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$2.00/NOVEMBER 5 - 11, 2012
INSIDE Metro nearing end of CEO search A boost for local agriculture, bioscience New leader will face budget challenge, must carry out outpatient plan INSIDE: Southwestern Cuyahoga The region’s AgBio County is a focus in the region’s com- industry cluster has a petitive health care market. Page 3 new leader, and he’ll By TIMOTHY MAGAW couple of those (candidates) a little a candidate for consideration by push the group’s [email protected] more intensely than the others,” the board before the end of the most promising said MetroHealth board chairman year,” Dr. Fountain said. MetroHealth on an interim basis in ideas. PAGE 11 The MetroHealth System is down Ronald Fountain, though he wouldn’t MetroHealth’s current CEO, 2008 and expected to stay on board to the final four candidates in its share details about the candidates Mark Moran, announced nearly a for two years at the most. ALSO: quest to find the next CEO to steer or say whether any were current year ago that he would step down “He’s been great,” Dr. Fountain ■ Legal experts say new breach the hard-pressed health system that MetroHealth employees. from the post once his successor said about Mr. Moran. “We didn’t of contract statute makes Ohio more is subsidized by Cuyahoga County. “If things work the way we hope was named. Mr. Moran, whose have somebody as quickly as he attractive to business. PAGE 4 “We’ve been working with a and expect them to, we should have contract expired last March, joined See METRO Page 18 Biz travel becoming a BROWNS, HASLAM SEE more costly BUSINESS DOWNSTATE proposition New owner looks to Columbus as battleground to woo more customers
Creativity, agencies Full story by JOEL HAMMOND ■ PAGE 7 help minimize spending
By GINGER CHRIST [email protected]
Soaring airfares are bringing out the creativity in business travelers, while providing travel agencies with an opportunity to gain clients eager to hold down their costs. Marc Insul is among the business travelers struggling to find affordable flights — a problem exacerbated by fewer flights. The president and chief INSIDE: Shut- operating officer tle operators, of Commercial hoteliers balk Asset Preserva- at latest city tion, a provider of proposal to property mainte- increase per- nance and build- trip fees to ing preservation airport. Page 3 services, spends 20% of his time away from his Cleveland office as he travels for conferences and sales calls and conducts business at his company’s headquarters in Salt Lake City. So, Mr. Insul is adjusting. He recently was going to stop at the corporate office on his way to a NEWSCOM/ meeting in Southern California, but STEVE rescheduled the visit to Utah as a BENNETT separate trip later because the revised ILLUSTRATION arrangements saved roughly $500. See TRAVEL Page 17
43 SPECIAL SECTION 7 FINANCE
NEWSPAPER Banks more frequently entering schools Entire contents © 2012
74470 83781 to teach financial literacy ■ Page 13 by Crain Communications Inc. Vol. 33, No. 43 0 PLUS: CAMPUS EXCLUSIVITY ■ ADVISER ■ & MORE 20121105-NEWS--2-NAT-CCI-CL_-- 11/2/2012 3:24 PM Page 1
2 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM NOVEMBER 5 - 11, 2012 COMING NEXT WEEK THEY’LL MANAGE Among employed men, 17% of Asians and whites worked in management- It’s that time of year again ... related occupations at the end of 2011, compared with 10% of blacks and 8% of Hispanics, according to new federal government data. For employed A Geauga County Christmas tree farm will women, smaller percentages of Asians and whites were in management com- 700 W. St. Clair Ave., Suite 310, celebrate the season under new ownership. pared with men, while larger percentages of blacks and Hispanics occupied Cleveland, OH 44113-1230 such positions. Here’s how the demographics break down: Phone: (216) 522-1383 How’s the transition going? Plus, is the holiday Fax: (216) 694-4264 optimism being felt nationwide trickling down Men 16+ White Black Asian Hispanic www.crainscleveland.com to Northeast Ohio’s small retailers? Publisher/editorial director: Management 17.4% 9.7% 16.9% 7.7% Brian D. Tucker ([email protected]) Editor: REGULAR FEATURES CORRECTION Professional 17.6 13.8 32.3 7.9 Mark Dodosh ([email protected]) Managing editor: Classified ...... 18 An Oct. 29, Page One story Sales 16.6 18.0 17.1 14.6 Scott Suttell ([email protected]) Editorial ...... 8 incorrectly reported the budget Sections editor: period for the proposed budget Women 16+ White Black Asian Hispanic Amy Ann Stoessel ([email protected]) Going Places ...... 10 under consideration by the Ohio Assistant editor: Management 14.7% 11.2% 15.4% 8.9% Joel Hammond ([email protected]) Letter...... 8 Third Frontier Commission. The Sports proposed budget is for calendar Senior reporter: List: Largest hospitals ..16 Professional 27.6 22.9 29.0 16.3 year 2013. The commission until Stan Bullard ([email protected]) Milestone ...... 19 recently operated under a fiscal Real estate and construction Sales 31.8 30.8 26.3 31.8 Reporters’ Notebook ....19 year that started on July 1. Reporters: Jay Miller ([email protected]) Government Chuck Soder ([email protected]) Technology Dan Shingler ([email protected]) Energy, steel and automotive Tim Magaw ([email protected]) Health care and education Michelle Park ([email protected]) Finance Ginger Christ ([email protected]) Manufacturing, marketing and retailing Research editor: Deborah W. Hillyer ([email protected]) Cartoonist/illustrator: Rich Williams Marketing director: Lori Yannucci Grim ([email protected]) Marketing/Events manager: Christian Hendricks ([email protected]) Assistant Events Manager: Jessica Snyder ([email protected]) Advertising sales manager: Nicole Mastrangelo ([email protected]) Senior account executive: Adam Mandell ([email protected]) Account executives: Dawn Donegan ([email protected]) Andy Hollander ([email protected]) Lindsey Nordloh ([email protected]) Sales and marketing assistant: Michelle Sustar ([email protected]) Office coordinator: Toni Coleman ([email protected]) Digital strategy and development manager: Stephen Herron ([email protected]) Web/Print production director: Craig L. Mackey ([email protected]) Production assistant/video editor: Steven Bennett ([email protected]) Graphic designer: Lauren M. Rafferty ([email protected]) Billing: Susan Jaranowski, 313-446-6024 ([email protected]) Credit: Todd Masura, 313-446-6097 ([email protected]) Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Robert C. Adams: Group vice president technology, circulation, manufacturing Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing
G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996)
Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-2912, or email to custom- [email protected], or call 877-812-1588 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777. Reprints: Call 1-800-290-5460 Ext. 125 Audit Bureau of Circulation 20121105-NEWS--3-NAT-CCI-CL_-- 11/2/2012 2:48 PM Page 1
NOVEMBER 5 - 11, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3 Local med device maker growing under new owner Dutch firm expands role of Medina’s OrthoHelix
By CHUCK SODER Medina, but also to help [email protected] the fast-growing operation expand even faster now that The volume of business it’s a division of the Amster- that officials at OrthoHelix dam-based medical device Surgical Designs in Medina company. oversee is about to double, Even without the new thanks to its new Dutch products, OrthoHelix already parent. Stripe plans to hire 20 to 30 people Tornier N.V., which ac- over the next six to eight quired the orthopedic device maker months, said Mr. Stripe, whose Oct. 4, plans to put OrthoHelix in company makes implantable MARC GOLUB Shuttle operators wait for passengers in the arrivals area at Cleveland Hopkins International Airport on Friday. charge of its foot and ankle product screw-and-plate systems surgeons line, said Dennis Stripe, president use to fix bone deformities and frac- of OrthoHelix. That line brings in tures. about $25 million in revenue per “That number could go up,” he year; by comparison, OrthoHelix as said. DRIVERS SHARE AIRFARE a whole is expected to generate $30 Tornier (pronounced torn-yay) million in sales this year. announced in August that it would The move is just one piece of evi- buy OrthoHelix for $135 million in Airport shuttles, limousine operators latest target of increased per-trip dence suggesting that Tornier not cash and stock. The figure could cost to Hopkins as city aims to hold down landing fees only plans to keep OrthoHelix in See ORTHO Page 18
By JAY MILLER line with its costs and with fees [email protected] THE WEEK IN QUOTES charged by other airports around irport shuttle and lim- the country. “The first thing right “This is a big state, ousine operators are In the middle, the head of the off the bat this person with a lot of people honking their horns in Airport Ground Transportation needs to have is the and a lot of successful anger over the possi- Association, members of which ability to craft a vision businesses, and we bilityA of a per-trip fee to pick up include parking lot owners and airports, says the Cleveland fee for the organization need to get them more and drop off passengers at Cleve- and communicate it involved with the land Hopkins International Air- increase isn’t out of line with port. what airports nationwide are in a way that’s credible Browns.” asking, though he questions the to the people listening.” — Jimmy Haslam, owner, For its part, the city of Cleve- Cleveland Browns. Page 7 land, which owns and operates fairness of not easing in such a — Bill Ryan, president of the Center for Health Affairs. Page One the airport, says it only is bringing big increase. its ground transportation fee in See FARE Page 6 “If a customer is more “We like student INSIDE THE CRAIN’S VAULT financially literate customers because
In October 2007, Crain’s reported that taxicab That plan gave three cab companies exclusive rights and makes better they will be higher operators excluded by the city from picking up to pick up passengers at the airport terminal. It also decisions … they’ll be wage earners in the fares at Cleveland Hopkins International Airport added a $3 surcharge to rides originating at the airport sued the city. From that story: and raised taxi fares from the airport significantly, nearly a better customer for future; they’ll ... The suit charges the city with breaching its contracts doubling some fares. the bank.” probably stay inside with the four licensed cab companies and the city- Attorney Gordon Friedman, who represented ABC licensed drivers, and with discriminating against the Taxi, Airport Taxi, USA Taxi and United Cab Co., said the — James Thurston, spokesman, our footprint.” Ohio Bankers League. Page 13 companies and drivers. financial thresholds set by the city to qualify for the right — Nick Certo, PNC’s senior vice The cab companies also asked for a temporary to serve the airport were set high to rule out his clients. president and manager of univer- restraining order to prevent the city from instituting its To read the entire story, follow this URL: sity and workplace banking. new cab system at Cleveland Hopkins. http://tinyurl.com/b3tvl3b. Page 13
INSIGHT Cuyahoga’s southwestern tip now ground zero in health care fight
the southwestern portion of Cuya- quite well as a whole,” said South- Hospitals see Middleburg Heights as prime target for revenue generation hoga County — an area that includes west General president and CEO Berea, Middleburg Heights and Thomas Selden. “Everybody who By TIMOTHY MAGAW burg Heights. County. Then there is the Cleve- Strongsville — the latest battle- needs paying patients looks at our [email protected] About two miles southeast, at land Clinic, which doubled the size ground in Northeast Ohio’s com- area. We have a good demographic the border of Middleburg Heights of a rehab site in Middleburg Heights petitive health care market. And as in terms of patients and their ability In the next five weeks, steel will and Strongsville, MetroHealth is last year and plans to expand these expansion plans take hold, to have insurance and to pay for start to rise from the toiled earth erecting a 57,000-square-foot mul- services at its health center in industry onlookers say, suburban their care.” surrounding Southwest General tispecialty health center — a $23 Strongsville, which records more health care seekers could find Health Center as it makes headway million investment that officials than 210,000 patient visits each themselves awash in a marketing Coping with volume on a $128 million expansion pro- hope will bring more paying year and remains one of medical onslaught as medical providers vie Middleburg Heights saw its ject that will alter dramatically the patients into the fold of the health giant’s busiest facilities. for their health care dollars. population inch upward about 3% hospital off Bagley Road in Middle- system subsidized by Cuyahoga This frenzy of activity has made “These communities are doing See HOSPITALS Page 17 20121105-NEWS--4-NAT-CCI-CL_-- 11/2/2012 2:31 PM Page 1
4 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM NOVEMBER 5 - 11, 2012 Another investor buys up AG stock
