Gov. John Kasich’s administration quietly is layingthe groundwork for a Medicaid program that pays doc-tors for providing good care rather than lots of care.
A novel approach? Not entirely, but health care observers say the governor’s office appears to be backingup its rhetoric with the state’s checkbook.
The state recently announced plans to rebid contractswith its Medicaid managed care providers, which coordinate care for nearly 70% of the people on Ohio’sMedicaid rolls. Under the new contracts, the state expects to pay more money to managed care groupsthat are able to demonstrate better outcomes for
patients.Moreover, the state is working to
transform the criteria by which it reimburses hospitals and physicians.
Now, providers are paid differing rates based on a patient’s diagnosis. However, state Medicaid directorJohn McCarthy told Crain’s the state is looking at “qualitydata and trying to figure out how to incorporate thatinto the payment methodology.”
While still short on details, these initial steps of overhauling the Medicaid program are just the start ofsignificant changes on the way, according to state officials leading the efforts. The push has hospitals,doctors and managed care plans bracing for what thechanges could mean for them.
“Kasich is putting some money behind this, and isn’tjust saying, ‘This is the right thing to do,’” said J.B. Silvers, a health care finance expert and professor of
Kasich proposal would rewardproviders with best outcomes
INSIDEStill in the club at Progressive Field
The Indians have maintained the all-inclusive food feature inProgressive Field’s luxury clubseating area. PAGE 7
ALSO INSIDE: ■ A replacement advocacy
group for the Flats is in the planning stages. PAGE 6
See MEDICAID Page 6
See TAX Page 4
Kasich teamrenews pushto collectmuni taxesCommunities still balkat turning over controlBy JAY [email protected]
After lying low since the fall, theKasich administration intends to renew its push to streamline munic-ipal income tax filing for businessesacross Ohio by bringing the collec-tion of municipal taxes under statecontrol.
Presently, 600 communities collecttheir own taxes, devise their ownforms and even define for themselveswhat income is subject to municipaltax. Putting the collection of thosetaxes in the state’s hands is part of an
effort, led by Lt.Gov. Mary Taylor,to make it easierto do business inOhio.
“Ideally, makingOhio a betterplace to do busi-ness includes mak-ing it easier to dobusiness on the
local level,” Ms. Taylor said on a visit to Cleveland last Tuesday, Jan.24. “We have heard (fragmented localtax collection) is an impediment tobusiness growth in Ohio.”
According to the Ohio MunicipalLeague, 540 communities in Ohiocollect income taxes. Some havejoined together in collection agenciesto handle their tax collections. TheBrecksville-based Regional IncomeTax Agency collects taxes for 207communities; the city of Cleveland’sCentral Collection Agency serves 63taxing districts.
Municipalities have reactedstrongly to what they see as the stateonce again usurping home rule, andthey’re especially concerned aboutturning over tax collection to thestate.
The lieutenant governor said nolegislation has been drafted, thoughshe and Ohio tax commissioner JoeTesta have been airing the idea sincelast summer.
“We’d like to have an open discussionof what are our options are,” she said
As bank’s capital level and economy have improved, its acquisition activity also may rise
Though he’s quick to emphasizethat acquisitions like the oneKeyCorp announced this monthare only one lever the bank will
use to achieve growth, Bill Koehler,Key’s No. 2 executive, said the bankinggiant is in a far better position to swingdeals now than it has been in recent years.
“We are much stronger financially,”Mr. Koehler, president of Key Commu-nity Bank and KeyBank N.A., said in aninterview last Wednesday, Jan. 25, with
Crain’s. “We should be viewed by a potential seller as an attractive partner,somebody who is going to be a respon-sible employer of their employees,somebody who will support the com-munity in the way that that organiza-tion probably has over time.”
Key signaled its interest in possibleacquisitions while reporting its fourth-quarter earnings last week. In Key’searnings release, KeyCorp chairmanand CEO Beth Mooney commented onKeyBank’s agreement to acquire 37HSBC Bank branches in Buffalo and
* — BUFFALO DATA DO NOT INCLUDE RECENT ACQUISITION OF 37 HSBC BRANCHES;BRANCH/BRANCH SHARE DATA FROM KEYCORP AS OF YEAR-END 2011; DEPOSITS/MARKET SHARE DATA FROM FDIC AS OF JUNE 30, 2011
22 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM JANUARY 30 - FEBRUARY 5, 2012
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Keith E. Crain: ChairmanRance Crain: PresidentMerrilee Crain: SecretaryMary Kay Crain: TreasurerWilliam A. Morrow: Executive vice president/operationsBrian D. Tucker: Vice presidentRobert C. Adams: Group vice president technology, circulation, manufacturingPaul Dalpiaz: Chief Information OfficerDave Kamis: Vice president/production & manufacturing
G.D. Crain Jr. Founder (1885-1973)Mrs. G.D. Crain Jr. Chairman (1911-1996)
Crain Communications Inc.
700 W. St. Clair Ave., Suite 310,Cleveland, OH 44113-1230Phone: (216) 522-1383Fax: (216) 694-4264www.crainscleveland.com
Cuyahoga County-ownedMetroHealth System con-tinues to face challenges;we analyze whether thebusiness model is realisticand talk to similarly structured hospitals.
Women who worked full time in wage and salary jobs in 2010 had median weekly earnings of $669, which is 81.2% of men’s median weekly earnings — $824 — thatyear, according to new data from the United States Bureau of Labor Statistics. The finding continued a pattern of women posting gains each decade that bring their earnings closer to those of men. By racial groups, women’s-to-men’s earnings ratios in2010 were higher among blacks and Hispanics than among Asians and whites. Here’sthe data breakdown:
Women’s earnings as a percentage of men’s earnings, 1980-2010
Year Total White Black Hispanic Asian2010 81.2% 80.5% 93.5% 90.7% 82.6%
2000 76.9 75.8 84.1 87.8 79.9
1990 71.9 71.5 85.3 87.4 NA
1980 64.2 63.4 75.8 73.5 NA
SOURCE: U.S. BUREAU OF LABOR STATISTICS; WWW.BLS.GOV
NEWSCOM
20120130-NEWS--2-NAT-CCI-CL_-- 1/27/2012 10:30 AM Page 1
Last July, following hisfirm’s 12th acquisition or mer-ger since 2001, D. MichaelSherman wasn’t shy aboutstating his intention tokeep buying businesses.
As proof, Dawson Cos.bought another company in Columbuslast September.
But now, in a surprising twist, thecompany that so often was the acquirer has become the acquired.
Mr. Sherman, chairman and CEOof Dawson, sold the insurance broker-agent based in Rocky Riverto AssuredPartners Inc. of Lake Mary,Fla., effective Dec. 31. Terms of thedeal were not disclosed.
Day-to-day operations won’t changefor Dawson, which has six offices inOhio, two in Florida and one in Virginia and employs about 250. Its name stays, and its leadership
remains the same.Gone, though, is Dawson’s
concern for where it willobtain capital to grow.
AssuredPartners is acompany formed last Marchby a Chicago-based privateequity firm, GTCR, andbacked by an initial invest-ment commitment of $250
million.Mr. Sherman said a sale of Dawson
“was not planned all along, butwhat I did know was that as we weremaking acquisitions as a closelyheld company … we would hit thewall at some point.”
“What we started to encounter aswe moved forward is that we wereexhausting our own ability to con-tinue to borrow money to fund thatexpansion,” Mr. Sherman said.
“We are in a position now that anyacquisition that we might entertainin our geographic territories, we
“Ideally, making Ohioa better place to dobusiness includesmaking it easier to dobusiness on the locallevel. (Fragmented local tax collection) isan impediment to busi-ness growth in Ohio.”— Lt. Gov. Mary Taylor. Page One
“Our business is redhot. … We’re workingour brains off.”— Mark A. Filippell, managing director, Western Reserve Partners LLC. Page 13
“Having the objectivefinance hat on andexercising thatagainst the personalrelationship HR hat is sometimes a bittaxing. But you needto do what needs to bedone.”— Bill Chorba, CFO, NineSigma.Page 13
“Product innovationis one of the most important aspects ofeconomic develop-ment for the city ofCleveland.”— Tracey Nichols, economic development director, city ofCleveland. Page 11
JANUARY 30 - FEBRUARY 5, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3
INSIGHT
THE WEEK IN QUOTES
Medical biller gets paid by making ’em pay With two acquisitions, Brecksville’s MedData ‘picking up steam’By TIMOTHY [email protected]
MedData Inc. CEO DouglasThompson characterized the explo-sive growth of his Brecksville-basedmedical billing company as a resultof just “getting better at what wedo.”
To put it simply, that means getting
people, insurance companies andgovernment programs to pay doctorsfor their efforts. Indeed, the companyclaims its services will boost aphysician group’s revenue by 10%to 15%.
But with the recent acquisition oftwo other medical billing outfits —one in Peoria, Ill., and another inGrand Rapids, Mich. — Mr. Thompson
said MedData is on theverge of rounding out itsservice offerings to turn thecompany into a medicalbilling powerhouse.
“For us, this has been agreat journey so far, andwe’re definitely picking up steam,”he said.
Founded more than 30 years ago,
MedData moved its head-quarters to Northeast Ohiofrom Seattle in 2008 afteracquiring Summit Health-care Services, a billing and coding company inBrecksville.
Since then, MedDatahas nearly doubled the sizeof its employee base at the
former Summit Healthcare locationon Snowville Road in Brecksville toabout 215 — a number expected to
grow, albeit modestly, as the com-pany continues to line up acquisi-tions.
“There’s always quite a list of (potential acquisitions),” Mr. Thomp-son said. “They come in fits andspurts, but the company right nowis focused on ensuring the acquisi-tions we’ve made recently are inte-grated correctly.”
Mr. Thompson took the helm ofMedData after Baird Capital Partners,
Thompson
See MEDDATA Page 8
See DAWSON Page 4
Dawson Cos. interruptsacquisitions just longenough to be boughtPurchase by Fla. firm to provide capital for growth
JASON MILLER
Tina Haddad, owner of Green Rock Lighting, at the company’s headquarters on the West Side of Cleveland
BRIGHT FUTURE IN LEDsGreen Rock Lighting sees opportunities at home,
elsewhere for high-tech, cost-saving lighting products
Tina Haddad thinks herGreen Rock Lighting hasa bright future — andnot just because it’s pro-
ducing fixtures for LEDs, or light-emitting diodes.
Her optimism, she says, isbased on the growing number ofU.S. cities preparing to upgradetheir street lighting. Cleveland isamong them, and she hopes thecity that installed the first electricstreet lights also will be one that
modernizes them by using herhomegrown products.
Ms. Haddad is investing in newequipment, hiring engineers andmaking space to produce what bythis time next year could be herbiggest product.
“I have wholeheartedly put oureggs in this basket, knowing it’s theway of the future,” Ms. Haddad said.
Latching on to a new productand producing it on what manycompanies would consider ashoestring is nothing new to Ms.
NOT JUST A CLEVELAND THING
Cities nationwide are aiming to replace existingstreet lights with the kind ofLED fixtures manufactured byGreen Rock Lighting, an affili-ate of Cleveland-based R HIndustries.
A sampling of cities thatare looking into the change:
■ Cleveland, where spokes-woman Andrea Taylor estimatesabout 70,000 older lights need replacing. Green Rock’s Tina Haddad says her lights costabout $800 apiece, for a possibleprice tag of $56 million.
■ Pittsburgh■ Baltimore
■ Des Moines, IowaAccording to Mark Kelly, a
regional director of sales atBridgelux, a company that haspartnered with Green Rock, LEDsuse far less power than traditionalstreet lights and can pay forthemselves in two or three years.
under way next month. State Rep.Cheryl Grossman, a Republican fromGrove City and assistant majoritywhip in the Ohio House, has sched-uled a meeting to discuss the issuefor Feb. 9.
