DETROIT BUSINESS MAIN 06-23-08 A 1 CDB 6/20/2008 7:00 PM Page 1
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www.crainsdetroit.com Vol. 24, No. 25 JUNE 23 – 29, 2008 $2 a copy; $59 a year
©Entire contents copyright 2008 by Crain Communications Inc. All rights reserved THIS JUST IN Eye surgery centers Mass transit funds proposed declare bankruptcy Five companies headed BY AMY LANE would allow which future increases in property by ophthalmologist and Bill expands CAPITOL CORRESPONDENT Michigan’s tax taxes could be used to finance tran- eye surgeon Dr. Mazin Yaldo increment fi- sit operations and redevelopment. LANSING — A bill starting to nancing law to be have filed for Chapter 11 In Detroit, for example, the bankruptcy protection. move through the Capitol could used to establish use of state’s property-tax revenue could be Associated Eye Institute of provide a piece of the puzzle need- “transit revital- Detroit, Associated Eye Spe- ed to push forward new mass tran- ization invest- used to repay bonds issued to help cialists of Farmington Hills, tax increment sit in Southeast Michigan and oth- ment zones.” finance a light-rail line along Michigan Glaucoma Institute er parts of the state. The zones Woodward Avenue, provide oper- P.C. in Dearborn Heights, The measure, sponsored by would be desig- ating funds, or support the capital Donigan Associated Surgical Center financing law longtime transit advocate Rep. nated areas investment needed for stations or P.C. in Dearborn Heights Marie Donigan, D-Royal Oak, stretching along transit routes in See Transit, Page 20 and Luna Cosmetic Centers P.C. in Troy filed for bank- ruptcy in the U.S. District Court for the Eastern District of Michigan. While Luna filed in May, the other entities filed last Mortgage fraud week. An assumed name for the Michigan Glaucoma In- stitute is the more heavily bust shows advertised Yaldo Eye Center, featured in ads including broadcasting personality Eli Zaret. improved rules, The filings come on the heels of Comerica Bank’s lawsuit against Luna Health Management, the enforcement umbrella organization, for nonpayment of loans of BY ROBERT ANKENY about $10 million. CRAIN’S DETROIT BUSINESS The individual filings were made to protect each Two of the metro Detroit cases that company from creditors at- are part of a major federal bust of tempting to collect on the mortgage fraud schemes in Michigan overall debt of the parent accounted for more than half — $25.4 company, according to at- million — of the $50 million in losses torneys. It is unclear how NATHAN SKID/CRAIN’S DETROIT BUSINESS linked to the cases. much Luna owes its 50-plus Bob Sarazin, Pentastar vice president, says aviation is a cost of conducting business. U.S. Attorney Stephen Murphy re- creditors, but it is estimat- ported Thursday that his office had ed that the individual enti- charged 28 people in 15 separate crim- ties could owe between $1 inal cases since March with mortgage million and $10 million fraud that led to the losses, mostly to each. financial institutions. Luna Health Manage- Fuel costs ground fliers Title company leaders and other fi- ment owes Huntington nancial professionals say there have Bank, one of the creditors been enough changes made by the found in the latest petition, government and individual firms that an estimated $1.8 million, Small businesses feel pinch of price spike the worst of Michigan’s financial loss- es from fraud may be over. according to its lawyer. BY BILL SHEA used again,” he said. Michigan has been one of the hard- Neither Yaldo nor his at- CRAIN’S DETROIT BUSINESS Local airports and aviation-re- torney could be reached for lated businesses at airports, $6.22 est-hit states by fraud, but better fraud-detection and prevention proce- comment. After more than 30 years, Vern known as fixed-base operators, are Cost per gallon of Jet-A — Bernadine Williams Kors is grounded. dures — and more attention from law reporting a downturn in fuel sales fuel Friday at Pentastar The owner of Kors Engineering Co. and flights as individuals and enforcement — have been making a Refinery begins upgrade Inc. in Waterford Township, Kors small companies cut back on fly- Aviation L.L.C. dent in a range of fraud schemes that has piloted his single-engine have plagued the Detroit region and Construction is under ing. Beechcraft Bonanza prop plane on Corporate aviation by large country for several years. way in southwest Detroit business trips since 1975 until sky- $7.32 In one of the new cases, mortgage on Marathon Petroleum Co. companies has remained relative- rocketing aviation fuel prices this ly level despite fuel prices, air- Cost per gallon of Jet-A broker Dennis Tamburo, 39, of Wash- L.L.C.’s upgrade project in year made it more cost-effective to ington Township, owner of Home Con- southwest Detroit after ports say, because flying is now fuel Friday at Metro Flight drive or use commercial flights. generally considered part of the nection Mortgage; and real estate agent Marathon obtained an air- Services at Detroit “We’re just letting (the plane) price of doing business, especially Mario Lalios, 30, of Shelby Township, See This Just In, Page 2 sit. It hasn’t been used in over six Metropolitan Airport months and probably will never be See Fuel, Page 21 See Fraud, Page 18
Business leaders seek CRAIN’S LIST to snag small, midsize Largest office furniture
NEWSPAPER events, Page 11 dealers, Page 17 DETROIT BUSINESS MAIN 06-23-08 A 2 CDB 6/20/2008 7:00 PM Page 1
Page 2 CRAIN’S DETROIT BUSINESS June 23, 2008
ance with air-quality standards, advertising. of chronic heart failure. The 27-month contract is for THIS JUST IN collaborating on the city-county The News’ business and adver- Forty patients will be studied development of lithium ion bat- emergency notification system tising operations are handled by at five sites in the U.S. teries. ■ From Page 1 and retrofitting 150 school buses the Detroit Media Partnership, The company also received no- — Crain News Service for Detroit Public Schools with which is 95 percent controlled by tice that it has been given a 180- quality permit to expand pro- diesel emission controls as an McLean, Va.-based Gannett Co. day extension from Nasdaq to County environment director duction capacity. air quality improvement mea- Inc., owner of the Detroit Free avoid delisting. On Dec. 20, the Officials at the Michigan De- sure. Press. company had been warned that to speak at S. Korea conference partment of Environmental Quali- Shaffner and Marathon com- Susie Ellwood, the partner- it faced delisting by June 17 if it Wayne County Environment ty formally signed the air qual- munications manager Chris Fox ship’s executive vice president did not get its share price above Director Kurt Heise is scheduled to ity permit at 8 a.m. Friday for said the approximately 90 con- and general manager, said no $1 for 10 consecutive days. speak at an international confer- the Detroit Heavy Oil Upgrade struction workers on the site buyouts or layoffs have been pre- A subsequent effort at a re- ence on advanced water quality Project, a $1.9 billion expan- could reach peak levels of 800- sented to staffers, and any plans verse stock split failed and the technology in South Korea on sion for the refinery. By 10 1,200 people by fall 2009, and the for a reduction would not be stock has remained well below Wednesday and Thursday. The a.m., a crew of construction company still expects to com- made public. $1, but Nasdaq granted the com- trip builds on Wayne County Ex- workers was already working, plete all improvements to the fa- In October, the partnership pany an extension to Dec. 15. ecutive Robert Ficano’s promotion said refinery Division Manag- cility by fourth quarter 2010. trimmed its overall workforce, — Tom Henderson of Michigan businesses in Asia. er George Shaffner. The expansion will eventually including newsrooms, by 5 per- South Korean officials signed The expansion will increase add 135 on-site Marathon and cent, or about 110 employees. Compact Power lands $12.9M a wide-ranging environmental the size of the refinery facility contractor company jobs to the Ellwood did confirm that two agreement with Wayne County by about 25 percent. Parent current 480 employees. jobs were eliminated when the battery R&D contract in 2007. The visit, June 22-28, is company Marathon Oil Corp. — Chad Halcom partnership chose to cease publi- United States Advanced Bat- has retained Houston-based The sponsored by the South Korean cation of its monthly health mag- Fluor Corp. for engineering, The Detroit News owner’s tery Consortium has awarded a government and private funds. azine, Vital. Its final edition is procurement and construc- $12.9 million contract to Troy- Heise will be the highest-rank- tion services on the refinery credit rating drops next month; it was not prof- based Compact Power Inc. to de- ing Wayne County official to vis- project, as well as Trenton- The owner of The Detroit News itable, she said. velop battery technology for it the Asian nation. based contractor E.C. Korneffel is in danger of defaulting on its — Bill Shea plug-in hybrid vehicles. —Robert Ankeny Co. Senior engineer Andrew loans and is likely to restructure Drury of the MDEQ Air Quality this year, an industry analyst Biotech gets good news, twice Division said a number of said last week. It was a good week for Ann Ar- CORRECTIONS good ideas came out of a pub- Standard & Poor’s credit-rating bor-based Aastrom Biosciences lic hearing April 30 with service last week lowered Den- Ⅲ The photo of Todd Ridley on Page 1 of the June 16 edition should Inc. (Nasdaq: ASTM), a company neighbors, Marathon repre- ver-based MediaNews Group Inc.’s have said it was taken by freelance photographer Rio Scafone. that makes regenerative medi- sentatives and members of the debt rating by two levels to CCC, Ⅲ On the Largest Banks and Thrifts list on Page 14 of the May 19 edi- cine based on stem cells. Sierra Club, which has previ- four levels above default. tion, Citizens Republic was mistakenly omitted. The bank should have ously opposed the project. S&P analyst Emile Courtney in a The company announced that ranked No. 4 with 2007 assets of $13.5 billion. Among the conditions for report last week said the pub- the U.S. Food and Drug Administra- Ⅲ On the Largest Senior-Living Facilities list on Page 13 of the June 9 Marathon’s approval are lisher is in danger of default and tion has approved the use of car- edition, Botsford Commons Community should have ranked No. 13 with a adding eight continuous air is likely to restructure because it diac repair cells for Phase II total of 200 senior-living units. Waltonwood at Cherry Hill (No. 12) should emission monitors on process faces increasing cash-flow prob- studies of treatment of dilated have had 213 total units, and the administrator should have been listed unit stacks to monitor compli- lems this year due to dwindling cardiomyopathy, a severe form as Susan Anderson.
