20120903-NEWS--1-NAT-CCI-CL_-- 8/31/2012 3:28 PM Page 1

VOL. 33, NO. 34 $2.00/SEPTEMBER 3 - 9, 2012

Deals show Key soliciting tech sector attractive options for to investors new HQ space By CHUCK SODER [email protected] Banking giant seeks efficiency, though

Northeast Ohio’s technology scene others theorize a better lease is its goal is coming of age. In the wake of two acquisitions By STAN BULLARD late last month totaling $470 million, [email protected] several people who follow technology companies in the region say many KeyCorp is indicating to developers and local tech firms now are capable of property owners that it might want to build attracting far greater amounts of a new headquarters in Cleveland, though money than they could have just a some real estate brokers believe it may be few years ago. expressing such interest in order to extract a In some cases, that money will better lease deal at its current home, the 57- come via acquisitions. In others, it story Key Tower. will be in the form of larger venture A property development source familiar capital investments. with the situation said KeyCorp has asked Both the former and the latter more than one downtown developer to already are starting to happen. provide office alternatives for the company. Although the number of local tech The source said Key wants less space than companies being acquired hasn’t the banking company occupies now at 127 risen drastically during the last two Public Square. years or so, some recent deals have “They are not looking to downsize (staff), been especially large. but want a more efficient layout,” the source On Aug. 24, for example, medical said. implant maker OrthoHelix Surgical According to a Feb. 27 regulatory filing, Designs Inc. of Medina announced it KeyCorp leases 26 floors totaling almost will be sold to medical device firm 690,000 square feet in Key Tower, the second- See TECH Page 8 tallest skyscraper between Chicago and New York City. The source said the space KeyCorp would INSIDE need for its headquarters could be trimmed with more efficient layouts. KeyCorp also In-depth shale coverage could benefit from technological improve- We analyze the trends and the ments in the 20 years since Key Tower’s major players in Ohio’s shale boom. completion. The source asked not to be PAGE 13 identified because he is not authorized to CRAIN’S FILE PHOTO See KEY Page 28 HOSPITALS AT BOTTOM OF BOTTLE Scarcity of some drugs, ‘suffocation’ of supply chain forces pharmacists to get creative

By TIMOTHY MAGAW make supplies of medications last. are generic injectable drugs. Alter- [email protected] Although the federal government natives, if they exist, often are sold The medicine cabinets at North- has offered a few tools to ease the at high markups. east Ohio’s hospitals are sparse burden, local hospital pharma- One hard-to-come-by pain these days, and while it’s no fault cists say the shortages show few medication typically costs the of their own, a nationwide drug signs of easing. More than 200 Cleveland Clinic 10 cents a dose. shortage has forced pharmacists drugs are in short supply or un- But, given the difficulty in securing to come up with creative ways to available entirely; the bulk of these See DRUGS Page 29 34 7 Expert advice to World grow your sales

NEWSPAPER Traded ConferenceC

74470 83781 Thursday, Sept. 27 See page 9 0 20120903-NEWS--2-NAT-CCI-CL_-- 8/31/2012 1:53 PM Page 1 20120903-NEWS--3-NAT-CCI-CL_-- 8/31/2012 2:22 PM Page 1

SEPTEMBER 3 - 9, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3 INSIGHT With final $25M, art institute will finish expansion CIA reaches $66 million goal, allowing it to start second phase of campus integration

By TIMOTHY MAGAW “The last $20 million is the [email protected] toughest,” said Mr. Nunes, who led a successful $15 Grafton Nunes’ paramount million fundraising effort at task upon becoming presi- Emerson College in Boston dent and CEO of the Cleve- prior to his arrival in Cleve- land Institute of Art in 2010 land. “Finishing that $66 was to sniff out the remaining million was important be- $25 million needed to com- Nunes cause the capital campaign plete the college’s $66 mil- and unification project was lion fundraising effort — the largest so important to the growth of the in the institution’s 130-year history. school.” Nearly 2½ years later, the small Completed in December 2010, the ANDRE JENNY art school steered by Mr. Nunes has first phase of the unification project reached that goal and is ready to was the complete renovation of break ground this fall on the final the college’s Joseph McCullough phase of its expansive building ini- Center for the Visual Arts on Euclid tiative. The project’s goal is to unite Avenue; it’s a former Ford Model T the school’s fragmented East Side assembly plant built in 1915 and SAME GAME. NEW NAME? campus into a single complex on acquired by the college in 1981. Euclid Avenue in University Circle’s The second phase, expected to Cleveland Browns Stadium soon may be rebranded, Uptown district. See CIA Page 28 but what value a deal might bring is tricky to gauge THE WEEK IN QUOTES

By JOEL HAMMOND [email protected] “The hospitals basi- “What we’ve done to cally validated that survive is we’ve gotten hen soon-to-be Cleve- land Browns owner they felt the (drug) into some other areas. Jimmy Haslam intro- shortage was some- We’ve diversified our duced himself to Cleve- landersW at a news conference Aug. 3 what severe.Years business.We’re finding at Browns headquarters in Berea, he was open and direct about everything ago, it was sporadic. industries and oppor- except potential personnel changes; Now it’s more of a tunities where we can with the sale still not complete, he was hesitant to comment on those chronic problem.” use our existing capital matters. — Lisa Anderson, a registered equipment.” His bluntness was a marked nurse and vice president of departure from the reclusive Randy FRANK JANSKY/ZUMA PRESS member services for the Center — Matt Reineke, president and New Cleveland Browns owner Jimmy Haslam (left) stands Lerner, followed quickly by another for Health Affairs. Page One CEO, Americarb. Page 12 with general manager Tom Heckert at the team’s Family anomaly: Mr. Haslam admitted that Night scrimmage on Aug. 8 at Cleveland Browns Stadium. he would explore, “probably,” selling the naming rights to Cleveland “The Utica is an inter- “We’re not anti-tax Browns Stadium, a potentially lucrative INSIDE: The most valuable naming rights esting area and an and we’re not afraid transaction. deals in the NFL. Page 11 “We live in a marketing world,” Mr. ■ A year in, 92.3 The Fan makes up ground interesting play and to pay our share, we Haslam said simply that day. on WKNR in local sports radio. Page 9 Two things appear to be certain in people go where just want to know any potential naming rights deal on the presenting sponsor. It’s also a lock opportunities are. … what we’re dealing North Coast: First, that it won’t be Pilot that Westlake-based TravelCenters of Flying J, the giant Knoxville-based America, Pilot’s chief competitor in And lots of people see with.” operator of truck stops that Mr. Haslam their business, won’t be chosen. potential in the Utica.” — Terry Fleming, executive runs; he reiterated in a Plain Dealer After that, the deal seems to be fair director of the Ohio Petroleum interview last week a previous asser- game. Browns spokesman Neal Gulkis — Gregory Brown, general Council in Columbus. Page 18 tion that his company would not be the See BROWNS Page 11 counsel for Texas-based Beland Energy Utica LLC and Beusa Energy. Page 13 ERC study finds more — and bigger — raises on tap for 2013 Only a small number of manufacturing companies plan to freeze wages INSIDE: Historical wage hike data that said they would freeze pay were from ERC. Page 9 not included in calculating pay raise averages. The ERC survey covered By DAVID PRIZINSKY by an average of 3% next year, com- companies deciding to increase year, and 60% said they would do so five job classifications ranging from [email protected] pared to the 2.8% wage and salary wages and salaries.” in 2013. Mr. Mordarski also noted executives to production, supervi- hikes projected in the year-ago He said the 3% average projected that only a small number of manu- sory and clerical. A slightly better Northeast Ohio survey. Actual increases put in place wage hike is slightly higher than facturing companies said they This year, when it came to actual worker pay picture is painted this during the current year averaged recent averages and is the highest would freeze wages next year, a raises, service companies loosened year by employers participating in 3%, slightly higher than anticipated since 2009. The largest average pay good sign. the purse strings a little more than the latest compensation survey pub- in the year-ago survey. hike recorded in the last dozen ERC The ERC contacted 154 companies manufacturers. The raises at service lished by the Employers Resource Marty Mordarski, director of surveys was 4.4%; that occurred in and organizations for the survey — firms exceeded those at manufac- Council, a human resources service research and membership at ERC, 2001. 76 manufacturing companies, 46 turing firms by a small margin, and organization in Mayfield Village. said the latest survey “indicates Half the companies surveyed non-manufacturing companies and that is expected again next year. Raises are expected to increase there is also a trend toward more said they raised pay 3% or more this 32 nonprofit organizations. Employers See ERC Page 9 20120903-NEWS--4-NAT-CCI-CL_-- 8/31/2012 10:55 AM Page 1

4 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM SEPTEMBER 3 - 9, 2012

PUBLISHER/EDITORIAL DIRECTOR: Brian D.Tucker ([email protected]) EDITOR: Mark Dodosh ([email protected]) MANAGING EDITOR: Scott Suttell ([email protected]) OPINION Bad breaks lected officials in Columbus have talked a good game about reducing the number of tax breaks that businesses enjoy in Ohio, but Ehaven’t made headway in stripping them from the tax code. Instead, they’ve added to their number, causing us to doubt whether they’re serious about doing away with any of the tax giveaways, which in total cost the state billions of dollars in revenue each year. As Crain’s government reporter Jay Miller wrote FROM THE PUBLISHER in a Page One story last week, a study by public policy nonprofit Policy Matters Ohio showed state legislators and Gov. John Kasich in the last year had approved at least nine new or expanded “tax expen- Look ahead, address the past messes ditures” — government-speak for tax credits, n a discussion about business and — including Mr. Gregory — found it company with years of experience selling deductions and exemptions. These additions came what needs to be done to jump-start confusing that President Obama has not products to global markets. How do you even though lawmakers and the governor have the American economy, who would tried to build bridges with the American plan for 2013 when the debt crisis and given the impression through public comments that you imagine decrying golden para- business community. Had he done so, instability in the eurozone continues to Ichutes as lucrative financial payouts that the Republicans might not have had so dominate the world’s business news even they believe there are needless tax loopholes that should be eliminated. “idiot CEO’s get when they get fired?” much to yell about last week in Tampa. headlines? Dennis Kucinich, you might guess. This was all captured by syndicated And what could Northeast Ohio, even Take remarks made last April on the floor of the Nope. columnist William D. Cohan of with its long history as a center of inter- Ohio House by state Rep. Mike Foley, a Cleveland Some Occupy Cleveland pro- Bloomberg News, who quoted national trade, do as a region to further Democrat and a member of a legislative study tester? BRIAN Mr. Wright as saying — correctly help our local companies prosper through committee on taxes. Rep. Foley said many of the tax Nah. TUCKER — that it does no good to keep exports? breaks “probably help economic development in An overblown, talk-show looking back and blaming peo- Many of our companies have been the state of Ohio.” blabberer? ple for the financial mess, and active in Asia for years, if not decades. What Wrong again. that our ongoing financial crisis will the Asia slowdown mean to them? “But,” he noted, “there are some out there that The man uttering those words demands that we act, and act On Sept. 27, business owners and are fairly silly and have been on the books for a long was one of America’s most- quickly. executives will be able to get some of time.” respected former chief execu- Real business and political those questions answered while making Fairly silly? Try ridiculous. tives, Lou Gerstner, the man leaders, they said, need to sit valuable connections at Crain’s NEO It’s absurd that the Ohio Department of Taxation responsible for the dramatic down together and work out a World Trade Conference. Two powerful every two years goes through the exhaustive effort turnaround of IBM. plan that begins right now. A keynote speakers will be sandwiched of creating its Tax Expenditure Report, which item- He and two others in his same category good first step would be to find those around four panel discussions probing — former General Electric CEO Jack real leaders. these questions and other issues, followed izes the cost to the state of each tax break, only to Welch and Bob Wright, former head of **** by a networking cocktail reception. see the document sit on the shelf. As the report itself NBC Universal — gathered on Nantucket YOU’RE A BUSINESS OWNER and For more information on the event — to states, the responsibility for evaluating each tax Island recently for a discussion with realize that in order to grow, you need to be held at Executive Caterers at Lander- expenditure’s merit “belongs jointly to the General David Gregory, host of NBC’s Meet The find new markets overseas. The problem haven — or to register, visit www.crains Assembly and the Governor.” Yet once a tax give- Press. is, you’re not quite sure where to start. cleveland.com/NEOWorldtix, or call ■ away is added to the roster, it continues on and on Particularly telling was that the men Or, you’re an executive of a local Christian Hendricks at 216-771-5182. and on, without a thorough examination by either the Legislature or the governor’s office of whether the tax break’s benefit to Ohio’s economy is worth PERSONAL VIEW the revenue the state forgoes. The failure of the legislative and executive branches of government to do anything of value Revising Third Frontier plan appropriate with the Tax Expenditure Report isn’t unique to the current occupants of the Statehouse and governor’s By BARBARA R. SNYDER Ms. Snyder is president of Case Western erating pace of change, Ohio Third Fron- tier investments should focus more on mansion. The state’s tax commissioner has been Reserve University and a member of the nyone who doubts the differ- Ohio Third Frontier Advisory Board. shorter-term opportunities for returns required since 1987 to produce the report as a ence a decade can make need on investment — that is, those within a supplement to the governor’s biennial budget. only look back to 2002. ments. The effort proved so successful window of fewer than five years. Twenty-five years and five gubernatorial adminis- In that year, United Airlines that in 2010, more than 60% of voters ■ Strengths focused: The Ohio Third filedA for bankruptcy, Palm and BlackBerry endorsed a proposal to extend the state’s Frontier should direct resources to those trations later, the elimination of a tax break remains about as rare an event in Columbus as a sighting of dominated the new smart phone market, support for an additional four years. areas where Ohio already has leadership and Mark Zuckerberg started his first year Why tinker with an approach that has relative to other states. Outside analysis Halley’s Comet in the heavens. at Harvard. attracted such acclaim and new dollars? has identified several industrial clusters Instead, the tax expenditures keep piling up — so Today, United has the world’s largest Because the status quo is never static — that meet this criterion, among them much so that they had reached 128 in the latest tax number of airline destinations, iPhones especially in the current business climate. Advanced Materials, Software Applica- department report. and Androids are all the rage, and Mr. Last month, I was among the members tions for Business & Healthcare, and Until Gov. Kasich and the Legislature actually Zuckerberg’s company, Facebook, boasts of the Ohio Third Frontier advisory board Medical Technology. ■ begin to peel back — rather than add to — the more than 950 million active users. and commission who came together Catalytic campuses: Revolutionary for a retreat to consider the program’s number of tax breaks on the books, it’s hard to con- For Ohio, 2002 stands out as the year advances from the Internet to Google the state launched Ohio Third Frontier, accomplishments and opportunities. emerged from universities, where faculty sider their talk about closing at least some of these a model for economic innovation that has Over two days of extensive conversation, members pursue the next “Big Idea” loopholes anything more than gratuitous lip service. brought the state more than 80,000 new several themes emerged: every day. By supporting the commercial- jobs and $6.6 billion in outside invest- ■ Rapid results: Given the ever-accel- See VIEW Page 6 20120903-NEWS--5-NAT-CCI-CL_-- 8/30/2012 3:34 PM Page 1

SEPTEMBER 3 - 9, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 5

THE BIG ISSUE Do you think political conventions are still relevant, and do they influence how you vote?

700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com

Publisher/editorial director: Brian D. Tucker ([email protected]) Editor: Mark Dodosh ([email protected]) Managing editor: ANNE CARTER NICK PETRAKIS ALEX MEYERS DANIELLE LIPPE Scott Suttell ([email protected]) Sections editor: Pepper Pike Cleveland Lakewood Cleveland Amy Ann Stoessel ([email protected]) I think they’re still relevant, because it To tell you the truth, in this day and I don’t think they have a great influ- I think they are important, but I think Assistant editor: kind of puts a face on the party. It just age with everyone tweeting and ence on how people vote. I think people have their opinions already in Joel Hammond ([email protected]) Sports kind of unifies the people in that party. Facebook and all the media — instant they’re still relevant, because it’s a place. So, personally, they do not Senior reporter: They don’t influence my decision to news — you get all the information, all platform for them to at least talk influence how I vote. Stan Bullard ([email protected]) vote, but that’s because I’m already the news breaking, on a daily basis. about the issues and their stance on Real estate and construction decided. So they’re just repeating the facts, if them, which is always going to get in Reporters: Jay Miller ([email protected]) you ask me. the public eye. Government Chuck Soder ([email protected]) Technology Dan Shingler ([email protected]) Energy, steel and automotive Tim Magaw ([email protected]) Health care and education Michelle Park ([email protected]) Finance Select Assets of Ginger Christ ([email protected]) Manufacturing, marketing and retailing Research editor: Deborah W. Hillyer ([email protected]) Industrial Sands Cartoonist/illustrator: Rich Williams Marketing director: have been sold to acquisition of has been recapitalized by has been acquired by Lori Grim ([email protected]) Marketing/Events manager: Christian Hendricks ([email protected]) Assistant Events Manager: Jessica Snyder ([email protected]) Advertising sales manager: $297 Million Nicole Mastrangelo ([email protected]) Senior account executive: Financial Advisor and Adam Mandell ([email protected]) Sell-Side Advisor Buy-Side Advisor Sole Placement Agent Sell-Side Advisor Account executives: Dawn Donegan ([email protected]) Andy Hollander ([email protected]) Lindsey Nordloh ([email protected]) Office coordinator: Toni Coleman ([email protected]) Digital strategy and development a portfolio company of manager: a portfolio company of has received a minority investment from Stephen Herron ([email protected]) Web/Print production director: Craig L. Mackey ([email protected]) has been acquired by an affiliate of has sold a grocery-anchored Production assistant/video editor: shopping center to Steven Bennett ([email protected]) has been acquired by Graphic designer: Lauren M. Rafferty ([email protected]) Billing: $179 Million Susan Jaranowski, 313-446-6024 ([email protected]) Credit: Financial Advisor and Todd Masura, 313-446-6097 Sell-Side Advisor Sell-Side Advisor Sell-Side Advisor Sole Placement Agent ([email protected])

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6 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM SEPTEMBER 3 - 9, 2012