In search of uniformityMs. Taylor said the administra-
tion’s concern focuses on problemsof uniformity. She said tax formsand even the definition of what income is taxed can vary from community to community. Somecommunities, she said, tax a portionof health insurance plans, such asthe amount set aside for a healthsavings account. There is also vari-ation in the way municipalities taxpensions, deferred compensationand even lottery winnings.
Some communities also allowsole proprietors a net operating losscarryforward, while others do not.
Employers must file monthly orquarterly forms reporting howmuch municipal income tax hasbeen withheld from employee pay-checks and to pay that tax to eachmunicipality, unless a community
outsources its tax services to one ofthe two tax collection agencies.
One of the main proponents ofmunicipal tax uniformity is theOhio Society of Certified Public Accountants. David Reape, seniormanager in the tax department ofBeachwood CPA firm Ciuni &Panichi Inc., who has been involvedin shaping the society’s legislativepolicy, said many client small busi-nesses are filing 20 to 30 differentmunicipal tax withholding formsfor employees.
Mr. Reape said one client, a construction company, files returnswith 100 different communities.
“What we’d like to see is just simplification in complying withthe rules we have now,” he said.
Worried? You betMost communities aren’t keen
on turning over tax collection to thestate.
Kent Scarrett, director of commu-nications for the Ohio MunicipalLeague, said league members worrythat if businesses file and pay theirmunicipal taxes to the state, it willslow the flow of tax revenue to com-munities.
“Our main concern is the loss of
local control of revenue,” he said.“There would be a lag time in con-trol of (income tax) revenue.”
Mr. Scarrett said his membersare concerned about waiting forquarterly or monthly checks from thestate for tax withholding paymentsthat businesses make throughoutthe year.
“There’s obviously an interrup-tion in cash flow that could lead tothe need for borrowing” by munic-ipalities that are used to receivingthe withholding payments directly,he said.
Mr. Scarrett said communities alsoworry that the state wouldn’t be asdiligent as the communities them-selves in auditing employers’ tax pay-ments and in pursuing non-payers.
“The state can’t do the job of(tracking down businesses) obligatedto make tax payments,” he said.
Since the issue first arose lastsummer, many communities havepassed resolutions or more infor-mally expressed their disagreementwith state control over municipaltaxes. Cleveland was one of thosecities but, through a spokeswoman,the city declined to comment, preferring to wait for specific legis-lation. ■
Tax: Communities fear state controlcontinued from PAGE 1
continued from PAGE 3
Dawson: Firm ‘will be active’growing its annualized revenue toroughly $164 million from nothinglast March.
Dawson and the others now arebrand names of AssuredPartners.However, in the Virginia market,Dawson uses the name Tabb, Brock-enbrough & Ragland, or TB&R, thename of the firm it acquired last July.
AssuredPartners’ priority hasshifted from buying platform com-panies to using its team and its capital to grow those that have joinedit, said Jim Henderson, chairmanand CEO of AssuredPartners.
Doubling Dawson’s revenue overthe next five years is the goal, Mr.Henderson said. Crain’s Book of Lists,published Dec. 19, listed Dawson asthe second-largest business insur-ance agency in Northeast Ohio with208 full-time equivalent employeesas of July 1, 2011.
Mr. Sherman has assumed respon-sibility for expanding the businessinto New England in addition togrowing Dawson’s existing markets.
Dawson’s expansion should begin“very, very quickly,” Mr. Shermansaid, noting that he’d spoken on oneday last week with four owners offirms in northern Ohio about joiningthe operation. He said Dawson willbe active throughout 2012.
In seeking to add other companiesto the network, Dawson will considerfirms’ existing clients, financial performance and the tenure and experience of their employees.
Already, the Dawson acquisitionmakes AssuredPartners the largestinsurance brokerage firm in Ohioand the 13th largest in the nation, according to firm executives.
The overarching goal is to growAssuredPartners to a top 10 agent-
broker in the United States with $400million or $500 million in annualrevenue, then potentially take thecompany public, Mr. Henderson said.But that’s down the road, “probablymore than five to eight years,” he said.
Mr. Sherman now is a board mem-ber and investor in AssuredPartners;many Dawson executives will invest,too, he said. Leaders of the othercompanies bought by AssuredPart-ners also are investors, Mr. Shermannoted. He declined to say how muchhis investment was other than tocharacterize it as a seven-figure number.
High anxietyMr. Sherman initiated the conver-
sations that ultimately led to Dawson’ssale. He’d discovered that Assured-Partners had been formed, and thatMr. Henderson, whom he’d knownfor some time, was leading thecharge. Mr. Sherman believed that itmight make sense to join forces.
He never had been on the sell sideof a deal before. He had purchasedDawson Cos. in December 1986 andhad been the acquirer more than 15times, growing Dawson to $33 millionin annual revenue from $2.7 million.
Now that he’s stood in their shoes,Mr. Sherman said, he has an increasedempathy for other potential sellers.
“The one thing I took from it that Inever experienced when I was acquiring is the high degree of anxi-ety that you go through as the seller,”Mr. Sherman said. “When I was going through the final quarter of2011, there was not a morning whenI did not ask myself those threequestions: Am I doing the right thingfor all of the shareholders? The employees? The clients?”
Ultimately, he and other Dawsonexecutives determined the answerwas, “Yes.”
“It perpetuates the company intothe future,” Mr. Sherman said. ■
“Viewed in a broader perspective,this acquisition marks an importantmilestone for Key,” Ms. Mooneysaid of the $110 million deal. “Duringthe challenging last few years, wehave focused on taking actions tostrengthen our balance sheet, fortifyour capital, effectively manage riskand expenses, and focus on ourcore relationship business. Thoseactions, while sometimes difficult,have now positioned us so that wecan, in a disciplined manner, act onopportunities to strengthen ourfranchise.”
The Jan. 12 acquisition announce-ment came eight months after Key’snew leadership team, led by Ms.Mooney, took over. It’s the first acquisition announced by Keysince July 2007.
Does this signal that new leader-ship is ushering in a more acquisi-tive era?
“I wouldn’t read into that,” Mr.Koehler said. “There have been alot of factors in the marketplaceand in the economy that have, overtime, had an impact on M&A activityin the market, and the reality is therehave not been a lot of transactionsover the last three years as the mostrecent recession and the liquiditycrisis took hold.”
Nonetheless, Key has capital todeploy, and questions about thecompany’s plans for its money
were not in short supply during thebank’s earnings conference call lastTuesday, Jan. 24.
“Key from a capital standpoint isin fabulous shape,” said Jeff Davis,an equity analyst with GuggenheimSecurities who has followed Key for11 years.
Responding to such questionsduring the conference, Ms. Mooneysaid, “Our priorities around capitalhave not changed.”
The primary use of capital, Ms.Mooney said, is investing in Key’sbusinesses and loan growth. Second,she said, would be the bank’s common stock dividend, thirdwould be a share repurchase andfourth would be selective acquisi-tions over time.
The 10% thresholdMr. Koehler did acknowledge in
the interview with Crain’s that thecurrent leadership team wants tobe ready to respond to the right acquisition opportunities whenthey arise.
Key does not have an asset sizerange, Mr. Koehler said, but when iteyes a deal, it considers the branchshare, market share, branch prof-
itability and returns. The institutionwould consider acquisitions acrossits footprint, which extends fromAlaska to Maine, he said.
“Any market that we’re in, there’slogic to investing in the market,” hesaid.
“Our strategic plan in our con-sumer business is to, in each of ourmarkets, drive to 10% or betterbranch share,” he added.
Branch share is the number ofbranches a bank operates in a givenmarket as a percentage of all bankbranches in the market. Once 10%share or greater is achieved, Mr.Koehler said, institutions can derive increased efficiency in theirinvestments, and they commandbetter brand name recognition andbetter sales impact.
While it would like to achievesuch branch share everywhere, Keyin 2008 identified six priority mar-kets: Cleveland, Buffalo, Denver,Indianapolis, Portland and Seattle.It aims to grow in the West becausegrowth demographics there are attractive, and it aims to grow in theother markets because its presence,as measured by branch density andmarket share, is strong, he said.
Key already has achieved 10% ormore branch share in four of its priority markets; only Denver andIndianapolis trail the 10% mark, according to the bank.
Market-by-market focusAcquisition is only one part of
achieving growth in today’s regula-tory, competitive and economiclandscape, Mr. Koehler stressed.Now, when acquiring and retainingcustomers is more important thanever, building new branches toachieve greater branch density iscritical, as is improving the perfor-mance of existing branches.
Key over the past three years hasopened 30 to 40 branches acrossthe country each year, and hasopened 16 in the Cleveland areaover the past four years. The bankalso is using relocations, consolida-tions and technology investmentsto strengthen its business in partic-ular markets. In Cleveland, for example, it’s moving branches toareas where its customers havemoved, Mr. Koehler said.
“The reality is that … we can’twait for an acquisition to come up,”Mr. Koehler said. “We have to focus
on making our business better,branch by branch, market by market,and then being ready to respond tothose acquisition activities thatcome up that do make sense.”
A deal here, a deal thereSo why did buying the branches in
Buffalo and Rochester make sense?Key saw a chance to enhance
its existing presence and provide customers better convenience, Mr.Koehler said.
“(HSBC is) a client-centric orga-nization that had a lot of the samesales management and risk disci-plines that we have,” he said. “Sothat was attractive to us. We thinkthere are things that we can learnfrom them.”
The deal nicely adds density inthose existing markets, observedGuggenheim’s Mr. Davis, who saidhe wasn’t surprised to see Keyspend money on expanding in theEast and not the West, where thepopulation growth is.
“Properties are sold, not bought,”Mr. Davis said. “The sellers deter-mine what’s for sale, not the buyer.That’s what was for sale.”
There’s a lot for sale in the bankingworld, Mr. Davis said, and he expects some of the same size movesby Key in the future.
“I think we’ll see Key as an incremental buyer here or there,”he said. “I don’t look for any sort of transformative acquisition forthem.” ■
“The reality is that ... we can’t wait for an acquisition to come up. Wehave to focus on making our business better ... and then being ready torespond to those acquisition activities that come up that do makesense.” – Bill Koehler, president, Key Community Bank and KeyBank N.A.
JANUARY 30 - FEBRUARY 5, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 5
continued from PAGE 1
Key: Reaching branch share goal helps in many ways
health systems management atCase Western Reserve University.“It’s a big signal.”
Pinching penniesThe Kasich administration’s quest
to change — or as the governor’shealth care czar, Greg Moody, char-acterized it, “modernize” — Ohio’sMedicaid program largely is drivenby its status as an unmanageabledrain on the state’s resources.
In fiscal 2011, which ended lastJune 30, the Medicaid program,which covers 2.2 million Ohioans,cost taxpayers roughly $17.5 billion.That total was an 11% increase over2010 and a nearly 30% jump over2008, according to data provided bythe governor’s Office of HealthTransformation.
On a basic level, the hope is thatstronger case management on thepart of the managed care plans andhealth care providers will stave offserious, more costly health problemsand drive down the cost of the Medicaid program. Part of the state’smanaged care reorganization wouldlead to the assignment of fewer patients to each case manager — anumber that now reaches as high as150 patients per manager.
“We’re systematically starting topay for performance,” Mr. Moody,officially dubbed director of thegovernor’s Office of Health Trans-formation, told Crain’s. “Our inten-tion is to continue that process oftransitioning into models of carethat pay for someone to take risksfor better outcomes.”
Managed care plans servingNortheast Ohio, such as United-Healthcare Community Plan ofOhio and Buckeye Community HealthPlan, have remained largely mumon what the Kasich administration’schanges could mean for their oper-ations, other than saying throughstatements they broadly support thegovernor’s efforts to rein in costs.
However, physicians note thatpatient hand-holding only can go sofar. Some responsibility for spiralingMedicaid costs rests on patientswho don’t heed medical advice —something the Kasich administra-tion’s proposals don’t take into account.
