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Readers first for 30 Years Creating a winter wonderland CRAIN’S also creates big businesses, DETROIT BUSINESS PAGE 8 DECEMBER 14-20, 2015 WhenALICE’s

Wilbur Ross: The king of fixing distressed compa- nies will speak Feb. 16 at Crain’s Biggest Deals event. problems become Ross molds trash into your problem Daily struggles of low-wage workers turn into GR firm helped treasure headaches — and costs — for employers create employer By Tom Henderson resource network [email protected] By Lindsay VanHulle Reliable transportation. Medical chal- Wilbur Ross Jr. buys failing companies in Crain’s Detroit Business/Bridge Magazine lenges. Child care gaps. These are some of By Lindsay VanHulle failing industries in failing locations — and t a car wash this past summer, a the barriers that separate low-income Crain’s Detroit Business/Bridge Magazine he comes naturally by his success in doing young man noticed Tanya Allen’s workers from opportunities to move for- In the early 1990s, Fred Keller asked so. Ahat bearing the LongHorn Steak- ward in career paths and ultimately in- a machine operator at his Grand Beginning in 1976, Ross spent 24 years at house logo and asked her if she knew any- crease their incomes. Nearly 1 million Rapids-area engineering firm who Chicago-based Rothschild Investment Corp., a one who worked at the restaurant chain. households in Michigan fit this profile. had a background in social work if it worldwide investment bank, first running She told him she owned one. Allen is a What does it mean for employers? Ram- was possible to hire local homeless its bankruptcy business and then running partner with a joint venture between At- pant turnover by this workforce population residents or welfare recipients. that firm’s private equity fund, which he lanta-based Hojeij Branded Foods and its gets expensive — and quickly, to the tune of At the time, Cascade Engineering Inc. bought in 2000 to launch New York City- Detroit partner, AP United LLC. The ven- $3,400 or more per position. The challenges wasn’t facing a labor shortage. Keller, based W.L. Ross & Co. LLC with $440 million ture owns nine restaurants inside the Mc- posed by this group of workers, nicknamed the company’s founder and chairman, in assets under Namara Terminal at Detroit Metropolitan ALICE (for “asset-limited, income-con- says he was motivated more by a de- Wilbur Ross Jr. will be management. Airport. strained, employed”), even have caused sire to demonstrate that business keynote speaker for the In 2010, de- “I’d like to work,” Allen recalls the man some Michigan companies to rethink their could be part of a solution to lift peo- Crain’s Biggest Deals event, spite having saying. But once she told him where the recruitment and retention strategies. In ple out of poverty. a showcase of the biggest proved his restaurant was located, she said, he some cases, employers are offering com- A van pool was deployed to pick up M&A deals of 2015. contrarian dropped his head. He didn’t have trans- munity resource-type services, all part of an a half dozen people from Grand model, Ross portation to get there. SEE ALICE, PAGE 18 Rapids’ Heartside neighborhood, just When: 5-9 p.m. Feb. 16 raised eye- south of downtown, and bring them Where: The Roostertail, brows, if not to Keller’s firm several miles away in 100 Marquette Drive, Detroit derisive INSIDE: Kent County’s Cascade Township. But Cost: $125 chortling, Where is ALICE? Where the within a few months, virtually all of when, with the working poor live, Page 18 the new hires were gone. Register: www.crainsdetroit. Great Reces- “We weren’t prepared to receive com/events The high cost of employee sion’s effects turnover, Page 18 them,” Keller says, “and they weren’t still reverber- prepared to work.” ating, he became the biggest investor in a Income-constrained workers In some ways, Keller’s early vision single-branch bank in Troy called, grandly “make it stretch,” Page 19 laid the foundation for what today is enough, First Michigan Bank. Supplier aims to give parolees called an employer resource net- “Is Wilbur Ross crazy?” read the headline new opportunities, Page 20 work, a regional partnership of of an article in BusinessWeek in 2003, just companies that provides wrap- after he had bought a sprawling, nearly Detroit Chassis helps pay for around services to vulnerable work- idled steel plant in Cleveland and long- Goodwill caseworker Keith Bennett SEE RESOURCE, PAGE 20 struggling Bethlehem Steel. to help workers like Randy Baker. SEE ROSS, PAGE 22

© Entire contents copyright 2015 by Crain Communications Inc. All rights reserved. crainsdetroit.com Vol. 31 No 51 $2 a copy. $59 a year. NEWSPAPER 20151214-NEWS--0002-NAT-CCI-CD_-- 12/11/2015 3:19 PM Page 1

2 CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015

news, the Grand Rapids market was N-Tour (www.mapntour.com) to MICHIGAN ranked No. 5 in the U.S. for its win- develop a sales and marketing plan. INSIDE ter jobs outlook in a new survey by Ⅲ The local representing UAW THIS ISSUE ManpowerGroup, a Milwaukee- members who walked off the job BANKRUPTCIES ...... 5 CLASSIFIED ADS ...... 17 based workforce services company. from a Nexteer Automotive manufac- MARY KRAMER ...... 8 turing complex near Saginaw said it OPINION ...... 6 MICH-CELLANEOUS reached a tentative agreement with OTHER VOICES ...... 6 BRIEFS the automotive steering company, PEOPLE ...... 16 Ⅲ A $45 million project will up- The Associated Press reported. The RUMBLINGS ...... 23 Will there be enough energy utilities are closing coal plants and date security screening and make union said workers would return to STAGE TWO STRATEGIES ...... 16 for proposed data center? have ramped up warnings of a other improvements at Gerald R. their jobs during the ratification WEEK ON THE WEB ...... 23 statewide capacity shortfall. Ford International Airport in Grand process. Nexteer has roughly 3,000 Amid highly publicized tax law Mendenhall told the Senate Rapids, MLive.com reported. Con- union employees at the site. challenges, another potential com- committee that climate was one of struction is scheduled to begin this Ⅲ Performance Fabricating LLC COMPANY INDEX: plication of Switch Communications the reasons Switch was attracted to week on the Gateway Transforma- plans to construct a 100,000-square- SEE PAGE 17 Group LLC’s proposed move to the area, noting it would cost less to tion project, which will include con- foot corporate headquarters and Michigan is how the energy-inten- cool the data center given the aver- solidation of passenger security manufacturing plant in Fenton Foundation ranked Michigan 35th sive company would secure a reli- age temperatures in the region. checkpoints, the construction of an Township near Flint, creating an ex- among the states in overall health. able electricity supply for its pro- “Michigan has a built-in advantage area where people may watch pas- pected 52 jobs. The $9.1 million fa- Ⅲ A $1 million gift to Michigan posed data center near Grand because it’s cold,” he said. sengers depart for flights, and im- cility will be supported by a $150,000 State University’s Eli Broad College of Rapids. That’s particularly the case if provements to ticketing, baggage performance-based grant from the Business has created an endowed Las Vegas-based Switch wants to Study: GR market nation’s screening and baggage claim areas. Michigan Strategic Fund, said the professorship in management, The power its data center with renew- hottest in housing for ’16 Ⅲ Kellogg Co. said it plans to cut Michigan Economic Development Corp. Associated Press reported. The gift able sources, as it does with its greenhouse gas emissions by 65 Performance Fabricating has out- is from Al and Nancy Gambrel; Al Nevada operations, MiBiz reported. Affordable housing, home-buy- percent across its operations by grown its leased facility in Fenton. Gambrel, who earned a bachelor’s In state Senate committee hear- ing millennials and a strong econo- 2050, the Battle Creek Enquirer re- Ⅲ Michigan continues to be degree in business from MSU in ing testimony, Jason Mendenhall, my have helped make Grand Rapids ported. The Battle Creek company, ranked in the bottom half of states 1976, is senior vice president of executive vice president of the the nation’s hottest housing market citing an interest in global sustain- in a national study on state health human resources at Oak Brook, Ill.- cloud at Switch, said the company for 2016, says a study by Trulia, a na- ability goals, announced the plans system performance, according to based TreeHouse Foods. had “established relations” with the tional real estate research firm. at the New York Times Energy for the latest Commonwealth Fund’s Ⅲ Bah, humbug? A new report power provider of the site in Kent According to MLive.com, the Tomorrow Conference in Paris. “Aiming Higher” report. The state finds Michigan as the seventh-least- County’s Gaines Township. Repre- study also measured the online ac- Ⅲ Map-N-Tour, a Midland-based ranked 31st in the report, which charitable state in the nation, sentatives from Jackson-based utili- tivity of persons searching for company that develops 3-D inter- evaluated 42 indicators in 2013 and Michigan Radio reported. Accord- ty Consumers Energy, which serves homes and the number of vacant active maps and other virtual expe- 2014 in five categories that ranged ing to the “Charity Calculator” at the the territory, declined to comment homes in a community. Charleston, rience applications for web, mobile from obesity rates to high levels of financial website Wallet Hub, the to MiBiz, citing a nondisclosure S.C., was ranked second, and and tablet devices, was awarded ethnic disparity of deaths for treat- state ranked 44th in an analysis of agreement. Austin, Texas, was third. Meanwhile, $11,600 in business accelerator able conditions. The 2014 Com- key metrics that included volunteer Switch’s project, in the former the Warren-Troy-Farmington Hills funds through the Macomb-OU INCu- monwealth report, covering 2010 to rate, percentage of population do- Steelcase Inc. pyramid, would be area was 51st and Detroit 87th. bator, the Midland Daily News re- 2012, ranked Michigan 29th. In a nating time and money, and the coming online at a time when major Meanwhile, in almost-as-good ported. This award will allow Map- separate report, the United Health median contribution to charity. Ⅲ

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Ŷ If your company was a self-funded customer of the Blues at any time since 1994, you likely have a claim. Ŷ Varnum has represented more than 120 Michigan companies to date. Ŷ For a free consultation to determine the size of your claim, contact us. Perrin Rynders Aaron Phelps 616/336-6734 616/336-6257 Legal Experience In Your Corner.® [email protected] [email protected]

Ŷ Detroit Ŷ Novi Ŷ Grand Rapids Ŷ Kalamazoo Ŷ Grand Haven Ŷ Lansing Ŷ Ann Arbor 20151214-NEWS--0003-NAT-CCI-CD_-- 12/11/2015 4:43 PM Page 1

CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 3

LOOKING BACK: Thirty years ago this month, Crain’s reported on the increased demand for warehouse space in Detroit’s Eastern Market. Lately, development efforts in the district have not matched those of nearby areas, but the necessity for Eastern Market tenants to expand may speed those plans. More at crainsdetroit.com/30 Lear targets FOOD FOR THOUGHT I-94 site for Eastern Market looks to grow borders Detroit plant

By Gary Anglebrandt By Dustin Walsh tions at the park. He expects the first Special to Crain’s Detroit Business [email protected] commitment to be announced by astern Market gets hot,” read the Lear Corp. plans to double down the second quarter of next year. front page of the Dec. 23, 1985, issue on its investment in Detroit by es- Lewand declined to name the other E of Crain’s Detroit Business. tablishing a new manufacturing suppliers in negotiations. The story was about a spike in demand plant in the next two years, joining a He did confirm that American for properties as food companies built more city-led effort to create a hub with at Axle is in negotiations to contract warehouse space. least four other automotive suppli- space from its largely unused De- It’s a headline that would work just as well ers. troit-Hamtramck plant near the in- now. Retailers regularly announce shop The push, supported by the De- dustrial park to two other suppliers. openings in the district. The Saturday public troit 3 automakers — seeks to re- David Dauch, chairman, presi- market has grown under the management store manufacturing capacity — dent and CEO of American Axle, did of Eastern Market Corp., the nonprofit estab- and jobs — at the I-94 Industrial not respond to calls on the topic. lished by the city in 2006. When TV advertis- Park near the junction of I-94 and I- Matt Simoncini, president and ers co-opt the gritty Detroit comeback nar- 75 near the American Axle & Manufac- CEO of Southfield-based Lear, said rative, they never fail to include a shot of an turing Holdings Inc. headquarters. now is the right time to expand the Eastern Market shed. The city, working with Los Ange- footprint in the city where Lear was Now, Eastern Market wants to make itself les-based advisory firm AECOM, has founded nearly 100 years ago. bigger by stretching the district’s bound- assembled 147 acres in and near the “The way I see it, Lear has never aries. President Dan Carmody said about 25 industrial park for the project, said been in a better position to expand companies — mostly food wholesalers, F. Thomas Lewand, group executive here,” Simoncini said. “We think we processors and distributors that already op- for jobs and economic develop- can create something bigger, like a erate in Eastern Market — want to expand ment for the city. supplier park with manufacturing but have run out of room. Wolverine Packing Lewand said the city is in active space that supports the wishes of Co., E.W. Grobbel Sons Inc. and Baratta Broth- discussions with suppliers about es- our customers while creating good ers Inc., which does business as Fairway Pack- tablishing manufacturing opera- SEE LEAR, PAGE 22 ing Co., are among them. “If we don’t find space for those compa- nies, some of them are going to have to go somewhere else,” Carmody said. Comerica Park refi highlights The district is bounded roughly by Mack Avenue to the north, I-75 to the west, St. Aubin Street to the east and Gratiot Avenue to the south. A large wall map in the non- Ilitch financial maneuvers profit’s offices shows new boundaries ex- tending eastward two blocks to Chene Street By Robert Snell and Bill Shea fessional sports team, to refinance and enveloping areas south of Gratiot. Car- Crain’s Detroit Business the baseball stadium’s remaining mody would not confirm these as the final A complex series of financial private construction debt. boundaries, saying those lines are tentative; moves by Mike Ilitch last year in- The Ilitch organization did not the boundary could end up being a little cluded a previously unreported refi- disclose how much Comerica Park east or west of Chene. nancing of Comerica Park and culmi- debt was refinanced, or how much A second phase could see the northern nated in the pizza mogul tapping savings was realized by the refi- edge moved beyond Mack. his portfolio of assets to financially nancing through Comerica Bank. The These plans would fall under the purview backstop the new Detroit Red Wings initial loan in 1997 was $140 million. of a new entity Eastern Market wants to es- hockey arena, Crain’s Detroit Busi- A source familiar with the matter, tablish in the first quarter of next year to MICHAEL LEWIS II ness has learned. who spoke only on the condition of promote development. The nonprofit entity Workers have been cleaning up the exterior of this former slaughterhouse, Public records and interviews il- anonymity, said the collateraliza- SEE MARKET, PAGE 17 now owned by developer Dennis Kefallinos.The northern extension of the lustrate how Ilitch, 86, pledged tion terms of the refinance were the Dequindre Cut greenway, still under construction, runs next to the other side pieces of his family’s $5.5 billion same as the original construction of this building.There are no firm usage plans for this site. empire to build the hockey arena loan, and the deal was done solely and capitalized on the soaring value to take advantage of a better interest of the Detroit Tigers, his other pro- SEE ILITCH, PAGE 21

MUST READS OF THE WEEK Uncertain chemistry

Dow-DuPont merger’s effects on Michigan unclear, but stakes are high, Page 4 Affordable Care scare Increases in health costs for small businesses under health overhaul haven’t met worst fears, Page 12 20151214-NEWS--0004-NAT-CCI-CD_-- 12/11/2015 4:52 PM Page 1

4 CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 Impact of Dow-DuPont merger on state certain,extent unclear

By Dustin Walsh nating duplicated efforts in research and professor of economics and [email protected] and development, sales, purchasing business at Northwood University in The merger of Midland-based and advertising, Jaffe said. Midland, said Dow is the anchor of Dow Chemical Co. and Wilmington, “These are categories that are al- the bay region, which includes Bay Del.-based DuPont Co. will inevitably ways under consideration in a deal City and Saginaw. impact the Michigan economy, like this,” he said. “There doesn’t ap- Nash believes the merger will though experts don’t agree on the pear to be a ton of direct overlap in create more jobs and a larger scope extent. the businesses, so consolidation be- for DowDuPont in Midland, despite The merger, which will create a comes trickier.” initial fears. new company called DowDuPont Speculation on whether Dow “If you look at the impact, there’s with a $130 billion market value, al- Chemical could eventually aban- only about $4 billion in overlapping lows the two chemical makers to don Midland remains high, but it’s business between the two entities, streamline operations and, likely, too early to make any assumptions, and I don’t think we’ll see a lot of cut costs across product lines, such Jaffe said. losses in Midland,” Nash said. “There as agriculture, plastics and other “Dow has a lot of capital expendi- may be some short-term disrup- chemicals. tures in Michigan, so there definite- tions, but my bet is that the mid- The stakes are high for Michigan. ly could be consolidation of manu- Michigan region and Dow will be Dow employs roughly 6,000 people facturing facilities and they could, larger and more prosperous for it. in the state and is the largest em- in principle, combine headquarters “We’ll see some sign changes, ployer and dominant economic elsewhere,” Jaffe said. “But Dow has and some people in Midland will force in its hometown of Midland. always remained strong with its wear the DuPont oval instead of the Dow and DuPont declined to commitment to Midland, and it’s Dow diamond, but I see a real op- comment directly for this story. not like Wilmington is a storybook portunity to grow business here be- “This transaction is a game- place to recruit talent.” cause of the combined entities.” changer for our industry and re- Tim Nash, senior vice president flects the culmination of a vision we of corporate and strategic alliances SEE NEXT PAGE have had for more than a decade to bring together these two powerful innovation and material science leaders,” Dow CEO Andrew Liveris said in a statement. Dow is synonymous with Mid- land and is the primary reason that city has avoided the decline of many midsized Michigan industrial towns. The mid-Michigan commu- nity of roughly 42,000 people is well educated and more prosperous than the state averages. More than 94 percent of Midland residents have a high school diplo- ma and more than 42 percent earned a bachelor’s degree or high- er, compared with the state average of 86 percent and 29 percent, re- spectively, according to 2014 U.S. Census Bureau data. Per capita income is also higher at $30,715, compared to the state average of $28,555. The presence of Dow, founded by Canadian immigrant Herbert Dow in 1890 to manufacture bleach, has shaped Midland’s business com- munity and cultural life. The influence is clear at the chem- ical-themed H Hotel; Dow Diamond, Intellectual Property | Litigation | Technology where the Great Lakes Loons minor league baseball team plays; and the Grace A. Dow Memorial Library. All were funded by the company. YOU CAN TELL FROM OUR BUILDING Herbert Dow also created Dow Transactional Gardens, the city’s 110-acre botani- WE MEAN BUSINESS. experience on par cal garden locale. In a conference call Friday, Liv- The GVSU Seidman College of Business full- or with the major Silicon eris and DuPont CEO Ed Breen con- Valley law firms. firmed that the companies’ head- part-time M.B.A. program will get you to the top. quarters will remain as a combined West Michigan’s premier business school now has – BRAD KANCIGOR,KANCIGOR, ASSOCIATEASSOCIATE GC entity. Under the reorganized Synopsys,Synopsys, IncInc an equally premier building, enhancing downtown DowDuPont, Liveris will serve as ex- Grand Rapids’ growing skyline and economic climate. ecutive chairman and Breen will be- come CEO. YOUNG BASILE. But restructuring will occur Strategic advisors to the world’s and that could lead to job losses, said David Jaffe, special situations most innovative companies. counsel for his own Birmingham firm, Jaffe Counsel PLC, and former ANN ARBOR TROY SILICON VALLEY CHICAGO general counsel for Guardian In- dustries Inc. www.youngbasile.com Cost savings will come from elimi- 20151214-NEWS--0005-NAT-CCI-CD_-- 12/11/2015 4:53 PM Page 1

CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 5

FROM PREVIOUS PAGE Last month, work began on Dow Chemical’s new six-story corporate COMMERCIAL LENDING | TREASURY MANAGEMENT | BUSINESS SERVICES center as part of the company’s 150- acre corporate headquarters cam- pus in Midland. It will include space for about 600 employees and con- tractors and is expected to be fully operational by mid-2017. In Southeast Michigan, both com- panies operate automotive units. Dow Automotive Systems employs about 250 in Auburn Hills with rev- State-of-the-art technology. enue of $2.8 billion in 2014. It’s un- known how many people DuPont Au- tomotive employs in Troy; that unit generated revenue of $3.1 billion in 2014. Local banking know-how. It is not yet known whether con- solidation or job cuts will occur with either company if and when the merger closes, but the companies Your hometown have said they expect cost savings of $3 billion within 18-24 months of the business combination, and job cuts often accompany big acquisitions. advantage. DuPont reduced its presence in Southeast Michigan in 2012, when it sold its performance coatings busi- ness to private equity firm Carlyle Group LP for $4.9 billion. The unit, headquartered in Mt. Clemens, em- Banking local means our experts are always by your side. Whether providing local insight to market conditions or guiding you ployed about 11,000 at 35 plants with state-of-the-art products designed to optimize cash flow and finance growth, you can count on us for world-class banking. globally. The company, now called Since 1917, we’ve been anchored right here in our community helping businesses move forward with decisions that come out Axalta Coating Systems , employs about of our office – and not out of state. It’s banking big…even when you’re banking local. 500 at its Mt. Clemens plant. The eventual plan is to split the combined DowDuPont into three Give us a call today. separate enterprises, focused on www.thefsb.com/business | 866-372-1275 agriculture, materials and specialty chemicals, with Dow and DuPont owning a 50 percent stake in each. The materials science company will fold in the automotive units of both Dow and DuPont, as well as the companies’ performance materials divisions and Dow’s performance plastics, consumer care and infra- structure segments, to create a com- Niche manufacturing in Detroit? bined $50 billion unit, the company ALL SEWN UP. said in a Friday conference call. We’ve got your accounting systems “By taking an integrated approach to customer-designed needs, we’re going to deliver enormous value to our customers …,” Liveris said in the conference call, pointing out that the companies’ specialties will allow it to provide more complete products to Our client, Detroit Denim, is a high-quality customers. denim manufacturer poised to scale the Nash agrees. “Dow is one of the leaders in exte- brand nationally. Emerging startups like riors, and DuPont is really focused this require accounting advice that can see on the interiors now,” Nash said. “Dow will now have the ability to the company through its next stage of serve customers much broader with growth. We work with founders to ensure a one-stop shop for components, and that bodes well for Midland, De- the business' tax and accounting systems troit and Michigan.” Ⅲ are right, right from the start. Because Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh when it comes to choosing an accountant, it should be a custom fit. BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit Dec. 4-10. Under Chapter 11, a company files for reorganiza- tion. Chapter 7 involves total liqui- dation. Contact for Inquiries Ⅲ B & Z Restaurant Group - Chicago Steve Wisinski, CPA, CFE, CFFA No. 1 LLC, 48781 West Road, Wixom, Partner voluntary Chapter 11. Assets and li- abilities not available. www.ShindelRock.com | 248.855.8833 Ⅲ LSJ Marketing Inc., 100 Kirts Eric Yelsma, Founder Steve Wisinski, Partner Blvd., Suite A, Troy, voluntary Chap- Detroit Denim ShindelRock 28100 Cabot Drive Ste. 102 | Novi, MI 48377 ter 7. Assets: $0; liabilities: $18,493,451.43. Natalie Broda 20151214-NEWS--0006-NAT-CCI-CD_-- 12/11/2015 2:21 PM Page 1

6 CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 CRAIN’S DETROIT BUSINESS U.S.needs to tackle gun violence OPINION like other public health problems an Bernardino, Calif.; Colorado outnumber the number of police SSprings, Colo.; Roseburg, Ore.; officers killed on the job each year Charleston, S.C.; Watertown, Conn.; by a 3-to-1 margin. Aurora, Colo.; Blacksburg, Va. Mass In the wake of previous mass murder in the U.S. continues apace. shootings, the gun lobby and its sup- A common-sense The overall statistics may not porters in Congress have focused show an increase in the number of public attention on mental illness, Americans killed by firearms each which does help explain some of the year. But the horrific nature of re- OTHER VOICES: mass killings. But most people with bill on security cent mass slaughters reveals a tragic Merrill Goozner temporary or chronic mental health truth: The proliferation of guns in problems are nonviolent, and at- our society has been, and continues Merrill Goozner is editor of Modern tempting to reduce gun violence by mid the rising hysteria about immigration, a bill to be, one of the nation’s leading Healthcare, a sister publication of improving those people’s care — sponsored by U.S. Rep. Candice Miller is taking a threats to public health. Crain’s Detroit Business. worthy as that is — will never get at A practical approach to increase security without ob- About the same number of peo- the root of the epidemic. jectionable — and probably unconstitutional — blanket ple die each year from gunshot als’ cherished Second Amendment The problem is easy access to the bans on Muslim travelers to the U.S. wounds — more than 32,000 — as rights. We didn’t take away people’s guns and ammunition that can be die in car accidents. That’s an aver- right to drive when outrage over used for mass slaughter. It is the The bill, which passed the House by a 407-19 vote on Dec. age of 88 deaths a day from homi- skyrocketing highway deaths forced proliferation of guns that are poorly 8, gives the secretary of Homeland Security the ability under cides, suicides and unintentional legislators to act. We passed laws designed, improperly cared for, or some circumstances to suspend or eliminate a country from gunshots. It’s the equivalent of an forcing auto manufacturers to in- serve no useful social or sporting a program that allows travelers from designated countries airplane falling out of the sky every stall seatbelts, purpose. day. No other country in the in- airbags and safer “The pseudo- The least we into the U.S. for up to 90 days without a visa. dustrialized world even comes designs. scientific idea, can do is require Currently, 38 countries participate in the program. They close to that level of preventable Earlier this registration and now would be required to continually share information carnage. year, eight pro- propounded by background with the U.S. on foreign travelers. Countries that fail to do so The societal costs are staggering fessional groups, many gun checks for all gun could be suspended from the program. — $174 billion a year for medical ranging from the purchases, require and mental health care, criminal American Acade- enthusiasts, that gun owners to Foreign travelers who have traveled to Syria or Iraq or are justice costs, wage losses and the my of Family there will be less carry liability in- dual nationals cannot participate in the program. price of pain, suffering and lost Physicians to the violence when surance (as we do Some Michigan Democrats in Congress think the bill goes quality of life, according to a recent American Bar for drivers), and too far, but we applaud Miller for her efforts to create tools study by the Children’s Safety Net- Association, de- everyone is force gun manu- work. That works out to $645 every manded more facturers to install that enhance U.S. security without caving into the fear that year for every gun in America. extensive firearm packing heat, digital technolo- produces ideas that are, well, un-American. You can add to that the immeas- regulations as a defies common gies such as We hope her common sense is contagious. Miller an- urable costs of surviving family first step toward sense.” thumbprints for nounced earlier this year that she won’t seek re-election in members’ pain and suffering; the reducing gun vi- access and bullet post-traumatic stress suffered by olence in our so- Merrill Goozner,Modern Healthcare tracing. “We’ve 2016. Michigan will miss her service. health care workers; and the para- ciety. They called been very suc- lyzing dread that parents every- for extending background checks cessful in bringing down death and where must face when contemplat- on the purchase of firearms to gun disability from cars,” said Dr. Will Midland remain company town? ing the fact that their kids’ school shows and individual transfers, Georges Benjamin, executive direc- might be next. banning individual ownership of tor of the American Public Health There are a lot of questions around the impending merger Yet we do nothing. The National assault weapons and their high- Association. “We can do the exact Rifle Association’s minions in Con- volume ammunition magazines, same thing for firearms.” of Dow Chemical and DuPont, but the big one in Michigan is gress span the political spectrum. and ending gag laws that prevent The pseudo-scientific idea, pro- this: What will hap- Sen. Bernie Sanders, the most left- physicians from discussing gun pounded by many gun enthusi- pen to the company wing candidate to run for president safety with patients. asts, that there will be less violence town? in nearly a century, joins the That last request could help pre- when everyone is packing heat, naysayers when it comes to many vent some of the more than 60 per- defies common sense. If perma- Dow was founded gun-control measures. The Repub- cent of gunshot deaths by suicide. nently enshrined in public policy, in Midland in 1897 lican-controlled Congress remains And pediatricians might be able to that idea will signal to the world and has maintained ideologically opposed to any form make gun owners more aware of that America has not only lost its its headquarters of government regulation on the fact that accidental shooting ability to address pressing social firearms. deaths among preschool-age chil- problems, it has lost its moral there ever since. The This isn’t about limiting individu- dren playing with unsecured guns compass. Ⅲ company has invest-

BLOOMBERG NEWS ed heavily in the town of 42,000, TALK ON THE WEB funding many community amenities and adding to its cor- Re: Detroit police vote to extend Re: St.John Providence meets porate campus — plans for a new 150,000-square-foot build- Reader responses to stories and contracts,get 4 percent raise blogs that appeared on Crain’s with nurse anesthetists ing there were announced this summer. For these and many website. Comments may be edited reasons, Dow has been a good corporate citizen. Public safety is a key priority. Keep for length and clarity. This contract was never about the Will this merger change that? So far, both companies have blocking and tackling, Mike Dug- money and in fact, the 68 CRNAs gan. It will move the city forward have agreed to a pay cut. This con- said their headquarters will stay put, but how the combina- and attract businesses and resi- thorize two more casinos around tract is about respect for our profes- tion will affect employment is as yet unknown. dents. You have to include the the downtown area. sion from the hospital administra- Dow has practical reasons to consider a merger — and schools to have a viable city, Justin Thompson tion in how they transition the even a new HQ location. Although Midland is deep in the though. employees to outside vendors. At no Jeff Reid time were the stakeholders invited company DNA — and vice versa — talent attraction is an Re: Moody’s: Detroit advances to the discussions, and the contract issue. Top corporate talent often doesn’t want to live in a Re: Casinos’November revenue after exiting bankruptcy has 11 pages of onerous work rules small town, so Dow’s spending on amenities has been key. rises slightly from a year ago greatly affecting the quality of life If we’re lucky, the deal will produce as good a result for If I could shed most of my debt for these very strong and highly That is good. Why go to the desert (promises to pay), I’d make a few skilled 68 CRNAs. This was never Midland — and Michigan — as the companies believe it will or some swamp to gamble and party? strides too. about the money. produce for themselves. Detroit should eventually au- Robert Tupilo CRNA 20151214-NEWS--0007-NAT-CCI-CD_-- 12/11/2015 1:57 PM Page 1

CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 7 CRNA outsourcing part of health care industry trend

By Chad Halcom Lago and an attorney for PSJ, can affect core functions of critical vide certain services.” ble noncompete agreements. [email protected] Carey Kalmowitz of The Health Law care hospitals that rely on them to David Shea, managing partner of After a meeting Wednesday, how- A contentious move to outsource Partners PC, did not return phone perform any surgeries. Shea Aiello PLLC in Southfield and an ever, he indicated that the terms had certified registered nurse-anes- calls seeking comment last week. Scholl would not confirm any attorney retained by all of the Michi- changed considerably and the nurse thetists at St. John Health System is just Michigan accounts for more than details about holdouts or ongoing gan 68, said last week that CRNAs anesthetists needed to vote on part of a larger trend among health 2,600 certified registered nurse employment talks. have been asked to take a 35 percent whether the agreement was more care providers, in Southeast Michi- anesthetists out of about 48,000 na- “CRNA associates who are cur- cut in overall compensation, and palatable. He would not elaborate gan and elsewhere, to contract the tionwide, who administer anesthe- rently employed by Providence- were agreeable to making conces- on the new terms before the vote. management of various specialists. sia during surgeries. Providence Park are given the op- sions in benefits, overtime and shift Members of the Michigan 68 have Some 68 holdouts among the 74 Urban and suburban hospitals typ- portunity to transition employment differential payments, Shea said. said previously the arrangement was certified registered nurse anes- ically employ an anesthesiologist doc- to the new company, effective Jan. But the new employer had also potentially disruptive to the group of thetists at St. John Providence Hospi- tor and a small group of CRNAs as a 1, 2016, with comparable pay and sought “oppressive” terms before specialists, some of whom have tal and Medical Center in Southfield team, although in rural communities benefits,” she said in a statement the November deadline, he said, worked for the hospital for decades. Ⅲ and St. John Providence Park Hospital about 70 percent of anesthesia is ad- emailed to Crain’s. “It is a common such as accepting employment Chad Halcom: (313) 446-6796 in Novi were still voting via email ministered independently by CRNAs. practice for health systems to con- terms and conditions that PSJ could Twitter: @ChadHalcom Thursday night whether to accept Labor disputes in these groups tract with business partners to pro- not yet supply for review, and possi- Jay Greene contributed to this report. recent changes to a third-party em- ployer contract that takes effect Jan. 1, their attorney confirmed. The group was previously told via email that the CRNAs who didn’t agree to join the newly formed PSJ Anesthesia PC could see their em- ployment end by Dec. 31. But the Detroit Medical Center al- ready agreed to contract the man- GIVE A GIFT THAT agement of its anesthetic services along with active residency and CRNA training in August to Dallas- LASTS FOREVER. based NorthStar Anesthesia, and Florida-based Mednax Inc. took over its second anesthesia services prac- tice in Michigan at Grand Blanc’s The Community Foundation for Southeast Michigan ensures your gift helps meet the needs in our Genesys Regional Medical Center , when communities today and tomorrow. We build endowment — permanent community capital — and Mednax acquired Great Lakes Anes- thesia Associates PC in early 2014. offer the maximum tax benefits under federal law for your gift. For 31 years, we’ve been helping “There have been other hospitals people in our region make a difference. Let us help you make a difference for generations to come. in Michigan to do it, and it is part of a larger trend we are already seeing Donate now at cfsem.org/gift or contact us at 1-888-WE ENDOW to learn more. nationwide,” said Andrea Teitel, president of the Michigan Association of Nurse Anesthetists. Providence recently secured a contract with PSJ Anesthesia to pro- vide CRNA services to the two hospi- tals starting in 2016, corporate public relations director Daniela Scholl confirmed last week. PSJ was formed earlier this year by anesthesiologist Dominick Lago of Northland Anesthe- sia Associates PC in Southfield, who is also affiliated with St. John. Teitel said the Michigan associa- tion takes no position in the Provi- dence contract talks. The #Michi- gan68 social media campaign for the 68 CRNA holdouts has raised more than $50,000 for legal services and other support since Nov. 28 via a Gofundme account. But Teitel said hospital manage- ment sees contracting out CRNA services as a better deal than billing their services as staff employees. “Quite often the hospitals are not capturing the revenue that they could from billing for the expertise of CRNAs. And as such, they find it’s more beneficial to have an outside group that contracts for their servic- es,” she said. “We are hopeful for an outcome where these CRNAs get compensa- tion that’s fair.” Other health care sources told Crain’s that Michigan is slightly be- hind other states in the trend to- ward outsourcing or third-party management groups for profes- sional groups, and St. John manage- ment likely approached Lago to suggest forming a new business to manage its CRNAs. 20151214-NEWS--0008,0009-NAT-CCI-CD_-- 12/11/2015 1:57 PM Page 1