An end and a beginning Youngstown firm buys Jeff Baldassari, Taylor president and CEO, said the company closed its doors June 8. The closing cost about 50 people their jobs at the plant in Taylor Chair’s assets Bedford and at a second plant — Taylor Desk — in Lynwood, Calif. Taylor bought that California plant 196-year-old Bedford company closed doors in in the 1980s. The closing also cost the jobs of June; Gasser will continue office furniture line Mr. Baldassari and executive vice president Brett Meals, who was a By JAY MILLER “They have a long history member of the seventh-generation [email protected] and they have a stellar descendents of company founder reputation in the (office Benjamin Fitch. Mr. Fitch opened The Taylor chair is on its way back. the business in Bedford in 1816. It will be made in Ohio, but not in furniture) industry.” Mr. Baldassari blamed the com- Bedford, its home for 196 years. – Mark Gasser, president, pany’s demise on the recession and Gasser Chair Co. of Youngstown Gasser Chair Co. the failure to win a tax abatement bought the name, chair designs, from the state of Ohio for the 72,000- customer list and other proprietary square-foot plant Taylor built in property at an Aug. 22 auction of the “The attraction to us was the fact Bedford in 2006. assets of The Taylor Cos., which folded that Taylor Chair — they have a long Kent Jones of Thompson Auction- earlier this year. history and they have a stellar repu- eers said the Aug. 22 auction cleaned Taylor was believed to be Cuyahoga tation in the (office furniture) indus- out the Bedford factory, selling items County’s oldest continuously oper- try — was in a separate and different ranging from saws and sanders to ating company; it called itself the market than we currently sell into, scrap leather and corrugated boxes. oldest furniture manufacturer in the which is more of the hospitality and He declined to say how much the sale United States. The company special- entertainment industries,” Mr. Gasser netted for creditors or to disclose ized in chairs for law offices, govern- said. “I don’t think we would have how much is owed to creditors. ment buildings and other institutions. considered getting into the office Meanwhile, the California factory Gasser president Mark Gasser seating business with anything less is being reborn. WEDNESDAY, SEPTEMBER 12, 2012 said his company has yet to decide than that type of a name.” A news release issued Aug. 23 by 11:30am Registration • 12 Noon Lunch & Program whether Taylor’s highly regarded He added, “It’s a very difficult Alan Paull said A.J. Paull Office LLC line of office chairs will be made at market to build or pioneer a brand BOB ROB CHRIS STUART Moderated By, opened for business on Aug. 1. Mr. BENNETT FROST REDFERN GARSON BILL MARTIN Gasser’s Youngstown plant or its in, and Taylor has already done that Paull’s grandfather had sold Eastern Millersburg plant, both of which he over many years.” Cabinet and Furniture Co. to Taylor described as underused. Mr. Gasser said he hasn’t been able in 1986. He then ran what became The company, which has more to assess yet how Gasser will market Taylor Desk. than 110 employees, paid more than and sell the Taylor chairs. But he said $100,000 for the package of Taylor the two companies’ marketing styles Taking a risk on history intellectual property it bought, Mr. were similar, noting that both have Mr. Baldassari, who said he may Gasser said. used independent sales representa- consult with Gasser Chair, was opti- Chairman, Ohio Chairman, Chairman, Ohio Chairman, National & Emmy Republican Party Republican Party of Democratic Party Democratic Party of Award-Winning Gasser will use its newly acquired tives who sell for multiple manufac- mistic that the chair business also Cuyahoga County Cuyahoga County Anchor, Fox 8 News furniture line to expand into the turers. can be restarted. He said he expects For more info: www.ExecutiveCaterers.com market for office chairs. The 65-year- Both chair makers also served what Gasser will focus on the 20% of the and click on Corporate Club or call 440.449.0700 old company specializes in seating he described as a middle market, Taylor chair line that accounted for for restaurants, hotels and casinos. It selling to customers who may buy 50 80% of the business. provided the slot machine and game to 100 chairs at a time. He said he “The good thing is, there aren’t table chairs for both the new Horse- wasn’t planning to compete in the many American wood (chair) manu- shoe casinos in Cleveland and mass market against companies such facturers left,” he said. “They can get Cincinnati. as Steelcase Inc. or Herman Miller Inc. back in because there isn’t a lot of Gasser Chair’s annual sales are competition in that sector.” about $10 million, Mr. Gasser said. Mr. Gasser, too, is optimistic. But That’s about the same size as Taylor he conceded sentiment was a factor Chair, which in 2006 — before the in the decision to buy Taylor Chair. recession — had sales of $11 million, “This is an opportunity to keep the according to information supplied name alive,” he said. “I must admit Attention Northeast Ohio Manufacturers by Thompson Auctioneers of Fair- that, honestly, I couldn’t bear to see born, which handled the disposal of the name and its history just evapo- Who Provide Products to the Water Industry Taylor assets. rate. I thought it was worth the risk.” ■ FREE EXPORT READINESS View: Time to evaluate ASSESSMENT AVAILABLE other tech opportunities continued from PAGE 4 those leaders who first brought the ization efforts of our institutions of Ohio Third Frontier to fruition. But MAGNET has an immediate If your company has higher learning, the Ohio Third then I remember that it hasn’t been opportunity to provide been considering exporting Frontier can ensure breakthroughs that long since we all thought that a several Northeast Ohio but lacked the information make their way to markets far more cell phone smaller than six inches manufacturers interested in needed to determine your quickly. was pretty special. exporting their water and capability to export, contact ■ Meaningful metrics: We require A decade after the Ohio Third water treatment related MAGNET today. much more rigorous collection and Frontier began, it’s time to assess industrial products to The free assessments are evaluation of metrics to determine whether additional opportunities the actual impact of our initiatives. exist for Ohio. Just as in a university foreign markets with a free to be delivered to qualified We have directed staff to explore laboratory, we need to try additional export readiness assessment manufacturers on a first- what measures will provide the most ideas, assess their outcomes, and and analysis. come, first-served basis. useful information for determining adjust based on that new information. Water-related manufacturers who would For this immediate opportunity to receive how best to proceed with regard to No program is perfect, and even like to increase their revenue by selling into a free report on your company’s readiness to existing and proposed programs. the best-sounding proposals may foreign markets are eligible to receive this sell your water-related industrial products Change is always challenging, not prevail in practice. But we have complimentary export readiness assessment overseas, contact MAGNET’s Randy Nemetz particularly when an offering appears an obligation to at least explore new through a special time-limited grant that has at [email protected] or to be going well. options. Ohioans have entrusted us been made available to MAGNET. 216.432.5321. Northeast Ohio companies, hos- with the responsibility of ensuring pitals and my own university, Case their future. Our task is to do all that Western Reserve, have benefited we can to make it as promising as it tremendously from the foresight of can be. ■ WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 e-mail: [email protected] 20120903-NEWS--7-NAT-CCI-CL_-- 8/31/2012 1:33 PM Page 1 20120903-NEWS--8-NAT-CCI-CL_-- 8/31/2012 3:42 PM Page 1

8 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM SEPTEMBER 3 - 9, 2012

to previous years, the size of the Entering ‘exit mode’ deals is, according to Mr. Bobrow Tech: VC funds flow to local companies and others who spoke with Crain’s. Among the venture firms that Mr. Bobrow noted how some acqui- have received money from the continued from PAGE 1 More tech deals are on the Capital Management Inc. of Pepper sitions from previous years were fund is Draper Triangle Ventures of Tornier N.V. of the Netherlands way, according to attorney Howard Pike and Wachovia Capital Partners small or involved companies that Pittsburgh. Draper years ago made for $135 million. A few days later, Bobrow, who advises private equity of Charlotte, N.C., for an undis- were not performing well. early investments into two local trucking software firm TMW Systems funds, venture capital firms and closed amount that he previously companies that recently went on to Inc. of Beachwood said it will be young growth companies for the said was less than $100 million. Investments add up raise more venture capital: heart sold for $335 million to Trimble Cleveland office of law firm Taft, Other tech companies that have Venture capital dollars also appear imaging technology developer Navigation Ltd. of Sunnyvale, Calif., Stettinius & Hollister LLP. He has struck deals to be acquired for rela- to be flowing readily into Northeast CardioInsight Technologies Inc. of which makes technology to manage seen an increase in the number of tively large amounts so far this year Ohio, according to JumpStart’s Cleveland raised $7.5 million earlier mobile workers. tech companies ready for exits and include U.S. Endoscopy, which is to figures. Granted, local companies this year, and appointment man- On the venture investment side, is working with a few now. be sold for $270 million to medical would need to raise more than $200 agement software firm TOA Tech- Northeast Ohio companies devel- Mr. Bobrow noted that improve- equipment maker Steris Corp., million in the second half of 2012 to nologies Inc. of Beachwood raised oping medical devices, software, ments in the broader market for its next-door neighbor in Mentor, reach the record of $317 million in $17 million last year. new materials and other high-tech mergers and acquisitions are helping, and Rolls-Royce Fuel Cell Systems venture capital raised in 2007. How- The dollar amounts of local venture products raised a total of $114 million but he added that the region’s tech (U.S.) Inc. of North Canton, which ever, the sheer number of compa- deals will “continue to climb” in the in venture capital during the first sector is in a better position to take for $45 million sold a 51% stake in nies receiving any amount of money future, and acquisitions of local half of 2012. That figure didn’t set a advantage of those improvements itself to Korean conglomerate LG. from venture capital firms or indi- tech companies will become more record, but it easily exceeded first- than it would have been a few years Of the eight local tech companies vidual investors has skyrocketed, common, said Mike Stubler, manag- half totals of $83 million, $50 million ago. identified by Crain’s as striking according to JumpStart’s figures. ing director at Draper. “We should and $18 million in 2011, 2010 and “I absolutely think it means that deals this year to be acquired, some During the first half of 2012, 73 start to see more of those (compa- 2009, respectively, according to data the industry is showing signs of — OrthoHelix, the Rolls-Royce sub- companies received investments, a nies) going into exit mode,” he said. from JumpStart Inc., a nonprofit that maturity,” he said. sidiary, marketing software firm number that beat annual figures Ralph Della Ratta Jr., managing BrandMuscle Inc., wireless equip- assists and invests in young tech Big hairy deals from most previous years. partner at Western Reserve Capital companies. ment provider Summit Data Com- The economy likely is a factor in Partners LLC in Cleveland, said he Money is flowing partly because The acquisition deals for Ortho- munications Inc. and Onosys, the overall increase in deals, but the expects acquisitions to rise. The of improvements in both the econ- Helix and TMW Systems illustrate which provides online food ordering increasing number of quality com- firm lately has been working on omy and the credit market. That’s Mr. Bobrow’s point. software for restaurants — are rela- panies in the region is another, said more deals that involve technology especially true for big acquisitions, The sale of OrthoHelix will mark tively young; all were formed since Lynn-Ann Gries, chief investment companies, and Mr. Della Ratta said which often involve debt financing. the first exit for the company, which 1999. The other three — U.S. Endo- officer at JumpStart. he knows of three that will be sold But there’s another factor driving is owned in part by Mutual Capital scopy, TMW and electronic trans- Ms. Gries said another reason is or are hunting for buyers. deals for tech companies in the region: Partners LLC, a growth-stage ven- action services provider Electronic the presence of the Ohio Capital Although the improved credit They are reaching the point where ture capital firm in Cleveland. TMW Merchant Systems — were formed Fund, a $150 million “fund of funds” market likely is helping drive acqui- they are ready to scale up or, in some founder Tom Weisz sold his stake in in the 1980s and 1990s. that invests in venture capital firms sitions in Northeast Ohio, compa- cases, be sold, according to several his business back in 2005, when the Although the number of acquisi- that commit to financing companies nies looking for venture capital people interviewed for this story. company was acquired by Peppertree tions isn’t particularly high compared in Ohio. The 25 venture capital firms haven’t been helped by national that have received money from the investing trends. Venture investments fund had invested $188 million in 66 have recovered somewhat from the Ohio companies as of March 31. recession but have been flat lately, However, most of the fund’s money according to the Pricewaterhouse- has been committed to venture Coopers/National Venture Capital firms, so if the state Legislature Association MoneyTree Report. doesn’t pass a bill to renew it, the Thus, any increase in venture investments the underlying firms capital in Northeast Ohio can be at- make could slow down, she said. tributed mainly to the achieve- “The work the Ohio Capital Fund ments of people in this region, said did in bringing additional venture Jonathan Murray, managing part- funds to the region has been pretty ner for Early Stage Partners of much the shining star in how we’ve Cleveland. been able to get our companies “Locally, we’ve gotten our act THE AIRPORT THAT MEANS BUSINESS financed,” Ms. Gries said. together,” Mr. Murray said. ■ IS CALLING ALL BUSINESSES. The Shale Revolution: Issues and financial opportunities for landowners Thursday, September 13, 2012 10:00 a.m. to 1:00 p.m. EDT Location: 2012 BURKE CORPORATE AND AVIATION EXPO McDonald Hopkins, Fifth Third Center 600 Superior Avenue, East, Suite 2100 Downtown Cleveland RSVP: mcdonaldhopkins.com Join local business leaders for this special event as we take a first class look at the or call: 216.348.5400 to register. latest in corporate aviation and service. And learn how Burke Lakefront Airport can help your company take off. BURKE LAKEFRONT AIRPORT RSVP Wednesday, September 12, 2012 by September 10, 2012: 4:00 p.m. – 8:00 p.m. [email protected] Hors d’oeuvres by Zack Bruell Kathleen Page at 216-265-3320 McDonald Hopkins LLC Restaurants, cocktails 600 Superior Ave., East, Suite 2100, Cleveland, OH 44114 • 216.348.5400 Carl J. Grassi Shawn M. Riley President Cleveland Managing Member

Chicago • Cleveland • Columbus • Detroit • Miami • West Palm Beach Visit www.burkeairport.com and click on events for more information mcdonaldhopkins.com 20120903-NEWS--9-NAT-CCI-CL_-- 8/30/2012 2:46 PM Page 1

SEPTEMBER 3 - 9, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 9 WKNR still No. 1 in sports ERC: Local survey mirrors national trend continued from PAGE 3 WAGE HIKES MAY GO UP Salvatore Indriolo, the company’s radio, but Fan closes gap The pay picture nationwide appears director of human resources. similar to the local snapshot pro- Research by Mayfield Village human Mr. Indriolo said the company, duced by ERC. resources group ERC show raises are with 425 full-time employees, is Data show year-old newcomer brings listeners Mercer, an international consulting expected to increase by an average of enjoying strong demand from all the firm, is projecting average pay raises 3% in 2013. A look at past ERC raises markets it serves. Vitamix uses the to FM dial; ESPN affiliate’s boss undeterred in the United States of 2.9% next estimates and actual figures: CPI in analyzing compensation bud- year, up from 2.7% this year. Mercer gets, but it also takes into account By JOEL HAMMOND more listeners and potential adver- surveyed 1,500 midsize and large Year Projected Actual internal and external benchmarks in [email protected] tisers on to sports radio. employers. setting pay levels, Mr. Indriolo said. WKRK program director Andy One company that is exceeding 2012 2.8% 3.0% One service company, Chapman the average size of raises planned and Chapman Inc. in Twinsburg, is To hear the principals involved, Roth agrees. He said his station’s 2011 2.8 2.8 there is no sports radio competition FM presence has opened sports talk next year is Fastener Industries Inc., planning a combined base pay and in Cleveland. to a group of listeners who either a Berea-based manufacturer with 2010 2.7 2.7 bonus compensation package to Those significant lineup changes hadn’t thought of sports radio operations that include Ohio Nut average about 4% next year, similar at WKNR-AM, 850, better known as before or, if they had, had never and Bolt Co. Fastener Industries will 2009 3.3 3.1 to this year. CEO Walter Chapman ESPN Cleveland, after CBS Radio’s made it to the FM side of the dial. raise wages and salaries by 4% next said the benefits consulting firm was 2008 3.3 3.4 WKRK-FM, 92.3, “The Fan,” went “That has been the most chal- year, a figure that matches the size of unable to increase compensation live in August 2011? Nothing more lenging part — grabbing people and increases that were effective this 2007 3.3 3.5 two years ago. He said business con- than gathering and applying feed- letting people know that there is year. ditions have improved since then back from listeners. sports radio on the FM dial,” said “We look at the Consumer Price 2006 3.3 3.4 and the 27-employee firm also has And the slow but steady ratings Mr. Roth, who in a previous life Index and try to stay ahead of it, if we gained market share. climb at WKRK? All part of the launched Major League Baseball’s can afford to,” said Patrick Finnegan, 2005 3.3 3.4 While the ERC compensation process of building an audience. Internet radio platform. the company’s president and CEO. guide turned up signs of optimism, 2004 3.2 3.6 According to data compiled by And as The Fan increases its The CPI has risen 1.4% from July last the improved outlook isn’t shared Baltimore-based Arbitron Inc., audience, it, too, is moving into year to July this year, according to 2003 3.0 3.3 universally, according to the National which tracks radio listenership developing a more robust marketing the Bureau of Labor Statistics. Federation of Independent Business. nationwide, WKNR remains the top presence. As evidence, Mr. Roth Mr. Finnegan said business is on Chief economist William Dunkel- sports dog in Cleveland. However, cites the station’s partnership with the rise at the 190-employee company. competitors. berg said the group’s latest business in Arbitron’s most recent Portable the Barley House in downtown The company is enjoying record Vitamix Corp., a food processing conditions report indicates small busi- People Meters data, WKRK continued Cleveland on its new Browns tailgate sales, partly because most of the products maker in Olmsted Town- nesses are concerned about higher to close the listener gap. Arbitron parties, which he sees as a way to business units at Fastener Industries ship, will raise employee pay from taxes and are not in a mood to expand. does not release its research pub- introduce even more people to the are benefiting as the recession 3% to 4% next year, a range that The NFIB said optimism is “dis- licly; a Cleveland-area media buyer station and expand its brand. weeded out some of the company’s matches 2012 hikes, according to turbingly low.” ■ provided the data to Crain’s. In terms of average quarterly Head to head audience, which measures the Mr. Roth said WKRK is seeing average number of people listening “substantial growth” in listeners on in any 15-minute span, the average each of its shows, referred to in radio difference in July of 1,500 listeners parlance as “day parts.” PRESENTED BY between the two stations was the “At different times of the year, smallest since The Fan began certain shows can be up or down,” broadcasting on Aug. 29, 2011. In its Mr. Roth said. “But now, everyone is first four months on air, the average almost near their high marks, and >VYSK monthly difference in quarterly we’re still going up.” audience was 4,350; since April, that A source said WKRK’s morning average difference has shrunk to drive show, the often-controversial ;YHKL*VUMLYLUJLK * 2,100 listeners per month. “Kiley and Booms,” often has out- Meanwhile, in terms of cumula- paced the nationally broadcast tive audience — which is referred to “Mike and Mike in the Morning” on Ways to Boost Your Global Sales: by Arbitron as “cume” and is a mea- WKNR and even at times has chal- sure of the total number of people a lenged the popular “Rover’s Morning Free, local support services for exporters station reaches in a month — WKRK Glory” on WMMS-FM, 100.7. The also has narrowed the gap. From Arbitron data for July, though, show Whether your firm is already selling into foreign markets – or is October through December last year, Rover well ahead of the pack among WKNR averaged 187,500 in cume males ages 25 to 54, with “Kiley and contemplating such an expansion – there is plenty of government per month, with WKRK averaging Booms” and “Mike and Mike” at a help in finding overseas buyers, securing financing or insuring only 98,300. Since April, WKNR’s near dead heat. cume has fallen 26% to an average WKNR’s midday show, “The international transactions. Learn from these experts: of 138,400 total listeners per month, Really Big Show,” with market vet- while WKRK’s monthly cume has eran Tony Rizzo and Aaron Gold- Moderator: moved up 18%, to 116,200. hammer, outdraws WKRK’s show “The takeaway is that WKNR still featuring local TV personalities Andy Pat Perrin, Global Finance Manager, Office of Business Assistance, is No. 1 in the market, regardless of Baskin and Jeff Phelps. In the after- Ohio Department of Development the demographic, but (WKRK) is noon drive-time slot, WKNR’s “The slowly catching up,” said the media Hooligans,” which features long- Panelists buyer who provided the data and has time Ohio State beat reporter Bruce tracked it since The Fan debuted. Hooley, Cleveland sports radio vet- t
Susan Whitney, Office Director, U.S. Commercial Service, Cleveland eran Greg Brinda and Chris Fedor, t
Amy Liu, Co-Director and Senior Fellow, Metropolitan Policy Program, Brookings Institution Heck with ratings and WKRK’s “The Bull and The Fox,” Ratings numbers, though, matter featuring New York radio veteran t
Patrick Hayes, Regional Manager, SBA Export Solutions Group, U.S. Export Assistance Center little at WKNR, according to Good Adam Gerstenhaber and former t
Mark Klein, Export Finance Manager, The Export-Import Bank of the U.S. Karma Broadcasting president Craig Ohio State defensive back Dustin Karmazin, who said the company Fox, are comparable. that owns the station isn’t a radio In July, according to the Arbitron Learn more about the other panels and register at: company, but rather a sports mar- data supplied to Crain’s, WKNR’s keting company. average quarterly audience beat www.CrainsCleveland.com/NEOworldtix “Ratings don’t impact our business WKRK in the male 25-54 group, model,” Mr. Karmazin said. “Our though WKRK’s cume was about DNA is in marketing and events, 4,000 listeners higher. Thursday, Sept. 27, noon - 6PM
t
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-BOEFSIBWFO helping execute for our partners The WKNR lineup reflects mas- and delivering return on investment sive changes at WKNR since WKRK for them. Radio is an aspect of that, went live. They include extending but not all of it.” The company’s “The Really Big Show” an hour and IN PARTNERSHIP WITH list of capabilities includes remote moving former Cleveland Cavaliers broadcasts, golf outings and invita- play-by-play man Michael Reghi tion-only gatherings with on-air and his partner, Kenny Roda, to late personalities and Cleveland sports night from afternoon drive, where alumni, among other functions. “The Hooligans” now reside. On the radio side, Mr. Karmazin Good Karma’s Mr. Karmazin, acknowledges that The Fan’s pres- though, said the changes were ence likely has taken away listeners. a result of listener reaction and re- But the region’s second sports-talk quests. “We really love our lineup,” station has helped, too, in turning Mr. Karmazin said. ■ 20120903-NEWS--10-NAT-CCI-CL_-- 8/31/2012 1:37 PM Page 1