“Something we have to recognizeis that we — hospitals, physicians,everyone else — have a part in thisas stakeholders, but patients are
stakeholders, too,” said Dr. AnthonyBacevice Jr., who runs an OB/GYNpractice in Avon.
Private sector principlesWhile the state’s effort to beef up
care coordination is admirable, somehealth care observers also questionwhether such moves would get ahandle on skyrocketing Medicaid costs.
For instance, Dr. Silvers notedthat a large portion of Medicaid enrollees are on the rolls for only ashort time because they might bebetween jobs, which would make ithard to coordinate care over a longperiod of time.
Likewise, Bill Ryan, president ofthe Center for Health Affairs, aCleveland-based advocacy grouprepresenting area hospitals, saidsimilar efforts to coordinate care havebeen implemented in the past withlittle to show in terms of success.
“I’m not so sure anymore thatmanaging care saves money,” saidMr. Ryan, who was deputy directorand chief operating officer of thestate’s Medicaid program from 1993to 1996. “I don’t believe any of thisstuff has controlled the rate ofgrowth of Medicaid expenditures inthe past, so I’ve got to scratch myhead and say, ‘Geez, what are wesupposed to do here?’”
But given the Kasich administra-tion’s decision to put some muscle— aka, money — behind the changes,state officials are optimistic they’vefound the winning formula.
Mr. Moody, for one, said heprefers to view the state as a “healthcare purchaser” — one looking forthe best bang for its buck, ratherthan an institution that blindlydoles out checks for thousands ofunnecessary procedures and tests.
In lockstep with that theme, thestate plans to lift language for thequality measures included in itsnew managed care contracts fromthe Catalyst for Payment Reform, anational coalition made up of largehealth care purchasers. The SanFrancisco nonprofit has unveiled asample contract for companies —and in Ohio’s case, Medicaid — todraw inspiration from as they devel-op new contracts with health plans.
“It’s very hard for one purchaser tomake a difference in the health caremarket, even when you’re as big asa state Medicaid program,” saidSuzanne Delbanco, executive of theCatalyst for Payment Reform. ■
In planning for new Flats group, industrial reps feel minimizedBy JAY [email protected]
Plans are under way to re-createan advocacy group for Cleveland’sFlats, but a spokesman for maritimeand industrial interests in the dis-trict says the planners aren’t payingenough attention to the concerns ofcompanies in those sectors.
At a meeting of the Cleveland-Cuyahoga County Port Authority lastWednesday, Jan. 25, Jim Cox, exec-utive director of the Flats IndustryAssociation, complained that hisgroup and its 40 member companies— including Cargill Deicing Tech-nology’s Cleveland salt mine, LaFarge North America’s cementoperations and Ontario Stone Co.— have not been included on theadvisory board that is creating anew Flats advocacy group calledFlats Forward Inc.
Steelmaker ArcelorMittal, thebiggest employer in the Flats, hasbeen involved directly in those dis-cussions.
Mr. Cox said he has been invitedto attend presentations about thenew organization, but has not hadinput in the decision-making process.
At the meeting, Joe Marinucci,president of Downtown Cleveland
Alliance, made a presentation aboutFlats Forward. The Port Authority is taking on a growing role on theCuyahoga River, and Mr. Marinucciis asking that the Port Authorityhouse whatever staff Flats Forwardmight have eventually. The presen-tation to the Port Authority boardwas informational only, and the boardtook no action on the presentation.
Mr. Cox explained briefly to thePort Authority board, and more extensively in a subsequent inter-view with Crain’s, that his membersare particularly troubled that theirconcerns about safety along theplanned Towpath Trail are not being heeded.
“Nobody’s relating to industry,”he said, noting that industrial prop-erty owners in the Flats pay propertytaxes while most residential propertythere is subject to tax abatement.“Everybody’s got security issues.We’re seen as obstructionists, butwe’re not.”
The Towpath Trail is a plannedhiking and bicycling path that ismapped to extend to Wendy Parkon Whiskey Island. Mr. Cox said thepath, as now planned, would usethe Willow Street Bridge, whichconnects the Cargill salt mine andOntario Stone property to highways
beyond the Flats. Mr. Cox said hismembers are concerned that addinghikers and bikers will create serioussafety hazards and security problems.
Forget the pastCouncilman Joe Cimperman, who
has been driving the creation ofFlats Forward, dismisses Mr. Cox’sassertions that industrial interestsaren’t sufficiently represented, notingthat Mr. Cox had attended some ofthe earlier organizational meetings.
“Maybe Mr. Cox is wonderingwhether or not he is welcome toparticipate in the organization andthe answer is a hearty yes,” Mr.Cimperman said. “But unlike thedays of old, we are not going to bepitting people against each other,because we don’t profit from conflict.We will be asking (representativesfrom) industry, maritime, residen-tial, recreational, commercial andentertainment” to participate onFlats Forward’s board of directors,he said.
An organization chart Mr. Marin-ucci presented to the Port Authorityboard showed a 25-person boardwith nine seats to be occupied byindustrial and maritime interests.
Flats Forward has been in theplanning stages for about a year,
Medicaid: Past coordination efforts have made few inroads
since an earlier organization, the FlatsOxbow Association, was in its deaththroes.
Cleveland has a long history ofwell-organized neighborhood advo-cacy and development groups. TheFlats Oxbow group lost the city’sconfidence and financial supportseveral years ago and had its owninternal problems.
The Flats Oxbow group was formedin the late 1970s when the Flats became dominated by the bars andrestaurants that made the area alively entertainment district. FlatsIndustry Association was formed in1988 to provide the traditionalheavy industries their own voice.Eventually, Flats Oxbow embracedthe area’s heavy industries.
‘A lost city’However, in the last decade, a
residential population has taken holdin the Flats, creating a constituencythat never felt it was representedadequately in Flats Oxbow. At thesame time, the industrial base in theFlats has declined, and some ofthose remaining feel threatened bythe way the area is changing.
“We’re a lost city down here,”said James Plotz, president of Wm.Plotz Machine and Forge Co., whichhas been in the Flats for 24 years.
Mr. Plotz said he, too, feels in thedark about plans for the new Flatsorganization. “It’s all behind-the-scenes stuff, and you can’t get astraight answer,” he said. ■
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Indians club seats retain all-inclusive featureTeam gauged customers’ opinions on potentialchanges to luxury seating area this offseasonBy JOEL [email protected]
For those with big appetites, theclub seating area at Progressive Fieldstill may be your best bet.
After an offseason studying potentialchanges for the luxury seating areain the second deck along the first-base line, the Cleveland Indians offi-cially announced last week that clubseat ticket buyers in 2012 would enjoy the same all-inclusive foodand non-alcoholic beverage perksthey have for many years, but at aslightly lower price than last season.
The Indians in October distributeda survey to past club seat customers,asking for their thoughts on six newpricing options, some of which included the all-inclusive food option and some of which did not. Atthat point, the team said the surveysimply was part of standard researchconducted by the team each offseason,and there were no plans in place toalter the area.
The team listed on its website lastweek the finalized options for 2012:
■$50 to $65 per ticket for full seasonclub seats, with the higher prices forseats closer to home plate;
■ $55 to $65 per ticket for 40-gameplans; and
■ $65 to $75 per ticket for 10-gameplans.
“Value of the all-inclusive programand price were both clear factors inthe purchase decision that werehighlighted in the fans’ response tothe survey, which helped frame ourclub strategy for 2012,” Indians senior director of communicationsCurtis Danburg wrote in an email.
In 2011, prices for club seats rangedfrom more than $65 (for full-seasontickets) to more than $80 (for 10-game packs and single-game tickets).The seats include gourmet food options not found elsewhere in theballpark, plus access to a climate-controlled lounge. The Indians intheir October survey listed possibleprices from $40 to $60.
The Indians last January raisedeyebrows when they included a“club seat test drive” as part of newand renewed season ticket packageslast season; the offer also included a
suite rental and access to the TerraceClub, the swank restaurant thatoverlooks left field.
Combined, those perks encompassthe most expensive real estate atProgressive Field, as the Indians continue their efforts to retain seasonticket holders, the lifeblood of prosports teams. Just last week, the Atlanta Braves made a similarly surprising move, as they offered a33% food and beverage discount —excluding alcohol — to season ticketholders who renew for 2012.
Changes also may be in the offingfor the ballpark’s kids play area inthe mezzanine section in right field— a change that may include redonesuites. One portion of a survey distributed last week read, “The Indians are considering enhancingthe kids play area at ProgressiveField. This new area will include anoutdoor space on the MezzanineLevel (including speed pitch, waffleball, batting cage, and video games)and an adjacent indoor space in thesuites with a children’s jungle gymand play area.”
Mr. Danburg said there currently
are no concrete plans for any changesin the mezzanine area.
The Indians have been after morerevenue sources inside ProgressiveField since March 2010, when theyasked nine architectural firms, including seven in Northeast Ohio,to submit ideas on how they could repurpose different areas within thestadium. The Indians have altered ahandful of suites since then, including
turning two into a “ChampionshipSuite,” remodeling one into their “FanCave” and moving their popular“Tribe Social Deck” to a suite andrebranding it the “Indians SocialSuite” last year.
Progressive Field has upwards of115 suites, second most in baseballto the Texas Rangers and widelyviewed by stadium experts as far toomany. ■
The Cleveland Indians had consid-ered changes totheir club seatingarea this offseason,but opted to retainthe same structure,which features unlimited gourmetfood options.ZUMA PRESS
Commercialinsurancerate climbcontinues Carriers, in turn, willunderwrite cautiously By MARK A. HOFFMANBusiness Insurance
U.S. commercial insurance ratesare expected to climb across manylines of business in 2012, accordingto an analysis released last week byMarsh & McLennan Cos.’ Marsh Inc.unit.
The expected rise would continuea trend that began in the second half of 2011, according to Marsh’s “Navigating the Risk and InsuranceLandscape: U.S. Insurance MarketReport 2012.” The report notes thatthe global property-and-casualty insurance industry sustained morethan $105 billion in insured catastro-phe losses last year.
While the losses had a “minimal”impact on the industry’s capital position, the losses hit earnings, thereport said.
“Carriers are expected to be extremely disciplined in their under-writing and seek rate increaseswhere they can,” said David Bidmead,Marsh U.S. CEO, in a statement accompanying the report.
In his introduction to the report,Mr. Bidmead wrote that many insurersare saying publicly that they will holdthe line on rates and are “showingmore willingness to lose a particularaccount rather than risk under-pricing.”
For risk managers purchasing various lines of insurance, “supplyingcomprehensive, up-to-date data” toinsurers, along with renewing insur-ance programs early, are some strate-gies to cope with a market in transitionthis year, Mr. Bidmead said. ■
Mark A. Hoffman is a senior editorwith Business Insurance, a sisterpublication of Crain’s ClevelandBusiness.
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the U.S.-based buyout fund of BairdPrivate Equity, acquired the companyin late 2007.
While he wouldn’t share exactfigures, Mr. Thompson said thecompany’s average annual revenuegrowth rate has been about 30%since 2007.
Also, the company’s average annual profit growth hovers at about40%.
Moreover, Mr. Thompson notedMedData’s continued growth hasalso caught the eye of several additional investors. Baird currentlyowns a majority stake in the com-pany, with current employees and a sundry of the company’s originalinvestors rounding out the owner-
ship.“When we first started, we did
business with 100 facilities, and nowhave about 700,” he said. “We’vedriven a national presence, andwe’re very well known in the specialties we do business.”
This month, MedData acquiredMedDirect Inc., a billing companyin Grand Rapids that specializes incollecting from patients, for anundisclosed sum. The move, Mr.Thompson said, allows MedData tocarry a “very significant” differenti-ation from any other major billingcompany.