tate investment firm Lexington Real- Former Pulte CEO’s firm secures 5.49% stake ty Trust since November 2003. Accord- ing to the Lexington Realty Trust web- amid go-private offer for American Greetings site, Mr. Grosfeld is 74 years ago. According to an April 22, 1997, By MARK DODOSH ments from the personal funds story in the Detroit Free Press, most [email protected] of Mr. Grosfeld and from the trust, of Mr. Grosfeld’s remaining ties to according to the filing. Pulte were severed after he settled Another investor — this time, a Dawson Investments is the second allegations that more than 22,000 Michigan investment firm controlled investor in American Greetings to investors were bilked by a Florida se- by James J. Grosfeld, a former CEO file an SEC Schedule 13D since the curities firm Mr. Grosfeld owned. of homebuilding giant Pulte Homes company’s Sept. 26 announcement The Free Press story said Mr. Gros- — has secured a 5% stake in the that the Weiss family formally had feld in January 1997 reached a $40 Class A common stock of American approached the American Greetings million settlement with the investors Greetings Corp., which is the object board with an offer to take the who had sued him in 1990 for alleged of a go-private offer by members of company private. A 13D filing is fraud in connection with commodities the Weiss family. required once a buyer secures at options they had bought through In an Oct. 26 filing with the Secu- least 5% of a company’s stock. Multivest Options Inc. rities and Exchange Commission, TowerView LLC, an investment Mr. Grosfeld’s secretary called last Dawson Investments LLC of South- firm controlled by New York investor Friday to say he would not comment field, Mich., said it had acquired Daniel R. Tisch, notified the SEC in for this story. Wednesday, December 5, 2012 1,580,614 shares, or 5.49%, of Amer- a 13D filing on Oct. 3 that it had An American Greetings spokes- Executive Caterers at Landerhaven ican Greetings’ Class A stock as of increased its stake in American woman who spoke to Crain’s last Oct. 23. Dawson Investments paid Greetings to 1.45 million Class A Friday morning did not provide by BNt#SFBLGBTU/FUXPSLJOH nearly $26.9 million for those shares, shares, or 5% of the Class A stock the publication’s deadline a response BNt1BOFM%JTDVTTJPO which it bought from Oct. 8 to Oct. outstanding. to a question about whether Mr. 23 on nine different trading days. Contacted by Crain’s last Thurs- Tisch or Mr. Grosfeld had contacted Sustainability In the Supply Chain The stock was bought at per- day, Nov. 1, Mr. Tisch declined to either American Greetings executives share prices ranging from $16.83 to comment on whether TowerView or board members about their invest- Innovation is what good businesses do best. $17.15. The Weiss family and other had either bought or sold any Amer- ments in the company. Learn how to affect change across your supply chain. related parties have offered $17.18 ican Greetings stock since its SEC Besides the two 13D filings, at a share for the Class A stock of filing. He also would not comment least three lawsuits have been filed American Greetings that they don’t on whether he has had any contact in Cuyahoga County Common Pleas $ Sponsored by already own. with American Greetings executives Court by American Greetings share- According to the SEC filing, or board members, and he would holders who object to the Weiss Dawson Investments is solely owned not say what TowerView’s plans family’s attempt to take the company $ $ by the James J. Grosfeld Trust, of are for its investment in American private on the grounds that it isn’t which Mr. Grosfeld is trustee. The Greetings. a fair offer. The lawsuits name as Underwritten by filing states that the sole business of Mr. Grosfeld was chairman and defendants the company itself and $ Dawson Investments is holding CEO of Pulte Homes from 1974 to members of its board of directors, investments on behalf of the trust. 1990. He has been a director of which include CEO Zev Weiss, The money used to buy the investment management giant Black- president and chief operating officer American Greetings shares came Rock Inc. since 1999 and has served Jeffrey Weiss, and their father, chair- 3&(*453"5*0/ Contact Jessica Snyder at from contributions to Dawson Invest- as a trustee of commercial real es- man Morry Weiss. ■ 216-771-5388 or [email protected] www.CrainsCleveland.com/BREAKFAST Ohio breach of contract statute shrinks
“They couldn’t believe that Ohio suits to be brought sooner, there is Experts say eight-year had such a long statute of limita- a better chance that witnesses are tions for breach of contract.” still available and that their memories limit makes state more Driven by their own frustration are fresher. It also benefits the with what they call an “excessively system because it should lead to a attractive to business long” limitations period, Mr. Eckel- somewhat quicker resolution of berry and Mark Johnson, also a liti- contractual disputes.” By MICHELLE PARK gation partner for Baker Hostetler, Given that breach of written [email protected] co-authored a 2011 article pub- contract is a more common type of lished by the Columbus Bar Associ- consumer class action lawsuit, Mr. In a change that many legal experts ation, “Bad for Business: Ohio’s Johnson anticipates that smaller- say makes Ohio more attractive to Statute of Limitations for Written size class actions will be filed in business, plaintiffs no longer have Contracts.” Ohio state courts, too. the equivalent of nearly four presi- For one, most states have limita- Frank Carrino, chief legal counsel dential terms to sue someone over tion periods of six years or less for and secretary for Westfield Insur- the breach of a written contract. these kinds of suits, said Mr. John- ance, a property and casualty insur- The state of Ohio has reduced the son, who also testified before legis- ance company based in Westfield statute of limitations for breach of lators in support of Senate Bill 224, Center, said the reduced limitations written contract to eight years from which reduced the limitations period. period should benefit the insurer 15, bringing Ohio more in line with And Messrs. Eckelberry and and its clients. the rest of the country, local lawyers say. Johnson agree: If a contract is “It gives us more certainty and Effective Sept. 28, the change breached, it’s unlikely someone will gives our clients more certainty means companies should face less wait 15 years — or even eight years about when they’re exposed,” Mr. legal exposure because the years for — to sue to recoup their losses. Carrino said. “All kinds of things which damages can be sought are “Court dockets are crowded to occur where passage of time is a seven fewer. It also means companies begin with,” Mr. Eckelberry said. disservice to the law.” no longer need to keep 15 years of “There are enough current disputes. Even plaintiffs’ attorneys aren’t data and records relating to contracts, We shouldn’t be wasting time on crying foul. the collection and storage of which something that happened 12 years “I’d be surprised if you find anyone can prove expensive. ago, 13 years ago. How bad could who is too offended by this eight- Some attorneys can’t believe it they have been damaged if they year statute of limitations,” said took this long for the change to occur. waited 13, 14 years to file suit?” Kathleen J. St. John, a partner at Prior to the change, Ohio had one of Nurenberg, Paris, Heller & McCarthy, the longest statutes of limitations for More certainty welcome a Cleveland personal injury firm that breach of written contract in the The change to an eight-year lim- also pursues consumer class actions. United States, according to a number itations period benefits the legal Ms. St. John said she never under- of local litigation attorneys. system as a whole, according to David stood why written contract plain- “In the past, (when) we explained A. Schaefer, who chairs the litigation tiffs were afforded 15 years to sue that Ohio had a 15-year statute of group for McCarthy, Lebit, Crystal & when the statute of limitations was limitations, the response was always, Liffman Co. LPA in Cleveland. much shorter for other legal actions, ‘Are you kidding me?’” said Rodger “Eight years is certainly more in particularly the single year people Eckelberry, a partner in litigation in line with the rest of the country,” he can file for medical malpractice in Baker Hostetler’s Columbus office. wrote in an email. “By requiring the Ohio. ■ 20121105-NEWS--5-NAT-CCI-CL_-- 11/2/2012 3:17 PM Page 1
NOVEMBER 5 - 11, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 5 Valley View industrial distributor finds its bearings nationwide as Bearing Distributors are trying “More distributors are Western, southern U.S. next as company tries to top last year’s revenue jump to find ways to provide more services to their customers in an effort to broadening their product By GINGER CHRIST company. We integrate,” he said. tain, according to Mr. Ruth. The stay competitive in a consolidating lines. ... It helps them [email protected] The company hires local people to system, which now is being installed market. soften some of the run and staff the foreign offices, he in Europe and will be integrated To win — and keep — the business volatility in the economy.” Bearing Distributors Inc. is tack- noted. globally by 2015, allows the company of large manufacturers, distributors ling the country — and even a bit of to develop insights on customers’ need to offer “everything and – Guy Blissett, wholesale the globe — one customer at a time. One for all distribution habits based on histor- anything a factory manager might distributor lead, IMB The industrial distributor and To manage its global footprint, ical data, he said. need,” Mr. Blissett said. supplier based in Valley View is fol- Bearing Distributors is rolling out Among the company’s customers “More distributors are broadening Bearing Distributors serves the lowing its customers to new markets, One BDI — an enterprise resource are General Electric, Kraft Foods their product lines and offering a automotive, material handing, using that business as a starting planning software package — to all and John Deere, as well as auto- wider range of products. It helps health care, package handling, food point for national and international its offices. Rather than operating nine makers Ford, General Motors and them soften some of the volatility in processing, power generation, steel, growth. different systems in 10 countries, Chrysler. the economy,” he said. “Somebody chemicals, wastewater treatment, The company has 175 branches in Bearing Distributors now will have Guy Blissett, wholesale distribu- like (Bearing Distributors), if they’re paper, printing and ethanol indus- the United States, Canada, Mexico, one system across the board. tion lead at IBM and author of selling bearings into a manufacturing tries, among others. Food processing, Europe and Asia and has 1,300 One BDI provides an opportunity “Facing the Forces of Change,” a plant, they will also now offer elec- auto manufacturing and oil and gas employees worldwide, 520 of whom for growth for the company even as book on the future of wholesale trical equipment, electrical wiring, are among its strongest growth areas, work in the United States. Bearing the global economy remains uncer- distribution, said distributors such conduit, boxes.” Mr. Shepard said. ■ Distributors in 2012 has opened five locations — it generally opens five or six per year — and plans to open three more before the end of the year. “Our goal is to cover the balance of the U.S.,” said Bill Shepard, director of North America sales and marketing for Bearing Distributors. The company distributes bearings, mechanical power transmission, electrical power transmission, linear motion, fluid power, material handing and safety products. Bearing Distributors is focusing on expansion in the western and southern United States, said John Ruth, the president and chief oper- ating officer of BDI-USA. It also will target growth in Western Europe, South America and the Asia-Pacific region, he said. The company chooses new office locations based on where its existing customers do business but then works to diversify its business in those markets, Mr. Ruth said. The strategy appears to be working. Bearing Distributors’ revenue in 2011 was $590 million, 18% higher than $502 million in 2010 and 47% above 2009 levels of $402 million, according to figures provided by the company. If the company’s current growth streak continues, it plans in 2014 to open a second distribution center to supplement its 48,800-square-foot building on Hub Parkway in Valley View. The center likely would be in Cleveland or another U.S. city, Mr. Shepard said. Mr. Shepard said one reason the company — owned by privately held Forge Industries Inc. of Youngstown — has been able to become a global player while many of its competitors are not is its ability to take risks. “The owner is willing to be a bit more risky than a public company would be,” Mr. Shepard said. “The real issue for us is, ‘What’s the return for us?’” Because a new office can cost several hundred thousand dollars, YOUR BUSINESS ISN’T JUST A JOB — IT’S A PASSION. You get to know your Bearing Distributors helps minimize the risk in foreign countries by customers, treat them fairly, and build relationships. Don’t you deserve that same kind studying the business environment of treatment from your bank? With Citizens Bank, you’ll get the right solutions and of that country, Mr. Ruth said. “We don’t operate in foreign products from people with the experience to know what’s right. After all, we’ve been countries like we’re a U.S.-based around over 140 years, helping businesses just like yours grow. So if you want a bank that shares your passion, call us. BECAUSE WITH US, IT’S PERSONAL. Volume 33, Number 43 Crain’s Cleveland Busi- ness (ISSN 0197-2375) is published weekly, except for combined issues on the third week of May and $)&$,*/(4"7*/(4r-0"/4-*/&40'$3&%*5r.&3$)"/54&37*$&4 fourth week of May, the fourth week of June and first week of July, the third week of December and fourth 53&"463:."/"(&.&/5r41&$*"-5:'*/"/$*/(r8&"-5)."/"(&.&/5 week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing of- fices. Price per copy: $2.00. POSTMASTER: Send 1-800-946-2264 address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, CITIZENSBANKING.COM/BUSINESS Michigan 48207-2912. 1-877-824-9373.