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June 23, 2008 CRAIN’S DETROIT BUSINESS Page 3 CRAIN’S Proton-beam groups compete INDEX
proton-beam centers. Taking Stock: Energy Conversion Devices, its Granholm veto will allow multiple centers “We will try and shorten the stock up length of treatment and that will 250 BY JAY GREENE It is unclear what effect two com- study or evidence bring down the cost of proton beam percent to that of conventional photo radia- since CRAIN’S DETROIT BUSINESS peting proton-beam centers will that proton-beam January, have on health care costs. Some ex- therapy is better tion treatment,” Vicini said. plans In the wake of Gov. Jennifer perts believe costs will rise for em- (than current radi- Granholm’s veto has paved the public Granholm’s surprise veto last week ployers and individuals because pro- ation technolo- way for Beaumont to build its own offerings. of a certificate-of-need rule to re- proton-beam center in Royal Oak in Company ton-beam services currently are gy).” CEO and quire a single multihospital collabo- more expensive than standard radia- But Dr. Frank a partnership with possibly two oth- president Morelli rative to build a $160 million proton- tion treatment. (See opinion, Page 8.) Vicini, Beau- er hospitals. Beaumont has formed a Mark beam cancer therapy center, two “It is pretty likely that there will mont’s chief of on- for-profit joint venture with ProCure Morelli met with competing hospital groups — William Treatment Centers of Bloomington, institutional investors be two centers built now,” said Larry cology, said while last week. Page 4. Beaumont Hospitals and a consortium Horwitz, president of the Economic Vicini two centers will Ind., to build the center. Alliance of Michigan, a business-labor increase competi- The second hospital group plan- Blue Cross: Insurance led by the University of Michigan Health Commissioner says System — are moving forward with coalition. “This will drive up health tion for patients, he believes the controversial acquisition plans to develop their own centers. care costs unnecessarily. There is no state can support as many as three See Proton beam, Page 21 allowed by state law. Page 7. Detroit Chamber: Group 7 merges, revamps longtime leadership programs. Page 17. Workplace giving: Area health charities plan to ramp up their efforts. Cruise Page 18. Race These organizations appear in this week’s Crain’s Detroit Business:
Accident Fund Insurance Co...... 7 Amerisure Insurance Co...... 7 AvFuel Corp...... 21 tune-up Blue Cross Blue Shield of Michigan . 7 Caesars Windsor ...... 12 for the Choose Michigan Fund ...... 5 Coleman A. Young Airport ...... 21 Organizers Cranbrook Institute of Science . . . . 12 Dearborn Inn ...... 12 Deloitte L.L.C...... 11 Detroit Marriott Troy Hotel ...... 12 make move Detroit Metro Convention & Visitors LEED Bureau ...... 11 Detroit Regional Chamber ...... 17 to raise revenue Eagle Crest Conference Resort . . . . 12 Energy Conversion Devices Inc. . . . . 4 BY SHERRI BEGIN ePrize L.L.C...... 12 Builders vie for first ‘green’ home certification CRAIN’S DETROIT BUSINESS Fort Shelby Doubletree Suites . . . . 12 GM Heritage Center ...... 12 Trophy sponsorships for a new clas- Gontina Building & Design ...... 3 BY DANIEL DUGGAN sic car show, new cruise sponsorships Greektown Casino ...... 12 CRAIN’S DETROIT BUSINESS and an eBay Motors auction could help Henry Ford Health System ...... 21 boost Woodward Dream Cruise Inc. rev- Hospitality Advisors ...... 13 hen Woody Gontina and Ilitch Holdings Inc...... 11 Timothy Risk set out to enue by nearly a third this year, orga- Iridescence ...... 12 W build a house and sell it, nizers say. Karmanos Cancer Institute ...... 21 they were excited about the idea of The nonprofit representing the nine Kors Engineering Co. Inc...... 1 being the first LEED-certified home communities along the cruise route has Little Caesar Enterprises Inc...... 11 in Oakland County. signed eBay Motors Loomis Sayles & Co. L.P...... 4 But they didn’t know about Art and another national Metro Flight Services Inc...... 21 company, Turtle Wax, Michigan Economic Dev. Corp...... 5 Roffey and Gail Danto — a husband Michigan Municipal League ...... 20 and wife building a house six miles to sponsorships for Michigan Strategic Fund ...... 5 away and also seeking the certifica- the 2008 Dream MotorCity Casino Hotel ...... 12 tion. Cruise on Aug. 16. Motor Cities National Heritage Area . 3 Both Bloomfield Township pro- And more sponsor- Northwest Airlines Inc...... 21 jects are set to be completed in the ships could be on the Oakland County Internat’l Airport . . 21 first quarter of next year. way, said Executive Omni Detroit Hotel ...... 12 Director Don Tanner. Pentastar Aviation L.L.C...... 21 The first to finish will be the first Regional Transit Council ...... 20 WDC is in talks home in the northern suburbs certi- Tanner Ritz-Carlton ...... 12 PHOTOS BY NATHAN SKID/CRAIN’S DETROIT BUSINESS fied under the residential Leadership with a number of po- Southeast Michigan Council Timothy Risk, left, and Woody Gontina are building a ‘green’ home to in Energy and Environmental Design, tential sponsors, including a major re- of Governments ...... 20 sell. Art Roffey and Gail Danto, top photo, are building one to live in. overseen by the Washington, D.C.- tailer, bank, carmaker and automotive Special D Events Inc...... 11 based U.S. Green Building Council. aftermarket company. Spirit Airlines Inc...... 21 It’s a friendly scenario. Neither “We’re trying to put more of a face to University of Michigan Health System 3 Westin Book Cadillac Detroit . . . . . 13 side is planning to sabotage the oth- the cruise and make it more of a hap- HOW MANY LEED HOMES ARE THERE? William Beaumont Hospitals ...... 3 er’s project. But being the first is also pening, and to help build and extend the The two Bloomfield Township projects would be the first in Willow Run Airport ...... 21 a nice distinction. Woodward Dream Cruise brand with- Oakland County, but not the first in Southeast Michigan, Woodward Dream Cruise Inc...... 3 “Yeah, we were disappointed when out becoming too commercial,” Tanner to be certified under the residential we heard that we might not be first,” said. Leadership in Energy and Gontina said. “But we’re happy that “The ultimate goal is to continue to BANKRUPTCIES ...... 6 Environmental Design, overseen by there’s more interest in building have a free event for the cruisers and BRIEFLY ...... 6 the Washington, D.C.-based U.S. this type of building.” crowds, (and) that takes dollars.” BUSINESS DIARY ...... 16 Green Building Council. Gontina and Risk formed WDC is organizing a car auction CALENDAR ...... 15 Clawson-based Gontina In Michigan: There are 25 through eBay Motors, in addition to the CAPITOL BRIEFINGS ...... 5 Building & Design to focus on LEED certified homes, almost company’s new cruise sponsorship, and CLASSIFIED ADS...... 14 construction of energy-effi- all in the Grand Rapids area and a new classic car show with 10 trophy KEITH CRAIN ...... 8 cient homes, built to mini- two in Ann Arbor. spots open to sponsorships. LETTERS ...... 8 mize environmental impact. In the nation: WDC also plans to offer a new VIP OPINION ...... 8 The home they’re building There are 310 registration, in partnership with the OTHER VOICES ...... 9 will be 3,700 square feet with an projects. Motor Cities National Heritage Area, a non- PEOPLE ...... 14 asking price of $1.3 million. It profit organization aiming to help in- RUMBLINGS...... 22 crease visibility of metro Detroit’s car will use geothermal heating Source: U.S. Green Building Council WEEK IN REVIEW ...... 22 See Green, Page 19 See Cruise, Page 20 DETROIT BUSINESS MAIN 06-23-08 A 4 CDB 6/20/2008 5:50 PM Page 1
Page 4 CRAIN’S DETROIT BUSINESS June 23, 2008 TAKING STOCK NEWS ABOUT DETROIT AREA PUBLIC COMPANIES On a roll, Energy Conversion Devices makes public offerings