For one MedData hadn’t focusedon patient collections, but given thegrowing trend of patients having tostomach more of their own health
care costs, Mr. Thompson said theMedDirect acquisition positions his firm to tap into that growingmarket.
MedDirect CEO Ken Bloem, nowchairman of MedData’s board of directors, said patient fees histori-cally have accounted for about 5%of a physician’s revenue, but todaycan account for as much as 20%.
That’s due, in part, to patients having to contribute more for insur-ance co-pays and deductibles.
“We’re not in business just to collect the bill, but we are in busi-ness to engage patients more effec-tively to link them with their physi-cian office or individual physicianso they know why they’re getting abill,” Mr. Bloem said. ■
Haddad and her manufacturingcompany, R H Industries. With astaff of only 15 and 100,000 squarefeet on Cleveland’s West Side, shesays she’s always had to fight aboveher weight.
Ms. Haddad’s business used itsmachining and fabrication shop onWest 33rd Street to make fixtures and protective cages for outdoorlighting systems when infrastructurespending was boosted by federalstimulus dollars as few years ago.When defense spending was strongand predictable, she cast brassdrain fixtures for the decks of Navyships at her nearby foundry.
Now, through Green Rock Lighting— an R H subsidiary Ms. Haddadformed last year — she’s looking tocapitalize on a new opportunity inthe lighting business.
Ms. Haddad said she spent about$250,000 on the equipment sheneeds to start production, keepingthe cost down by buying usedequipment and by using machineryshe already owns. She already hashired three engineers in 2012 tocontinue design and testing workon the new products, and said sheexpects to hire production staff thisyear, beginning with five new hiresshe hopes to complete by mid-February.
Seeing the lightMs. Haddad probably will need to
fight larger competitors to get thebusiness she wants. She thinks shecan do it, though, in part becauseshe’ll be marketing her products as“Made in the USA,” from the partsshe sources elsewhere to her ownfabrication and final assembly inCleveland.
Ms. Haddad also won’t be goingit alone. She’s partnering with Cali-fornia-based Bridgelux, a manufac-turer of LED arrays that will providethe critical light-emitting diodesMs. Haddad will need to make herlights work.
Bridgelux doubled its revenues in2011, when it posted sales of about$60 million, said Mark Kelly, directorof sales for the company’s Mid-Atlantic region, which includesOhio. It got there not by producinglighting systems itself, Mr. Kellysaid, but by providing arrays toabout 250 smaller manufacturerssuch as Ms. Haddad — similar tothe way computer chip makers selltheir products to other manufactur-ers.
“I want to be the Intel, not theDell” of the LED lighting business,Mr. Kelly said.
Mr. Kelly said he thinks Ms. Haddadcan succeed, in part becauseBridgelux is providing Green Rocknot only with LED arrays, but alsowith engineering support and con-nections with other vendors.
Cleveland’s a plum
One reason Bridgelux believes inMs. Haddad is because she is dedi-cated to making her products in theUnited States — somethingBridgelux not only supports itself,but which it also sees as a marketingadvantage when it comes to sellingto cities and U.S. government entities,Mr. Kelly said.
The first big test for Green Rockmight come right in its own backyard.
Ms. Haddad said she is one of thecompanies bidding to supply streetlights to the city of Cleveland. Shesaid she believes Green Rock is oneof three finalists who will beginworking with the city this year asCleveland evaluates both the lightsand the companies that providethem.
The city’s business will be a plumfor whatever company wins it.
According to Andrea Taylor,spokeswoman for Cleveland MayorFrank Jackson, Cleveland has about70,000 incandescent or other old-style lights, which it hopes to replace with efficient and longer-lasting LED fixtures beginning thisyear. Bids are under evaluation sothat the city can contract out thefirst phases of the work this year,Ms. Taylor said.
That’s a lot of lights — and a lot ofmoney to be made replacing them.
Do the mathThe fixtures must be heavy duty
and able not only to hold lights, butstand up to harsh outdoor condi-tions for years. Ms. Haddad estimatesher fixtures will cost $800 or $900each but will last for decades due totheir cast aluminum construction. Ifanyone is counting, 70,000 lights at$800 apiece add up to a price tag ofabout $56 million.
And Cleveland is not the only city to begin thinking about more efficient lighting. Because they usefar less power than traditional streetlights, LED lights can pay for them-selves in two or three years, thenprovide continued energy savingsindefinitely, Mr. Kelly said. While atraditional streetlight burns out after about 10,000 hours of use, anLED lasts about 50,000 hours.
“In 11 years, if you didn’t do anything, only about 30% of your(LED) lights would go down,” Mr.Kelly said.
Cities such as Pittsburgh, Balti-more, Des Moines and dozens ofothers already have begun replacingtheir lights, but hundreds of othersalso will do so in the next few years,Mr. Kelly predicts. That changeovercreates opportunities for not onlyBridgelux, but for smaller compa-nies such as Green Rock.
As Ms. Haddad notes, “I just wanta piece of that pie.” ■
Urban League rolls out acceleratorTenants hope to collaborate on projects, clients
The Urban League of Cleveland is adding a business accelerator,which it will call UBiz Connect, tothe line of business services it offers.
UBiz Connect will offer a dozenbusinesses discounted professionalconsulting services in human resources, marketing and accountingas well as office space and computerand Wi-Fi service.
The tenant companies, all existingbusinesses, will use the space at theUrban League’s Cleveland office assatellite offices in the hope the busi-nesses will collaborate on projectsor with clients they might not be
able to serve individually, said N.Michael Obi, the Urban League’s director of its Multi-Cultural Busi-ness Development Center.
Mr. Obi said the Urban Leaguehopes that new, bigger businessesmight grow from those collabora-tions. Mr. Obi said seven tenants already have been identified.
The accelerator businesses willshare space with the business development center, a federallysponsored small business develop-ment center the Urban League hasrun since 2009.
UBiz Connect is funded by a$50,000 grant from the JP MorganChase Foundation.
“Clearly we see small business
as the engine of the American econ-omy, so supporting small business and making sure that they are successful is an important part ofthat (effort),” said Cinnamon Pelly, aColumbus-based vice president ofthe bank foundation. “Our support(of UBiz Connect) is an importantpiece to help seed some of thatwork.”
Ms. Pelly said the bank would be interested in financing new busi-nesses that grow from the accelera-tor.
Business accelerators are similarto incubators, but they usually focuson companies entering or growing ina national or global market.
UBiz Connect will subsidize somesupport services for client businesses.Those businesses will pay a $150monthly membership fee. ■
continued from PAGE 3
Lights: Green Rock says‘Made in USA’ should helpcontinued from PAGE 3
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As reported in a recent Crain’sCleveland Business story, the LakeErie Energy Development Corp.(LEEDCo) is lobbying Ohio
legislators to force state-regulated utilitiesto buy electricity generated by a proposedLake Erie wind farm at a price highenough to pay for the project.
What Crain’s did not report was howhigh the actual costs will be, and it failedto compare these high costs to other alternative clean energy opportunities inOhio. These facts shine a spotlight on theirrational distortions systemic in Ohio’scurrent clean energy policies that favor“renewable” energy over alternativeclean energy sources, to the detriment ofOhio’s economic future.
LEEDCo estimates that the wind farm’selectricity must be sold at a wholesalerate of $175 to $225 per megawatt hourfor the project to be economically viable.In contrast, average wholesale electricalgeneration rates in Ohio are less than$50 per megawatt hour and are not projected to exceed $80 per megawatthour in the next 10 years. No wonderLEEDCo is lobbying Ohio legislators toforce power companies to buy electricityfrom the proposed project.
Supporters say the per-megawatt-hourcosts for the wind farm do not reflectpositive economic impacts to Ohio fromthe development of technologies and industry suppliers to build freshwater
wind farms throughout the United States.However, at anything near these costs,freshwater wind farms are not likely tobecome a realistic growth industry. Asreported by The Plain Dealer, high off-shore generation costs even have resultedin the Dutch falling out of love with windfarms.
Which brings me to the crux of the issue with Ohio’s clean energy policies.
The Ohio Legislature should not useOhio taxpayer (or ratepayer) dollars topick clean energy winners and losers. Itperverts the rational marketplace and harmsOhio’s greatest assets — our industrialmanufacturing sector and low cost ofelectricity. All zero-emission energy isclean energy.
An estimated 5,000 to 8,000 megawatts
Mr. Traves is president of Labyrinth Management Group Inc. in Medina.
As someone who makes his livingwriting about manufacturing,I’m happy to hear it get positiveplay in any president’s State
of the Union speech. But I worry we’re losing touch with how manufacturingworks and what it needs.
We have a cultural memory of the dayswhen factories employed thou-sands of relatively low-skilledworkers and provided themwith relatively high wages. Butthese are not those days, and therecession has put them furtherbehind us because, to survive,companies must increase theirefficiencies.
Look at the ArcelorMittal steelmill in Cleveland.
The mill has been throughmany recessions, owners, shutdowns andretoolings, and it has emerged as one ofthe most efficient mills in the world. Today, its 1,500 steelworkers make thesame amount of steel as 5,000 of theirpredecessors, which is why the mill sur-vives.
So, while manufacturing is comingback, it’s not correct to assume it’s bringing
all of its old jobs back with it.Yet policymakers act as if new manu-
facturing plants will provide jobs tothose former steel workers, millions ofother workers laid off from out-of-dateplants and a few million able bodies withhigh school educations (or less).
Anyone who thinks that is probablysmoking something that wouldprevent them from getting a jobin manufacturing themselves. But,if I had 100 skilled machinists, Icould probably find them all jobsin a week.
As manufacturers love to pointout, the factory jobs of today arenot like the ones our fathers had.
The shops are clean, the payis better and the work requiresa strong mind, rather than a
sturdy back. The jobs they provide require far more education than the jobsof old, and only a highly trained workercan make a contribution on a modernplant floor. I couldn’t do it, not withoutsome substantial training, including someserious refresher courses in mathematics.
So fostering manufacturing with tradepolicies, tax incentives and other tools is
all good, and it will increase the sector’sneed for employees. But, I wonder, wherewill it get them?
In some other countries, a manufac-turer can call the union and they’ll send hima machinist, welder or a skilled workerfrom whatever trade they represent.Here, industrial unions don’t generallywork that way and there is little cooper-ation between them and employers.
Meanwhile, the days when large U.S.factories offered apprenticeships toteach skills to new hires are nearly gone.
If the United States is going to build itsmanufacturing sector, we have to pre-pare ourselves and our children to workin it. This will require both individual effort and policies that make adequatetraining available to those who wouldmake good use of it. Perhaps instead ofjust handing someone an unemploymentcheck, we should also train them to be a machinist or welder or computer pro-grammer or … something.
Ask a manufacturer, they’ll tell you.And perhaps instead of asking whatmanufacturing can do for us and ourcountry, we first should ask what weshould be doing for it. ■
1100 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM JANUARY 30 - FEBRUARY 5, 2012
Get to itR
epublicans in Columbus have a big piece ofunfinished business they must attend to inthe weeks ahead. It is the job of holdingdown the cost of government by limiting the
extent to which pension and health care costs aresubject to collective bargaining in contract talks between public employees and their employers.
Gov. John Kasich and the Republican members ofthe Legislature owe local governments and schooldistricts across Ohio for the mess they made of Senate Bill 5, last year’s failed attempt to address thecollective bargaining issue. Instead of focusing onbenefit costs, Republicans created a broad, anti-unionbill that riled up labor leaders and their Democraticallies, who together got behind a successful ballotinitiative to repeal the bill in November.
SB 5 was supposed to be a lifeline to cities andschools, both of which suffered when Gov. Kasichand the Legislature brought Ohio’s budget into balance last summer by reducing their levels of stateassistance. The governor’s justification for thosecuts was that the new collective bargaining billwould provide local public bodies with the coverthey’d need to bring down their employee benefitcosts, thus lessening the need for state dollars.