8 CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 SPECIAL REPORT: MICHIGAN

MARY KRAMER [email protected] Twitter: @mkramercrain Target other BUSINESS schools,not EAA

rotesters recently stormed a meeting of Eastern Michigan PUniversity’s Board of Regents, demanding that the board sever ties to the Education Achievement Authori- ty for failing to serve its mostly black urban students. They were loud, they were angry. And they probably had the wrong target. When it comes to failing African- American students, Grand Rapids, Lansing, Muskegon, Saginaw and Yp- silanti schools are all worse — yes, worse — in performance than Detroit Public Schools. Detroit’s worst schools were spun into the EAA. So where are the protests in those cities? A report released last week puts Michigan at nearly the bottom in the nation in the academic performance of African-American students. Just 10 percent of Michigan’s African-Ameri- can students taking the test were hit- ting proficiency marks in fourth-grade math, 9 percent in fourth-grade read- ing, 5 percent in eighth-grade math and 9 percent in eighth-grade reading. Detroit is the worst big city in the country, but the other Michigan dis- tricts are worse yet, according to an analysis by Education Trust-Midwest. How to fix it? Florida focused on PHOTOS COURTESY BRONNER’S universal preschool and on training Bronner’s Commercial Display counts Macomb Mall in Roseville (above) among customers in a business teachers to teach reading. Tennessee that began in 1951 with painted signs in Clare (right). Below right is a Muskegon display in 1962 . focused on effective teaching — with 5,000 trained evaluators doing on-site classroom evaluations and 700 of the highest-performing teachers now coaching their peers. Both states have far better results than Michigan. LIGHTING THE Michigan soon may require third- graders to be proficient in reading be- fore moving to fourth grade. Training teachers, which seems like a no- brainer, is critical. We’ve seen other programs fail; recent test results speak for themselves. Who trains teachers and how should be a concern to the HOLIDAYS entire business community. orations to cities and shopping malls and in People magazine, and it continues to be a So why are protesters obsessed Michigan businesses adorns primarily outdoor space. media darling as the years pass. with the EAA and not the crummy busy trimming streets, The company was started in 1964 by John Today, the display part of the business has schools all over this state? LeClerc, who at a young age started decorating more than 1,000 customers annually and six Mostly union politics. But the EAA malls for festive season the interiors of a couple of J.C. Penney stores in and a half employees. Typically, once pur- has not lived up to expectations. Early the Detroit area. He went on to deck out De- chased, décor items are installed and removed missteps include poor training of By Marti Benedetti troit-area malls before transitioning his busi- by city workers, Goff said. Since 2009, Bronner’s teachers, especially on technology, [email protected] ness to outdoor trimming. Commerical Display has seen a 26 percent in- and lousy financial controls that led he annual ritual of installing sparkly, Bronner’s first sale of commercial Christmas crease in revenue, though Goff would not re- to an indictment last week of a former colorful holiday decorations in the decorations was to the city of Clare in 1951, veal specific sales figures. principal and two contractors. shopping centers and downtowns of said Brian Goff, display consultant at Bronner’s Among the state municipalities Bronner’s But it was EAA’s new leadership Michigan cities often falls to a handful Commercial Display. The well-known Bronner’s counts as customers are Dearborn, Southfield, that blew the corruption whistle. And T of Michigan companies, two multi-gen- Christmas Wonderland store is a division of Taylor, Mackinaw City, Marquette, St. Ignace you don’t read it in the headlines, but erationally owned and operated. Bronner’s Commercial Display and sits adja- and Sault Ste. Marie. It also provides decorating three of the 15 terrible schools origi- The granddaddy of holiday decorating in the cent to it on 27 acres. Billed as “the world’s plans and décor to the Detroit and Toledo zoos nally placed in the EAA have im- state is Frankenmuth-based Bronner’s Commer- largest Christmas store,” it opened in 1955 after and theme parks such as Disney World, Disney- proved test scores, climbing out of the cial Display, which got its start in 1945 when the holiday display company, a fact that sur- land and Six Flags. basement of “worst” schools. Christmas-loving Wally Bronner started paint- prises most people, who think the store came Goff said he sits down with a city or compa- Question: How many other urban ing signs and working on holiday display win- first. ny’s staff to hash out a decoration plan. Some districts can say one-fifth of their dows in Bay City. In 1976, actor John Wayne placed a tele- cities use only décor items such as garland and schools made such progress in just Family-owned Northville Township-based phone order to the Bronner’s store for a Santa lighted pole decorations; others prefer a bright- three years? Ⅲ LeClerc Display Co. Inc. specializes in leasing dec- suit. In 1990, Wally and his store were featured SEE NEXT PAGE 20151214-NEWS--0008,0009-NAT-CCI-CD_-- 12/11/2015 10:45 AM Page 2

CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 9 SPECIAL REPORT: MICHIGAN BUSINESS

FROM PREVIOUS PAGE holiday decor industry is Marion, LED lights cost considerably more travaganza, which attracts a lineup prises 1.5 million lights, is a source Ind.-based Winterland, which caters to purchase, however, so there is a of hundreds of vehicles every night, of pride for residents and visitors. ly decorated Christmas tree with to the decorating needs of clients greater initial investment. is about $3,500. When the lights were switched on bulbs and lights. For cities that like worldwide, including Michigan “Thirty-five years ago, people Shelby Township-based Dan’s Ex- during a ceremony Nov. 23, Trevar- to change it up every few years, dec- cities such as Traverse City, Kalama- didn’t care about being green,” cavating has the behemoth task of row said 40,000 to 50,000 people — orations are leased. Bronner’s does zoo and Benton Harbor. “We have Maurer said. “Now it’s important.” coating the buildings with lights. the largest crowd she has seen — much more business selling décor sold to 200 cities in Michigan over Additionally, if a mall has 15 Rob Hentkowski, vice president of were there to oooh and ahhh. than leasing. 25 years,” said David Fred, Winter- Christmas trees in a display with in- Dan’s Excavating, said it takes 12 to Trevarrow said the light show has Goff specializes in decorating land founder and owner. candescent lighting, simply pulling 14 workers two months to do it. Re- economic, community and retail cities’ downtowns, and Kevin Maur- Winterland’s work extends from out a bulb could shut the whole moving them is much faster. sales benefits. “I’ve had businesses er, Bronner’s commercial sales man- installing the menagerie of lights for thing down,” he said. “This was a The city’s pays Dan’s $225,000 an- call me wanting to locate here,” she ager, hones in on beautifying the in- the Detroit Zoo ’s Zoolights to lighted huge problem, especially for my nually to install and maintain the said. teriors of malls, hotels and casinos. Christmas trees in Dubai. type of clients.” lights over the holidays. Replace- Like many of the holiday dis- Downtown Grand Rapids uses a LeClerc Display’s largest client is Maurer said LED lights are diffi- ment strands each year cost $15,000 plays, Rochester will have its lights local company for decor. After downtown Detroit. The company cult to disrupt, and the color inten- to $20,000 more. glowing beyond the Christmas sea- doing its own outdoor decorations has seven full-time employees and sity is more vibrant. “This is our third year doing the son. The lights will continue on for years, it contracts with Christmas bumps it up to 15 or so during the Malls spend about $125,000 to lights in Rochester, and it’s the only weekends through January. Décor by DeVries in Jenison. busy holiday season. It specializes $150,000 just for the holiday deco- downtown lights we do,” Hentkows- Bailey said his company’s clients, Bill Pringle, owner and president in making, selling and leasing pole rations (not including electricity ki said. including downtown Detroit, lean of Christmas Décor for five years, décor and ground displays. and installation-takedown costs), The Big, Bright Light Show, now toward wanting a seasonal décor in- said his clients also include the Sales fluctuate between $500,000 compared with earlier years when it in its 10th year, is the brainchild of stead of a holiday one so it can be Muskegon area, Grandville, Caledo- and $1 million, said Shawn Bailey, ranged from $300,000 to $400,000, Kristi Trevarrow, executive director kept up longer to help people get nia, and the Canadian Lakes Resort in grandson of the founder and gener- Mauer said. Lower-cost LED light- of the Rochester Downtown Develop- through the drab winter months. central Michigan. al manager of LeClerc. A midsized ing has helped meet budgets. Many ment Authority. She said the idea Downtown decorations will be up “For Grand Rapids, we do light- city usually pays $10,000 to $20,000 also opt for traditional décor so it originated from what she saw at through February. ing, pole décor, ornament clusters on decorating, depending on how won’t go out of style. Disney World. The bulk of LeClerc’s handiwork and ornamented garland” along a elaborate the project is. Maurer said malls are opting for Several years ago, Trevarrow and is glittery blue and white snowflakes variety of downtown streets and at Goff, Maurer and Bailey said the more tasteful and simple decora- her husband attended the Osborne on the poles along Jefferson Avenue the Amway Grand Plaza Hotel, Pringle most significant trend in the last tions. He cited Southland Center in Family Spectacle of Dancing Lights and Woodward Avenue, but also in- said. His company installs, removes, several years is LED lights, which Taylor, which got new décor this at Disney and were “overwhelmed” cludes Grand Circus Park, Broad- stores and repairs the decorations. cost about 80 percent less to oper- year. Casinos typically just decorate when the lights went on. “It was the way, Washington Boulevard, the De- One of the largest players in the ate than the incandescent variety. the lobby and exterior of the build- most beautiful thing I had ever troit Opera House and Music Hall and, ing. “We can’t put much inside be- seen,” she said. new this year, Greektown. It deco- cause it blocks security cameras,” She and her husband looked rated the poles in Campus Martius, he said. carefully at how the 6.5 million but not the giant tree. While the Detroit suburbs have lights were put together to create Bailey predicted the redevelop- varying degrees of festooned down- the show. They brought it back to ing Capitol Park and Paradise Valley towns, Rochester puts on the Ritz the Rochester DDA board with a will likely join the list after they are with what it calls “The Big, Bright recommendation to duplicate it. wired for electricity. Light Show.” Every storefront along “(Our downtown retail) can’t “Over the years, different streets’ Main Street is blanketed with verti- compete with the big-box stores, (decorations) have come and gone cal colored lights. The light strings but maybe we can do something to depending on the focus,” he said. on the buildings are just 4 inches make our city a standout,” she told “The last five years, downtown has apart, which creates twinkling walls the board. been amazing with all the renewed of color. The electrical bill for the ex- The Rochester show, which com- interest.” Ⅲ IS EVERYTHING.IS Call Paul Mattes Vice President-Principal Certified Risk Architect Advanced technologies and global competition require new skills. 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10 CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 SPECIAL REPORT: MICHIGAN BUSINESS

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#FBDI A popular Gaylord-area resort plus a $10 million bank loan toward whose big-name owners include the $26 million purchase. James J. Boutrous II, Detroit Managing Member Carl J. Grassi, President former Chrysler Corp. CEO Robert The group bought about 85 per- Eaton may be ready to seek new fi- cent of the resort property, with the nancing for improvements and Melling family of Melling Tool Co. in growth after improving its balance Jackson and Melling Resorts Interna- sheet and unloading nearly $35 mil- tional keeping the remaining share. lion in debt. But the resort reported eight Treetops Acquisition Co. LLC, straight operating losses through owner of Treetops Resort and Spa in 2010, required more capital from Otsego County’s Dover Township, the owners for improvements, be- has been modestly profitable since came embroiled in a tax dispute 2011 but had been saddled with with Otsego County over years of al- years of debt from a 2002 acquisi- leged delinquencies, refinanced tion, followed by eight years of op- amid bank pressure and struggled erating losses and some facility im- to keep up with interest. provements. “We recognized there were seri- But resort General Manager ous (property) improvements that Barry Owens said the company needed to be made, and we were hopes to have more appeal to fortunate that these owners had the lenders for financing future im- wherewithal to make them and did provements, after settling with all not need to take cash out of the op- but one of its creditors. eration at the time,” Owens said. In July, U.S. Bankruptcy Court “Often in bankruptcy cases like Judge Daniel Opperman confirmed this, there’s a receiver appointed, a reorganization plan in the compa- but we always stayed in manage- TUESDAY, ny’s November 2014 bankruptcy, ment, it never affected our employ- but a dispute with Otsego County ment or reduced our hours, and we FEB.16 Treasurer Diann Axford still lingers were able to continue to operate.” TITLE SPONSOR 5 - 9 p.m. over past property taxes. A majority of the resort owners in Roostertail, The exit plan shed more than 2010 and 2011 bought out $14.3 Detroit $30 million in debt and allowed six million in acquisition debt then of its eight previous owners to gain held by Citizens Bank, for $11.9 mil- full equity in the resort. lion, as members of a newly formed Join Crain’s as we revealal “We’re thinking we’re more posi- Treetops Acquisition Co. II or TAC II tioned for bank financing, and a lot LLC. The bankruptcy exit plan al- of that would be for improvements lowed that entity to essentially con- 25 of the biggest deals in 2015. to existing facilities and to update vert the debt into Treetops equity. things,” Owens said. “There’s noth- The TAC II owners — Eaton, Then meet the people behind them. ing in the plan as massive as a new Lanigan, CEO D. Scott Luttrell of in- golf course, but we may look at a vestment firm LCM Group in Dallas, few new amenities like zip lines or CFO Mark Ridenour of Heidtman KEYNOTEK SPEAKER: Register at climbing walls — stuff like that.” Steel in Toledo, former Progressive WilburW Ross Crainsdetroit.com/events The resort’s past struggles trace Tool and Industries Co. shareholder Al OneO of the nation’s or call (313) 446-0300 back to a 2002 acquisition by an in- Wisne and Mark Melling of the best-knownb private equity vestor group that included longtime Melling companies — are now full investors,i he’s known for golf pro Rick Smith of the Rick Smith owners of the Treetops business. seeings things in deals that Golf Academies at Oakland University Rick Smith and another Treetops nobodyn else sees – until TITLE SPONSOR PREMIER SPONSOR and elsewhere. Acquisition owner who was not a aftera the deal is done. Smith, Robert Eaton, former TAC II member, Bob Sierra of SB DaimlerChrysler AG director and re- General Partners, were in a separate tired Illinois-Owens Inc. Chairman/ SEE NEXT PAGE 20151214-NEWS--0010,0011-NAT-CCI-CD_-- 12/11/2015 10:46 AM Page 2

CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 11 SPECIAL REPORT: MICHIGAN BUSINESS

FROM PREVIOUS PAGE Its debt was mostly related to the sulated than some other communi- class of owner-creditors and retain acquisition. Treetops owed its 20 ties up north, because it gets also no stake in the resort. Smith is a largest unsecured creditors only a more regional play out of Michigan well-known golf course designer combined $1.3 million, and nearly as a boating destination,” he said. and former golf operations director half of that was to law firm Par- “But the market as a whole is utterly at Treetops. menter O’Toole in Muskegon. dependent on the downstate econ- It was not clear how much of a The Otsego treasurer’s office con- omy.” stake they lost, but their businesses tends Treetops owes about $590,000 Jason Bank, partner at Kerr Russell each held more than 10 percent eq- in delinquent property taxes from and Weber PLC in Detroit and attor- uity, according to a corporate own- 2007 to 2012, but the company con- ney for Treetops Acquisition Co., ership statement in court. tends it actually is owed a tax refund said the next goal is to settle the tax Smith’s attorney, Lynn Brimer at of about $41,000. dispute. Strobl & Sharp PC in Bloomfield Hills, While ski and golf tourism are Bank and Joseph Sgroi, a partner and Drew Carr of business manager two primary revenue streams, at Honigman Miller Schwartz and Cohn Fidelity Sports Group in Orlando, Fla., Owens said, the resort also is build- LLP and attorney for the creditors would not comment for this story. ing revenue through weddings, cor- committee in bankruptcy court, Sierra and an executive at his porate retreats and other events. both said the settlement for Tree- Sierra Properties real estate compa- “A lot of resorts like Treetops tops does not involve Sigma Alpha ny in Florida did not return phone have a good product, but it’s still a Mu and Sigma Delta Tau at the Univer- calls. very discretionary spend. People sity of Michigan. “There wasn’t any plan against will be planning weddings and golf The resort sued the Greek organi- anyone (in ownership). I don’t know outings more at places like that as zations and more than a dozen UM why they didn’t participate in form- all boats keep rising” on Michigan’s students after a Jan. 17-18 visit ing” the new entity, said Robert economic recovery, said Ron Wil- where guests allegedly destroyed Mollhagen, partner at Varnum LLP son, CEO of Hotel Investment Ser- nearly 50 resort rooms and caused and attorney for TAC II in the bank- vices Inc. in Troy. more than $400,000 in damages. ruptcy. “And as things get better down- The lawsuit was later merged with “And it was all resolved amicably. state, there is more market upstate the bankruptcy, but Opperman A lot of objections get filed in court for tourist dollars. It’s also some- agreed in October to let it proceed to preserve your rights, even though what tied to real estate — people separately again at Otsego County you’re really actively negotiating. can recover and take a long week- Circuit Court. This was a very successful bank- end or a golf vacation a lot easier Treetops has already received ruptcy, and from day one there was and sooner than they can recover $25,000 from the local chapter of always an active negotiation.” and buy a cottage.” Sigma Alpha Mu — which has since The reorganization plan submit- Like Treetops, Hotel Investment been dissolved by the national or- ted in June essentially swaps the Services saw tourism suffer during ganization — and about $200,000 TAC II debt claim for all of the equi- the recession at its three managed from its insurer, Philadelphia Insur- ty. properties on Mackinac Island — ance Co., to go toward those dam- The resort itself is on pace for the Inn at Stonecliffe, Harbour View ages. nearly $13 million annual revenue, Inn and Harbour View Bed & Breakfast. Sgroi said that any payments that with varying monthly income but But he also said business has im- result from the litigation will go to averaging a few percentage points proved each year since 2010 and the current resort company and its above break-even, according to that this year is the company’s best owners. Ⅲ Owens and income statements for on the island since then. Chad Halcom: (313) 446-6796 November 2014 through June. “And Mackinac is a little more in- Twitter: @chadhalcom

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12 CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 SPECIAL REPORT: SECOND STAGE Company drops insurance,hopes to offer it again