10 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM SEPTEMBER 3 - 9, 2012

13015 YORK-DELTA DRIVE GOING PLACES NORTH ROYALTON, OHIO JOB CHANGES OHIO: Natan Milgrom to commercial middle market relationship manager. AUTOMOTIVE FIRSTMERIT CORP.: Michael G. GANLEY BMW: Vince Cuffaro to Robinson to executive vice president, client adviser. Wealth Management Services. Milgrom Wolfort Creegan DISTRIBUTION FINANCIAL SERVICE FLACK STEEL: David Feldstein to CEDAR BROOK FINANCIAL PART- director of risk management. NERS LLC: David Anderson to chief compliance officer. EDUCATION RETIREMENT SOLUTIONS: CLEVELAND STATE UNIVERSITY: Zachary Keberdle and Srdjan Paul Wolansky to director of Demonjic to associate financial consultants. $9$,/$%/()256$/( advancement, College of Liberal Arts and Social Sciences. SS&G: Alicia Huffman, Kelli Miller Samsa Ginsberg Pine ‡ 7RWDO6)%XLOGLQJ and Nicole Benden to associates. )RUPRUHLQIRUPDWLRQFRQWDFW ‡ 6)2I¿FH LAKE ERIE COLLEGE: Ruta Greiner .(9,1-.8&=<16., ‡ 6):DUHKRXVH to director of public relations and SS&G HEALTHCARE SERVICES REAL ESTATE  creative services; Kathryn Staats to LLC: Darlene Steines, Stephanie ‡ $FUHV JONES LANG LASALLE: A.J. Magner NHYLQNXF]\QVNL#RPFOHFRP assistant director, alumni and public Irwin, Michael Zalenski, Monica ‡ 1HZO\3DLQWHG:KLWH,QWHULRU to managing director, corporate relations; Joseph Kosch to digital Swank and Karen Ann Wiecek to ‡ 7/LJKWLQJ accounts, industrial; Andrew Coleman media developer. billing specialists; LaDonna Kessler ‡ 7UXFN'RFNV'ULYH,Q to senior vice president, tenant repre- and Tina Heatwall to practice man- 'RRUV PADUA FRANCISCAN HIGH sentation. ZZZRVWHQGRUIPRUULVFRP ‡ ¶¶&HLOLQJ+HLJKW SCHOOL: Kimberly Merryman agers. ‡ 7RQ&UDQH Sherer to director, marketing and WESTERN RESERVE PARTNERS RETAIL public relations. LLC: Justin A. Wolfort to vice AMBIANCE: Jeremy Ginsberg to e- president; Thomas P. Creegan to commerce manager. ENGINEERING associate. PROFESSIONAL SERVICE INDUS- WALTHALL, DRAKE & WALLACE UTILITY TRIES INC.: Delvecchio Gray to LLP CPAS: Jen Witczak to supervisor; FIRSTENERGY CORP.: Ty Pine to senior roof consultant. Janice Paul-Canfield to director, director, state government affairs for quality control; Jean M. Pavlin to Ohio. FINANCE director, accounting and audits. FIFTH THIRD BANK, NORTHEASTERN HEALTH CARE BOARDS UNIVERSITY HOSPITALS FERTILITY GREATER CLEVELAND ASTD: Lori CENTER: Dr. Bryan Hecht to fertility Klepfer to president; Stephanie specialist; Dr. Brooke Rossi and Dr. Steirn to executive director; Shannon Bill Hurd to medical staff. Hunt to president elect and vice presi- dent, programs; Sheri Mazurek to INSURANCE vice president, finance; Stan Gromek HYLANT GROUP: Jeffrey Belgrave to vice president, membership and and Michael Baumgartner to client administration; Jenny Mayo to vice executives. president, marketing. HOLDEN ARBORETUM: Paul R. LEGAL Abbey (Fairport Asset Management) BUCKINGHAM, DOOLITTLE & BUR- to chairman. ROUGHS LLP: David J. Lindner, PLAYHOUSESQUARE PARTNERS: Justin S. Greenfelder, Michael J. Dawn McFadden (Jones Day) and Matasich and Dustin J. Vrabel to Brent Pietrafese (Calfee) to co-chairs; partners. Robert Lewis and Clayton Smith to LITTLER MENDELSON: Inna Shelley vice-chairs; Carli Cichocki, Christina to associate. Klenotic, Matt Silla, Cristin Snod- grass, Ivana Vucenovic, George MCDONALD HOPKINS LLC: Reider, Maurie Donnelly, Sam Matthew J. Samsa to associate. Miller, Jennifer Jackson, Kevin THORMAN HARDIN-LEVINE CO. LPA: Ropenus, Emma Bembridge and Sara Verespej to associate; Laura Amanda Hicken to committee co- Greene to client service manager. chairs. WELTMAN, WEINBERG & REIS CO. LPA: Jason K. Wright to Litigation Send information for Going Places to and Defense Group. [email protected]. Employees lack benefit info Most don’t feel informed about plan enrollment options

By MATT DUNNING in a separate Aflac survey released Business Insurance in April. In that study, 49% of the 1,800 employers who responded charac- A majority of employees said they terized their benefits communica- aren’t receiving adequate enrollment tions as very or extremely effective. information about their company’s Forty-eight percent of employees benefit plans, according to a survey surveyed said they are only “some- by supplemental insurance provider times” aware of changes made each Aflac Inc. year in their benefit plans, and 13% About 52% of the more than 2,500 said they are rarely or never aware employees who responded to Aflac’s of changes made. 2012 Open Enrollment Survey said Exactly half of the employees sur- their employers have not distributed veyed somewhat or strongly agreed any information regarding coming that they would be better informed open enrollment periods. Thirty-nine about their health insurance choices percent said they were only some- if they were given the opportunity what prepared for open enrollments, to meet with an insurance consul- while 26% said they were unpre- tant during open enrollment. ■ pared or very unprepared. The survey’s findings offer a sharp Matt Dunning is an associate contrast to employers’ assessments editor with Business Insurance, a of the effectiveness of their benefits sister publication of Crain’s Cleve- communications strategies, outlined land Business. 20120903-NEWS--11-NAT-CCI-CL_-- 8/30/2012 1:36 PM Page 1

SEPTEMBER 3 - 9, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 11 Browns: Stadium naming rights deals can carry risks for sponsors continued from PAGE 3 The Saints since 1999 have been naming rights wouldn’t need to NFL NAMING RIGHTS DEALS confirmed that until Mr. Haslam successful on the field, with five compete with the nostalgia of a officially takes control of the team, playoff appearances and a Super longtime name, as when auto insurer NEw Cleveland Browns owner Jimmy Haslam said last month he would market he would have no comment on Bowl victory. But Mercedes-Benz Progressive Corp. bought the naming naming rights for Cleveland Browns Stadium. Here’s a look at the annual value for naming rights possibilities. But what has had to endure the team’s bounty rights to the former Jacobs Field in the top NFL naming rights deals: Mr. Haslam might encounter when scandal, in which coach Sean Pay- 2008; some fans still call Progressive shopping the stadium’s most visible ton, general manager Mickey Loomis, Field “The Jake,” and a cottage Sponsor Team Per-year value Expiration real estate to prospective suitors is former defensive coordinator Gregg industry of T-shirts — “It’s Still The that the market for naming rights Williams and current and former Jake To Me,” for example — has MetLife Jets/Giants $17 million 2036 deals isn’t as robust as it once was. players were suspended for varying sprung up. Reliant Texans 9.375 million 2032 In August 2011, MetLife bought amounts of time for perpetuating a Still, gaining first-time naming the naming rights to New Meadow- practice of offering players money rights to a team’s home doesn’t Gillette Patriots 8 million 2031 lands Stadium, home of the NFL’s for knocking opponents out of games. assure a sponsor of success. Giants and Jets, for a reported $17 “The company purchasing the U. of Phoenix Cardinals 7.72 million 2026 million to $20 million per season Blank slate naming rights really needs a strong through 2036. But that price was On the plus side for the Browns, promise from the team that it will FedEx Redskins 7.59 million 2025 thought by marketing mavens to be their stadium isn’t sponsored already do everything possible to help with Bank of America Panthers 7 million 2023 somewhat low for two teams in the nor does it have a catchy nickname. the rollout of the name and activa- largest media market in the world — (Save your “Factory of Sadness” tion of the partnership,” Mr. Dietz Lucas Oil Colts 6.07 million 2027 and for a stadium that will play host jokes.) Thus, a sponsor that buys said. ■ to the 2014 Super Bowl. A better gauge of what marketing rights to Browns Stadium could fetch may be found in New Orleans, where the Saints announced a deal last Sep- tember to rename the Superdome the Mercedes-Benz Superdome, for $5 million per year for 10 years. The Houston Texans, by compar- ison, receive about $9.4 million a year under a 30-year deal with electric giant Reliant. But Reliant’s name went on the then-new stadium in 2002, when the economy was better. “The Browns should be selling the idea that the future looks bright.” – Michael Dietz, founder, Dietz Trott Sports and Entertainment Management

“The Saints’ deal isn’t a record, but it’s not rock-bottom low, either,” said Michael Dietz, whose Farming- ton Hills, Mich., sports marketing firm, Dietz Trott Sports and Enter- tainment Management, recently opened a Cleveland office headed by former Mid-American Conference commissioner Rick Chryst. Whether a company in Cleveland has plenty of change to spare — or would want to shell out big bucks for a team that, unlike the Saints, hasn’t come close to playing in, much less winning, a Super Bowl — remains to be seen. But Mr. Dietz said a national company looking to expand into Northeast Ohio or the Midwest could be a possibility, as could regional companies — especially banks — that are big in the Midwest. No guarantees The Browns are 68-141 since returning to the NFL in 1999, with one playoff appearance and 10 seasons with 10 losses or more. That poor level of performance has limited the team’s exposure on national televi- sion — they play one game, on Sept. 27 at Baltimore’s M&T Bank Stadium, YOUR BUSINESS ISN’T JUST A JOB — IT’S A PASSION. You get to know your on national TV this season — which would limit the value of a naming customers, treat them fairly, and build relationships. Don’t you deserve that same kind rights deal for the team. Mr. Dietz said a company consid- of treatment from your bank? With Citizens Bank, you’ll get the right solutions and ering such a deal would enter into an products from people with the experience to know what’s right. After all, we’ve been agreement knowing the team’s record won’t be perfect — but also around over 140 years, helping businesses just like yours grow. So if you want a bank believing Mr. Haslam will set the that shares your passion, call us. BECAUSE WITH US, IT’S PERSONAL. organization in the right direction. “Sponsors would need to believe in the turnaround plan in place, and $)&$,*/(

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12 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM SEPTEMBER 3 - 9, 2012 Price wars with Chinese sap energy from local solar industry installation company. to compete on innovation. We’re are hurting U.S. manufacturers, Innovation will propel U.S. firms, advocates say The price points are below what not going to compete on low cost,” they have had a positive effect on many U.S. manufacturers consider Mr. Karpinski said. “It’s all about installers. The lower price helps By GINGER CHRIST tiguous counties, according to the competitive, which is troublesome the game-changing innovation.” make solar power more competitive [email protected] Solar Energy Industries Association, because solar panels are treated like The innovation angle is one in with electric power and lures more a U.S. trade association for solar commodities, said Neil Sater, CEO of which the 25-person GreenField customers to purchase the systems, Plagued by a loss of state and energy companies. It has been a GreenField Solar Corp., an Oberlin- Solar hopes to find its success. The Dovetail Solar’s Mr. Frasz said. federal incentives and a shift in rough road to travel for those com- based solar cell fabricator. solar cell equipment maker, which Installations do appear to be on focus, at least within the state, to shale panies, especially those on the “There’s little brand recognition,” still is in the development phase, the rebound. Photovoltaic system drilling, Northeast Ohio companies manufacturing side, which has Mr. Sater said. “That’s tough because plans next year to market commer- installations in 2011 rose 109% from tied to solar energy are fighting to been hammered by Chinese rivals companies have to compete on price.” cially its StarGen solar concentrators. the previous year, according to a make a go of it as the luster has faded undercutting prices. The pricing woes have caused a The concentrators use mirrors to Solar Market Insight Report issued from what seemed like a promising Chinese competition has pushed shake-out among solar manufac- reflect intense sunlight onto small by the Solar Energy Industries Asso- industry. the price of solar panels down 60% turers, including notable examples strips of solar cells. ciation and GTM Research, a market Of the 164 solar-related companies in the past 18 months, said Alan such as Solyndra, a California-based Mr. Sater said he hopes not only research company. In fact, solar in the state, 29% — or 47 companies Frasz, president of Dovetail Solar solar panel company that closed in the technology but also the appear- installations have steadily increased — are in Cuyahoga and the six con- and Wind, a Cleveland-based solar August 2011 despite receiving a $535 ance of the concentrators will dis- each year since 2007 when the Solar million loan guarantee from the U.S. tinguish his company from others. Energy Industries Association first Energy Department. StarGen concentrators look like a started collecting data. For Mr. Sater, the fierce competi- hybrid of a satellite dish and a solar Dovetail Solar this year is on pace tion creates a “chicken-and-egg panel. to up its sales 50% this year from SALT • SALT • SALT problem.” Manufacturers need to 2011, when the company broke scale up production to lower their Survival strategy even, and already has hired seven • Water Softener per-unit costs, but also need to be The struggles of solar panel man- employees. The 40-person company • Industrial • Ice Melt able to lower their prices to increase ufacturers are creating ripples in the also on Aug. 1 opened a physical production, he said. supply chain. office in Cincinnati, giving it offices • Food The companies that will survive Americarb, an Ashland-based in four cities across the state. Call For Pricing!! the solar slump are those that are producer of components for high- But, as Mr. Frasz is quick to point Minimum Delivery: technologically advanced, said Dave temperature furnaces used to make out, “It’s not a gravy train yet.” 1Pallet Karpinski, vice president of Nor- solar energy equipment, in the last Tech, a regional technology-based 10 months has lost 95% of its solar Credit issues economic development group. “I business, said Matt Reineke, presi- Dorothy Baunach, partner at Ener- 1-800-547-1538 think we’re going to get back to what dent and CEO of Americarb. G Solution, a solar panel installer in Salt Distributors Since 1966 we’ve always known: The U.S. is going As solar panel manufacturers Mogadore, agrees. have closed their doors, the demand In the absence of government for new equipment dried up. And, incentives, solar installers rely on as those shuttered companies sold solar renewable energy credits — their inventory to surviving manu- credits awarded for each megawatt facturers, the replacement parts hour of solar-generated electricity market also waned, Mr. Reineke that can be sold to utility companies said. The company was forced to — to defray the upfront cost of an cut the work force at its main man- installation, installers say. The cred- ufacturing plant in Ashland by half, its, which can be used to satisfy leaving Americarb with 70 workers an electric company’s solar power locally. requirement, used to sell for $300 “What we’ve done to survive is per credit but now bring in $200 or we’ve gotten into some other areas. less each, Ms. Baunach said. We’ve diversified our business,” Mr. The reason for the declining Reineke said. “We’re finding indus- demand for the credits is a number tries and opportunities where we can of the electric companies — the use our existing capital equipment.” leading purchasers of the credits — The company, which used to rely already have satisfied alternative on solar orders for 75% of its busi- energy requirements mandated by ness, now only fills solar orders as Ohio law. The state requires that all capacity allows. It instead focuses electric companies must generate on producing parts for furnaces 12.5% of their energy from renew- YOUR BUSINESS used to make LED lights and on able sources by 2025, with at least parts used in high-temperature 0.5% of that total being from solar. mining and aerospace equipment. “The renewable energy credit IS MOVING FAST. “It’s too cyclical to count on,” Mr. market in Ohio is pretty soft,” Ms. Reineke said about the solar industry. 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or the past few months, there’s been much speculation on what would become of the 337,000 acres that Chesapeake Energy put up for sale as Fpart of an effort to pay off a mountain of debt that the company ran up to — among other things — buy the mineral rights on those lands. But while that’s the single biggest bundle of mineral rights likely to change hands in Ohio’s Utica shale gas play, it’s not the only one. Companies and investors alike still are jockeying LET THE GAMES for positions to profit from the Utica’s appar- ently vast deposits of natural gas, crude oil and liquids used in the petrochemical industry — CONTINUE and some observers say we’ve yet to see all of the energy companies that will eventually emerge to drill in Ohio. As Chesapeake sells a chunk of its holdings, “We are seeing new names pop up, smaller companies new and old jockey for position companies with names we’ve never heard of,” said Mark Dolezal, president of the Eastern in Ohio’s rapidly developing Utica play Geauga Landowners, a group of about 300 landowners in Geauga County that has put By DAN SHINGLER ■ [email protected] together 17,000 acres for which it hopes to sell mineral rights. See GAME Page 16

FILE PHOTO/ STEPHEN HERRON Shale isn’t going away, so let us guide you through it f you’re sick of hearing about its Ohio facilities or DAN On top of what the additional steel plant expansion we’ve still got shale gas, we’ve got some in-state production, yet SHINGLER energy companies are projects. A billion in new steel some work to disappointing news for you: that’s exactly what already spending to get the gas, plants? Sounds like China. But do. Our coverage of the topic is not has happened because of we’ve also already seen pinch yourself: It’s Ohio. This indus- Ionly increasing, but we’re ramping the shale gas industry here. billions more committed These are not the forecasts of try is still an up to do even more with a new One company alone, or planned for industrial starry-eyed energy hounds. They infant in Ohio, and we’ve magazine called Shale that will Chesapeake Energy, has development that will represent real dollars already being yet to see the real drilling begin. come out in December. invested more than $1.2 support this industry. Shell spent by real corporations that Barring some unforeseen major Why? billion to secure the mineral is planning to spend about have done their homework. And if development, the months and years Because in the two years that rights on roughly 1.3 mil- $3 billion to build a gas a billion dollars’ worth of invest- ahead will be a flurry of activity as Crain’s Cleveland Business has been lion acres of Ohio land. processing plant just ment into Ohio steel mills doesn’t drillers drill, pipeline companies writing about shale gas and oil, Other energy companies have across the Ohio River in Pennsyl- get your attention, you’re probably lay new lines, processing facilities we’ve become convinced that this spent billions more — money that vania, largely to process gas that reading the wrong newspaper and get built and, perhaps, an infra- could be the biggest economic news so far has gone toward payments to Shell believes will come from Ohio. should pick up a copy of the structure emerges to begin using to hit our state since the advent of Ohio farmers and other land and In Youngstown, Houston-based Weekly World News. Only Bat Boy natural gas to fuel cars and trucks the steel or automotive industries. mineral rights owners willing to V&M Star is spending $650 million or mutant aliens likely are to pro- the way that gasoline does today. Yet, people still ask: Can it really sell those rights for energy to build a new steel mill that will vide more shocking headlines to We’d love to tell you all about it, become that big? development. If you don’t think that’s make tubing for the oil and gas anyone who grew up in this Rust as it happens — we plan to write It already has. being felt in the state’s economy, industry — while other mills in Belt state of ours. in this new Shale magazine about It’s hard to remember the last look at the want ads or talk to a Youngstown, Canton and Lorain But, there’s nothing like oil for a the good, as well as any bad and time a major corporation invested pickup truck dealer in a place like plan their own expansions, repre- little rust, right? So, for those of ugly that comes with this industry. hundreds of millions of dollars into Carrollton. senting more than $300 million in you sticking with Crain’s and reality, — Dan Shingler, editor, Shale 20120903-NEWS--14-NAT-CCI-CL_-- 8/30/2012 10:47 AM Page 1