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6 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM NOVEMBER 5 - 11, 2012
IMPROV Fare: Operators object to increased fee COMEDY CLUB continued from PAGE 3 “What we’re trying to do is posi- “I believe there are valid & RESTAURANT Any time an airport can increase tion the airport and its cost struc- its revenue from vendors and con- ture to have the most favorable hap- arguments on both BOOK YOUR cessionaires, it can reduce the cost pen,” Mr. Smith said. “We want the sides.” airlines pay for their airport opera- airlines in a position to add service.” – Martin Keane, councilman, city HOLIDAY PARTY NOW! tions in the form of landing fees. The Airports continually worry that of Cleveland lower the charges to the airlines, the cost-conscious airlines will divert Dinner & Show thinking among airport operators flights to places with lower charges. the fee would add $38,800 to the Packages Available goes, the greater the likelihood an At most U.S. airports, including cost of the hotel’s free shuttle to the airport will get more flights or at least Cleveland Hopkins, airlines pay all airport. He said he couldn’t pass 40-400 people not lose flights in the constant of an airport’s operating costs under that cost along to hotel guests. reshuffling of airline schedules. a master lease, minus revenue re- Mr. Smith discounted that argu- West Bank • Flats • Next to Shooters The city in January proposed ceived from non-aeronautical sources, ment, saying the airport’s analysis charging limousine companies and such as parking, concessions and suggested that the fee would add at (216) 696-IMPROV(4677) airport parking and hotel shuttle other rental fees. most 25 cents to the cost of a room ask for the “partyman” operators a $3.50 trip fee whenever At Cleveland Hopkins in 2011, the night at the hotel. He added that www.clevelandimprov.com they come onto airport grounds. A airlines accounted for $87.4 million when the airport proposed the fee license plate recognition system of $115 million in total revenue, earlier in the year, the city was willing would count the trips. according to published income to forgo it until 2013, which gave The companies currently pay an statements. companies time to build the added annual $550 fee per vehicle to use That thinking doesn’t add up for the cost into their 2013 budgets. the airport. ground transportation operators, Mr. Smith said he is willing to The airport initiated a similar fee however. hear alternative proposals for raising with taxicab operators in 2007, Stephen Qua II, president of revenue. charging a $3 trip fee that could be Company Car & Limousine, said the Could be worse added to the metered fare and passed fee increase could cost his firm along to passengers for each trip another $180,000 annually. He said Ray Mundy, executive director of leaving the airport. his 38 vehicles make 1,000 airport the Airport Ground Transportation trips a week. Association, said the Cleveland Cost conscious Mr. Qua said his company is fee only would be slightly above the Ricky Smith, the city’s director of willing to pay its fair share of the average of what U.S. airports are port control and chief of the Cleve- cost of parking its cars in the limou- charging shuttle and limousine land Airport System, told Crain’s in a sine parking lot while they wait for operators. His organization is com- telephone interview last Thursday, customers. But he questions this prised of ground transportation 2603 W. MARKET ST., FARILAWN Nov. 1, that the last fee increase, to new fee. operators, such as parking lot and $550 a year from $500, was four years “I don’t know why I should pay limousine firms, airports and indus- $YDLODEOHIRU6DOH ago. Before that, for as long as airport anything more to pick up your try suppliers. 6TXDUH)HHW staff could determine, the charge mother at the airport than you do,” “At $550 per vehicle, the Cleve- /DUJH6XUIDFH3DUNLQJ$UHD was $450 a year. he said. “I wouldn’t complain if they land airport, for an airport its size, 7KUHH6WRU\$WULXP The current fee, Mr. Smith said, put one of those little baskets at the would be in the lowest quartile, /RFDWHG1H[WWRWKH)DLUODZQ&RXQU\&OXE generates about $150,000 a year for end of the roadway and everybody probably in the lowest 10% of trip &ORVH3UR[LPLW\WR, the airport. The new fee would push threw in a quarter.” fees being charged,” Mr. Mundy that closer to $2 million. His argu- said. “Three dollars-fifty cents per Pay to play -DFN:'UHVFKHU&3$6,25 ment in favor of the fee is that it trip would put them a little bit *)&R\OH,,,6,25 would cover the cost of airport road- Mr. Smith said he thinks it’s fair above average, but not a great deal.” way maintenance that’s attributable for a profit-making business to con- Mr. Mundy said some airports even ZZZRVWHQGRUIPRUULVFRP to commercial vehicles, about $1.2 tribute to the cost of maintaining are charging off-airport parking oper- million, with something left over to the airport. ators a percentage of their revenue, reduce the costs the airlines pay. “The private citizen who is drop- in the 8% to 10% range, as a condition ping his mother off at the airport is for access to the airport grounds. not doing it for a profit and making “Those operators would love to multiple trips a day to the airport,” have a per-trip charge — that’s he said. cheaper for them,” he said. At a Cleveland City Council Avia- Mr. Mundy said Cleveland might tion and Transportation Committee be trying to make up for lost time by hearing Oct. 24, parking lot and pushing through a big fee increase hotel operators offered similar all at once, though he suspects there objections to the fee. might be room for negotiating a Susan Kane, a vice president of middle ground. Park ‘N Fly, a national airport parking Councilman Martin Keane, who company that operates a lot on chairs the aviation committee, said Snow Road near the airport, said he isn’t sure how this issue will be Turns out the distance between she was worried the fee could put resolved. the company out of business in “I believe there are valid arguments Cleveland. on both sides,” he said. “We’re still middle management and upper “Cleveland’s proposed fees clearly getting responses to our requests are out of line (with the industry) for more information.” management is one degree. and not based on the actual cost of Mr. Keane said he has been told ground transportation service,” Ms. part of the problem is that some of Kane said. She said the fee would these service providers may be raise the fees associated with oper- locked into long-term contracts ating the company’s shuttle services with clients, including the airlines, from its parking lot to $228,000 a which negotiate room rates at airport year from $5,500. area hotels for their flight crews. Dan Pora, assistant general Still, he said he hopes legislation manager of the Cleveland Airport can be passed before the end of the Marriott, made a similar plea, saying year. ■
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NOVEMBER 5 - 11, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 7 In effort to enhance marketing, Browns, GCP exploring Haslam targets state capital how best to work together New Browns owner Jimmy Haslam in negotiations with potential naming met with Crain’s last Wednesday to rights sponsors for Cleveland Browns By JOEL HAMMOND talk about his experience in Cleve- Stadium, and there will be a naming [email protected] land so far and his plans for the rights deal in place for the 2013 organization. Aside from trying to season. Asked why not Pilot Flying J Jimmy Haslam intends to turn expand the Browns’ footprint, Mr. — the large truck stop company Ohio into a battleground state even Haslam hit the following high notes: owned by his family — Mr. Haslam after this week’s election is over. ■ Mr. Haslam met last week said, “I think there are other compa- The newly approved Cleveland with the leadership of the region’s nies that would have more interest.” Browns owner said in a meeting chamber of commerce, the Greater ■ He reiterated that the team with Crain’s editorial board last Cleveland Partnership, to talk about would bring in top architects to Wednesday, Oct. 31, that the Browns “points of intersection in economic study improvements to the stadium. need a “jolt of energy” that could be development” between the Browns ■ Mr. Haslam said part of his mo- accomplished by “re-firing up the and Cleveland, according to Browns tivation for buying the team was his fan base.” general counsel Fred Nance. “We competitive nature, which famously But it isn’t just Northeast Ohio are engaging directly through the was displayed when CBS TV cameras fans that could use a recharge: Mr. vehicle that is the voice of the busi- caught him reacting emotionally to Haslam said he’ll venture outside the ness community,” Mr. Nance said. a late drop in the end zone by receiver immediate area, into Columbus and ■ The Browns are part of a com- Josh Gordon in the team’s loss to other parts south, in an effort to JAY LAPRETE/THE ASSOCIATED PRESS mittee formed by Cleveland Mayor Indianapolis on Oct. 22. build ticket sales by energizing a Jimmy Haslam at his introductory news conference in Berea in August. Frank Jackson that put together an ■ The Browns continue to talk fan base leery of still more losing and RFP for developers to pitch their with Hall of Fame running back Jim another push of the reset button. broadcasts at 50,000 watts, while its lish Browns Country through the ideas for the lakefront, but neither Brown, who took exception to “We’re selling the Browns,” Mr. sister station, WMMS-FM 100.7, I-71 corridor and make it more of a Mr. Haslam nor Mr. Nance would outgoing team president Mike Holm- Haslam said, “and it’s not just in which simulcasts Browns games, year-round brand,” Ms. Reau said. commit to the team being a partner gren’s attempt to minimize Mr. Cleveland. It’s Northeast Ohio; it’s all broadcasts at 34,000 watts. “But a concern is, if fans in Columbus in development efforts. However, Brown’s role with the team. But no of Ohio. We’re very respectful of the “The whole communications are giving up their entire Saturday, Mr. Haslam did say, “It’s in Cleve- specific role for Mr. Brown within Brown (family that owns the Cincin- aspect is something we can do a lot will they give up their full Sunday land’s interest and in the Browns’ the new regime has been deter- nati Bengals), but there are a lot of better,” Mr. Haslam said, referring in (for Browns games)? Most people interest to develop that spectacular mined as of now. “We’ve developed Browns fans in Columbus. I don’t general to how the team connects these days can’t do both, and OSU property.” a great relationship,” Mr. Haslam know that we’ve taken advantage of that. with the marketplace. has delivered for fans.” ■ ■ The Browns have been involved said. — Joel Hammond “This is a big state, with a lot of “There’s an opportunity to more people and a lot of successful busi- aggressively market the Browns,” he nesses, and we need to get them said. more involved with the Browns,” Mr. For example, sports marketing Haslam said. observers said, Mr. Haslam could Data from New York-based link his two most valuable assets — Scarborough Research, a pioneer in his family’s $6 billion truck stop studying fan tastes in individual company, Pilot Flying J, and the Browns markets, seems to back up Columbus’ — in cross-promotional efforts. status as a battleground market, at Pilot Flying J operates a dozen least in terms of pro sports loyalty. truck stops in Ohio, including eight As one might expect, Ohio State outside Northeast Ohio. One way University football and basketball Mr. Haslam could increase the rank Nos. 1 and 2, respectively, Browns’ exposure outside the team’s Health care reform in the among the 1.8 million or so adults in traditional market is by upgrading a the Columbus area. According to sponsorship of the Browns to include Scarborough, 66% of that group either Browns-related promotions in Pilot election’s aftermath: Now what? have watched, attended or listened stores statewide. to — the research firm’s “WAL” mea- Dan Gilbert already engages in Cleveland - Thursday, December 6, 2012 sure — an Ohio State football game such cross-promotional ploys with Sponsored by in the last year, while the WAL for his teams that play at Quicken Loans AM s "REAKFAST .ETWORKING Ohio State basketball registered 50%. Arena in downtown Cleveland. The For the Browns, the WAL measure Lake Erie Monsters, Mr. Gilbert’s ,OCATION 4HE 5NION #LUB was 37%, and for the Bengals, 32%. American Hockey League team, and Jim Kahler, former vice president the Arena Football League’s Cleve- %UCLID !VENUE #LEVELAND /( of sales and marketing for the Cleve- land Gladiators each are promoted land Cavaliers and now executive and displayed prominently at The Q director of the Center for Sports during Cleveland Cavaliers games, Administration at Ohio University, and vice versa. finds encouragement for the Browns Mr. Kahler said other Browns in the 37% figure. sponsors could benefit from an “That number, in a market that increased emphasis by the Browns isn’t their home, is good,” said Mr. on marketing. Discount Drug Mart, Kahler, who sees Columbus as “a based in Medina, already is promoted neutral battleground” for fans of as the place to buy tickets outside professional football. the team’s box office — a privilege for which the retailer pays the team Tricks of the trade a lump sum. In return, Discount !KRON 4UESDAY $ECEMBER Sponsored by One way the Browns might expand Drug Mart can up-sell its vendors to their footprint is with an improved be a part of team-themed promotions AM s "REAKFAST .ETWORKING network of radio affiliates. in its stores. ,OCATION 'REYSTONE (ALL Crain’s reported in mid-October Elephant in the room that the Browns were seeking bids % -ILL 3TREET !KRON /( from media companies for the rights As the Scarborough data suggest, to the team’s flagship radio broad- the Bengals aren’t the Browns’ top casts. As part of that process, senior competition in the state. Cincinnati vice president of business develop- long has struggled with fan apathy, ment Jim Ross said, the Browns are and consistently is forced to black aiming to increase the number of out home games on local television radio affiliates statewide and to hook because of its inability to sell out up with stronger affiliates in markets games at Paul Brown Stadium. (This where the team already has a radio season, the Bengals have improved, presence. to an average of 62,536 in three At present, the Browns’ radio home games.) network spans 28 affiliates, with only Instead, Ohio State — and fans’ Registration & Sponsorship: Contact Jessica Snyder at Underwritten by four in Columbus or markets south. busier schedules — are the real chal- 216-771-5388 or [email protected] Its Columbus affiliate, WBWR-FM lenge to the Browns, said Jackie 105.7, is a 2,400-watt station. By Reau, CEO of Cincinnati-based www.CrainsCleveland.com/BREAKFAST comparison, the team’s flagship Game Day PR. station in Cleveland, WTAM-AM 1100, “I think there is a way to re-estab- 20121105-NEWS--8-NAT-CCI-CL_-- 11/1/2012 4:33 PM Page 1
8 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM NOVEMBER 5 - 11, 2012
PUBLISHER/EDITORIAL DIRECTOR: Brian D.Tucker ([email protected]) EDITOR: Mark Dodosh ([email protected]) MANAGING EDITOR: Scott Suttell ([email protected]) OPINION Nice digs e wouldn’t go back to the old form of Cuyahoga County government for a second, nor was there much to praise about the former Board of County Com- missionersW during the last few years of its existence. We’ll give the now-imprisoned Jimmy Dimora credit for one good move, though — that was voting to pass the increase in the county sales tax that made possible the construction of a new convention center and medical mart in Cleveland. It was back on July 26, 2007, that then-commis- FROM THE PUBLISHER sioner Dimora and his colleague, Tim Hagan, bypassed a public vote on the tax hike by approving the one-quarter percentage point increase at a No monkeying around on this issue meeting of the three-member board. Commissioner Peter Lawson Jones voted against it. ake a deep breath and repeat af- or lose them, it spurred my thinking zoos, obviously — had registered by last The action was not universally popular, and ter me: “It’s just one more day. about government and the legislative week. immediately prompted talk about a petition drive to It’s just one more day. It’s just process. The state plans to build a $3.5 million revoke the tax hike. However, the increase remained one more day… It’s inarguable that we need govern- holding facility that will house seized in place, and money began to pile up for the new T “And I’m going to put my foot ment, and reasonable folks can agree to animals until they can be relocated to a convention and med mart complex even though the through my TV if I have to stomach one disagree about how much is too much or zoo or some other appropriate facility. site for it had yet to be determined. more commercial with some politician enough. But when some guy sets loose That’s a good investment. More than five years later, construction of the calling his or her opponent a liar!” his lions and other beasts and then kills “Our last resort would be that we have $465 million project is on track for completion next Seriously, now… himself, leaving authorities to to take custody of an animal,” state Agri- Wait. I was being serious. clean up the mess, it’s right for culture Director Terry Daniels told the July, ahead of schedule and on budget. It didn’t hurt OK, so it’s time for me to BRIAN government to step in. newspaper. “We want the public to be during negotiations with contractors and property take a deep mental breath, and TUCKER You might recall that Terry safe.” owners that the county had money in hand and was repeat after myself: “There are Thompson did just that a year Hear, hear, Mr. Daniels. We want that ready to move ahead with the project once it settled some good people in govern- ago at his property outside as well, and so do the hundreds of sher- upon the