuppliers,thesmaller version cyclehasbeenimproving reported. of $13billionforTRW,Bloomberg Corp based licited takeoverbidforLivonia- Friedrichshafen AG environment (fordeals).” cent, whichmakesitanattractive flow growthof10percentto15per- tion) faster,andwe’reseeingcash taxes, depreciationandamortiza- EBITDA (earningsbeforeinterest, Public suppliersaregenerating since therecessionandrecovery. has intensifiedinautomotive began inthedotcombubblebut Sowerby said.“Thisphenomenon story Iwanttokeeplisteningto,” their focusisoncashflow,that’sa from aCEOorCFOandtheysay firm banking andprivateinvestment Southfield-based investment Raj Kothari,managingdirectorof operations andnewtooling,said new vehicledemandbyexpanding the supplybasemeetrising flow.” who focusonimprovingcash ing themselvesagainstthePEs public companiesarebenchmark- uity inthemarket,wheremature due totheprevalenceofprivateeq- term cashflow;that’schanging tions, butthatdoesn’thelplong- tions managetoquarterlyexpecta- thor ofthestudy,told corrective action,”Kingma,co-au- most ofthetier-onesperformed suppliers aredoingbetterbecause ■ Cash flow: Page 6 “Typically, we’veseenorganiza- From Page1 Having visibilityofcashflow “That’s thebenefitofpri- Kingma said,inyearspast, For example,Livonia-based “Suppliers havelearned In 2013,largeNorthAmerican However, whilethecashcon- Last week,Germansupplier “Any timeIsitacrossthetable Cash flowdisciplineishelping . ZFcouldfinanceacashbid Loomis Sayles&Co.LP Cascade PartnersLLC TRW AutomotiveHoldings . increasedexpendi- made anunso- Crain’s . . . Suppliers learnandSuppliers adapt in- ZF absolutely wipeouta to improvecashflowthroughthe are workingmorecollaboratively pliers haverecognizedthegapand tomakers andlargertier-onesup- the float.” now becausetheycan’tmanage wipe outalotofcompaniesright days to90couldabsolutely “Moving paymenttermsfrom30 the supplybase,”Kotharisaid. mands havehugeimplicationsto understanding, theincreasedde- working capital. don’t takeactiontoimprovetheir base ofsmallersuppliersifthey from automakerscouldcripplethe said. ing andprocurement,thestudy greater efficiencyinmanufactur- more favorabletermsanddrive sure fromautomakers,negotiate leverage tocombatpricingpres- 2007. “ lot ofcompanies. terms from 30daysterms from Raj Kothari,CascadePartnersLLC However, Kingmasaid,au- “While OEMsarealittlemore Kothari saidincreaseddemand Larger suppliershavemore C to 90days could Moving payment RAIN ’ S D ETROIT B USINESS ” @dustinpwalsh [email protected]. Twitter: future dependsonit.” more critical,”Kingmasaid.“The balance sheethasneverbeen try, anditsabilitytomanage said. cash conversioncycle,thestudy initiatives, tofurtherreducethe plexity inprocesses,amongother shared servicesandreducecom- collection systems,expand more efficientbillingandcash enue. percent oftheircombinedrev- study. Thatrepresentsnearly10 improved figure,accordingtothe lion tiedupinworkingcapital,an suppliers haveasmuch$51bil- tives, thestudysaid. ical tocontinueefficiencyinitia- year —it’sbecomeevenmorecrit- exceed pre-recessionlevelsthis volume intheU.S.isexpectedto tinues toescalate—production solve theproblem.” one ismanagingtheprocessto flow cominginthedoorandevery- to haverealvisibilityofthecash very importanttothesupplybase room togrow,certainly,butit’s body,” Kingmasaid.“There’s prove thebalancesheetforevery- tive environment,anditwillim- supply chain. Dustin Walsh:(313)446-6042, “It’s acapital-intensiveindus- Suppliers willneedtocreate The top50globalautomotive As thepaceofproductioncon- “This isamuchmorecollabora- July 21,2014 20140721-NEWS--0007-NAT-CCI-CD_-- 7/18/2014 7:01 PM Page 1

July 21, 2014 CRAIN’S DETROIT BUSINESS Page 7

Accountants: Demand, pay growing 7KHURDGWRWKHFRUQHURIÀFH ■ From Page 3 recruited, Killingback added. percent.” partner of Deloitte’s Detroit office. But the candidate’s background “A good candidate doesn’t have They meet professionals and po- and expertise need to match the just one opportunity,” said Ankton tential co-workers in the Renais- STARTS HERE. opening, so someone with a bank- at Robert Half. He or she will get sance Center and start to under- ing background may not be chosen two or three, plus a counteroffer stand what Deloitte offers. for an auto accounting job, she said. from his or her current firm. “Whether they’re from New Now “everybody wants a senior Salaries are going up as a result, York or New Delhi, we give them a A business degree from accountant. Even if you don’t have she and others said. good Detroit experience,” said Wayne State University an opening and you find a great se- After years of fairly flat pay for Davidoff, who oversees about 900 does more than nior accountant, they’ll make most jobs, finance and accounting professionals. provide an academic room,” said Ankton. salaries for new hires are expected When he was at the Mackinac Pol- Nationwide, accounting and fi- to rise 3.4 percent this year nation- icy Conference, Davidoff listened to foundation for success nance staffs were among the 10 oc- wide, according to Robert Half’s some of the five-minute pitches of — it helps open doors. cupations that are hardest to fill, salary survey. veterans talking about themselves. Our graduates join a according to Manpower Group, with Others say the salaries may go (He was pretty busy as an officer in hiring managers saying they’re up for exceptional candidates, but the Detroit Regional Chamber and strong network of more harder to find than engineers. it is not widespread. next year’s chair of the policy con- than 31,000 successful The reason is simple: Compa- What is widespread is hiring on ference.) One woman really im- alumni across Metro nies are growing again and need college campuses, first for interns, pressed him, yet he couldn’t find more financial types to audit their then later for entry-level accoun- her later. So afterward, he found Detroit and worldwide. operations and tally finances. tants. This gets intense in the fall, her contact information and invit- Whether you’re landing “Companies are beginning to fo- when both accounting firms and ed her to visit Deloitte’s Renais- that ﬁrst job or making cus more on growth, hiring and in- big businesses such as Ford and sance Center offices. “I met her your way to the vestment,” Arleen R. Thomas, se- some suppliers are recruiting and gave her an introduction to executive suite, there’s nior vice president of management soon-to-graduate seniors. the firm,” he said. Now she’s going Paul A. Glantz, BA ’80 accounting and global markets for At Plante Moran and Deloitte, to interview for a job opening. likely a Wayne State CEO, Proctor Financial the American Institute of Certified current staff will take out-of-state Having a consulting arm and a alum nearby, ready Public Accountants, said in a state- candidates and their spouses huge educational facility called Chairman, Emagine Entertainment ment. The CPA organization’s sur- around Detroit. “We give them a Deloitte University helps to re- to help. vey of executives in accounting firsthand look at what it’s like to cruit and retain staff. So does the roles found that availability of live and work in Southeast Michi- size: Deloitte has close to 1,200 ac- skilled staff moved up to third on gan,” said Hollis Griffin, Plante countants, tax and other staffers at their list of top challenges, from Moran’s recruiting director. Some- three Michigan offices. Yet David- sixth at the end of 2013. times they help the partner land a off spends 5 percent to 10 percent of The demand has intensified in job here, too, tapping their net- his time, depending on the season, the last 18 months or so along with works and introducing them to on recruiting and hiring. overall economic activity. companies in their field. In the competitive world of land- School of Business Administration Sign-on bonuses are booming, Candidates may be taken to De- ing financial and accounting pro- with 74 percent of North American troit Tigers or Detroit Red Wings fessionals, recruiting is a year- business.wayne.edu companies offering them, up from games, museums or restaurants, round, everywhere task. “It takes AIM HIGHER 54 percent in 2010, according to a said Mark Davidoff, managing a bit of a village,” he said. WorldatWork report on bonuses. For professionals such as accountants, that increases to 89 percent, and the average sign-on bonus would be $5,000 to $9,999. (Four percent received $25,000 or more.) At Yeo & Yeo, an accounting and computer consulting firm with five Michigan offices, signing bonuses “happen quite frequent- Health Care Experience ly,” said Kymberly Hess, the firm’s human resources director. “It’s hard for us to compete with the ® signing bonuses of big firms” such In Your Corner. as Deloitte and Ernst & Young, which could be as high as $15,000. “We’re trying to sway them” to ■ Focused on health care law for systems, join the firm, she said. So Yeo & Yeo offers a few perks not general- physicians and payors in all market segments. ly offered by its peers: Even though accountants are salaried ■ Third party reimbursement, public and professionals, “we pay an over- private health care provider fi nancing, time bonus for working overtime hours,” she said. Staff members and commercialization of physician may choose whether they want the inventions and ideas. money or time off, or some of both. Other firms have discovered they need to offer an extra week or two of vacation time to experienced accountants and financial professionals, said Killingback. “Give them a raise and give them a bonus after 90 days, and maybe an extra week of vacation. Clients tend to be very eager to ac- commodate for the right person,” she noted. Many candidates are looking for a higher salary plus a move into a management job. “They want to reduce the travel time,” said Killingback, who has worked in recruiting and HR for about 20 years. “They’re looking for positions where they’re home First Tier Ranking four nights a week versus two in Health Care Law nights a week.” Sometimes she calls a candidate about a great job that requires 50 percent travel and ■ Metro Detroit ■ Grand Rapids ■ Kalamazoo ■ Grand Haven ■ Lansing Contact Scott Alfree at [email protected] hears: “No, call me when it’s 20 20140721-NEWS--0008-NAT-CCI-CD_-- 7/18/2014 5:32 PM Page 1

Page 8 CRAIN’S DETROIT BUSINESS July 21, 2014 OPINION MARY KRAMER Cohesion keeps city growing Evans top choice Who could imagine a by many of the same headquarters to the Fox Theatre in year ago that Detroit — institutions who 1988, a time when most of the mov- still in bankruptcy — backed the DIA. ing trucks were still heading the would see the kinds of And today, we re- other way. announcements we’ve port on the game- What a position for Detroit to be for Wayne exec seen in the past seven changing plans for a in if billionaires are now vying for days? new hockey arena that ways to make commercial and leven names are on the Democratic primary ballot for A handful of compa- will create a vital link philanthropic investments in the nies last week pledged between downtown city. Wayne County executive. It seems incredible that incum- more than $26 million to and Midtown. The Il- The key to this all is engage- E bent Bob Ficano would be among them, given his admin- the Detroit Institute of itch family is thinking ment: People with money, re- istration’s sorry record for corruption (at worst) and inept finan- Art’s $100 million bogey big on this, and the en- sources and influence working to cial administration (at best). The unfinished Gratiot Avenue jail for the “grand bargain” tire city will benefit. make things happen. site speaks for itself. So do convictions of four former county that could enable the Patriarch Mike Ilitch John Rakolta Jr., CEO of con- DIA to be spun out of city owner- and his wife and business partner, struction giant Walbridge, often managers. Ficano has not been charged with anything, but vot- ship and protect its collection from Marian, also announced an $8.5 has spoken about Michigan’s lack ers may instead find him guilty of hubris for running. a bankruptcy fire sale. million gift to Wayne State Univer- of “cohesion.” Because political Two candidates are worth voters’ consideration: Westland Leading the pack was Penske sity’s School of Medicine that like- and business interests are so often Mayor William Wild and former Wayne County Sheriff and Corp. with $10 million, followed by ly will pave the way for new surgi- at odds, it costs the state — and the Detroit Police Chief Warren Evans. two $5 million gifts from Rock Ven- cal products and procedures. region — because companies don’t tures/Quicken Loans and DTE En- The arena plans are remarkable. want to invest or expand where Wild, owner of a family business, has earned many endorse- ergy Foundation, the largest single And it is as though the Ilitches are people are at odds. ments, including the Detroit Regional Chamber and Ford Motor grant ever made by DTE’s charita- saying to Detroit — and the world Regardless of who gets credit for Co. Chairman Bill Ford Jr. He has a good business sense. Exam- ble arm. — hey, there’s more than one bil- what investment, it sure seems ple: He did his own analysis of financials on the failed jail project Earlier in the week, Crain’s was lionaire helping to make things more “cohesive” these days. and proposes using unspent bond money to finance improve- part of a business leadership an- happen in this town. Dan Gilbert’s nouncement about The Detroit $1.5 billion (and counting) invest- Mary Kramer is publisher of ments at the existing jail and 36th District Court. Homecoming initiative to draw ed since 2010 has created a tipping Crain's Detroit Business. Catch her But in the crowded pack, Warren Evans is our top choice. He successful “expatriates” of metro point. But admirers of the Ilitches take on business news at 6:10 a.m. pledges to focus on basics — public safety, roads and some hu- Detroit back to the city in Septem- want to make sure they get credit Mondays on the Paul W. Smith show man services. Plus, he’s already had experience with large bud- ber for a 48-hour immersion that too for what they’re doing now and on WJR AM 760 and in her blog at gets and has important allies: Detroit Mayor Mike Duggan and could lead to new investments. what they’ve done since they www.crainsdetroit.com/kramer. The effort is supported financially moved their Little Caesars pizza E-mail her at [email protected]. Wayne County Prosecutor Kym Worthy. Business leadership has often said the region suffers from splintered alliances and political squabbling. Elected leaders who work well together would help the region, perhaps by con- solidating services or working together on joint contracts. It’s time for the county to take these important steps. We LETTERS support Warren Evans. To review Evans’ and other candidates’ stances on the issues, and for highlights of other primaries of interest, see our Police caution on liquor laws election report on Pages 16-18. Editor: globally. At the same time, key Crain’s Detroit Business Regarding the article “Politics, public health indicators, such as welcomes letters to the editor. Open primary best for state power bottle up efforts to alter overconsumption, underage All letters will be considered for liquor laws,” Page 1, June 29: publication, provided they are drinking and drunken driving The crowded field of primary election candidates for Since 2011, law enforcement offi- signed and do not defame continue on a downward trend in Wayne County executive is a good platform to push another cials throughout Michigan have individuals or organizations. Michigan. election reform: a better runoff system. Michigan should elim- raised concerns about efforts that Letters may be edited for length While distributors were our were underway to make major and clarity. partners in opposing wronghead- inate the traditional party primary and replace it with an open changes to Michigan’s system of Write: Editor, Crain’s Detroit ed policies to weaken Michigan’s primary, as many other states have now. alcohol regulations. Business, 1155 Gratiot Ave., alcohol safeguards, we must point How it works: The two top vote-getters in the primary Police chiefs joined public Detroit, MI 48207-2997. out that the real factor that sank health and substance abuse pre- would vie in November, regardless of their party affiliation. Email: [email protected] the proposals was the justifiable You could vote for a candidate from each major party or two vention advocates to urge Gov. and common-sense-driven con- Snyder and the Legislature to candidates from the same party. In either case, they are the cerns of families, nurses, faith make public health a priority while encouraging business leaders, police, counselors and or- candidates who rank highly among voters in primary con- when they revised alcohol regula- growth and expanding consumer dinary people who care more tions. Our message was simple: tests. choice. about public health than alcohol Michigan’s current system of alco- Too often, November elections are decided in August pri- The system works well and the profits. hol safeguards strikes the right maries that have tiny voter turnouts. This model produces proof is the fact that Michigan is Robert Stevenson balance between protecting public considered one of the best craft Executive director higher-quality choices for voters. safety and promoting moderation, beer states in the nation, even Michigan Association of Chiefs of Police

KEITH CRAIN: Don’t count your chickens on votes … yet I am sure that it’s a good idea for percentage of the elec- There are plenty of I’m not sure any voter really al election is over three months political candidates to hire survey torate only has cell- candidates, both Repub- cares about survey results that away. In politics, three months is a firms to find out how they are do- phones and this group lican and Democrat, take place around the Fourth of lifetime. ing and what issues their particu- of voters is not being, who are fighting hard July as if they are going to mirror The best advice to anyone who lar voter bloc is interested in for the most part, in- to get in the ring and do the opinions of the voters in No- has an election three months away learning. cluded in any survey. It battle in the general vember. The numbers are usually is: “Don’t count your chickens be- I would imagine that voters doesn’t make for very election. too small and still don’t include fore they’re hatched.” have different issues all across the accurate results. Your candidate is not cellphone owners, who seem to be It’s going to be an interesting state, and for local candidates, it’s It would also seem always the one who is strong voters in general elections. primary in just a few days, and the going to be quite different than very different for candi- going to win the prima- Whatever the survey results are next few months will probably in- statewide candidates for offices in dates who are battling ry or even be in the in July, let’s not get too excited. clude a lot of mudslinging. That Lansing and Washington. in a primary versus can- right party. Whoever you are in favor of in the seems to be the norm these days. There is a lot of noise being didates who aren’t wor- We have ourselves a general election, it’s a very long It’s always interesting to watch made about the results of these rying about a primary but are al- few statewide races, and already the way away and anything can and sausage being made. It’s not nice, surveys. Most of the surveys still ready concentrating on the polls are being released to tell us probably will happen. but it sure beats any other way to ignore the simple fact that a large November election. what’s going on in their campaigns. The last time I looked, the gener- elect our representatives. 20140721-NEWS--0009-NAT-CCI-CD_-- 7/18/2014 9:10 AM Page 1