BY TOM HENDERSON to Credit Suisse International, an affili- from the company in August. CRAIN’S DETROIT BUSINESS ate of Credit Suisse Securities L.L.C. Morelli immediately cut back on Those shares are not dilutitive be- research that was high on pizzazz Rochester Hills-based Energy Con- cause they eventually will be re- but low on commercial prospects version Devices Inc. (Nasdaq: ENER), turned to the company. and focused on beefing up the com- coming off the best quarter in its 48- Credit Suisse then will offer the pany’s best-selling product, the so- year history and with its stock up shares for sale to buyers of the con- lar laminate material that commer- more than 250 percent since Janu- vertible notes to serve as a hedge cial builders incorporate into roofs. ary, has launched two public offer- on their investments in the notes. On May 8, ECD announced third- ings, hoping to raise the $365 mil- The shares must be returned to quarter results for the period end- lion needed to more than quintuple ECD before June 15, 2013. ing March 31, with net income of $7 production capacity of its fast-sell- ECD will not receive any pro- ing solar roofing material by 2012. million or 17 cents a share on rev- ceeds of the sale of those shares by enue of $70 million. The same quar- The company currently can pro- Credit Suisse except for a lending duce enough of the laminated sheet- ter the year before, it lost $6.9 mil- fee of one cent a share, or about lion on revenue of $27.4 million. ing at its two facilities in Rochester $34,000. Hills, one in Greenville and one in The stock had closed at $34.81 on ECD’s two offerings follow simi- Tijuana, Mexico, to produce nearly May 7. It closed the next day at a lar offerings by other solar-power 180 megawatts of electricity yearly. 12-month high of $49.91. companies. In February 2007, San Previously it had announced a David Sowerby, portfolio man- Jose-based SunPower Corp., a mak- major expansion of its Greenville ager and chief market analyst at er of solar cells, panels and sys- site — a second plant that is sched- Bloomfield Hills-based Loomis tems, made a $175 million offering uled to be completed by the end of Sayles & Co. L.P., said one concern of convertible senior notes tied to summer — to help take production for would-be investors could be the lending of 2.9 million shares of to 300 megawatts yearly by 2010. ECD’s history of a highly up-and- stock. And in May, JA Solar Holdings Now, though, with the new fund- down share price. Inc. of China offered $350 million of ing, it plans on producing 1,000 convertible notes tied to the lend- “As many times as it’s been a megawatts, or one gigawatt, a year. ing of 13 million shares of stock. top-performing stock over the Company CEO and President ECD officials declined to com- years, it’s been a below-average Mark Morelli spent last week ment because of an SEC-mandated performer.” meeting with institutional in- quiet period after the filing of of- He said the company is benefit- vestors to pitch the offerings. ing from making its offering at a His tour took him to New York, ferings. In January, Morelli told Crain’s time when “the world is infatuated Boston, Silicon Valley and San with solar...With capital more Francisco. The pitch was well- that ECD was poised to become con- sistently profitable for the first time scarce in the subprime toxic debt enough received that ECD upped fallout, it is positive to see compa- the size of each offering. since the company was founded in nies getting finance opportunities.” ECD said June 12 it had filed pre- 1960. His marching orders were to Credit Suisse Securities and UBS liminary paperwork with the U.S. achieve that goal when he was Securities L.L.C. are managers of the Securities and Exchange Commission hired last year, taking over Sept. 1. stock and notes offerings. JPMor- for a public stock offering of 4.7 mil- He replaced Robert Stempel, the lion shares of common stock and former General Motors Corp. CEO gan Chase & Co., Lazard Ltd. and $225 million of convertible senior who took over as CEO at ECD in Deutsche Bank Securities will serve notes to come due in 2013. 1995. Company founder Stanford as co-managers. After digesting the news, the Ovshinsky had stepped down as Tom Henderson: (313) 446-0337, market reacted strongly. president in March and retired [email protected] Last Monday, the stock, which had closed the previous week at $66.99, shot up to an all-time high of $77.71 in midday trading before STREET TALK settling back to $76.86. It finished Friday at $76.64. Its 12-month low THIS WEEK’S STOCK TOTALS: 15 GAINERS, 49 LOSERS, 7 UNCHANGED of $20.47 was set Jan. 22. CDB’S TOP PERFORMERS 6/20 6/13 PERCENT Thursday, the company an- CLOSE CLOSE CHANGE nounced it was increasing its of- 1. Energy Conversion Devices Inc. $76.64 $66.99 14.41 ferings and announced pricing on 2. FNBH Bancorp Inc. 10.75 9.91 8.48 each. It now is targeting $275 mil- 3. Federal Screw Works 6.00 5.62 6.76 lion in convertible notes. The 4. Pulte Homes Inc. 11.19 10.78 3.80 amount of stock in the public offer- 5. Rofin-Sinar Technologies Inc. 34.36 33.17 3.59 ing went up slightly, from 4,708,500 6. Saga Communications Inc. 5.60 5.44 2.94 shares to 4,714,975 shares. 7. Perceptron Inc. 9.10 9.02 0.89 Brokers can offer up to an addi- Rockwell Medical Technologies 6.89 6.85 0.58 tional 190,500 shares of common 8. stock and up to an additional 9. Credit Acceptance Corp. 26.22 26.09 0.50 $41.25 million of convertible notes 10. Universal Truckload Services Inc. 23.08 23.24 -0.69 if demand warrants. 6/20 6/13 PERCENT CDB’S LOW PERFORMERS CLOSE CLOSE CHANGE The stock will be offered at $72 a share. The notes will bear 3 percent 1. Oxford Bank Corp. $14.75 $19.50 -24.36 interest and can be converted to 2. American Axle 11.08 14.00 -20.86 stock, with some restrictions, at 3. General Motors Corp. 13.88 16.45 -15.62 $91.80 a share on or after March 15, 4. Dearborn Bancorp Inc. 5.11 6.00 -14.83 2013. 5. Amerigon Inc. 9.11 10.46 -12.91 Interestingly, most of the new 6. Lear Corp. 19.10 21.45 -10.96 stock won’t be dilutitive, meaning 7. TRW Automotive Holdings Corp. 20.59 22.89 -10.05 it won’t count for the purpose of 8. Champion Enterprises Inc. 6.86 7.51 -8.66 computing earnings per share. 9. Valassis Communications Inc. 13.02 14.21 -8.37 ECD will collect the proceeds on 10. Meadowbrook Insurance Group 6.18 6.73 -8.17 the sale of nearly 1.3 million shares. Source: Bloomberg News. From a list of publicly owned companies with headquarters Those shares are dilutitive. More in Wayne, Oakland, Macomb, Washtenaw or Livingston counties. Note: Stocks trading than 3.4 million shares won’t be at less than $5 are not included. sold by the company but will be lent DETROIT BUSINESS MAIN 06-23-08 A 5 CDB 6/20/2008 2:50 PM Page 1
June 23, 2008 CRAIN’S DETROIT BUSINESS Page 5 Loan program may become forgiving
LANSING — A pro- boost collaborations be- tiative, initially presented by Gov. Peruchietti. She replaces Joyce Karr, now in gram to help Michigan tween alternative energy Jennifer Granholm in her State of ■ Colleen Pobur, former vice Boven’s previous position at the close economic develop- Capitol companies, universities the State address. president with Novi-based Strate- commercial services bureau. ment deals is moving for- Briefings and others. gic Public Affairs, has been appoint- Also at OFIR, Jenita Moore, for- ward with new legisla- Senate Bill 1380, spon- Comings & goings ed to the Michigan Liquor Control mer deputy director of Gov. tion that will allow the sored by Jason Allen, R- Commission by Gov. Jennifer Granholm’s legislative affairs di- state to forgive loans Traverse City, creates a ■ Cindy Peruchietti, chief of staff Granholm. Pobur succeeds Virgie vision, has been named deputy made under the program. Centers of Energy Excel- to House Speaker Andy Dillon, D- Rollins, whose term expired. commissioner for policy. Joe Gar- As Crain’s has report- lence program in which Redford Township, is leaving July ■ Jean Boven, former director of cia, formerly an attorney with East ed, the $18.7 million state grants will serve as 3 to become chief administrative licensing for the Michigan Depart- Lansing law firm Guggemos Brown Choose Michigan Fund pro- officer of the Early Childhood Invest- ment of Labor & Economic Growth’s & Gilkey, P.C., has been named chief gram will provide up- catalysts for energy tech- ment Corp., a state-initiated non- Bureau of Commercial Services, of staff to OFIR Commissioner Ken front loans against future nology development. Amy Lane profit aimed at early childhood de- tax credits, as incentive The bill allows the has been named deputy