site of the old convention center as the ment, despite how they act in Zanesville. He released 56 iff’s deputies, state troopers and police home for the new one. public during campaign season. animals, among them lions, officers across the state that get plenty of It’s impossible to say what would have happened And there really is some good tigers, leopards and bears. The training about dealing with bad guys but had the commissioners decided to put on the ballot that comes out of our public police, who were ill-prepared next to none about caging a lion. the tax hike for the convention center/med mart. servants.” for such a mess, were forced to Mr. Daniels says the state estimates Take Ohio’s new exotic animal Our guess is that it would have been rejected. kill 48 of the animals and Ohio there are 500 to 600 exotic animals in law, for example. made national news. Ohio, and he couldn’t say why more Convention centers aren’t like ballparks or arenas, And no, this is not going to be some Gov. Kasich, correctly, stepped in and owners hadn’t registered by now. The which sports fans lovingly embrace. They also aren’t cheesy joke about politicians and animals. issued a temporary moratorium on the state’s veterinarian worries that owners like tax levies for mental health services or park sys- Right about now, I’m siding with the ownership of exotic animals, and law- don’t trust the state. tems, which appeal to voters’ sense of doing good. animals. makers helped establish new laws con- I don’t know about you, but on this Convention centers are cold, hulking buildings But when I read in The Columbus trolling ownership and mandating regis- issue, I’m putting my trust in govern- that many local residents never will step into their Dispatch that today is the deadline for tration by owners. The newspaper ment. People who want pets ought to go entire lives. If commissioners Dimora and Hagan owners of exotic animals to either register reported that 40 owners — some of them to their local animal shelter. ■ hadn’t taken matters into their own hands, it’s likely Cleveland would be no closer now to a new meeting complex than it was 30 years ago, when it already LETTERS was apparent that its convention center was obsolete and that the city was missing out on tons of meeting business because of it. For much-needed port reform, defeat levy The man who is now Jailbird Jimmy may have seen the tax hike for the convention center complex he Cleveland-Cuyahoga County Port city-dominated, with two-thirds of its really taken off and the Seaway was ac- as a fresh pot of money for his contractor friends to Authority levy, known as Issue board selected by Cleveland’s mayor. tually destined to fail from its opening tap into so that he could enjoy a few more favors 108, must be rejected to force For at least the last five or six years, it is a day as shipping passed its capacity by. from them. It’s hard not to question the motives of needed reform to a faulty, mis- government in search of some purpose The appointed authority has also had its Ttake-prone government board. as its base mission has diminished, taking share of serial gross mismanagement, someone found guilty of accepting bribes. However, the need for a new convention center The current proposal is more bailout on economic development revenue and recent involvement in special perks, of the city of Cleveland by suburban bonds, failed plans to move the port, favoritism and fallout in the scandal- was beyond dispute if Cleveland hoped to capitalize voters, who are 70% of the county various lakefront real estate development plagued old county government, which on hundreds of millions of dollars of public and population and would pay more than ideas not within its core expertise, and appointed three of its nine board mem- private investment in its meeting and tourism 80% of the taxes. The bailout is mostly now the role of “river keeper” for Cleve- bers, one of whom just resigned under business. The proof is in the conventions that for spending not related to the port, land and its infrastructure. a cloud. already are lining up to come to the city once the orchestrated by representatives of the These various changes of direction and Having reformed county government, new complex is open. city of Cleveland — a bridge from City mission have been taken with little effec- we must continue the housecleaning by Cleveland essentially was out of the convention Hall to the Science Center, repairing tive public input, and certainly little replacing the authority with a new game for a generation. Now it’s months away from Franklin Hill to save city water and sewer input by government that represents government structure, appointed by the re-entering the business in a grand way. And it can lines, and so on. Less than 20% of the taxes most of the taxpayers. new government. With the county’s thank two guys for their roles in giving it a fresh even go to existing port-related activi- Actual port operations are largely new economic development powers, ties. limited to bulk cargo (iron, stone, cement, whether the port should continue as the start. For its 44 years, the Cleveland-Cuya- grain, salt), as St. Lawrence Seaway bonding conduit for county development hoga County Port Authority has been shipping and general cargo has never See LETTERS Page 9 20121105-NEWS--9-NAT-CCI-CL_-- 11/1/2012 3:59 PM Page 1
NOVEMBER 5 - 11, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 9 THE BIG ISSUE Office 28,300 Sq. Ft. Do you think the destruction from Hurricane Sandy will improve the chances the country begins to take more aggressive action on climate change? 16035 Industrial Parkway
Furnished -- Price far below market Former PNC/National City Comptroller Building Ceilings 9 ft. - Bottom of Deck 18’9” (1) Dock STENCIL LOVE SANDRA BELL AMANDA ORENCHUK AUGUSTINE Near to Cleveland Hopkins Airport, between I-480 & I-71 Cleveland Parma Mundelein, Ill. PONCE DE LEON CALL 216-469-6170 [email protected] Yes. It’s about the ozone I’m not sure. I don’t see I do think that will be on Shaker Heights (layer) and various things. where there is a big major people’s minds. I think Yes, certainly. I just told It makes you think. You climate change, other than climate change is a my son this morning on shut down New York City, maybe our times of year pattern, so it’s tough to the way to school that the that’s bad stuff. — our summers are later (judge on) one isolated reason we are having such and the spring’s later. event or a couple events strong weather phenomena in a small period of time. has to do with the seas You have to understand it being warmer. over time, a long period. WEDNESDAY, NOVEMBER 14, 2012 11:30am Registration • 12 Noon Lunch & Program ➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com. BAIJU DR. LUIS JIM Moderated By, SHAH PROENZA FREE LOU MAGLIO NEOMED building debt worries analyst
vice president of administration also noted that the “inability of the Moody’s leery of $88M and finance. “Our goal is to grow university to substantially lease up CEO, BioMotiv President, The Deputy Director, NASA Emmy Award-Winning to finance infrastructure this university and do it in a way that the building or secure favorable University of Akron Glenn Research Center Anchor, Fox 8 News expands our academic programs pricing or terms that mitigate risk of For more info: www.ExecutiveCaterers.com and click on Corporate Club or call 440.449.0700 and improves the quality of the the increase in debt service payments By TIMOTHY MAGAW students we produce.” could further pressure the rating [email protected] The wellness center project — the downward.” cost of which nearly has doubled However, Mr. Wray expects the The rate at which Northeast Ohio since it was conceived — is expected leases to be shored up by December. Medical University is piling on debt to be a collaborative effort between “What we are doing is we are to finance a roughly $166 million NEOMED and several other organi- relying on a significant amount of expansion of its aging campus in zations. NEOMED officials have these external dollars to carry the For daily on-line updates, sign up @ Rootstown has spooked a prominent shied away from identifying which debt,” he said. “That’s why Moody’s CrainsCleveland.com/Daily credit ratings agency. partners might be involved, though pointed that out, but the negotia- As part of the dramatic campus they likely would include some of tions are ongoing.” overhaul, NEOMED plans to issue the area’s health care organizations, Despite the downgrade, Mr. Wray upward of $88 million in debt to such as the Summa and Akron Gen- said NEOMED is solid financially. finance a 215,000-square-foot health, eral health systems. The Ohio Board of Regents, wellness and education center, which Akron General already operates a which assigns a score determining Peering over the fiscal cliff according to Moody’s Investors joint venture with Signet Develop- the fiscal health of each public higher Service would “severely leverage the ment Corp. in Akron that is aimed at education institution, gave NEOMED university against its small operating commercializing the health system’s a perfect score. No other university A post election base.” As a result, Moody’s down- wellness efforts. Signet is involved hit that milestone. analysis: graded the university’s underlying with the $36 million, 270,000-square- Moreover, Mr. Wray said Moody’s rating from A1 to A2 and said there was foot housing component of the didn’t account for the $9 million in What is the potential potential for a further downgrade. NEOMED expansion. added revenue the university will NEOMED is undeterred by the Moody’s said the university bring in on an annual basis due to a impact on business? downgrade. hasn’t signed any agreements with new partnership with Cleveland “We understand there is a risk organizations to lease space in the State University, which will expand component of us undertaking this … wellness center; those leases are NEOMED’s medical student enroll- ROUNDTABLE EVENT but we feel there is a much bigger expected to foot the bill for the bulk ment to 650 from 500 over four years. risk by not doing this and staying where — if not all — of the project that’s “That’s one of the major drivers Wednesday, November 14, 2012 we’re at,” said John Wray, NEOMED’s slated to open in July 2014. Moody’s (for) expanding,” Mr. Wray said. ■ 11:30 a.m. to 1:00 p.m. EST Location: LETTERS McDonald Hopkins, Fifth Third Center 600 Superior Avenue, East, Suite 2100 continued from PAGE 8 port-focused operation. do when they are unable to run on Downtown Cleveland should be decided and controlled a failed record. Homer S. Taft by the new government. Mr. Tucker and his liberal — oh, Bay Village RSVP: mcdonaldhopkins.com Though embarrassments and sorry — moderate buddies have been resignations have led to better asleep at the wheel. We now have or call: 216.348.5400 to register. management at the moment, history Forget moderation unsustainable spending and $16 teaches this will not last. If a semi- ■ Brian Tucker in his Oct. 29 com- trillion in debt that is crushing our autonomous board is needed for port mentary, “Desperate for a strong country. operations, it should have majority third candidate,” again takes a shot The 2010 mid-term election, with appointment by the county residents at the Tea Party. Those right-wing the will of the Tea Party, got America who pay the bills. radicals are always standing in the back on track. Now we need to Since the port’s operations remain way of compromise, in Mr. Tucker’s finish the job. mostly in Cleveland, it should have view. a seat at the table and respectable He goes on to say, “Barack Obama Jeff Longo representation of county appointees. is too smart to believe that all the North Royalton McDonald Hopkins LLC But the needed change and reforms ills facing our country will be solved 600 Superior Ave., East, Suite 2100, Cleveland, OH 44114 • 216.348.5400 will not happen voluntarily, just as if we can just get those wealthy they haven’t for 44 years despite Americans to pay more.” Mr. Tucker’s WRITE TO US Carl J. Grassi Shawn M. Riley commitments to do so. jaw-dropping naiveté is stunning. Send your letters to: Mark Dodosh, President Cleveland Managing Member Only by defeating the levy and The last four years Mr. Obama has editor, Crain’s Cleveland Business, Chicago • Cleveland • Columbus • Detroit • Miami • West Palm Beach ending spending of public money been engaged in class warfare to 700 W. St. Clair Ave., Suite 310, convince a majority of Americans by this entity will the city and county Cleveland, OH 44113-1230 mcdonaldhopkins.com ever come to the table for a better, exactly that. This is what politicians e-mail: [email protected] 20121105-NEWS--10-NAT-CCI-CL_-- 11/2/2012 3:25 PM Page 1
10 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM NOVEMBER 5 - 11, 2012
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NorTech extends deadline for 2013 Innovation Awards Technology advocacy group at this address: http://tinyurl.com/ NorTech has extended the deadline cox44cl. for nominations for the NorTech The NorTech Innovation Awards Innovation Awards, which recognize event is attended by hundreds of Northeast Ohio’s most innovative people who share a common inter- organizations and leaders. est in developing and commercial- Nominations now are open izing emerging technologies in through 1 p.m. this Friday, Nov. 9. Northeast Ohio. NorTech, in partnership with For more information about Crain’s Cleveland Business, in March the program and the nomination 2013 will recognize and honor process, contact Beth Elliott at “breakthrough innovations” that have [email protected] or at 216-363- demonstrated a dramatic impact on 6889. a specific industry or market sector, And for editorial coverage of past or that have the clear potential to do NorTech Innovation Award sections, so. including photo slideshows and Individuals, businesses or organi- videos from the annual NorTech zations meeting those criteria are Innovation Awards event, visit encouraged to submit an entry. http://crainscleveland.com/section/ Download a nomination packet NORTECH. ■ 20121105-NEWS--11-NAT-CCI-CL_-- 11/1/2012 1:56 PM Page 1
NOVEMBER 5 - 11, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 11 New leader pushing AgBio cluster’s most promising ideas
By KATHY CARR and Development Center over the wealth.” cases that demonstrate high growth matched state and industry support, [email protected] last two years has been working on Mr. Gwin will work with economic potential. and $450,000 in grants from the building the agriculture-bioscience development organizations to pop- Fund for Our Economic Future. Part The Agriculture-Bioscience Industry infrastructure through a mapping ulate the social networking site by Planting seeds for jobs of the latest Fund grant of $175,000, Cluster — a coalition of more than system at LocalFoodSystems.org. encouraging entities with a stake in The hope is that the cluster with issued in June, is supporting Mr. 100 stakeholders that includes the The mapping system, which func- agriculture to create profiles online. Mr. Gwin’s stewardship will create Gwin’s position, and $25,000 is Wayne County Economic Develop- tions as a social networking website, Mr. Gwin also is helping to estab- 400 jobs by June 2016, said Emily allocated to study over the next year ment Council and the Ohio Agricul- allows both existing companies and lish greater connections among the Garr, manager of research, grants the cluster’s potential, said Brad tural Research and Development planned businesses to post infor- cluster’s entrepreneurs, the Ohio and evaluation for the Fund for Our Whitehead, the Fund’s president. Center — has found a point man for mation about themselves and con- Agricultural Research and Develop- Economic Future, a philanthropy- The agriculture industry in its efforts to connect participants in nect with potential customers and ment Center’s research programs supported group that looks to advance Northeast Ohio generates about Northeast Ohio’s agriculture sector supply chain participants. and the resources of JumpStart Inc., Northeast Ohio’s economic develop- $8.2 billion in annual revenue, and so boost the region’s stake in the “It allows for more collaboration,” a Cleveland-based nonprofit that ment. Mr. Gwin’s efforts over the next according to the Fund. nation’s $60 billion specialty crops said Casey Hoy, professor and Kel- finances and assists young compa- year should facilitate 60 new jobs and “We’re not quite sure how large and market. logg Endowed Chair in Agricultural nies. The latter is looking for busi- $1.5 million in payroll, Mr. Hoy said. how fast the markets are growing,” As the AgBio cluster’s portfolio Ecosystems Management at the ness cases that fit its portfolio require- The AgBio Industry Cluster since Mr. Whitehead said. “In Northeast manager, Brian Gwin is working Ohio Agricultural Research and ments for advancing entrepreneurial 2008 has been supported by a Ohio, agriculture is huge. One in 10 to mobilize economic development Development Center. “We want to ventures, Mr. Gwin said, and could $1.13 million U.S. Department of jobs are accounted for by the agri- officials, business planners and build local ownership and local serve a financing outlet for business Agriculture grant, $1.13 million in culture industry.” ■ financial institutions to cultivate Northeast Ohio’s agriculture and bioscience industry. His plan includes working with those stakeholders to advance the feasibility of 150 busi- ness “cases” — early stage ideas that have the potential grow the sector. “We’re hoping to build grassroots economic development,” said Mr. Gwin, who assumed his job Aug. 1. Of those 150 concepts, Mr. Gwin is shepherding the advancement of 15 Could your global business cases — representing ideas in areas such as waste-to-energy, dairy processing and crop season extension — by helping them seek banking needs capital from investors. As part of its initiative to accel- erate development of Ohio’s largest industry, the cluster in 2008 identi- use some fied 12 business projects that demonstrated to economic develop- ment officials how those concepts could evolve into businesses that local advice? contribute to Northeast Ohio’s food production system. Those projects evolved into various states of viability; they included Cleveland-based Quasar Energy Group’s work to convert food waste to energy and the establishment of Lucky Penny Creamery in Kent. The latter is an artisan goat dairy that has doubled its production in the last three years, said owner Abbe Turner. “The AgBio Industry Cluster is great for developing infrastructure for entrepreneurial agriculture in Ohio and developing networking oppor- tunities,” Ms. Turner said. Mr. Gwin’s role should bolster that potential, Ms. Turner added. “He’s a talented human being,” Experience worldwide capabilities she said. “He’s comfortable going from mud boots to blue suits.” with hometown sensibilities. Connecting the dots From advisory, trade, and payment services to working capital and foreign exchange, The Ohio Agricultural Research FirstMerit combines all the international banking products and services you’d expect CALLING OHIO HOME from a larger institution, with the personalized service of a trusted neighborhood bank. Northeast Ohio is home to more than 16,000 food-related establishments, many of which are small businesses. ■ The region spends about $15 billion annually on food, but only between 1% and 5% is produced locally. ■ A movement is afoot by public, private and nonprofit entities in Northeast Ohio to increase food localization to 25% over the next decade, which would generate more than 27,000 new jobs, increase annual regional output by $4.2 billion and expand state and local TO LEARN MORE, CONTACT: tax collections by $126 million, Chris Pilkington at 800-237-6384. PERSONAL BUSINESS COMMERCIAL WEALTH according to a 2010 study called “The Northeast Ohio Local Food Assessment,” commissioned by the Follow the latest market trends Member FDIC Cleveland Foundation and the Kent @firstmerit_mkt 294 _FM12 State University Cleveland Urban Design Collaborative, among others. 20121105-NEWS--12-NAT-CCI-CL_-- 11/1/2012 1:57 PM Page 1