July 21, 2014 CRAIN’S DETROIT BUSINESS Page 9 OTHER VOICES: Proposal 1 vote vital to Mich. reinvention

When Michigan business replace estimated PPT ed PPT revenue lost for important ment, small business, labor and nies and employees have become owners invest in equip- revenue lost for local ser- local services like police, fire, agriculture groups. more competitive in the global ment, whether it be high- vices and create a fund- schools, jails, roads and libraries. The Detroit Regional Chamber marketplace. The results are tech machinery or a new of- ing source that commu- Furthermore, Proposal 1 is not is a member, as are Business Lead- clear: Our population is growing, fice chair, they have to pay nities can count on. a tax increase for anyone. It is ers for Michigan, Michigan Cham- our economy is expanding and the personal property tax. Proposal 1 solves two paid for by eliminating special ber of Commerce, Small Business our unemployment rate is drop- They pay the PPT repeated- problems — without a corporate tax breaks and estab- Association of Michigan, Michi- ping faster than the national av- ly, every single year they tax increase: lishing a statewide essential ser- gan Manufacturers Association erage. All of this is because of the own the equipment. With Ⅲ It keeps in place the vices assessment paid only by and local chambers from across decisions that have been made to the margin for success so Michigan Legislature’s manufacturers receiving a PPT the state. There is also strong local better position Michigan in the slim, particularly for small bipartisan work to end reduction. government support, including the 21st century. Sandy Baruah Eliminating the PPT on Aug. 5 businesses, that’s the dif- the antiquated, unfair Proposal 1 has broad statewide Michigan Municipal League, with a “yes” vote on Proposal 1 is ference between hanging a “We’re double tax on personal support. Michigan Citizens for Michigan Association of Counties one of the easy decisions Michigan hiring” sign and putting a padlock property paid by local small busi- Strong and Safe Communities, a and Michigan Townships Associa- needs to continue our progress. on the front door. nesses. bipartisan coalition supporting tion. Proposal 1, includes tens of thou- Over the last three years, Sandy Baruah is president and That’s the lunacy of the PPT: Ⅲ It stabilizes local communi- sands of members representing po- Michigan has been on a path of CEO of the Detroit Regional Cham- Paying hard-earned money to be ties by providing dedicated fund- lice, fire, education, local govern- reinvention. Our state, compa- ber. less competitive. Michigan busi- ing for 100 percent of the estimat- nesses pay an unfair double tax that puts them at a competitive disadvantage with businesses in neighboring states that don’t charge the tax. The PPT also siphons money they could instead Your Mission. Your Story. put into creating jobs. That will continue unless voters pass Pro- posal 1 on Aug. 5. Passing Proposal 1 is the next 81% of Crain’s readers important step in Michigan’s rein- take action based on vention and will impact every Your business and community in the what they read* state. It’s estimated that eliminating the PPT would create up to 15,000 new jobs in Michigan and Success! bring in $450 million in additional business investment. At the same time, Michigan’s local communities have struggled Showcase your nonprofi t 2013 for years with the wild revenue organization, or the organization fluctuations the PPT produces, Success negatively impacting services they your company supports, in provide daily. Proposal 1 will fully Crain’s 2014 Story: Ronald McDonald NOMINATIONS SOUGHT Giving Guide House of Detroit FOR NONPROFIT CONTEST Published in the Oct. 27 issue of Crain’s, This year’s Crain’s Best-Managed Nonprofit Contest is focused on positioning the nonprofi t profi les in front of The Crain's Giving Guide promotional good management practices of business owners, CEOs, presidents nonprofits. “ad was paid for with two major Applicants are asked to give and top-level executives. examples of how they deploy their donations that came to our Ronald mission and resources, among The digital edition will be on McDonald House on that same day other information. crainsdetroit.com for an entire year Applications are due Aug. 25. Finalists will be interviewed in the guide came out. In addition to person by judges the morning of BONUS DISTRIBUTION: Nov. 10. receiving these donations, we've had 750 distribution to wealth managers Applicants for the award must be a a fl urry of emails from individuals from 501(c)(3) with headquarters in and estate/trust attorneys in Wayne, Washtenaw, Oakland, Southeast Michigan companies that want to volunteer at Macomb or Livingston counties. Applications must include an entry our agency. In just two days, we form, a copy of the organization’s 800 additional copies will be distributed code of ethics, a copy of the most at the AFP annual Philanthropy Day Dinner saw a dramatic uptick in responses! recent audited financial statement and a copy of the most recent IRS ” 990 form. — Jennifer J. Litomisky, Previous first-place winners are not executive director, RMHC of SE MI eligible; neither are hospitals, HMOs, medical clinics, business 90% of readers have and professional organizations, schools, churches or foundations. donated to or volunteered The winners will be profiled in the for a nonproÀ t* Dec. 1 issue, receive a special “best-managed” logo from Crain’s Publication Date: Oct. 27 for use in promotional material and will be recognized at the Crain’s Profi le Reservation Deadline: Oct. 1 Newsmaker of the Year lunch early The fi rst 52 nonprofi ts to sign up will be next year. featured as “Nonprofi t of Note” in an issue For an application form, please email YahNica Crawford at of Crain’s Nonprofi t Report e-newsletter. [email protected] or visit crainsdetroit.com/givingguide_ads www.crainsdetroit.com/nonprofit contest. For information about the contest itself, email Executive Reserve your profi le today! Editor Cindy Goodaker at [email protected] or call Contact Marla Wise at [email protected] or (313) 446-6032. (313) 446-0460. ✦ *Signet Study, Sept. 2013 20140721-NEWS--0010-NAT-CCI-CD_-- 7/18/2014 9:13 AM Page 1

Page 10 CRAIN’S DETROIT BUSINESS July 21, 2014 Wright & Filippis narrows Possible is everything. focus with sale of home Today, more than ever, global competition, new technologies, and corporate streamlining require innovative medical equipment biz thinking and leaderships abilities. BY JAY GREENE derprice” home health products CRAIN’S DETROIT BUSINESS to Medicare. Continuing your education can be key Like Henry Ford, Filippis said Wright & Filippis Inc. of Rochester his 70-year-old company found it- to your success. From biomedical and Hills is going back to its roots of self with no choice but to sell its providing clinical services with durable medical equipment prod- the sale of its home medical equip- uct line, which includes hospital robotics engineering to chemical biology ment business last month to Clear- beds, standard wheelchairs and water, Fla.-based Lincare Holdings, oxygen supplies, after 35 years in and psychology, Lawrence Technological said CEO A.J. Filippis. the business. The family-owned company, “We had been operating for a with 450 employees, will focus on University can prepare you for the jobs year with 40 percent to 45 percent expanding four core areas: pros- reimbursement cuts. Even with of the future. thetics, orthotics, complex rehabilitation, and home accessibility and our size, we are one of the largest personal mobility products, Filip- independent (DME) providers, we pis said. couldn’t continue,” Filippis said. “This has been a year-and-a- Of Wright & Filippis’ $113 million in 2013 projected net revenue, Explore over 100 undergraduate, half-long process where we looked the Lincare sale represents 31 per- master’s, and doctoral programs in at the change in reimbursement cent, or $35 million in annual Colleges of Architecture and Design, with Medicare and all the payers sales, Filippis said. Projected rev- Arts and Sciences, Engineering, and decided on a new strategic di- enue for 2015 is $50 million to $75 and Management. rection,” Filippis said. “We feel (payers) are looking at us as com- million, he said. The sale price was not disclosed. 2014 2014 2014 modities. We are focusing now BEST COLLEGES GREEN AMERICA’S BEST more on clinical care.” Under Lincare, Filippis said, in the Midwest COLLEGE UNIVERSITIES Princeton Princeton U.S. News & Over the past two years, the former Wright & Filippis cus- Review® Review® World Report® durable medical equipment indus- tomers will be well served. Lawrence Technological University | 21000 West Ten Mile Road, Southfield, MI 48075-1058 try, including Wright & Filippis “The good news is Lincare is go- 800.225.5588 | [email protected] | www.ltu.edu and many hospital-based compa- ing to operate out of the majority nies, has been in the midst of a of our locations (in Michigan and shakeout as the Centers for Ohio). We will not be displacing Medicare and Medicaid Services these patients,” he said. moved to a cost-cutting competi- Of some 37 Wright & Filippis of- tive bidding process that has deci- fices, Lincare will share space in mated smaller competitors. 30, he said. Last year, several Southeast Lincare, which has offices in 48 Michigan-based hospital-owned states, specializes in prosthetics, home equipment product compa- orthotics, respiratory care and nies and an affiliate of Center home medical equipment. In 2012, Line-based Binson’s Home Health Lincare was acquired by Linde AG Centers merged into Grand Rapids- of Germany for $3.8 billion. based Hart Medical Equipment Co. to “This will also help provide for cope with the Medicare pricing patients when they travel,” Filip- changes. pis said. “When they leave Michi- Home equipment companies gan, go to Florida, we had to make owned by Flint-based McLaren Health Care and Grand Rapids- arrangements with another THE IMPORTANCE OF EMPLOYEE ENGAGEMENT based Genesys, one of five regional provider in another state. Now, they can go practically anywhere Dale Carnegie Training has been increasing employee engagement for over 100 years. One systems owned by Ascension Health Michigan, initially joined Hart. in country and have access to a recent initiative* included a comprehensive study of employee engagement across the US. Henry Ford Health System recent- Lincare location.” ly decided to merge its Henry Ford Filippis said the company is eye- Health Products into Hart Medical, ing several acquisitions to expand said CEO Nancy Schlichting. Hen- its renewed focus on clinical care ry Ford will own a 35 percent in- products and services. vestment share of the company. “We plan on growing our busi- “Very few health system pro- ness significantly over the next grams have been successful in four years,” Filippis said. that space,” Schlichting said. “Na- Jay Greene: (313) 446-0325, tional players have more scale [email protected]. Twitter: and they have the ability to un- @jaybgreene

HONORING ENTREPRENEURS Join Crain’s Detroit Business in its 2014 Salute to Entrepreneurs, 7:30-10 a.m. July 24 at The Henry, Autograph Collection, Dearborn. Every year, Crain’s recognizes entrepreneurs for their innovation, problem- solving abilities or sheer relentlessness. In addition to the awards

*Dale Carnegie surveyed the functional and emotional elements of employee engagement from a national ceremony, hear firsthand accounts from business executives who find ways representative sample of 1,500 employees. /** Source - Bureau of National Affairs / ***Source - Gallup to compete against larger rivals. Featuring Eoin Commerford, CEO, Moosejaw Mountaineering; Marc Gardner, founder, North American Bancard LLC and PayAnywhere LLC; and Lydia Gutierrez, president and CEO, READ MORE ON EMPLOYEE ENGAGEMENT AT Hacienda Mexican Foods. Roundtable discussions will provide in-person advice from the experts www.michigan.dalecarnegie.com featured in the Crain’s Small Business Strategies webinar series. Preregistration has closed. Walk-in registration is $65 per person. 248.380.7000 For ticket information, call Kacey Anderson at (313) 446-0300, email her at [email protected], or visit crainsdetroit.com/events.

July 21, 2014 CRAIN’S DETROIT BUSINESS Page 11

HEALTH PLANS LOOK AHEAD 2014 shows promise after struggles of last year, according to study, Page 14

People

Ella Kazerooni, professor of radiology, associate chair for clinical affairs and director of The health of cardiothoracic radiology at the University of Michigan, has been awarded a gold medal from the American Roentgen Ray health systems Society for Kazerooni distinguished service to radiology. She was also given the inaugural President’s Inspiration Revenue’s a challenge, but Award for Leadership from the Society of Thoracic Radiology. Hayley Thompson, associate investment income helps professor of oncology for the Wayne State School of Medicine and the population studies keep systems in black and disparities research program BY JAY GREENE at the Barbara Ann CRAIN’S DETROIT BUSINESS Karmanos Cancer Institute, will serve edicare payment cutbacks, hospital as a member of readmission penalties, rising bad the Societal and Ethical Issues in Mdebt from high-deductible plans, in- Thompson research study formation technology investments and re- section at the duced inpatient demand all took their toll Center for Scientific Review of the last year on local health systems. National Institutes of Health. Revenue declined at four of the region’s Ananda Prasad, M.D., professor of internal medicine at Wayne State nine health systems and hospitals surveyed University, has been honored by the by Crain’s, increased less American College of Nutrition with its BATTLING BACK than 1 percent for three 2014 Alexander and Mildred Seelig systems and rose above 9 Magnesium Award. The award Henry Ford Health recognizes contributions defining the System works to percent for two systems. role of metals in nutrition. increase revenue, Page 13 Despite the financial Michael Embry, president of challenges, most of the re- Comprehensive Benefits Inc., porting health systems and independent hos- Chesterfield Township, has been elected to the National Association of pitals earned positive bottom lines in 2013 Health Underwriters board of trustees thanks to investment income, except for Crit- as secretary. tenton Hospital and Medical Center in Gov. Rick Snyder made the Rochester Hills, which lost $22.2 million on following appointments: Laura operations and is now shopping for buyers. Marcero of Grosse For 2013, Garden City Hospital and Detroit- Pointe Farms, managing director based Henry Ford Health System also lost mon- of restructuring ey on operations, $5.4 million and $12 million, and turnaround respectively, but investment income helped practice, Huron to bolster bottom lines. Nationally, the aver- Consulting Group age operating margin in 2013 for 179 systems Inc., to the Board GLENN TRIEST of Osteopathic surveyed by Modern Healthcare, a sister Regina Doxtader, CFO of Botsford Hospital, said her organization “had to work pretty hard on Medicine and See Health Systems, Page 12 expense control” in 2013 as health systems in general balanced a variety of challenges. Surgery; Jeff Marcero Beutner, Michigan SOUTHEAST MICHIGAN HEALTH SYSTEMS 2013 FINANCIALS territory manager for J&B Medical Supply Inc. in Wixom, to the Board of Operating income Net income Investment income Total revenue Nursing Home Administrators; 2013 2012 2013 2012 2013 2012 2013 2012 Zeeshan Husain, D.P.M., a partner Beaumont Health System $6.7 $57.7 $65.4 $108.5 $58.3 $59.5 $2.27B $2.24B with Rochester Center for Foot and Henry Ford Health System ($12.0) $28.4 $0.5 $34.4 $58.3 $66.8 $4.52B $4.48B Ankle Surgery and the assistant Oakwood Healthcare $23.8 $21.3 $65.7 $39.6 $43.6 $26.7 $1.16B $1.19B residency director of the Detroit Crittenton Hospital ($22.2) ($16.1) ($1.4) ($3.1) $21.8 $13.9 $226.5 $239.0 Medical Center podiatric medicine and Botsford Health Care $1.4 $9.8 $7.3 $12.3 $6.5 $5.6 $331.5 $334.1 surgery residency program, and McLaren Health Care (9-30-13) $65.5 $60.2 $185.5 $243.4 $92.1 $94.0 $2.49B $2.22B Nathan Tallman, director of corporate Garden City Hospital (9-30-13) ($5.4) ($2.2) $3.1 $2.0 $1.1 $1.6 $127.0 $126.6 development for Metro Wire and Cable University of Michigan (6-30-14)* $17.0 $2.7 NA $67.8 NA $91.5 $2.5B $2.4B Corp. in Sterling Heights, to the Board of Podiatric Medicine; and Kurt Tech, a St. John Providence (6-30-14)* $70.0 $59.4 $164.4 $108.6 $63.8 $121.7 $1.93B $1.96B commercial credit analyst for Talmer Figures in millions, except where noted. All hospital systems fiscal year 2013 ended Dec. 31 unless noted. DMC is owned by for-profit Tenet Healthcare Corp., which only reports Bank and Trust in Troy, to the Board of companywide numbers. Figures for St. Joseph Mercy, which has a fiscal year ended June 30, were not available. Optometry. *Figures for 6-30-14 are projected. Source: Hospital systems audited financial statements and interviews 20140721-NEWS--0011,0012,0013-NAT-CCI-CD_-- 7/18/2014 10:20 AM Page 2

Page 12 CRAIN’S DETROIT BUSINESS July 21, 2014 Health Care After ‘tough years,’ Henry Ford to cut