commis- Ross. Moore and Garcia fill posi- to attract business investment and Strategic Fund board to velopment. Peter Cunningham, sioner of the regulatory compliance tions vacant since 2007. jobs. spend up to $45 million from the Dillon’s deputy chief of staff and division within the Michigan Office Amy Lane: (517) 371-5355, But a bill passed last week by 21st Century Jobs Fund for the ini- legislative director, will replace of Financial and Insurance Regulation. [email protected] the state House allows the Michigan Strategic Fund board to also forgive those loans on the basis of the pro- ject’s economic impact. Under House Bill 6208, the loan agreement would enumerate terms, conditions and require- ments under which some or all of a loan could be forgiven, including the factors of job creation and in- vestment. Why offer a loan and then for- give it? To compete with other states that offer significant upfront cash, prop- Descendent of the autobahn. erty and other sweeteners to attract projects, said Jeff Mason, senior vice president and chief business Ruler of the interstate. development officer at the Michigan Economic Development Corp. “We really believe that having It comes from the bloodline of some of the most powerful automobiles ever built. the ability to forgive loans for cer- THE 2008 C-CLASS tain large projects where there’s STARTING AT We added a short-throw, 6-speed shifter and lowered the sport-tuned suspension ever significant job creation not only $ * so slightly. The result is a feat of engineering that seems to rule wherever it goes. will help us close some of the deals, 32,475 but will help us more effectively Test-drive the C-Class today at your local Mercedes-Benz dealer. MBUSA.com compete with what other states are putting out there,” Mason said. Under the bill, loans would be at least $500,000 each and would bear an interest rate of at least 1 percent. Mason said the MEDC hopes the Senate will consider the bill this week and that the measure will be approved before lawmakers leave for their summer break. “We think potentially there are some major projects that could be hanging in the balance, that by having this tool available over the summer, we may be able to close on,” he said. The bill, sponsored by Rep. Ed Clemente, D-Lincoln Park, also ad- dresses a loan fund that is part of Michigan’s recently passed film-in- centive package. It is among several new bills affecting the Strategic Fund. House Bill 6206, for example, adds information-technology com- panies to the list of sectors eligible for competitive awards under the 21st Century Jobs Fund. The awards are currently available to for-profit companies in life sciences, alterna- tive energy, advanced automotive materials and manufacturing, and homeland security and defense. In a news release, bill sponsor Rep. Andy Meisner, D-Ferndale, said adding IT firms will speed the growth of a sector that already has strong Michigan roots. Other bills lift the specifications on the percentage of money that Special Rates Available to Chrysler Employees the board can spend in various Jobs Fund programs, and revise Mercedes-Benz of Bloomfield Hills Mercedes-Benz of Novi Mercedes-Benz of Rochester the Strategic Economic Investment 36600 North Woodward Ave. 39500 Grand River Ave. 595 South Rochester Rd. and Commercialization Board, which (248) 644-8400 (248) 426-9600 (248) 652-3800 makes Jobs Fund awards. Another measure, passed by the *MSRP for a 2008 C300 Sport Sedan includes transp. charge. Excludes all options, taxes, title, regis. and dealer prep. 2008 C300 Sport shown at $36,935 includes optional Iridium Silver metallic paint, Panorama Roof and Premium 2 Package. Senate last week, is designed to Options, model availability and actual dealer price may vary. See dealer for details. ©2008 Authorized Mercedes-Benz Dealers For more information, call 1-800-FOR-MERCEDES, or visit MBUSA.com. DETROIT BUSINESS MAIN 06-23-08 A 6 CDB 6/20/2008 5:33 PM Page 1
Page 6 CRAIN’S DETROIT BUSINESS June 23, 2008 VC company raises $1M for seed-capital fund
BY TOM HENDERSON on at the (Detroit) Medical Center physicians at the Medical Center and Fire Retirement System. he said. CRAIN’S DETROIT BUSINESS and Wayne State. There’s just so and the staff at Wayne State, and I Meanwhile, Forbes said the Pri- Some of those could come from much good research going on here. saw a lot of talented people doing vate Fund held a first close of $1 four research groups and two labs INetworks L.L.C., a Pittsburgh- And this is home ground for me,” incredible things,” she said. million, raised from local high-net that the Henry Ford Health System is based venture-capital company said Laurie Forbes, managing di- “After being involved in Tri- worth individuals (“I’m out scheduled to open in TechTown in that opened an office last fall in rector of the Pri- dent, where fundraising for both funds; I’m a TechTown, the Wayne State Universi- vate Fund and di- you’re trying to one-man gang,”) and that she has early July, in about 14,000 square ty-affiliated tech park and business rector of investor After being save lives, I could- been meeting with local re- feet of space as part of a seven-year incubator, has raised its first $1 relations for “ n’t go back to cor- searchers and hopes to announce lease. million for a new seed-capital fund BioOpportuni- involved in Trident, porate bonds,” a deal “soon, in weeks. ... The com- “I think it’s great what they’re and hopes to make its initial in- ties. she said of her de- panies we invest in will stay here. doing. We need more of that early vestment in a local biotech compa- A Milford resi- where you’re trying cision to join We won’t take anyone out of stage financing, particularly in life ny in the next few weeks. dent, she spent 19 iNetworks. “I had here.” sciences,” said David Morris, co- The company is raising two Morgan years at to save lives, I a great career at She said the funds will target founder and managing director of funds: a $5 million seed fund called Stanley, where she Morgan Stanley. I medical devices, medical services Detroit-based Oracle Capital Part- the iNetworks Private Fund L.P. to fi- helped hospitals couldn’t go back to made a lot of mon- and medical IT, but will avoid drug nance early stage companies with arrange bond of- ey. People development because of the time ners L.L.C., a venture-capital firm initial investments of $250,000, ferings and debt corporate bonds. thought I had lost and cost involved. that targets minority-owned firms. which will be run from Detroit; restructuring be- ” my mind when I “We’re obviously delighted iNet- “It gives promising companies and the $100 million iNetworks fore quitting in Laurie Forbes, took a leave to works chose TechTown. They with interesting technologies a BioOpportunities Fund L.P., which 2006 after co- iNetworks Private Fund L.P. start Trident.” could have chosen any number of chance to get to that next step, will be run from Pittsburgh. founding Trident INetworks has other locations,” said Randal where they can larger rounds of It plans to hold a first close soon Partners L.L.C., a Montreal-based applied for funding from the Charlton, interim executive direc- traditional financing.” of $50 million for the biofund. stem-cell research company that state’s 21st Century Investment Fund tor at TechTown. INetworks, founded in 1999, also The plan is to grow companies was later sold to a hospital group. and the Venture Michigan Fund, both “There are a number of opportu- has a Cleveland office to facilitate here from the small fund to the Forbes is a longtime member of managed by Credit Suisse, and has nities coming through the medical point where they are ready for in- the finance committee of the board been in talks about investments research community that sur- investments in biotech spin-offs vestment from the larger fund. of directors of DMC Harper-Hutzel for the BioOpportunity Fund with round TechTown that we hope to from the Cleveland Clinic. “We picked TechTown and De- Hospital. both the city of Detroit’s General put in front of iNetworks. We’ll Tom Henderson: (313) 446-0337, troit because we see so much going “I’ve worked with the staff and Retirement System and the Police make sure they get the first look,” [email protected]