14 CRAIN’S CLEVELAND BUSINESS SEPTEMBER 3 - 9, 2012 Action Management Services Industry suppliers may need API logo Earning the trust of Northeast Ohio professionals for over 30 years. programs. Ohio only has 25 on the Messrs. Durante and Porter said. It Few Ohio businesses same list. And it’s why those Texas takes several months for even the Professional -- Honest certified to make parts companies dominate the industry’s most organized company to pre- To The Point supply chain, even in Ohio. pare for an audit, Mr. Porter said. The API certifies manufacturers Then, nearly all companies have • Executive Search for oil and gas drilling with an audit process similar to things they must correct after the what companies go through to get initial audit. Plus, there’s still a • Professional Placement By DAN SHINGLER • Consulting ISO certifications, said Ed Durante, waiting period once corrections [email protected] president of Houston-based Texas are made before a manufacturer International Engineering Consul- can put the API monogram on its uppose there was a machine tants and an API auditor. It’s a products. ACTION shop owner in Cleveland process that can take months to “We have a prerequisite that Management Services looking for a new market prepare for and up to a year to someone cannot be a licensee un- 6055 Rockside Woods Blvd. Cleveland, OH 44131 into which to sell finely complete — but is worth it in order less they have the quality system Stooled parts that he knows how to 216-642-8777 to sell products to the oil and gas up for three months,” Mr. Porter make as well as anyone. A scan of www.actionmgmt.com industry, Mr. Durante tells prospec- said. “You can’t just turn on the most any paper in the state says: tive supply chain participants. light and be done.” TAKE ACTION TODAY! Shale gas! Companies that go through the There also is a wait for an auditor Surely, this machine shop has all API certification process then can — because there are no API auditors it takes to make and sell whatever participate in the institute’s mono- in Ohio. Across the world, API has this new gas industry needs in the gram program — meaning they about 140 auditors who will con- way of drill bits, valves, brackets, can put the API monogram on duct about 3,300 audits in 2012, hardware, connectors or anything their products and sell them to the Mr. Porter said. But 80% of those else made of metal: industry with the institute’s stamp auditors are overseas, along with Lathes? Check. of approval. the bulk of the world’s oil and gas CNC machines with varying That monogram is becoming as equipment makers and service numbers of axles? Check. valuable in Ohio as it is in Houston providers. The know-how to work with any or Oklahoma City, said Christina “In the past, we have not had a tool or alloy? Double check. Polesovsky, associate director of lot of activity in Ohio,” Mr. Porter Rail and highway access? Check. the Ohio Petroleum Council in said. “The closest auditors we have ISO quality standards? Which Columbus. for the northern area right now are one? Got ’em all. Check. “Many of our members won’t really coming from Toronto.” An API monogram? ... Uh-oh. use anything but API-mono- That situation means manufac- A lot of Ohio manufacturers grammed products,” Ms. turers can’t just call up and ask for don’t yet know what an API mono- Polesovsky said. an audit and expect an auditor to gram is. But many in the oil and gas come out right away — they need industry say they should. Selective service to schedule their audit months in Manufacturers in Houston know To be fair, not everything gas advance of their readiness date if — they have to, because API stands drillers buy is subject to an API they want to get certified quickly, for the American Petroleum Insti- standard or certification. Mr. Porter said. tute, and without those three magic “Not everyone who is a vendor letters on their products, the energy or service provider needs all of this Get a move on industry is about as interested in — it’s the companies active on the So far, however, there’s no pro- buying their parts and pieces as it is well site,” notes Kristy Hawthorne, gram to help manufacturers under- in drilling dry holes. director of membership services for stand either the need for API certi- That’s one reason there are 637 the Ohio Oil and Gas Association, fication or the process of acquiring Texas companies listed on the API also in Columbus. For example, she it. The Ohio Manufacturers’ Asso- website as participants in the insti- said, road construction or landscape ciation does not have a program tute’s licensing and certification companies that prepare a well-site addressing API certification, though before drilling begins often can do it may consider one in the future, so without the certification. said Ryan Augsburger, managing But the standards come heavily director of public policy services into play for manufacturers who for the association. produce pipes, valves, fittings and Likewise, API has not held any other stuff that sits on top of or workshops on the topic for local goes down into a gas well. That’s in manufacturers or service providers, part because the gas industry is though it has sent Mr. Durante and standards-oriented as it seeks to others to at least begin to make ensure safe operations. Drillers say potential industry suppliers aware if it’s a part that can fail and lead to of the need for API certification at a problem with a well, they’ll industry conferences in the area. demand that it be API certified. What will it take to get such pro- For folks such as machine shop grams in place — or, perhaps more owners, an API certification could importantly, to get auditors in be a must-have if they are to break Ohio? Just ask, says Mr. Porter. But into the oil and gas supply chain so far, he says, no one has. developing right outside their doors. “If I knew we were going to have “When companies like Chesa- interest growing in Cleveland, it peake are in the area, they’re only doesn’t take a lot of effort on our part going to buy from approved API to do auditor qualifications,” Mr. licensees. They’re going to ask that Porter said. “We will definitely recruit the manufacturer stamp that mono- if we need to put a hard charge on gram onto the equipment itself,” getting additional auditors.” said Reid Porter, director of global Convincing API to mobilize an industry services for the American auditor recruitment effort might Petroleum Institute in Houston. require more action from economic developers, policy makers and the Here’s the catch Low Maintenance Flooring Ohio Manufacturers’ Association As it is, drillers say they still buy — and drillers say they hope that most of their critical components action takes place. They’ll get by, for High Traffic Areas. from places such as Texas, where whether it happens or not, but it companies already have the API would be better for Ohio and the  © ©    ©   monogram in place and are well energy industry if steps were taken  ©    versed in API standards. It’s still to bolster the local supply chain by early as far as drilling goes in Ohio, getting more API certifications in and the supply chain here is only place, industry insiders say. See how affordable a Nature Stone floor really is! beginning to ramp up. Both “If there’s a message in your drillers and local economic devel- story that Ohio needs to under- 6FKHGXOH

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16 CRAIN’S CLEVELAND BUSINESS SEPTEMBER 3 - 9, 2012 Game: Major drillers enter the fray, for fear of losing out continued from PAGE 13 existing independent oil companies OHIO COUNTIES AFFECTED BY type of investment in the Utica,” Indeed, new players not only are such as Beusa, the Utica also is Mr. Stengell said. entering the Ohio Utica, but are attracting interest from other par- CHESAPEAKE’S SALE OF UTICA LEASES Major oil companies probably being formed to do so. Texas-based don’t need the Utica to keep their ties, ranging from private equity These 19 counties are affected by Chesapeake’s Beland Energy Utica LLC, for one, production levels up, and what they groups in Houston that hope to moves; the shaded area indicates the scope of the was created in May by Beusa Energy produce here would only be a small buy up rights and contract with Utica shale, while the orange area indicates areas principals, who have had success part of their global volume. But at other companies to develop wells, that contains drilling for shale gas in the Hay- the same time none of them want to Big Oil — companies such as wet gas. nesville shale play, which includes BP, Exxon and Chevron that dwarf to be seen as missing out on a play parts of Arkansas, Louisiana and even the Utica’s giant, Chesapeake as highly publicized as the Utica is East Texas, said Gregory Brown, the Energy, in size and resources. in the U.S., he said. general counsel for both Beland By far the largest leaseholder in “They don’t want to sit on the and Beusa. They hope to repeat the Utica with 1 million acres sidelines and then find out three their success in the Utica, he said. under lease — even after it sells years from now that the results are “The Utica is an interesting area 337,000 acres — Oklahoma City- better than expected and the valua- and an interesting play and people based Chesapeake has a market tion is better than expected,” Mr. go where opportunities are,” Mr. capitalization of about $13 billion. Stengell said. Brown said. “And lots of people see Small potatoes compared to, say, Mr. Stengell, who is marketing potential in the Utica.” BP, which has a market cap of leases on about 175,000 acres in Mr. Brown declined to say how about $134 billion — and a pimple Ohio, said he’s aware of at least one much capital Beusa, a privately compared to Exxon Mobil’s moun- big producer that is hoping to buy held company, has to spend on tainous market cap of more than the mineral rights on 100,000 acres Utica leases or for drilling here, but $400 billion. in the Utica, though he declined to said the company would like to At least some of “the Bigs” are name the company. But that’s not a initially acquire the mineral rights showing increased interest in the big deal in the world of Big Oil, no to 15,000 to 20,000 acres here. If Utica as well, said Tom Stewart, matter how many headlines those acres prove profitable, it executive vice president of the it grabs in Ohio. likely will try to buy more, he said. Ohio Oil and Gas Association in “That’s a $200 mil- That’s not going to be a cheap Columbus. Most notably, BP has lion to $300 million in- ticket in at this point. Mineral begun to expand its interest, Mr. vestment. But for a BP, rights in the Utica have skyrocketed Stewart said. that’s not something to even in price in the last two years, and “BP has moved out from around write a press release about,” Mr. currently fetch between $2,000 and the Youngstown area and Trumbull Stengell said. $5,000 per acre. County areas,” Mr Stewart said. “I Just the beginning Even at the low end of that price hear they’re now (buying leases) in range, the mineral rights alone on 10 counties.” Crain’s in an email. interesting to see There are other ways that mineral 15,000 acres would cost $30 million BP’s Ohio spokesman Curtis But Mr. Stewart thinks the major whether (Big Oil is) here two years rights in Ohio might still change — which does not include the Thomas largely confirmed that, oil companies might be more inter- from now. These are companies that hands, Mr. Stengell predicts: via joint roughly $6 million to $10 million though he declined to say how much ested in the Utica if Ohio’s tax situ- have choices worldwide.” ventures between companies or outright acquisitions of small compa- that Utica drillers say they currently acreage BP has now acquired in ation was more predictable. He’s a They want to stay in the game are spending to drill each new well. Ohio, citing the Utica’s “extremely staunch opponent of Ohio Gov. John nies by larger ones that are buying A 15,000-acre parcel could support competitive environment” of late. Kasich’s current effort to increase Big companies such as BP, Exxon them primarily for their Utica rights. about 23 well pads, at 640 acres per “BP has recently expanded our severance taxes on oil and gas or Shell have more options, because Some companies, including pad, with each pad containing as acquisition efforts in Trumbull and production from the Utica shale. of their size and international Chesapeake, already have done many as six wells, drillers say. eight other counties including “I don’t think some of the big com- presence, Mr. Stewart explained. this. In January, Chesapeake sold a While even the Utica’s biggest 25% stake in more than 600,000 Crowded field Carroll, Columbiana, Guernsey, panies are going to do a whole lot un- Harrison, Mahoning, Stark and til they have regulatory and tax cer- current exploration companies are Utica acres to the French-based Aside from new ventures by Tuscarawas,” Mr. Thomas told tainty,” he said. “It’s going to be largely confined to domestic pro- Energy company Total, for $2.3 bil- duction, Big Oil has the world to lion — recouping all it had spent to choose from when it decides where acquire rights on 1.3 million Utica to invest and drill, Mr. Stewart said. acres in that one transaction. One need only look at recent Mr. Stengell predicts that other headlines to confirm his logic. super-independents — the term Shell, for example, announced in now being used to describe the August that it plans to invest $1 bil- Utica’s large drillers — will engage lion a year in shale gas exploration in similar transactions that allow in China, where it’s also building a them to access new capital with $12.6 billion refinery and petro- which to develop wells, while still chemical processing plant. Here, controlling their holdings. meanwhile, folks are waiting to see Some companies will probably get how Shell proceeds with its plans to offers from larger rivals that they just build a $3 billion processing plant can’t refuse, Mr. Stengell predicts. on the Ohio-Pennsylvania border. “A company comes out and Big Oil also tends to like big acquires 1,000 acres, or 10,000 acres. acreage, Mr. Stewart said, and Then, they drill 10 wells or 15 or 20 major producers are not as likely as and production looks really good ... small, independent drillers to go then a big company like Anadarko house to house cobbling together (Petroleum) or even a major says, acreage one small farm at a time. ‘Let’s get in there,’ and buys them But there still are some large up,” Mr. Stengell said. “That’s blocks of mineral rights available in where the getting really gets good.” Ohio. Aside from groups such as the Some companies already have Geauga Landowners, of which there gained their Utica acreage via such are at least several, there also are deals, and more will do so in the professional marketers such as future, Mr. Stengell predicts. Steve Stengell working with groups But whether that happens, one of landowners that include not only thing seems certain — we’ve not seen farmers, but old-line energy the last of large lease transactions companies that have spent decades among energy companies in the acquiring mineral rights in Ohio. Utica, nor have we likely yet seen the They often paid a pittance for arrival of all of the drillers that those rights — as little as $5 an acre, eventually will try their luck in Ohio. say some producers — and now Mr. Stewart said he only has to they own rights to shale gas that look to Shell’s decision to invest $3 requires high-tech and expensive billion in a processing plant to drilling techniques. So they sell those prove to himself that the Utica is a deep rights to other, larger drillers, bona fide major oil and gas play explained Mr. Stengell, president of and a major blip on the industry’s Kentucky-based Encore Energy and radar screen nationally. a longtime participant in Ohio’s “You’re not going to invest that conventional gas-drilling industry. kind of money without some cer- “My belief is that Big Oil is going tainty that the feedstock (the Uti- to continue to come into the play, ca’s wet gas) is going to be there,” because they want to make some Mr. Stewart said. ■ 20120903-NEWS--17-NAT-CCI-CL_-- 8/30/2012 2:17 PM Page 1

SEPTEMBER 3 - 9, 2012 CRAIN’S CLEVELAND BUSINESS 17

UTICA SHALE’S MAJOR PLAYERS Some names to know in terms OHIO/PENNSYLVANIA UTICA SHALE NET ACREAGE of energy companies staking a claim to the Utica Shale: Here’s a look at various companies’ acreage positions in the Utica shale. The information represents known acreage posi- tions, as there are a number of other companies for which complete information is not available.

Company Number of acres Company Number of acres Chesapeake Energy 1,000,000* Devon 157,000 ■ Hess Corp.: Another “super- independent” energy company, EnerVest** 760,000 Total 154,750 New York-based Hess has a market cap of about $17 billion and entered Chevron 600,000 Consol Energy 100,000 ■ Chesapeake Energy: Based in the Utica with a splash in fall 2011, Oklahoma City, Chesapeake is the when it spent $593 million to acquire Anadarko Petroleum 240,000 BP 84,000 nation’s second-largest producer of the mineral rights to acquire a natural gas and is the 800-pound 50% stake in 200,000 acres then Hess Corp. 200,000 ExxonMobil (XTO) 75,000 gorilla in the Utica. The company controlled by Consul Energy. Since moved in early to begin buying up then, Hess has reportedly upped its Range Resources 190,000 Rex Energy 72,200 leases and as of the beginning of stake in the Utica and today has this year had acquired the mineral mineral rights to about 185,000 acres. SOURCE: PUBLISHED REPORTS; OHIO DEPARTMENT OF NATURAL RESOURCES; COMPANY WEBSITES rights on 1.3 million acres in the — Dan Shingler * — DOES NOT INCLUDE 337,000 ACRES FOR SALE; ** — ESTIMATE play. The company also ran up a mountain of debt via this and other costly activities, causing it to attempt to divest its assets, including the mineral rights to 337,000 acres of Ohio land. Its CEO, Aubrey McClendon, has described the Utica play as “the biggest thing to happen to the state economically since the plow.” It still will have a million acres of the Utica under its control after it completes the sale of 337,000 acres to raise cash and pay down its debt.

■ EnerVest/EV Energy Partners: EnerVest is a Houston-based explo- ration company, and EV Energy Partners is a unit formed by EnerVest in 2006 for long-term acquisition and TAPPING INTO development of gas and oil resources. The group reportedly holds leases OPPORTUNITY on about 760,000 acres in the Utica and has just begun drilling here, with one well completed in Stark County and another in Carroll County. So far, the company has said the wells have exceeded their expectations for oil and gas produc- tion.

MY BENESCH MY TEAM Benesch Shale Oil & Gas Industry Team: Singular resources for a multifaceted opportunity Helping our clients navigate the complexities and exploit the potential of shale oil and gas exploration and drilling, including:

■ Chevron: A “major” in the • Real Estate—mineral rights, leasing, acquisition, sales world of Big Oil, Chevron controls • Environmental—permitting, licensing, compliance, disposal the mineral rights on about 600,000 Utica acres. However, the • Transportation & Logistics—carriage, heavy haul, permitted OD and OL loads energy giant, with a market cap of more than $200 billion, has so far • Public Finance—financing, capital markets, bond counsel been more of a buyer than a driller in Ohio. It plans its first well some- • Public Law—legislative, regulatory, tax time in September, in Harrison County. • Private Equity—partnerships, joint ventures, venture capital, financing • Corporate—supply chain ■ Anadarko Petroleum: One of the so-called “super-independents,” • Construction—infrastructure including roads, bridges, supply chain facilities Anadarko is big for an independent energy company, bigger than Chesapeake even, with a market cap of more than $34 billion. It The potential is unprecedented. reported on July 31 that it has three wells in production, three near How will you tap the opportunity? completion and one that was just being drilled. While optimistic, the company has said it will wait until 2013 to further discuss its land position in Ohio. It owns or has a stake in mineral rights for about 300,000 acres in the play, including Cleveland • Columbus • Indianapolis • Philadelphia • Shanghai • White Plains • Wilmington • www.beneschlaw.com/shale about 240,000 acres that it directly controls. 20120903-NEWS--18-NAT-CCI-CL_-- 8/30/2012 2:46 PM Page 1