A DVISOR S POTLIGHT costs, install e-health records system

said. “We will easily get $50 million MICHAEL LOVASCO BY JAY GREENE CRAIN’S DETROIT BUSINESS (in savings) out of it (this year).” Vice President We knew we were Schlichting also expects rev- Henry Ford Health System is bat- “ enue to grow steadily this year as Mike believes the first step in every client engagement is tling back from a couple of years of going to have two or more than 20,000 newly insured establishing trust through an absolute focus on understanding a near break-even profit margins private and Medicaid patients en- client’s long-term financial goals and objectives. Representing the and a recent bond rating down- three tough years. ter the system through Health Al- third generation in the family insurance and financial services grade, but CEO Nancy Schlichting ” liance Plan and Midwest Health Plan, business, Mike combines his lifelong immersion in the industry said she’s confident that a major Nancy Schlichting its two HMOs. with his later experiences working on Wall Street to help launch cost-cutting initiative and other “We are focusing more on non- a consulting practice that puts clients’ interests first and provides moves will help reverse those patient growth with our ambulato- stalled in the next several years. independent advice and customized consulting services. trends. ry care network,” she said, adding Operating income also was The Detroit-based system last that Henry Ford Hospital has in- dampened by $30 million in 535 Griswold Street, Suite 1600 • Detroit, MI 48226 • www.lovascogroup.com • 313.394.1700 month had $831 million of tax-ex- creased inpatient referrals from Medicare cuts, a 2 percent employ- A Member Firm of M Financial Group. empt bonds downgraded to A3 outside of Michigan by 38 percent ee pay raise for the system’s 23,000 Securities Offered Through M Holdings Securities, Inc., A Registered Broker/Dealer, Member FINRA/SIPC. from A2 by Moody’s Investor Service, since 2012. workers that cost $12 million and a LoVasco Consulting Group is Independently Owned and Operated. primarily because it posted below- Last year, Henry Ford also end- $2.6 million, or 1.7 percent, in- average operating results in 2013 crease in bad debt and charity care ed negotiations to merge with and is in the midst of installing an to $146 million. Beaumont, which recently ap- expensive electronic health record With investment income of $58.3 proved a deal to combine opera- system. million and the sale of its interest tions with Botsford Hospital and “It is disappointing and from my in Dialysis Partners of Northwest Ohio Oakwood. Moody’s cited that as standpoint doesn’t make sense be- for about $15 million, Henry Ford another reason for downgrading. cause we have seen a nice lift from managed to stay in the black with “There isn’t a whole lot left. We our cost reduction and strategic $500,000 in net income. have limited opportunities,” growth” plans, said Schlichting. “We knew we were going to have Schlichting said of possible local Schlichting said the five-hospi- two or three tough years for us merger partners. Let the Giant Buy Your tal system is beginning a major Schlichting said Henry Ford re- with increasing uncompensated initiative over the next three years care, Medicare cuts and the Epic mains open to new models of affili- to reduce $300 million in costs. She impact to us that caused produc- ation, akin to the recent decision said the system will focus on re- tivity issues,” Schlichting said. of Ascension Health and Trinity ducing administrative costs In 2012, Henry Ford decided to Health to form a third company for through efficiency gains and low- scrap its homegrown system, Care- managed care contracting purpos- ering supply and labor expenses. Plus Next Generation, which it had es or to form affiliations with mul- IT A$$ET$ In 2013, Henry Ford posted an projected to spend $100 million to ti-state health systems. operational loss of $12 million on upgrade. Instead, Henry Ford se- “We are busy optimizing our total revenue of $4.52 billion, a 1 lected Epic. Many health systems in model,” she said. “There are a lot percent increase from 2012. The Southeast Michigan, including of systems trying to emulate Hen- system spent $65 million last year Beaumont Health System, Oakwood ry Ford. Everybody is broadening on an electronic health record sys- Healthcare and the University of Michi- their marketplace and aligning tem designed by Epic Systems Corp. gan Health System, also use Epic. with physicians.” of Wisconsin. It will spend a total “Epic is working for us now. It is Jay Greene: (313) 446-0325, of $356 million on capital and oper- an incredible tool to create more ef- [email protected]. Twitter: ating expenses when it is fully in- ficiency and reduce waste,” she @jaybgreene E-waste recycling/data destruction/computer liquidation Call: 248-891-7330 or Email: [email protected] Health systems: Meeting challenges ■ From Page 11 publication to Crain’s Detroit Busi- many reasons. Medicare penalized based Oakwood Healthcare Inc. and ness, was 3.1 percent, down from hospitals millions of dollars for Farmington Hills-based Botsford 3.6 percent in 2012. readmitting certain patients with- Health Care. Pending regulatory ap- For Farmington Hills-based in 30 days. Private auditors, hired proval this fall, the new system Botsford Hospital, 2013 was a tough by Medicare to scrutinize inpa- will control eight hospitals, 3,337 year as revenue declined by 0.7 tient claims, rejected millions of beds, 5,000 physicians, $3.8 billion NEW ARRIVALS percent to $331.5 million, inpatient dollars in hospital payments. Pri- in revenue and 30 percent of inpa- admissions dropped by 4 percent vate payers and Medicare also tient days, said the Michigan Health FRACTIONAL AND MANAGED BUSINESS AVIATION PROGRAMS. and outpatient visits fell by 5 per- pressured hospitals into admitting Market Review. SERVING ALL SOUTHEASTERN MICHIGAN. cent, said CFO Regina Doxtader. a greater percentage of patients Earlier this month, Garden City As a result, Botsford’s operating into lower-cost observation units, Hospital, which has seen net as- income in 2013 dropped 85 percent further reducing revenue. sets drop to a negative $500,000 to $1.4 million from $9.8 million. Moreover, the move by employ- from $33.5 million over the past And despite investment income ers to encourage high-deductible five years, completed its sale to for- being up 16 percent to $6.5 million health plans as a cost-containment profit Prime Healthcare Services of last year, net income declined 41 device appears to be working. Ontario, Calif., for about $90 mil- percent to $7.3 million last year But hospital executives tell lion. Some $55 million of the sale from $12.3 million in 2012. Crain’s they are seeing increases proceeds will be used to retire “We had to work pretty hard on in bad debt from patients who bond debt, and another $35 million expense control to get to a 0.4 per- have high-deductible health plans will be used on capital projects cent operating margin,” Doxtader and are unable to pay their share over the next five years. said. Expenses only increased by of out-of-pocket costs. Here’s how some local health 1.8 percent, a historically low per- Executives say high-deductible systems fared: centage increase, she said. plans also are working to dampen Botsford’s experience is not un- inpatient admissions — and rev- McLaren Health KING AIR B200 usual. Health systems have been enue — because patients are avoid- balancing a range of challenges. ing some elective procedures, McLaren Health Care Corp., a Last year, inpatient admissions again due to out-of-pocket costs. Flint-based system with 12 hospi- declined about 3 percent in South- And health systems continue to tals, led the way with net income of east Michigan, mirroring national seek scale. $185.5 million on total revenue of $2.49 billion in fiscal 2013 for a 7.5 CORPORATEEAGLE.COM averages and dampening hospi- Last month, Beaumont Health tals’ traditional source of revenue. was formed by Royal Oak-based percent total margin. Revenue growth declined for Beaumont Health System, Dearborn- See Next Page 20140721-NEWS--0011,0012,0013-NAT-CCI-CD_-- 7/18/2014 10:20 AM Page 3

July 21, 2014 CRAIN’S DETROIT BUSINESS Page 13 Health Care

From Previous Page “We had pretty good back-to- amount of care sought. cal year 2014 ended June 30, a 17.8 costs per acuity adjusted patient back years,” said Oakwood CFO Vitale also said readmission percent increase over last year’s case by 0.77 percent. This means Despite the banner year, profits John Keuten. penalties, total of $59.4 million. St. John cut the average treatment were lower last year than in 2012, “It was the first year that operat- Medicare reim- “We had a pretty good year with expense, adjusting for how sick the when McLaren earned $243.4 mil- ing costs of 2013 were less than op- bursement cuts operating income at $70 million for patients were. lion on revenue of $2.22 billion for erating costs of 2012,” Keuten said, and “take-backs” a 3.5 percent margin,” said CFO “Even with inflation and lower an 11.2 percent margin. adding that lower supply, insur- from Medicare Patrick McGuire. “Our volume volume, this decrease, although it McLaren’s operating profits ance, interest expenses and auditors that de- was soft and down a bit. We did appears modest, is very significant edged up 8.8 percent to $65.5 mil- staffing costs led to a 1.6 percent termine hospi- well with our higher end (prof- and difficult to achieve,” he said. lion in 2013 from $60.2 million the reduction in total expenses to $1.15 tals overcharged itable services) and surgical vol- year before. billion last year. for services have ume, which is a major factor in One local health care expert, “Top-line net revenue has been had an effect. how we get University of Michigan who asked not to be named, said difficult in the Southeast Michigan “Everybody is paid.” Vitale T. Anthony Denton, COO of UM McLaren’s secret to high prof- market for all systems,” Keuten affected by that. Net income is Hospitals and Health Centers, credit- itability is its “laser focus on ex- said. “We are seeing inpatient vol- (Private Medicare auditors) inter- projected to rise ed the system’s performance to penses. The other systems talk umes deteriorate from year to year pret the rules more aggressively to $164.4 million more patients. about it. McLaren actually does it. as more insurance companies than we expected,” Vitale said. “We this year, up UM’s patient care discharges They are a model for others.” block patients from the inpatient are appealing and expect to receive from $108.6 mil- and obstetric cases grew 5.1 per- Phil Incarnati, McLaren’s CEO, unit and they go into observation a good portion back.” lion last year. cent and patient days increased by said McLaren has always focused status.” However, rev- 3.8 percent for UM’s adult, chil- on keeping expenses below indus- enue is expected For 2014, Keuten said Oakwood dren’s and women’s hospitals, try and competitor averages. projects a 1 percent operating mar- Crittenton Hospital to decline 1.5 Denton said. “We manage very closely on the gin, or about $14 million in operat- McGuire percent to $1.93 Crittenton Hospital, which last “We are still getting our refer- expense side,” Incarnati said. ing income. “We billion from $1.96 billion in fiscal year hired a new CEO, Roy Powell, rals from all around the state. It is “Our biggest single area where we will come pretty and contracted out its cancer center 2013. one of the enablers to grow dis- saw improvements was in the sup- close to what we to St. John Providence Health System, McGuire said revenue declines charges,” said Paul Castillo, CFO ply chain. You look at the top line showed for the projects a major turnaround and are mainly due to increases in un- of UM Health System. growing. Our supply costs are go- core business in positive operating margin this year. compensated care, Medicare cuts This year, Denton said, UM Hos- ing down.” 2013,” he said. The hospital’s operating loss of and flat patient volumes. pitals also has seen surgical cases While revenue increased 14 per- Keuten said $22.2 million last year was primar- However, St. John experienced grow. “We have had a 700-case in- cent last year, McLaren’s supply patient dis- ily due to a decrease in patients large increases in newly insured costs increased only 0.5 percent, or charges were and changeover to a new accounts Medicaid patients starting in April crease so far through May.” $2 million, to $374 million. down 2.8 per- receivables system, Powell said. when the Healthy Michigan Med- Castillo projects $17 million in Last fall, McLaren acquired Bar- cent, although “Strategic initiatives have been icaid expansion started. operating income, a 0.7 percent Keuten bara Ann Karmanos Cancer Institute ambulatory and implemented with increased focus “We saw our self-pay volume get margin, for fiscal 2014 ended June in a deal facing a court challenge emergency department visits were on physician recruitment, (collec- cut in half for the three-month peri- 30, on revenue of $2.52 billion. by the Detroit Medical Center. up 2.4 percent and 3.6 percent, re- tions on past due bills), payer con- od (April through June),” McGuire Castillo also said UM Health is McLaren also owns two hospitals spectively. Rehabilitation stays tracting and ex- said. “Those people have always budgeting for a 3 percent operating in metro Detroit were up 13 percent, and pul- pense control,” come to us. Now they have Medic- margin, or $80 million in operating — McLaren Oak- monary admissions were up 1.2 Powell said. aid, which is the lowest payer, but income, on projected revenue of land in Pontiac percent. Crittenton’s we were still paid something.” $2.66 billion for fiscal 2015. and McLaren Ma- Over the past three years, Oak- 5.2 percent drop McGuire said focusing on patient Jay Greene: (313) 446-0325, comb in Mt. wood’s value-analysis teams, which in revenue to safety has helped hold down costs. [email protected]. Twitter: Clemens. include physicians, nurses and ad- $226.5 million For example, St. John lowered @jaybgreene Incarnati said ministrators, have worked to re- last year was the fiscal 2015, duce costs and improve quality in greatest drop of which begins several departments, Keuten said. any local hospi- Oct. 1, will in- For example, lower supply costs tal. Revenue de- clude full-year for orthopedic procedures helped Powell Incarnati clines were due revenue for two to lower overall system expenses, to lower surgical volume and debt newly added hospitals — Port Huron he said. Overall, supply costs de- write-offs, Powell said. Hospital and Karmanos — and clined 3.9 percent to $171 million But of the $12.5 million revenue McLaren’s total revenue will hit from $178 million. drop, Crittenton Cancer Center only $3.5 billion. Insurance costs, which include accounted for $2.5 million of the For the first six months of fiscal medical malpractice, were cut by decline, financial statements 2014, ended March 31, McLaren 41 percent to $16 million. show. One of the major revenue recorded operating income of $23.7 “We worked hard with physi- generators for the center was for- million on $1.32 billion of revenue cians to address the issues they mer Crittenton oncologist Farid compared with operating income have, and we more than adequate- Fata, M.D., who is accused by fed- of $23.7 million on $1.22 total rev- ly covered the amount of claims eral prosecutors of millions of dol- enue for the same period in 2013. processed,” Keuten said. lars in Medicare fraud. He is “We tend to be very conservative awaiting trial later this year. in how we state numbers in the first Beaumont Health System But Powell said the major rea- six months,” Incarnati said. “We son the cancer center faced declin- like to have a better second half.” At Beaumont Health System, ing revenue was the departure of Incarnati said early data is CFO Nick Vitale said significant primary radiation oncologist, V. showing lower levels of bad debt increases in bad debt — $93 mil- Elayne Arterbery, M.D., who last this year, compared with last year lion in 2013 from $72 million in year moved to the Detroit Medical when McLaren absorbed $119 mil- 2012 — along with a 2.8 percent Center after 10 years at Crittenton. lion of unpaid patient bills. drop in admissions led to revenue In 2013, Crittenton also reported “There is positive impact with growth of only 1.4 percent to $2.27 a potential Stark Law anti-kick- Medicaid (and private insurance billion in 2013. back violation to the Centers for expansion),” he said. “The newly Net income dropped 88 percent Medicare and Medicaid Services. insured show up in the emergency to $6.7 million. “Crittenton voluntarily report- department, and we are paid 35 “We had a good year, not a great ed to CMS that monies had been percent of costs. That is better year,” said Vitale, noting that 2012 loaned to members of the hospi- than nothing.” was a record year for Beaumont tal’s medical staff,” Powell said in when it posted $108.5 million in net a statement. He noted the hospital income. He said 2014 is expected to believes the loans were allowable Oakwood Healthcare be almost as strong as 2012. under federal law. Oakwood Healthcare, a four-hospi- Vitale said cold weather in the Powell said Crittenton projects a tal system, also posted the best re- fourth quarter last year started to positive operating margin in 2014. sults in its recent history. It has dampen patient volume. Lower- “The first five months are sever- been improving operations than-expected reimbursements al million dollars better than last through a combination of wise in- and shifting payer mix to self-pay year at this time,” Powell said, at- vesting, cost cutting and efficiency and Medicaid accounts were other tributing it to Crittenton’s strate- gains, financial reports show. reasons for lower revenue. gy of being “the lowest-cost, high- In 2013, Oakwood increased op- “Our bad debt is up 30 percent est-value hospital in the area.” erating income 11.2 percent to year over year,” Vitale said, say- $23.8 million from $21.3 million in ing that one factor is insured pa- 2012. With investment income of tients who can’t afford coinsur- St. John Providence $43.6 million, net income in- ance and large deductibles. That Officials at St. John Providence creased 66 percent to $65.7 million group also hurts revenue because Health System are projecting oper- last year from $39.6 million in 2012. out-of-pocket costs reduce the ating income of $70 million for fis- 20140721-NEWS--0014-NAT-CCI-CD_-- 7/18/2014 10:24 AM Page 1

Page 14 CRAIN’S DETROIT BUSINESS July 21, 2014 1HHGDQ,QYHVWPHQW Health Care 5HDO(VWDWH/RDQ" Select Michigan health plans by the numbers Profit Profit Net income Net income Percent margin margin 2013 2012 change 2013 2012 Blue Care Network & Blue Care Complete $109.6 million $167.4 million (35%) 4% 6.2% CoventryCares $4.4 million $7.1 million (38%) 2.7% 4.1% Harbor Health Plan* ($267,511) ($66,540) (302%) -3% -1% Health Alliance Plan & HAP Midwest Health Plan $27.3 million $28.9 million (6%) 1.2% 1.2% Health Plus $6 million $10.6 million (43%) -0.8% 1.5% McLaren Health Plan ($174,146) $14.8 million (101%) 0% 3.3% Meridian Health Plan $5.7 million $5.2 million 10% 0.5% 0.5% Molina Healthcare $18.6 million $9.4 million 98% 2.1% 1.1% Priority Health $58.5 million $64.7 million (10%) 2.8% 3% Total Health Care ($6.3 million) $264,458 (2282%) -1.9% 0.1% &DOOXV United Healthcare ($3.2 million) $4.2 million (176%) -0.4% 0.5% Total $220.2 million $312.5 million /RDQDPRXQWVDQGDERYH Source: Michigan Health Market Report, 2014. Allan Baumgarten $GGLWLRQDODYDLODEOHORDQV *Formerly Pro Care Health Plan 6%$86'$/RDQV 2ZQHU2FFXSLHG5HDO(VWDWH /LQHVRI&UHGLW $FFRXQWV5HFHLYDEOH Michigan health plans struggled in 2013, (TXLSPHQW %DQN:RUNRXWV but see opportunity in 2014, study shows