BRIEFLY Pulte fined by EPA for runoff Marketing & Public Relations has opened an office in suburban The Environmental Protection Columbus, Ohio, the 10-year-old Agency and Department of Justice agency’s third location. said June 11 that Bloomfield Hills- The Columbus office, in the Eas- based Pulte Homes Inc. would pay ton Town Center retail and office an $877,000 fine for failing to con- area, will be run by new hire Moni- trol runoff at construction sites ca Ireland, vice president, who across the country, the Associated comes to Identity after eight years Press reported. with the Walt Disney Co. She will be The company also will complete responsible for Identity’s 10 clients a $608,000 project to reduce the in the area, which include Nation- amount of sediment entering a wide Realty Investors, the real estate northern California watershed. development affiliate of Nationwide Mutual Insurance Co. Entrepreneur’s Quest names The new office comes as Identi- ty’s revenue is up 20 percent the contest winners first half of 2008 from last year’s $3 OcuSciences Inc. of Ann Arbor, million, said Mark Winter, co- which does noninvasive imaging founder and partner. The agency to detect retinal diseases, won the also has a two-person office in Bal- $25,000 grand prize June 12 at the timore that handles editorial ser- annual Great Lakes Entrepreneur’s vices work. Quest business plan competition. — Bill Shea DevHive Corp. of Livonia, which is building a software-as-a-service platform for custom business ap- plications, won the runner-up prize of $5,000. Winning the first-place prize of BANKRUPTCIES $5,000 in the new business idea cate- The following businesses filed for gory was 3D Biomatrix of Ann Arbor, Chapter 7 or 11 protection in U.S. a drug-discovery company. Ann Ar- Bankruptcy Court in Detroit June 13- bor-based dusoto.com, an online 20. Under Chapter 11, a company files for reorganization. Chapter 7 involves provider of nightlife and travel in- total liquidation. formation, won $1,000 as runner-up. Renaissance Spa, L.L.C., 3617 W. OPS Solutions L.L.C. of Northville Maple Road, Bloomfield Hills, volun- won $12,500 as recipient of the Au- tary Chapter 11. Assets and liabilities tomation Alley Advanced Manufac- not available. turing Innovation Award, with Ann DMT Technologies Inc., 20920 Balinski Arbor-based FlexSys Inc., an engi- Drive, Clinton Township, voluntary neering design and prototype com- Chapter 7. Assets and liabilities not pany that claims to have developed available. more efficient blades for wind tur- Associated Eye Institute in Detroit PC, bines, winning the Alternative En- Michigan Glaucoma Institute PC, As- ergy Innovation Award and $12,500. sociated Surgical Center PC, Luna The event was held at the James Cosmetic Centers PC and Associated B. Henry Center at Michigan State Eye Specialists of Farmington Hills, all University. under Luna Health Management, in various locations in Detroit, Farming- — Tom Henderson ton Hills and Dearborn Heights. Vol- untary Chapter 11. Assets and liabili- Identity opens Columbus office ties not available. (See story, Page 1.) Bingham Farms-based Identity —Compiled by Bernadine Williams DETROIT BUSINESS MAIN 06-23-08 A 7 CDB 6/20/2008 2:48 PM Page 1
June 23, 2008 CRAIN’S DETROIT BUSINESS Page 7 Insurance commissioner OKs Blue Cross acquisition
BY JAY GREENE and the attendant escalation of commissioner has rendered an CRAIN’S DETROIT BUSINESS subscriber fees,” wrote Gallinger, opinion that the transaction is Proposed expansions by (Blue Cross) who also is vice president with proper,” Stojic said. Insurance Commissioner Ken “ Ross believes it is well within state are anti-market and anti-consumer. Amerisure Insurance Co., a Farming- Since 2003, Blue Cross has in- laws for Blue Cross Blue Shield of ” ton Hills-based property and casu- creased premium rates 79 percent Michigan alty insurer. for individual policies and 92 per- to have purchased a Cali- Kurt Gallinger, spokesman, insurers opposing legislation fornia-based for-profit insurance Helen Stojic, Blue Cross’ media cent for group policies, Gallinger company for $125 million in 2007. West is one of four workers’ com- tion of CompWest is the latest ex- relations director, said Blue Cross said. But Attorney General Mike Cox pensation companies that Acci- ample of Blue Cross’ multiple vio- has followed state law in acquiring “Proposed expansions by (Blue is still investigating allegations dent Fund has acquired since 2005. lations of state laws. the insurance companies for Acci- Cross) are anti-market and anti- that Blue Cross violated state laws “Blue Cross now controls multi- “If the Legislature chooses to dent Fund. She said the profits from consumer,” Gallinger said. “They by acquiring CompWest Insurance ple for-profit stock companies in proceed toward the enactment of Accident Fund are used to lower would serve only to expand a mo- Co. and several other insurance Michigan, Wisconsin and Califor- the proposed expansions, it would health care subscriber premiums. nopoly, reduce competition and in- companies for its Accident Fund In- nia,” Gallinger said in a June 4 let- be rewarding apparent lawless- “We are not going to respond to crease consumer burdens.” surance Co. of America, a workers’ ter to Smith. ness and sanctioning the contin- the ranting of a registered opposi- Jay Greene: (313) 446-0325, compensation insurer. Gallinger said the 2007 acquisi- ued diversion of subscriber funds tion lobbyist after the insurance [email protected] Cox was unavailable for com- ment on the status of his investiga- tion. Rusty Hills, his communica- tions director, said Cox has been gathering documents and perform- ing a legal analysis of the transac- tions. There is no timeline to com- plete the investigation, he said. In a May 22 letter to Rep. Virgil Smith, D-Detroit, Ross said state law governing Blue Cross “explic- itly permits (the insurer) to engage in other financial transactions with the Accident Fund.” Smith, chair of the House Insur- ance Committee, asked Ross in a May 19 letter for a ruling on the Blue Cross acquisitions due to con- cerns raised by Cox about their le- gality. Ross said the Office of Financial Insurance Regulation has consistent- ly interpreted state law — specifi- cally Public Act 350 — “broadly to permit (Blue Cross) to operate the Accident Fund in a manner consis- tent with a routine parent/sub- sidiary relationship.” Under state law approved in 1993 when the state sold Accident Fund to the Blues for $262 million, Accident Fund is limited to work- ers’ compensation insurance and employer’s liability insurance. A 1999 amendment also allows Accident Fund to sell limited types of disability insurance to replace lost wages. While OFIR previously has ap- proved technical agreements asso- ciated with the CompWest acquisi- ESPITE THE WAVERING MARKET AND HAZY ECONOMIC FORECASTS THERE tion, Ross appears for the first $ time to have formally approved in IS ONE THING THAT SHOULD NEVER FLUCTUATE ¯ A BANK´S PURPOSE writing the actual asset transfer that led to the purchase of Comp- 3INCE #OMERICA "ANK HAS DEDICATED ITSELF TO HELPING West, according to documents CUSTOMERS NOT ONLY REACH THEIR GOALS BUT SURPASS THEM OFIR provided to Crain’s. IS YOUR BANK In his letter, Smith asked Ross if the $125 million transfer from Blue 7HICH MIGHT EXPLAIN WHY WE´VE BEEN ±IN BUSINESS² FOR OVER Cross to the Accident Fund com- LOOKING AFTER YEARS plies with state law, specifically Section 207(1)(X)(vi) of PA 350. YOUR BUSINESS, 3O WHEN THE ECONOMIC EVENTS OF TOMORROW SEEM IMPOSSIBLE TO Ross replied: “The answer is PREDICT REMEMBER THAT #OMERICA "ANK IS STANDING STRONG AND yes.” OR THEIRS? But Kurt Gallinger, a spokes- TRUE TO YOUR COMPANY´S SUCCESS man for a group of insurers oppos- ing legislation that would allow the Accident Fund to expand into WE’RE IN THIS TOGETHER. other lines of insurance, said Ross is wrong in his analysis because it YOUR CO AND OURS. is narrowly focused. For example, Gallinger said an- other section of state law — Sec- tion 207(1)(o) of PA 350 — prohibits Blue Cross from “owning or con- trolling 10 percent or more of the voting securities of for-profit in- surers” unless the insurer that is acquired is only authorized to sell disability insurance. This section was amended in 2003.