12 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM NOVEMBER 5 - 11, 2012
Type: Employer’s withholding, ID: 26-3781519 28500 Miles Road, Solon TAX LIENS employer’s annual federal tax return Date filed: Sept. 6, 2012 ID: 26-2802385 Amount: $40,626 Type: Employer’s withholding, Date filed: March 29, 2012 The Internal Revenue Service filed tax Pure Seal Inc. unemployment Date released: Aug. 1, 2012 liens against the following businesses Renaissance Center for Compre- 1300 W. Hill Drive, Gates Mills Amount: $33,021 Type: Employer’s withholding, in the Cuyahoga County Recorder’s hensive and Cosmetic Dentistry ID: 20-1978231 unemployment Office. The IRS files a tax lien to 2211 Crocker Road, Suite 110, Sunman Mechanical LLC Date filed: Sept. 18, 2012 Amount: $35,702 protect the interests of the federal Westlake 17830 Englewood Drive, Type: Unemployment, failure to file government. The lien is a public notice ID: 01-0688742 Middleburg Heights Terrence L Ochterski DVM Co. PA complete return, employer’s annual to creditors that the government has Date filed: Sept. 6, 2012 ID: 20-3303457 5257 Warrensville Center Road, federal tax return a claim against a company’s property. Type: Failure to file complete return Date filed: Sept. 7, 2012 Maple Heights Amount: $91,313 Liens reported here are $5,000 and Amount: $37,237 Type: Employer’s withholding ID: 34-1577130 higher. Dates listed are the dates the Elite Academy of the Arts Terra Serra LLC Café AH-Roma Amount: $32,095 Date filed: May 4, 2004 documents were filed in the Recorder’s 12200 Fairhill Road, third floor, 32 W. Bridge St., Berea CEU4U Inc. Date released: Aug. 1, 2012 Office. Cleveland ID: 34-1943631 3681 Green Road, Suite 100, Type: Employer’s withholding, ID: 25-1921477 Date filed: Sept. 18, 2012 Beachwood unemployment LIENS FILED Date filed: Sept. 11, 2012 Type: Employer’s withholding, unem- ID: 31-1560488 Amount: $29,711 Type: Return of organization exempt A Caring Alternative Inc. ployment Date filed: Sept. 6, 2012 Terrence L Ochterski DVM Co. PA from income tax 1220 Huron Road, Cleveland Amount: $36,022 Type: Corporate income 5257 Warrensville Center Road, Amount: $65,000 ID: 34-1801887 Arcelor Mittal Cleveland Works Amount: $27,989 Maple Heights Date filed: Sept. 11, 2012 MJS Repairs & International Steel Group Inc. Everything and Then Some Inc. ID: 34-1577130 Type: Employer’s withholding Home Remodeling Inc. 3060 Eggers Ave., Cleveland 16405 Euclid Ave., Cleveland Date filed: April 30, 2008 Amount: $113,236 P.O. Box 201724, Cleveland ID: 04-3634622 ID: 34-1420827 Date released: Aug. 1, 2012 Date filed: Sept. 6, 2012 Type: Employer’s withholding Medical Care Center LLC ID: 34-1954881 Date filed: Sept. 26, 2012 Type: Employer’s annual railroad Amount: $18,856 1250 Superior Ave. E., Cleveland Date filed: Sept. 6, 2012 Type: Employer’s withholding, unem- Type: Employer’s withholding retirement tax return ID: 34-1905631 ployment, failure to file complete return Terrence L Ochterski DVM Co. PA Amount: $46,252 Amount: $35,521 Date filed: Sept. 11, 2012 Amount: $25,518 5257 Warrensville Center Road, Type: Employer’s withholding Tremont Electric LLC MSB Holdings LLC First Choice Homecare Inc. Maple Heights Amount: $92,226 2379 Professor Ave., Cleveland 24481 Detroit Road, Westlake 601 Towpath Trail, Suite C, ID: 34-1577130 ID: 26-0316466 ID: 20-0897380 Date filed: April 5, 2005 American Phoenix Broadview Heights Date filed: Sept. 7, 2012 Date filed: Sept. 6, 2012 Date released: Aug. 1, 2012 Hospitality LLC Phil the Fire ID: 34-1876809 Type: Partnership income Type: Employer’s withholding, Type: Employer’s withholding, failure 3750 Orange Place, Beachwood Date filed: Sept. 18, 2012 Amount: $42,120 partnership income to file complete return ID: 27-4843446 Type: Employer’s withholding Amount: $35,481 Amount: $13,037 Date filed: Sept. 18, 2012 Jay-Lor IV Inc. 56 West Amount: $25,505 Type: Employer’s withholding, 32737 Cedar Road, Mayfield Heights Outside Design Financial Kahl & Co. University Circle Used Cars Inc. unemployment ID: 32-0258497 Management Inc. P.O. Box 461, Berea 11730 Euclid Ave., Cleveland Amount: $91,576 Date filed: Sept. 18, 2012 1560 Brainard Road, Lyndhurst ID: 34-1595042 ID: 34-1184460 Date filed: Sept. 6, 2012 Date filed: May 5, 2008 Type: Employer’s withholding, Date released: Aug. 14, 2012 corporate income Type: Employer’s withholding, failure Amount: $25,215 to file complete return, corp. income Amount: $28,355 Avon Pizza LLC Coleones Pizza & Subs Walter E Martens & Sons Inc. 1260 Smith Court, Rocky River 9811 Denison Ave., Cleveland ID: 26-3021097 ID: 34-1314080 Date filed: Sept. 20, 2012 Date filed: Dec. 3, 2007 Type: Employer’s withholding Date released: Aug. 8, 2012 Amount: $21,900 Type: Unemployment Amount: $7,803 Eagle Precision Products LLC 13880 Progress Parkway, Weekare Daycare Inc. Take the work out of your North Royalton 4834 Broadview Road, Cleveland ID: 58-2672418 ID: 34-1695141 company’s voice and data plan. Date filed: Sept. 7, 2012 Date filed: April 20, 2010 Type: Employer’s withholding Date released: Aug. 1, 2012 Amount: $21,814 Type: Employer’s withholding, EC Financial LLC employer’s annual federal tax return 8555 Sweet Valley Drive, Valley View Amount: $7,795 ID: 26-3324371 Westlake Pizza Inc. Date filed: Sept. 11, 2012 24533 Center Ridge Road, Westlake Type: Employer’s withholding ID: 20-8706195 Amount: $19,744 Date filed: Oct. 13, 2009 Date released: Aug. 1, 2012 LIENS RELEASED Type: Employer’s withholding Sono Inc. Shinano Restaurant Amount: $18,023
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NOVEMBER 5 - 11, 2012 CRAIN’S CLEVELAND BUSINESS 13
INSIDE
15 ADVISER: LEASES SOON COULD IMPACT BOTTOM LINE. FINANCE INVESTING IN THE FUTURE A CRASH COURSE IN BANKING Institutions more frequently entering schools, gaining exposure to customers of tomorrow
By MICHELLE PARK [email protected]
hen the clock strikes lunch at Lake Catholic High School, it’s time for some of the school’s studentsW to open and operate a bank branch. In one of many examples of local bankers stepping up to help schools educate students on personal finances, a student-run credit union branch opened in late September at the Mentor school. The SmartStart Cougar Branch is a project of the school and Cardinal Community Credit Union, and if Cardinal Community CEO Christine Blake has her way, the student-run concept will expand to other schools, too. Currently, the branch operates
JANET CENTURY three days a week, primarily accepting Mentor Lake Catholic seniors Rachael Habowski, Luke Meaney, Elizabeth Grubach and Joe Pinjun man deposits into savings accounts. the Cardinal Community Credit Union booth at the high school. They’re flanked by Dedric Bonner, a Car- dinal member service supervisor. See COURSE Page 14
Banks target deals offering exclusive rights on college campuses
By TIMOTHY MAGAW financial pressures on colleges customers because they will be million sponsorship fee for access branches and ATMs. The deals [email protected] and universities, the deals also are higher wage earners in the future; to the university’s campus. The often call for the banks to offer injecting some much-needed they’ll build families and will bank also landed a 15-year part- internships to students and pump hile college students revenue into their own coffers. probably stay inside our footprint.” nership with Ohio State University money into scholarships, financial aren’t known for their Still, the banks entrenched on PNC, which is headquartered in worth roughly $125 million in all literacy programs and — as with vast wealth, that hasn’t Northeast Ohio’s campuses say Pittsburgh, recently signed on as to act as the exclusive bank for the Huntington’s Ohio State deal — stopped a handful of they aren’t in the game to make the University of Akron’s official state’s largest university. economic development. Hunting- financialW institutions with large money off the students by pounding bank and will operate a branch “We’re not there to make money ton, for instance, pledged $100 footprints in Northeast Ohio from them with fees or pushing them to on campus. The bank also has on all their students,” said David million in community lending to attempting to lure in young folks sign up for credit cards with high relationships with Case Western Schamer, senior vice president support the ongoing development in hopes they’ll stick with the interest rates. Regulators, for one, Reserve University and Notre and director of university banking of the neighborhood surrounding banks once they’re high earners. have dinged institutions across Dame College in South Euclid. for Huntington National Bank, the Ohio State campus. Huntington National Bank and the country for such efforts. Huntington, on the other hand, which is headquartered in Colum- “Our offers are very robust in PNC Bank — two of largest banks “We market ourselves as a is in talks with Cleveland State bus. “We’re there to develop rela- what we’ll give the university, not in the region in terms of deposits strong partner for schools with University. While the details of a tionships.” only in terms of services for the — in recent years have inked common interests for the well- 10-year contract still are being campus but also discounts for lucrative deals with local colleges being of students,” said Nick Certo, hashed out, the initial proposal Digging deep employees and the commitments and universities for exclusive ac- PNC’s senior vice president and approved by Cleveland State The relationships between we’ve made to support the com- cess to large pools of prospective manager of university and work- trustees last year had Huntington banks and colleges go well beyond munity around campus,” Mr. clients. And given the prevailing place banking. “We like student paying the university a $1.15 the installation of on-campus See COLLEGE Page 14 20121105-NEWS--14-NAT-CCI-CL_-- 11/1/2012 2:26 PM Page 1
14 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM NOVEMBER 5 - 11, 2012 FINANCE College: Banks’ relationships grow deeper Course: Programs make continued from PAGE 13 countries and states is, you want to last three years by investing more Schamer said. provide those services here,” said resources and adding more staff to customers more aware Aside from the revenue infusion, Anne Bruno, director of the student its university banking division. college officials say they seek out union at the University of Akron. Banks are rolling out products continued from PAGE 13 September it is expanding the banking deals as a service to “That’s a service that’s very valu- that are of particular interest to Beginning with the Class of 2014, program this school year to 1,875 students. Having a broad banking able.” college students. PNC, for instance, Ohio high schools are required by schools within the bank’s multi- presence on campus, college offi- While the presence of banks on offers a “virtual wallet” — an online the so-called Ohio core curriculum state footprint. Fifth Third’s delivery cials say, is particularly relevant campus isn’t a new phenomenon, banking interface with financial to integrate economics and financial of the program to 357 high schools for students from outside the the breadth of the relationships management tools that can link literacy instruction into a social in Ohio alone represents an invest- country or those who don’t have and offered services continues to with students’ school calendars. studies course or other class some- ment of about $441,200. accounts with local financial insti- evolve, according to Huntington’s time between ninth grade and Just a month into its pilot student- tutions. Mr. Schamer. He noted that Credit union route? graduation. run branch, Cardinal Community “Depending how dense your Huntington had “doubled down” Despite the flurry of on-campus And the mandate, which took already is in talks with two other student population from other on its efforts in the area over the relationships with banks, some fear effect April 4, 2007, requires high schools about expanding the the institutions might not have the schools to use public-private part- program, Ms. Blake said. The students’ best interest at heart. nerships, resources and materials credit union’s investment includes Because college students are prone in developing their curricula. not only its people’s time, but the to account overdrafts, some for- In some cases, bankers are laptops and fixtures involved in the profit financial institutions may developing and delivering their branch kiosk, she said. be looking to younger account own programs, and in others, “If you’ve made one student holders to generate fee income, institutions (Huntington National aware of one consequence, if one said Patrick Harris, a spokesman for Bank, for one) are partnering with student rethinks buying a cell the Ohio Credit Union League, in business banking well-known organizations, such as phone or determines what kind of an email. Junior Achievement. Either way, house they can afford, you’ve
Local credit unions, however, Products & Services Include: the frequency with which bankers achieved,” Ms. Blake said. Free Internet Banking also have put their skin in the game. are going inside schools seems to Therein lies an intangible return Commercial Real Estate Free Online Bill Pay Emerald Group Credit Union of have increased, said James most institutions anticipate: Commercial Line of Credit Remote Deposit Capture Cleveland offers a program geared Thurston, spokesman for the Ohio Smarter, more responsible con- Commercial Letter of Credit Mobile Banking toward students, including a free Bankers League. sumers. And many say that the Business Checking eStatements checking account and a low line of credit Visa card. Also, the Kent
CUSTOMIZED Business Debit Cards Payroll Credit Union targets students at “If a customer is more financially literate and makes Kent State University as a source for new members and offers them better decisions ... they’ll be a better customer.” CarrieStackhouse the online banking products they – James Thurston expect. spokesman, Ohio Bankers League AVP, Commercial Lending Kent Credit Union CEO Joseph [email protected] Crawfis said about 20% of the credit “From the bankers’ perspective, results of the before and after tests union’s members are college stu- www.cortland-banks.com/Stackhouse of course it gives them exposure they administer with their pro- dents, and by in large tend to stick to tomorrow’s customers,” Mr. gramming prove that they’re For more with the institution upon graduation. Thurston said. “But also if a cus- making a mark. information: Mr. Crawfis said the credit union tomer is more financially literate Another potential return for also is exploring new lending 330.717.7472 and makes better decisions … they’ll financial institutions: endearing options for people with no credit be a better customer for the bank.” themselves to young customers history, which could appeal to the even before they bank. student demographic. ■ Future payoff “The ‘payoff’ is that we are Also investing in the customers growing our younger membership of tomorrow are Parma-based base and building a good reputa- Unity Catholic Federal Credit tion among young families,” said Union, which offers its award- Kelly C. Reddy, business develop- winning “Piggy Banks to Credit ment manager for Unity Catholic National firm expertise… Cards” program to schools within Federal Credit Union. “Hopefully, the Catholic Diocese of Cleveland, they will think of Unity Catholic local attention. and Cincinnati-based Fifth Third when they need a financial product Bank, which spends about $1,500 in the future.” per school to sponsor the high school curriculum of best-selling ‘A dangerous place’ Our team of specialists brings an unequaled author Dave Ramsey, called “Foun- Though teaching financial literacy combination of experience and commitment to dations in Personal Finance.” is a relatively new, unfunded The bank announced in late continued on NEXT PAGE provide you with value-added accounting and business advisory services.