Now, as a new year begins, municipalities andschool districts must deal with the worst of bothworlds — less state money and no bill that puts capson how much they can pay in the way of their employees’ health care and pension benefits.
That wasn’t the deal.At a Dec. 19 press conference that looked back at
his first year in office and outlined his agenda for2012, Gov. Kasich indicated he had little appetite forrevisiting the collective bargaining issue. On the repeal of SB 5, the governor said:
“I don’t always get it right. I make mistakes. It’sthe way it goes. If you cannot lose something andtake it like a man — or like a leader — and learnfrom it, then you haven’t learned anything aboutlife. They just said ‘no.’ I’m OK with that. It’s cool.You move to the next thing.”
But it’s not cool, governor — at least not with thecommunities and schools that a reasonable collectivebargaining bill would have helped.
It also comes off as more than a bit cavalier tochalk up the SB 5 debacle to, “It’s the way it goes.” Itdidn’t need to go that way, especially if Republicanleaders had shown restraint in their use of power asthey addressed what was by far the most importantissue they tackled in 2011.
Rather than move on to the next thing, Gov. Kasichand the Legislature should make amends for theirmistakes and should take another crack at crafting acollective bargaining bill.
The bill shouldn’t be a catch-all measure, but instead should focus on health care and pensionbenefits and seniority rules, all of which havetremendous impact on cities and school districts.
Republicans pushed the state’s budget pain downto the local level last year. They should help relievethat pain this year by not reneging on their implicitpromise to lend local bodies a helping hand by easingtheir contract dealings with unionized employees.
JANUARY 30 - FEBRUARY 5, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 11
RAYSHAWN JORDANClevelandThey should reject the tax.(The price) is already toohigh and expensive.
➤➤➤➤ To watch past installments of Big Issue, visit the Multimedia section at www.CrainsCleveland.com.
THE BIG ISSUEEach pack of cigarettes sold in Cuyahoga County carries a 30-cent excise tax to support local artsorganizations. Should voters support a renewal of the tax if it is on the ballot in 2015?
GINA CIRINOLyndhurstTax them. Cigarettes areunhealthy products, and itwould help people stopbuying them. And the taxmoney is helping the artscommunity.
MARY MCCAHONClevelandYes, a cigarette tax isawesome. I think morepeople should quit smoking, and I like that the tax dollars go to goodthings that help the community.
JAN MILLERLakewoodI’m not sure. I’m a big supporter of the arts, but cigarette prices are already too high.
of clean energy from industrial co-generation is available in Ohio. Thecost of this net zero emission elec-tricity typically ranges from $65 to$80 per megawatt hour, well belowcosts for land-based renewable energysources and light years away from aLake Erie wind farm’s costs.
If clean energy from industrialco-generation increased in Ohiofrom less than 1% currently to 20%,or about 5,000 megawatts, Ohioanscould realize more than $10 billion
in capital investment, $2.9 billion inannual energy savings, 40,000 newjobs and reductions in air pollutantemissions of 36 million metric tons(a net negative).
One example of the adverse impact of Ohio’s current clean energypolicy is AK Steel’s proposed elec-trical co-generation project in Middletown that was put on hold in2011. This clean energy project wascarbon neutral and would haveproduced 827,820 megawatt hoursof electricity annually at a net neg-
ative air pollution emission rate. Iestimate that the cost per megawatthour of electricity produced by theproject was probably close to $70 or$80, less than half the “viability”rate for the Lake Erie wind farm.
Still, AK Steel mothballed the pro-ject, I expect because the Midwestis currently blessed with wholesaleelectricity costs that are at record-low prices. As a result, the companycould buy electricity and pay trans-mission costs at a cheaper rate thanthe project’s internal cost of gener-
ation (even as competitive as it is).This may be OK for AK Steel, butOhioans lost $300 million in privatesector investment, a huge numberof construction jobs, a net reduc-tion in air pollutant emissions, andadditional cost-effective zero emis-sion electricity.
So, if private companies andfoundations want to continue tiltingat Lake Erie windmills, I’ll cheer themon. Just don’t ask Ohio taxpayers orelectricity ratepayers to continuesubsidizing renewable energy projects
over more cost-effective industrialco-generation and combined heatand power.
To do so puts Ohio’s industrialmanufacturing sector at a compet-itive disadvantage and will increaseOhio’s electricity rates more than amarket-based clean energy policy.Low-cost electricity can be part ofOhio’s competitive advantage torevitalize manufacturing. To keepclean energy policies in Ohio thatwork against this goal is bad forOhio and bad for our country. ■
continued from PAGE 10
View: Taxpayers have more cost-effective options than wind power
TAX LIENSThe Internal Revenue Service filed taxliens against the following businessesin the Cuyahoga County Recorder’sOffice. The IRS files a tax lien to protect the interests of the federalgovernment. The lien is a public noticeto creditors that the government hasa claim against a company’s property.Liens reported here are $5,000 andhigher. Dates listed are the dates thedocuments were filed in theRecorder’s Office.
LIENS FILEDOhio Sauce Corp. Hot Sauce Williams12310 Superior Ave., ClevelandID: 34-1286996Date filed: Nov. 3, 2011Type: Employer’s withholding, unemploymentAmount: $31,910
William E. Crowe, M.D., Inc.6681 Ridge Road, Suite 204, ParmaID: 30-0019966Date filed: Nov. 3, 2011Type: Employer’s withholding, failureto file complete returnAmount: $30,886
Green Thumb Florists GardenCenter and Landscapers Inc.11515 Lorain Ave., ClevelandID: 34-1824632Date filed: Nov. 18, 2011Type: Employer’s withholding, failureto file complete returnAmount: $22,817
Farohs Candies & Gifts LLC7223 Pearl Road, ClevelandID: 01-0851289Date filed: Nov. 30, 2011 Type: Federal tax returnAmount: $22,742
K & B Construction & Mechanical Corp.7550 James Drive, North RoyaltonID: 34-1799897Date filed: Nov. 10, 2011Type: Employer’s withholdingAmount: $21,391
NASA assists Magnet’s latest loans10 awardees will get help from GlennBy DAN [email protected]
As it has in previous years, manu-facturing advocacy group Magnet ishelping to administer local govern-ment loans intended to help manu-facturers bring new products to market.But this time, the loans come withfree engineering help from Cleve-land’s NASA Glenn Research Center.
About 10 businesses ultimately willbe awarded low-interest loans of upto $50,000, along with 40 hours ofengineering help from NASA’s tech-nology experts. The loans jointly arefinanced by the city of Cleveland andCuyahoga County; businesses thatreceive them must promise to man-ufacture products that come out of theeffort in either the city or the county.
NASA has committed 400 hours ofservices to the program, while the cityand county have committed a com-bined $450,000 to fund the loans.
“It’s an excellent opportunity foryou, as manufacturers, to use (NASA’s)services,” Magnet strategic programofficer Greg Zucca told a group ofabout 40 manufacturers last Wednes-day, Jan. 25, when the program wasunveiled.
Audience members expressed interest in the program, for help with
such products as advanced sensorsor special materials, and one evenasked if companies could submitmore than one application. (Theycan, but are only eligible for oneloan and one NASA services con-tract, according to Magnet.)
To win the loans and NASA contracts, businesses must showthey have a product in developmentthat has the potential to be broughtto market in three to five years. Theyalso must demonstrate a need forspecific help from NASA.
On that last point, the parametersare broad, according to NASA leadsystems engineer Eric Baumann,who said the agency works in fieldssuch as electronic shielding, turboand jet engines, biomedical tech-nologies and specialized materialsand structures.
“We do a little of everything,” Mr.Baumann said.
Advice for applicantsThe 40 hours of help is meant to
address specific challenges, not todevelop a product fully, said EdNolan, Magnet vice president ofproduct development. Winningbusinesses likely will be those that arespecific in their applications abouttheir technological challenges, he said.
“Don’t just write, ‘It breaks whenI use it.’ Be as specific as you can,”Mr. Nolan advised applicants.
Manufacturers interested in applyingfor the loan and technology help,
which come as a package, have untilFeb. 15 to apply. They can find moreinformation about the program andNASA’s areas of expertise at Magnet’swebsite, www.magnetwork.org, wherethey also can apply for the program.
Magnet and NASA said they hopeto announce the program’s awardsin April.
Cleveland economic developmentdirector Tracey Nichols said the cityhopes the program will foster thegrowth of manufacturing in Cleve-land. The sector has been cited nationally, of late, for helping to leadthe United States out of recession,and it remains a crucial part ofCleveland’s economy, she said.
“Product innovation is one of themost important aspects of economicdevelopment for the city of Cleve-land,” Ms. Nichols said. “And we’regoing to put some funds together toensure these products are fundedand brought to market.”
The program is the most recentexample of NASA’s efforts to reach outto the local manufacturing commu-nity. Last year, it teamed up withMagnet to provide technical assis-tance specifically to companies in the automotive supply chain. That effort drew requests from more than90 manufacturers for assistance andresulted in companies using NASAtechnology for products such astruck tire sensors and the develop-ment of new welding electrodes,NASA representatives said. ■
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GOING PLACESJOB CHANGES
EDUCATIONCLEVELAND STATE UNIVERSITY:Peggy Gries Wager to executive inresidence, advancement. LORAIN COUNTY COMMUNITYCOLLEGE: Terri Burgess Sandu todirector, Entrepreneurship InnovationInstitute and executive director, Work-force Development.NOTRE DAME COLLEGE: David A.Armstrong to vice president of devel-opment.
FINANCECFBANK: Michele R. Guildoo tovice president, human resources anddeposit operations; Paul A. Manghillisto vice president, commercial lending;Sharon K. Farris to manager, mort-gage operations.
FINANCIAL SERVICECW WEALTH ADVISORS: DeborahC. Jira to partner. KPMG LLP: Michael Gavigan toprincipal. PEASE & ASSOCIATES INC.:Christopher Szuch to senior manager;Megan Haldi to staff accountant;Megan Valencic to administrative assistant.
INSURANCEHYLANT GROUP: Scott Dillabaughto president, Cleveland office.WILLIS NORTH AMERICA: CaseyPetersen to managing partner.
LEGALSCHNEIDER, SMELTZ, RANNEY &LAFOND: Ryan P. Nowlin to partner;Colleen Meredith to associate.ULMER & BERNE LLP: JeffreyBaddeley to partner.
WELTMAN, WEINBERG & REIS CO. LPA: Scott D. Fink, Amy ClumHolbrook and Jennifer Monty Rieker to partners.
MANUFACTURINGAUTO BOLT CO.: Leo McNeeley tooperations manager. LASZERAY TECHNOLOGY INC.:Steven Patton to president; MichaelBrodnik to general manager; KevinGoergen to manufacturing analyst. SWAGELOK CO.: Jill Whelan to vicepresident, corporate communications.
MARKETINGHOME TEAM MARKETING: LorienParry to associate account supervisor;Andrea Essig to account manager;Terry Maruna to account executive.
NONPROFITGLOBAL CLEVELAND: Andrea Castrovillari to chief development officer; Lauren Sable Freiman to director, marketing; Beth Gantz towelcome hub manager; Joel Matos toguest services coordinator; LarryMiller to president; Meran Rogers todirector, volunteer services; Roya Ismail-Beigi Shirazi to program director. NACS FOUNDATION: Vicki MorrisBenion to executive director.
SERVICEDIGITAL COLOR INTERNATIONAL:Jim Hoffman to vice president, salesand marketing.DIRECT CONSULTING ASSOCATES:Frank Myeroff to managing partnerand vice president, business develop-ment and operations.EMPLOYEESCREENIQ: AngelaBosworth to vice president of compliance and general counsel.