18 CRAIN’S CLEVELAND BUSINESS SEPTEMBER 3 - 9, 2012 Severance tax talks turn tough CreatingValue. Kasich seeks addition SEVERANCE TAX RATES IN PERCENTAGE TERMS You Value to state’s take, but one group says he is ‘not Opportunity... negotiating anything’ By DAN SHINGLER WeWe ValueValue thatthat too.too. [email protected] hio Gov. John Kasich appears to be going directly to big oil and gas producers to negotiate some sort of Ochange in how the state taxes oil and gas, as relations between the RESOURCES FOR Kasich administration and the Ohio THE FUTURE Oil and Gas Association seem to have become sour, if not downright acrimonious. would single out his industry and Or, as one statehouse observer stifle a sector that is buoying Ohio’s ON THE WEB who asked to remain anonymous economy. said: “It’s gotten ugly, and it appears Mr. Stewart said he did not ques- For an opinion piece on the to be getting personal.” tion Gov. Kasich’s motives. He said proposed severance tax by Thomas Talking to either the governor’s he thinks the governor wants to E. Stewart, executive vice president office or OOGA only bolstered that take action that will help the state of the Ohio Oil and Gas Association, claim. as a whole but does not understand go to www.CrainsCleveland.com/ Meaden & Moore helps you maximize Asked whether the governor was the ramifications of his proposed againsttax. negotiating with the industry or tax increase. Ohio’s shale opportunity by navigating showing any flexibility on the topic “They intend to raise $500 million of raising severance taxes on oil and from that (tax increase), and it will Later this month, BP officials will the industry’s complex tax, business and gas produced in Ohio, OOGA exec- have no impact on drilling? Anyone make a presentation to the governor’s utive vice president Tom Stewart who believes that is someone who office, outlining what the company compliance issues. scoffed at the suggestion that Gov. has never made a risk investment in thinks would be some best practices Kasich was in a bargaining mood. their life,” Mr. Stewart said. in terms of oil and gas taxation at “He’s not negotiating anything the state level, along with some with anyone,” said Mr. Stewart, Up for negotiation practices that the industry thinks Call 330.264.7307 for a when asked of reports last month Those are tough terms when are too complicated. BP’s senior that the governor was reaching out directed at a former finance indus- director of government and public complimentary consultation. to the oil and gas industry to try to try executive such as Gov. Kasich, affairs for Ohio, Bruce Johnson, will find a compromise on the issue of and the governor’s office had a spearhead the company’s commu- severance taxes. response that was just as harsh. nications efforts on the issue, Mr. The governor wants to increase Kasich spokesman Rob Nichols said Fleming said. severance taxes on oil and gas to that Mr. Stewart was mistaken with Reached late last week, Mr. www.meadenmoore.com fund a decrease in the state’s regards to the governor not negoti- Johnson said BP regional president income tax, while Mr. Stewart is ating with anyone — he’s just not Tim Harrington met with Gov. opposed to new taxes that he says negotiating with OOGA. Kasich on two occasions and that “There’s actually been quite a the governor has asked BP for input, bit of conversation between the given its experience operating in administration and some of the oil multiple states. and gas companies,” said Kasich Messrs. Johnson and Fleming spokesman Rob Nichols. “It sounds both said that BP is not out to avoid as if Mr. Stewart is not as plugged in a tax increase altogether, but wants as he was perhaps before.” any changes to result in a simple tax So who then, is the governor code that won’t be a burden to talking to as he seeks advice and comply with or be so expensive that industry input on his plans for the it makes it unprofitable to drill in severance tax? BP, at least for one, Ohio. It and other drillers also are said Terry Fleming, executive direc- opposed to a tax structure, such as tor of the Ohio Petroleum Council the one currently put forth by Gov. in Columbus. Kasich, that would tax different “I’m pretty sure the governor’s resources at different rates. spokesperson is referring to BP,” “We considered it not unwork- said Mr. Fleming, noting that the able, but very difficult. That’s the Business and governor’s office met with BP Group message that went back to the October 30–31, 2012 s Attend Ohio’s Community Sponsors: CEO Robert Dudley when Mr. administration. It’s too much like largest state-wide s Columbus2020 Dudley was visiting Ohio in July. Arkansas — and in Arkansas, it’s Greater Columbus conference and s &IRST%NERGY&OUNDATION Convention Center s +ENT3TATE5NIVERSITY expo focused on s MAGNET FROM CRAIN’S BLOGS Columbus, Ohio driving progress in s /HIO&UEL#ELL#OALITION A recent blog entry on Crains of its current base in Ohio,” said advanced energy s 1UASAR%NERGY'ROUP Cleveland.com and Crain’s Joseph A. Stanislaw, founder of the s 2OCKWELL!UTOMATION weekly Energy newsletter: advisory firm The JAStanislaw Group WIRE-Net LLC, an independent senior adviser to s Explore real s A Houston company, Hilcorp Energy Deloitte’s energy and sustainability Presented by world commercial Promotional Sponsor: Co., since June has stepped up practice and a member of several significantly its pursuit of oil and energy-related boards. opportunities gas leases in eastern and southern “Companies are moving north to grab Mahoning County, according to a story land that doesn’t already have holds,” Media Sponsors: from The (Youngstown) Vindicator. Mr. Stanislaw told The Vindicator. Produced by Engage with leaders s Of the 444 leases signed by Greg Lalicker, president of Hilcorp, on the cutting edge Hilcorp in Mahoning County, 433 of told the newspaper, “When you are in of advanced energy them — that is, all but 11 — have the early stages of a play, companies been filed in 2012, and most of those are really trying to get a sense of technologies have come this summer, the newspa- what all is going on. … Whether this per reports. potential turns out to be more liquids The expansion of the oil and gas or more gas will only be known once business into both Mahoning and we have the results from drilling and advancedenergyexpo.com Trumbull counties “is just a natural production. That is why we are here expansion of the industry to the north — to figure that out.” 20120903-NEWS--19-NAT-CCI-CL_-- 8/31/2012 1:35 PM Page 1

SEPTEMBER 3 - 9, 2012 CRAIN’S CLEVELAND BUSINESS 19

administration. It’s too much like Arkansas — and in Arkansas, it’s difficult to determine who owes Register for Crain’s shale panel discussion Sept. 20 what,” Mr. Johnson said. Instead of a tax scheme that has rain’s Cleveland Business, serves on the appropriations, one rate for gas, another for oil and in partnership with the consumer affairs, ethics, judiciary, a third for other hydrocarbons, BP Canton Regional Chamber liquor control and rules committees. will urge the governor to instead of Commerce, is hosting a Rep. Ellis is the sponsor of Penn- push for a simple BTU tax, Mr. Cpanel discussion Sept. 20 analyzing sylvania’s shale well impact fee Johnson said. Such a tax would be the tax issue as it relates to shale legislation, and he will talk about imposed on the energy value of the gas. that state’s shale development resources taken from the ground in The event, “Shale Drilling and experience and how the legislation Ohio, as expressed in BTUs — or Taxes: What’s Fair?,” will be from was developed and discuss its Ellis Kaminski James Bennett British Thermal Units, a measure 7:30 a.m. to 10:30 a.m. at the current impact. of thermal energy — whether the McKinley Grand Hotel in Canton. The panel discussion aims to Regional Chamber of Commerce. County engineer. resource is dry gas, wet gas, oil In addition to the panel discussion, provide an array of perspectives in Representing the pro tax side on For more information, go to or something else, Mr. Fleming it will include a breakfast and net- finding the proper balance between the panel will be a representative www.crainscleveland.com/shale said. working portion and a keynote a tax structure that benefits Ohio from Gov. John Kasich’s office; on tax or contact Jessica D. Snyder, ‘We’re not afraid to pay our speaker. while ensuring a reasonable cost the con side will be Jerry James, assistant events manager, at 216- share’ The keynote speaker will be Rep. structure for shale oil businesses. president of Artex Oil Co. and pres- 771-5388 or [email protected] Brian Ellis of the Pennsylvania The panel will be moderated by ident of the Ohio Oil and Gas Asso- Tickets must be purchased in For its part, the Ohio Petroleum House of Representatives, who was David Kaminski, director of energy ciation. Serving as the neutral pan- advance of the event; walk-ins will Council is not universally against elected in 2004. He currently and public affairs for the Canton elist will be Keith Bennett, Stark not be accepted. any tax increase on oil and gas pro- duced within the state, but believes it is too early to be able to calculate what the rate of any new tax would be. The industry needs to better understand both what other future tax rates will be, in addition to the severance tax, and also have a better handle on the profitability of its Ohio wells. With the taxes that all businesses pay a subject of debate, and only 12 shale wells producing in Ohio so far, it’s simply too early for the industry to evaluate its position, Mr. Fleming said. “We’re not anti-tax and we’re not afraid to pay our share, we just want to know what we’re dealing with,” he said. As for OOGA, the relationship between it and the Ohio Petroleum Council is a good one, Mr. Fleming said, but the two groups represent different constituencies within the industry. The Petroleum Council, part of the American Petroleum Institute, represents mostly big, multinational energy companies, while OOGA tends to represent smaller producers with a long his- tory in Ohio. The governor’s proposed sever- ance tax increase would affect wells being developed almost exclusively by larger companies, but the OOGA members have a definite stake in those same wells, Mr. Fleming said, because many of Ohio’s small pro- ducers sold mineral rights to big producers. That allows companies such as BP to drill for shale gas and oil, while making royalty payments to the smaller producers who sold them mineral rights — and puts them both in the same boat in terms of severance taxes. “A lot of Tom’s members have sold their rights to my members,”

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20 CRAIN’S CLEVELAND BUSINESS SEPTEMBER 3 - 9, 2012

face, have higher taxes than Ohio — and found that there are mitigating Drillers in Ohio face tight regulations, relaxed taxes circumstances in many of those states that result in taxes that are EVERYTHING’S BIGGER IN TEXAS, INCLUDING GAS TAX effectively lower, especially for hor- Report: Some states with higher rates still izontal drilling of shale gas wells The oil and gas industry says equals a 7.5% tax. Texas produces that produce gas only after they are lure producers; industry opposes increase raising taxes on drillers could slow more shale gas than any other state. fracked, like the wells in Ohio. the pace of exploration in Ohio. How- ■ Oklahoma charges 17.2 cents, Texas, for example, charges its base By DAN SHINGLER ducing states, at least in terms of ever, a recent report from Resources or 7%. The state has 44,000 gas tax rate on drillers accessing con- [email protected] its regulations. For example, Ohio for the Future, a nonprofit in Washing- wells and is the third-largest producer ventional deposits of oil and gas, joined many other producing states ton, D.C., shows that some states of shale gas. but discounts the rate significantly hio has some fairly strict by requiring that groundwater with high gas taxes are big oil and ■ West Virginia charges 12.3 cents for high-cost shale gas, he said. regulations, but very low be tested for methane and other gas producers. per mcf, about 5%. The state has Other states have similar mitigating taxes, when it comes to contaminants, the report finds. ■ Texas charges 18.45 cents per 52,000 conventional gas wells. circumstances, Mr. Stewart said. how it’s handling the In some areas, Ohio appears to thousand cubic feet (mcf) of natural ■ Ohio charges 2.5 cents, about For example, Michigan has a tax Ogrowing shale gas industry in com- have adopted even more stringent gas produced. At $2.46 per mcf, that 1% of the gas’ market value. rate of 5%, which is about five times parison to other states, a recent regulations than some other states. higher than Ohio. report finds. For instance, while nearly all states “But, what we don’t often read is But all states are not the same in require that drillers encase their yet to really begin drilling its new However, the report shows that that a producer paying that 5% in terms of their geology, the need to well bores in steel and cement near shale gas wells in earnest, either, some states with the highest sever- Michigan gets to offset that against protect local populations and the the surface and down through fresh- Mr. Richardson said. The study ance taxes also have the highest his normal state business taxes. … way they approach and justify their water aquifers, Ohio also requires counts all of Ohio’s wells, even con- number of wells drilled. So it’s a fair deal,” Mr. Stewart said. tax environments, say the report’s that drillers use casings on their ventional wells that have been Texas has among the highest Other states should not be used author and a representative of the well bores for 1,000 feet at the drilled in Ohio for about the last overall tax rates on oil and gas pro- as examples, because their tax Ohio Oil and Gas Association. bottom of the well. That’s twice as 100 years. Including those in the duction but leads the nation with strategies aren’t working, he said. “Conditions are different in dif- much as the 500 feet of casing mix, Ohio already has nearly 35,000 more than 95,000 total gas wells “Arkansas put in a severance tax ferent states,” said Nathan Richard- required in Pennsylvania, Louisiana wells to monitor, the report found. and twice the shale gas production in 2008, gave a small abatement of any other state. But Texas is a period of a couple of years — and son, a lawyer and resident scholar or California, the report finds. Taxing issues at the Washington, D.C.-based non- Also, in the area of disclosure, very large state in terms of its land ever since then, the drilling rate has profit Resources for the Future, Ohio is one of only five states that In the area of taxes, however, the area. But even relatively small West dropped by as much as 50%,” Mr. and one of the authors of the July require drillers to disclose both the report seems to indicate that drillers Virginia, with a tax rate of 12.3 cents Stewart said. report. “Let’s say you are looking at volume and the concentrations of are getting a very good deal in Ohio, per mcf, or about 5% of the total “And West Virginia? I’m not sure how deep a well casing has to go to chemicals they use in their frack- which currently taxes the produc- proceeds from the sale of its gas, why anyone in Ohio public policy protect groundwater — what you ing fluid — the mixture of water, tion of gas at 2.5 cents per thousand has more than 52,000 gas wells, all would want to mimic the state of might be looking at could just sand and chemicals that drillers cubic feet (mcf) of gas produced, or of them old-style conventional West Virginia,” he said, noting that reflect how deep the groundwater pump at high pressure into a well about 1% of the gas’ market value. wells, data in the report show. drillers are ignoring parts of West is in different states.” to fracture the shale and release its That’s much less than the 18.45 Oklahoma, similar in size to Ohio Virginia, while drilling in nearby Mr. Richardson and his colleagues natural gas, oil and other valuable cents per mcf, or 7.5%, that Texas and with taxes about seven times Pennsylvania is going strong. set out to compare taxes and regu- resources. charges with its severance tax, or higher, still has 44,000 gas wells and Pennsylvania charges drillers an lations across the states, with an “If you think disclosure is a good the 17.2 cents per mcf (7%) that Ok- is the third-largest producing state impact fee to compensate local emphasis on those that are partici- idea, then Ohio is ahead of most lahoma charges, the report found. in terms of shale gas, the report finds. governments for wear and tear on pating in the nation’s so-called shale other states,” Mr. Richardson said. The study used a price point of Data like that might be helpful to their infrastructure but has no sev- gas boom. They released their initial Ohio also has among the lowest $2.46 per mcf in order to convert state legislators as they try to decide erance tax, he said. “That really findings in July, updating them at number of wells per state inspector. absolute taxes to percentages. whether to back their governor’s tax hasn’t worked out for the great the end of that month to include Each Ohio inspector is responsible Drillers, who are fighting Ohio request. But both Mr. Richardson state of West Virginia,” Mr. Stewart the provisions of Ohio’s latest leg- for overseeing between 31 and 140 Gov. John Kasich’s ongoing efforts and Tom Stewart, executive vice said. islation on oil and gas drilling, Sen- wells. In some other producing to increase severance taxes in Ohio, president of the Ohio Oil and Gas Mr. Stewart said he’s fine with ate Bill 315, which took effect Aug. 1. states, such as Texas and Oklahoma, have argued that a tax increase would Association, warned that comparing Ohio’s regulations. Indeed, he con- Geological variations aside, the one inspector monitor more than have a chilling effect on drilling in the how states tax gas drilling isn’t always tends, they are the result of about a report shows that Ohio has caught 1,000 wells, the report stated. state, pushing companies to move as simple as just comparing rates. century of drilling in Ohio and rep- up with many other major gas-pro- That’s not just because Ohio has their rigs to other states. “There may be a lower tax on ini- resent challenges that were met tial production in some states (such along the way with new laws that as Texas),” Mr. Richardson said. often were supported by the oil and “The problem with that is, on shale gas industry. gas wells, that’s a substantial part of But higher taxes are something your tax revenues.” the industry remains dead set He said that’s because shale gas against, he said. A tax of just a few wells tend to produce more gas per percentage points on a drillers’ gross day initially, right after they are receipts could end up being a tax drilled and production has begun, on as much as half of their profits, than they do months or even days because margins are tight, Mr. and weeks afterward. Stewart said. “And anyone who believes that Scratching the surface taking half of the net profits won’t Mr. Stewart said he’s looked at have an impact on the drilling rate several other states that, on the sur- is nuts,” he said. ■

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SEPTEMBER 3 - 9, 2012 CRAIN’S CLEVELAND BUSINESS 21 Obama, Romney laud potential, but EPA action uncertain

By TERRY UHL about the positive opportunities from auction in December. [email protected] from shale development and its However, the U.S. Forest Service More at stake in Brown, Mandel race impact on manufacturing, although announced last week it is lifting the ecause Ohio is a swing the plan has no specifics on the fracking ban in the Wayne National By TERRY UHL second Obama administration state in the 2012 presidential Marcellus or Utica shale fields. Forest. Thirteen sites in the forest [email protected] would lead to U.S. Environmental election, both Republican It does proclaim, “America’s will be auctioned later this year for Protection Agency regulation of nominee Mitt Romney and natural resources can be a long- drilling by 2016. Ohio shale experts evelopment of the Utica hydraulic fracturing, which would BPresident Barack Obama will term competitive advantage for note the forest is not a “hot” area for shale field and related take the responsibility away from continue to visit the state regularly American manufacturing and their shale development right now. regulatory issues are of the states. between now and Election Day. development is the key to a rein- The Obama administration also more intense debate in the Challenger Mandel of Lyndhurst And while they may speak of the dustrialization of the U.S. economy.” has made plans to open more DU.S. Senate race between incumbent is very specific: “I will do everything I national energy security benefits The Romney position paper does offshore tracts for drilling, albeit Sherrod Brown, a Democrat from can in Washington to keep bureau- that responsible development of propose a “State Energy Develop- not until 2017. Drilling in Lake Erie Avon, and his Republican chal- crats out of the way. I trust the state the Utica shale field can bring, it ment Council, where states can continues to be banned on the lenger, Ohio Treasurer Josh Mandel. of Ohio more than I do the federal may not be until after the election work together … to share expertise American side by federal and state Both candidates acknowledge government.” Sen. Brown’s office that Ohioans find out if the U.S. and best management practices.” laws. No candidates have discussed the huge economic and energy did not respond to a question about Environmental Protection Agency President Obama early in 2012 reversing those bans. Natural gas advantages of Ohio’s geology. his position on EPA regulation of will begin to regulate more directly released a jobs report with a section wells have been drilled on the “Everywhere I travel in the state, fracking. the hydraulic fracturing process that credited the growth in natural Canadian side of Lake Erie since the residents are telling me how our If the shale development pans vital to shale field development. gas production resulting from late 1950s and produce approxi- leaders need to make sure we take out, Mr. Mandel said, “Twenty During his 2012 State of the shale field development with the mately 30 million cubic feet (MMcf) advantage of the shale opportunity years from now, Ohio will be one Union address, President Obama rebound in U.S. manufacturing. per day. (During a normal January, while protecting our air, water and of the leading states in the country backed natural gas drilling as a The section noted that with appro- the average Ohio home uses about land. I know, and they know, for energy exploration and produc- clean energy source. Shortly after, priate regulation, shale field devel- 18 MMcf of natural gas.) responsible development can tion. And it will have revitalized he signed an executive order that opment could be of significant But the rumor of federal EPA improve our tax base, lower our our manufacturing industry, as we led to a mid-April announcement benefit to the U.S. economy. The regulation of fracking — the process energy costs and improve our are already beginning to see in the from the EPA on rules to be imple- report remains among the few spe- of piping water, sand and chemicals national security,” Mr. Mandel steel category with V&M and U.S. mented in two years to control cific comments from the adminis- at extremely high pressure into wells said in an interview. Steel.” emissions from wells as the fracking tration on shale gas development. to fracture the shale rock thereby Sen. Brown’s focus has been to In Sen. Brown’s view, “As shale process ends. To date, there has One of the more controversial releasing the oil and gas — contin- find ways to use the shale opportu- development moves forward, we been no announcement on EPA aspects of the Romney energy plan ues to go unanswered by the Obama nity to create more Ohio jobs. must protect our water supplies, regulation of fracking chemicals. is his desire to give states more administration. In a visit this summer to the ensure that local communities are Both presidential candidates regulatory authority on energy Mr. Romney’s plan doesn’t Eastern Gateway Community Col- consulted, and take every precau- speak glowingly of the prospect of production on federally owned land. specifically address EPA fracking lege in Jefferson County, he talked tion to safely dispose of waste. We Utica shale oil and gas entering The Obama administration has chemicals regulation issue either, with officials and students about need to be sure that local and the U.S. energy picture. reduced the number of acres of but says a Romney administration their government-funded ShaleNet county governments aren’t stuck Mr. Romney’s recently released federal land available for energy ex- would “strengthen environmental jobs training program and discussed with the tab for roads or cleanup. energy white paper, titled “For a ploration by more than 15%, includ- protection without destroying his legislation to aid Ohio’s unem- But make no mistake, these jobs Strong Middle Class: Energy Inde- ing at one point more than 3,000 jobs, paralyzing industry, or ployed workers to get retrained for could be a real boost to Ohio’s pendence,” lists a number of quo- acres of southern Ohio’s Wayne Na- barring the use of resources like jobs in the shale industry. economy,” he said in a written tations from recent news articles tional Forest that were withdrawn coal.” ■ What is not clear is whether a statement. ■

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Our Energy & Natural Resources team includes attorneys experienced in energy, exploration and production, regulatory and environmental law, real estate and government relations. Calfee assists clients in meeting the legal challenges presented by the dramatic growth in drilling to and producing from the Marcellus and Utica Shales.