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NOVEMBER 5 - 11, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 15 FINANCE
mandate, Sal Miroglotta, president of Lake Catholic High School, is not sorry it’s required. Leases soon could impact businesses’ balance sheets “Finances are more complicated than they used to be, and students n today’s world, leases are a NEVINNUSSBAUM line expense approach. The lessee the lessor’s claim to the residual get hit with financial matters a lot routine financing tool in would determine which approach value of the leased asset at the end faster than they used to,” he said, operating a business. to apply on the basis of whether it of the lease term. citing as examples college loans and From copiers to drill presses to acquires and consumes a more- Changes to accounting for leases Ioffice space, leasing can provide than-insignificant portion of the have been in discussion for more credit cards. “(The world of finance) is a dangerous place to walk into and access to assets that are critical to the underlying asset. than three years, and are expected ■ have no knowledge.” needs of the business. When evaluat- The lessor perspective: The to undergo further comment If the Ohio Department of Educa- ing the benefits of leasing, many lessor would account for a lease periods before becoming effective. tion’s steering team for financial businesses look to issues such as total under one of two proposed models: Industry insiders do not expect an literacy proceeds as hoped, it will capital expenditure, potential tax ADVISER the “receivable and residual (R&R) immediate decision on the new have drafted financial literacy acad- benefits and cash flow requirements. model” or a model similar to that rules, with predictions for enact- emic content standards for grades Soon, however, businesses also used in operating lease accounting. ment as far out as 2016. kindergarten through 12 and have may want to consider the impact to made of the impact to the financial The choice would depend on There is a push to enact certain them approved by the end of this their balance sheet by that asset. metrics used to analyze a company. whether the lessee acquires and exceptions for private companies; school year, said Tom Rutan, the Proposed changes by the Financial Also, industries heavily invested in consumes more than an insignificant however, no one expects this issue ODE’s associate director in the Accounting Standards Board (FASB), leasing, such as retail and transporta- portion of the underlying asset. to be dropped entirely as it is a key office of curriculum and assessment in conjunction with the Interna- tion, have been following this closely. Under the R&R model, at lease component to narrowing the gap in ■ and the chair of that steering team. tional Accounting Standards Board, The lessee perspective: The commencement a lessor would the way U.S. and international ac- Already, legislative changes made would require companies to recog- proposed guidance is referred to as de-recognize the leased asset and, counting rules treat leases. in 2008 call for financial literacy nize assets and liabilities arising the “right-of-use (ROU) model.” If in its place, recognize a lease receiv- The challenge, as always, is to education for middle grades, too, from leasing transactions in the enacted, the lessee will recognize able and a residual asset. find a balance between meaningful Mr. Rutan noted. statement of financial position. an ROU asset and a liability for the The lease receivable would reporting and unnecessary record- “We believe that an educated The most notable change over lease contract on the balance sheet. represent a lessor’s right to receive keeping. For now, companies population does a much better job existing guidance is that operating The ROU asset represents the lease payments and would initially should be informed regarding the of managing the financial affairs for leases now will be quantified on lessee’s right to use the leased asset be measured at an amount equal to potential changes, their existing themselves, for the community and the balance sheet. There are some for the term of the lease. The liabili- the present value of future lease pay- leases and contracts that reference for the nation than a generation of exceptions based on the lease terms ty represents the lessee’s obligation ments, discounted by the rate financial metrics derived from ■ kids that are taught at the knee of or type of leasing transaction; to make lease payments. implicit in the lease agreement. The their balance sheet. Mom and Dad,” Mr. Rutan said. however, the majority of operating The ROU asset then would be lessor would recognize profit related Luckily, many banks and credit leases would be affected. amortized using one of two proposed to the receivable, if any, when the Nevin Nussbaum is a certified unions — among them, Dollar Bank, Under the current guidance, firms approaches: the interest and amor- asset is transferred to the lessee. public accountant and partner at Huntington and KeyBank — also are required to classify their leases as tization approach or the straight- The residual asset would represent Cohen & Co. offer programs for students in either capital or operating leases. elementary and middle schools. Capital leases require the capital- Gayle Gadison, social studies cur- ization of assets and liabilities, and riculum manager for the Cleveland are amortized over time; operating Metropolitan School District, which leases are recorded as a period welcomes volunteers from several expense. The existing accounting banks throughout the year, is glad to models have been criticized for see students get both the mandated failing to meet the needs of the users lessons and the career exposure. of financial statements because “To me, as an educator, the insti- they do not provide a faithful repre- tutions and their support make all sentation of leasing transactions. of this real,” she said. “If the purpose Why is such a seemingly small of education is to prep kids for life accounting change garnering so after high school, well, this is it.” ■ much attention? Much has been Your legacy can truly make a difference.
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16 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM NOVEMBER 5 - 11, 2012 LARGEST HOSPITALS RANKED BY 2011 NET PATIENT REVENUE
Net patient revenue Company ($ millions) FTE Address Staffed employees as Year Top executive Rank Phone/Website 2011 2010 % change beds of 6/30/2012 founded Health care system Title Cleveland Clinic 1 9500 Euclid Ave., Cleveland 44195 3,636.7 3,415.7 6.5 1,267 25,566 1921 Cleveland Clinic Delos M. "Toby" Cosgrove, M.D. (216) 444-2200/www.clevelandclinic.org Health System president, CEO University Hospitals Case Medical Center and Subsidiaries 2 11100 Euclid Ave., Cleveland 44106 1,684.8 1,567.1 7.5 807 11,823 1866 University Hospitals Fred C. Rothstein, M.D. (216) 844-1000/www.uhhospitals.org president MetroHealth Medical Center 3 2500 MetroHealth Drive, Cleveland 44109 669.4 681.9 (1.8) 365 5,359 1837 MetroHealth System Mark J. Moran (216) 778-7800/www.metrohealth.org president, CEO Summa Akron City Hospital and Summa St. Thomas Hospital 4 525 E. Market St., Akron 44309 655.2 646.1 1.4 431 4,230 1892 and Summa Health Robert Harrigan (330) 375-3000/www.summahealth.org 1922 System president Akron General Medical Center 5 400 Wabash Ave., Akron 44307 467.1 427.9 9.2 461 2,930 1914 Akron General Alan J. Papa (330) 344-6000/www.akrongeneral.org Health System president Akron Children's Hospital 6 One Perkins Square, Akron 44308 460.0 423.9 8.5 345 3,586 1890 NA William H. Considine (330) 543-1000/www.akronchildrens.org president, CEO Fairview Hospital 7 18101 Lorain Ave., Cleveland 44111 429.1 414.4 3.5 375 2,299 1892 Cleveland Clinic Janice Murphy (216) 476-7000/www.fairviewhospital.org Health System president Aultman Hospital 8 2600 Sixth St. S.W., Canton 44710 371.5 NA NA 643 3,733 1892 NA Edward J. Roth III (330) 452-9911/www.aultman.org president, CEO Hillcrest Hospital 9 6780 Mayfield Road, Mayfield Heights 44124 365.3 343.8 6.2 406 2,203 1968 Cleveland Clinic Jeffrey A. Leimgruber (440) 312-4500/www.hillcresthospital.org Health System president St. Elizabeth Health Center Donald Koenig 10 1044 Belmont Ave., Youngstown 44501-1790 275.2 278.2 (1.1) 429 1,846 1911 Humility of Mary executive vice president, (330) 746-7211/www.hmpartners.org Health Partners operations Southwest General 11 18697 Bagley Road, Middleburg Heights 44130 274.8 268.5 2.4 346 1,754 1920 partnering with Thomas A. Selden (440) 816-8000/www.swgeneral.com University Hospitals president, CEO Mercy Medical Center(1) 12 1320 Mercy Drive N.W., Canton 44708 248.8 249.9 (0.4) 337 1,946 1908 Sisters of Charity Thomas E. Cecconi (330) 489-1000/www.cantonmercy.org Health System president, CEO Mercy 13 3700 Kolbe Road, Lorain 44053 198.8 192.0 3.5 317 2,122 1892 Catholic Health Edwin M. Oley (440) 960-4000/www.mercyonline.org Partners president, CEO EMH Elyria Medical Center 14 630 E. River St., Elyria 44035 189.4 181.2 4.5 248 2,129 1908 EMH Healthcare Donald S. Sheldon (440) 329-7500/www.emh-healthcare.org president, CEO Firelands Regional Medical Center(1) 15 1111 Hayes Ave., Sandusky 44870 184.0 179.7 2.4 232 1,410 1876 Firelands Regional Martin E. Tursky (419) 557-7400/www.firelands.com Health System president, CEO TriPoint Medical Center(2) 16 7590 Auburn Road, Concord Township 44077 183.7 158.6 15.8 135 2,180 2009 Lake Health Cynthia Moore-Hardy (440) 375-8100/www.lakehealth.org president, CEO Parma Community General Hospital 17 7007 Powers Blvd., Parma 44129 177.4 178.8 (0.8) 290 1,463 1961 NA Terrence G. Deis (440) 743-3000/www.parmahospital.org president, CEO Summa Barberton Hospital 18 155 Fifth St. N.E., Barberton 44203 174.3 156.0 11.8 136 1,017 1915 Summa Health Thomas A. DeBord (330) 615-3000/http://summahealth.org/locations/Hospitals/barberton System president Marymount Hospital 19 12300 McCracken Road, Garfield Heights 44125 172.3 177.8 (3.1) 232 1,173 1949 Cleveland Clinic Joanne Zeroske (216) 581-0500/www.marymount.org Health System president Trumbull Memorial Hospital(1) 20 1350 E. Market St., Warren 44482 160.3 173.5 (7.6) 311 1,470 NA ValleyCare Health Robert Wolleben (330) 841-9011/www.trumbullmemorial.net System of Ohio CEO West Medical Center(3) 21 36000 Euclid Ave., Willoughby 44094 157.9 163.7 (3.5) 267 2,180 1961 Lake Health Cynthia Moore-Hardy (440) 953-9600/www.lakehealth.org president, CEO St. John Medical Center 22 29000 Center Ridge Road, Westlake 44145 148.4 138.0 7.5 194 756 1981 UHHS/CSAHS - William A. Young (440) 835-8000/www.stjohnmedicalcenter.net Cuyahoga, Inc. president, CEO Lakewood Hospital 23 14519 Detroit Ave., Lakewood 44107 143.4 137.3 4.4 250 895 1907 Cleveland Clinic Robert Weil, M.D. (216) 521-4200/www.lakewoodhospital.org Health System president South Pointe Hospital 24 20000 Harvard Road, Warrensville Heights 44122 137.5 139.8 (1.7) 172 937 1957 Cleveland Clinic Brian Harte, M.D. (216) 491-6000/www.southpointehospital.org Health System president Northside Medical Center(1) 25 500 Gypsy Lane, Youngstown 44501 136.7 150.2 (9.0) 188 1,698 NA ValleyCare Health David J. Fikse (330) 884-1000/www.valleycareofohio.net System of Ohio CEO St. Vincent Charity Medical Center 26 2351 E. 22nd St., Cleveland 44115 135.5 124.5 8.8 154 845 1865 Sisters of Charity David F. Perse, M.D. (216) 861-6200/www.stvincentcharity.com Health System president, CEO St. Joseph Health Center 27 667 Eastland Ave., Warren 44484 130.7 128.3 1.9 138 807 1924 Humility of Mary John Finizio (330) 841-4000/www.hmpartners.org Health Partners president Robinson Memorial Hospital 28 6847 N. Chestnut St., Ravenna 44266 121.5 124.7 (2.6) 141 1,094 1917 Summa Health Stephen Colecchi (330) 297-0811/www.robinsonmemorial.org System president, CEO Euclid Hospital 29 18901 Lake Shore Blvd., Euclid 44119 116.2 117.5 (1.1) 231 860 1952 Cleveland Clinic Mark Froimson, M.D. (216) 531-9000/www.euclidhospital.org Health System president Fisher-Titus Medical Center(1) 30 272 Benedict Ave., Norwalk 44857 110.8 108.7 1.9 145 705 1957 NA Patrick J. Martin (419) 668-8101/www.fisher-titus.com president, CEO Source: Information submitted by the hospital unless the entry has a (1) footnote. Crain's Cleveland Business does not independently verify the information and there is no RESEARCHED BY Deborah W. Hillyer guarantee these listings are complete or accurate. (1) Information is from the American Hospital Directory based on Medicare cost reports, www.ahd.com. If the 2011 cost reports are not currently available through ahd.com, the information listed is for 2010 and 2009. Employee numbers represent total employees, not full-time equivalent employees. Staffed beds is the number of total complex beds. (2) Numbers are estimates and include 13 off-site locations and Lake Health Physician Group practices. Employee number also includes West Medical Center. (3) Numbers are estimates, employee numbers include West Medical Center and TriPoint Medical Center and subsidiaries. 20121105-NEWS--17-NAT-CCI-CL_-- 11/2/2012 3:03 PM Page 1