Disability insurance does not in- -%-"%2 &$)# %15!, /00/245.)49 ,%.$%2 comerica.com clude workers’ compensation in- surance, Gallinger said. Comp- DETROIT BUSINESS MAIN 06-23-08 A 8 CDB 6/20/2008 2:49 PM Page 1
Page 8 CRAIN’S DETROIT BUSINESS June 23, 2008 OPINION Beaumont got the ruling it deserved illiam Beaumont Hospitals often earns poor grades from peer hospitals in the region for “plays well with W others.” That’s due in part to the Royal Oak-based health system’s history of going its own way. It’s also partly due to its subur- ban location, which has helped it grow without the burden of high proportions of uninsured patients that its urban peers deal with every day. But in its quest to build a new cancer treatment center us- ing proton-beam therapy, Beaumont has gotten a bum rap. By creating its own proton-beam consortium, competing hospitals hoped to knock Beaumont out of contention for state approval for its center. But Gov. Granholm issued a surprise veto of a state health commission’s rule that, in effect, gave a green light to that six-hospital consortium led by UM Hospi- tals and Henry Ford Health System. (See story, Page 3.) Granholm used antitrust issues as her rationale. But in our minds, there’s also an issue of fairness. Beaumont had been working for months on plans for its center with the for-profit company, ProCure Treatment Centers of Bloomington, Ind. LETTERS Earlier this year, well before the consortium filed its appli- cation with the state, Beaumont met with and ultimately invit- ed at least two hospitals — UM and Karmanos Cancer Institute — to be partners on its project, offering opportunities for rev- Tax ‘rant’ needs another look enue sharing and discussing branding the center in a neutral, non-do-you-have-a-Beaumont-cancer-doctor way. The proposal Editor: freeloading is coming to an end. Crain’s Detroit Business In the June 9 edition, there is a This new Michigan Business Tax was clear that Beaumont would be the lead hospital. welcomes letters to the editor. fairly sensational article about a structure we have to deal with may Now, with Beaumont poised to proceed on its own, the oth- All letters will be considered for be unfair, but I think we need to use er hospitals might now ask if they “play well with others.” Plymouth Township business publication, provided they are finding a “14,000% tax bill jump” signed and do not defame realistic arguments to point out the (“Tax bill jumps 14,000% for Ply- individuals or organizations. unfairness in the system. Relying A good new transit investment mouth Twp. company”). While it Letters may be edited for length on sensational “14,000% jump” is easy to go about ranting and and clarity. headlines only hurts us in the end by destroying our credibility and With gas at $4 a gallon, political support for public transit raving about how the new tax Write: Editor, Crain’s Detroit may be growing. It’s about time. structure in the state of Michigan Business, 1155 Gratiot Ave., ultimately makes us sound like a bunch of whiny spoiled brats. State Rep. Marie Donigan, D-Royal Oak, is proposing to use is unfair and likely to cause prob- Detroit, MI 48207-2997. Ron Gage tax-increment financing, already a tool for redeveloping core- lems for many small businesses, I E-mail: [email protected] Owner city downtowns, to establish “transit revitalization invest- think this case deserves a bit more Linux Network Services scrutiny. Westland ment zones.” Increases in property taxes could finance bonds of argument — assume 100 percent In the article, Stardock Corp. to develop and pay for transit. (See story, Page 1.) growth over last year. This esti- Why SBT didn’t work talks about how its tax bill is mate puts their income in 2007 at Projects in both Detroit (light rail) and Grand Rapids (rapid- jumping from $1,200 a year to roughly $9 million. This brings Editor: bus transit) would be helped by such financing, so Donigan roughly $168,000 a year. On the their reported tax rate for 2007 at I think the fact that Stardock hopes to build an east-west coalition of lawmakers to support the surface, this certainly looks in- roughly .013 percent of their gross. Corp. is getting a 14,000 percent tax increase in the new Michigan plan. The Michigan Municipal League actually hatched the idea credible — until one scratches be- Now looking at 2008, their tax rate low that thin surface. In the arti- Business Tax vs. the previous Sin- and brought it to Donigan, a champion of transit. jumps up to .93 percent of gross. cle, Stardock is reported to have If there is anyone in the room gle Business Tax shows exactly Donigan’s House Bill 6114 creates a structure for contigu- revenues that “could approach $18 who thinks that a .93 percent tax why the SBT didn’t work (“Tax ous governments, transit agencies and businesses to create million” in 2008. Let’s run the on gross revenue is unfair, please bill jumps 14,000% for Plymouth zones for transit. It offers a funding option that doesn’t rob numbers, shall we? let us know immediately. Twp. company,” June 9). It doesn’t scarce funds for other projects. It’s a smart idea that should be Since we don’t have the num- I would suggest that perhaps Star- make sense for a company with enacted into law. bers from 2007, let’s — for the sake dock is complaining because their See Letters, Page 9
KEITH CRAIN: Why can’t the government downsize? The whole world knows that the and learn what it will training for a legisla- so inept. They would, no doubt, lose handily. economy in Michigan stinks. Un- take to balance a budget. ture but when they If anyone suggests I’m being too And that’s a real shame. employment is 8.5 percent, a huge I’ve concluded, sadly, wrote the rules for harsh, that we elected these folks It would be interesting to count number that’s going to take a long most politicians have Michigan, somehow and deserve what we voted for, I’m all the elected officials in our state time to shrink. never ever run or even they forgot to include not sure we had much of a choice. and see how many of them even Companies are laying off people worked for a tax-paying that simple provision. Too often all we hear from those worked for a company, much less right and left. Some are declaring company. How can anyone have campaigning for elected office is actually ran any sort of operation bankruptcy. Some are selling or Too many of our any idea of running a how they are going to take care of that had a payroll and paid taxes. closing. All are cutting costs and politicians are teachers government if they don’t all our ills. Somehow, no one ever That’s why it’s so easy for them doing some painful downsizing. or lawyers or social-ser- have a lick of experience questions where the money is com- to solve all the problems by raising So why are politicians so inept vice workers or any running a real, live busi- ing from to do that. I suppose that taxes and spending more money. when it comes to downsizing gov- number of other profes- ness? If most, if not all, of no one would ever be elected if they It’s very disappointing. But we ernment? I’m continually stunned sions that never had to our legislators have no campaigned on the whole idea of got ourselves into this mess. I guess by the inability of local, regional make a payroll. Somehow it would practical experience, it’s obvious lowering costs, reducing entitle- that means we might want to try and state government to cut costs seem to be a necessary part of why governments in this state are ments and the size of government. and get out of it in the next election. DETROIT BUSINESS MAIN 06-23-08 A 9 CDB 6/19/2008 3:16 PM Page 1
June 23, 2008 CRAIN’S DETROIT BUSINESS Page 9 OTHER VOICES: Energy bills would electrify economy
The following was submitted by other alternative-energy technolo- primarily by out-of-state electric the energy-reform legislation as a regulatory environment and re- Rich Studley, executive vice president gies, and baseload power plants. vendors, which thrive on the critical step in our recovery. duced investment uncertainty, of the Michigan Chamber of Com- Michigan needs the certainty volatility of the energy market. “It is vital for legislators and which should lower the cost of cap- merce; Chuck Hadden, vice president this legislation offers. That’s why States that continue the deregulat- regulators to understand that with ital for utilities, allow businesses of the Michigan Manufacturers As- nearly 300 businesses and organi- ed market approach they advocate, so much competition for capital, to provide energy at the lowest sociation; and Sarah Hubbard, vice zations have joined the Michigan however, are seeing devastatingly the states that have the right struc- cost to consumers, and spur eco- president of government relations, Jobs and Energy Coalition. high wholesale power prices. A re- tures for investment will attract nomic development in the state.” Detroit Regional Chamber. This legislation addresses three cent Wall Street Journal article de- investor dollars,” said a recent Michigan can’t afford to fall vic- The Michigan House of Repre- primary goals: scribed Texas as the latest victim Lehman Brothers report. “Operat- tim to the whims of a volatile mar- sentatives recently passed critical 1. Increase our commitment to of deregulation. It noted that the ing as a hybrid market like Michi- ket. Passage of the energy-reform energy-reform legislation. These renewable energy such as wind, state’s utility commission held an gan is problematic for utilities, package is essential to keeping us bills, currently being considered solar or biomass. emergency meeting to address ratepayers and investors.” on the road to economic recovery. by the Michigan Senate Commit- 2. Pave the way for the financing “ominous and so far unexplained” Credit Suisse analysts said, “We If our leaders in Lansing don’t tee on Energy Policy, will help cre- needed to build new baseload pow- spikes in wholesale power prices are pleased to see political support act soon to safeguard Michigan’s ate thousands of jobs and set the er plants. and their impact on customers. for energy infrastructure in Michi- energy future, our state will find stage for major new investments 3. Encourage energy efficiency. Investment analysts are watch- gan. Legislation provides the op- its future economic prospects in energy efficiency, renewables, This approach has been opposed ing Michigan carefully, pointing to portunity to create a constructive growing even dimmer.