Once Frank Kadaf, president of Active Solutions Group Inc., lost the ability to hold onto his company’s health care plan, he and his employees scrambled to find other options. The insurer dropped the company’s group policy once the Affordable Care Act went into effect on Jan. 1, 2014. “It was kind of a mess,” Kadaf said. “It put us at a disadvantage that we had to cancel what we had in place, and myself and other employees had to make other arrangements.” Active Solutions has 11 employees. The Dearborn-based company reached $1.15 million in revenue last year and is expect- ed to exceed $1.32 million this year. The company is a supplier of voice-over-In- ternet phone services. Kadaf was paying about $1,700 per month for his company’s group policy before it was canceled. Comparable plans now cost about 20 percent more. At that point, Kadaf decided it was more beneficial for himself and employ- ees to start looking for health care policies on their own. Many looked to the health- Affordable Care care.gov website. SCARE “Some weren’t happy about it,” said Stories by Rachelle Damico Kadaf. “They didn’t want to go through the marketplace or have to deal with the he arrival of the Affordable Care Act tend to terminate medical plans within the fired, laid off or cut employee hours. healthcare.gov website, especially with had many businesses owners wor- next five years and send employees to the Companies that have 100 or more em- the issues that it was having.” rying about the impact it would public health exchange to seek coverage, ac- ployees who work more than 30 hours per Kadaf hired an insurance broker to T bring. Worries about high insurance cording to a new survey by Mercer, a human week had to comply this year or face finan- SEE SOLUTIONS, PAGE 13 rates, cutting or laying off employees and ter- resource consulting firm based in New York. cial penalties of at least $2,000 and up to minating medical plans seemed to pour in To end this year’s coverage of second- $3,000 a worker. Businesses with 50-99 em- faster than the rules themselves. stage businesses, we revisited a few owners ployees also will be required to offer health LARRY PEPLIN The law itself has been subject to post-en- who shared stories of management chal- care insurance to workers in 2016. Frank Kadaf, president of Active Solutions Group actment changes, leaving a lot of business lenges and lessons learned over the past 12 The ACA also expanded rules under IRS Inc., is still searching for a group health care plan. owners seeking answers and scrambling to months. We had just one question for them: tax code 105(h), which says businesses can- meet new deadlines. Now that the ACA has been in effect for at not discriminate based on classification of “We have to give it time to work out,” Leon least one full year for you, how have you employees. The rules, which previously ap- Richardson, president of Southfield-based dealt with it? plied only to self-funded plans, expanded to ChemicoMays LLC told Crain’s one year ago. Although Frank Kadaf, president of Dear- include insured plans. (Guidance to enforce “We may in the long run pay less. I’m just not born-based Active Solutions Group Inc., was the rules has yet to be issued.) sure, I don’t think anyone is.” forced to cancel his company health care In Southfield-based Diversified Restaurant There is truth to that statement: Despite plan after it became noncompliant with the Holdings Inc.’s case, the non-discrimination concerns that the ACA would lead to greatly ACA, he is still looking for a group plan even rules brought hard decisions over how to increased insurance costs, midsize business- though he is not required to offer insurance. cover managers and the many hourly work- es are seeing increases that average 3 percent “There was a lot of fear the employers were ers it employs at its restaurants. after making plan changes. That’s the lowest going to drop their plans and send their em- “There’s a cost to having more employees rate in more than 10 years, according to a ployees off to the exchanges, and we just if you’re decreasing hours,” McLaughlan said. new survey by Troy-based Marsh & McLennan haven’t seen that,” said McLaughlan. Vincent Salvia, president and CEO of Agency LLC. In another Marsh & McLennan survey, 99 Rochester Hills-based Generations Home Care “That’s a positive message for this year,” percent of mid-market employers said they Group, said that the first year was hard. said Rebecca McLaughlan, vice president of likely will offer health coverage to full-time “It was very stressful because every time Marsh & McLennan. “I predict 2016 will be employees for at least two more years. the government made a change, I’d run the same or possibly even lower.” McLaughlan said there have not been a through my business plan again,” Salvia Only 5 percent of Michigan employers in- significant number of businesses that have said. Four companies tell how they’re working through ACA. See story above left and Pages 13-15 20151214-NEWS--0013-NAT-CCI-CD_-- 12/11/2015 11:50 AM Page 1

CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 13 SPECIAL REPORT: SECOND STAGE “I wish we would have started earlier and dealt with a stronger broker that understood the process more.” CEO sees ACA as positive so far Frank Kadaf,Active Solutions At the end of last year, week for the lowest deductible plan. and costs. ChemicoMays LLC President and “It offers employees flexibility “We feel employees are happier,” employee count is under 50, he has CEO Leon Richardson told Crain’s it depending on what they can af- said ChemicoMays Human Re- SOLUTIONS been working with other brokers to was too early to jump to conclu- ford,” said Richardson. source Manager Shaleontyne Con- FROM PAGE 12 see if the company can eventually go sions on the Affordable Care Act Since the ACA has come into stantine. “The insurance we now help the company through the back on a group policy again. and that he might have a different force, ChemicoMays has paid more offer is affordable to every level of process and meet with individual “You’re not going to get talent if opinion after an- insurance costs due to a 20 percent employee.” employees to go over options. you don’t have something as basic as other year. increase in enrollment benefits. Constantine said the biggest “People don’t want to have this health insurance,” Kadaf said. So a year later, The company always has offered burden on the company has been type of change, especially when it In the last year, he has interviewed we called him to health care to all employees, but form 1095-C, which requires busi- comes to something that can be about six people. For two of them, see where his Richardson believes the enrollment nesses with at least 50 full-time em- detrimental to the way they live,” health care was a major factor in de- thoughts are. increase is due to more lower-level ployees report coverage informa- said Kadaf. “If somebody has a lapse ciding not to take the job. “It’s really employees signing up to avoid tion to both employees and the in insurance and something hap- “One of them was for sure out be- been a positive penalties under ACA. Internal Revenue Service. Chemico- pens to them, think about what the cause they had a family and they so far,” said “It’s not that big of a financial Mays had help from Roseland, N.J.- consequences are financially.” needed insurance,” said Kadaf. “The Leon Richardson: Richardson. “It’s contribution on our part,” said based ADP LLC, the company’s pay- Active Solutions worked with the other one, we tried to negotiate ACA has been a plus adding value to Richardson. “It’s been more of an roll and human resource software broker over a period of 60-90 days salary instead and we just couldn’t for ChemicoMays. the lives of em- expense, but not drastic.” provider. before the Jan. 1, 2014, deadline. see eye-to-eye.” ployees by giving ChemicoMays originally classi- “It changed so frequently that at Kadaf said the process was a rush to Although Kadaf believes the ACA health care access to those that may fied full-time employees as those times we waited until something fill out paperwork and was not with- ultimately is for the greater good, he not have had it in the past.” who worked an average of 32 hours more permanent went into place,” out complications. said the process has been difficult ChemicoMays has 310 employ- a week. To comply with the Afford- said Constantine. “I wish we would have started ear- and at times messy. ees and is expected to reach $110 able Care Act shared responsibility Constantine said the company’s lier and dealt with a stronger broker “I feel like it came on very quick- million in revenue this year. Last provision, the company now de- current focus is making sure the in- that understood the process more ly,” said Kadaf. “There was not year’s revenue was $96 million. fines full-time workers as those formation provided to the IRS is and didn’t wait until the 11th hour to enough lead time for a small-busi- Before the ACA came into effect, who work 30 hours or more a week. captured and accurate. try and push something through,” ness owner to make proper adjust- ChemicoMays offered employees “It allows other employees “We felt that it really wasn’t that said Kadaf. “There was a lot of open- ments or get things right, especially one health care plan option. Now, health care access, which is a good difficult to us to adjust since we al- ended information, and everyone since even the professionals in the the Southfield-based company has thing,” said Richardson. ready had a fairly affordable plan did not know all the crystal-clear an- business were still not comfortable three. Employees can choose plans ChemicoMays arranged meet- for our employees,” said Constan- swers.” with it or educated enough to make starting at a cost of $15 every other ings with an insurance broker over tine. “It didn’t have a significant im- Even though Kadaf is not required the right decisions.” week for a high-deductible health an approximate two-month period pact on our business.” to offer health insurance because his Rachelle Damico care plan and $101.28 every other to go over different insurance plans Rachelle Damico

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14 CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 SPECIAL REPORT: SECOND STAGE Firm finds ACA didn’t hurt bottom line as much as feared

Owner Vincent Salvia at “At the highest insurance projec- year or face financial penalties of at “It’s a horrible business plan,” “It was Rochester-Hills based Sage Holdings tion, there was agony and stress,” least $2,000 and up to $3,000 per said Salvia. “It was not fun looking Group Ltd., which does business as he said. “I thought, why even stay in worker. at tearing down the business I’ve much Generations Home Care Group, feared business if I have to give all of my “The penalty was crazy,” said been building for 10 years.” less of the Affordable Care Act would have money away?” Salvia. He spent about three months a major impact on profitability. Generations has 110 employees Businesses with 50-99 employ- meeting with Rochester Hills-based an That hasn’t come to pass, but and is expected to reach $4.3 mil- ees also will be required to offer Human Capital LLC, which provides impact that doesn’t mean Salvia or his top lion in revenue this year. Its rev- health care insurance to workers in health care consulting. Human brass are happy with the new way enue last year was $3.5 million. 2016. Capital has been handling Genera- financially.” of doing things. Companies with 100 or more Salvia contemplated selling divi- tions’ payroll, human resources Vincent Salvia, Salvia had been looking through full-time workers, defined as em- sions of his company to keep his and workers compensation for four Sage Holdings Group Ltd. financial statements since 2013, ployees who work more than 30 employee count at 50 people per years. trying to predict outcomes. hours per week, had to comply this division. “We found a package that just barely meets the minimum re- quirements to keep it legal,” said Salvia. Salvia pays $40 a month per em- ployee for a high-deductible health care plan he picked purely for price reasons. “I was relieved that I had a num- ber that I could work into my budg- et to stay in business,” said Salvia. Before the Jan 1, 2014, govern- ment health care deadline, only Salvia’s top executives were on the company’s health care plan. “They’re complaining they had better insurance before,” said Salvia. “They were dissatisfied.” Salvia said the few managers who were willing to pay more to keep their previous insurance plans could not do so because the com- pany did not satisfy minimum en- rollment requirements. “They were very unhappy that they were forced to give up their good plan,” said Salvia. Since Generations began offer- ing all employees health care, only 35 percent of them have participat- ed. Salvia believes employees who aren’t participating are either pay- ing the penalty for not having in- surance or staying on spouses’ plans. The company went from insur- ing eight employees to 16. Salvia said the increase in insurance costs is less than 10 percent. “It was much less of an impact fi- nancially than I feared,” said Salvia. Let’s grow, right now. “The changes I had to make were minimal because we got such a low rate and most people didn’t sign up for it.” And, with historically low rates, there’s never been a more opportunistic Salvia said several employees time to expand your business with a commercial real estate loan from who formerly had no health insur- When it comes to Comerica. As the leading bank for business*, we’ve been financing ance were thankful they had the business, timing is business expansion for nearly 150 years. Whether you need to build or plan. purchase, expand or refinance, it’s the right time. Are you ready? “It was nice to hear some people everything. are happy to have what they have,” Call 800.705.2387, stop by a Comerica banking center or said Salvia. “There’s some good visit comerica.com/cre. coming out of it.” Generations signed 2016 health care renewals last month. The price went down from $41 a month per employee to about $31 a month per employee. “It was just a godsend,” said Salvia. Salvia said although he is happy his rate went down, he does not like the fact that he is required by the government to offer insurance. ® “Providing insurance for people RAISE YOUR EXPECTATIONS. would be a nice thing, but instead MEMBER FDIC. EQUAL OPPORTUNITY LENDER. Comerica Bank NMLS ID: 480990 we’re trying to avoid penalties from *Based on commercial and industrial loans as a percentage of total assets. the government,” he said. “It’s the Data provided by SNL Financial, December 2014. CBP-5200-06 09/15 total wrong motivation.” Rachelle Damico 20151214-NEWS--0015-NAT-CCI-CD_-- 12/11/2015 10:48 AM Page 1

CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 15 SPECIAL REPORT: SECOND STAGE Managers paid price when Diversified made ACA changes When Southfield-based Diversi- self-insured plan in preparation of fied Restaurant Holdings Inc. imple- the ACA. More companies have mented changes in line with the Af- begun to self-insure as a way to fordable Care Act in 2013, it was the avoid incurring new taxes resulting company’s managers who were from ACA. With self-insuring, as op- most affected. posed to paying an insurance com- “They went from paying zero pany for coverage, employers are re- (premium) dollars to a significant sponsible for paying any claims that amount,” said Michael Ansley, pres- arise. This gives the employer more ident and CEO of Diversified. “It re- control over costs, but it is more of a ally hurt our managers.” gamble. The holding company is the “Our increases in the past have largest franchisee for Buffalo Wild been higher than we were comfort- Wings and owner of the Bagger able with so when you’re self-in- Dave’s Burger Tavern chain. It sured, you have a little bit more flex- reached $128 million in revenue ibility,” said Lemon. “It’s all about GLENN TRIEST last year and has about 4,500 em- risk management.” Michael Ansley, president and CEO of Southfield-based Diversified Restaurant Holdings Inc., said complying with the Affordable ployees. Diversified used Kansas City, Care Act ended up hurting managers. As a restaurant business with Mo.-based health insurance broker many part-time employees, Di- Lockton Inc. to assist with the insur- months, Ansley also met with Di- “We’ve seen considerable in- impact on managers. versified faced a special dilemma. ance change. versified’s committee, which in- creases in the actual premiums the “We were worried about how The ACA broadened tax rules that “We were in a better position cludes Ansley, the company’s CFO last three years, but we’ve been able upset they were going to get,” said say employers cannot discrimi- than most,” said Ansley. “We were and controller, employees and to redesign the plan to some extent Ansley. “For the most part, it went nate by offering different plans to comfortable from the perspective other board members, to discuss to mitigate that,” said Ansley. over better than we expected, and different employees. This broad- that we already offered hourly em- insurance plans and how much Ansley said Diversified is paying they understood our hands were ening affected Diversified’s health ployees health care.” costs such as co-pays and de- higher insurance rates, but the tied.” care plan, and as a result the com- Over the course of six to eight ductibles would be. biggest adjustment has been the Rachelle Damico pany had to move managers to a new group policy plan that is shared with hourly employees. “We don’t like it, but we have to look for other ways and benefits that give us a competitive advan- tage,” said Ansley. Tax Law and Tax The company now only offers health insurance to those who work 30 hours or more a week to allow Litigation Experience full-time workers the financial flexi- bility of three different health care ® plan options. In Your Corner. The employees’ current health care plans start at $92 a month for a Ŷ Civil and criminal tax litigation. higher-deductible health insurance plan and $172 a month for the low- Ŷ Represents Fortune 1000 companies in State est deductible plan. Ansley said less than 10 percent and Local Tax (“SALT”) litigation. of employees have chosen to par- Ŷ ticipate in the company’s current Previously employed by the Department health care plan. He believes this of Attorney General, State of Michigan as is because many Diversified em- legal counsel to the Department of Treasury ployees are age 26 and under, and may still be on their parents in tax litigation matters. plans. “We informed them they can stay on their parents’ plan and spelled everything out to employ- ees to let them know what their options are,” said Ansley. “And ob- viously, we’re an option.” Amy Lemon, director of Diversi- fied’s team member relations, said the company has had an uptick in employee enrollment, which she believes is due to employees avoid- ing health care penalties. “The plan was designed to make sure that the company stayed com- First Tier Ranking pliant with requirements and that in Tax Law and we were offering something that Tax Litigation was affordable and deemed to be valuable to employees,” said Contact Tom Kenny at [email protected] Ŷ Detroit Ŷ Novi Ŷ Grand Rapids Ŷ Kalamazoo Ŷ Grand Haven Ŷ Lansing Lemon. Diversified also switched to a 20151214-NEWS--0016-NAT-CCI-CD_-- 12/11/2015 10:49 AM Page 1