BY JAY GREENE eral years. said the Michigan Health report. CRAIN’S DETROIT BUSINESS But HMO net income dropped by Medicaid medical expenses per nearly $100 million last year due to member per month averaged Michigan’s 18 health plans lower investment income, inade- $268.09 in 2013, up 10.6 percent from notched a 1.8 percent profit margin quate Medicaid capitation pay- $242.48 in 2012, the report said. ZZZHFOLSVHFDSLWDOJURXSFRP in 2013, taking in $212.4 million in ments to cover premature babies, Competition to add new mem- 2UFKDUG/DNH5G6\OYDQ/DNH0, profits, a somewhat lower figure and rising medical and adminis- bers from Medicaid expansion and ³6LQFH´ than in 2012 when the HMOs report- trative expenses, said Rick Mur- privately insured patients through ed collective net income of $311 mil- dock, executive director of the the federal health insurance ex- lion for an average 2.6 percent mar- Michigan Association of Health Plans. change will work to dampen pre- gin, according to the 2014 Michigan Aside from rising expenses and mium increases and moderate Health Market Review. $16 million in lower Medicaid profit margins, Murdock said. While HMO enrollment was HMO profits, another factor in the Nationally, experts are predict- slightly down in 2013 with 2.7 mil- total profitability drop was Blue ing 6 percent to 8 percent premium lion members, Allan Baumgarten, Care Network, which saw commer- increases in 2014. But Murdock be- SUMMER FUN the Minneapolis-based researcher cial underwriting net income de- lieves those premium increases in who compiled the report, said 2014 cline 58 percent to $54.4 million Michigan will be lower because of has shown strong gains in enroll- last year from $132.3 million in competitive pressures. PACKAGE ment from Medicaid expansion 2012, Baumgarten said. Murdock also said HMOs are and private health insurance “Blue Care had a huge commer- bracing for contracting changes signups in the exchange under the cial margin in 2012, but medical this year from ongoing consolida- Patient Protection and Affordable expenses went up 3 percent in tion of physician practices and Care Act. 2013,” he said. hospital-based systems. Baumgarten said nearly 90,000 In 2013, Blue Care, the largest For example, Beaumont Health people pur- HMO in Michigan, recorded a 4 System, Oakwood Healthcare and VS chased private percent margin on net income of Botsford Hospital have agreed to health insur- $109.6 million, down from 2012’s merge into Beaumont Health. CHE ance during the $167.4 million in net income. Those Trinity Health and Ascension Health first three figures also include Blue Cross Com- Michigan also agreed to form To- months of this plete, a Medicaid HMO. gether Health Care Network for joint year. Another Kevin Klobucar, Blue Care’s managed care contracting. 322,022 enrolled CEO, said Blue Care lowered aver- Hospitals and physicians “will TUESDAY, JULY 29 • 7:08 in Medicaid ex- age premiums in 2013 after deter- be in a better position to negotiate pansion as of mining it was managing its med- price than previously,” Murdock July 10, said the WEDNESDAY, JULY 30 • 7:08 Baumgarten ical expenses. However, commer- said. Michigan Depart- cial administrative expenses in- For 2014, Murdock said, comment of Community Health. creased significantly, primarily mercial HMOs’ margins declined “This is a huge opportunity for because of added costs from the Af- to less than 2 percent, but Medic- Medicaid HMOs” that only aver- fordable Care Act, he said. aid HMOs are expected to increase Perfect for work aged a 0.9 percent profit margin in Blue Care’s commercial admin- margins of 1 percent and 2 percent. and family outings. 2013, Baumgarten said. Commercial istrative expenses rose 17 percent “We think Medicaid margins HMOs averaged 2.2 percent. in 2013 to $55 per member per are too low. We gave that message Includes choice of Baumgarten said there is uncer- month from about $47 per member to the Legislature last year,” Mur- Upper Box Inﬁeld, tainty on medical expenses and per month, according to the Michi- dock said. “Margins will be profitability because there could gan Health report. All HMOs aver- squeezed on the commercial side Mezzanine or Upper be pent-up demand for care with aged a 3.5 percent increase to because of price competition. Reserved ticket, value previously uninsured people. $39.19, the report said. There will be a two- to three-year Over the next couple of years, Murdock said health plan ex- shakeout in the industry.” meal and Tigers T-shirt. more than 477,000 Michigan resi- penses have been slowly increas- Murdock said 2014 is hard to dents are expected to join the al- ing over the past four years as predict because of rising specialty ready 1.9 million covered under medical claims and prescription drug prices. Awaited here is a deci- Medicaid. Eventually, 25 percent of drug prices have bumped up. sion later this year from the De- the state’s population will have On average, commercial medical partment of Community Health on Medicaid coverage, experts predict. expenses for HMOs ticked slightly the new hepatitis C drug, Sovaldi. Baumgarten also predicted an- upward in 2013 to 2.9 percent in “It is $1,000 per pill. Other spe- other 180,000 people will purchase 2013, or $315.43 per member per cialty drugs have been approved, private health insurance this year, month, compared with 2012 when but only at a $40-$60-$80 per pill turning around commercial HMO medical expenses grew 2.8 percent cost,” he said. “The state has to fac- enrollment losses over the last sev- to $306.60 per member per month, tor those costs into rates.” DBpageAD_DBpageAD.qxd 7/18/2014 10:01 AM Page 1 2014 UPCOMING PARTNER EVENTS consumer advice: Coming Up from Marketing & Sales Executives of Detroit (MSED) Annual Automotive Roundtable Luncheon: “Managing Growth in Innovation” pick the right Join us and our panel of experts for this annual off-the-record discussion. Panelists include Doug Grimm, chairman, president and CEO, Grede Holdings; Dan Sceli, health plan CEO, Peterson Spring and Elizabeth Umberson, vice president, ZF North America. for you Moderator: David Versical, director of editorial operations, Automotive News July 24 • 11 a.m.-1:30 p.m. Aug. 4 • Noon-1 p.m. MSU Management Education Center, 811 W. Square Lake Road, Troy MSED Members: $45 • Non-Members: $60 • Strategies to get information on plans Registration: msedetroit.org or call Meeting Coordinators at (248) 643-6590 • Resources that can be used to make decisions 22nd Annual Marketing & Sales Professionals’ Golf Outing to Beneﬁ t MSED Scholarships • What to watch out for Golf at a beautiful course, network with marketing and sales professionals from our community AND make an important contribution to the future of our profession FREE WEBINAR - Register at crainsdetroit.com/webinars through scholarships funded from the proceeds. August 21 • Noon-7:30 p.m. Sponsored by: Twin Lakes Golf Club, 455 Twin Lakes Dr., In Partnership with: Oakland Charter Twp. Individual Golfer: $160 • Foursome: $600 ™ Corporate Foursome: $750 (foursome, hole sponsorship and signage) Sponsorships available from $200-$5,000 Registration: msedetroit.org or call Meeting Coordinators at (248) 643-6590 Does Your Ad Coming Up from the Troy Chamber Troy Restaurant Week Nineteen Troy restaurants will offer patrons special menus. August 17-22 Information: (248) 641-8151 or troyrestaurantweek.com STAND Economic Development Forum Series: Arts in Economic Development Arts and culture are essential ingredients to building vibrant communities and economy. ArtServe Michigan is a statewide nonproÀ t organization leading advocacy for the OUT? arts, culture and arts education and the transformative power of the creative industries in Michigan. Featured Speaker: Jennifer Goulet, president and CEO, ArtServe August 20 • 8-9:30 a.m. Rehmann, 1500 W. Big Beaver Rd., Troy Members: Free Registration: (248) 641-8151, [email protected] or troychamber.com/events Gain insight Find out in the High quality, into what Michigan Hispanic Chamber of Commerce reliable and 23rd Annual Golf Outing August 11 issue of readers think trustworthy. Join MHCC for one of Michigan’s largest golf outings at about your ad. Cherry Creek Golf Club, Greystone Golf Club and The Orchards Golf Club. This event is an exciting opportunity to network with fellow OEMs, Tier 1, Tier 2 supplier Michigan Hispanic Chamber of Commerce companies and Chamber members. There are a limited Too much to read in an ad! number of corporate sponsor opportunities available. Keep it simple. Golf Committee Chair: Grace Lieblein, vice president global purchasing and supply chain, General Motors Co. August 18 • 7 a.m.-7 p.m. Registration: www.mhcc.org or Barbara Lange at (248) 792-2763 Message The Signet AdStudy® is a was clear Strong name WBEC-Great Lakes 14th Annual Women’s Business and precise. recognition Conference value-added opportunity for and good Save the Date! Join more than 500 women business Crain’s Detroit Business advertisers ad which owners and supporters for two days of engaging and will measure the effectiveness makes me workshops, the Women’s Business Showcase and the want to opportunity to meet supplier diversity executives. Achieve of your ads FREE OF CHARGE!* learn more. six months of sales prospecting in two days! September 29-30 Limited availability! Suburban Collection Showplace, AD CLOSE: July 31 *Ads must be 1/4 page or larger. Ads must be 46100 Grand River Ave., Novi incremental to current schedule. Information: (734) 677-1400 or miceed.org

For more local events, visit Crain’s Executive Calendar at To reserve your space, contact Marla Wise at crainsdetroit.com/executivecalendar [email protected] or (313) 446-6032. 20140721-NEWS--0016-NAT-CCI-CD_-- 7/18/2014 9:56 AM Page 1

Page 16 CRAIN’S DETROIT BUSINESS July 21, 2014

he Aug. 5 primary in Michigan is one that mat- election, contact Jennette Smith, managing editor, ters when it comes to power shifts in certain Know the candidates [email protected], or Chris Gautz, Lansing corre- Tcoveted districts. Will Thomas Stallworth, D-De- spondent, [email protected] troit, currently a state representative in the 7th Dis- PAC spending up ... way up, this page trict, be rewarded with a state Senate slot for working with this scorecard The most interesting Senate primary outside De- to broker the “grand bargain” in the Detroit pension troit involves — what else? — road funding, this page deal? Will Mike Kowall, R-White Lake, chairman of candidates for Wayne County executive. Wayne County executive: A grid is your guide, the Senate Economic Development Committee and This report does not include state or congression- Page 17 noted for legislation that would have supported a new al races in which leading candidates are running un- Term-limited reps look to lengthen Lansing lives in hospital for McLaren Health Care, earn another term? opposed in their political party. But getting past the state Senate, Page 18 These are some of the races to watch, and this is primary is the first order of business for the candi- Congressional contests: A rundown of the primary your scorecard. Before you vote, review the race high- dates highlighted here. If you have a suggestion for races in the 8th, 11th and 14th Congressional Dis- lights in our coverage along with a guide to the major our coverage leading up to the November general tricts, Page 19 Fundraising for state’s 150 largest PACs up 44% over ’12

BY CHRIS GAUTZ tion has just a little more than $9,000 Senate Republican Campaign Jan. 1 through April 20: Detroit Regional Chamber PAC: CAPITOL CORRESPONDENT in the bank as it supports former Committee: Raised from Feb. 11 $227,684.24; spent between Feb. 11 Raised from Feb. 11 through April congressman Mark Schauer in his through April 20: $509,136.68; through April 20: $111,535.31; cash 20: $14,904.05; raised from Jan. 1 This election season’s war chests bid to unseat Snyder. The DGA has raised from Jan. 1 through April on hand as of April 20: $524,437,75. through April 20: $16,446.48; spent are expected to be hefty, if the been running a series of ads lately 20: $509,136.68; spent between Feb. Blue Cross Blue Shield of Michigan between Feb. 11 through April 20: amount of money flooding into po- in support of Schauer, so when its 11 through April 20: $81,716.67; PAC: Raised from Feb. 11 through $7,890; cash on hand as of April 20: litical action committees continues campaign finance filing is released cash on hand as of April 20: April 20: $115,494.95; raised from $20,489.54. to grow as political analysts expect. later this month, it should reflect $1,998,386.08. Jan. 1 through April 20: $187,350.82; Democratic Governors A report by the Lansing-based those expenses. House Republican Campaign Com- spent between Feb. 11 through Association: Raised from Feb. 11 Michigan Campaign Finance Network T.J. Bucholz, president of Lans- mittee: Raised from Feb. 11 through April 20: $173,523.24; cash on hand through April 20: $0; raised from in April showed that the state’s 150 ing-based Vanguard Public Affairs, April 20: $639,780; raised from Jan. as of April 20: $331,634.77. Jan. 1 through April 20: $0; spent largest PACs had a 44 percent in- said the election cycle so far has 1 through April 20: $639,780; spent Business Leaders for Michigan between Feb. 11 through April 20: crease in fundraising hauls com- been “fairly sleepy,” with the open between Feb. 11 through April 20: PAC: Raised from Feb. 11 through $0; cash on hand as of April 20: pared with the same point in the U.S. Senate race attracting most of $48,452.81; cash on hand as of April April 20: $94,750; raised from Jan. 1 $9,158.24. 2012 election cycle, an increase of the big money from outside groups. 20: $1,956,292.34. through April 20: $94,750; spent be- DTE Energy Co. PAC: Raised from $9.9 million. But that will change soon, he said. Michigan House Democratic Fund: tween Feb. 11 through April 20: Feb. 11 through April 20: $67,783.82; Those 150 PACs have raised a to- “I think some of the dollars Raised from Feb. 11 through April $6,523.98; cash on hand as of April raised from Jan. 1 through April 20: tal of $32 million so far, and it will haven’t been spent yet,” Bucholz 20: $501,409.39; raised from Jan. 1 20: $262,020.22. $108,518.48; spent between Feb. 11 be clear how much larger PACs said. “Once we hit Labor Day, through April 20: $1,492,146.62; through April 20: $150,700; cash on have grown when PACs and candi- you’ll really start to see money Michigan Chamber of Commerce spent between Feb. 11 through hand as of April 20: $7,655.91. dates for state office release new spent on television ads.” PAC: Raised from Feb. 11 through April 20: $109,863.51; cash on hand Turnaround Detroit Super PAC campaign finance data on July 25. Here are some of the top politi- April 20: $79.791.62; raised from as of April 20: $1,365,676.72. So far this year, the PAC spend- cal action committees in the state, Jan. 1 through April 20: $103,534.33; (Detroit Mayor Mike Duggan): ing has been dominated, as usual, and those backed by businesses Michigan Senate Democratic spent between Feb. 11 through Raised from Feb. 11 through April by the House and Senate campaign and unions, as reported by the Fund: Raised from Feb. 11 through April 20: $121,761.10; cash on hand 20: $0; raised from Jan. 1 through funds of both political parties and Michigan Secretary of State: April 20: $265,770.66; raised from as of April 20: $216,038.28. April 20: $0; spent between Feb. 11 by business and union groups. Republican Governors Associa- Jan. 1 through April 20: Michigan Chamber PAC III Super- through April 20: $15,617.11; cash The largest PAC in the state so tion: Raised from Feb. 11 through $265,770.66; spent between Feb. 11 PAC: Raised from Feb. 11 through on hand as of April 20: $737.50. far is the Republican Governors Asso- April 20: $0; raised from Jan. 1 through April 20: $77,965.20; cash April 20: $29,200; raised from Jan. 1 Crain’s reporter Kirk Pinho con- ciation, which has more than $4 mil- through April 20: $0; spent be- on hand as of April 20: $714,216.07. through April 20: $29,975; spent be- tributed to this report. lion in the bank to help support the tween Feb. 11 through April 20: Michigan Education Association tween Feb. 11 through April 20: Chris Gautz: (517) 403-4403, re-election of Gov. Rick Snyder. $37,305.10; cash on hand as of April PAC: Raised from Feb. 11 through $676.39; cash on hand as of April [email protected]. Twitter: The Democratic Governors Associa- 20: $4,368,330.46. April 20: $184,100.90; raised from 20: $173,308.09. @chrisgautz Road funding at play in MacMaster-Schmidt race

Easily the most inter- Republicans have been End-of-the-year campaign fi- mer U.S. House Majority Leader esting and watched state unable to come up with nance filings with the secretary of Eric Cantor suffered a stunning de- Senate primary outside Capitol enough votes for some state show Schmidt with a sizable feat in Virginia last month to a rela- of Southeast Michigan is Briefings form of a tax increase war chest. He ended the year with tively unknown primary opponent one taking place among that will generate at more than $93,000 in cash on hand, with little financial resources. the cherry trees in north- least $1.2 billion more compared to just more than $4,000 But aside from the endorse- ern Michigan. annually in revenue to for MacMaster. ments and financial edge Schmidt But there’s more than fix state roads and MacMaster’s funding has large- has, he also has voter population one reason that people bridges. ly come from small donations from trends on his side. The Republi- are watching this faceoff Among the Republi- residents of the district, while can-leaning district stretches from between state Reps. Greg cans opposed to such a MacMaster Schmidt about half of Schmidt’s funding Traverse City to Mackinac Island MacMaster, R-Kewadin, tax increase is MacMas- came from what was left over from to Sault Ste. Marie, which should and Wayne Schmidt, R- ter, who has aligned him- Chris Gautz feeling is that if more members like his House campaign, as well as give an edge to Schmidt as he is Traverse City. It’s not self with many Tea Party MacMaster take office, it will make several large checks from business from the more populous portion of just about who will serve as the groups in the district and bills it harder to ever get a deal done on groups and from district residents. the district. next state senator for the 37th Dis- himself as the true conservative in transportation because of their un- But MacMaster has name recog- MacMaster and Schmidt are trict, but whether the outcome will the race. willingness to raise taxes. nition throughout the district running to replace Sen. Howard serve as a harbinger of a major He has said the $1.2 billion need- Schmidt has been endorsed by from his years as a TV and radio Walker, R-Traverse City, who de- deal on road funding in the Legisla- ed for roads can be found with a re- the Detroit Regional Chamber and the weatherman. While some of his clined to run for a second term. ture. aligning of existing state re- Michigan Chamber of Commerce, and supporters have not shown they Both camps have polling show- As chairman of the Transporta- sources. MacMaster boasts a plethora of en- have strong financial resources, ing they have a considerable lead tion Committee, Schmidt has been The business community, which dorsements from local elected offi- his Tea Party supporters are be- in the race, but the only polling the point person in the House dur- predominantly backs Schmidt, sup- cials and individuals. MacMaster lieved to be motivated and willing that matters takes place on Aug. 5, ing negotiations to find ways to in- ports the call for some type of tax also has the backing of former con- to work hard to get out the vote. which is why this primary race crease revenue for the state’s increase. And business groups are gressman Pete Hoekstra, former In other races around the state will be an important one to watch roads. That is now being used putting financial resources behind state GOP chairman Saul Anuzis and nation, candidates backed by until the end. against him by MacMaster. candidates like Schmidt who face and controversial Republican Na- Tea Party groups have shown they Chris Gautz: (517) 403-4403, Schmidt’s efforts, and those of opposition from Tea Party-aligned tional Committee member and for- can out-hustle candidates backed [email protected]. Twitter: Gov. Rick Snyder, have failed as candidates like MacMaster. The mer state lawmaker Dave Agema. by more establishment groups. For- @chrisgautz 20140721-NEWS--0017-NAT-CCI-CD_-- 7/18/2014 9:54 AM Page 1