NOVEMBER 5 - 11, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 17 Travel: Business spending rises even as trip volume falls continued from PAGE 1 I try to coordinate that with multi- costs. people and find the best product, For example, sales at Professional “It’s an inconvenient flight, and it ple stops,” Mr. Insul said. “You can “If you plan your business travel, that’s the cost of doing business.” Travel are 30% higher this year than would have been better to do it all oftentimes take advantage of lower- you can get some fairly good deals,” And that cost of doing business is in 2011, Mr. Turk said. The increase as one trip,” Mr. Insul said, but he cost direct flights you may not Mr. Corkran said. “If you don’t plan rising, according to figures from the is driven by higher flying costs and couldn’t pass up the savings. get from Cleveland.” He also uses it, and just say you have to go next Global Business Travel Association. the fewer number of flights avail- The flexibility displayed by Mr. corporate and personal credit cards Tuesday, prices are more volatile The group estimates business able, he said. Those factors lead Insul is becoming a hallmark of to eliminate baggage fees and earn and a lot less predictable.” travel spending in 2012 will increase more travelers to hand off dealing business travelers seeking to cut reward points for flights, hotels and Mark Walton, vice president of 2% to $257 billion from $251.9 bil- with arrangements to the profes- costs. rental cars. strategy and account management lion the previous year, even though sionals. Rob Turk, executive vice president of Orbitz for Business, said rates the total number of trips taken will Travel management companies of North Olmsted-based Profes- Timing is everything almost always are lower for those decrease 1.6% to 438.1 million from not only can book travel and find sional Travel Inc., which primarily Mike Corkran, founder and CEO who can buy tickets in advance. 445 million in 2011. In its October deals, but also can track spending report, the association cited “rising data for companies to use to ana- serves corporate clients, said clients of China Centric Associates, a Cost of doing business increasingly choose to travel in consulting firm in Beachwood that business travel costs” as the reason lyze their travel habits, Mr. Turk coach rather than business class. helps U.S. companies develop busi- For many travelers, though, it’s for the increase in spending. said. Others opt to fly into small airports ness strategies in China, tries to time tough to be flexible on dates and Orbitz’s Mr. Walton said domestic “The ultimate goal in managing on cheaper flights rather than into his trips so he can get better rates. times. and international airfares are 6% to travel is to reduce costs,” he said. “If hub locations, then take ground Mr. Corkran, who travels interna- Robert Rosenthal, president of 7% higher this year than in 2011, you don’t have information, you transportation to their end destina- tionally six to seven times a year and Cleveland-based Finch Co., which and hotels are 5% more. Mr. Insul can’t control the spend.” tions. domestically four to five times a does business as apparel retailer said he doesn’t see those costs Carol Schneider, owner of Cleve- “What we try to do is create and month, blocks off three weeks of Next Stores, travels to major markets coming down any time soon. land Travel Inc., said her Cleveland provide options for our travelers to time for potential trips for China such as New York, Los Angeles and “The fact is that these additional company has seen an increase in utilize connections more effectively,” and then tries to find the best Chicago twice per month. Flights to charges — the seat changes and the customers who typically would Mr. Turk said. combination of dates within that New York that nine months ago baggage rates — are such tremen- book online but are dismayed by Mr. Insul tries to double up on his period to make the trip. Because his cost $250 per person now cost $350, dous revenue drivers for the airlines higher ticket prices. trips whenever possible, especially company works in various regions he said. that they have no reason to give “Today, there are so many while on the West Coast. of China, he also chooses to fly into While he and other employees those up,” he said. ancillary fees involved with airline “If I’m going to go a longer distance, different cities each time to reduce might spend a few extra days in a city travel that more business travelers to avoid a return trip, for the most Faring well are willing to relinquish the part the company simply must absorb While higher prices are a control of making their own travel rising prices, Mr. Rosenthal said. headache for corporate travelers, arrangements and pay a travel agent “We think about what we need to they are leading to an increase in to do it because the process has do to be successful,” he said. “If it business for travel management once again become too time-con- Hospitals: Systems fight entails being in the market to meet companies. suming,” Ms. Schneider said. ■ for future positioning
continued from PAGE 3 burg Heights.” over the last decade, according to the most recent census data, while MetroHealth’s play Cuyahoga County’s population fell One of the reasons MetroHealth by more than 8%. The area’s popu- is making a stronger play in the lation growth is what largely led to suburbs is an attempt to lure more Southwest’s decision to beef up its paying patients as it looks to prop campus, according to Mr. Selden. up its finances, which have been The first phase of Southwest’s hurt by the steadily rising amount of expansion — an effort that broke uncompensated care it provides to ground earlier this spring — the county’s indigent. TWO HEALTH CARE SYSTEMS WERE BATTLING IT OUT includes an expanded emergency Health care leaders investing in department, a new critical-care unit the southwestern part of the county IN THE SAME MARKET. IT WASN’T HEALTHY. and a new parking garage to cope say the area’s exposure to patients with growing patient volumes. The on the Medicaid rolls and the unin- second phase that will start to take sured is relatively low — an advan- It was heated. There was tension. There were the doctors and the nurses and shape in the coming weeks includes tage for any system looking to gen- the conversion of most of the hospi- erate more revenue. For example, WKHH[HFXWLYHV7KHUHZHUHWKHDFDGHPLFVDQGWKHFOLQLFLDQVDQGWKHÀQDQFH tal’s two-person rooms into private only about 5.5% of Southwest Gen- people. And, of course, there were the patients, whose health and well-being suites and a new patient bed tower eral’s gross revenue through the with 100 private rooms. first eight months of the year came were at stake. In the end, we were able to bring them all together and create As for MetroHealth, it has had a from Medicaid patients, according stake in the southwestern portion of to a recent report from Moody’s a health care partnership that’s not only one of the largest of its kind. the county since the early 1990s, Investors Service. It’s also one of the healthiest. when it opened its Strongsville Some health care observers have Health Center, said Dr. Holly Perzy, likened the activity of what’s medical director for the facility. happening in Middleburg Heights Dr. Perzy said the at-capacity and the surrounding areas to multi- Strongsville site, which will close million-dollar health care invest- when the Middleburg Heights ments made in recent years in Med- health center opens next summer, ina by the Cleveland Clinic, Summa has allowed MetroHealth to build a Health System in Akron and Univer- strong primary care network in sity Hospitals. the area that should feed well into Tom Campanella, who directs the new health center. She noted Baldwin Wallace University’s health that MetroHealth has been in care MBA program, said the Middle-
Strongsville longer than the Cleve- burg Heights and Strongsville Higher standards make better lawyers.® land Clinic, which opened its health investments are part of a broader center in the city in 1998. effort by health care providers to For more information on our work in health care, visit vorys.com/health. Southwest General, which boasts muscle up their entire enterprises in a leading 42.5% market share in the anticipation of reimbursement cuts area 20 miles southwest of Cleve- from commercial and government land, expects MetroHealth to make payers. a play for some of its patients and steer “I think there’s recognition from those that require more advanced all the players that it’s going to be care to its main campus off West 25th much more of a competitive market Street in Cleveland or to its health in the future, and they’re trying to and surgery center on West 150th put themselves in a position of Street. strength in regards to the services “Why else would Metro build they offer, the geographic coverage Vorys, Sater, Seymour and Pease LLP here?” Southwest General’s Mr. and the overall infrastructure that’s Selden said. “We’re going to make available to meet those needs,” Mr. 1375 East Ninth Street 2100 One Cleveland Center Cleveland, Ohio 44114 sure in our marketing efforts that Campanella said. 106 South Main Street Suite 1100 Akron, Ohio 44308 our patients understand all the care He added, “In the end, people they need is right here in Middle- will vote with their feet.” ■ 20121105-NEWS--18-NAT-CCI-CL_-- 11/2/2012 2:09 PM Page 1
18 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM NOVEMBER 5 - 11, 2012 Metro: Upgrades to main campus depend on financial health
continued from PAGE 1 job description for the post doesn’t Bill Ryan, president of the Center the county’s indigent population. less provide for any expansion. would have liked, but he has said, go into detail about MetroHealth’s for Health Affairs, an advocacy MetroHealth announced plans MetroHealth’s ability to pay for ‘OK, I’ll stay on until the end of the challenges or the type of candidate group representing area hospitals. for the Middleburg Heights building such an expansive upgrade hinges end of the year.’ He is doing what the search committee prefers. In- “That’s the whole ball game when in fall 2011, and Mr. Moran then said on its ability to get a handle on its he believes is right for the hospital.” stead, it says it seeks someone who you’re talking about a CEO.” the system was planning three more finances. Last November, Metro- Mr. Moran’s successor will take is a “mission-driven individual who If anything, Mr. Moran already similar ambulatory sites. Metro- Health laid off 104 employees and the reins of a health care enterprise thrives in a high-energy, multi-focal, has laid the groundwork for his Health had said it would announce eliminated another 151 vacant po- with an annual budget north of complex teaching environment.” own vision of what a financially another health center before the sitions in order to stave off heavy $750 million that’s seen its fair share sustainable MetroHealth would Middleburg Heights building is projected operating losses. At the of hurdles over the last few years. The right fit look like, though Mr. Ryan suggested completed by the summer of 2013. time, officials said MetroHealth MetroHealth’s finances, for one, MetroHealth is different than its it wouldn’t be surprising if elements “We are continuing to look at would stomach a $6.3 million oper- have been ravaged by the 35% privately run counterparts, such as of that plan changed somewhat various locations (for other health ating loss in 2011 and an additional increase in uncompensated care the Cleveland Clinic and University under new leadership. centers) and getting ready for a new $21.1 million loss in 2012 if the the health system has stomached Hospitals. Its CEO job, according to An integral part of the plan put CEO,” Dr. Fountain said. “The can- appropriate steps weren’t taken. since Mr. Moran took the helm in health care observers, requires an into gear under Mr. Moran’s watch is didates we’ve talked to understand The financial picture, however, ap- 2008. The absence of revenue from individual able to balance the needs the construction in the county of four the ambulatory strategy.” pears to be headed in the right direc- so many patients has resulted in of many stakeholders, including outpatient health centers, including tion. Mr. Moran said earlier this year layoffs and steep budget cuts. county government, board mem- a $23 million, 57,000-square-foot Hitting the target the system, which boasts more than The health system also has been bers, staff, patients and taxpayers. building under construction in Mid- Earlier this year, Mr. Moran also $750 million in annual operating rev- criticized for past expenditures on “The first thing right off the bat dleburg Heights. The outpatient cen- laid out plans for a dramatic over- enue, hoped to finish 2012 with at consulting contracts running into this person needs to have is the ters are expected to bring more com- haul of MetroHealth’s aging, 38- least $10 million in operating income the hundreds of thousands of dol- ability to craft a vision for the orga- mercially insured patients — and acre campus on West 25th Street in — a target Dr. Fountain said Metro- lars, even as it receives a $36 million nization and communicate it in a thus revenue — into MetroHealth’s Cleveland. Hospital officials esti- Health is poised to meet. annual subsidy from the county. way that’s credible to the people coffers in order to help offset the mate it could cost as much as $435 “Our finances are good,” Dr. While it’s no secret the next CEO listening and get people’s buy-in to growing debt the system takes on by million over the next five years just Fountain said. “We should hit our has a tough road ahead, the official actually execute that vision,” said serving as the safety net hospital for to maintain current facilities, much goals for the year.” ■