16 CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 SPECIAL REPORT: SECOND STAGE PEOPLE: Petkey blessing: Wider customer net SPOTLIGHT Amato to step down as Losing primary client first was clearly a bad idea. Metaldyne co-president Operationally, there was the led company to hit risk of executives being away Thomas Amato, co-president from the office too much. They of powertrain components sup- road, find new biz worked around this by making plier Metaldyne Performance Sometimes blessings come in sure only two of the top four were Group Inc., will step down from disguise. Petkey LLC on the road at any one time, even the position at year’s end, the That was the case with Petkey if all they were managing was the company said. Location: Wixom LLC in Wixom, a provider of mi- Nicholas Acosta: Tom Borg: Don’t 25 percent of sales that remained Co-Presi- President: Nicholas Acosta crochips and registration services Looked at every wait to ask for after the big customer dropped dent Douglas for pet owners to use in case they Description: Pet recovery and aspect of industry. employee ideas. Petkey. Grimm has lose their pets. behavior services At least then, “our 25 percent been named Problem: Early in Petkey’s life as can’t get down to 10-15 percent,” president and a business, it relied on one na- Employees: 23 Online sales now make up 15 Acosta said. COO, and Rus- tional pet adoption organization Revenue: $4.7 million in 2014 percent to 20 percent of revenue Expert opinion: Communication, sell Bradley was for more than 90 percent of its for the company. both internal and external, is the named execu- business. This concerted effort soaked way to avoid ending up in the sit- tive vice presi- In 2008, that customer pulled looked at every aspect within the up much of the executives’ time. uation that Petkey faced and to Thomas Amato dent of sales. the plug as part of a program to industry of where people go to “All four of us had to step up,” claw out of it if a company can’t Amato was make vendors compete for busi- register microchips or get the Acosta said. “I barely saw my avoid falling into it, said Tom named chairman and CEO of Met- ness. The revenue stream that services we provide.” family.” Borg, a consultant based in Can- aldyne LLC in 2007, leading the once made up more than 90 per- The Petkey executives also saw Money was funneled into pay- ton Township. company through a 2012 acquisi- cent of business dropped to 25 an opportunity to gain an edge ing for travel expenses. Employee strategy sessions can tion by American Securities LLC and percent, sending Petkey into a over competitors, who by and “Anything left over after keep- churn up revenue-generating a 2014 merger with Grede Holdings tailspin. large were big pharmaceutical ing the lights on would be spent ideas, and there’s no reason to LLC and HHI Group Holdings LLC. The Revenue dropped from $2 mil- companies. At these shows, they on new-customer acquisition,” wait until disaster strikes to hold combined entity, Southfield-based lion a year to under $1 million. could put a personal face on their Acosta said. them. MPG, was listed on the New York The employee count fell from small company. After four years of this, things “Often, owners don’t listen to Stock Exchange in December 2014. about 15 to seven. Acosta went as far as giving out turned around. Volumes in- these folks because they think “Initially, we panicked and ran his cellphone number to new creased and Petkey began hiring they know everything,” Borg Budden named Priority around with our heads cut off just customers, telling them to call again. Revenue is on track to hit said. Health president,CEO like anyone would,” said Presi- him should they have any $5 million this year, and the em- New tools can help get this dent Nicholas Acosta. problems. ployee count is at 23. done without taking up too much Joan Budden, chief marketing of- “We let some people go. Every- At the same time, one employ- The original customer remains time. SnapSuggest is one that ficer of Priority Health since 2009, one took a haircut in pay,” in- ee spearheaded an effort to build a customer of Petkey but now ac- Borg is evaluating; it’s an app that will become its president and CEO cluding owners and top manage- an online sales presence. The em- counts for 10 percent of sales, allows employees to anonymous- next month. She will replace retir- ment. ployee, Blair Hulet, who now is Acosta said. The company has 360 ly suggest something and for oth- ing CEO Mike Freed Jan. 1, the Solution: To grab new cus- executive vice president and CIO, accounts now. ers to chime in. Grand Rapids-based company tomers and diversify the cus- took the responsibility to ask the Was it then a blessing that the Externally, owners can seek out said. tomer base at the same time, questions and learn the technical original big customer did what it others who have gone through Budden Petkey’s top four executives went nuances needed to make it did to Petkey? the same experience. Even if came to Priori- on the road. happen. “We laugh about it all the time. those other owners are in differ- ty Health after They hit the trade show circuit Customers, which include in- It was the best thing that ever ent industries, they may have holding various hard, going to dog shows, veteri- dividual pet owners, can buy happened to us,” Acosta said. valuable lessons. executive posi- narian shows, groomer shows and Petkey services directly through Risks and considerations: Petkey “I’d call them up, buy them a tions at De- dog shelter shows. its website, which has a registry had no other option than the one cup of coffee. In a sense they’re troit-based Blue “You name it. If there was a and also a lost-and-found data- it chose, Acosta said. Going after experts,” Borg said. Cross Blue Shield show, I was at it,” Acosta said. “We base. one large customer to replace the Gary Anglebrandt of Michigan. Joan Budden They included stints in the in- dividual consumer division, proj- ADVERTISING & MANUFACTURING ect management office and cor- MAKRETING porate strategy departments. Budden has been involved with Mark Bellissimo, Paul Hundhammer, Priority’s individual, group com- mercial and government programs. CEO, Vice President of JR Thompson and Strategic Accounts, Pflum elected to head Competition Graphics Carhartt, Inc. Mich.Chemistry Council Bellissimo has been Hundhammer will lead the appointed CEO of J.R. strategic account team and Greg Pflum, vice president and FINANCIAL Thompson Company (JRT) and Competition drive the overall strategic sales plan across all general manager of BASF Corp.’s SERVICES Graphics (CG). A 29-year marketing and channels of distribution. His responsibilities Michigan operations, has been advertising industry veteran, he’ll manage all will include expanding the business with elected president of the Michigan Andrew (Drew) creative, business and financial aspects of current partners and explore future business Chemistry Council, a Lansing-based Ottaway, JRT/CG, leading a combined staff of more than opportunities. Prior to Carhartt, Hundhammer policy advocacy group. Executive Vice President 100 people and focusing on building client worked for Nike, Inc. in several strategic sales Pflum will serve a two-year and Managing Director of relationships and driving long-term growth. leadership roles including the Strategic term beginning in January for the Lending, Flagstar Bank Bellissimo previously worked at Campbell- Account Director for Foot Locker. Most organization, which represents Ewald, advancing to the position of President recently, Paul served as the Senior Vice the chemical industry’s interests Andrew W. (Drew) Ottaway and Managing Director and serving as a President of Sales for Event Network. to state legislators. joins Flagstar as executive vice president and member of the Board of Directors. He also Pflum oversees BASF’s opera- managing director of lending, responsible for all founded and managed Campbell-Ewald’s 180- tions in Wyandotte, Southfield and commercial real estate, large corporate, middle person retail marketing agency, CE Retail. Fighting Island on the Detroit market, and warehouse lending, as well as River and roughly 2,000 employ- consumer finance, equipment finance, ees. He was an executive for Ger- government banking, treasury management,and Crain’s has moved its complete list of appointments and promotions to man chemical and nutritional in- strategic alliances. He has over 25 years of www.crainsdetroit.com/peopleonthemove. Guaranteed placement in print gredient supplier Cognis Holding banking experience in Michigan, most recently GmbH and online can be purchased at this website. before it was acquired by as senior vice president at Comerica Bank. BASF in 2011. Ⅲ 20151214-NEWS--0017-NAT-CCI-CD_-- 12/11/2015 4:44 PM Page 1

CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 17

going through the same calculus.” estate development,” Beebe said. shore up its core,” meaning the tra- tially, is a former slaughterhouse MARKET Joseph Kuspa, vice chairman of “It’s not too late.” ditional market, and also needed to that sat vacant and blighted for FROM PAGE 3 Eastern Market’s board, said loca- The Water Board building figure out who actually owned vari- years. Exterior work now is being would have its own board, filled tions being considered for this are ous parcels of land. done on the building by its owner, with property development folks east of St. Aubin, outside current When it comes to missed devel- While the nonprofit can’t force Dennis Kefallinos, who has convert- and community residents, Car- district borders. opment opportunities in Eastern deals into existence on land it does- ed many old Detroit industrial and mody said. It would seek a for-profit Slow pace Market, the first property that n’t own, it can bring parties together commercial properties into lofts. joint partner whose job would be to comes up is the old Detroit Water to make deals happen. “We have But Chris Mihailovich, general get land ready for development. Wolverine Packing President Jim Board building, which has been not been doing much of that for the manager of Kefallinos’ Boydell Devel- The Troy-based Kresge Founda- Bonahoom is all for expansion. The empty since the 1990s. The 100,000- past 10 years,” but the commitment opment Corp., said Kefallinos has no tion gave Eastern Market $550,000 company has been using the I-75 square-foot property sits just east of is there now, Kuspa said. firm plans for the property. The ex- to support the entity. service drive as a parking lot be- Roma Cafe at Erskine and Orleans Carmody ticked off a handful of terior work is being done to pretty it Eastern Market, in its quest to cause it has run out of space to park streets and has a history of plans projects completed or started within up for the extension of the Dequin- preserve the authenticity of the trailers. that never got off the ground. the past year. There was Wolverine’s dre Cut from Gratiot to Mack, which market, has a bias for food busi- Development “has been slower Joseph Kuspa, former owner of purchase this past summer. Pellerito runs right next to the structure. nesses, and its new development than we like,” Bonahoom said. Metro Produce Inc. and current vice Foods Inc. bought city property next to Eastern Market has been slow to entity would carry that same slant. To alleviate the problem, chairman of the Eastern Market Corp. the company’s headquarters on join the crowd because cheaper But it also would make room for Wolverine this past summer board (as well as mayor of Southgate), Mack. Eastern Market is assisting with space has been available on the out- residential and retail, mirroring an- bought a 3-acre parcel of city land had plans for the property as far back plans for both Milano Bakery & Cafe skirts of downtown and Midtown, other responsibility of the corpora- between Rivard Street and the as 1995, including one to install a and the FD Lofts on Russell Street to Mihailovich said. While Eastern Mar- tion, that of balancing the interests service drive to use as a staging canola oil processing plant there. expand into adjacent city property. ket has properties and stability, prices of varying parties within the district. area. The deal took two years to Robert Heide, owner of the near- As for the Water Board building, remained higher throughout the re- To that end, it has been looking into close, even though it was the city by FD Lofts on Russell and Erskine Carmody said the nonprofit is waiting cession years, adding to already high the possibility of developing Shed 4 that first approached him. streets, also had various designs for for the right proposal. The building’s costs of renovating old properties. as a mixed-use project with housing The lack of progress is frustrating the place, going back at least a high ceilings, wide column bases and “Eastern Market is not over- on top. for some. decade. One of the more recent accessibility for trucks make it perfect looked,” but developers have put it Terminal problem Eastern Market’s development ones was a plan in 2011 for a mixed- for food distribution, and it “would be on a longer schedule, he said. efforts pale in comparison with use development targeted at cre- a sin to use it for housing or other George Jackson, former head of Regular business growth is push- those of Midtown Inc., whose chief, ative entrepreneurs and food start- smaller commercial uses,” he said. the Detroit Economic Growth Corp., ing companies like Wolverine, a Sue Mosey, has orchestrated a ups, a tilapia farm among them. Carmody said Heide’s plans, or at was Eastern Market Corp.’s first meat distributor, to expand. boom in construction, said Kimber- Amid these various plans, a zon- least the ones with which he was fa- chairman. He said development Another factor in play is the 2011 ly Hill, one of the owners of ing dispute broke out when Kuspa miliar, were mixed-use projects not has only recently again become fea- Food Safety Modernization Act, Mootown Ice Cream & Dessert Shoppe sued the Detroit Board of Zoning Ap- suitable for the building. Such uses sible as progress in nearby areas aimed at preventing contamina- on Russell Street. Hill was executive peals over its approval of a use for are better placed elsewhere in the pushes demand outward. tion, particularly among produce director of the coalition that was the site proposed by Heide. The district, perhaps along the Dequin- “Nothing in Detroit happens companies. The U.S. Food and Drug Eastern Market Corp.’s predecessor zoning ultimately was upheld, but dre Cut, which only recently became overnight,” Jackson said. “I didn’t Administration released guidelines prior to 2006. in 2007 the dispute almost reached feasible for development, he said. think it was going to move as fast as last month. To meet them, many “What development?” Hill said. the Michigan Supreme Court, which One of those properties, poten- Midtown.” Ⅲ companies must revamp facilities “They still have not developed any declined to hear it. or build new ones. pieces of city land.” Last year, Garden Fresh Gourmet’s Eastern Market itself within five Karen Brown has run her Eastern founder and former owner, Jack years will have to build a refrigerat- Market shop, Savvy Chic, for 17 years Aronson, was working with Farm- JOB REAL ed facility for its wholesale growers, and is a board member of Eastern ington Hills developer LoPatin & Co. something in the range of 20,000- Market Corp. to put a food business incubator in FRONT ESTATE 30,000 square feet, Carmody said. “People want to move here, but the building, but to no avail. Facing the same pressures are the there’s nowhere to go, no new build- Meanwhile, the building sits. POSITIONS AVAILABLE COMMERCIAL PROPERTIES eight produce companies that run ings,” Brown said. ‘Delicate balance’ REAL ESTATE FACILITY & GRAND BLANC ~ 9 - 50 ft. Lots in very nice sub Detroit Pro- the 300,000-square-foot There were about 60 acres of city- OPERATION MANAGER altogether, City W&S, paved rd. $60K. O.B.O. duce Terminal, which sits on 26 acres owned land as of 2012, according to Why hasn’t more happened? ********************** As a Real Estate Facility & Operation 14,000 Sq. Ft. Off. Bldg. ~ Sterling Heights on on West Fort Street. Eastern Market Corp.’s manage- Carmody said the years follow- Van Dyke N. of 17 MI Rd. $975K ~ 94% Leased Manager, you will assist the facility’s GM in the ********************** The idea has come up to build ment agreement with the city. East- ing Crain’s 1985 story were tough overall operation and maintenance of facilities on a large campus and be responsible for the New Baltimore Subdivision ~ 80’ wide, City W&S, something bigger — in an expand- ern Market was unable to provide ones as the national food industry paved roads., $80K, sewer tap fee pd. planning, organization, direction and control of ********************* ed Eastern Market district — to ac- updated details. went through rounds of consolida- the operational activities of the properties, to optimize the utilization of all available 50 Acres Residential Land on 25 Mi. Rd. Just commodate everyone. Eastern Kate Beebe was president of tion. That led to the closing of resources. You will participate in formulation of East of Gratiot. W&S on prop - $550K O.B.O. ********************** Market is spending $70,000 to look Eastern Market Corp. the first two slaughterhouses and warehouses in overall property objectives, operational policies and plans, oversee campus operations, 10 ~ 2,400 Sq. Ft. & 5 ~ 1,500 Sq. Ft. Bldgs. 34K into it. years of its existence and came up the 1990s and early 2000s. including utility plants, to assure delivery of Sq. Ft Tot. ~ Util. Ind. Metered ea. has own add. environmental services and utilities to meet the $1.4M O.B.O. ~ 100% leased ~ 10% Cap The Detroit Produce Terminal with the plan eventually approved Demand from food wholesalers ********************* Detroit City Council client’s operational needs. He/she will manage would need to spend $15 million by to form the and distributors has only arisen in direct reports and contractors and provide BILL MCMACHEN ~ 586-915-4441 just to meet the new federal re- nonprofit. the last two years, Carmody said. guidance, training and support to ensuring they [email protected] quirements, and in the end would She expected more resources to Before that, the glut of post-reces- are performed in a manner consistent with high-quality maintenance and economical OFFICE SPACE still have a “1925 facility that isn’t be put toward developing the areas sion warehousing inventory was operations. For consideration, please email energy efficient and is terrible with surrounding the central market by too easy to grab, even if it meant Ron Radcliffe at [email protected]. FERNDALE 1000 sq. ft. Lower Level regard to materiel logistics,” Car- now. moving elsewhere, as Butcher & Ideal for Artist, Storage, or ? mody said. “A lot of good things have been Packer Supply Co. did in 2010 when it MISCELLANEOUS $500/mo. 248-398-7000 PROFESSIONAL OFFICE “Nearly everyone in the whole- done for the market. I don’t think moved to Macomb County. 9 MILE & WOODWARD sale distribution of fruits and veg- anything’s been done that puts us The two dozen or so companies SURVEY 550 sq. ft., Furnished with private bathroom . etables in Southeast Michigan is further behind with respect to real that have come calling are “an alto- $600/mo 248-396-7000 gether recent phenomenon of large ANALYZE companies wanting to stay near the MARKET INDEX TO COMPANIES market.” MATCH These companies have significant mention in this week’s Crain’s Detroit Business: Kuspa has been on the nonprofit’s PLACE Active Solutions Group...... 12 Goodwill Industries of Greater Detroit...... 20 board since its inception and was a AP United ...... 1 Hotel Investment Services ...... 11 leading organizer of its predecessor. MISCELLANEOUS Boydell Development...... 17 Lear...... 3 He said Eastern Market comes with Bronner’s Commercial Display ...... 8 LeClerc Display...... 8 special responsibilities that other NEED WAREHOUSING? Cascade Engineering...... 1 Marsh & McLennan Agency ...... 12 neighborhoods don’t have to worry Plymouth & Livonia Area ChemicoMays ...... 12, 13 Michigan Association of Nurse Anesthetists .... 7 CrainsDetroit.com/JobConnect | Christmas Decor by DeVries ...... 9 Michigan Department of Corrections ...... 20 about: Maintaining the area’s au- • Cross-Dock Services • Trucking Services Coastal Automotive ...... 18 Michigan Dept. of Health and Human Services 18 thenticity as a center of food busi- • Diverse Supplier • Reasonable Rates Dan’s Excavating...... 9 Petkey ...... 16 ness, and managing the conflicting Call Us For Personalized Call 810-701-0833 Detroit Chassis ...... 19 Plunkett Cooney ...... 21 interests among retailers, vendors, Detroit Manufacturing Systems...... 19 RochesterDowntown Development Authority ... 9 Service: (313) 446-6068 wholesalers and residents. OFFICE FURNITURE Detroit Red Wings...... 3 Sage Holdings Group ...... 14 “It’s a delicate balance,” Kuspa FAX: (313) 446-034 7 Detroit Tigers...... 3 St. John Health System...... 7 said. “Development for the sake of E-MAIL: cdbclassified @crain.com Office Furniture Warehouse Clearance Diversified Restaurant Holdings...... 12, 15 Sakthi Automotive Group...... 20 INTERNET: development doesn’t do a lot for an Stack Chairs, Conference Chairs & Tables Dow Chemical...... 4 Treetops Acquisition ...... 10 www.crainsdetroit.com/section/classifieds Dupont...... 4 Talmer Bank and Trust ...... 22 area with the uniqueness of Eastern Panels & Cubicles, Herman Miller, Steelcase, Hon, File & Storage Cabinets, Reception Desks Exec. Eastern Market Corp...... 3 United Way ...... 18 See Market.” Desks, New & Used, Mahogany & Cherry. Education Achievement Authority...... 8 West Michigan TEAM ...... 20 Crainsdetroit.com/Section/Classifieds The nonprofit from its inception www.betterbusinesssystems.com Generations Home Care Group...... 12, 14 Wolverine Packing...... 3 in 2006 had “three or four years to for more classified advertisements [email protected] - 248-548-6404 20151214-NEWS--0018,0019,0020-NAT-CCI-CD_-- 12/11/2015 5:16 PM Page 1