July 21, 2014 CRAIN’S DETROIT BUSINESS Page 17

The county has been a The county ended the last target of FBI probes and Candidates for Wayne fiscal year with a $175 What should the county do there are real and perceived County executive, most million budget deficit. How with its jail operations on lack of controls. What Ideas for technology recent job, campaign would you shore up the Gratiot Avenue and the half- would you do to improve investments and new website* county's finances? built jail site? internal management? systems? Endorsements

Audit all departments to If nothing happens in the Would hire retainable Free countywide Wi-Fi. Also, Waiting until after the Fred Bolden (R) make sure there are no next few months, would workers. This can be the Bit Lab group at primary to get Hewlett more secret accounts. review the current plans and achieved with managers Michigan State University is endorsements. Packard Would cut the number of make decision based on identifying backgrounds, doing multiple research consultant executive appointments that. First instinct is to sell skills or personality projects in technology from 175 to 25. Would to Rock Financial group for characteristics employees security and he is reviewing follow the county deficit plan the sheer development have in common. You to county use. that should be in place Oct. potential. should plan careers, not fill 1, but has finance reviewing roles, which has been done for accuracy. by the past two executives. Also would tackle fredaboldenforwcexecutive. underperformance issues. com Invest in line managers. Still must tackle the County’s best option is to Each appointee should have Ironically, three out of the Former Wayne County Phil Cavanagh (D) structural deficit because secure backing on the a job description, assigned four people now going to Prosecutor John O’Hair, Sir county is on brink of having remaining $100 million duties and held accountable prison are from the county’s Michael Berry, former State an emergency manager. bond issue and finish to perform those duties at IT department, which shows Attorney General Frank lawmaker, Would focus first on funding construction. high standards. Progress strict oversight is needed. Kelley 10th District constitutionally mandated reports would be required. The various departments do core services. Would review No more blind oversight by not communicate because the number of appointees to the executive. they were all established see how many are truly under different IT systems. necessary. Would unite the platforms and integrate systems. cavanagh4ceo.com Priorities are public safety, The public, press and Will recruit a top team and a County is way behind on Wayne County Prosecutor Warren Evans (D) roads and select human county commission do not culture of transparency and hardware and software Kym Worthy, Detroit Mayor services. If county focuses yet have all the relevant create a new ethical and investments. The former Mike Duggan, Dearborn Former on core competencies, numbers to make a performance code of leader of the IT department Mayor Jack O’Reilly, Livonia Detroit instead of dubious projects, decision. conduct. Will search for best is now in prison for taking City Council President police chief budget will stabilize. Will practices in public safety, bribes. Cannot commit to Maureen Miller Brosnan, the and sheriff conduct a forensic-style road development and exact steps until we do a full Independent Business of Wayne audit; meet stakeholders maintenance, and human desk audit of employees’ Association and the County and share the real numbers; services delivery. Will resources, the training and Government Administrators draft multi-year budgets implement those practices experience level, and the Association, Detroit Free based on realistic numbers; while involving stakeholders full extent of the deficit and Press and adopt private-sector such as unions and the available funds for warrencevans2014.com best practices. county commission. investments. Deficit is primarily due to Commission is reviewing Have been accountable for County has invested in The support of many Robert Ficano (D) falling property tax options presented by my the few employees who many improvements hundreds of individuals in collections and smaller administration. Complicated betrayed the public trust. including wcCompass, the form of contributions to Wayne state support. Major parts of situation, with many Cooperated with authorities, (compass.waynecounty.com) my campaign, as reflected County deficit elimination plan have competing factors. However, and four people were sent to check snow plowing and in the campaign finance executive been implemented; $150 there remain $140 million in to prison. An executive’s road maintenance. For FY reports. million from the delinquent available bonds to complete responsibility is important, 2014-15, plans include: tax fund boosted the general a new jail. Moving the jail to but so too is a person’s new network-based VoIP fund. Workforce has been Mound Road or finishing the responsibility for behavior. countywide phone system; reduced by about 1,400 downtown structure will lead Have put in place a new increased capabilities for since 2008. Efficiencies of to significant economic county ethics policy. County cybersecurity defenses; and more than $57million have development. website shows detailed improvements in customer robertficano.com been realized. budget and other data. services. Voted against deficit Visited two other states and Communities are calling for Need to better use Former Michigan Gov. Kevin McNamara (D) elimination plan because it saw jails with the same change largely because the resources in the Wayne Jennifer Granholm and 13th transfers $120 million of number of cells built for captain of the ship wasn’t County business community Congressional District On Wayne county debt onto the under $200 million. Why keeping an eye on what was to improve technology, Democratic Party, which County communities by forcing can’t we do that? Public happening below deck. which will reduce cost of represents more Commission, them to buy the Downriver deserves answers. Best Controls necessary to delivering services and communities in Wayne 11th District Wastewater Treatment Plant case now is to keep the restore honesty in county improve service delivery. County than any other they have invested in. Plans project site instead of government begin with fully Need to be the model for district. to work with communities to wasting $140 million using the ethics ordinance using technology to better decide what services are already spent until we can and ethics board, and deliver services and needed, duplicated or not afford to finish the project. financial transparency. translate that into use by mcnamarawayne.com needed. Has identified at the 43 municipalities. least $30 million in savings. Bring together workers, their Counting bond sales and Ethics 2.0 plan has five Priority will be open data The Detroit News; Detroit William Wild (D) unions and local officials to interest, county is actually fixes to protect Wayne platform, so citizens can Regional Chamber of find negotiated solutions. on the hook for $560 million County taxpayers: full-time track county contracts, Commerce; AFPD PAC; Bill Mayor of Be transparent, so everyone for the failed jail project. ethics officer; posting all public works projects and Ford, chairman of Ford Westland sees the need to match Would look at selling the county contracts at economic development Motor Co.; Jim Nicholson, expenses to revenues. Cut project site and perhaps WayneCounty.com; initiatives. Primary CEO of PVS Chemicals; from the top. In Westland, other county-owned empowering the ethics investment would be to Shelden Yellen, CEO of cut mayoral appointees by properties at market value. officer to file complaints; appoint county innovation Belfor Restoration; Chuck one-third; I made the same Coupled with unspent bond mandatory training for all officer, tasked with bringing Dardas, president and COO, contributions to pension proceeds, could finance executive appointees; public transparency to government Alpha Group. and health care we asked of major improvements to hearings for removal of functions. employees. Consolidate and existing jail and 36th ethics board members. wild4waynecounty.com share services. District Court. Budget only for necessary Need to see true costs Lead by example. Those Current financial accounting Has not accepted any. Christopher Wojtowicz (D) mandated operations. Could before making a final who serve will be held system is laughed at. The comment more after 30 decision. If jail operations accountable. Checks in the baseline of technology is in Claims days into the term to are moved to Mound Road, system so that there are the education and operation investigator establish the baseline of then will not give away any another set of eyes. of any system. Wayne for Wayne true accountability of the property for a dime on the Transparency is key. County will move into the County Risk budget. Unable to determine dollar. 21st century. Management current status due to lack of trust in current administration.

cwojo4ceo.org

* Candidate questionnaires were edited for conciseness while preserving main ideas. 20140721-NEWS--0018-NAT-CCI-CD_-- 7/18/2014 9:57 AM Page 1

Page 18 CRAIN’S DETROIT BUSINESS July 21, 2014 Term-limited reps pursue new life in state Senate 2nd District the Lodge to the House. During her three terms, Huntington Imperium Logistics LLC and has run Van Dyke and she has continued to run a neigh- Woods, and Vic- for the U.S. Senate and U.S. House. Ⅲ In the 2nd District, which is then in a nar- borhood service center. ki Barnett, Farm- Political analysts say his previous heavily Democratic, Rep. John row band south Perennial candidate Howard ington Hills, both exposure on the ballot could give Olumba, Detroit, through the city Worthy is also running, but is con- term-limited, him a leg up in name identification is challenging before cutting sidered a nonfactor by analysts. jumped into the since he has campaigned in large state Sen. Bert between Dear- race early when portions of this Senate district. Johnson, De- born and River State Sen. Vin- Political newcomer Baker previ- troit, 40, who is Rouge, and en- 5th District cent Gregory an- ously worked for President Ronald seeking a second compassing nounced he Reagan after his time in the Oval and final four- Smith Lincoln Park would not seek a Gregory Office as well as for Tom Gores’ year term. and Southgate. second term be- California-based private equity Olumba ran While the two cause he instead planned to run for firm Platinum Equity LLC, where he against Mayor Democrats Congress. worked on real estate projects. Johnson Mike Duggan in agree on most But Gregory’s congressional bid The GOP primary winner will the 2013 primary topics, one area and the necessary fundraising did face Republican-turned-Democrat election, finish- where they have not go well, and he decided to get attorney Ryan Fishman, with South- ing sixth. He clashed is over back into the Senate race. If he had- field-based Fishman Group PC, or for- came under fire a community n’t tested the congressional waters, mer Clawson school board member this year over benefits pack- Stallworth Knezek it’s likely neither woman would Cyndi Peltonen, who works in the questions about age for the resi- have challenged him, but both music department at the International his residency. dents of the Del- stayed in when Gregory returned. Academy in Bloomfield Hills. Olumba, 33, Tlaib ray So rather than cruise to a second announced last neighborhood, many of whom term, Gregory is faced with a year that he was would lose their homes if NITC is tough primary challenge against 15th District leaving the De- built. Olumba two well-known and respected mocratic Caucus Both candidates previously ex- House members. to form the Independent Urban pressed support for the bridge tied Gregory, 66, is a retired detective Democracy Caucus. He is the vice to assistance for the Delray commu- with the Wayne County Sheriff’s of- president of the homeless shelter nity. But Smith told The Detroit fice and served 10 years on the Oak- and warming center Shelters of Love News in a July 10 story that commu- land County Commission. Lipton, 47, is Inc. and a graduate of the University nity assistance was an issue he Nathan Jackson a patent attorney, and Barnett, 60, is of Michigan and the Northern Illinois “could really care less about” be- Ⅲ The race to replace term-lim- the former Farmington Hills mayor University College of Law. cause he is from northwest Detroit. ited Sen. Tupac Hunter, Detroit, and financial consultant with LPL Fi- Other Democrats in the race are The benefits as Tlaib envisions has a trio of current state repre- nancial in Farmington Hills. Georgia Lemmons, retired teacher them would include assurances sentatives vying for a four-year Kowall Maddock and wife of Detroit Public Schools that local residents would be of- term in the upper chamber’s heav- Ⅲ Sen. Mike Kowall, R-White Board of Education President fered jobs to build the bridge and ily Democratic 5th District. Reps. 13th District Lake Township, squares off in his LaMar Lemmons, and Taras Nyko- that air quality and other health Thomas Stallworth, Detroit; David quest for a second term against riak of Hamtramck. protections are in place to protect Knezek, Dearborn Heights; and Milford Township-based A-1 Bail residents from diesel pollution David Nathan, Detroit, join former Bonds Agency Inc. President Matt 4th District from trucks using the bridge. state Rep. Shanelle Jackson of De- Maddock, a tea party favorite. Tlaib has repeatedly clashed troit and Frank Tomcsik of Red- Kowall, 62, was elected to the Ⅲ Two Detroit Democrats are with Manuel Moroun, owner of the ford Township as candidates vying Senate in 2010 after serving as locked in one of the most heated Ambassador Bridge, who opposes for the Democratic nomination. White Lake Township supervisor Senate primary battles — and one NITC. Hunter was a state representa- since 2004 and, prior to that, a state where divisions over the New In- Smith, 40, has the backing of the tive from 2003 to 2006. representative beginning in 1998. ternational Trade Crossing bridge Detroit Regional Chamber, as well as Stallworth, 61, was instrumental He is chairman of the Economic project could be a factor. a number of unions. Before enter- in brokering the Detroit “grand Knollenberg Moss Development Committee and was Sen. Virgil Smith is seeking a sec- ing politics, he ran several small bargain” legislation in Lansing president of his father’s White ond term in the solidly Democratic businesses. His father, Virgil Smith this summer with state Rep. John Lake Township company, Accurate seat, but he is facing a stiff chal- Jr., represented Detroit in the Leg- Walsh, R-Livonia. Woodworking Inc., from 1985 to 2002. lenge from term-limited state Rep. islature for more than 20 years. Knezek, 27, a U.S. Marine who He sponsored legislation sought Rashida Tlaib. Tlaib, 37, the first female Mus- served two tours in Iraq, is a grad- by McLaren Health Care that would The oddly shaped district lim lawmaker in state history, has uate of the University of Michigan- have established an eight-mile stretches from the north along a law degree and worked at several Dearborn and former substitute radius to relocate unused beds in Eight Mile Road from just east of nonprofits before being elected to teacher. Pontiac to a new hospital in Inde- Nathan, 42. and his wife own De- pendence Township, instead of the troit-based Nathan’s Choice Realty PC. two-mile radius currently allowed. Jackson, 34, was elected to the That bill died in the lame-duck THE MILLER LAW FIRM House in 2006 and served on the ap- Raczkowski Baker legislative session in December. In Changing the Odds in our Clients’ Favor propriations committee. Ⅲ This open Senate seat in the addition, he has championed legis- Carrie O’Connor of Redford Republican-leaning district along lation that Gov. Rick Snyder Township is also running as a De- the eastern edge of Oakland Coun- signed last year allowing testing of mocrat. ty features a five-way GOP prima- autonomous vehicles, and a bill to The district covers northwest ry with four viable candidates. increase activities allowed in business improvement districts. Detroit, Dearborn Heights and The race features term-limited Kowall said he has been en- Inkster. state Rep. Marty Knollenberg, Troy; dorsed by the National Federation of former Republican state Reps. Independent Business, the Small Chuck Moss and Andrew Raczkows- 11th District Business Association of Michigan and ki; and attorney Ethan Baker. Re- the Detroit Regional Chamber. He publican Al Gui is also in the race, said the top issue in the primary but he filed paperwork with the campaign will be road funding. state indicating he will not raise Maddock, 48, said he is a li- more than $1,000 for his campaign. censed private detective. He said The candidates are seeking to re- on his website that he “will never place Sen. John Pappageorge, R- vote with the Democrats like my The Miller Law Firm is Recognized Troy, who cannot run again due to incumbent opponent.” as a Leader in Complex Business Litigation term limits. The Lakes Area Tea Party has en- Knollenberg, 50, is the only cur- dorsed Maddock, but he said he is rent office holder running. Prior to not seeking business group en- Q Automotive supplier counseling Q Commercial and business lawsuits Lipton Barnett politics, he owned an insurance dorsements. His top issues are Q Employment litigation Q Shareholder and partnership disputes company in Troy. roads and jobs.