TECHNOLOGYMCPC INC.: Paul Gulden and EricWebber to managed services engi-neers; Amanda Lockhart to eventsmanagement specialist; Kevin McCarthy to director, business development and partner management;Daniel Juris to controller; KevinFord to delivery engineer; Michelle
DillabaughJiraArmstrong
Murphy, Christopher Dottavio andThomas Adkins to project managers;Eric Laurence to contract manager;Douglas Jones to account manager;Jason Turner and Ronnie Munn tovirtualization engineers; HowardCreed to solution consultant.
BOARDSFEDERAL RESERVE BANK OFCLEVELAND: Alfred M. Rankin Jr.(Nacco Industries Inc.) to chairman;Richard K. Smucker to deputy chairman. FRIENDS OF WESTLAKE PORTERPUBLIC LIBRARY: Karen Alfred topresident; Carol Welo to vice president;Melanie Alban to treasurer; JenniferCirincione to recording secretary;Dr. Jeanne Bishop to correspondingsecretary.LEGAL AID SOCIETY OF CLEVELAND:Adrian Thompson (Taft) to president;Ann Bergen and Rick Petrulis tovice presidents; Karen Giffen to secretary/treasurer. MARKET DISTRICT IMPROVEMENTCORP.: Darrell A. Young (Darrell A.Young Enterprises) to president; MikeForan to vice president; Gregory S.Gacka to treasurer; Greg Patt tosecretary.NORTHERN OHIO REGIONAL MULTIPLE LISTING SERVICE:Dennis Steed to chairman; Alan Hallock to vice chairman; Karen O’Donnell to treasurer.
Crain’s that highlights positive businessdevelopments. Send information tomanaging editor Scott Suttell at [email protected].
■■ Robert J. Klonk, pres-ident and chief sales officer at Oswald Cos.of Cleveland, wasnamed chairman of the
Council of EmployeeBenefits Executives.Mr. Klonk, who had been
serving as the council’s vicechairman, succeeds Vinnie Daboul,who resigned as chairman in Decem-ber after changing companies.
The Council of Employee BenefitsExecutives is a standing committeeof the Council of Insurance Agents& Brokers, representing the benefitsbusiness interests of council memberfirms. Mr. Klonk will serve as its chair-man through the 2013 EmployeeBenefits Leadership Forum.
■■ Catacel Corp. of Garrettsvillesaid it elected Gary McDaniel to itsfive-member board of directors totap into his “wide-ranging expertisewithin the petroleum refining and
industrial gas processing sectors.”That background, coupled with
Mr. McDaniel’s “proven track recordof growing startup/early-stage com-panies,” should help Catacel grow inthe hydrocarbon processing busi-ness, the company said.
Mr. McDaniel has spent morethan 20 years in leadership andmanagement posts in energy andhydrocarbon companies.
■■ TOA Technologies of Cleveland,a provider of mobile work forcemanagement and scheduling soft-ware, has named a Hyland Softwareexecutive as its new vice presidentof worldwide marketing.
John Opdycke will manage TOATechnologies’ corporate communi-cations, demand-generation andproduct marketing programs “tar-geted at new business acquisition,industry thought leadership and theoverall advancement of solutions thatdeliver increased efficiency, reducedcosts and enhanced customer expe-rience,” the company said.
Mr. Opdycke has more than 20 years’ experience in b-to-b marketing.Previously, he was vice president ofmarketing for Westlake-based Hyland.
Five months after joiningNineSigma as its chieffinancial officer, BillChorba spearheaded a
strategic move to unbundle theorganization’s human resourcesservices from a third-partyprovider and oversee thosefunctions internally.
The decision not only madegood financial sense, but it alsoaligned with the professionalservices firm’s focus on intellec-
tual capital and maintaining itslean corporate structure.
Since April 2010, Mr. Chorbahas been engaged in HR admin-istration and compliance issuesas well as recruitment, trainingand personnel development. He also works closely with insurance brokers on benefitsand health care plan design.And he recently introduced anew wellness program at theBeachwood company.
“As CFOs, if we’re good at
FINANCEI N S I D E
JANUARY 30 - FEBRUARY 5, 2012 CRAIN’S CLEVELAND BUSINESS 13
16 SOME PRIVATEEQUITY FIRMSBALKING AT NEWSEC RULE.
With more dealsdone, adviserwork multipliesInvestment banking is ‘red hot’with cash now more accessibleBy MICHELLE [email protected]
The investment banking business isbouncing back in a big way.
A couple years ago, companies’earnings were depressed or nonexis-
tent and money for acquisitions was hard tofind. However, it appears 2011 was a turningpoint: Now that many businesses’ balancesheets have improved and capital is moreavailable, the people who make their livingadvising companies on deals and financinghave more work to do.
It’s hard to find a Northeast Ohio invest-ment banker that hasn’t expanded its workforce recently.
“Our business is redhot,” said Mark A. Filippell, managing director forWestern Reserve PartnersLLC, a Cleveland firm thatadded five people in 2011,increasing its staff to 28.“We’re working our brainsoff.”
Western Reserve Part-ners expects to bring its
total staff to 35 by June and for the first timein its eight-year history is expanding outsideCleveland, with the planned February launch of a valuations business in Columbusand a Dallas office slated to open later thisyear.
KeyBanc Capital Markets — the invest-ment banking business of KeyCorp — lastyear increased its staff by a net 40 for a totalof about 530, including significant additionsto its senior investment banking ranks, saidRandy Paine, executive vice president andhead of KeyBanc Capital Markets Corporateand Investment Banking.
KeyBanc last year raised $125 billion invarious markets for its clients, an 18% increase from the $106 billion it raised in2010. It had record volume in its debt capitalmarkets and syndicated loan work, and itsnumber of transactions, including mergerand acquisition deals, increased 10%.
KeyBanc also opened an 11th office, inHouston, in late 2011.
Riding the waveStrategic and financial buyers are flush
with cash, thanks in part to an improvingeconomy. Plus, super low interest rates makefor attractive financing terms for buyers.
“There’s a ton of available cash to be deployed,” said Tony Amador, managing director of BellMark Partners LLC, a Clevelandinvestment bank that saw revenues in 2011climb 55% to 60% over 2010.
BellMark last year hired three investmentbankers, bringing its total staff to nine. Someof that growth is likely the result of growingname recognition for BellMark, which startedin 2009 and also has an office in Boston, Mr.Amador said.
More companies have resumed playing offense, not just defense, observed CharlieCrowley,
Filippell
See ADVISERS Page 14
See HUMAN Page 15
CFOS SEE THE HUMAN SIDE
“A lot of HR decisions require a true cost-benefit analysis anyways, and that really becomes a budgetary issue or concern.”
— Tim McEldowney, Buckingham Doolittle& Burroughs LLP
WHAT CFOs ARE SAYING“When issues arise with employees, I
tend to look at them more objectivelyand from a financial standpoint.”
— Todd Rossman, Mortgage InformationServices Inc.
“Over the last two years we have seen an increasing number of CFOs with increasing frequency bringing issues regarding human capital and HR to the forefront of our discussion.”
— Nick Araco Jr., president and CEO ofthe CFO Alliance, a national professional network
Financial executives now more often asked to apply skills to HR duties
JANET CENTURY
Bill Chorba, the chief financial officer of Beachwood-based NineSigma, since April 2010 also has overseen the company’s human resources duties. “Youneed to do what needs to be done and sometimes that requires hard decisions,” Mr. Chorba said.
14 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM JANUARY 30 - FEBRUARY 5, 2012
When It Gets Down to Business…Solon Gets It!The City of Solon welcomes these new businesses:Blue Star Tavern
Family Tree Home Care Services, LLC
First Watch
Joanne Michael Hair Studio
Streem Orthodontists
Swirl Wine Bar
And thanks these real estate professionals for bringing new business to Solon: Jeffrey Calig - NAI Daus
Frank Costanzo - Howard Hanna
Nanci Ferrante - Kowit & Passov Real Estate Group
Scott Repie - NAI Cummins Real Estate Inc.
David Stecker - Greenberg Real Estate Advisors
Jim Wolf - Kowit & Passov Real Estate Group
Solon’s Got It!Prime industrial, office and retail sites at www.solonohio.orgCity of Solon • 34200 Bainbridge Road • Solon, Ohio 44139 • 440.337.1313 Peggy Weil Dorfman, Economic Development Manager • [email protected]
The Solon Select is a distinguished group of more than 800 businesses that have chosen to locate in the City of Solon.
FINANCE
As eurozone teeters,export fears intensifyWeakened demand from one of United States’big customers could slow domestic turnaroundBy JAY [email protected]
At year’s end, manufacturerstold Crain’s ClevelandBusiness that unless Europe implodes, the
economy here should keep gainingsteam and keep local plants hum-ming. European business, throughexports and U.S.-owned Europeanproduction, had been bright spotsfor American manufacturers in 2011.
But there is concern that a Euro-pean economic collapse may beunder way.
According to a Jan. 24 report inthe International Business Times, aNew York City-based online newsorganization, “there is little doubtnow that the eurozone is in a recession, with real GDP expectedto decline through the secondquarter of this year.” The story cited economists from IHS, a Colorado-based information andeconomics consulting firm. “Forseveral countries (Italy, Spain,Greece and Portugal), the down-turn will extend through the summeror beyond. Even Germany will behard pressed to avoid the pain.
“Fiscal austerity, very tight credit conditions and fragile confi-dence have afflicted the majorityof European economies, evensome of the least troubled,” thestory said.
Similarly, Paul Dales, senior U.S.economist for Capital Economists,a London-based consultancy, is estimating that annual exportgrowth to the 17 nations that usethe euro has slowed from 15% inAugust to 2.5% in November. “Ifthe eurozone is on the verge of asdeep a recession as we think it is,then it makes sense that U.S. exports would be falling,” he saidin his report.
The impact on local firms, however, does not yet appear to beserious, according to a Cleveland-based federal trade official.
“I haven’t heard anything negative, which is somewhat surprising,” said Susan Whitney, office director of the Cleveland office of the U.S. Commercial Service, a part of the federal commerce department. “Whetherpeople are slowing down inGreece and Portugal and Italy, Iwould assume that’s happening.
“But clients aren’t calling andsaying, ‘We’re not getting paid byour customers in Greece,’” shesaid. “It probably means that allthey are doing is changing theirterms of payment. Maybe they arenow asking for letters of credit orpayments in cash or smaller orders.”
Properly equippedThat restrained concern may be
due to the fact that Northeast Ohiofirms focus on business equipment,rather than making products forconsumer markets. A Jan. 20 reportby the International Trade Admin-istration of the U.S. Department ofCommerce said that demand forbusiness equipment has been particularly robust.
Still, the concern for the futureof the European economy is real.Exports to Europe from the UnitedStates have been falling and econ-omists and trade observers areconcerned that a recession in Europe will slow down recovery inthe United States as Europeanfirms curtail purchase of U.S. goods.
Europe consumes nearly one-fifth of America’s exports and aweakening Europe could furthershrink demand for Americangoods and slow the U.S. economyjust as the job market has startedto strengthen. Overall exports fromthe United States dropped 0.9%,according to the U.S. Departmentof Commerce’s most recentmonthly trade report. But Americanexports to Europe alone fell moresharply, by nearly 6%.
That decline is being felt at
Parker Hannifin Corp., a MayfieldHeights-based firm that makes hydraulic and pneumatic controlsfor manufacturing equipment andvehicles.
“Our international business, including Europe, is weaker thanwe anticipated,” said Aidan Gormley, Parker Hannifin’s directorof corporate communications.“Definitely things in Europe areslowing down, and we’re seeingthat effect on our business.”
Mr. Gormley said Parker Hannifindoes little exporting, but it hasmanufacturing and distributioncenters across Europe.
By contrast, Don Esarove, president of the Cleveland-basedCypress Corp., said the manufac-turing firms his holding companyowns aren’t seeing a significant decline in European business. “It’sa mixed bag,” he said. “We bothbuy and sell into Europe throughour six small (manufacturing)companies and our businesses aredoing pretty well right now. Themanufacturing sectors are doingpretty well.”