LETTERS CONTINUED ■ From Page 8 $18 million in revenue to only have been paying $1,200 in tax while similarly sized Michigan manufac- turers paid dramatically more re- gardless of profitability. The MBT may be far from per- fect, but it was certainly a step in the right direction prior to the Enjoy service to Mexico surcharge, which was tacked on later. John Stevens President with emphasis on the word Hercules Machine Tool & Die L.L.C. Warren Back the Fair Tax “service”. Editor: Once again I am saddened to see another Michigan business look- ing to move out of our state due to the high cost of taxes and operat- ing in Michigan: “Tax bill jumps The “2007 Best Airline in Mexico*” is pleased to offer 14,000% for Plymouth Twp. compa- ny” (June 9). Detroit–Monterrey–Mexico City service**. There is another answer, and Amy Lane wrote about it in her arti- cle “Fair Tax backers hope MBT anger will bring votes” (March 31). The Fair Tax would not only elimi- nate the Michigan Business Tax but *AeroMexico named “2007 Best Airline in Mexico” all business-to-business taxes, the by Business Traveler magazine. personal income tax, personal prop- erty tax on business fixtures and equipment and give every family in Michigan a rebate for the taxes they pay up to the poverty level. What a terrible shame that our elected officials rushed to put to- gether a package of bills like the Michigan Business Tax, so detri- • Conduct business in Monterrey and Mexico City with punctual morning flights mental to business and jobs in • Once in Monterrey, connect to major cities with direct flights to Chihuahua, Hermosillo, Leon, Guadalajara and many others Michigan, and never gave seri- ous thought to a plan that not • Fly with the only airline in Mexico that travels to Central America, South America, Europe and Asia only would modernize the tax • Enjoy unsurpassed hospitality with AeroMexico, where all beverages and delicious meals are complimentary for business system for the 21st century but would bring our jobs back to and coach passengers Michigan. Studies show a sales tax is the AM 693 Aircraft: 737-700 Departing: Mondays, Wednesdays and Fridays steadiest stream of revenue for state and local governments; why Departure Arrival Departure Arrival are we not looking at this plan? DTW 8:30 a.m. MTY 11:05 a.m. MTY 12:30 p.m. MEX 2:00 p.m. Fifteen other states derive their state budgets from a sales tax alone. When is Michigan going to AM 692 Aircraft: 737-700 Departing: Tuesdays, Thursdays and Saturdays learn? Thousands of volunteers are Departure Arrival Departure Arrival spending their time to get peti- MEX 11:00 a.m. MTY 12:20 p.m. MTY 1:50 p.m. DTW 6:30 p.m. tions signed when our legislators with one vote could put this sim- ple, fair and energizing plan on November’s ballot. Control the Founding member of SkyTeam Alliance taxes and you will control spend- ing in Lansing. Linda Jolicoeur President 1 800 237 6639 (aeromex) aeromexico.com Target Equipment Leasing Inc. Farmington Hills **Some connecting flights from Monterrey operated by AeroMexico Connect. See Letters, Page 17 DBpageAD.qxd 6/10/2008 9:37 AM Page 1
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June 23, 2008 CRAIN’S DETROIT BUSINESS Page 11
A CONVERSATION WITH Bookings for the Book The Westin Book Cadillac Detroit reports early success in attracting Carol corporate events. Galle, Page 13. Special D Events Meetings & Conventions
Carol Galle is president and co- founder of Special D Events Inc. in Royal Oak. Galle has run corporate events all over the country since starting the firm in 1992. She has had buildings wrapped in bows, turned a parking lot into a 1940s diner, and invited Archbishop Desmond small Tutu to Battle Creek for a meetings, nonprofit event. She spoke with reporter Daniel Duggan about the events business.
What’s the strangest request you’ve had? We were in Wisconsin and a client asked for a gorilla costume. It was part of a gag where he’d be the proverbial gorilla in the room while his boss was talking. Luckily, it was around Halloween time, so we found a costume store. Where do your ideas come from? bigmoney We try to give clients a range of ideas, some totally outrageous, just to get them thinking. BY DANIEL DUGGAN sorb the new business, he said. Sometimes it’s the clients who CRAIN’S DETROIT BUSINESS While the “Meet in the D” program is a have the ideas. At an exhibit near Convention campaign for local meetings, it’s part of Orlando, a client wanted to involve hen people and media from all the larger goal of growing the number of Sea World and wanted Shamu at over the world flood Detroit for small meetings in the region. his booth ... it turned out to be a bureau, biz W the North American International When Chris Baum hit. Auto Show, the economic benefit of the was hired as senior event is easy to see. Is it easy to get Shamu? It’s a lot vice president of sales leaders seek When Little Caesar Enterprises Inc. holds and marketing at the easier than Winnie the Pooh. a franchisee meeting here, it may not be That’s really hard. There are DMCVB in April 2006, front-page news. he also began pushing licensing issues and you need to to snag more However, that 1,500-person meeting bring out the whole cast. Shamu a focus on smaller would draw an economic impact of $1.43 meetings. was easy. It was a guy in a suit million, according to estimates by the De- and one bodyguard. small and “The 800 members of troit Metro Convention & Visitors Bureau. the bureau are looking Though the bureau and meeting plan- What’s the biggest mistake for a lead on a small ners are still focused on bringing major Baum meeting planners make? Not corporate meeting midsize events conventions to the re- understanding how much time it more so than the next big event for Cobo,” gion, there has been a can take to plan an event. This said Baum. “An event with 100 rooms for shift in recent months might sound like a fun job, but for the region three nights is what the average hotel is to seek the big money when you come up with the time looking for. It’s the bread and butter of that can come from line and start working backward, the industry.” smaller meetings. you can be surprised with how little No one denies the boost of big conven- The bureau esti- time you have. Sometimes, like a tions in drawing attention and offering mates meetings with corporate anniversary, you’re opportunities for many hotels and ven- 500 people can mean an planning two years in advance. dors. Yet, the smaller events can quickly economic impact for bring a big boost in business as well. the region of close to What happens when events don’t Ilitch “You get an event that brings $25 mil- $500,000 per event. go as planned? You find the lion in revenue and 15,000 rooms, and peo- “We can get a lot of economic activity problems and make the changes ple are impressed,” he said. “But there by promoting corporate meetings and get- you need to. We were doing an are hundreds of events going on every event last summer for the ting a larger share of that business,” said day that are supporting the restaurants, University of Michigan when the Ilitch Holdings Inc. President and CEO the hotels, the entire industry.” Survival Flight crash occurred Chris Ilitch. Ilitch, also chair- Some of the companies that have al- (killing six people on a mission to man of the bureau, kicked ready signed on with Ilitch’s plan, out- obtain transplant organs). The off the “Let’s Meet in the entire event had to be changed, D” program, which lined at an event May 20, illustrate the im- take on a more somber tone. $500,000 asks local businesses pact companies’ meetings can have in the Sometimes it’s a matter of What a 500-person event to hold more of region. Deloitte L.L.C., for example, held a meet- changing things at the last generates for the region. their meetings in minute. We had a luncheon Detroit. He’s ask- ing with 100 people for its national auto- planned at a hotel, which decided ing they choose motive consulting practice in Atlanta last to do some painting the day the D rather than year, said Managing Partner Joe Angileri before. It smelled like paint in the 200 Las Vegas or Or- of the Detroit office of Deloitte. room, so we had to move it Maximum number of rooms lando, for example. The company has regional meetings for outside. It’s one of those things; the 14-office group, which includes De- needed for most There are 16 mil- if the attendees only knew ... lion visitors per year troit. Angileri said those meetings, with meetings. to the Detroit area, 400 to 500 people, will be held in Detroit If you know spending $4 billion, Ilitch rather than rotating to other cities. In ad- someone said. Of that amount, 25 per- dition, Deloitte is launching a green con- interesting you cent is on meetings and conventions. sulting practice out of its Detroit office would like Daniel and brought its inaugural meeting, and Duggan to interview, That amount of spending can be doubled 400 attendees, to Detroit. call (313) 446-0414 by recruiting more corporate meetings, or write dduggan and there are enough venues to easily ab- See Events, Page 12 @crain.com. DETROIT BUSINESS MAIN 06-23-08 A 12 CDB 6/19/2008 3:17 PM Page 1
Page 12 CRAIN’S DETROIT BUSINESS June 23, 2008
FOCUS:MEETINGS & CONVENTIONS New, renovated spaces give companies options