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22 CRAIN’S CLEVELAND BUSINESS SEPTEMBER 3 - 9, 2012

restrict oil and gas drilling SHALE’S RIPPLE EFFECTS through zoning, noise or other measures. That year, however, You would be hard-pressed to find an abound for those doing business in Northeast GOVERNMENT the state Legislature took away local control over the permit- industry or sector that has not felt the effects Ohio. ting process, and, because of of the region’s shale boom in some way. Here’s a look at just a handful of the ways a 1965 law, that opened up From real estate and manufacturing to mar- that shale is having a ripple effect throughout urban and suburban areas for The Ohio oil and gas rush has drilling. keting and technology, opportunities in shale the region’s economy. had an unwanted impact on many Depending on the depth of a local communities, places that proposed well, drillers need mineral “It’s not going to be easy to get efficient way to deploy that capital are used to regulating who gets to rights to a footprint of as much as those (dollars) turned around in into your market,” he said. build what, and where, within their 40 acres around a well before they loans to the community,” said The Ohio Credit Union League is boundaries. can start pumping. When PEP FINANCE Patrick Harris, an Ohio Credit Union planning a seminar this fall to Take Stow, where drilling for oil Drilling realized it was going to go League spokesman. He cited as an assist credit unions in developing and gas — vertically — has been an deeper than planned on its Stow example one $20 million-asset ways to deploy these large deposits, uncontroversial fact of life around well, it sought to expand its foot- institution whose top executive Mr. Harris said. the Summit County community for print with the 0.3-acre parcel expects as much as $3 million to Another in the finance sector decades. But now, the city has owned by city of Stow. Theirs is the industry that han- come through the door in the next whose oil and gas-related business decided it rather would forgo a Though Stow has turned PEP dles the most anticipated by-prod- few months. is building is Cleveland investment $20,000 signing bonus and future Drilling down, the company has the uct of the Utica shale play: cash. Bankers anticipate that com- banking firm Western Reserve royalties on land it owns than allow 1965 law — known as the mandatory Bankers, financial advisers and mercial loan growth will catch up Partners LLC, which is advising another well to start pumping. pooling law — on which to fall back. wealth managers are hosting free with deposits as businesses seek more companies that make and After several heated city council Under the law, if a driller con- workshops and, in some cases, going the means to build infrastructure service equipment necessary to meetings, the city has decided not tracts with the owners of at least door to door to attract deposits and and buy equipment to get oil and find, pump, transport and process to give PEP Drilling of Mount half the required acreage, a single market themselves as the experts gas to the market, said James the gas, said Mark A. Filippell, Vernon, Ill., land it needs to start property owner, or even several landowners and companies need to Thurston, spokesman for the Ohio managing director. pumping gas from a horizontal well property owners, can’t stop the manage new wealth. Bankers League. “People sell businesses for two it drilled on the land of a Stow drilling by refusing to join the pool. Even as bank and credit union But until things even out, capital reasons: greed and fear,” Mr. church near the city’s land, said Instead, if a landowner balks, the executives work to rake in deposits, planning is a bigger job, said Jeff Filippell said. “Greed is when Councilman Michael Rasor. producer can ask an Ohio Depart- some institutions, particularly Quayle, senior vice president and things look very good, and right “I really don’t have a problem ment of Natural Resources advisory smaller ones, are challenged when general counsel for the bankers now for many of these companies, with (drilling),” Mr. Rasor said in a panel to force the pooling, giving that actually happens because league. things look very good.” telephone interview. “But one thing the driller the mineral rights and deposits are liabilities, and a deluge “Certainly it’s a good problem to Western Reserve is advising sever- I wanted to get was indemnity on the paying royalties to the balking of them can create capital ratio have, that you’re growing to the al energy-related companies now, environmental liabilities, and the property owner. issues that raise red flags for point that you have to think about but those deals remain confiden- driller didn’t offer it to us.” The law was enacted to control a regulators. bank capital and what’s the most tial. — Michelle Park Others in the community proliferation of drilling into the worried about noise and increased same underground pool. truck traffic. So, on Aug. 6, the city With Stow city council’s refusal said no to PEP Drilling. to sell its mineral rights, PEP However, Stow’s mayor and city Drilling now must decide whether council may not have the last word. to seek mandatory pooling. Until 2004, communities could — Jay Miller AN ADVISOR WHO CAN HELP YOU

“We feel that we have a LAY THE GROUNDWORK HIGHER major role to play because )25<285)8785( Ń $1'<2851(:)281'/,)( we are not funded by one EDUCATION side or another.” – Xiangwu “David” Zeng chairman, department of The complicated business of civil engineering, exploring and drilling for natural Case Western Reserve University gas in the region’s shale formations has ignited a wave of interest among Northeast Ohio’s institutions “David” Zeng, chairman of CWRU’s of higher learning. department of civil engineering and While those in the higher one of the faculty members education sector admit it often involved with the initiative. takes years for colleges to respond Youngstown State University last to what’s happening with the econ- fall unveiled its own research insti- omy, the job prospects and research tute — the Natural Gas and Water opportunities offered by the shale Resources Institute — focusing on the boom have a number of local insti- study of the water used in the shale tutions scrambling. gas extraction process. This spring, $0HUULOO/\QFK)LQDQFLDO$GYLVRUFDQRçHUWKHSHUVRQDOVXSSRUWDQGoQDQFLDOJXLGDQFHWR Case Western Reserve University the institute also will offer a minor KHOS\RXFRQVLGHUWKHLVVXHVWKDWDULVHZLWKQHZZHDOWK,I\RXDUHDVKDOHUHJLRQUHVRXUFH in Cleveland, for one, is banding under the same name. RZQHUZKRLVWKLQNLQJDERXWRUFXUUHQWO\OHDVLQJODQGIRUWKHSXUSRVHRIH[WUDFWLQJQDWXUDOJDV together several researchers under Jeffrey Dick, the institute’s RURLOFRQWDFWRQHRIWKH'LUHFWRUVRIRXU1RUWKHDVW2KLRRèFHVIRUDFRQoGHQWLDOGLVFXVVLRQ an umbrella known as the Center director, said the minor largely is for Shale Energy Research and geared toward those in the STEM Education to study multiple facets fields — science, technology, engi- Jon E. Lawrence Daniel W. Renz of the region’s shale rush, ranging neering and mathematics. Complex Director–Greater Cleveland Complex Director–Greater Akron from its impact on the economy to While other colleges and univer- (216) 292-8008 (330) 379-4750 its effects on public health and the sities haven’t made as bold a com- environment. The center involves mitment as CWRU or Youngstown %UHFNVYLOOH&KDJULQ)DOOV&OHYHODQG $NURQ%DWK&DQoHOG&DQWRQ+HUPLWDJH more than 30 faculty members State, faculty at several local institu- 0HQWRU3HSSHU3LNH:HVWODNH +XGVRQ0HGLQD from the private university’s engi- tions have incorporated aspects neering, medical, business, law and of the shale industry into their science programs. coursework. Also, researchers at Also, the university is in talks Cleveland State University’s Maxine with several companies entrenched Goodman Levin College of Urban in the shale industry about Affairs have studied the economic working with the center, but those impact of the shale rush. involved with the project said it was Still, higher education adminis- too early to disclose any by name. trators hint that other programs The center’s leadership also is grap- and research clusters could well Merrill Lynch Wealth Management makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated, a registered broker-dealer and pling with how it best can interact be on their way. Staffers at the member SIPC, and other subsidiaries of Bank of America Corporation. with businesses in the industry, University of Akron’s Wayne College Investment products: especially if the center is to main- in Orrville, for example, are holding tain its independence. meetings to determine whether the Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value “As an independent university, college could offer any continuing © 2012 Bank of America Corporation. All rights reserved. we feel that we have a major role to education programs to meet the AD-08-12-0493 ARJ2H335-08-12 Code 470143PM-0812 play because we are not funded by industry’s needs. one side or another,” said Xiangwu — Timothy Magaw 20120903-NEWS--23-NAT-CCI-CL_-- 8/31/2012 1:54 PM Page 1

SEPTEMBER 3 - 9, 2012 CRAIN’S CLEVELAND BUSINESS 23

oil and gas practice group formal- facturing,” Mr. used for shale drilling across the ized earlier this year at Tucker Ellis Colm said. “We’re country, all of its investments are LEGAL LLP in Cleveland. still on the uphill not directly tied to the local Utica Other legal work will arise over MANUFACTURING side of the growth shale boom. Rather, the company is AFFAIRS existing lease rights and the rights curve.” benefiting from the overall strength of way and real estate negotiations Already, out-of- of the oil and shale business. necessary as people seek to lay state companies are Shawn Seanor, vice president of pipeline for transporting gas and developing process- oil and gas engineered steel solu- Ironically, lawyers expect to be gas liquids, Mr. Morrical said. The shale drilling boom is ing plants, distribution infrastructure tions for Timken, said that while a kept busy for years by both sides of Responding to the interest, the reinvigorating Northeast Ohio’s and are buying up oil and gas leases, number of companies are moving the shale play debate — those with Cleveland Metropolitan Bar Associ- manufacturing industry, bringing injecting hundred of millions of dol- distribution centers, warehouses the desire to drill, baby, drill, and ation in mid-September will host a hundreds of millions of dollars of lars into the state economy. And local and support services to Ohio, they those already suing over the envi- conference titled “Utica Shale: investment and direct and indirect companies are keeping pace. largely aren’t moving manufacturing ronmental and health impacts. Issues in Law, Practice and Policy,” jobs to the region, according to Take Canton-based Timken Co., facilities to the region. But he sees A number of regional law firms which will provide an overview of John Colm, president and executive which makes bars and tubes used in that as a likely possibility. have formed in recent months the legal issues presented as people director of Wire-Net, a Cleveland- the horizontal drilling equipment Timken’s customers are starting shale-centered practice groups work to extract oil and gas. based manufacturing advocacy needed to extract shale. In the past to see the advantages of moving focused on serving clients ranging “It will clearly taper off at some group. two years, the producer of bearings manufacturing operations to Ohio, from single landowners who need point,” Mr. Morrical predicted of At all levels, from upstream to and steel has announced capital which is near both the source of land leases to large corporations attorneys’ shale-related workload. midstream to downstream, the expenditure projects totaling more steel and the end location where that want to strike up joint operating “How far off, that is difficult to say. I Utica shale activity is having a “sig- than $310 million in Northeast Ohio. the components will be used, Mr. agreements with other companies. think there’s going to be a lot of nificant positive impact on manu- Because Timken equipment is Seanor said. — Ginger Christ Cleveland-based Thompson Hine work for quite a while.” LLP started its Team Shale in fall Richard H. Nemeth of Nemeth & 2011. Asked about the group’s activi- Barrett LLC started taking on oil “The shale story in Northeast much more credibility in terms of en- ty, Michael L. Hardy, who leads the and gas clients about a year and a Ohio is counterintuitive. It’s ergy,” he said. “When we go out and team, noted that a year ago, the firm half ago to supplement his firm’s hard for reporters to believe it’s pitch what we do, we have much had no shale-related work. Today, it bankruptcy work since consumer MARKETING hard to find rooms in Youngs- more to talk about in Cleveland.” is evaluating easement documents bankruptcies are down. town. That is an eye-opener.” The problem, however, is in and rights of way for a midstream But he’s no newbie: He has The shale conversation serves translating the region’s shale boom exploration company and negotiat- geology and law degrees, and in as a natural entry point in dis- into direct jobs for the local mar- ing leases on behalf of “significant 1984 he was hired by an oil and gas cussing the region’s strong man- keting community, Mr. LaBar said. corporate clients,” he said. company to handle leasing and The shale boom is putting North- ufacturing base and its efforts in The bigger drilling companies “It takes a while to develop our right-of-way issues before the east Ohio on the map, particularly wind and renewable fuel cell ener- moving to Ohio typically bring their penetration into the various sectors industry waned in the late 1980s. in the eyes of the national media, gies, said Mr. Batyko, who regularly own marketing resources and, for in the market,” Mr. Hardy said. Now, Mr. Nemeth’s firm is officials say. travels to New York City to promote the most part, aren’t hiring local “That’s no different than the level putting together a website about its Groups such as the Cleveland Northeast Ohio to national media representatives, he said. Yet. of involvement it takes to get oil and gas work, which he hopes to Plus Marketing Alliance are using outlets like The New York Times. However, Mr. LaBar sees oppor- involved in other practice areas.” launch in the next month or so, and the attention given to the region Gregg LaBar, senior vice president tunity for those in the local marketing Attorneys who handle leases and he’s spreading the word through because of shale drilling to raise the at Dix & Eaton, a Cleveland-based industry to find a way into the shale title searches have been “extremely renewed memberships in oil and local profile. integrated communications consul- industry through networking. New busy,” and while that high level of gas law organizations. “It opens the door for us to talk tancy, notices a growing prominence companies likely will look to find leasing activity is subsiding, work “This was a nice skill to be able to about the region’s other assets,” of the region in the national con- local representation after they’ve will continue at a different pace, fall back on,” he said. said Rick Batyko, executive director sciousness thanks to the shale boom. established themselves and grown said Glenn Morrical, co-chair of the — Michelle Park of Cleveland Plus Marketing Alliance. “Ohio and Northeast Ohio have in the region. — Ginger Christ 20120903-NEWS--24-NAT-CCI-CL_-- 8/30/2012 3:32 PM Page 1

24 CRAIN’S CLEVELAND BUSINESS SEPTEMBER 3 - 9, 2012

a Boston-based industrial property owner in the $3.4 million sale of a REAL Youngstown building to Artificial Lift Systems Inc., yet another oil and ESTATE gas vendor. Another deal reeks of the trans- RESULTS. forming influence oil money will have on the region, and is close to In the decades since the end of home. Beck Energy, a natural gas OIL & GAS LEASE FORFEITURE World War II, a half-century of exploration and drilling company business departures and two long rooted in Ravenna, acquired generations of population declines an office building in Independence narrowed Northeast Ohio real for $6 million as an investment in AAre yoou unnsure about what rigghts yoou have with regaard to estate to a zero-sum game. When a June. aan alrready existiing oil and ggas leeasa e? Contact the law firm with business or person moved within Terry Coyne, an executive offices locally & throughoutOhio experienced with litigation involving the region, it was at the expense of managing director at the Cleveland another location. office of the Newmark Grubb horizontal drilling & legal services specifically geared toward land rights. Shale’s rising significance in the Knight Frank real estate brokerage, region already promises to reverse puts the resurgence of activity in Our attorneys can assist with an array of complex issues including: that trend. A raft of new businesses, this region in historic terms. • Review of titles and deeds to determine extent of ownership such as Halliburton of Houston, “John D. Rockefeller helped • Negotiation of lease terms, service agreements and royalties which recently committed to estab- make Northeast Ohio what it is by • Handling of disputes over the ownership of mineral rights lishing an oil field supply unit in consolidating Cleveland-area Zanesville, and other suppliers of refineries serving the Oil City, Pa., On the services to drillers already are giving oil boom,” Mr. Coyne said. “The OHIO FARM new purpose to long-empty existing same geography and geology will BUREAU’S official buildings and spawning new ones make us rich again.” attorney referral list CALL TOLL-FREE: 1-855-LAND-1-WE (1-855-526-3193) in neglected industrial parks. Beyond the emerging supplier for oil and gas leasing EMAIL: [email protected] A North Dakota or Pennsylvania- business, area companies that issues like population spike may be yet to make pipe used in wells also are come, but the influx of businesses thriving — and expanding. More- already is palpable to commercial over, Mr. Coyne said he believes the real estate owners and commission- push for mineral rights to exploit calculating brokers. Not counted shale will push farther north in among that group are farmers and Northeast Ohio than expected. other land owners reaping big His reason? “I’m fielding calls bucks from selling mineral rights. from people looking for large Results.Results Period.Period Consider two recent examples of parcels of land for farming. They brokerages that reaped rewards don’t care if there are buildings on from tenants entering the region to it. You can’t farm where there are Akron | Cincinnati | Cleveland | Columbus | Sandusky | Toledo | Youngstown | Ft. Mitchell | Lexington | Louisville | Indianapolis supply its nascent shale industry. buildings. It’s something else,” Mr. At NAI Cummins, an Akron-based Coyne said. commercial brokerage, the father- The “something else,” he surmises, son team of Bob and Scott Raskow is mineral rights. represented Baker Hughes Oilfield One property that’s netting calls Operations Inc. of Houston in the — for which the mineral rights are A networking and education conference $3.3 million purchase of 108 acres not for sale — speaks volumes about in Massillon. Baker Hughes plans to the ability of shale to reinvigorate a build a hub to serve oil companies region weakened by industrial Register Now and drillers that will exploit the decline: It is the 167-acre former >VYSK region’s Utica shale formation. site of the Chrysler plant in Twins- www.CrainsCleveland.com/NEOworldtix Likewise, George Pofok, a senior burg, which Mr. Coyne represents ;YHKL*VUMLYLUJL vice president at the Cresco brokerage as a new industrial park. in Independence, in May represented — Stan Bullard

The Cleveland Metropolitan Bar Association, Cleveland-Marshall College of Law and glass-like material designed to – clean contaminated water, Maxine Goodman Levin College of Urban Affairs, Cleveland State University present: which is produced in large TECHNOLOGY quantities when oil and gas wells are drilled. Other young companies aim to break into the industry, too. For instance, MesoCoat Inc. of Not even Texas is big enough to Euclid plans to market its PcomP UTICA develop all of the technologies that metal coating system to companies oil and gas companies need to drilling in the Marcellus and Utica efficiently extract, process and shale areas. The company is working transport the natural gas buried with partners in Houston to try to SHALE beneath shale rock formations. find its way into the supply chain, Some Northeast Ohio companies said CEO Andy Sherman, adding ISSUES IN LAW PRACTICE already are making pieces and parts that he expects companies to use that go into machinery used in the more local suppliers as the amount AND POLICY fracking process and at other points of drilling in the Midwest grows. in the supply chain, according to Bigger companies also are devel- Dave Karpinski, vice president of oping new products for the shale technology innovation at NorTech. gas market, said Mr. Karpinski, of Sept. 13 &14 Others are working on new products NorTech. For example, specialty right now. materials supplier Fairmount “It’s definitely not all in Houston, Minerals of Chardon is about to One and half day conference, 10 CLE hours pending Texas or Louisiana,” he said. open a new $5 million research and NorTech aims to help out those development center in Sugar Land, local companies. The nonprofit, Texas, to capitalize on growing C|M|LAW Moot Court Room which works to promote technology- demand for specialty sands, resins 1801 Euclid Avenue based economic development in and other materials used in the Northeast Ohio, earlier this year fracking process. decided to start helping workers There are lots of opportunities Sponsored by: Crain’s Cleveland Business; and suppliers capitalize on the rise for companies to develop products Bricker & Eckler, LLP; Hull & Associates, Inc.; in shale gas drilling. It eventually locally, too, Mr. Karpinski said. The Steptoe & Johnson, PLLC; Tucker Ellis LLP; and plans to do more to assist local oil and gas industry always needs companies developing advanced better equipment and more University Clean Energy Alliance of Ohio materials, industrial control systems durable materials — stuff that and water technology for the shale Northeast Ohio companies know industry. how to make, he added. ABSMaterials Inc. of Wooster “There’s room for small and big already has staked out a spot in the companies up and down the clemetrobar.org/CLE/Shale oil and gas industry: Founded in (supply) chain,” he said. 2008, the company has developed a — Chuck Soder 20120903-NEWS--25-NAT-CCI-CL_-- 8/31/2012 10:56 AM Page 1

SEPTEMBER 3 - 9, 2012 CRAIN’S CLEVELAND BUSINESS 25 Fracking advocates, opponents push their messages