Mr. Esarove, who is a member of the board of directors of the International Business Network, aCleveland nonprofit that encouragesbusiness growth into internationalmarkets, said many industries aredoing well in Europe and he citedthe strong business one of Cypress’scompanies, Riley Gear Co. based inSt. Augustine, Fla.
“We supply transmission supplyboxes for oil rigs off Norway, that’sstill pretty strong,” he said. ■
“Definitely things in Europe are slowing down, and we’reseeing that effect on our business.”
– Aidan Gormleydirector of corporate communications, Parker Hannifin
managing director of Paragon Capital Group LLC in MayfieldHeights, which also had a better yearin 2011 than 2010.
“There’s just less fear in themarket,” Mr. Crowley said. “Thereis a sense for many CEOs andboard members that the worst isover in this recession, and it’s timeto get back and focus on growthand building value.”
Mr. Filippell expects business tostay steady, in part, because hesaid there’s a pent-up supply ofcompanies that have needed tosell but couldn’t for a few years because their owners would nothave fetched the prices they wanted.
“Now, those are coming out ofthe woodwork,” he said.
League Park Advisors LLC,which opened in June 2010, seesthe recent growth in its businessas proof its founders were rightthere’d be a surge in the market.
The Beachwood firm closed twodeals in 2010 and 11 in 2011, six ofwhich wrapped up in the lastquarter, said Sean Dorsey, founderand managing director. League
Park added six people in late 2011and now stands at 10.
Mr. Dorsey sees the pattern assustainable for a few reasons,namely the wave of baby boomersretiring and the preference of thenext generation to inherit cashrather than the family business.
“This is not just a blip in the mar-ket,” said Brian Powers, managingdirector for League Park. “Thereare some sustainable, societal andmarket-driven trends that shouldkeep this wave going forward for atleast the next couple years.”
Good signsIf investment bankers’ backlogs
are the crystal ball, 2012 shouldprove busy.
Though revenues were relativelyflat from 2010 to 2011, Western Reserve Partners has “a ton ofthings that will close quickly in2012,” Mr. Filippell said. He expectsthe firm’s revenues to at least double in 2012 over 2011, whichwould result in the strongest revenue year in its history.
KeyBanc Capital Markets’ backlog of work is the best it has
been since the economic downturn,Mr. Paine said. It’s up 50% over thefirm’s backlog at the end of 2010.
One driver of KeyBanc’s growth,Mr. Paine said, is the strategic planit set for itself in 2009, when itidentified areas it wanted to “beefup” in its ability to serve clients. Inaccordance with that plan, thecompany has grown its leverage finance business significantly, inaddition to adding greatly to its investment banking staff.
There’s a domino effect wheninvestment bankers are busy, Bell-Mark’s Mr. Amador said. A host ofother professionals, includinglawyers and accountants, get busier,too, because they’re needed toperform due diligence for deals.
Though he also anticipates abusier 2012, Mr. Crowley notedthere’s reason for caution.
“We’re still in an environmentwhere for many of our clients, theright advice is to just ride out thestorm and not pursue a transactionin the near term, whether it’s capitalraising or a merger,” said Mr. Crowley, whose firm largely servesfinancial institutions. ■
Advisers: Recent activity ‘not just a blip’continued from PAGE 13
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asset management and workingwith balance sheets to generatefuture opportunities of growthand value for the business, it’snatural to also be able to do thatwith people, particularly whenthey are the chief asset of the organization,” he said.
Mr. Chorba is one of a growingnumber of CFOs nationwide andhere in Northeast Ohio who areassuming tactical human resources responsibilities withintheir respective organizations. According to a survey last year by Robert Half Management Resources, about one-fifth of1,400 CFOs surveyed have takenon more HR duties in the pastthree years.
There always has been a required level of collaboration between the CFO and HR depart-ment, especially because HR typically oversees many of thecompany’s highest-cost centers,said Eugene Lodato, division director for Robert Half’s Cleve-land office.
“It has become more prevalentover the last few years with the increased emphasis on reducingcost and managing expenses, especially in those areas that havethe most financial impact to thecompany, such as health care
costs, staffing levels, benefits andthe structure of their compensation,”Mr. Lodato said.
Nick Araco Jr., president andCEO of the CFO Alliance, a nationalprofessional network, said hismembership of nearly 3,000 CFOsidentified this expanded role inHR as one of the most pressing sofar in 2012.
“I interact with CFOs on a dailybasis, and we get them to tell uswhat’s keeping them up at nightfrom an opportunity and issuestandpoint,” said Mr. Araco, whojust weeks ago held a discussionon this very topic in Dallas. “Overthe last two years we have seen anincreasing number of CFOs withincreasing frequency bringing issues regarding human capitaland HR to the forefront of our discussion.”
Driven by necessityCFOs, especially those in
privately held, midsize companies,are taking an active role in dutiesthat range from the hiring and selection process of key talent toperformance-related decisionsand the creation of a corporateculture that promotes professionaldevelopment and growth, Mr. Araco said.
It’s a natural fit for a CFO because many of these HR roles
dovetail nicely into the inherentstrengths needed in the job of topfiscal officer of a company. Andthat’s good, because oftentimesCFOs take over the duties out ofnecessity.
“CFOs are very process-drivenand compliance-driven, so man-aging the pension plan, insuranceplan or workers’ comp is an easytransition for them,” said RobGaglione, president of FinancialResources Group in BroadviewHeights. Mr. Gaglione, a certifiedpublic accountant by trade, specializes in recruiting and placing highly qualified financialcandidates.
“And CFOs are always lookingto control costs and find additionalrevenue streams. With HR, you arenever going to have a revenuestream. It’s always a cost center,and it is typically the first functionto go when a company needs toreduce staff and cut expenses,” hesaid.
A strategic restructuring atBuckingham Doolittle & BurroughsLLP in late 2009 and early 2010 ledthe multioffice law firm to eliminateits director of human resourcesand delegate those responsibilitiesamong key people in the organization,including the firm’s administrator,a new human resources managerand the CFO.
The firm’s culture of collaborationhas made the transition of dutiesquite painless, said CFO TimMcEldowney, who is involved indecision making regardingstaffing, recruiting new attorneysand compensation decisions.
“We’re fortunate to have a topemployment attorney, SusanRodgers, in our firm, so we justhave to go down the hall to ask hera question,” he said.
His new HR responsibilities takea considerable amount of his time,but Mr. McEldowney doesn’t havea negative view of his expanded role.
“A lot of HR decisions require atrue cost-benefit analysis anyways,and that really becomes a bud-getary issue or concern,” he said.“It almost took the one step out ofthe mix … and it almost madecommunication flow easier.”
Numbers vs. people skillsTodd Rossman, CFO at Mort-
gage Information Services Inc. inWarrensville Heights, said hespends a lot of time on benefit design and implementation ofplans, including medical and voluntary plans and 401(k)s. Hiscompany doesn’t have an HRmanager and hasn’t since hejoined it in 2004.
“As the CFO, you’ve got a view-point of the financial condition of
the entire organization, so I thinkthe analysis of how costly a plan isand how much of the burden thecompany wants to take on versuspass on to the employees, it’s a little easier for a financial person towork through,” Mr. Rossman said.
The drawback of the dual role?Well, quite simply, he’s an accoun-tant, not an HR person.
“There are probably some softskills that I lack,” Mr. Rossmansaid, adding that all his HR traininghas been on the job, though hedoes rely on his company’s internallegal department for complianceguidance when new employmentlaws are passed. “When issuesarise with employees, I tend tolook at them more objectively andfrom a financial standpoint.”
For Mr. Chorba, the main challenge is time management. Inaddition to all the information hemust process and apply regardingaccounting and financial reporting,he must be equally diligent aboutHR management and complianceinformation.
In addition, he said, “having theobjective finance hat on and exercising that against the personalrelationship HR hat is sometimesa bit taxing personally, but youneed to do what needs to be doneand sometimes that requires harddecisions.” ■
Human: Skills required for CFO job make transition smoothFINANCE
continued from PAGE 13
20120130-NEWS--15-NAT-CCI-CL_-- 1/27/2012 10:30 AM Page 1
A majority of business owners andexecutives expect U.S. businessconditions to improve this year, but amajority of them also doubt Congresswill pass legislation that will makesuch improvement happen, a surveyby McDonald Hopkins LLC reveals.
Conducted during the first threeweeks of January, the law firm’s2012 Business Outlook Surveyfound confidence in Congress hasplummeted from one year to thenext: Sixty-four percent of businessleaders said they felt pessimistic
about whether Congress will act toimprove business conditions, whereaslast year, 25% were pessimistic.
Of the more than 500 respon-dents, 66% expect U.S. businessconditions to improve modestly,down from 77% last year who expected modest improvement.
Most of the survey participantsare located in Ohio, Illinois, Michiganand Florida, states where McDonald
Hopkins has offices.The 10-question survey also found
business leaders are less optimisticthis year about the business condi-tions of their own organizations:55% expect conditions to improvemodestly, down from 61% in 2011.
Respondents also were asked toidentify the business community’sthree greatest challenges. Forty-threepercent cited increasing health carecosts; 40% said retaining profit mar-gins and 39% said federal, state andlocal regulations. — Michelle Park
ON THE WEB Story from www.CrainsCleveland.com.
16 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM JANUARY 30 - FEBRUARY 5, 2012
BUSINESS Commercial Banking is our business.
Building our bank Building our bank Building our bank one quality relationship one quality relationship one quality relationship at a time.at a time.at a time.
Most private equity firmsby March 31 must registerwith the Securities andExchange Commission
— a requirement that has themchugging obediently toward com-pliance, even though many, if notall, see it as a senseless exercise.
The vast majority of private equity firms never have had to register with the SEC as invest-ment advisers. But now, fundswith $150 million or more in assetsunder management must do so,which means they also will incurlegal costs, must name or hirecompliance officers and potentiallywill be subject to yearly audits.
And they’re not happy about it.“It’s a pit bull on a gnat’s ass,”
Mark Mansour, senior managingpartner of MCM Capital Partners
in Beachwood,said, referringto the SEC regu-lating funds ofthat size.
He and offi-cials at otherfirms argue thethreshold forregistration issenselessly low.
“Somebody has yet to explain tome how private equity funds thathave an AUM (assets under man-agement) of $150 million or $250million or $1 billion can have amaterial impact” on the health ofthe U.S. economy, Mr. Mansour said.
The registration requirement ispart of the sweeping Dodd-FrankWall Street Reform and ConsumerProtection Act.
Private equity insiders say themandate is an ill-fitting Band-Aidstuck on their industry to mitigaterisks private equity doesn’t create.Forcing private equity firms — whichraise millions of dollars and aim togenerate returns for investors bybuying, operating and selling com-panies — to register with the SEC,they say, will not lower systemicrisk or protect consumers.
“Each transaction is independentof the other,” said Pam Hendrickson,chief operating officer of TheRiverside Co., this region’s mostprolific firm. “The bankruptcy ofone private equity-owned company— while it would be very unfortunate— in no way could it harm the
whole economy.”Plus, general consumers aren’t
involved in private equity, notedBassem A. Mansour, co-CEO of Resilience Capital Partners, aBeachwood private equity firm.(He is not related to Mark Mansour.)That’s because private equity investsonly the money of accredited investors, such as high-net-worthindividuals, pension funds and endowments.
Price checkThe expense of compliance is
significant — for some firms reachinginto the tens, maybe hundreds, ofthousands of dollars, sources say.
“Those incremental costs … haveto come out of somewhere, andthat means the financial viabilityof private equity is impacted,” saidJohn Mino, a partner who runs theprivate equity group for Calfee,Halter & Griswold LLP, a Clevelandlaw firm.
The market won’t allow privateequity firms to charge higher management fees, in Mr. Mino’sopinion, so the firms simply willneed to eat the higher costs.