BY JONATHAN EPPLEY of like a facelift for the meeting SPECIAL TO CRAIN’S DETROIT BUSINESS space.” Caesars Kennedy said the hotel is using Detroit-area hotels and meeting the Internet to attract new clients. venues continue to open the doors Video clips of the hotel are posted to new spaces and polish up older Windsor on YouTube and a virtual tour ones. More than 207,000 square feet of video podcast is in the works. new or renovated space has either expansion The Detroit Marriott Troy Hotel opened since January or will open spent $1.5 million to renovate its within the next year. 16,000-square-foot ballroom and The Detroit casinos have creat- opens meeting space, which can accom- ed some of the biggest new offer- modate up to 1,000 guests. ings, but mainstay corporate set- On Thursday, Caesars Wind- In Sterling Heights, the GM Her- tings in the suburbs are also sor opened the doors to its more itage Center has opened its doors to investing in upgrades. than 200,000-square-foot, $430 more meetings. Center spokesper- The largest local convention and million hotel, casino and con- son Frank Sopta said the center meeting space opened at MotorCity vention space expansion. has been available for non-GM Included in the expansion is Casino Hotel as part of its $300 mil- functions for several years but is 100,000 square feet of conven- lion permanent facility expansion. only now being marketed as such. The casino and hotel opened 37,000 PHOTO COURTESY OF THE GM HERITAGE CENTER tion and meeting space. The The GM Heritage Center has opened its doors to more people. The facility can The center is near Mound Road square feet of convention and space includes a 39,500-square- accommodate up to 600 people. and Metropolitan Parkway. meeting space on May 6 and plans foot multipurpose theater, a di- vidable 26,000-square-foot ball- Five thousand square feet of to open a 30,000-square-foot multi- tel, parking garage and theater ex- to IACC’s Web site. room and seven conference meeting space is available inside purpose theater this summer. pansion project, which will total IACC-approved spaces reflect rooms ranging from 1,500 an 81,000-square-foot center filled The space includes a 12,000- about $500 million in construction current best practices in technolo- square feet to 2,000 square feet. with nearly 200 classic GM auto- square-foot grand ballroom, four costs, said Susan Sereno, director gy, service, design and food. The The expansion will add to the 1,500-square-foot breakout rooms of sales and marketing. Eagle Crest Conference Resort in Yp- mobiles. casino’s existing 15,000-square- and two board rooms of about 500 The meeting space is to include silanti is the only IACC-approved Sopta said the facility can ac- foot Promenade Ballroom and square feet each. five breakout rooms, two board conference space in Southeast commodate 600 people and is being Colonnade Room. Jason Brown, Jennifer Kulczycki, media and rooms and a grand ballroom divis- Michigan. marketed to corporations, non- vice president of Farmington community-relations manager for ible into three sections. “We’re trying to carve out a dif- profit organizations and car clubs. Hills-based public relations MotorCity, said at least one meet- Sereno said the casino plans to ferent niche,” Aprill said. The center, however, is not open firm Hermanoff & Associates Inc., ing per day has been booked since use the familiarity of the Greek- Meeting space at the Fort Shelby for events like weddings or private which handles public relations the meeting space opened over a town district to attract clients. is to include 17 breakout rooms, parties. for the casino, said the casino is month ago. “I think location is our biggest each ranging between 300 square being marketed on both sides of “We’re trying to make this facil- “We’ve been hosting groups of selling feature,” she said. feet and 1,100 square feet, and two the border as an “all-in-one” ity available to more people to en- all shapes and sizes,” she said. Beyond casino space, another ballrooms with 2,200-2,800 square destination using the familiar joy the GM vehicles,” Sopta said. “We’ve done anywhere from con- big downtown venue to watch is feet of space. The $82 million reno- Caesars nameplate. Carolyn Artman, manager of struction companies to banks.” Iri- inside the renovated Fort Shelby vated hotel is set to open Nov. 15. The casino and hotel are op- media relations for the Detroit descence, the restaurant on the Doubletree Suites. The hotel, operat- Beyond downtown, Marriott Inter- erated by Las Vegas-based Har- Metro Convention & Visitors Bureau, 17th floor of the hotel, can be rent- ed by the Hilton Hotel Corp., is to national Inc.-managed hotels in rah’s Entertainment Inc. on behalf attributes the investment in vari- ed during the day as meeting have more than 21,000 square feet Dearborn and Troy spent $7 mil- of the Ontario government. ous kinds of convention and meet- space, but not during dinner of meeting and conference space. lion to renovate guest rooms and — Jonathan Eppley hours. The hotel is applying for Interna- meeting spaces. Both hotels re- ing spaces to a growing push from Greektown Casino plans to open tional Association of Conference Cen- opened their meeting spaces earli- meeting planners to promote local 25,000 square feet of meeting space ters approval, said Bill Aprill, ho- er this year. “We’ve definitely noticed posi- meetings. The area can market it- by February. tel director of sales and marketing. The Dearborn Inn spent $5.5 mil- tive feedback since the renova- self as “accessible, affordable and Despite filing for Chapter 11 If approved, the Fort Shelby will lion to paint and carpet its 17,000 tion,” said Jodie Kennedy, Mar- an alternative meeting destination bankruptcy late last month, the be the only IACC-approved confer- square feet of meeting space and riott regional marketing and with excellent amenities and at- casino is going forward on the ho- ence center in Detroit, according renovate 229 guest rooms. e-commerce manager. “It was kind tractions,” she said.
Events: Small meetingsprofitable Cranbrook hosts traveling PGA Championship exhibit Golf is a game that He estimates that as ■ From Page 11 loves its traditions and ABOUT THE PGA EXHIBIT many as 30,000 people history. A traveling ex- could visit the free ex- “People have liked coming here for the “Midweek, it’s crucial for hotels to have corpo- hibit at Cranbrook aims What: PGA Championship hibit by the time it meetings,” he said. “It’s a good location that’s rate meetings.” to celebrate that — and of- History Exhibit presented by leaves July 30. easy to get to. The airport certainly helps with RBS. Given the importance, the Irving, Texas- fer a unique setting for an “We try to connect that.” based Omni chain is constantly looking for evening corporate event. When: 10 a.m.-5 p.m. daily, visitors to science, and Similarly, Pleasant Ridge-based ePrize L.L.C. new ways to make its sites places for meet- with extended hours until 10 The PGA Championship p.m. Fridays, through July 30. in this case, the will hold its national meetings in the area, ings. It recently rolled out a new promotion History Exhibit showcases physics of the golf rather than other cities as has been the prac- for small meetings, offering color-coordinated Where: Cranbrook Institute of some noteworthy mo- Science, 39221 Woodward swing,” he said. “This tice in the past. meeting spaces for different meeting themes. ments in golf with a col- is going to attract an With offices in New York, Dallas, Chicago, Ave., Bloomfield Hills. A brainstorming meeting gets red decor; a lection of memorabilia at Cost: Free. audience who normal- Los Angeles and Dallas, an annual meeting meeting for bad budget news gets a soothing the Cranbrook Institute of ly might not visit.” Details: The traveling exhibit of can include 600 people with employees and blue, for instance. Science in Bloomfield The roughly 3,000- spouses, said Alesya Opelt, vice president of artifacts from 89 past PGA Another strategy is to find more local sales Township. Championship winners is a square-foot exhibit, lo- marketing. prospects. The traveling exhibit, must-see for golf fans. A portion cated at the museum’s “Traditionally, some of the meetings have “You have to look at backyard business as which debuted in 2000, of the exhibit, including new west entrance, is been in Detroit, some have been in other well,” said Heidi Nowak, director of sales and brings together artifacts interactive elements, will be at also available for cor- places,” she said. “Now, all the meetings will the 90th PGA Championship at marketing for the Ritz-Carlton in Dearborn. collected from 89 past porate parties and pri- be in Detroit.” champions of the PGA Oakland Hills Country Club from vate gatherings after “Companies that are five miles away could be The Deloitte and ePrize meetings are actual- Championship, from Aug. 4-10. hours, Stafford said. a lot of business, and not all hotels capitalize ly larger in scope than many corporate events. Tiger Woods’ shirt and Web site: www.cranbrook.edu. Ryan Cannon, tour- on what’s right here.” Nationally, Baum said, the average corporate shoes to Gary Player’s 9- nament director of the meeting averages 75 attendees. She’s also excited about what she views as a iron that helped him win the 1972 PGA 2008 PGA Championship, said this is the People in the meeting business are excited more collaborative approach. Championship at nearby Oakland Hills first year the exhibit, presented by RBS, by the growing focus on small and midsize cor- “I’ve worked in other markets, and I’ve nev- Country Club. has attracted a title sponsor, allowing it porate meetings. er seen such a cohesive effort,” she said. “It’s Michael Stafford, director of the insti- to expand and improve. “When we aren’t filled by a major, citywide great to see everyone working toward a com- tute, said hosting the exhibit was a per- “There are great videos,” he said. “It event, every hotel is out looking for meet- mon goal.” fect fit, considering the proximity of the is just a nice interactive tour through ings,” said Damon Bell, director of sales and Daniel Duggan: (313) 446-0414, museum to Oakland Hills, site of the 90th the history of the PGA Championship.” marketing for the Omni Detroit Hotel in Detroit. [email protected] PGA Championship to be held Aug. 4-10. — Jason Deegan DETROIT BUSINESS MAIN 06-23-08 A 13 CDB 6/19/2008 3:18 PM Page 1
June 23, 2008 CRAIN’S DETROIT BUSINESS Page 13
FOCUS:MEETINGS & CONVENTIONS
Soon-to-open Book Cadillac 'OLF AT ITS 0URESTx 2OSCOMMON -ICHIGAN AT A &RACTION