Referral fees honored on contingency fee cases Ⅲ This predominantly Democrat- Moss, 60, the former House Ap- Others in the race are Republi- ic district in South Oakland County propriations chairman, has the can Ron Molnar and Democrats 950 West University Drive, Suite 300 248-841-2200 millerlawpc.com features a competitive three-way backing of the Detroit Regional Tom Crawford and Michael Smith. Rochester, Michigan 48307 primary with an odd dynamic. Chamber. — Stories by Chris Gautz State Reps. Ellen Cogen Lipton, Raczkowski, 45, a veteran, owns and Kirk Pinho 20140721-NEWS--0019-NAT-CCI-CD_-- 7/18/2014 11:02 AM Page 1

July 21, 2014 CRAIN’S DETROIT BUSINESS Page 19

One term in, and Congress pitch: GOP rival’s record too taxing Two Oakland County Republi- before they were opponents. cans hoping to fill the open seat in Rogers, who is leaving Congress the 8th Congressional District have to pursue a national radio career, spent the past few months trashing is endorsing Bishop. Bishop also Bentivolio challenged each other’s records in the state Leg- has the backing of the Detroit Re- islature as the means to do so. gional Chamber. Bishop, 47, is an attorney who BY KIRK PINHO Former state Senate Majority lost his race for Oakland County CRAIN’S DETROIT BUSINESS Leader Mike Bishop of Rochester prosecutor in 2012. He is the chief and state Rep. Tom McMillin of legal officer for Clawson-based In- First-term U.S. Rep. Kerry Rochester Hills seek to replace Bentivolio, Milford, a Tea Party ternational Bancard Corp. U.S. Rep. Mike Rogers. Bishop McMillin McMillin, 49, a CPA, is in his final favorite, faces a challenge in the The two have sparred often in the Aug. 5 Republican primary by term in the state House. He is a for- short campaign as McMillin has re- sions to be totally deductible from mer Oakland County commissioner David Trott, chairman and CEO named the Michigan Business Tax the state income tax for seniors and Auburn Hills mayor. Endorse- of Farmington Hills-based Trott & as the “Mike Bishop Tax” in one of born after 1946. Bishop, borrowing ments include U.S. Rep. Justin Trott PC. his ads and notes Bishop helped cre- a Democratic attack line, refers to Amash, R-Cascade Township. Trott also owns Attorneys Title Trott Bentivolio ate that much-maligned tax that it as the “pension tax increase.” The winner will face one of four Agency LLC and co-owns Dietz Trott McMillin voted to end. Bishop’s campaign also created a Democratic candidates in the Re- I have created and saved,” Trott Sports & Entertainment. Bishop has fired back, pointing website, McMillinforBishop.com, publican-leaning district in No- told Crain’s. “I run my compa- Bentivolio, who shocked the out McMillin voted for a 2011 tax that features old video clips of vember. nies with honesty, integrity and Southeast Michigan political es- change that no longer allows pen- McMillin heaping praise on Bishop — Chris Gautz tablishment two years ago when have invested in technologies he won the 11th District Republi- that have improved the indus- can primary following incum- tries I am involved in.” bent Thaddeus McCotter’s peti- The congressional seat, which tion scandal, is a Vietnam and covers southwest Oakland Coun- 3 Dems look to fill void left by Peters’ Senate run Iraq war veteran. He also owns a ty and northwest Wayne County, reindeer farm in Milford and is a leans Republican, but Democrats The seat in the 14th District is a Former Demo- former teacher of English, histo- believe they have a shot, given wide-open opportunity for candi- crat congress- ry, social studies and computer- some of the controversies in dates looking to replace U.S. Rep. man Hansen aided design. He also has experi- which Bentivolio has found him- Gary Peters, who is taking a run at Clarke is looking ence in automotive design. self, including comments last the U.S. Senate. for a ticket back Trott, 53, a Commerce Town- summer about wanting to im- State Rep. Rudy Hobbs, D-South- to Washington. ship resident, said he has picked peach President Barack Obama. field, got in the race early and While he had a up endorsements from the Michi- However, political analysts scored a number of key endorse- late start, an- gan Chamber of Commerce, the De- say Trott’s line of work in the ments. Hobbs, 39, has been backed nouncing he troit Regional Chamber and the U.S. foreclosure industry makes him by the United Auto Workers, the Michi- would run for the Chamber of Commerce, as well as a hard sell to some voters. gan Education Association, the Michi- Hobbs Lawrence Clarke seat on the day of the Michigan Farm Bureau. Democratic candidates vying gan State AFL-CIO, the Detroit Regional the filing dead- Trott said he got into the race for the party nomination are: Chamber, U.S. Sen. Carl Levin and with the lead, with some suggesting line, he has run in portions of this because the district needs better Ⅲ Bloomfield Hills surgeon former Gov. Jennifer Granholm. she may be the front-runner. district before and fared well. Clarke, representation. He said Bentivo- Anil Kumar, 63, owner of the Ku- But Southfield Mayor Brenda Lawrence, 59, is backed by Detroit 57, is an adjunct professor at the Uni- lio, 62, is the wrong man for the mar Surgical Center LLC, Rochester Lawrence, a former Democrat lieu- City Council President Brenda versity of Detroit Mercy Law School. job, refuses to debate Trott in per- Hills and Metropolitan Urology As- tenant governor candidate, has Jones, the National Association of Re- Democrat Burgess Foster is also son and doesn’t hold town hall sociates PC, Waterford Township. strong name identification in the altors and Lansing Mayor Virg running but is expected to be a meetings for district residents. Ⅲ Bobby McKenzie, Canton district, and some early polling Bernero, whose gubernatorial tick- non-factor in the race. Bentivolio’s campaign did not Township, most recently a senior from a national firm showed her et she ran on in 2010. — Chris Gautz respond to an interview request. adviser in the U.S. Department of In the private sector, Trott and State Bureau of Counterterror- his wife made millions through ism. his law firm and related compa- Ⅲ Bill Roberts, Livonia, a REAL nies that are involved in nearly LaRouche Democrat who also every aspect of the home foreclo- ran in the 2012 primary. JOB FRONT ESTATE sure process — from NDeX to At- Ⅲ Nancy Skinner, Birming- torneys Title and other title com- ham, former chief of staff to for- panies to a small stake in Detroit mer first gentleman Daniel Mul- POSITIONS AVAILABLE POSITIONS AVAILABLE COMMERCIAL PROPERTIES Legal News Publishing LLC. hern and 2006 9th District “I am proud of the companies I nominee against former GOP GIFFELS WEBSTER û MOTEL FOR SALE û have built and the 1,800 jobs that congressman Joe Knollenberg. 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Page 20 CRAIN’S DETROIT BUSINESS July 21, 2014 We think the impact on our community will be exponential if it’s all done at once. “ Chris Ilitch ” WHY THE ILITCHES CHOSE TO WING IT BY BILL SHEA | CRAIN'S DETROIT BUSINESS

dramatic transformation of the heart said. owned by Marian Ilitch. From a new home to Additionally, the Ilitches are The plan is to simultaneously of Detroit will begin in September, a new hometown ... now promising to spend “tens of reinvigorate the whole area, but when the Ilitch family breaks ground millions” more for infrastructure the centerpiece is the new arena. The Ilitch plan comprises five improvements in the district, on the construction of a $450 million mainly around Cass Park west of The arena Detroit Red Wings arena concurrently neighborhoods and a host of the arena site to create mixed-use A development in addition to the neighborhoods, Ilitch said, but he Planning and land acquisition with another $200 million in apartments, restau- declined to specify a total. for the yet-unnamed arena began arena. On the following pages, rants, office buildings, parks and shops over 45 “This is not part of our agree- in the 1990s, and it will be a “de- read about how these changes ment with anyone. We’re just do- constructed” design that pulls the blocks. will roll out and alter the face of ing it,” he said, adding that glass-roofed concourse, offices and Olympia has been in talks with other elements in separate build- Detroit. the mayor’s office on the neces- ings outside the arena to make its This is the city’s entertainment that timeline, and upping the ante. sary approvals. restaurants and retail available all district, super-sized. The Ilitches, the Little Caesars The additional spending will be the time, even when the venue is- Planned is a gargantuan three- pizza chain founders who have At crainsdetroit.com/arena used to fix roads, streetlights, n’t being used for hockey or year construction project to create owned the hockey team since 1982, Video: Chris Ilitch talks design: landscaping and other aesthetic events. five new neighborhoods intended told Crain’s last week that their work within a 45-block area aimed “We’re in love with the de- to stitch together the city where construction timeline has been Why he wants the new arena to at creating a clean, desirable slate tached structure concept,” Ilitch it’s divided by the trench-like radically moved forward so the in- be the “baddest bowl” from which to build five neighbor- said, calling the design “revolu- Fisher Freeway underneath vestment can have a maximum hoods with unique identities. tionary” and saying it may influ- Woodward Avenue. catalytic impact for the city. Wings history in pictures and “It frees the city up to spend its ence arena design in the future. The 650,000-square-foot hockey “We think the impact on our video: A timeline resources on other priorities,” Il- Olympia and Red Wings team and events center and the new community will be exponential if offices will be connected to the neighborhoods — including hun- it’s all done at once,” said Chris Il- itch said. Chat live with Bill Shea: Business DTE Energy Co. and other utilities arena, as will apartments, restau- dreds of apartments to be built itch, president and CEO of Ilitch rants, retail, parking garages and will be asked to make any fixes or both outside Comerica Park and the Holdings and son of Red Wings of sports reporter will take other to-be-decided development. upgrades in the area while new hockey arena — are sched- owners Mike and Marian Ilitch. Concessions will be under a glass- questions from 1-2 p.m. July 21. Olympia has the streets uled to be ready by summer 2017. “This project takes on a much big- covered ceiling around the venue, torn up, he said. A 2013 deal between the Ilitches, ger scale. There is nothing and a special emphasis in restau- “This is an investor’s through their Olympia Development like this going on in our rant planning is a push for up-and- playground,” Ilitch said. of Michigan, and the city’s Down- country.” coming local chefs, including mi- town Development Authority to build Ilitch said cost isn’t the Drone’s-eye view All together, the area nority chefs. the arena at the largely vacant and first consideration as the stretches from Charlotte The lower seating bowl and blighted area of Woodward at I-75 planning has evolved for a See how development plans will change Street, the street north of the entertainment district landscape playing surface will be 32-34 feet obligated the family to spend at project with a very large Temple Street, south to below street level (Comerica Park least $200 million in ancillary de- vision for the whole enter- Crainsdetroit.com/arena Grand Circus Park, east to is 27 feet below grade), which also velopment within five years of the tainment district. the existing stadiums and to means the building will not be a venue’s opening. “This is more than a de- a northwestern boundary But the Ilitches are accelerating velopment; this is our passion,” he abutting MotorCity Casino Hotel, See Next Page

A cross section of the new Red Wings arena shows the below-street-level playing surface and concessions under a glass-covered ceiling around the venue.

DENNIS ALLAIN RENDERINGS 20140721-NEWS--0020,0021-NAT-CCI-CD_-- 7/18/2014 8:03 PM Page 2

July 21, 2014 CRAIN’S DETROIT BUSINESS Page 21

Neighborhood development

1 Cass Park Village 4 Wildcat Corner Eclectic, and primarily residential with restaurants A hub for pro sports and entertainment, anchored by Ford and some retail. Field and Comerica Park. 2 New Arena Area 5 Columbia Park Home to the new Red Wings hockey arena and free- New contemporarily designed neighborhood including standing buildings with apartments and retail. public park space.

3 Columbia Street Densely developed entertainment destination including Maps and detailed neighborhood descriptions restaurants, nightlife and new office space. continue on the following pages

From Previous Page woman declined to comment. ly hired to manage construction of with the Red Wings Ilitch said the number of suites The designers are attempting to the arena. Other firms involved logo atop it. will be announced in the future. massive, foreboding facility that keep the loud and intimate atmos- with the rest of the project haven’t Ilitch said it’s too early to dis- Joe Louis Arena has 86 suites, and towers above everything else in phere of city-owned Joe Louis been disclosed, but Ilitch said they cuss whether naming rights to the some of the impetus behind relo- the neighborhood, Ilitch said. Arena, the Red Wings’ home since will be later this year. arena will be sold or not. Under cating to a new arena is to derive The arena may stand no more it opened in 1979, but the new Lofts or apartments will be adja- the agreement with the DDA, new revenue from more modern than two or three stories tall, with venue must follow the disability cent to the arena, but Ilitch didn’t Olympia can sell the naming suites and other venue amenities. the entrances funneling onto the access and other laws that govern have a count of how many. rights to the building, and keep all The venue will have more con- concourse level. today’s facility designs, Ilitch said. “The market will dictate that, revenue from any such deal. certs, shows and other events than It won’t be imposing to its “Internally, we’re referring to it not us,” he said. The arena will seat about 20,000, it will hockey games, Ilitch said. neighbors,” Ilitch said. as one of the ‘baddest bowls’ in the He said he expects such living to rather than the 18,500 previously The arena construction cost Building a below-grade bowl is NHL,” he said. be attractive to millennials who disclosed, Ilitch said. Joe Louis may exceed the previously dis- costly compared to an arena built Ground will be broken this fall want to live in the city, and noted Arena seats 20,066, second in ca- closed $450 million estimate, Ilitch from the ground up. with light demolition and other that apartment demand outstrips pacity in the 30-team National said, and if it does, the family will “It’s much more expensive to preparatory work getting under- supply in the central business dis- Hockey League only to the Bell Cen- pay for it. build to the depth we’re talking way. Heavy earth-moving will be- trict. tre’s 21,273 in Montreal. “If it’s over, it’s on us,” he said. here,” Ilitch said. “We’re not going gin in March with the goal of hav- The Wings, having made the Joe Louis Arena eventually will to scrimp.” ing the arena open by summer 2017. playoffs for 22 consecutive years be razed and the site redeveloped. The lead designer is Kansas Southfield-based Barton Malow Flexible design and won four of their 11 Stanley The state has pledged to cover the City-based 360 Architecture, which Co., Detroit-based White Construc- The lighted roof will be capable Cups under Ilitch ownership, have $6 million demolition cost. has worked on several major sta- tion and Indianapolis-based Hunt of showing images. The render- been among the league’s atten- diums. A 360 Architecture spokes- Construction Group have been joint- ings show the whole roof lit in red dance leaders for many years. See Next Page 22 20140721-NEWS--0022,0023-NAT-CCI-CD_-- 7/18/2014 7:44 PM Page 1

Page 22 CRAIN’S DETROIT BUSINESS July 21, 2014

“ We’re not developing it all. We don’t own it all.” Chris Ilitch, on the neighborhood property that comprises the entertainment district

From Previous Page called Columbia Park, a new and contemporarily designed neigh- Mixed-use plans borhood including new public park space. It will be a mix of ex- Surrounding the new arena isting and third-party investment. area will be four other neighbor- And west of the new hockey are- hoods that the Ilitches will create na, north of the Fisher Freeway, or improve. will be Cass Park Village, with Ilitch has dubbed the area that residential and retail elements. Il- includes Comerica Park and Ford itch said the area will be “funky, Field as the “Wildcat Corner” frontiering” and where much of neighborhood. the infrastructure work will take Olympia will concurrently build place. 300 apartments in two buildings Olympia is adopting rundown on what currently are the surface Cass Park to rehabilitate the green parking lots between Comerica space as a sort of anchor for the Park — home of the Ilitch-owned neighborhood. And it will build Detroit Tigers — and Woodward Av- new green spaces in Columbia enue. Park. Those units will have ground- “Great parks are vitally impor- floor retail and restaurants, and tant,” Ilitch said. green spaces. The neighborhood names are in- Additionally, Ilitch said, the ternal working names, and parking lost to the new apart- Olympia expects the public to de- ments may be replaced via construction of a second garage adja- cent to the current Tigers parking structure on Montcalm Street. A separate new building across Adams Street will provide additional bleacher seats for Tigers games, and possibly retail and bar space. Ilitch said they will work with the Detroit Lions to bring the Ford Field fan experience a block closer to Woodward, on Adams — which dead-ends at the main entrance to the football stadium. Facing the Comerica development, atop Columbia Street between the Fox Theatre, which houses Ilitch offices, and the Fillmore Theatre, Olympia will build a mul- tistory 120,000-square-foot office building that will have ground-level restaurants and could be COURTESY OF ILITCH HOLDINGS NEW WINGS ARENA NUMBERS nightlife-oriented. They’re calling A basic conceptual drawing of the hockey arena design shows how elements cide the names and how the areas Cost: $450 million that area simply Columbia Street, develop. that are usually housed in a “big box” development can be re-envisioned as Team: Detroit Red Wings and it’s used today “We need to have a lot of discus- separate structures. The bowl itself is at the center. mainly for parking sions with the community,” Ilitch Seats: About 20,000 and an outdoor said. Opens: Summer 2017 day care that ject, and has had talks with other quired land for the project. While the conceptual render- Owner: Detroit Downtown will be relo- potential investors. Ilitch declined Some of the land was acquired ings are filled with busy, vibrant Development Authority cated. to name names, but did say all the by the Ilitches when the acreage scenes of people and new con- Naming rights: Olympia West of the talks have been initiated by those for Comerica Park was bought in struction in the neighborhoods, interested in the project. the 1990s, with the intent of even- Development of Michigan retains Fox Theatre the right to sell the name. No how it actually looks in the fu- Negotiations with development tually building a hockey arena. area is what decision has been announced ture is impossible to know. The is being partners and others will occur af- Doug Kuiper, vice president of about when or if that will occur. final look and feel will develop ter construction is started and the corporate communications for Il- How it will be built: organically over time, Ilitch said. project is further along. Ilitch itch Holdings, said he had no Ⅲ Chris Ilitch: “We’re not developing it all,” Il- wants to ensure the project takes knowledge of any tax breaks being $450 million in Michigan Strategic Fund bonds, to be paid “Great parks are off right; a lot of time and money is provided for the neighborhood de- itch said. “We don’t own it all.” off by $262 million from the DDA vitally Plans also include a hotel, but at stake. velopments. important.” and $188 million from Olympia, no details have been disclosed. For starters, it has taken 14 the real estate arm of Wings years to acquire all the land need- Creating links owners Mike and Marian Ilitch’s Acquisition ed because land speculators sat on business holdings properties in hopes of getting a big Ilitch said the construction and How it will operate: investment throughout the enter- Olympia payday — something Ilitch termed Ⅲ Revenue: Red Wings keep all has been ap- “lottery tickets.” tainment district will link down- Ⅲ Maintenance: Reserve fund proached town, where Dan Gilbert has been “We overpaid for a ton of real funded by the state bonds by ven- estate,” he said. “Quite frankly, snapping up office buildings and Ⅲ Lease: 35 years; 12 five-year ture capi- some of them cashed in on that lot- other properties and renovating options tal firms tery ticket.” them, and Midtown, where Wayne interest- Through various entities, the Il- State University and the Detroit Med- Ⅲ Rent: $11.5 million concession fee paid to DDA, for bond ed in itches paid about $50 million for ical Center have been investing. retirement the pro- land. The city and DDA also ac- See Next Page 20140721-NEWS--0022,0023-NAT-CCI-CD_-- 7/18/2014 7:44 PM Page 2