opportunity for OrthoHelix: Today, all sheet would have made it hard to the division’s revenue comes from obtain a traditional loan, they said. Ortho: Acquisition helps overseas targets inside the United States, whereas OrthoHelix later received two $1 international customers account for million grants from the Ohio Third continued from PAGE 3 for surgeons who focus on the opment, OrthoHelix also handles nearly half of Tornier’s sales. Frontier economic development grow to $155 million if the division extremities, believes OrthoHelix’s shipping and receiving, quality OrthoHelix’s goal is to start program. The company used the hits what former OrthoHelix board Medina operations can become a control and other back office func- selling its products in other coun- money to develop two new tech- member Wayne Wallace described “center of excellence” for the com- tions in Medina. Most of its sales are tries early next year, Mr. Stripe said. nologies that have been incorporated as reasonable earnings goals for the pany’s foot and ankle products, made through independent agents, “We’re going global … as soon as into its products. next two years. according to comments Tornier CEO and all its products are made by we can,” he said. Plus, River Cities Capital had raised In an interview with Crain’s, Messrs. Doug Kohrs made during a Sep- other companies, though many are money from the Ohio Capital Fund, a Stripe and Wallace described the tember conference call discussing produced in Ohio. Setting priorities taxpayer-backed “fund of funds” that acquisition as a big win for the state. the deal. Whereas Tornier’s foot Overall, though, Tornier wants But the domestic market has invests in venture capital firms that Not only did the deal lead to a big and ankle products accounted for to avoid disrupting OrthoHelix’s been good to OrthoHelix, too. The commit to funneling at least half of payday for the company’s owners less than 10% of the $140 million in momentum, Mr. Mowry said company’s 2012 revenue is expected the money to Ohio companies. — Mutual Capital Partners of Cleve- sales the company posted during during an Oct. 25 interview with to beat last year’s sales figures by Mr. Wallace said that support land, River Cities Capital Funds of the first half of 2012, that product Crain’s. more than 30%, and its gross profit weighed on his mind during the Cincinnati and several individuals, category accounts for most of “Not only (does OrthoHelix) have margins are in the 80% range. So far acquisition process. And though most of whom live in Ohio — but OrthoHelix’s revenue. great products, but they have great this year, OrthoHelix has increased Mr. Wallace’s first priority at Mutual Tornier has agreed in writing to David Mowry, chief operating processes and talent,” he said. the size of its staff to 82 from 65. Capital Partners was to make keep OrthoHelix in Ohio for at least officer at Tornier, said the two The acquisition also could help Protecting those jobs and creating money for the firm’s investors — two years, said Mr. Wallace, who companies create an “extremely OrthoHelix ramp up sales overseas. more was a high priority for both they put in about $4 million and also is co-founder of Mutual Capi- complementary combination.” Tornier and OrthoHelix plan to sell Messrs. Stripe and Wallace. For one, walked away with roughly six times tal Partners. He would not say what Although there are no immediate each others’ products, which would the company had received a lot of that amount — priority No. 2 was to document contained the statement, plans to move any employees to or give OrthoHelix access to its parent state support before the acquisition: make sure OrthoHelix’s employees citing confidentiality agreements. from OrthoHelix, Mr. Mowry said company’s sales agents throughout OrthoHelix about five years ago could keep their jobs. he sees the Medina operation Europe, as well as in Australia and ‘We’re going global’ secured a $750,000 loan from the “Hey, we want this place to be becoming a “key R&D center” for Japan. Ohio Department of Development here,” he said. “We want our em- Tornier, which makes products Tornier. Besides research and devel- Those sales channels represent an at a time when the company’s balance ployees to be taken care of.” ■ REAL ESTATE CLASSIFIED Phone: (216) 522-1383 Fax: (216) 694-4264 Copy Deadline: Wednesdays @ 2:00 p.m. Contact: Toni Coleman E-mail: [email protected] All Ads Pre-Paid: Check or Credit Card
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NOVEMBER 5 - 11, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 19 THEINSIDER REPORTERS’ NOTEBOOK THEWEEK BEHIND THE NEWS WITH CRAIN’S WRITERS Another realty data primarily steel podium for the church that it would be called FlashStarts. OCTOBER 29 - NOVEMBER 4 had a congregation of more than 20,000 and That day, he set up a Wordpress blog provider? Xcellent news a huge following of other pastors, too. to serve as the company’s website — and ■ The big story: Cleveland Clinic and GE Northeast Ohio will gain another online Many of those pastors, it turns out, also to document even the smallest steps he Healthcare signed on as tenants in the under- realty data provider at year’s end when liked the idea of having a podium on wheels. goes through to get the company up and construction medical mart in downtown Cleve- Xceligent Inc. goes live with regional infor- Mr. Loos’ company, Podiums running. land. Thomas Gentile III, president and CEO of mation here. in Motion, has sold an estimated Since then, he has used flash- GE Healthcare, said the company will use its The Independence, Mo.-based service 80 to 90 of his affectionately nick- starts.com to talk about formally space to promote several lines of business, starting said a team of 40 employees is working named “Holy Rollers” this year, up incorporating the company, winning with its breast cancer, Alzheimer’s and cardiology throughout Northeast Ohio by collecting from 60 last year and 20 in 2009, his first few clients and changing his equipment and services. The Clinic will take data from brokerages and property owners, when it all began. His podiums sell tactics based on customer feedback. space on the medical mart’s fourth floor — its IT as well as by canvassing and photographing for $750 to $1,200. He also weaves in lessons for entre- area. Chief information officer Martin Harris commercial property. In all, Mr. Loos has sold more than preneurs. said the Clinic will bring together suppliers of The company has started interviewing for 200 podiums to churches in 35 states. Mr. Stack knows the challenges health care information technology ranging from a local staff of at least three, according to About two months ago, he hired a they face. diagnostic equipment to warehouse management Xceligent spokesman Sam Lewis. part-time person to help him keep He’s best known for starting and software used to keep patient floors stocked. Xceligent was a big winner in CoStar pace. selling online book retailer Books.com Group Inc.’s $860 million purchase last April “I kept getting calls from and a company that made software License to innovate: Parker Hannifin Corp. of the LoopNet realty service. churches all over the country,” Mr. for software developers, Flashline Inc., signed an exclusive licensing agreement with Because the purchase combined the two Loos said. “(Pastors) like the free- both of which were based in Cleveland. Vanderbilt University for the school’s exoskele- major realty data services, the Federal Trade dom that they have with the wheels on the His latest company, Sideways Inc. of ton technology, which allows individuals with Commission required LoopNet to sell its podium.” Cleveland, continues to develop interactive severe spinal cord injury to walk and enhances interest in Xceligent to DMG Information All the while, Mr. Loos works a full-time books for tablet computers, but he admits rehabilitation for people who have suffered a Inc., provide some of its data to the firm and job and also is owner of Hans Noble Design, that it hasn’t taken off. The company had stroke. The agreement gives Parker exclusive rights take other steps to help Xceligent compete a custom steel furniture company named about 15 employees two years ago, but now to develop, manufacture and sell the device. effectively. after his metalworker father and blacksmith Mr. Stack is a one-man show, working with Parker intends to invest in further development Xceligent’s online subscription service grandfather — who share the name Hans — independent contractors. of the technology and establish a business unit costs $175 monthly. — Stan Bullard and his maternal great-grandfather, Noble, On the blog, he said he plans to highlight targeting commercial launch of the exoskeleton an artist. — Michelle Park his mistakes and failures — or “pending device in 2014. Sermons served successes,” as he calls them — because he Stack starts anew believes they can be instructive. on the move So what was his biggest mistake over the The (previously) missing link: University ■ in the shower Hospitals’ cancer program continues to extend What began with a request from the years? Taking “way too much advice from ■ its footprint, as the health system announced a pastor of The Word Church in Warrensville While taking a shower on Oct. 15, serial really smart people,” he said. partnership that will bring new cancer care Heights to create a moving podium for use entrepreneur Charles Stack decided to start “When you’re in a space that’s so new, so services to Lorain County. University Hospitals during his sermons has grown into a hot a business. revolutionary, asking what other people’s and Mercy, a health system with two hospitals in business for Alex Loos, a 29-year-old resi- Later, over breakfast with his wife, he opinions are is a recipe for cowardice. Lorain County, have inked a deal that will link dent of Columbia Station. determined that the company would focus Nobody gets it,” Mr. Stack said. — Chuck the two organization’s cancer programs. The Mr. Loos didn’t know when he welded the on coaching CEOs of startups, and that it Soder systems said they “have been working together to identify ongoing needs in the community and … have come up with an innovative plan to MILESTONE BEST OF THE BLOGS increase close-to-home access to advanced cancer care services.” Excerpts from recent blog entries on The documentary follows “the happy- CrainsCleveland.com. ending stories of a handful of unusually He’ll bring insight to the job: Cardio- bright kids,” including the son of director Insight Technologies Inc., a Cleveland-based Peter Lewis’ pledge: More for James Redford, who is the son of Robert developer of technology that noninvasively Redford. “They talk about their bouts of self- generates 3-D images of the electrical activity of charity, and reform drug laws hatred and disdain for school and also the heart, named Patrick J. Wethington its pres- ■Fortune profiled Progressive Corp. chairman about the moments when they realized that ident and CEO. CardioInsight said Mr. Wething- Peter B. Lewis, who it labeled the newest their limited reading skills were not character flaws.” ton brings to the job more than 20 years of med- Hershey Lerner Bernie Lerner and “most eccentric” signer of the Giving ical device experience in the cardiovascular field. Pledge — a group of billionaires promising Charles Schwab, Richard Branson and Dr. Cosgrove are among those who talk about He served most recently as president and CEO THE COMPANY: Automated to give away at least half of their fortunes to of HemoSphere, a medical device maker that charity. how they struggled in school with dyslexia. recently was acquired by CryoLife, also a biotech Packaging Systems, Streetsboro The number of Giving Pledge signers company. THE OCCASION: Its 50th anniversary grew by 11 last month and now totals 92, Regardless of Nov. 6 results, Fortune said. A new pay scale: Musicians of The Cleve- there’s money to be made Mr. Lewis has a distinction among land Orchestra ratified a three-year ■ It isn’t just 50 years in business that’s those 92: He’s the first with a Giving Joe Heider, a Cleveland-based contract that will be in effect through cause for celebration at Automated Packaging Pledge letter that calls for the legal- financial adviser at Rehmann, was Aug. 30, 2015. The agreement sets mini- Systems. ization of marijuana. (The group quoted in a Reuters story about mum weekly compensation, benefit In addition to hitting the half-century mark, normally focuses on education, what investors might expect to levels, and other terms and conditions the company’s founders — brothers Hershey, health and the environment.) see next year based on which of employment for the musicians of age 92, and Bernie Lerner, 85 — were inducted The story goes on at length presidential candidate wins on the orchestra. In the first year of the last week into the Packaging Hall of Fame. about Mr. Lewis’ history with Nov. 6. agreement, the minimum weekly The Lerner brothers founded Automated marijuana. But Mr. Lewis offered “The stock market overall will salary is set at $2,333, unchanged Packaging in 1962 and remain active in a bit of political analysis for the react most favorably to a victory from the weekly minimum at the the business today. They invented the pre- times: “If there is one area that is taboo by Republican challenger Mitt Rom- end of the previous agreement. It will opened bag-on-a-roll concept called Autobag, for most philanthropists, yet exemplifies ney because his preferences for deregula- rise to $2,356 for the 2013-14 season and they have grown Automated Packaging disastrous public policy, it is our nation’s tion and tax cuts are the most friendly for and $2,403 for the 2014-15 season. into a global business with lines of Autobag, outdated, ineffective marijuana laws. A businesses and the wealthy,” the chief port- SidePouch and AirPouch bag and protective majority of Americans are ready to change folio strategist at Wells Fargo Advantage The state of tax loopholes: A new study packaging products. marijuana laws, yet we continue to arrest Funds said. Another observer noted that a of Ohio tax filings found that nearly 2,200 Ohio Hershey and Bernie Lerner “also invented young people for engaging in an activity Romney victory would help coal producers, income tax filers with six-figure incomes — many of the unique processes used in con- that is utterly commonplace.” railroads, large banks and defense compa- including 10 millionaire households — used the verting plastic film into preformed bags and nies. low-income tax credit to reduce their state protective packaging materials,” according They clearly didn’t Mr. Heider told Reuters that small-cap income tax in the 2010 tax year. The study, to a news release from the company. stocks would gain from a second term for “Closing the Loophole in Ohio’s Low-Income Combined, they are responsible for most let dyslexia stop them President Barack Obama because accom- Tax Credit,” by the Cleveland-based Center for of the company’s 132 U.S. patents. Art ■ Dr. Toby Cosgrove, CEO of the Cleveland modative lending terms and low interest Community Solutions, argues that limiting the Gould, an original partner, was the company’s Clinic, is among the big names featured in rates likely would remain in place. deduction with a ceiling of $50,000 in federal first salesman. All three partners were at a a new HBO documentary, “The Big Picture: He added that an Obama victory “could adjusted gross incomes for using the credit recent 50th anniversary celebration in Streets- Rethinking Dyslexia,” that debuted last also lead to a selloff in dividend-paying would save the state $1.36 million a year. boro, with more than 1,000 employees and week. companies and stocks with large share price guests in attendance. The Washington Post said the film “makes gains near the end of the calendar year as To keep up with business news as it happens, visit Automated Packaging has five manufacturing the case that dyslexia may cause difficulties investors prepare for preferential tax treat- www.CrainsCleveland.com. plants in Northeast Ohio. in reading, but it doesn’t cause difficulties ments of dividends and capital gains to For information, visit www.Autobag.com. in broader learning.” end.” 20121105-NEWS--20-NAT-CCI-CL_-- 11/2/2012 3:27 PM Page 1