18 CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 WHY ALICE MATTERS

WHERE DOES ALICE LIVE? to earn $16,818 per year just to meet ALICE his or her expenses, or $8.41 per FROM PAGE 1 Nearly 1 million households — 930,503 — in Michigan are considered ALICE, an hour. A family of four would need to acronym used by United Way organizations across the country to represent people earn $50,345 — $12.59 per hour if effort to reduce turnover rates. who are “asset-limited, income-constrained but employed.” both parents work, or $25.17 based “We’re desperate for people When including people living in poverty, 1.5 million Michigan households, or 40 on a 40-hour work week if only one right now. We’re getting ready percent, don’t earn enough money to cover their necessary expenses. parent is employed. to open up our 10th restaurant In order to cover expenses and (this) month and, quite frankly, The five-county metro Detroit region is no exception. Below, find the municipalities have money left aside to build a sav- ALICE: What is it? we’re scrambling to get really that rank in the top 10 based on percentage of ALICE households within their ings — in other words, to become fi- borders. The first ALICE report was quality employees out there,” nancially stable — a four-person conducted by the United Way of Allen said. “Because we don’t A note about Detroit: The city does not rank in the top 10 for ALICE — at 29 percent household would need to earn at Northern New Jersey in 2009 in have a succinct mass trans- of households, it ties for 11th. But 38 percent of Detroit households are least $92,409 annually, or 84 percent an effort to understand the portation system, it’s very diffi- impoverished, ranking it second when measured by that statistic. more than survival income alone. financial constraints faced by a cult for people who want to Highland Park ranks first on both the percentage of households in poverty — 45 That larger figure accounts for sav- population often referred to as work to get out to that loca- percent — and last in the percentage of households earning above the ALICE ing $563 a month and having a little the working poor. The acronym tion.” income threshold — just 26 percent. The enclave has the same percentage of budget breathing room, such as funds for the family to eat out once ALICE stands for “asset-limited, Meet ALICE ALICE households as Detroit, 29 percent. income-constrained but a week. To reach that $92,409 figure, employed.” Though named for a woman, both parents would need to earn at ALICE is a composite of women and least $25.17 per hour, or $46.20 per The project since has expanded men, young adults and seniors, sin- hour if only one parent works. to the rest of New Jersey, as well gle households and families. The A single ALICE employee, mean- as five other states — Michigan, acronym was coined in 2009 by a while, would need to earn an annu- Indiana, Florida, Connecticut and United Way organization in New Jer- al income of $24,430, or 45 percent California. Michigan’s report was sey, which sought to identify barri- more than needed to cover base ex- released in September 2014. ers to employment that hold back penses. That comes to $12.22 per Five more states — Iowa, low-income workers from achiev- hour. Louisiana, Washington, Oregon ing career success. Yet achieving those incomes will and Idaho — are conducting their More often, they’re referred to as be problematic in a state dominat- own ALICE reports now. the working poor, with incomes ed by low-wage jobs, researchers The project attempts to define the above the federal poverty limit but suggest. In all, 63 percent of Michi- income threshold needed for an too small to be financially stable. gan jobs pay an hourly wage below ALICE worker to cover basic Many have limited education or $20, they found. And the fastest- expenses (referred to as the skills, small family support systems growing expected job openings — Household Survival Budget) and or little savings. ALICE advocates in health care, retail, construction cover expenses while maintaining say some of today’s low-skilled and food preparation — require lit- some savings (called the workers grew up without role mod- tle schooling and pay less than $15 Household Stability Budget). ALICE els who could demonstrate what it per hour. In fact, the authors wrote, data show that more workers than means to work full time or teach those openings are expected to only those who meet federal “soft skills” such as communication grow at least twice as fast as jobs poverty income limits struggle to and problem-solving. that require more skills. make ends meet. Common industries that employ “Two hallmarks of the service- ALICE workers include manufac- sector economy are that these jobs Read more at turing, hospitality, customer service pay low wages and workers must be www.unitedwayalice.org. and construction. physically on-site; cashiers, nurses’ ALICE workers have jobs, but aides and security guards cannot their existence is fragile. One flat telecommute or be outsourced,” tire, an unexpected doctor’s visit or they wrote. “This means that Michi- a sick babysitter could mean a gan’s economy is dependent on jobs missed shift and paycheck. That, in whose wages are so low that work- turn, could cost them their jobs: Ab- ers cannot afford to live near their senteeism is one of the most com- jobs even though they are required mon reasons ALICE workers are to work on-site.” The cost of fired. United Way leaders already are turnover National estimates peg the cost talking about updating the ALICE of losing a single employee at about report to account for federal Afford- The loss of a single employee — $3,400, based on hiring and training able Care Act health insurance and the expense of hiring a a replacement, lost productivity changes, a higher state minimum replacement — can cost and even extra overtime for workers wage and cost-of-living increases, companies more than $3,400, who stay. To prevent turnover, many said Scott Dzurka, president and national estimates suggest. employers across the state are CEO of the Michigan Association of The Society for Human choosing to pool funds for the SOURCE: UNITED WAY ALICE MICHIGAN REPORT United Ways. Resource Management salary and benefits of a caseworker Expanding network estimated last year that the who meets with qualified employ- can become distractions to produc- ture of the size of Michigan’s low-in- average cost per hire nationally ees at their work sites during work tivity — and recognize that a solu- come workforce: Forty percent of When an employee at Coastal Au- was $3,420 in 2014. hours. tion is not the sole job of govern- the state’s households — 1.5 million tomotive misses a day of work, he or That includes fees for third- The partnerships, known as em- ment welfare programs or nonprofit — don’t make enough money to she amasses “points,” or demerits. party consultants or advertising ployer resource networks, have human services agencies. cover their bills, according to Michi- The Rochester Hills-based supplier agencies, job fairs and online job helped workers access bus fare or “As cold-hearted as this may gan’s ALICE report, released in Sep- of energy-absorbing vehicle materi- boards, employee referral gas money, child care services and sound, if business doesn’t see return tember 2014. als says workers have called off a bonuses, travel and relocation help to prevent utility shutoffs. Em- on their investment, they’re not Of them, 930,503 can be consid- shift for such reasons as a friend’s costs and recruiter ployers say the networks also have going to do it,” said Duane Berger, ered ALICE. Income varies by coun- car had a flat tire and they had no compensation. Other dramatically increased retention. chief deputy director and COO with ty and family size, but generally, other ride. acquisition costs could include Advocates for ALICE and human the Michigan Department of Health ALICE households led by someone Company administrators are em- training, uniforms and name resources consultants say business and Human Services, who travels the younger than 65 earn between pathetic, but they say their hands badges, lost productivity and long has maintained that it’s not an state to promote employer resource $35,000 and $50,000 per year. Se- are also tied, since they can’t award extra overtime for remaining employer’s responsibility to solve networks. niors generally earn $20,000 to some employees preferential treat- employees. their employees’ personal prob- “It’s got to be a business solu- $25,000 annually. ment over others. lems. But what if they could? tion,” Berger said. “If human capi- That income is far short of what “So many people we lose because The group also estimated the Companies that succeed at re- tal’s stabilized at work, they’re prob- United Way’s findings estimate is they don’t have a way to get to work,” national average time to fill a ducing turnover, they argue, are the ably stabilized in their family lives.” needed just to cover basic expenses. said Victoria Roberts, Coastal’s job last year was 42 days, and ones that attempt to understand Not enough income For instance, researchers deter- human resources manager. the average annual turnover the challenges their employees mined that a single-person ALICE rate was 18 percent of staff. bring to work each day — which Data paint an eye-opening pic- household in Michigan would need SEE NEXT PAGE 20151214-NEWS--0018,0019,0020-NAT-CCI-CD_-- 12/11/2015 5:16 PM Page 2

CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 19 WHY ALICE MATTERS

FROM PREVIOUS PAGE agement, a U.S. membership organi- skilled trades is making it harder for zation for human resources profes- some employers to find new work- The supplier three years ago sionals. ers to fill the pipeline. Income-constrained workers forged a $9.8 million program with That’s based on a number of on- The ALICE report “has started to the state called Community Ven- boarding costs, including fees paid open up their eyes,” Dzurka said of tures, which uses general fund dol- to a third-party consultant or adver- employers. lars to match employers with human tising agency, job fairs or online job Companies that join an employ- must ‘make it stretch’ service providers that can help ex-of- boards; employee referral bonuses; er resource network spend money fenders and workers on the state’s travel and relocation costs; compen- up front with the hope that they’ll By Lindsay VanHulle public assistance or Medicaid rolls sation for recruiters; and other tal- reap a greater return on investment. Crain’s Detroit Business/Bridge Magazine hold on to jobs. ent acquisition expenses. Berger said participating employers Before the recession, Randy That program, though, is limited Harder to estimate is the dollar repeatedly have noticed improve- Baker was a supervisor at a clean- only to employees who live in the city value attributed to lost productivity, ment in retention. ing company in charge of main- of Pontiac, since the state concen- or impact of turnover on customer Hiring a caseworker to handle taining two glass office towers in trates its dollars in four of the state’s service quality, said Rick Guzzo, a solutions to social problems also Southfield. most troubled urban centers — De- partner with human resources con- frees up in-house human resources His position was cut as the troit, Pontiac, Flint and Saginaw. That sultant Mercer LLC who is based in managers to focus on business company downsized — partly, means a worker at Coastal who is Washington, D.C. Same with vacan- needs, Berger said. Baker says, because fewer office struggling to make ends meet but cy costs, such as maintaining an “A lot of companies will say, ‘It’s tenants were leasing space. A lives a few miles away in Auburn Hills open desk or unused phone service. not my job to solve social problems. widowed father of a teenage son isn’t eligible to receive any services, When an employer begins to ex- It’s not my problem to worry about and daughter and now unem- such as gas cards or funds to prevent perience a rash of turnover, C-suite how they get to work. It’s not my ployed, Baker still had to keep up utility shutoffs. executives could benefit from dig- problem to worry about their kids.’ with mortgage payments on the As a result, Coastal Automotive ging into the root causes, Guzzo And to some degree, that’s true,” family’s home in Eastpointe and has committed to join a startup em- said. Rarely is it Berger said. other related bills. ployer resource network that will any one factor in “More and more companies are About 10 months ago, he serve workers who live in all of Oak- isolation. More recognizing, ‘Maybe it’s not my re- found a job as a production work- land County, extending wraparound likely, he said, sponsibility, but if I want business er at Detroit Chassis LLC, which services to even more people. Oak- absenteeism or bottom line to be (the) best it can makes motor home and RV “We have to do land Livingston Human Service Agency job loss is the re- be, I’ve got to have good assets in frames as a subsidiary of Detroit- with what we will be the network’s administrator. sult of several my human capital.’” based SPECTRA LMP LLC. Baker Coastal recently started a pilot factors at work Employers who successfully earns $13.50 an hour on a 40- have and make program with ride-sharing service — scheduling boost retention don’t focus just on hour work week to move chassis it stretch.” Uber, which arranges to drive em- Tanya Allen: Be- complications, raising wages, said Guzzo, of Mer- between assembly lines and in- ployees to work. That program has lieves resource net- low wages or cer. Instead, they have perfected a stall gas lines. His full-time sched- Randy Baker,production worker, helped at least one dedicated em- work will pay off. transportation system of employment practices, ule also earns him medical bene- Detroit Chassis LLC ployee, who works as a team leader, among them. from scheduling to skills training. fits. drop off her two children and arrive “The work that we do with large For Tanya Allen, who operates Yet Baker, 51, says he continues of vehicle repairs, work clothes on time for her shift at 6 a.m., said employers is to help them under- restaurants at Detroit Metro for to find himself stretched thin fi- and shoes. Wendel Martin, Coastal’s commercial stand: Of all the things that could be joint venture HBF APU JV LLC, that in- nancially. He is an example of At $11 per hour for 40 hours of director. causing turnover, what’s actually cludes offering a work environment ALICE — a phrase adopted by work, Dotson, 40, says she makes Without it, he said, she likely most influential in their situation?” that is conducive to retention. United Way organizations across too much to qualify for state as- would have lost her job due to trans- Guzzo said. “Those factors can differ HBF APU recently joined the the county to highlight the pre- sistance but “it can be tricky” to portation issues alone, regardless of greatly from one employment set- Wayne County employer resource carious financial existence of live paycheck to paycheck. Her her job performance. ting to another. It’s not always network, at a cost of $10,000 annu- people who are “asset-limited, in- cable recently was shut off after Since joining the Community Ven- wages. It’s not always just schedule. ally. She believes it will pay divi- come-constrained but em- she fell behind on bill payments. tures program, Coastal Automotive’s It’s not always they hired the wrong dends in reducing turnover costs. ployed.” “You can see the money, but it’s retention rate has improved from people.” Employees who are distracted by “I’m blessed to be making that still not enough,” said Dotson, a about 40 percent over 12 months to ‘Open up their eyes’ outside problems, especially in a and it helps tremendously, but it’s Detroit resident who is renting roughly 67 percent, the state said. customer-facing job, affect the still a struggle,” Baker said of his her own place for the first time Turnover cost Advocates for ALICE say business quality of service given to cus- current wage, which works out to after always splitting rent with has to buy into policy changes that tomers, she said. And each time the gross annual earnings of about roommates. Employers have a definite finan- emphasize people along with the company has to train a new worker, $28,080 on 40 hours per week. Detroit Chassis, where Baker cial incentive to want to improve re- bottom line. speed of service declines. “We have to do with what we works, splits the cost of a case- tention: The cost of turnover. The state is transitioning away “Pay it later or pay it now,” Allen have and make it stretch.” worker with Detroit Manufactur- Nationally, the average cost per from a manufacturing-centric econ- said. “If you don’t invest in your em- A conundrum on low-income ing Systems and two other com- hire was $3,420 last year, according to omy into one that values knowl- ployees now, you will pay later.” workers, according to Michigan’s panies. estimates from the Alexandria, Va.- edge-based services and higher ed- Lindsay VanHulle: (517) 657-2204 ALICE report, is that they often Baker said he receives a gas based Society for Human Resource Man- ucation. And a talent shortage in the Twitter: @LindsayVanHulle are paid far less than what they card that lasts two weeks, as well need to make ends meet — and as uniforms and boots for work. the state’s fastest-growing job A financial coach told him he openings are in low-skilled, low- has good credit and encouraged wage industries, meaning no him to pay extra on his mortgage quick trajectory for earnings per month in order to pay it off growth for many like Baker. early. It’s a good idea, he said, but Jeanine Dotson, who works a difficult to accomplish when day shift on the line at Detroit most of his paycheck goes out im- Manufacturing Systems LLC, says mediately to other bills. her company’s membership in “It just gives you a goal as far what’s known as an employer re- as, ‘This is what I can do when I source network — an entity that start making more or get a second pools resources to help employ- or a third job,’ ” said Baker, who ees at multiple organizations nav- added that the program helps igate employee workforce issues him feel optimistic that he will be — has allowed her to receive bus able to move up the financial lad- fare and, now that she bought a der. vehicle, a $50 gas card every two His caseworkers make him be- weeks for her roughly 20-minute lieve it’s possible, too. commute. “You can see it on their faces. To resolve transportation is- You can see it on their actions,” sues — often the biggest reasons Baker said. “They really care for absenteeism and turnover — about the individual.” Ⅲ LARRY PEPLIN Dotson said she also has received Lindsay VanHulle: (517) 657-2204 Lori Ann Smith, an employee of P.F. Chang’s at Detroit Metropolitan Airport, along with Wassim Takriti, vice president of opera- financial help to cover a portion Twitter: @LindsayVanHulle tions for HBF APU JV LLC at DTW. 20151214-NEWS--0018,0019,0020-NAT-CCI-CD_-- 12/11/2015 3:54 PM Page 3

20 CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 WHY ALICE MATTERS Supplier aims to give parolees new workplace opportunities

By Lindsay VanHulle shop floor as CNC operators, hi-lo cialist with the state corrections including retention workshops with support themselves. Crain’s Detroit Business/Bridge Magazine drivers and maintenance workers, department. parole officers about the types of Parolees know their felony con- One segment of the ALICE popu- earning between $11 and $14 per On a smaller scale, corrections conditions the new hire might face viction automatically disqualifies lation is gaining a second chance in hour, Verma said. A few parolees al- staff members regularly focus on on the job and wage subsidies for them from jobs at many compa- the workplace: Paroled prisoners. ready have been promoted, some employers’ outreach, including employers who want to give a nies, Verma said. Sakthi Automotive Group USA Inc. is within a matter of months. making them aware of the types of parolee a tryout in a temporary Sakthi’s goal is to offer them a making headlines for its innovative They make up a workforce 280 education and training prisoners position. second chance. approach to boosting its employee strong, with a goal to hit 650 em- receive while incarcerated. They “We are on a good path, but we Experience so far has shown ranks — hiring ex-offenders amid a ployees within a few years, Verma also offer employer tours inside have to continue what we’re doing, parolees, once re-acclimated to the $60 million expansion of its south- said. Sakthi makes aluminum cast- prisons to see the work firsthand, and I think that more employers workforce, to be dedicated west Detroit facility. ings for the automotive industry. Robinson said. have to become open to consider- employees. The company, a subsidiary of Sakthi’s approach has statewide The department often develops ing (them),” Robinson said. “I think they are sincere; they are India-based supplier Sakthi Group, is attention. training programs based on the Verma said the benefits for Sakthi willing to learn,” Verma said. Sakthi an example of the business-led sup- The Michigan Department of Cor- types of specialized skills employers are twofold — his company is able projects it will have revenue of $58 port that ALICE advocates say is rections has worked with Sakthi and need, such as welding, she said. to add skilled labor, especially as million this year, $150 million in needed to help low-income workers other employers to try to place con- The department uses several manufacturers worry about a loom- 2016 and $450 million by 2020. Ⅲ not only keep their jobs but reduce victed offenders in jobs upon their other tools to help ex-offenders ing talent shortage, while helping Lindsay VanHulle: (517) 657-2204 the rate of turnover. release from prison. transition back into employment, prisoners re-enter civilian life and Twitter: @LindsayVanHulle CEO Lalit Verma says 25 convicted This year, the department held a felons were hired within a six-month job fair in conjunction with U.S. a single worker at $3,400. Yet most hours to watch children of second- period this year, with a goal to em- Attorney Barbara McQuade’s of- RESOURCE companies don’t know their own and third-shift manufacturing ploy at least 48 over the next two fice, representing the Eastern Dis- FROM PAGE 1 turnover costs, Berger said. workers, said James Durian, direc- years. Verma said recently the com- trict of Michigan, that attracted Nor do many know ALICE’s im- tor of the state’s Community Ven- pany plans to hire “as many … good, nearly 800 paroled prisoners and ers to boost retention rates. pact on their workforce, he said. tures program, which connects capable people as we can find.” nearly 20 employers, said Janella Cascade Engineering, which spe- Berger said an employer once said workers receiving public assistance Most enter the company on the Robinson, a prison re-entry spe- cializes in plastic injection molding, he didn’t have any workers fitting with services and is involved with later would contract with a state the ALICE description until he the Detroit-area resource networks. caseworker who worked at the looked closer at starting wages. “We can only do that because plant, Keller said. In the early 2000s, Employers sometimes say these big companies came to the that project became the state’s first turnover is the cost of doing busi- table,” Durian said. employer resource network, partly ness, Berger said. He wants to show Return on investment Machine because other firms were interested C-suite executives that the initial in- EXPANDING: in what Cascade was doing. vestment lowers costs. Organizers are studying the net- manufacturer The model has been replicated “You’re asking them to invest fi- works’ results as they prepare to across the state — in Kalamazoo and nancially, and you would think they take the concept to more cities. with a $1 million Battle Creek, in Flint and Saginaw and would balk at that, but they’re not,” The W.E. Upjohn Institute for Em- now in Southeast Michigan. Compa- said Keith Bennett, a program direc- ployment Research in Kalamazoo re- line of credit nies jointly hire a caseworker who vis- tor with Goodwill Industries of Greater ceived a five-year, $3 million federal its each participating workplace and Detroit, who is starting a resource grant to expand a Southwest Michi- meets confidentially with employees. network in Wayne County. gan employer resource network and It has proven successful at retain- Attracting interest evaluate its success. ing workers, particularly in indus- The grant will help the program Helping staffi ng companies, tries like manufacturing that pay The Wayne County effort started grow from 10 companies to 35, said consultants, distributors and more with lower wages and require less educa- coming together this past spring. Scott Cubberly, a grant project tion. The program dovetails with the So far, four employers have signed manager with Upjohn and Michigan business cash fl ow solutions. United Way’s ALICE report (See story, on — Detroit Manufacturing Systems Works Southwest, which serves Page 1), released last year to identify LLC, a joint venture between Wayne- Branch, Calhoun, Kalamazoo and barriers Michigan’s working poor based Rush Group and French auto St. Joseph counties. › A/R Financing face in meeting basic needs. supplier Faurecia SA; Integrated Manu- The evaluation will quantify the At Cascade, monthly turnover fell facturing & Assembly in Detroit; De- program’s return on investment and › Lines of Credit from 40 percent to 3 percent in troit Chassis LLC; and HBF APU JV LLC, use the results to expand the net- about four years, Keller said. Cas- a joint venture between Atlanta- works, he said.There is data to indi- (248) 658-1100 www.hitachibusinessfi nance.com cade pays about $30,000 per year to based Hojeij Branded Foods and its cate some early success. participate in the network. Detroit partner, AP United LLC, that Eight in 10 low-income workers Typical employer contributions operates restaurants at Detroit Metro- who receive loans continue to save range from $5,000 to $20,000, de- politan Airport. once the funds are repaid, said pending on how many companies The program has a $760,000 James Vander Hulst, president of join, how many workers receive budget, Bennett said. He said he is in West Michigan TEAM, a nonprofit that services and the types of services of- talks with as many as four other em- acts as the fiscal agent for west-side fered, said Duane Berger, chief ployers about joining. ERNs. Participating employers’ re- deputy director and COO with the A social worker typically spends tention rate is 98 percent. Michigan Department of Health and two days per week at each partici- The Source, the Grand Rapids re- Human Services, who promotes the pating employer, he said. The goal: source network that includes Cas- networks statewide. To help low-income workers, includ- cade Engineering, started in 2003 “What we’re doing here is market- ing ALICE, achieve financial stability with seven employers, executive di- ing best practices,” Berger said. and move up the career ladder. rector Mindy Ysasi said. It now has “This is not a government solution. Organizers also want to change 15 mostly small to medium-sized This is a business solution.” ALICE’s mindset toward work. If an manufacturers. The human services caseworker, employee starts a new job but much Keller, of Cascade Engineering, called a success coach, is the pri- of the early paychecks go to pay said his firm’s supervisors didn’t mary up-front cost at roughly overdue utility bills, Bennett said, fully buy in until they were put $60,000, Berger said. “you don’t see the value of that job.” through a poverty simulation. That Member employers decide local- In Pontiac, the Oakland Livingston dispelled misperceptions that low- ly what services to offer. They can in- Human Service Agency is creating a income workers are lazy. clude bus fare or gas cards, training, similar employer resource network “When you’re in a middle-class second-shift day care, budget coun- that will serve Oakland County. environment, you’d kind of expect seling and even access to loans. Coastal Automotive in Rochester the folks to be able to handle that Workforce impact Hills is committed. Organizers are situation on their own,” he said. recruiting more firms. “What we learned is they needed National human resources ex- In Saginaw, for instance, a day some assistance in the early stages perts peg the average cost of losing care provider agreed to stay open 24 to learn what needed to be done.” Ⅲ 20151214-NEWS--0021-NAT-CCI-CD_-- 12/11/2015 4:45 PM Page 1

CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 21 REFI INTEREST the 1994-95 and 2012-13 seasons. ILITCH However, sports industry insiders FROM PAGE 3 Detroit Tigers owner Mike Ilitch isn’t say the threat of a lockout or strike rate. alone in taking advantage of better has diminished greatly since then The team previously refinanced interest rates on Comerica Park. because both sides know the finan- the 41,574-seat, $326 million ball- The Detroit-Wayne County Stadium cial harm is devastating. park in 2005 (using an 11-bank syn- Authorityowns the ballpark,which cost “The overall cost of disruption dicate led by original stadium finan- $326 million to build.The authority isn’t worth the potential gain,” said cier Sumitomo Mitsui Bank) after saved nearly $6 million in 2012 by Wayne DeSarbo, executive director failed attempts to do so in 2000 and refinancing the original $85.8 million in at the Center for Sports Business and 2001. Low attendance, fueled by 30-year tax-exempt bonds issued in Research at Penn State University. poor play, contributed to the unsuc- 1997 to pay the public portion of the The new Red Wings arena is ex- cessful refinancing attempts, Sports ballpark’s construction. pected to have non-hockey events Business Daily reported at the time. on more than 140 nights a year, The bonds are being paid off by rental- The source familiar with the refi- helping ensure a steady revenue car and hotel-room taxes approved by nancing said the team may have re- stream even if hockey was shelved Wayne County voters in the 1990s. financed the stadium at least one for awhile. time since 2005 and 2014. An additional $40 million in The public, via a special down- Because the Tigers have been a construction financing came from the town property tax in Detroit mostly playoff team with a full stadium and city’s Downtown Development paid by major corporations, is fi- loyal local television audience for Authority,and the Michigan Strategic nancing $250 million of the arena’s the past decade, the value of the Fundprovided $55 million.Ilitch was construction. team has skyrocketed to $1.125 bil- responsible for $140 million of the cost. The two series of bonds totaling lion, according to Forbes’ most re- The stadium opened in 2000. $450 million were floated in De- cent estimate. Major League Base- cember 2014 by the Michigan Strate- ball’s successful revenue-sharing gic Fund in a transaction authorized model, built on enormous TV, digi- Caesars pizza chain — and Forbes by the state Legislature to pay for tal and licensing deals, also has estimates Mike and wife Marian the arena’s construction. turned baseball teams into bank- themselves to be worth $5.5 million. Ilitch, through his Olympia Devel- friendly cash cows for owners. Marian Ilitch owns MotorCity opment of Michigan real estate busi- Forbes estimated the franchise’s Hotel Casino, and Mike Ilitch inde- ness, has pledged to pay for any- value at $292 million in 2006. This pendently owns the Tigers because thing beyond $450 million, which year, the financial news site estimat- of Major League Baseball’s rules so far has been $175 million in addi- ed the Tigers to be worth $1.125 bil- against casino cross-ownership. tional expected spending. lion, an increase of 285 percent. They jointly own the hockey team. Like the Tigers, the Red Wings Ilitch bought the Tigers for $85 They’re leveraging their various as- show up in public records as having million in 1992 from Domino’s Pizza sets for a series of high-profile invest- been tapped as collateral in Ilitch founder Tom Monaghan. ments, including the arena; a $200 deals. Public records show that Ilitch, million-plus mixed-use redevelop- In 2001, the team used its ticket through one of his trusts, pledged ment over 50 city blocks around the revenue; money from television, rights to revenue from the team and arena (with outside investors, too); a cable and radio deals; merchandise the stadium to back the debt refi- new Little Caesars headquarters next agreements; concessions; and play- nancing — now a standard practice to their Fox Theatre offices; and $40 er contracts as collateral in a deal for such a transaction, million for a new Wayne State Univer- with Paris-based lender Société “If they have contractually obli- sity business school that will bear Générale S.A., according to Wayne gated income streams from TV and Mike Ilitch’s name. County records. sponsorships and other areas, The purpose of that deal was not The arena financing there’s no reason they cannot use disclosed. that as collateral,” said David Carter, On the hockey front, Ilitch Protecting assets executive director of the University of pledged assets held in a trust to Southern California’s Marshall Sports back $200 million in bonds sold to The particular trust used to back Business Institute. finance part of the $627 million the arena bonds does not contain “It makes sense they’d rely on arena’s construction, according to a the Tigers or Comerica Park — that as security. These are collateral- financing statements filed in Michi- meaning that the baseball team’s ized known revenue streams he can gan and Delaware. fortunes are not jeopardized if the quite literally take to the bank.” In the deal with Detroit’s Down- hockey arena project runs into trou- “From a lender’s perspective, you town Development Authority, which ble, according to the source familiar look at what assets are available to se- will own the hockey arena, one of with the financing. cure the debt because this is a signifi- his trusts ultimately backstops The Ilitch organization declined to cant undertaking with some risk,” $11.5 million in annual bond debt identify for Crain’s what assets are said Douglas Bernstein, a banking repayments. contained in the arena-backing trust. and bankruptcy partner with Bloom- The primary source of the bond It’s normal business practice for a field Hills-based Plunkett Cooney PC. repayments will be the revenue gen- wealthy individual to have many “You put a lien on the firstborn and erated by the arena’s operations — trusts to protect major assets, and it then ask for more collateral.” Red Wings games and other events. is publicly known that Ilitch’s interest The Tigers are known to collect Revenue already is trickling in in the Tigers and Comerica Park con- $50 million annually from their ahead of the 20,000-seat arena’s cessions are entrusted together, ac- local TV broadcast rights deal with debut for the 2017-18 hockey sea- cording to financing statements filed Southfield-based Fox Sports Detroit, son. The arena’s 52 corporate suites with the Michigan Secretary of State. and ticket revenue and concession and all but three of the 22 mini- That trust was used in July 2014 revenue remain among baseball’s suites have been sold, the Ilitch or- to back the ballpark refinancing. best because of strong attendance. ganization said in November. Cor- Like hockey, baseball’s history in- Ilitch has ensured busy turnstiles porate suites lease for more than cludes season-killing labor troubles, and a loyal TV audience by spend- $300,000 a year and the leases are but there hasn’t been a work stop- ing $1.5 billion on players, including for seven to 10 years, which is at page since 1994. But if some other several popular superstars that least $109 million in revenue. financial catastrophe unfolded, the helped propel the team to World Se- Trust assets would be used for re- Tigers are exposed to have their rev- ries appearances in 2006 and 2012. payment only if the arena weren’t enue used for debt repayment in- Additionally, Dallas-based Com- generating $11.5 million in revenue, stead of, say, salaries. erica Bank is paying the team $2.2 an unlikely scenario, barring a cata- “If Armageddon occurred, that’s million a year until 2028 as part of a clysmic event. potentially less money to spend on 30-year, $66 million deal inked in There is one scenario that could free agents,” Plunkett Cooney’s 1998, before the stadium opened. disrupt arena revenue: labor trouble. Bernstein said. “This is way far- The Ilitch family wealth has in- For example, the National Hockey fetched, but these things happen.” Ⅲ creased as the baseball team im- League canceled the entire 2004-05 Bill Shea: (313) 446-1626; proved. Their business holdings had season because of collective bargain- Twitter: @Bill_Shea19 $3.3 billion in combined revenue ing strife between the owners and Robert Snell: (313) 446-1654; last year — anchored by the Little players. Games were also canceled in Twitter: @RobertSnellnews 20151214-NEWS--0022-NAT-CCI-CD_-- 12/11/2015 3:22 PM Page 1