July 21, 2014 CRAIN’S DETROIT BUSINESS Page 23

“ The neighborhood development ... is really important because you have the opportunity here to build something ... that is more consistent and sustainable.” Michael Cooper, Harley Ellis Devereaux

Beyond that, though, challenges From Previous Page include completing the project “This is the only project that “without grinding the city to a halt” could bring this to the city,” Ilitch and finding enough skilled workers said. to fill the 8,300 expected construc- The creation of the Fisher Free- tion jobs needed, Cooper said. way/I-75 basically created a deep “The arena itself is a big deal, trench that stymied Detroit’s devel- but when you talk about five dis- opment, bifurcating the downtown tinct districts … how do you keep and the rest of city’s spine — Wood- the city open for business?” ward Avenue. This is something the Robert Gibbs, managing princi- Ilitch plan seeks to overcome. pal of Birmingham-based Gibbs There also is intent to improve Planning Group Inc., said the plan’s the Woodward/I-75 overpass in retail element is strong. Detroit, some to-be-determined way that he said, has only about 3 square would allow pedestrians to easily feet of retail space per person, move between downtown and the while in the suburbs it’s about 15. arena district. Nationally, it’s 22 square feet. “This site has 250,000 people living within five miles of it. That’s a The benefits hell of a lot of people, one-third of Olympia has touted the benefits the city, plus you’ve got all the of- the project will bring to the strug- fice workers and university stu- gling city, which declared munici- dents,” he said. pal bankruptcy a year ago. There are 83,000 people within It predicts its work will create three miles of it, he said — four 8,300 construction jobs and 1,100 times as many as Birmingham. permanent post-construction jobs, along with at least $1.8 billion in Retail strategy economic impact for the city, region and state through new wages, Gibbs, who also teaches an ur- materials, taxes and additional re- ban retail course at Harvard Univer- lated spending. sity, said the development could While these kinds of impact support national junior depart- numbers are sometimes tough to ment stores like a City Target, quantify and are frequently dis- which is about half the size of a puted by economists, the Ilitch or- regular Target store; Kohl’s; TJ ganization points to many specific Maxx; and Dress Barn. community outreach efforts that He also said sporting goods and home improvement stores are are also part of the plans. good fits for the area. New outreach includes a Cass Olympia intends to seek primar- Tech internship program, office ily local stores and eateries for its space for local startups, and the project, Ilitch said, rather than na- DENNIS ALLAIN RENDERINGS support for local minority chefs tional brands. And the focus is on and entrepreneurs. finding the right kind of retail for While the arena and neighbor- current and future perceived de- COMMUNITY INVESTMENT hoods are being built, construc- mand for food, entertainment and tion of the $137 million, 3.3-mile hard and soft goods. Previously discussed plans Evolving plans M-1 Rail streetcar line on Wood- He said he doesn’t want the ward Avenue begins this month, $200 million in new, private mixed-use development New private investment to occur in year one of the kinds of commoditized stores typi- and will include a stop by the beyond funds committed to arena. project versus by year eight, speeding job creation and cally found in a suburban shop- hockey arena by the time the rail Creation of an expected 8,300 construction jobs and economic impact. ping mall, for instance. loop is operational in 2016. 1,100 permanent post-construction jobs. “Tens of millions” of dollars in new, near-term private “We don’t envision that here,” Il- Olympia is a major investor in the At least $1.8 billion in economic impact for the city, investment in the district’s lighting, sidewalks, green itch said. “We want authentic De- streetcar line, Ilitch said. region and state through new wages, materials, taxes spaces and streets. troit. We want the hot concepts and and additional related spending. Offer city officials and others development, urban up-and-coming entrepreneurs.” Self-funded security at the events center. planning and related expertise to support the growth Can it work? Detroit Mayor Mike Duggan and Targets 30 percent participation by Detroit- and revitalization of other key “main street” areas In spite of the project’s enormi- Gov. Rick Snyder have been headquartered businesses and 51 percent by Detroit throughout Detroit neighborhoods. ty, planning and architecture ex- briefed on the project’s specifics, resident workers. Explore ways to make affordable housing an perts believe it is feasible. and are enthusiastic backers, Il- itch said. Continue after construction to aggressively recruit and important component of the city’s economic and “Holy moly,” said Michael “They are over the moon about include local businesses and entrepreneurs in the development plans. Cooper, managing principal of the it,” he said. project. Neighborhood-friendly arena design to integrate with Southfield office of architecture Other downtown business and Ongoing meetings with a neighborhood advisory new and existing development. firm Harley Ellis Devereaux Corp., when told of its size. community leaders were briefed, or committee to work on issues important to neighbors and Offer dedicated space in the district to support were scheduled to be, last week. So the community. budding local and minority chefs and restaurateurs. Cooper likened the plan to Chicago’s Wrigleyville, the resi- was singer Kid Rock and so was Work with existing training and workforce Additional investments in at least two new green dential neighborhood anchored by management of Fox Sports Detroit, organizations on Detroit resident training and hiring for spaces in district neighborhoods. the Cubs’ stadium, Wrigley Field. which has the media rights con- the project. Offer committed space in the district to startup tech “The neighborhood development tracts for the Red Wings and Tigers. Identify or create opportunities for Detroit youths to and innovation enterprises. that is going along with this is real- Bill Shea: (313) 446-1626, participate in the project and other affiliated Work with Cass Technical High School to define, ly important because you have the [email protected]. Twitter: businesses. establish and implement internship or work/study opportunity here to build some- @bill_shea19 Adopt and improve Cass Park. programs for students. thing for the city that is more con- Crain’s reporter Kirk Pinho consistent and sustainable,” he said. tributed to this story. 20140721-NEWS--0024,0025-NAT-CCI-CD_-- 7/18/2014 7:45 PM Page 1

Page 24 CRAIN’S DETROIT BUSINESS July 21, 2014

1926 Detroit Cougars Team founded, plays in Windsor while arena is built Changing the n 1927 - Olympia Stadium opens

1930-32 Detroit Falcons Name changed in Ⅲ Cass Park Village. This 1930; shipping neighborhood is described magnate James Norris as eclectic, and primarily buys financially residential with restau- troubled team in 1932 rants and some retail. Chris Ilitch used the phrase 1932 “funky and frontiering” to Detroit Red Wings describe its character. This neighborhood includes the New name, neww lologo:gog : existing Cass Park historic A winged wheell district, is just west of the 1936 - planned hockey arena area First Stanleyey and includes plans for upgrades to Cass Park itself, Cup win which is at the center. Also Wings sweep in this area are Cass Tech Maple Leafs High School and Masonic in 4 games Temple. 1937-55 Six more Stanley Cups

1952 - Legend of the octopus Eight tentacles symbolize eight playoff wins

1979 - Joe Louis Arena The team moves into new riverfront home Ⅲ New Arena Area. This area will be anchored by the new hockey arena, which is planned as a “deconstructed” structure with many of the elements of a sports com- 1982 - Ilitches plex as separate freestanding buildings connected by ground-level and overhead buy Red Wingsgs enclosed walkways to the main bowl. The hockey rink will be below grade to keep the above-ground profile to a few sto- Norris family sellss ries tall. A concourse area protected by a glass ceiling will house the concessions. team to Mike and Marian Ilitch for Outside that perimeter, linked buildings will contain office space, including Red $8 million Wings offices, apartments and lofts, and year-round retail and restaurant offerings. Conceptual renderings for the arena depict a highly customizable roof that can 1997 - Eighthh be adapted to change color and promote events, such as a music concert, on non- Stanley Cup win game nights. Wings end 42-yearar drought with first of four titles in 12 years

December 2012 - New arena plan Ilitches announce they intend to buildd new arena

July 2013 - Arena funds State Strategic Fundndd OKs sale of bonds to pay for public portion of construction

February 2014 - Council approval Detroit City Council approves $450 million arena 20140721-NEWS--0024,0025-NAT-CCI-CD_-- 7/18/2014 7:45 PM Page 2

July 21, 2014 CRAIN’S DETROIT BUSINESS Page 25

www.crainsdetroit.com EDITOR-IN-CHIEF Keith E. Crain GROUP PUBLISHER Mary Kramer, (313) 446-0399 or [email protected] ASSOCIATE PUBLISHER Marla Wise, (313) 446- 6032 or [email protected] EXECUTIVE EDITOR Cindy Goodaker, (313) 446- 0460 or [email protected] e neighborhood MANAGING EDITOR Jennette Smith, (313) 446- 1622 or [email protected] DIRECTOR, DIGITAL STRATEGY Nancy Hanus, (313) 446-1621 or [email protected] MANAGING EDITOR/CUSTOM AND SPECIAL PROJECTS Daniel Duggan, (313) 446-0414 or [email protected] SENIOR EDITOR/DESIGN Bob Allen, (313) 446- 0344 or [email protected] SENIOR EDITOR Gary Piatek, (313) 446-0357 or [email protected] WEB EDITOR Kristin Bull, (313) 446-1608 or Ⅲ Columbia Street. Between the [email protected] RESEARCH AND DATA EDITOR Sonya Hill, (313) Fox Theatre and Fillmore Detroit, 446-0402 or [email protected] WEB PRODUCER Norman Witte III, (313) 446- this is planned as the hub for up- 6059, [email protected] scale dining, ornate gas street- EDITORIAL SUPPORT (313) 446-0419; YahNica Crawford, (313) 446-0329 lamps, and nightlife — it’s envi- NEWSROOM (313) 446-0329, FAX (313) 446- 1687 TIP LINE (313) 446-6766 sioned as a densely developed REPORTERS entertainment destination. New of- Jay Greene, senior reporter: Covers health care, insurance, energy utilities and the environment. fice space with a modern design to- (313) 446-0325 or [email protected] taling 120,000 square feet also is Amy Haimerl, entrepreneurship editor: Covers entrepreneurship and city of Detroit. (313) 446- planned. What’s there now is an ex- 0416 or [email protected] Chad Halcom: Covers litigation and the defense isting street that operates as Fox of- industry. (313) 446-6796 or [email protected] Tom Henderson: Covers banking, finance, fice center parking space, a day technology and biotechnology. (313) 446-0337 or care to be relocated, and a service [email protected] Kirk Pinho: Covers real estate, higher education, and loading area. Oakland and Macomb counties. (313) 446-0412 or [email protected] Bill Shea, enterprise editor: Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or [email protected] Dustin Walsh: Covers the business of law, auto suppliers, manufacturing and steel. (313) 446- 6042 or [email protected] Sherri Welch, senior reporter: Covers nonprofits, services, retail and hospitality. (313) 446-1694 or [email protected] LANSING BUREAU Chris Gautz: Covers business issues at the Capitol and utilities. (517) 403-4403 or [email protected] ADVERTISING SALES INQUIRIES (313) 446-6052; FAX (313) 393-0997 SALES MANAGER Tammy Rokowski SENIOR ACCOUNT EXECUTIVE: Matthew J. Langan ADVERTISING SALES Christine Galasso, Jeff Lasser, Sarah Stachowicz Ⅲ Wildcat Corner. This is the working name CLASSIFIED SALES Angela Schutte, manager, (313)-446-6051 of the neighborhood anchored by Comerica DIGITAL MARKETING MANAGER Park and Ford Field. It’s slated for more de- Jennifer Chinn AUDIENCE DEVELOPMENT DIRECTOR Eric Cedo velopment to unify the area as a hub for pro EVENTS MANAGER Kacey Anderson sports. The surface parking lots between the SENIOR PRODUCER FOR DIGITAL/ONLINE PRODUCTS Pierrette Dagg ballpark and Woodward Avenue will make SENIOR ART DIRECTOR Sylvia Kolaski way for 300 apartments and/or lofts; a second SALES SUPPORT Suzanne Janik, YahNica Crawford PRODUCTION MANAGER Wendy Kobylarz parking garage may be added next to the cur- PRODUCTION SUPERVISOR Andrew Spanos rent Tigers garage on Montcalm Street, and a CUSTOMER SERVICE MAIN NUMBER: Call (877) 824-9374 or write new out-building for Comerica Park will be [email protected] built across Adams Street. The latter could SUBSCRIPTIONS $59 one year, $98 two years. Out of state, $79 one year, $138 for two years. have rooftop bleacher seats, office space and Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or retail and bar/restaurant space on the first (877) 824-9374. floor. It also would also be designed to begin SINGLE COPIES: (877) 824-9374 REPRINTS: (212) 210-0750; the neighborhood’s tie-in to Ford Field a block or Alicia Samuel at [email protected] TO FIND A DATE A STORY WAS PUBLISHED: farther west. (313) 446-0406 or e-mail [email protected] CRAIN’S DETROIT BUSINESS IS PUBLISHED BY CRAIN COMMUNICATIONS INC. CHAIRMAN Keith E. Crain PRESIDENT Rance Crain TREASURER Mary Kay Crain Executive Vice President/Operations William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Executive Vice President/Director of Corporate Operations KC Crain Vice President/Production & Manufacturing Dave Kamis Chief Financial Officer Thomas Stevens Ⅲ Columbia Park. This is de- Chief Information Officer Anthony DiPonio scribed as a new, contemporarily G.D. Crain Jr. Founder (1885-1973) designed neighborhood including Mrs. G.D. Crain Jr. Chairman (1911-1996) EDITORIAL & BUSINESS OFFICES: new public park space. The area 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 west of the Fox Theatre area is Cable address: TWX 248-221-5122 AUTNEW DET currently home to scattered bars CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except for a special issue the and restaurants and surface lots; third week of August, and no issue the third week of December by Crain Communications Inc. at the Ilitch plan seeks to amp that 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and up with a mix of busy streets and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, quiet green spaces. Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Entire contents copyright 2014 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is strictly prohibited. 20140721-NEWS--0026-NAT-CCI-CD_-- 7/18/2014 8:09 PM Page 1

Page 26 CRAIN’S DETROIT BUSINESS July 21, 2014

The money, the players, the Pistons New arena revives speculation about Pistons move to Detroit

Mike Ilitch Marian Ilitch Chris Ilitch He’s spent another $40 million BY BILL SHEA since on improvements at the Pistons and downtown? CRAIN’S DETROIT BUSINESS Palace, which opened in 1988 and The Ilitches remains a highly praised venue. Could the Detroit Pistons leave Gores’ organization retains all the Palace of Auburn Hills to play at Tom Gores’ Los Angeles-based revenue, such as concessions, tick- the new Detroit Red Wings arena in Platinum Equity LCC, via email. “At et sales and parking. Here are some of the key players in the Detroit Red Wings arena downtown Detroit? the same time, we would never A move into the Red Wings facil- district project: The answer: Maybe, if it made close the door on alternatives if ity likely would involve sharing Ⅲ Mike Ilitch: Co-founded the Little Caesars pizza chain in 1959 in sense. they made good sense for our fans, revenue with the Ilitches, who Garden City with wife Marian, and is chairman of Ilitch Holdings Inc., The owners of the teams and for our team, for our business and will run the new venue. the family business holdings that had $3.1 billion in 2013 revenue. their associated entertainment or- for Michigan.” Bought the Detroit Red Wings in 1982 for $8 million from the Norris Still, Platinum has its eye on ganizations are business rivals, He declined to say if there have what’s happening in Detroit. family and Detroit Tigers in 1992 from Tom Monaghan for $85 but on the Pistons’ end, it’s at least million. been conversations with the Ilitch- “As an investor in Michigan, a theoretical possibility. es about a move. The Ilitch organi- we’re excited about what’s hap- Ⅲ Marian Ilitch: Vice chairwoman of Ilitch Holdings and co-founder of “We have a beautiful arena in Little Caesars. Known for handling the financial oversight of the zation declined comment. pening in downtown Detroit,” family’s business ventures. Owner, separately, since 2005 of the Palace of Auburn Hills, and we Mike Ilitch was interested in Barnhill said. “There is a great MotorCity Casino Hotel. have invested tens of millions of buying the team when it went up turnaround story being written Ⅲ Chris Ilitch: President and CEO of Ilitch Holdings, son of Mike and dollars over the past three years to for sale in 2010, but it ended up be- right now in the city and across Marian. The day-to-day head of the family’s various business modernize and improve that facili- ing Gores that bought the Pistons, Michigan. We applaud the efforts holdings and the face of the arena district project. ty,” said Mark Barnhill, a the arena, and Palace Sports and En- of everyone who is contributing to spokesman and principal at owner tertainment in 2011 for $325 million. that story.”