“If it continues to move forward Sides seek edge in tense public relations battle “I just think you’d be foolish not to develop the resource it needs to be done in the most in a responsible way. ... I would love it if extremists on responsible manner. We need to By CHRISSY KADLECK out, billboards that are 10 feet by have regulations put in place to [email protected] 20 feet have appeared in six com- both sides would just shut up.” protect the environmental and munities. – Ned Hill human health and safety,” Mr. hio appears to be a “Our budget is basically zero dean, Maxine Goodman Levin College of Urban Affairs, Dougherty said. perennial battleground and the industry for a year or more Cleveland State University He said it’s disappointing the state. has spent millions and millions of issue has become so contentious. This time, though, it’s dollars trying to persuade Ohioans “Both sides have had to unfortu- Owhat’s underground that is the and Americans that this is safe,” having a 4.0 earthquake that has a PR campaigns taking place in the nately take their corners like rabid source of an energy-rich, fuel- Ms. Pesec said. “And I think that tendency to shake up people’s per- state, Cleveland State’s Mr. Hill dogs and really fight a battle that I driven debate — one that has the reason that they need to spend spective.” said: one tailored to those immedi- don’t think is healthy,” Mr. Dougher- created a deep chasm of political so much money is because they In June, Don’t Frack Ohio mobi- ately affected by fracking, and one ty said. “It has been portrayed as and public discourse. are trying to prove something that lized 1,200 anti-fracking supporters for a larger statewide and anyone who is not 100% for drilling, High-volume, horizontal hy- is not true, and Americans know it.” to descend on the Ohio General national audience. the ‘Drill baby, drill!’ as much as we draulic fracturing — commonly Meanwhile, prosperity and Assembly in Columbus to sign a “If you go into shale country itself, can, then you must want to called fracking — is a controversial investment, especially in areas of people’s bill banning fracking in it’s an area which is anxious for jobs completely ban it and never have any and relatively new drilling technol- the state that have had little atten- the state. and anxious for royalty incomes so homegrown energy sources period.” ogy that is being used to extract oil tion since the mid-1950s and early “What you are seeing is a well- it’s a very easy PR campaign,” said Some might say that industry is and gas from Utica shale deposits ’60s, is one of the key messages organized, well-funded machine Mr. Hill, who adds that he is neither winning the PR battle. But Linda in the Buckeye State. from the pro-fracking front, which put on by the fossil fuel industry pro nor anti-shale. “I just think Woggon, executive director of Ohio This practice has dredged a well includes industry leaders like the versus essentially a different cur- you’d be foolish not to develop the Shale Coalition, said public support of opposition from environmental- U.S. Chamber of Commerce. rency, which is people power,” Mr. resource in a responsible way. … I and understanding of fracking is ists and citizens groups worried It also includes the Ohio Shale Kessler said. “What we can do is would love it if extremists on both critical to make the most of the jobs about the lack of regulation and Coalition, a broad-base group organize and try to demonstrate sides would just shut up.” this industry will create. groundwater contamination. Pro- organized to assist businesses in power by numbers … to create Trent Dougherty, director of “We don’t have a really good pool ponents in the petroleum industry capitalizing on opportunities such a strong anti-fracking force legal affairs for the Ohio Environ- of talent, skilled people ready for and big business organizations, created by the shale industry, that the legislature would have no mental Council, said while his the jobs that this is going to result however, gush about its powerful which by some accounts is choice but to unwind some of the organization believes the country in so it’s important that people un- economic impact and job creation expected to bring more than work that they did (last year).” needs to break its addiction to derstand it so they can make deci- in some of the most impoverished 65,000 jobs to the state by 2014. fossil-fuel powered energy, it sions about training they can get in areas of the state. Two battlegrounds Weapons of choice realizes that the shale gas play is a order to be prepared for these This tug-of-war of facts, projec- In many ways, there are multiple reality in Ohio. jobs,” she said. ■ tions and environmental impacts The U.S. Chamber of Commerce surrounding the issue of fracking in July launched “Shale Works for has resulted in dueling public US,” a multistate, multimillion- relations campaigns. And while dollar campaign that includes neither side will put a dollar figure radio and newspaper ads focused to their campaigns, it’s easy to say on advocacy and education. The that millions of dollars are going effort’s goal is to weave a national toward swaying public opinion narrative about the widespread and political will. positive economic effects of shale “Both sides have issues to development. wrestle with,” said Edward “Ned” Christopher Guith, vice president Hill, dean of the Maxine Goodman for policy at the U.S. Chamber’s Levin College of Urban Affairs at Institute for 21st Century Energy, Cleveland State University, who said the petroleum industry has was part of the research team that done a “phenomenal” job of edu- completed an economic impact cating the public in the past year Shale. study for the Ohio Shale Coalition and of trying to “demystify some of in February. the hyperbole that has come out of An ever-changing landscape “The environmentalists, who are the anti-fracking crowd.” highly skeptical of developing “This is an issue that is trans- shale, and the industry, whose forming the country, and it’s so requires expert creative solutions. vested interest is pretty well hard to stand in the way of it,” Mr. known,” he said. “Unfortunately Guith said, adding that the U.S. for the oil and gas industry, everyone Chamber wanted to join the move- has watched bad John Wayne ment to help tell the positive story movies, which have gushing oil surrounding fracking. derricks in the background, so “Our biggest asset is our credi- there is a lot of skepticism. Nobody bility to the average American. We is going to believe anybody.” have such broad-base support and we represent every aspect of Dueling messages business, not just oil and gas,” Mr. Fracking is a hot-button issue Guith said. that is easy to sensationalize, Mr. “Obviously, we support hydraulic Hill said. “But if both sides don’t fracturing, but that is not necessarily try to get their message out, they what we are trying to debate here,” are just going to get drowned.” he said. “There is a much broader For the opposition, you have economic perspective and we groups like Don’t Frack Ohio and want Americans, and we want Network for Oil & Gas Account- Ohioans and we want businesses ability & Protection (NEOGAP). throughout the country to under- Ulmer & Berne LLP is committed to staying abreast of new Vanessa Pesec, president of stand this other side of the story regulations within the oil and gas industry and partnering NEOGAP, said her organization that hasn’t gotten near the amount with our clients to maximize their opportunities. Our expertise represents as many as 20 to 30 of coverage that the controversy groups around the state that want surrounding the operations has.” spans the entire energy spectrum, including leasing, title, fracking banned “until such time Don’t Frack Ohio harnesses a regulatory, permitting, supply chain, tax, and litigation. that the industry can prove, through different kind of currency in their Midwest Real Estate News ranked Ulmer & Berne #1 BOB KARL peer-reviewed scientific studies, PR campaign against what its in Ohio and #10 on its list of the Top Real Estate Law Firms. that this relatively new, highly supporters believe is a drilling [email protected] industrial and invasive extraction practice of earth-shaking propor- method is safe,” she said. tions. To get their messages across, “One thing in Ohio that really these grassroots groups often post woke people up was the earthquake yard signs with messages like: in Youngstown on New Year’s Eve “Keep Our Community Healthy (2011),” said Daniel Kessler, and Safe … Stop Fracking.” spokesman with Don’t Frack Ohio, They make copies on their home a coalition effort of more than a computers or at the local store, dozen other organizations, spear- ulmer.com and every once in a while take an headed by 350.org, a movement advertisement out in the paper. In focused on climate change. “When a beefed-up effort to get the message you start shaking the earth and 20120903-NEWS--26-NAT-CCI-CL_-- 8/31/2012 11:55 AM Page 1

26 CRAIN’S CLEVELAND BUSINESS SEPTEMBER 3 - 9, 2012 A DAY ON THE DRILLING SITE So what’s it like on a shale gas areas to the south and east of Cleve- drilling site? land, and here’s a little of what we’ve We’ve spent a few days in the rich found.

STEPHEN HERRON PHOTOS A segment of drilling pipe is about to be changed so drillers can add another section to go deeper at Chesapeake’s first well in Stark County, near Canton. The shale that holds the gas and oil that drillers seek is more than a mile below.

A top motor is seen from the rig floor of a drilling operation near Canton. The motor, suspended by cables, turns the pipe that holds the drill bit. The weight of the motor and pipe help to drive the bit through thousands of feet of sand- stone and other material on its way to the Utica shale below.

ABOVE: Behind the well bore on a well pad developed by Chesapeake Energy in Stark County, giant winches handle steel cable used to support the drilling rig. They are surrounded by equipment and tanks that drillers use to store and manage some of the water, sand and chemicals involved in fracking. BELOW: Fracking operations under way at a rig site near Mineral City, Tuscarawas County, Ohio. 20120903-NEWS--27-NAT-CCI-CL_-- 8/31/2012 11:02 AM Page 1

SEPTEMBER 3 - 9, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 27 LARGEST GRANTMAKING FOUNDATIONS RANKED BY AMOUNT OF 2011 GRANTS

Year Name 2010 2011 2011 founded Address 2011 grants grants assets 2011 largest smallest Total Top executive Rank Phone/Website (millions) (millions) (millions) grant ($) grant ($) Largest grants staff Title Cleveland Foundation Suite 1300 Services Inc., Case Western Reserve 1 1422 Euclid Ave., Suite 1300, Cleveland 44115 $78.7 $94.1 $1,816.9 3,100,000 44 University, Cleveland State University, Neighborhood 1914 Ronald B. Richard (216) 861-3810/www.clevelandfoundation.org Leadership Institute, BioEnterprise Corp. 69 president, CEO The George Gund Foundation The Foundation Fighting Blindness, Cleveland Institute of 2 45 Prospect Ave. West, Suite 1845, Cleveland 44115 $16.6 $23.6 $422.3 2,000,000 500 Art, County of Cuyahoga-Invest in Children, The 1952 David T. Abbott (216) 241-3114/www.gundfoundation.org Cleveland Foundation-Portfolio of Excellent Schools 12 executive director Lerner Foundation(1) Cleveland Clinic Foundation, Hospital for Special 3 26500 Curtiss Wright Parkway, Highland Heights 44143 $16.3 $18.6 $10.5 10,001,000 50 Surgery (New York), Cleveland Orchestra, Jewish 1993 Norma Lerner (440) 891-5000 Community Federation NA president, treasurer The Timken Foundation of Canton(2) Stark State College Foundation, Town of Sosnowiec 4 200 Market Ave. N., Suite 210, Canton 44702 $13.3 $7.4 $221.6 476,000 6,450 (Poland), University of Akron Foundation, Habitat for 1934 Ward J. Timken (330) 452-1144 Humanity (Bucharest, Romania) NA president, trustee KeyBank Foundation Cleveland Orchestra, United Way of Greater Cleveland, 5 800 Superior Ave., Cleveland 44114 $12.6 $12.7 $35.9 1,500,000 10,000 Case Western Reserve University, Cleveland Clinic 1969 Margot James Copeland (216) 828-7349/www.key.com/foundation Foundation, Susan G. Komen Breast Cancer Foundation 3 chairman, CEO Saint Luke's Foundation of Cleveland MetroHealth Foundation, Neighborhood Progress Inc., Denise San Antonio 6 4208 Prospect Ave., Cleveland 44103 $9.6 $7.6 $170.6 1,000,000 500 Friends of Breakthrough Schools, CWRU School of 1997 Zeman (216) 431-8010/www.saintlukesfoundation.org Dental Medicine 8 president, CEO Stark Community Foundation Stark Education Partnership, United Way of Greater 7 400 Market Ave. N., Suite 200, Canton 44702 $8.1 $5.5 $156.1 NA NA Stark County, Aultman Hospital Compassion Care 1963 Mark J. Samolczyk (330) 454-3426/www.starkcf.org Center, The Wilderness Center, Canton Museum of Art 10 president

Eaton Charitable Fund William B. Doggett United Way of Greater Cleveland, University Hospitals of 1953 senior vice president, 8 1111 Superior Ave., Cleveland 44114 $8.1 $7.3 $2.3 520,034 50 Cleveland, National Merit Scholarship Foundation, 0 Public & Community (216) 523-5000/www.eaton.com United Way of Asheville & Buncombe Count Affairs Kelvin & Eleanor Smith Foundation 9 30195 Chagrin Blvd., Suite 275, Cleveland 44124 $7.5 $6.5 $140.0 1,000,000 2,500 NA 1955 Ellen Stirn Mavec (216) 591-9111/www.kesmithfoundation.org 3 president, chairman Mt. Sinai Health Care Foundation Allen Med. Library Bldg., 11000 Euclid Ave., Cleveland Jewish Federation, Case Western Reserve University 1994 Mitchell Balk 10 44106-1714 $6.7 $6.5 $121.0 2,000,000 NA School of Medicine, Cuyahoga County Invest in Children, 4 president (216) 421-5500/www.mtsinaifoundation.org Fund for Our Economic Future/BioEnterprise Akron Community Foundation Akron Art Museum, City of Akron Neighborhood 11 345 W. Cedar St., Akron 44307 $6.3 $6.0 $140.7 497,500 25 Partnership, Akron Metropolitan Housing Early Learning 1955 John T. Petures Jr. (330) 376-8522/www.akroncommunityfdn.org Project 15 president, CEO Community West Foundation Case Western Reserve University, Cleveland Food Bank, 12 20545 Center Ridge Road, Suite 448, Rocky River 44116 $5.5 $3.4 $80.6 830,000 250 Fairview Hospital, Lutheran Hospital, Malachi House, 1997 David T. Dombrowiak (216) 476-7060/www.communitywestfoundation.org University School 8 president, CEO Weatherhead Foundation 13 25825 Science Park Drive, Beachwood 44122 $5.0 $5.0 NA NA NA Tulane University, Harvard University, Columbia 1953 Celia J. Weatherhead (216) 292-7100 University, University of Texas NA president GAR Foundation United Way of Summit County, Summit Education 14 277 E. Mill St., Akron 44308-1735 $4.7 $5.7 $138.3 450,000 1,000 Initiative, Center for Nonprofit Excellence, Greenleaf 1967 Christine Amer Mayer (330) 576-2926/www.garfoundation.org Family Center 4 president Nord Family Foundation Amherst Historical Society, Community Foundation of 15 747 Milan Ave., Amherst 44001 $4.6 $4.0 $92.8 450,000 25 Lorain County, Cleveland Scholarship Programs Inc., 1988 John Mullaney (440) 984-3939/www.nordff.org Nurturing Center 5 executive director Parker Hannifin Foundation(3) Cleveland State Univ., United Way, Great Lakes Theatre 16 6035 Parkland Blvd., Cleveland 44124 $4.3 $4.0 $6.2 650,000 100 Festival, Helen Moss Cancer Research Foundation 1953 Don Washkewicz (216) 896-3000 Professorship, Ohio Foundation of Independent Colleges NA president, trustee The Youngstown Foundation Easter Seal Society, United Way of Youngstown/ 17 P.O. Box 1162, Youngstown 44501 $4.1 $4.0 $80.0 454,000 1,000 Mahoning County, Compass Family & Community 1918 Janice E. Strasfeld (330) 744-0320/www.youngstownfoundation.org Services, Visiting Nurses Association 2 executive director Community Foundation of Lorain County 18 9080 Leavitt Road, Elyria 44035 $4.0 $3.9 $80.0 362,443 250 Community Health Partners Foundation, Lorain Palace 1980 Brian R. Frederick (440) 984-7390/www.peoplewhocare.org Civic Center, Common Ground 10 president, CEO H. C. S. Foundation(4) Catholic Relief Services (Baltimore, Md.) Lakewood 19 1801 E. Ninth St., Suite 1105, Cleveland 44114 $3.8 $4.7 $95.5 200,000 1,000 Hospital Association, Ohio Dominican University, 1959 Board of trustees (216) 781-3502 Cincinnati Museum Center NA The Lubrizol Foundation Friends of Breakthrough Schools Citizens Academy II; 20 29400 Lakeland Blvd., Wickliffe 44092 $3.7 $2.5 $17.5 1,000,000 1,000 United Way of Greater Cleveland, United Way of Lake 1952 David J. Enzerra (440) 347-1797/www.lubrizol.com County, The University of Akron 2 president Nordson Corp. Foundation The Power of Three, CWRU-SHAEP program, Boys & 21 28601 Clemens Road, Westlake 44145 $3.7 $2.6 $15.7 250,000 1,250 Girls Club of Lorain County, CollegeNow, El Centro de 1988 Cecilia H. Render (440) 892-1580/www.nordson.com Servicios Sociales, Lorain City Schools 4 executive director Fairmount Minerals Foundation University Hospitals, Cleveland Central Catholic High 22 11833 Ravenna Road, Chardon 44024 $3.6 $1.4 $8.7 150,000 10 School, America SCORES Cleveland, Aqua Clara 2008 Jenniffer D. Deckard (440) 285-3132/www.fairmountminerals.com Foundation, Cleveland Botanical Garden 0 president Elisabeth Severance Prentiss Foundation(4) University Hospitals of Cleveland, Cleveland Clinic 23 PNC Bank, Box 94651, Cleveland 44114 $3.6 $4.2 $74.1 1 5,000 Taussig Cancer Center, Free Clinic of Cleveland, 1939 Richard W. Mack (216) 222-2760/www.esprentissfoundation.org MetroHealth, Providence House NA secretary Martha Holden Jennings Foundation Cleveland Municipal School District, Literacy 24 1228 Euclid Ave., Suite 710, Cleveland 44115 $3.3 $3.8 $60.1 160,000 330 Cooperative, Cleveland Clinic Foundation, Miami 1959 William T. Hiller (216) 589-5700/www.mhjf.org University, Ohio Department of Education 4 executive director The Raymond John Wean Foundation Mahoning Valley Organizing Collaborative, Youngstown 25 147 W. Market St., Warren 44481 $3.2 $4.6 $75.1 500,000 500 Neighborhood Development Corp., Trumbull 1949 Jeffrey M. Glebocki (330) 394-5600/www.rjweanfdn.org Neighborhood Partnership, Community Solutions Assoc. 4 president William J. and Dorothy K. O'Neill Foundation 26 30195 Chagrin Blvd., Suite 106, Cleveland 44124 $3.1 $3.0 $72.8 100,000 100 Fund for our Economic Future, Notre Dame College, 1987 Leah S. Gary (216) 831-4134/www.oneillfdn.org Dutchess Land Conservancy, Holy Cross Mission Center 3 president, CEO The Burton D. Morgan Foundation BioEnterprise Corp., Blackstone LaunchPad Initiative, 27 22 Aurora St., Hudson 44236 $3.1 $5.2 $119.5 542,234 250 Entrepreneurship Education Consortium, Invent Now, 1967 Deborah D. Hoover (330) 655-1660/www.bdmorganfdn.org Junior Achievement of North Central Ohio 7 president, CEO Forest City Enterprises Charitable Foundation Inc.(5) Jewish Community Federation, United Way Services, 28 50 Public Square, Suite 1100, Cleveland 44113 $3.0 $2.9 $0.2 500,000 150 Cleveland Metropolitan School District-STEM Program, 1977 Charles A. Ratner (216) 621-6060 Case Western Reserve University NA president Reinberger Foundation Great Lakes Science Center, Power of Three, Fund For 29 30000 Chagrin Blvd., Suite 300, Cleveland 44124 $2.9 $2.5 $61.4 500,000 2,000 Our Economic Future, Kent State University, Lutheran 1968 Karen R. Hooser (216) 292-2790/www.reinbergerfoundation.org Metropolitan Ministry, Flying Horse Farm 1 president Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these RESEARCHED BY Deborah W. Hillyer listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Information is from the 2011 990-PF. (2) Information is from the 2010 990-PF for tax year ending Sept. 30, 2011. (3) Information is from the 2010 990-PF for tax year ending June 30, 2011. (4) Information is from the 2010 990-PF. (5) Information is from the 2010 990-PF for tax year ending Jan 31, 2011. 20120903-NEWS--28-NAT-CCI-CL_-- 8/31/2012 3:16 PM Page 1