22 CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015

in Michigan now that the rest of the country always agree, but there were no play out? ROSS was in recession, too? harsh words. Strategic investors will more and CRAIN’S FROM PAGE 1 I’d been very friendly with the late Clearly the growth strategy worked. Did more dominate the M&A field, be- DETROIT BUSINESS That same sentiment was being Alfred Taubman and his wife, Judy, it surprise you how smoothly and how well? cause their cost of capital is much www.crainsdetroit.com asked seven years later after his foray and he gave me very good insights It did. The rapidity with which lower than leverage-buyout cost of Editor-in-Chief Keith E. Crain into Michigan banking. into Michigan. He gave me the confi- they built that bank was faster than capital. Most corporations are happy Group Publisher Mary Kramer, (313) 446-0399 or [email protected] “Ross is a collector of the junked, dence to invest there. For years, we what I thought it would be. The other to make a 10 or 11 percent return on Associate Publisher Marla Wise, (313) 446-6032 the unloved, the wretched refuse of had New Year’s Eve dinner at their thing that turned out better than I equity. LBOs need to return 20 per- or [email protected] Editor Jennette Smith, (313) 446-1622 or an economy that has mostly given place in Palm Beach, and then the thought it would was the economic cent, and their borrowing rate is sev- [email protected] up making things in favor of buying next day we’d go back to the Taub- turnaround in Michigan. Obviously eral hundred basis points higher Executive Editor Cindy Goodaker, (313) 446-0460 or [email protected] them elsewhere,” read one passage mans to bet on football and eat Kobe Detroit was an accident waiting to than corporations’. So it makes sense Director, Digital Strategy, Audience Development in the BusinessWeek article. beef hot dogs. happen, but what wasn’t obvious for corporations with strong balance Nancy Hanus, (313) 446-1621 or [email protected] That refuse is gold now. Today, W.L. I ended up being quite familiar was how quickly it was going to hap- sheets to pay higher multiples. Managing Editor Michael Lee, (313) 446-1630 or Ross & Co. has about $9 billion under with Michigan. First of all, we’d been pen. And how fast the city got to the You mentioned interest rates returning [email protected] Managing Editor/Custom and Special Projects management and Ross himself is list- investing in an auto parts business in other side. Considering the com- to normal. Everyone assumes the Fed will fi- Daniel Duggan, (313) 446-0414 or ed by Forbes as having a net worth of Michigan and had done quite well. plexity of the problems in Detroit, it nally raise rates a quarter-percent off his- [email protected] Assistant Managing Editor Kristin Bull, $3 billion, ranking him No. 554 in the We made 14 acquisitions, all dis- worked out so much faster than any- toric lows when it meets on Wednesday. I as- (313) 446-1608 or [email protected] world and No. 194 in the U.S. tressed, for International Automotive one could have thought. sume you’ll welcome at least a small start on News Editor Beth Reeber Valone, (313) 446-5875 or [email protected] Ross’ company committed al- Components Group, and now we have Do you know Mayor Mike Duggan? the path to normal? Senior Editor Gary Piatek, (313) 446-0357 most $50 million of a $200 million 27,000 employees in 17 countries. I do. I’ve met him and Gov. Rick I’ll be disgusted if they don’t raise or [email protected] Research and Data EditorSonya Hill,(313) 446-0402 capital raise for a bank that had And at the time, we were also a large Snyder and I’m keen on both, though them. I not only think it’s a good or [email protected] about $100 million in assets. At the investor and I was on the board of As- I know the governor a lot better. I thing, but I’m extremely disappoint- Editorial Support (313) 446-0419; YahNica Craw- sured Guaranty ford, (313) 446-0329 time, there was no industry more be- , which guaranteed a think they’ve both done a great job. I ed it took them so long. This has been Newsroom (313) 446-0329, FAX (313) 446-1687 , leaguered than banking, and no lot of debt for the city of Detroit. was surprised, to tell you the truth, the world’s most tortured set of deci- TIP LINE (313) 446-6766 state more beleaguered than Michi- Second, we’d spent some time that Gov. Snyder didn’t throw his hat sions on interest rates I’ve ever seen. REPORTERS gan. And despite his track record, a with Gov. (Jennifer) Granholm and in the ring and run for president. It’s ridiculous it’s taken so long to go Jay Greene, senior reporter Covers health care, in- The national M&A market has been ex- surance, energy, utilities and the environment. lot of national observers wondered, thought she was doing a pretty good to 25 basis points. My concern, now, (313) 446-0325 or [email protected] again, if he had any idea what he was job of trying to deal with the funda- tremely hot the last two or three years. Local is they’ll raise rates so slowly that we’ll Chad Halcom Covers litigation, the defense indus- try and education. (313) 446-6796 or getting into. mental problems of the state. The investment bankers say that although sales be … into the next recession before [email protected] Ross had the last laugh. First most important part was we were multiples have gone through the roof, 2016 is they’re done raising them, and they Tom Henderson Covers banking, finance, tech- nology and biotechnology. (313) 446-0337 or Michigan, subsequently renamed convinced Michigan was not going going to be another strong year. Are you wor- won’t have enough tools in the tool- [email protected] Talmer Bank and Trust, dramatically ex- to fall into Lake Michigan and be- ried that things have got too frothy? box to respond with. Kirk Pinho Covers real estate, Oakland and Ma- comb counties. (313) 446-0412 or panded its footprint in Michigan and come the Lost Continent of Atlantis. The leverage-buyout side of the But that points out the contradic- [email protected] into Wisconsin, Illinois and Ohio But why a small bank here? business has got frothy. You look at tory nature of the Fed’s two mandates Bill Shea, enterprise editor Covers media, advertising and marketing, the business of through the acquisition of the assets We were already a pioneer in buy- the average multiple of EBIDTA — to have inflation at 2 percent and sports, and transportation. of troubled banks shut down by reg- ing distressed banks. We’d done very (earnings before interest, deprecia- to create employment. These are (313) 446-1626 or [email protected] Robert Snell, reporter Covers city of Detroit ulators. well with Florida Bank. And we liked tion, taxes and amortization) that is contradictory mandates, and this and regional politics. (313) 446-1654 or [email protected] Talmer raised more than $200 the two guys there (David Provost, getting paid and it’s about 10 times. Fed has been far more worried about Lindsay VanHulle, Lansing reporter. (517) 657- million in an initial public offering in CEO of Talmer Bancorp Inc. and Gary That’s a record. I come from the old jobs than inflation. They have disad- 2204 or [email protected] Dustin Walsh, senior reporter Covers the busi- 2014 and today has about $6.5 bil- Torgow, chairman). They’d already school, where you paid six times and vantaged savers in favor of borrow- ness of law, auto suppliers, manufacturing and lion in assets. built up a bank (the Bank of Bloomfield borrowed four times and thought ers, and that’s not good fiscal policy. steel. (313) 446-6042 or [email protected] Sherri Welch, senior reporter Covers nonprofits, Having agreed to appear at an Hills) and sold it to the PrivateBank of you were quite leveraged. Now, peo- The Fed has had such a preoccupa- services, retail and hospitality. (313) M&A awards night Crain’s is holding Chicago. They had a very tiny, $100 ple are paying 10 times and borrow- tion with an increase of 25 basis 446-1694 or [email protected] in February, Ross talked with Crain’s million bank. But it was a clean bank, ing six to seven times. That’s a prob- points, which is basically a rounding ADVERTISING reporter Tom Henderson about why he which was very smart. It provided lem caused by these low interest error, and now they have everyone so Sales Inquiries (313) 446-6032; FAX (313) 393-0997 decided to invest in a tiny bank in them the entrance requirement with rates. When interest rates get to a fixated on interest rates, there will Sales Manager Tammy Rokowski Senior Account Executive Matthew J. Langan Michigan and about a wide range of the FDIC to be qualified to bid on the more normal level, these leveraged probably be a lot of volatility next Advertising Sales Christine Galasso, Catherine other issues. assets of what was clearly going to be buyouts will not create the returns year when they keep raising them. Grace, Joe Miller, Sarah Stachowicz Classified Sales Manager Angela Schutte, (313) News that you were investing in a one- a lot of very distressed banks in they were planning on, and they They were worried about a recession. 446-6051 branch bank in Michigan took people here Michigan. We agreed to be their probably won’t be able to be refi- Well, if a rounding error is what Classified Sales Lynn Calcaterra, (313) 446-6086 by surprise. We’d had our own one-state re- biggest investor, and it worked out nanced. stands in the way of a recovery, it’s not Events Manager Kacey Anderson Creative Services Director Pierrette Templeton Ⅲ cession for years. We’d got beaten down, quite well. It turned out to be an ex- Private equity funds have a lot of money much of a recovery, is it? Senior Art Director Sylvia Kolaski so the reaction was, why would this New cellent partnership. We didn’t have to invest, and corporations have record Tom Henderson: (313) 446-0337 Marketing Coordinator Ariel Black York financier want to invest in a tiny bank one harsh word with them. We didn’t amounts of cash on hand. So how does that Twitter: @TomHenderson2 Special Projects Coordinator Keenan Covington Sales Support Suzanne Janik, YahNica Crawford Editorial Assistant Nancy Powers Production Manager Wendy Kobylarz new jobs in the city, with the majority He said amassing enough land for portation modes: air, freight, rail Production Supervisor Andrew Spanos LEAR of which targeted at city residents, In a supplier park would work only in or water. CUSTOMER SERVICE FROM PAGE 3 2014, Detroit had 258,807 jobs and a spaces like the I-94 Industrial Park, Lear made other investments in Main Number: Call (877) 824-9374 or [email protected] population of 706,663, according to land formerly owned by American the city earlier this year. In July, Lear Subscriptions $59 one year, $98 two years. Out of jobs in the city.” an April report by the Corporation for a Axle. Rehabbing of aging industrial bought the 50,000-square-foot Hem- state, $79 one year, $138 for two years. Outside U.S.A., add $48 per year to out-of-state rate for sur- Simoncini said General Motors Co., Skilled Workforce and funded by J.P. space for modern manufacturing meter Building on Centre Street in De- face mail. Call (313) 446-0450 or (877) 824-9374. Single Copies (877) 824-9374 Fiat Chrysler Automobiles NV and Ford Morgan Chase & Co. doesn’t make sense because of cost troit for nearly $6 million. It will Reprints (212) 210-0750; or Krista Bora at Motor Co. are asking for their large “Our unemployment rate is down, and difficulty, MacDonald said. house employees from Lear’s shared [email protected] To find a date a story was published (313) 446- suppliers to at least consider opening but it’s still 14 percent; that’s still more Still, a substantial development is services, information technology and 0406 or e-mail [email protected] manufacturing plants in the city. than double the national average” of logical because none of the compa- administrative operations. Crain’s Detroit Business is published by Crain Communications Inc. The Detroit 3 are focused on creat- 5 percent, Lewand said. “Our board nies would be isolated in a remote Then in September, it acquired a Chairman Keith E. Crain ing more jobs for Detroiters, as sever- and major employers understand the portion of the city. “They like to be building on State Street in Detroit’s President Rance Crain al of their executives sit on the newly importance of creating jobs for De- around one another,” he said. Capital Park to house an innovation Treasurer Mary Kay Crain Executive Vice President/Operations revived Detroit Workforce Development troiters.” Simoncini said a successful indus- and design center. The building will William A. Morrow Board, which includes Simoncini and As Crain’s reported 12 months ago, trial park will spur further manufac- house a gallery, a seat design studio Executive Vice President/Director of Strategic Operations Chris Crain Dauch, Lewand said. manufacturers are interested in the I- turing development in the city. and a software design center. Executive Vice President/Director of Corporate “We are continually discussing 94 Industrial Park because of its prox- “If we can prove the concept, oth- Simoncini said the building’s prox- Operations KC Crain Vice President/Production & Manufacturing potential business opportunities imity to highways and existing infra- ers will follow,” he said. “Nothing imity to Wayne State University and the Dave Kamis with our supplier partners, and are structure. breeds success like success.” College for Creative Studies make it a Chief Financial Officer Thomas Stevens Chief Information Officer Anthony DiPonio always open to new ideas if they offer “It’s a great location that has access The I-94 Industrial Park falls under prime location to attract top design G.D. Crain Jr. Founder (1885-1973) sustainable, mutual benefits,” Mark to every major freeway,” Simoncini the designation of the Next Michigan talent. Mrs. G.D. Crain Jr. Chairman (1911-1996) Development Corp. Editorial & Business Offices Reuss, GM’s executive vice president said. “The infrastructure is fantastic , which the Legisla- “It’s a win-win and, frankly, I’m 1155 Gratiot Ave., Detroit MI 48207-2732; of global product development and and the employees are available, and ture approved in January. shocked more companies haven’t (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET supply chain as well as a member of we could get components to every As such a development, the site made moves (to Detroit),” Simoncini CRAIN’S DETROITBUSINESS ISSN # 0882-1992 is pub- the workforce board, said in a state- major plant in the region — even as would be able to offer economic in- said. “Hell, yes, it’s a competitive ad- lished weekly,except fora special issue the third weekof November,and no issue the third weekofDecemberby ment. “Developing a local supply far away as Lansing.” centives to businesses that use mul- vantage. You should see the re- Crain Communications Inc.at 1155 Gratiot Ave.,Detroit base results in better quality, true Detroit has many acres of vacant tiple modes of transportation. In- sumes that are coming to us from MI 48207-2732.Periodicals postage paid at Detroit,MI and additional mailing offices.POSTMASTER: Send ad- growth on an export/trade basis for land, but it’s hard to find it in a con- centives include state and local our competitors.” Ⅲ dress changes to CRAIN’S DETROITBUSINESS,Circula- tion Department,P.O.Box07925,Detroit,MI 48207-9732. the U.S. and, of course, the re-cre- centrated chunk, said Dave Mac- incentives, tax increment financing Crain’s reporter Kirk Pinho contributed GST# 136760444.Printed in U.S.A. ation of Detroit’s tax base.” Donald, executive vice president in and property tax abatements — as to this report. Entire contents copyright 2015 byCrain Communica- tions Inc.All rights reserved.Reproduction oruse ofedi- The workforce board convened in the Royal Oak office of Jones Lang long as the business uses at least Dustin Walsh: (313) 446-6042 torial content in anymannerwithout permission is October with a goal to create 100,000 LaSalle. two of the four designated trans- Twitter: @dustinpwalsh strictly prohibited. 20151214-NEWS--0023-NAT-CCI-CD_-- 12/11/2015 4:44 PM Page 1

CRAIN’S DETROIT BUSINESS // DECEMBER 14, 2015 23 ON THE WEB RUMBLINGS WEEK DEC. 5-11

Detroit Digits passed by Chicago as the top ex- Points of Light seeks ideas Mental health porter to Canada, could impact the A numbers-focused look at last Detroit region’s economic growth. board delays ICA week’s headlines: Ⅲ Casino employees represent- for conference in Detroit ed by union members of the De- pact decision $1.3M troit Casino Council will receive oints of Light is looking for The settlement amount Clinton lump-sum bonuses of $4,250, ideas for workshops at its Township-based Adell among other considerations, as Pannual national conference, he board of the Detroit- Broadcasting Corp. will pay the part of tentative five-year contract which, the organization announced Wayne Mental Health Au- estate of a former WADL-TV 38 settlements with Greektown Casi- last week, will be held in Detroit Tthority voted 7-5 Friday to employee who died last year while no-Hotel, MGM Grand Detroit and next year. suspend at least until Jan. 31 a de- MotorCity Casino Hotel. The Atlanta-based organization involved in litigation with the Ⅲ cision this month by its CEO, Tom company over the loss of his The city of Detroit said three was founded by President George MICHAEL LEWIS II Watkins, to terminate a contract health care benefits. police unions have agreed to ex- H.W. Bush to connect causes with The $137 million M-1 Rail streetcar project with Detroit-based developmen- tend their contracts to 2020 in ex- volunteers. Its 2016 conference on may be getting a new name soon. tal disability provider Integrated change for raises and other volunteering and service is sched- Care Alliance. Watkins contended 25 changes, AP reported. A 4 percent uled for June 27-29 at Cobo Center. in the light rail project, making it ICA, which was recently acquired The approximate amount of jobs raise will take effect Jan. 1. The workshops are 90 minutes the largest single corporate donor, by Molina Healthcare of Michigan, is cut from Detroit advertising Ⅲ Detroit’s economic and fiscal long and typically focus on ways to and has purchased the naming Campbell Ewald in violation of three contractual agency ’s 500- health are stronger almost one attract volunteers. Conference top- rights. terms, and cited his authority as person staff. The layoffs come as a year after exiting bankruptcy, but ics include education, disaster serv- CEO to sever ICA’s $48 million con- result of major client losses over the city faces serious risks regard- ices, government, next-generation the past five years. Flint not alone among cities tract with the authority, according ing future pension payments, leaders and innovation. Full re- with lead problems to memos obtained by Crain’s. New York-based Moody’s Investors quirements to propose workshop $108.6M Service Inc. said in an analysis. ideas are on the conference web- While lead levels of the drinking The revenue reported for Detroit’s Ⅲ COMPANY NEWS A former principal in the Ed- site: volunteeringandservice.org. water in Flint have caused a furor casinos in November, according to ucation Achievement Authority re- The conferences typically draw this year, it turns out many Michi- Ⅲ Detroit Medical Center an- the Michigan Gaming Control form school district and two oth- 4,000 to 5,000 people. This year’s gan cities are no better off. nounced an unspecified number Board. The amount is down 3.7 ers were indicted by a federal event in Houston attracted 4,800 In a report last week, Bridge Mag- of layoffs, elimination of open percent from October’s tally but up grand jury on charges including people, 48 percent of whom repre- azine showed a long list of Michi- positions and an overall 1 percent 1.8 percent from November 2014. bribery, conspiracy, money laun- sented nonprofits. Another 18 per- gan cities have higher percentages reduction in its workforce to re- dering and tax evasion. The in- cent represented businesses, and of children with elevated blood lead duce costs and improve efficien- companies manage representa- dictment against ex-Mumford High 11 percent came from colleges and levels than Flint’s — often much cies, officials told Crain’s. tives in the field. School Principal Kenyetta Wilbourn universities. higher. Ⅲ United Kingdom-based Im- Ⅲ Troy’s Oakland Mall welcomed Snapp and two contractors is the The cost to attend ranges from Unlike Flint, the source of lead pellam Group PLC agreed to acquire a new retailer, Swedish fashion re- latest public corruption case fol- $200 to $750. The event entails poisoning elsewhere isn’t necessari- Southfield-based Bartech Holding tailer H&M. The store is the third lowing a years-long federal inves- about 200 events, including 150 ly the drinking water. In much of Corp. and its subsidiary Bartech H&M to open in metro Detroit in tigation of Detroit City Hall and workshops. There also is a service the state where lead is a problem, Group Inc. for $120 million in cash recent months, following open- Detroit Public Schools. project for the host city. For Detroit, the source has been old lead paint and debt. Bartech, a global man- ings in Livonia and Taylor. Ⅲ The Women’s City Club build- the project is likely to be aimed at on homes built before 1978, as well aged services provider, had been Ⅲ Quicken Loans Inc.’s book of ing in downtown Detroit has a workforce development and neigh- as lead residue in dust and soil. majority-owned by Sverica Capital employee rules didn’t violate work- new owner with a likely mixed- borhood rebuilding. Among the cities with higher Management LLC since 2012. ers’ free-speech rights because it use conversion on the way, but The organization also is seeking percentages than Flint’s 5 percent Ⅲ Clinton Township-based was irrelevant to daily operations new owner Eric Larson, president local nonprofit and business lead- were Detroit, Grand Rapids, Jack- Tweddle Group Inc. opened an of- and was largely ignored by staffers, and CEO of Bloomfield Hills- ers to work on the host committee. son and Port Huron. In Detroit’s fice in Detroit focused on con- an attorney for the Detroit compa- based Larson Realty Group, said he Interested parties can contact Jen- case, five ZIP codes had more than nected car software. Thirty em- ny told an administrative law is still deciding how to use the nifer Geckler at (404) 979-2900 or 700 children test positive in 2013, or ployees were moved into leased judge hearing a case brought by 75,000-square-foot building. [email protected]. nearly 15 percent of the 4,910 chil- space in the Francis Palms Building the National Labor Relations Board. Ⅲ Kim Schatzel, interim presi- dren tested. An interactive map and in the Foxtown area. Ⅲ Visteon Corp., the Van Buren dent of Eastern Michigan University, ‘Catch the RocketRail at the full Bridge story can be found at Ⅲ The Michigan AIDS Coalition Township automotive electronics will leave the post she’s held since Woodward and Jefferson’ crainsdetroit.com. has merged into Matrix Human Ser- supplier, announced a $1.75 bil- July to become president of Tow- The numbers won’t come as vices and is operating as the MAC lion special cash distribution to son University in Maryland. The above could become a com- comfort for business leaders al- Health program under the Matrix shareholders and a stock buyback Ⅲ Daniel Ogden Kerber, the re- monly heard phrase in Detroit if a ready concerned about education umbrella. Detroit-based Matrix is program of up to $500 million. tired COO of the Wayne County Air- newly trademarked name is any in- in Michigan. Lead poisoning affects retaining the coalition’s leased lo- Ⅲ Peter Karmanos Jr., the retired port Authority, faces up to 20 years dication. the nervous systems of children, in- cation in Ferndale. co-founder of Detroit-based Com- in prison after being charged in a On Dec. 3, Quicken Loans Inc. cluding their brains, causing cogni- Ⅲ Detroit-based Huron Capital puware Corp., said he is not plan- fraud case for allegedly falsely ob- trademarked the name RocketRail, tive problems that manifest in Partners LLC said it has sold its ning to move the Carolina Hurri- taining hundreds of thousands of describing it as being associated learning disabilities. majority interest in Baltimore canes, the National Hockey League dollars from the beleaguered with “transportation of passengers consulting firm Jensen Hughes Inc. franchise he owns, from Raleigh, county retirement system. via rail.” B-ham boxing comes to Gryphon Investors, a San Fran- N.C. Karmanos has indicated he Ⅲ Metro Detroit home and con- An M-1 Rail representative would to Eastern Market cisco private equity firm. Terms of wants to sell the team, the subject dominium sales slowed last not confirm the name as final. the deal were not released. of relocation chatter. month, dropping 4.2 percent year- Quicken was supposed to an- A bit of Birmingham has moved Ⅲ Chelsea Milling Co., the Ⅲ The Troy-based Kresge Foun- over-year, said a report by Farm- nounce the name in November but to downtown Detroit. Jabs Gym, a Chelsea-based maker of Jiffy Mix dation said organizations in 12 ington Hills-based Realcomp Ltd. then postponed it. boxing and yoga business based in baking mixes, is planning a $35 U.S. cities will share nearly $8 mil- II. But median home and condo RocketRail is the latest in a series Birmingham, opened a location in million expansion to help diversi- lion to help low-income commu- sale prices continued a positive of rail-related trademark registra- Eastern Market last week. fy the business, AP reported. nities deal with issues related to upward swing, rising 5 percent tions by Quicken in the past 13 Among its offerings are “night- Ⅲ Detroit-based chickpea pasta climate change, AP reported. last month from November 2014. months. In November 2014, Quick- club-style” classes where high-en- manufacturer Banza LLC was Ⅲ The Central Michigan Universi- en trademarked the names ergy dance music accompanies named an Endeavor Entrepre- OTHER NEWS ty and University of Minnesota foot- Quickline, Qlink and Qline, according boxing and kickboxing training. neur by a panel of international ball teams were matched in the to the trademark database. In Feb- Jabs hopes to tap into the re-en- business experts in Mexico City. Ⅲ Southeast Michigan’s eco- second Quick Lane Bowl Dec. 28 at ruary, Quicken trademarked the ergized downtown world of office Ⅲ Detroit-based Fontinalis Part- nomic growth is slowing amid Ford Field in Detroit. name Qride. workers and apartment dwellers. ners has led an investment round long-term challenges regarding RocketRail appears to be a play Classes are offered as early as 7 a.m. of $3.5 million for Detroit-based per-capita income and other key OBITUARIES off a series of products tied to during weekdays; after-work class- Service.com, a startup that in con- indicators, according to the De- Gilbert-related ventures that use es begin at 6 p.m. junction with the funding has troit Regional Chamber’s second an- Ⅲ Macomb County Treasurer the words “rock” and “rocket,” such The Birmingham location has opened an office in Columbus, nual regional report card. The re- Ted Wahby, a former Comerica Bank as Rocket Mortgage, Rock Ventures been open for three years. The East- Ohio. Service.com has developed port, released last week, said executive and St. Clair Shores and Rocket Fiber. ern Market location is the compa- a smartphone app that helps challenges, including being sur- mayor, died Dec. 5. He was 84. Ⅲ Quicken has invested $10 million ny’s second. Ⅲ DBpageAD_DBpageAD.qxd 11/30/2015 12:30 PM Page 1

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