Deal includes ‘tens of Builders and architects millions’ for infrastructure How the new Detroit Red Wings Companies involved in the arena district project arena will be paid for is known, How the financing works but how the millions of dollars in Here are the companies known White also was part of a joint that will open in 2017. concurrent private development to be involved in the Ilitch family’s venture with St. Clair Shores- Past pro sports venues include will be financed hasn’t been dis- the DDA, a city agency staffed un- arena district project. Chris Ilitch, based JM Olson Corp. that turned Nationwide Arena, American Airlines closed. der a contract by the nonprofit De- president and CEO of Ilitch Holdings the old seven-story, 750,000-square- Arena, Safeco Field and MetLife Sta- The Ilitch family has pledged to troit Economic Growth Corp. The Inc., said additional companies foot J.L. Hudson Co. warehouse into dium. spend “tens of millions” of addi- DEGC has been the primary lead will be disclosed this fall. commercial office space attached The firm reportedly had $34 mil- tional dollars on infrastructure on the new arena deal for the city. It was announced in April that a to Ford Field. lion in 2012 revenue. work beyond what it agreed to pay Ⅲ Olympia will operate the are- consortium called Barton Malow- The company last year was Ⅲ Street-Works: A White Plains, as part of the $650 million arena na under a 35-year concession Hunt-White was hired as the general hired as a subcontractor for the N.Y.-based firm that will lead the district project. That newly dis- agreement with the DDA. There contractor to handle construction. $137 million private-public M-1 Rail urban planning and design for the closed spending will pay for new are 12 five-year renewal options. Ⅲ Barton Malow Co.: The South- streetcar project along Woodward arena project, it works on mixed- roads, lighting, sidewalks and Olympia keeps all revenue, in- field-based builder had $1.1 billion Avenue, which will include a stop use and commercial development, green spaces near the arena. cluding concessions and parking, in 2013 revenue and most recently near the hockey arena. planning and financing. The family could simply start and from any naming rights deal. was in the news as being named Ⅲ Hunt Construction Group: The One of its major projects was writing checks off Mike and Mari- Ⅲ Olympia must spend — or in- the managing partner of a joint Indianapolis-based firm is one of creating the 42-acre, $750 million an Ilitch’s $3.7 billion fortune, as duce other private investors to venture overseeing a four-year, the largest sports stadium and are- Santana Row urban village in San estimated by Forbes.com, or seek spend — at least $200 million in an- $150 million renovation of the 91- na builders in the world. It has av- Jose, Calif., in the mid-2000s. debt financing via lenders, as it cillary development in the expand- year-old Rose Bowl stadium in eraged $1.9 billion in revenue over Ⅲ Olympia Development of Michi- did to cover its portion of $326 mil- ed DDA district. That spending Pasadena, Calif. the past five years. gan: The real estate arm of the Il- lion Comerica Park. must begin no later than five years The company is owned by the Hunt, launched in 1944, began itch family’s business holdings, Here is how the arena deal after the arena’s 2017 opening, but Maibach family; Ben Maibach III building sports facilities in the formed in 1996, is responsible for works: Olympia has promised to spend is chairman and CEO. early 1960s, and has done more management the arena project and Ⅲ The state Legislature in 2012 $100 million concurrently with the Its other high-profile sports than 100 venues since then. ancillary development. work includes designing, building Aside from Ford Field, its pro- Ⅲ Ilitch Holdings Inc.: The Detroit- approved a deal in which the Michi- arena construction. and financing the $55.7 million ject list includes the Barclays Cen- based management services com- gan Strategic Fund will sell 30-year Ⅲ Olympia paid an estimated Pontiac Silverdome and the $30 mil- ter, Marlins Park, Citi Field, Lucas Oil pany for Mike and Marian Ilitch’s tax-exempt private activity bonds $50 million for half the land needed for the arena district, according to lion Joe Louis Arena in the 1970s, Stadium, University of Phoenix Stadi- various business enterprises is to cover construction of the $450 a Nov. 1 cost-benefit analysis pro- and more recently, the $24.5 mil- um, Miller Park, Heinz Field and headquartered in the Fox Theatre, million arena. vided to the Detroit City Council lion expansion of Spartan Stadium Amway Center. which was renovated by the family Ⅲ In June 2013, Ilitch-owned by its Legislative Policy Division. and the $226 million Michigan Stadi- It has 700 employees in nine of- in the 1980s. Olympia Development of Michigan Ⅲ Wayne County in November um expansion and upgrade. fices nationwide. Hunt also builds Formed in 1999, the company and Detroit’s Downtown Develop- approved an inter-governmental It was hired last year to be con- airports, casinos, offices, perform- said it had more than $3.1 billion ment Authority signed this agree- agreement with the DDA that allo- struction manager for the $300 mil- ing arts venues, hospitals, conven- in revenue last year, but doesn’t ment: Property and school taxes al- cates 1.5 mills of new county prop- lion redevelopment of Daytona In- tion centers and hotels. disclose details. ready captured in the DDA’s erty tax capture on increased prop- ternational Speedway’s mile-long Ⅲ 360 Architecture: The Kansas The Ilitch businesses, under expanded district will repay $261.5 erty values in the expanded grandstand. City-based firm, founded in 2004 af- joint and single family members’ million (58 percent) of the build- district to repayment of the arena Barton Malow has 1,500 employ- ter a merger of two other compa- ownership, includes the Little Cae- ing’s construction debt, while bonds, said Bryce Kelley, director ees and 13 offices. It also builds of- nies, is a major designer of sports sars pizza chain, the two sports Olympia would provide $188.4 mil- of the Wayne County Economic Devel- fices, schools, hospitals and facto- facilities, including the new Red teams, Olympia Development, lion (42 percent), according to de- opment Growth Engine. ries. Wings arena. Olympia Entertainment (including tails provided by the state. The Ⅲ The DDA tax capture, on the Ⅲ White Construction: The De- Its other major work includes the Fox and City theaters and Hock- city approved expanding the DDA books since the 1970s, can be used troit-based firm owned by Bernard the 18,641-seat, $480 million Rogers eytown Café), Uptown Entertainment, tax district to encompass the arena only for economic development White had $31.3 million in 2012 Place for the NHL’s Edmonton Oilers Blue Line Foodservice Distribution, site. The state reimburses the within its district. It cannot be ap- revenue, and was part of the con- now under construction, and the Champion Foods and MotorCity Casi- schools for the diverted money. plied to debt, pensions or other struction management team that $1.2 billion, 71,000-seat retractable- no Hotel. Ⅲ The arena will be owned by bankruptcy-related issues. built Comerica Park in 2000. roof stadium for the Atlanta Falcons — Bill Shea 20140721-NEWS--0027-NAT-CCI-CD_-- 7/18/2014 6:53 PM Page 1

July 21, 2014 CRAIN’S DETROIT BUSINESS Page 27 RUMBLINGS WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF JULY 12-18

nia Medical Inc., Kalamazoo; for an 1,800-square-foot cal government workers in $3 million, Algal Scientific UM approves store in Chicago, where it bankruptcy proceedings, New distillery Corp., Plymouth Township; will sell its watches, bicy- Bloomberg reported. $2 million, Histosonics Inc., cles and leather goods start- The Detroit Economic De- Ann Arbor; $1.8 million, Are plan for clinical ing in October, Crain’s velopment Corp. approved a You a Human LLC, Detroit; Chicago Business reported. memorandum of under- and $902,000, Pixel Velocity As part of its ongoing standing that allows the De- to offer ode Inc., Ann Arbor. research center restructuring, Van Buren troit Police Athletic League Inc. Township-based supplier to build its headquarters niversity of Michigan Visteon Corp. agreed to and a youth baseball field at Cornerstone lands LPGA regents approved a transfer $350 million of its the former Tiger Stadium site. stars for fundraiser U plan to build a $2.6 $1.1 billion pension obliga- Mike and Marian Ilitch to the mitten million clinical research tions to Prudential Insurance announced an $8.5 million The Ladies Professional center on the fifth floor of Co. of America. grant to Wayne State Univer- n abandoned Hazel That’s according to a job Golf Association plans to the original W.K. Kellogg New York City-based sity to develop innovative Park lumber yard description posted on the bring 23 of its golfers to play Eye Center tower on Wall 601W Cos., new owner of surgery technologies and A will be home to a DEGC’s website. Jackson here in August to raise $1 Street in Ann Arbor. The the 2.2 million-square-foot create the Ilitch Chair for vodka, rum, gin and announced his resignation million in scholarships for 5,100-square-foot center, ad- Southfield Town Center, hired Surgical Innovation. whiskey distillery in a few in January after 12 years at Detroit children to attend jacent to Kellogg’s new the Farmington Hills office The Detroit Historical So- short months. the helm. Cornerstone Schools. eight-story Brehm patient of Houston-based Transwest- ciety raised more than $21.2 Thumb Knuckle Distillery Calling the ideal candi- The Turning Point Invita- tower, will offer space for ern as leasing and manage- million — exceeding its goal LLC is expected to open in date “charismatic” and tional is set for Aug. 25 at clinical trials, rooms for pa- ment company for the five- by over $1 million — during 12,000 square feet at 24310 “collaborative-minded,” the the Country Club of Detroit tient examinations and of- building complex. its five-year Past>Forward John R Road north of East DEGC posting says the new in Grosse Pointe Farms. fices for clinical trial coor- California-based call campaign to fund projects at Woodward Heights Boule- president and CEO will be The money raised will dinators and faculty. center company S&P Data the Detroit Historical Museum, vard in October, said brew- responsible for developing support scholarships for Michigan LLC was awarded Dossin Great Lakes Museum tax and job Cornerstone’s Nevada cam- ery founder Doug McElroy. N THE MOVE a $1 million performance- and the society’s Collections Although he still needs li- base broad- pus in the city, where tu- O based grant to assist with Resource Center at Historic censes to distill the spirits ening strate- ition runs $5,950 per child Craig Fahle, 47, an- its plans to bring 420 jobs to Fort Wayne. and occupy gies, and lo- per year. Nancy Lopez, Meg nounced he is leaving his the 156,000-square-foot Troy The Wayne County Com- the space, cal, state Mallon, Beth Daniel, Juli WDET 101.9 FM weekday Officentre complex starting mission gave final approval he’s moving and federal Inkster and Mo Martin, who talk show to become direc- in August. of the sale of the vacant Old full-steam outreach, won the Women’s British tor of public affairs and se- The Village of Rochester Wayne County Building, as ahead with and should Open this month, are among nior adviser for the Detroit Hills retail plaza by spring well as a 120-space county- at least have strong those scheduled to play. Land Bank Authority. His final 2015 will have welcomed Lu- owned parking lot at 400 E. $250,000 in negotiating So how did Cornerstone Jackson show will be Aug. 8. lulemon Athletica, Michael Fort St. in downtown De- renovations skills. land the fundraiser? Dara Munson, 40, is leav- Symon’s B Spot, Paper troit, from the county to a to the build- The new DEGC chief will One of its student men- ing as president and CEO of Source, Lane Bryant, J. Bar- private New York investing, aban- oversee a 45-person staff tors, Plymouth physician McElroy Detroit- baro Men’s Clothiers and Tay- ment group for $13.4 million. doned for and prepare a $4 million an- Ben Gilmore, mentioned Cor- based Big lor & Colt Men’s BarberSpa. Oakland University about seven years. The total nual budget. nerstone schools to a con- Brothers Big MGM Grand Detroit’s rev- trustees approved a three- Robert Rossbach, a DEGC investment is expected to be nection at the LPGA. Sisters of enue rose to $49.7 million in year contract for new Presi- spokesman, said Jackson less than $1 million. In March, Durant got a Metropolitan June 2014, up 19 percent dent George Hynd that will planned for April 1 to be his The front of the building text from an LPGA rep ask- Detroit to be- from the same month in pay $400,000 per year, effec- last day, but the DEGC board will be used for retail. ing to meet him. That led to come COO 2013, while revenue at Mo- tive Aug. 15. asked him to stay as it There will also be a tasting conversations with com- of Detroit- torCity Casino Hotel declined University of Michigan looked for his successor. room that also can be used missioner Michael Whan, in- based Girl 4 percent to $34 million, and regents denied the athletic for private events. cluding an April dinner in Scouts of Greektown Casino-Hotel’s fell department’s proposal for A 750-milliliter bottle of State’s VC quarter best in Augusta, Ga., during the Munson Southeastern 3.4 percent to $25.3 million, fireworks displays during Bear Knuckle Vodka will Masters, with fellow event Michigan, effective Aug. 1. according to the Michigan home football games sell for around $30, and a 14 years, report says co-chair Tony Earley, former Col. Dennis Strissel, Gaming Control Board. against Miami University on chairman and CEO of DTE 750-milliliter bottle of Michigan had its best commander of the Salvation Ann Arbor-based ven- Sept. 13 and Penn State Uni- Thumb Knuckle Rum will Energy Co. After hearing Army Eastern Michigan Divi- ture capital firm Plymouth versity on Oct. 11, the Detroit quarter for venture capital about Cornerstone, Whan sell for around $25. investing in 14 years and the sion, plans to retire Oct. 1 Ventures finished raising its Free Press reported. The next step is to make was on board. from the Southfield-based third and largest fund, sur- Detroit officials said second-best since records be- LPGA fans and Corner- aged rum, followed by fla- gan to be kept in 1995, ac- affiliate. Maj. John Turner, passing its original target eight houses in the Mary- vored vodkas using Michi- stone supporters can pur- divisional leader of the Sal- of $60 million and closing grove neighborhood were cording to the quarterly chase gallery tickets for gan cherries, apples, blueber- Money Tree report issued vation Army Indiana Division, the fund at $61 million. awarded to the Detroit Land ries, cranberries and honey. $500 each (or two for $800), will replace him. Auburn Hills-based Con- Bank Authority under the by PricewaterhouseCoopers with two-thirds of the price Gin will follow, and even- Former Quicken Loans tinental Structural Plastics Inc. city’s nuisance abatement and the National Venture Capi- tax-deductible, by visiting tually whiskey — which Inc. and Rock Ventures LLC signed an agreement to ac- program and will be offered tal Association, based on data cornerstoneschools.org. takes a few years to distill. public relations director quire five North American at auction, AP reported. compiled by Thomson Reuters. Clark Durant, Corner- McElroy said he would Laura Biehl, 29, announced plants from Magna Interna- The Michigan Depart- A total of $114.2 million stone’s founding chairman, like to use Thumb Knuckle she started as Gov. Rick Sny- tional Inc. Terms weren’t dis- ment of Environmental Quality was invested by venture said about 500 gallery tick- Distillery as an incubator for der’s communications man- closed. The plants are in rejected a request by Detroit capitalists in 11 Michigan ets will be available. distillers graduating from ager on July 7, replacing Lenoir, Newton and Salis- Bulk Storage to store piles of companies, up sharply from Want to get even closer? Michigan State University’s Dan Waun. bury, N.C.; Grabill, Ind.; and petroleum coke at an open the $37.6 million that was “Individuals or compa- Artisan Distilling Program. Former Ford Motor Co. Saltillo, Mexico. riverfront site in Detroit be- invested in 14 companies in nies that give or raise Thumb Knuckle gets its CEO Alan Mulally, 68, who cause the company failed to the first quarter. That’s the $25,000 or more for the name from the “two knuck- retired June 30, joined the outline sufficient dust con- highest total since $143 mil- scholarship fund, we’re go- les” of the thumb — Detroit lion was invested in 17 deals board of directors at Cali- OTHER NEWS trol measures. ing to find a way for them to fornia-based Google Inc. and Port Sanilac in Sanilac in the first quarter of 2000. The Detroit Institute of David Kircos and Hunter play,” Durant said. Eddie Munson, retired Rosenblume, interns at De- County, where most prod- The total was driven by Arts received another $26.8 former managing partner troit Venture Partners, won ucts used to make the spir- the largest single VC invest- million in pledges from of the Detroit office of $5,000 in Automation Alley’s its are from. ment round in a company Michigan businesses, bring- BITS & PIECES KPMG LLC and longtime first 24-hour hackathon for in state history, the $59.5 ing it to 80 percent of its million invested in Ply- Beaumont Health System civic leader, was elected to their mobile app allowing Want George Jackson’s announced the creation of the board of directors of $100 million commitment to Detroit Public Library users to mouth Township-based the deal meant to shore up ProNAi Therapeutics Inc., the Harry N. Herkowitz, M.D., Columbus, Ohio-based search the library’s catalog job? Here’s how to land it Distinguished Chair in Ortho- Huntington Bancshares Inc. city pension funds and pro- and order e-books. which is developing drugs tect museum artwork. You’ll need some serious to fight cancer. CrowdRise pedics. Herkowitz died June U.S. Bankruptcy Judge economic development and LLC, a Royal Oak-based 7, 2013, at age 65. More than COMPANY NEWS Steven Rhodes said Detroit BITUARIES business chops and strong crowdfunding platform that $2.2 million has been con- O must pay $10,000 to cover managerial and negotiating raises money for charity, tributed to the fund. HopCat, the bar and Joy Hakanson Colby, the skills to be the next Detroit raised $23 million. Margaret Williams, inter- restaurant chain from the cost of recovering confi- former Detroit News critic Economic Growth Corp. presi- Other disclosed deals in- im dean of the business Grand Rapids-based Barfly dential documents it acci- who covered the city’s art dent and CEO. clude: $9.8 million for Grand school at Wayne State Univer- Ventures Inc., is slated to dentally sent to creditors scene for 60 years, died The DEGC wants George River Aseptic Manufacturing sity, has left to become dean come to Ann Arbor, in the this year during its bank- July 2. She was 88. Jackson’s replacement to Inc., Grand Rapids; $6.5 mil- of the College of Business former Borders Group Inc. flag- ruptcy, AP reported. Elaine Stritch, the De- have at least 10 years of eco- lion, Atterocor Inc., Ann Ar- and Public Administration ship store, by late January. A bill co-sponsored by troit-born Emmy- and Tony nomic development or busi- bor; $4.7 million, SirionLabs at the University of North Detroit-based Shino- U.S. Rep. John Conyers, D- Award-winning actress, ness executive experience. Inc., Troy; $3.4 million, Axo- Dakota. la/Detroit LLC signed a lease Detroit, seeks to protect lo- died July 17. She was 89. DBpageAD_DBpageAD.qxd 5/28/2014 11:34 AM Page 1

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