28 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM SEPTEMBER 3 - 9, 2012 CIA: Expansion allows school to increase its enrollment continued from PAGE 3 “Once the buildings are complete, we’ll have the break ground this fall, is a 91,000- facilities to match the quality of our faculty.” square-foot building that will be connected to the former Ford plant. – Robert Borden, executive director of enrollment and financial aid, CIA That structure is slated for comple- tion by early 2014. its enrollment to a number that national reputation” by broadening its would allow the institution “to recruitment efforts, according to The art of development achieve financial sustainability over Robert Borden, executive director of The new building will replace the the long term.” enrollment and financial aid. college’s aging main building, which At present, the college’s student “As population in Northeast Ohio is located on East Boulevard less base hovers at about 520, but Mr. and the Northeast generally has than a mile from the new Euclid Nunes said an enrollment of 625 to started to go down, that started to Avenue site. The college plans to sell 650 students would be the appropri- have an effect on our (enrollment) the building, though Mr. Nunes ate size for the college if it’s to bring strategy,” Mr. Borden said. “It became declined to disclose any interested in enough revenue to sustain its apparent as an institution we couldn’t operations comfortably. Tuition at rely on what was coming to us fairly buyers. RENDERING PROVIDED the Cleveland Institute of Art is easily from Northeast Ohio.” Chris Ronayne, president of Uni- The second phase of the Cleveland Institute of Art spans 91,000 square feet. versity Circle Inc., which oversees about $33,000 a year. Mr. Borden said the college has To accommodate that growth, the targeted its recruitment efforts within development plans and manage- The Cleveland Institute of Art’s cation project — his largest gift to an college tweaked its plans for the new a 500-mile radius of its campus, ment of the area, characterized the initial investment in 2010 at its area institution in nearly a decade. building on Euclid by increasing the though it also has found particular mystery of who ultimately would Euclid Avenue site was the first of “You can argue (the Cleveland scope of the project by 36,000 square success in recruiting from pockets buy the soon-to-be vacated art several development projects to Institute of Art expansion) was a feet. That’s 65% larger than the original of Texas, California and Florida. The school building as the “$64,000 take shape in the University Circle catalyst and kick-starter overall in a plans, which called for a complex that $66 million investment in the question” involved with the area’s neighborhood. Work started early very difficult economic climate,” could accommodate 583 students. college’s physical facilities enhances development. The move opens up a last year on the nearly $27 million Mr. Ronayne said. “To accomplish this Over the last three years, the its pitch. roughly four-acre site across from Museum of Contemporary Art Cleve- really just speaks to the confidence Cleveland Institute of Art stomached “Once the buildings are complete, the Cleveland Museum of Art and land, for example, and Case Western people have in this institution.” three of its largest freshman classes we’ll have the facilities to match Case Western Reserve University. Reserve University is building a $50 in the school’s history. Part of the the quality of our faculty,” Mr. Bor- “You’ve got a signature site that is million student center. Rightsizing the school reason for that growth has been the den said. “When that starts to sync arguably on one of the greatest sites The art school’s investment also While the immediate goal of the school’s ability to transcend its rep- together, that will be in everyone’s between Chicago and New York spurred well-known philanthropist expansion project was to unify the utation as a “regional school with a best interest.” ■ because of its proximity to these arts Peter B. Lewis, chairman and Cleveland Institute of Art campus, institutions,” Mr. Ronayne said. “It’s former CEO of Progressive Corp., to Mr. Nunes said it also created the high on everybody’s radar.” donate $5 million toward the unifi- opportunity for the school to increase Key: One local broker calls move ‘part of the dance’

continued from PAGE 1 landlord, you would go out (seeking discuss the subject publicly. proposals) on a building years in A second development source, advance. They can threaten to leave who asked not to be identified for to get a lower rate and less space in the same reason, said he knows return for a long-term renewal if KeyCorp’s headquarters proposal is they need less space.” circulating among a small circle of He issued a prediction: “At the prospects that he would not identify. end of the day, they will stay. It’s a KeyCorp downplayed the signifi- great building, a great position. It’s cance of its contacts with develop- cheaper to stay there than to move. ers. But you’ve got to go through the In a written statement, David dance.” Reavis, senior vice president and Nonetheless, a search of the market external communications director by an anchor tenant at times can at KeyCorp, said, “Key continually produce unexpected and far-reaching reviews its corporate real estate results. assets to ensure our investments are aligned with our needs and market Eaton’s specter conditions. A similar market review by Eaton “This includes looking for oppor- Corp. three years ago of its space tunities to eliminate excess real needs and the office market set in estate space as our needs and market motion the diversified manufacturer’s conditions change,” Mr. Reavis stated. pending exit from downtown Cleve- Mr. Reavis declined to comment land to its new office campus that’s on follow-up questions, citing nearing completion in suburban KeyCorp’s policy to refrain from Beachwood. That search was led by discussing talks with any vendor. the Cleveland office of Jones Lang Start of the dance? LaSalle — the same company that’s handling the headquarters inquiry While the potential of a skyline- process for KeyCorp. altering building is intriguing, bro- A Jones Lang spokeswoman kerage insiders doubt KeyCorp will declined comment on the KeyCorp exit Key Tower, which one describes situation. as “the best space in town.” Instead, Key Tower was built by Westlake- they see KeyCorp using the specter based Jacobs Group but was sold in of a new building as leverage in a two-step process completed in lease negotiations. 2010 to an investment fund operated Real estate data provider CoStar by Wells Real Estate Funds Inc. of says KeyCorp’s lease at the tower Norcross, Ga. Jacobs Real Estate expires in 2017. Although CoStar Services still manages and leases does not report a rent figure for the building on Wells’ behalf. None KeyCorp, it says the average rent in of three Jacobs executives contacted the building is $27.46 a square foot, by Crain’s returned messages by at the top of the Cleveland market. Friday afternoon. Among those brokers who see KeyCorp has 11,000 employees KeyCorp’s potential move as a throughout its multistate footprint negotiating ploy is Robert Nosal, and $86.5 billion in total assets as of executive managing director in the June 30, according to a Securities Cleveland office of Newmark Grubb and Exchange Commission filing. ■ Knight Frank. “It’s the right time to do this,” Mr. Reporter Michelle Park contributed Nosal said. “To beat up on the to this story. 20120903-NEWS--29-NAT-CCI-CL_-- 8/31/2012 1:40 PM Page 1

SEPTEMBER 3 - 9, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 29 Drugs: In some places, shortages force docs to tweak treatment

continued from PAGE 1 the drug, the health system instead purchases an alternative that costs upwards of $10 a dose, according to Scott Knoer, the system’s chief phar- macy officer. “Every hospital is working on this, and most of the public never even knows how much work goes into handling the problem,” said Mr. Knoer, who has a full-time staff mem- ber devoted to managing the issue. The reasons for the drug shortages are wide-ranging. Several drug man- ufacturers have closed or consolidated operations in the face of shrinking profit margins, a trend health care observers say has suffocated the supply chain. In addition, the U.S. Food and Drug Administration contends more RUGGERO FATICA PHOTOS than half of the shortages are a result LEFT: Sudhir Shah (left) a Cleveland Clinic pharmacist, and Jay Patel, a pharmacy technician, work in the hospital’s clean lab. RIGHT: Pharmacy technician Michael of quality issues that forced regula- Melville compounds sterile products. tors to shutter, either permanently or temporarily, drug manufacturing On the plus side, the FDA now The new normal? burg Heights. “It’s a daily struggle, second dry-erase board to keep track plants. That was the case at Ben requires drug manufacturers to and we really can’t anticipate what in his pharmacy of the mounting Venue Laboratories Inc., which last provide six months’ advance notice Hospital officials say it’s still too the next crisis is going to be. I think list of drugs on short supply. year halted production operations at of decisions to discontinue certain early to tell whether measures to our team has gotten very good at Local hospital officials acknowl- its headquarters in Bedford after drugs, so that hospitals and the market curb the problem will have a lasting what to do no matter what the edge the drug shortages often force multiple inspections turned up can react accordingly. Such disclo- impact. Wiggle room, maybe, but a shortage is, but it’s a struggle.” them to tweak patients’ treatment dozens of quality control issues. sures in the past were voluntary. cure-all appears nowhere in sight. Kevin Zupancic, director of phar- plans. They said patients haven’t been Ben Venue’s shutdown led to a “This has been a problem that’s “It’s bad,” said Stacey Zorska, macy at Parma Community General hurt, but the prospect of opting critical shortage of injectable been brewing for a while,” UH’s Dr. director of pharmacy at Southwest Hospital, said he’s reminded of the for backup drugs so regularly is a methotrexate, a drug used to treat Anderson said. “It’s reassuring to me General Health Center in Middle- shortage daily. He has had to buy a concern. ■ leukemia in children and rheuma- as a leader to see the FDA and Con- toid arthritis in adults. gress taking it seriously.” “It’s going to take a long time to Locally, the Center for Health Affairs, figure this out,” said Dr. Michael an advocacy group for Northeast Anderson, chief medical officer at Ohio hospitals, has decided to step University Hospitals Case Medical up its lobbying efforts at the state level Center, in talking about how to after surveying its member hospitals address the shortage. “It’ll take a long to gauge the breadth of the problem. time to find the right balance between “The hospitals basically validated the needs of companies and the that they felt the shortage was some- ERC is Northeast needs of patients.” what severe,” said Lisa Anderson, a registered nurse and the Center for A lobbying effort Health Affairs’ vice president of It wasn’t until this summer — member services. “Years ago, it was Ohio’s leading thanks to a lobbying effort in Con- sporadic. Now it’s more of a chronic gress led by the Cleveland Clinic — problem.” that larger health systems by law could The group is looking to ease restric- repackage certain drugs into smaller tions on drug compounding — the doses and share them among hospi- method by which drugs are concocted provider of tals within their system. Previously, from raw materials at hospitals’ the Clinic only could repackage in-house pharmacies. At present, the drugs and share them on its main Ohio State Board of Pharmacy per- compensation campus; it was barred, for example, mits hospitals to compound drugs from sharing them with Hillcrest on a patient-by-patient basis, rather Hospital, just 10 miles east in May- than stockpile compounded drugs in field Heights. anticipation of need. State regula- Still, the Clinic’s Mr. Knoer esti- tions also limit the transfer of com- and benefits data. mates the repackaging legislation pounded drugs between a health will help extend the life of only about system’s member hospitals. 10% of the drugs on short supply. The Center for Health Affairs also The new provision doesn’t apply plans to lobby state lawmakers in Salary, wage and benefits data for thousands to controlled substances. It’s also support of legislation that would unclear how the provision might forbid pharmacies from selling drugs of positions locally, regionally and nationally. affect hospitals loosely affiliated with in short supply to wholesalers, who one another, instead of those that in turn resell them to hospitals at are wholly owned. high markup. # 6 7 GET DAILY NEWS ALERTS FROM CRAIN’S!

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30 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM SEPTEMBER 3 - 9, 2012

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SEPTEMBER 3 - 9, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 31 THEINSIDER REPORTERS’ NOTEBOOK THEWEEK BEHIND THE NEWS WITH CRAIN’S WRITERS AUGUST 27 - SEPTEMBER 2 NCAA decides to hold Free art, but with foundation.org/Grantmaking/PorterArt its festivities elsewhere a few strings attached Gallery.html. — Timothy Magaw The big story: TMW Systems Inc., a Beach- ■ The Greater Cleveland Sports Commis- ■ Local nonprofits looking to spruce up their Marketing a new wood-based provider of software for managing sion has lost out on the 2013 Division II Winter office space could land a piece of modern transportation fleets, agreed to be acquired by a National Championships Festival, which art at no charge from the collection of the marketing group California company in a $335 million transac- was scheduled for Spire Institute in Geneva late Nancy and Frank Porter, the longtime ■ Even though industrial marketing doesn’t tion. Trimble Navigation Ltd. of Sunnyvale, next March. proprietors of Central Cadillac have a television show such as “Mad Men” Calif., which itself is a producer of wireless tech- Jeff Orloff, Spire’s chief oper- in downtown Cleveland. to glamorize it, Craig Coffey thinks creating nology to manage field and mobile workers ating officer, said last week that The Cleveland Foundation a Northeast Ohio chapter of the Business more efficiently, entered into a definitive agree- the NCAA opted to move the obtained the Porters’ large Marketing Association will help make busi- ment to buy privately held TMW. Trimble said event — which features champi- modern art collection as part of ness-to-business marketing more attractive the all-cash purchase will be financed through onships in men’s and women’s a bequest of their estate in 2003 to young people either in or considering its existing credit facility. The transaction is swimming, men’s and women’s that totaled between $60 million marketing careers. expected to close in the fourth quarter. (See indoor track, and wrestling — to and $70 million, according to “I want (the BMA chapter) to be like the related story, Page One.) Birmingham, Ala., because of Kathy Hallissey, the foundation’s cool guy or the cool chick that everyone challenges with the hotel block. director of community-respon- wants to know,” said Mr. Coffey, marketing Their chip has come in: Shearer’s Foods, Division II is the only NCAA sive grantmaking. communications coordinator for Parker the big snack food manufacturer based in group that holds more than one The foundation until Sept. 28 Hannifin Corp. and part of the local BMA Brewster in Stark County, event at the same site at the same is fielding applications from steering committee. “I want it to be cutting agreed to be acquired by time; the goal of the festivals is FILE PHOTO/MARC GOLUB nonprofits interested in obtaining edge. I want it to be reflective of the people a private equity firm in to house all athletes in one area, The indoor track facility a piece of art for display in their we want to attract.” Chicago. Wind Point preferably a city center, to cre- at Spire Institute offices or for educational use. To While the region has other marketing Partners did not say what ate a unique atmosphere. When be eligible, the nonprofits must associations, Mr. Coffey said, it lacks an it will pay for Shearer’s, challenges arose in downtown Cleveland, support residents of Cuyahoga, Lake or association for those dealing primarily with which claims to be the largest producer of where the NCAA wanted all athletes to stay, Geauga counties. the B-to-B market rather than the more vis- private-label salty snacks in North America and the governing body opted to change the Some of the art available includes pieces ible consumer products market,. the largest producer of kettle-cooked potato venue, Mr. Orloff said. by Leon Polk, Evelyn Svec Ward, William “Companies can use the BMA to help up chips in the world. The transaction is expected The NCAA, which originally awarded the Pettet and Enrique Gran. their game in B2B marketing,” said Eduardo to close in October. Shearer’s makes both branded 2013 winter event to Cleveland in April, has Qualifying nonprofits must acknowledge Conrado, chief marketing officer at Motorola and private-label snacks. It started with four held its two previous festivals — last fall and they’ll be able to pay for transportation, Solutions and national chairman of BMA, employees in 1974; it has 1,850 now. this past spring — in Louisville, Ky. Mr. storage and insurance for the pieces of art who promotes its “tribal learning” approach. Orloff said Spire and the sports commission they’re awarded. In addition, applicants are The local BMA chapter will hold quarterly Grab some Z’s: Shiloh Industries Inc. of continue to discuss bringing future events asked to describe how they’d use each piece meetings, which will serve as fundraisers Valley City, a maker of steel blanks, complex to the sprawling athletic facility, though he of art and whether they had any sort of rela- and new member attraction events, as well as stampings and modular assemblies for the auto- refused to discuss those possible events tionship with the Porter family. periodic committee meetings, Mr. Coffey said. motive and heavy truck markets, named as its because deals are not finalized. — Joel For a list of the available pieces and infor- Its first event will feature business author CEO an executive from Federal-Mogul Corp. Its Hammond mation about applying, visit http://cleveland Paul Gillin on Sept. 13. — Ginger Christ board of directors appointed Ramzi Y. Hermiz as president and CEO, effective Sept. 4. Mr. Hermiz will succeed Theodore K. Zampetis, who previ- ously announced his plan to retire on Dec. 31. WHAT’S NEW BEST OF THE BLOGS Mr. Hermiz has served since 2009 as senior vice president of vehicle safety and protection at Excerpts from recent blog entries on Recession, with the greatest shortfall among Southfield, Mich.-based Federal-Mogul. CrainsCleveland.com. young adults squeezed financially by the weak economy,” HousingWire reported, citing PVF gets a lift: PVF Capital Corp., the parent Private equity firms the work of Tim Dunne at the Cleveland Fed. of Park View Federal Savings Bank, said a regu- pick up the buying pace Tighter lending standards “are further latory order issued against the bank in October complicating the housing sector’s ability to 2009 was lifted. PVF met the targets established ■ Private equity buyouts are back, The Wall recover by reducing access to mortgage by the order of its regulator. Those targets involve Street Journal reported, but they’re “smaller credit,” according to Mr. Dunne’s research. tier one capital, risk-based capital and classified and less flashy” than in past booms. “This may have increased the incentive of and criticized asset ratios, as well as achieving “Emboldened by a flurry of activity, individuals to delay household formation in profitability, PVF said. The regulatory order was private-equity executives say the buyout order to save for a down payment, build issued Oct. 19, 2009, and required the bank to market is crawling back from the doldrums credit histories, or repair tarnished credit raise its core capital level and its total risk-based THE COMPANY: Buyers Products, of the financial crisis, when the debt that scores,” Mr. Dunne wrote. capital level. PVF exceeded the required capital fueled such deals disappeared and potential The analysis shows the biggest dropoff levels by raising $30 million in March 2010. Cleveland sellers were put off by low valuations,” The in household formation occurred among Journal said. adults aged 18 to 34. That’s how they Rolec: Diversified manu- THE PRODUCT: SnowDogg municipal The paper said private equity firms “have “An additional 2 million younger adults facturer Eaton Corp. agreed to buy Rolec plows with a trip edge snapped up $64.7 billion worth of U.S. com- now live in a household headed by their Comercial e Industrial S.A. of Santiago, Chile. panies since January, the highest amount parents than did before the recession,” Eaton did not say what it will pay for Rolec, a You might not be ready to think about year-to-date since 2007,” according to data HousingWire reported. “Although these maker of integrated power assemblies and low- snow, but Buyers Products is — and so, it provider Dealogic. younger adults make up a relatively small voltage and medium-voltage switchgear, and a hopes, are the company’s customers. Among the executives quoted in the portion of household heads, they account provider of engineering services, particularly to Buyers Products, which makes products piece is Stewart Kohl, co-chief executive of for almost three-quarters of the overall the mining market in Chile and Peru. for the mobile equipment market, has intro- Cleveland- and New York-based Riverside shortfall in household formation.” duced SnowDogg municipal plows with a trip Co. He told The Journal that he has found Dam right: Advanced Hydro Solutions LLC of edge to keep snow in front of the plow. lenders eager to invest in his firm’s 18 buy- By one measure, small Beachwood sold its six-megawatt Mahoning The trip edge plow “is a new addition to outs this year, all of which targeted companies Creek hydroelectric project in western Pennsyl- the existing line of full-trip reversible plows, with annual sales between $10 million and firms are doing better vania to Enduring Hydro LLC of Chevy Chase, available in standard rolled carbon steel or $250 million. ■ Small business bankruptcies continued Md., which plans to add a $16 million hydroelec- optional stainless moldboard for easier snow “Some of the investment bankers that their decline in the second quarter of 2012, tric generation system to the existing dam. Ad- removal as well as extended plow life,” the Riverside works with have been so busy this shrinking by nearly 17% from the previous vanced Hydro said Mahoning Creek received its company says. Continuous welds “provide summer that one institution asked Mr. Kohl quarter, according to the new Small Busi- Federal Energy Regulatory Commission license for a stronger plow while laser-cut components to delay the sale of one of its companies ness Bankruptcy Report from Equifax. in March 2011 and is completing final permitting provide a smooth finish and precise fit,” because its staff was overloaded,” the It’s the fourth straight quarterly decline before construction. according to Buyers Products. newspaper reported. in the number of total U.S. small business Trip-edge plows are available in three bankruptcies and the lowest for the sec- See you next year: The Ohio Optometric standard sizes: 42 inches by 10, 11 and 12 Kids won’t leave? ond quarter since 2007. The number of Association’s annual EastWest Eye Conference feet. All SnowDogg municipal plows are avail- business bankruptcies peaked in the will move to the under-construction Cleveland able with a variety of hitch configurations and You’re not alone second quarter of 2009, Equifax reports. Convention Center in 2013, 2014 and 2015. The a choice of 3- or 4-inch cylinder. ■ Parents of a certain age should “Small business owners are still optometrists’ meeting will attract 1,500 atten- For information, visit www.BuyersProducts relate to a recent story from steadfastly deleveraging, bringing dees and 100 exhibitors, who are expected to .com. HousingWire, which is based on their debts, assets and cash flows book 1,125 room nights in downtown hotels, research from the Federal Reserve into better alignment; couple that according to MMPI Inc., the developer and man- Send information about new products to Bank of Cleveland. with promising signals in small business ager of the new trade show complex. managing editor Scott Suttell at ssuttell@ “The rate at which Americans formed lending, and business owners are better crain.com. households fell sharply during the Great positioned to stay afloat,” Equifax said. 20120903-NEWS--32-NAT-CCI-CL_-- 8/31/2012 1:36 PM Page 1