“You don’t have the ability to goback to your investors and say, ‘Excuse me, investors, we havemore costs so we’d like more management fee,’” Mr. Mino said.“Your costs are locked in.
“Does it put anybody out ofbusiness?” he continued. “I don’tthink so. I do think some of thesmaller firms are saying they haveto get bigger.”
Even those firms that are not required to become registered investment advisers will be affectedbecause it’s possible investorsmight become more inclined to invest with only those that are registered, Mr. Mino said. Plus,many smaller funds still must provide informational filings to theSEC, he noted.
Worth the expense?Critics of the new requirement
note that private equity firms donot invest in a highly leveragedmanner and aren’t investing inpublic securities, a market atwhich many of the accompanyingregulations are targeted.
“It’s time, it’s money and it’s opportunity cost — people spendingtime (to) comply with a set of regulations that really don’t seemto be changing the risk profile of
what you do,” Riverside’s Ms. Hendrickson said.
For example, she said, private equity firms under the new regula-tions must hire a third-party custodianto hold their securities. However,unlike other sectors that buy securi-ties that are tradable, private equityfirms possess securities that arenon-negotiable because they repre-sent stakes in private companies.
“That just seems like a waste oftime and money to have to dosomething like that when the securities could be easily held in asafe place,” she said.
“Capital is scarce, banks are underpressure, so it seems odd that youwould saddle an industry whose jobis to provide capital to businesseswith a bunch of regulation,” Ms.Hendrickson said. “Private equityhas been around for over 50 years,and in that time, I don’t think you’veseen any creation of systemic risk.”
Mr. Mino said he also believes thenew requirement misses the mark.
“The risk profile for private equitywill not change as a result of Dodd-Frank regulation because they’regoing to continue doing business asthey always have,” he said.
Several pieces of legislation havebeen introduced in the U.S. Housein an attempt to pare back the impact of Dodd-Frank on privateequity or to exempt private equitycompletely, Mr. Mino said.
“Something like that may stillhappen,” Mr. Mino said. “But nobody’s really — pardon the pun— banking on it.”
Dose of transparencyThough criticism abounds, some
see limited benefit to the new compliance requirement.
“What I do think is healthy for theindustry is transparency,” Riverside’sMs. Hendrickson said. “I think theindustry needs more transparency.”
Asked whether he supports theadded regulation, one local institu-tional private equity investor whoasked not to be identified replied,“If it’s not too much trouble andhassle, the more regulation, the safermost investors would feel. I’m justnot sure it’s that easy of an answer.”
For one, he said he worries thatthe regulations will be onerous forsmaller firms and “likely a distractionto their business.”
Though Christopher J. Mulligan,another Calfee private equity attorney,also doesn’t see much advantage tothe regulations, he can see a benefitto the SEC keeping tabs on “very,very large national firms” — thosehe defined as holding tens of billionsof dollars under management. ■
M. Mansour
Biz owners doubt Congress’ ability to improve conditions
20120130-NEWS--16-NAT-CCI-CL_-- 1/27/2012 10:32 AM Page 1
JANUARY 30 - FEBRUARY 5, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 17
LARGEST ENGINEERING FIRMSRANKED BY NUMBER OF LOCAL REGISTERED ENGINEERS(1)
Rank
CompanyAddressPhone/Website
Number oflocal
registeredengineers
Number oflocal
employeesCorporate
headquartersYear
founded 2011 projects
2011 localengineeringbillings ($millions)
Top local executiveTitle
1URS Corp.1375 Euclid Ave., Suite 600, Cleveland 44115(216) 622-2400/www.urscorp.com
146 669 San Francisco 1904 Cleveland Convention Center and Medical Mart, ClevelandHorseshoe Casino, Flats East Build 7 304.0
Gary R. Hribar, vp, URSdivision; William Colt, seniorvice president
2GPD Group520 S. Main St., Suite 2531, Akron 44311(800) 955-4731/www.gpdgroup.com
78 325 Akron 1961 State route 94, Wadsworth; State route 261, Norton;Cedar Exchange traffic study, Akron 47.2 Dave Granger
president
3HWH Architects Engineers Planners Inc.1300 E. Ninth St., Suite 900, Cleveland 44114(216) 875-4000/www.hwhaep.com
76 122 Cleveland 1908 GE Energy; Goodyear Tire & Rubber Co.; Lubrizol Corp. NA Peter P. Jancarchairman
4DLZ Ohio Inc.614 W. Superior Ave., Cleveland 44113(216) 771-1090/www.dlz.com
53 165 Columbus 1947Cedar Ave. reconstruction, City of Cleveland; ProgramManagement Services, City of Akron; new animal controlfacility, Summit County
22.6 Thomas G. Sisleysenior vice president
4Middough Inc.1901 E. 13th St., Suite 400, Cleveland 44114(216) 367-6000/www.middough.com
53 230 Cleveland 1950V & M Star, Youngstown; PRO-TEC, Leipsic; NortheastOhio Regional Sewer District, program system integrationand programming services PSIM-28, Cleveland
51.0 Ronald R. Ledinpresident, CEO
6Arcadis U.S. Inc.1100 Superior Ave., Suite 1250, Cleveland 44114(216) 781-6177/www.arcadis-us.com
42 90 HighlandsRanch, Colo. 1888
NEORSD-Southerly WWTC, renewable energy facility;Akron-WPCS, Step Feed process; ODOT-Anthony WayneSuspension Bridge/Maumee River rehabilitation
NAJim Crandallsenior vice president,principal in charge
7Westlake Reed Leskosky925 Euclid Ave., Suite 1900, Cleveland 44115(216) 522-1350/www.wrldesign.com
37 100 Cleveland 1905General Services Administration; Cleveland Clinic,Twinsburg Family Health and Surgery Center; Museum ofContemporary Art, Cleveland
25 80 Cleveland 1983Cleveland Medical Mart & Convention Center; Eaton Corp.worldwide headquarters; Goodyear corporateheadquarters
12.7 James T. Ciceropresident
15Burgess & Niple1300 E. Ninth St., Suite 612, Cleveland 44114(216) 241-9600/www.burgessniple.com
23 42 Columbus 1912Cleveland, commercial road bridge rehabilitation; ODOT,Lorain-Carnegie Bridge Cuyahoga River Crossing Trail;Akron, CSO long-term control plan program management
6.4Charles J. Zibbeldirector,Great Lakes region
16ms consultants inc.9217 Midwest Ave., Suite 100, Cleveland 44125(216) 581-4035/www.msconsultants.com
12 16 Millburn, N.J. 1966 East 55th St. Rapid Transit Station; Euclid Creek Tunnel;Stumph Road (CR266) Highway 3.0
Michael G. VitaleMichael F. McCarthyvice presidents
22KS Associates Inc.260 Burns Road, Suite 100, Elyria 44035(440) 365-4730/www.ksassociates.com
12 28 Elyria 1987Case Western Reserve University Tinkham Veale UniversityCenter; SR 57 corridor improvement project, Elyria; LorainCounty Community College Smart CommercializationEntrepreneurship Innovation Center
NA Lynn S. Migginspresident
22The Mannik & Smith Group Inc.23225 Mercantile Road, Beachwood 44122(216) 378-1490/www.manniksmithgroup.com
12 20 Maumee 1955Mercy Medical Center Avon-ecol,surv,civ,traff,geo; Alcoa50K Press Foundation-geo,struct, mat. testing; ODOTSR91/RT2 Bridge Structure Study/Engineering
NAMark A. Smoleysenior vice president,director NE Ohio operations
22TranSystems Corp. of Ohio55 Public Square, Suite 1900, Cleveland 44113(216) 861-1780/www.transystems.com
11 28 Akron 1953Verizon Wireless, Twinsburg Data Center expansion;Allstate, Chubbuck, Idaho call-in center; Wang Theatreupgrade, Boston
NA James E. Peterspresident
Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee theselistings 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 ofLists are available to purchase at www.crainscleveland.com.(1) Numbers as of May 31, 2011.(2) Formerly MWH Americas Inc.
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Thursday, April 19 • The Ritz-Carlton, Cleveland7:00 - 8:00 a.m. • Breakfast & Networking8:00 - 9:30 a.m. • Panel Discussion
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PANELISTS
Orla E. (Chip) Collier III, Partner & Co-Chair of Energy Practice Group, Benesch
Sylvia Barnes, Managing Director and Group Head of Oil & Gas, KeyBanc Capital Markets
William T. Beaufait, Shareholder, Maloney + Novotny LLC
Hope they getgood gas mileage■ Think your commute to work is hectic? Tryon Matt LaWell’s summer driving schedule.
Mr. LaWell and his wife, Carolyn, areLakewood residents who plan to set off forJacksonville, Fla., in early April to start a project nine years in the making: “A MinorLeague Season,” a nationwide, summer-longtrip on which they’ll visit 117 minor-leaguebaseball stadiums in 129 days, encompassing26,000 miles. (Full disclosure: Mr. LaWell isa friend of mine.)
The idea got started in 2003 when Mr. LaWell was a bored rising
sophomore at Ohio Universityin Athens, Ohio, and hasstayed with him through
sports writing jobs in KansasCity, Mo., Rocky Mount, N.C.,and, most recently, a position
in Cleveland with Smart Business.“If you’ve ever visited Athens during the
summer, when there aren’t something like20,000 students wandering down CourtStreet and across College Green, you knowthere’s very little to do there those threemonths,” Mr. LaWell said.
He and his wife will hit 40 states, with thelongest stay in California — 12 games, fromMay 6 through May 18. Mr. LaWell said hisbiggest personal thrills likely will come Aug. 10, when he plans to meet childhoodfavorite and Hall of Fame Chicago Cubs second baseman Ryne Sandberg, who nowmanages the Lehigh Valley Iron Pigs, theClass AAA affiliate of the PhiladelphiaPhillies; and July 3, when the couple will be
in Charleston, S.C., home of the RiverDogs,in whom legendary actor Bill Murray has afinancial interest.
“I was Peter Venkman (Mr. Murray’scharacter in “GhostBusters”) for Halloweenwhen I was 5,” he said.
For a lengthy Q&A with Mr. LaWell, including more details on how the plan washatched and has evolved, visit my sports busi-ness blog at www.CrainsCleveland.com/section/BLOGS04. — Joel Hammond
A chip off the old IP block■ At the ripe old age of 10, Anne Marie Murphyhas filed for her first patent.
It is “really helpful,” she acknowledges, thather mom is patent attorney Cindy Murphyof Cindy Murphy LLC in Cleveland.
The young Ms. Murphy’s invention is aremovable connector for floating rafts, dis-tinct from other patented connectors in thatit links rafts so that the pillow head rests faceeach other.
The idea for it dawned on Ms. Murphy, afifth-grader at Laurel School, as she wasswimming with a friend who was terrified ofthe pool’s deep end. To help her friend, Ms.Murphy connected two floating rafts withStyrofoam noodles. The two friends thencould float together on the deep end, shesaid.
Cindy Murphy prepared and filed herdaughter’s patent application in late September; it was published by the U.S.Patent and Trademark Office on Jan. 5 to inform others that Ms. Murphy is pursuingthe patent. For now, the invention is dubbed
the “floating friendship assembly.”Anne Marie Murphy’s hope is to sell the
patent to someone who will manufacturethe product.
It likely will take at least three years for thepatent to be issued, considering the currentbacklog, Cindy Murphy said.
“The strange thing was, (working withAnne Marie) wasn’t that different than my50- and 60-year-old clients,” Cindy Murphysaid. “I had to do a couple revisions on thisto make my client happy,” she said with alaugh. — Michelle Park
Lots of interest in parking lots■ Terra Park, a Toronto-based investmentfund operator that focuses on buying landin downtown areas, got a foothold in down-town Cleveland with a $2.25 million deal fora parking lot near Cleveland State University.
It bought the lot Jan. 20 on the northwestcorner of East 22nd Street and Prospect Avenue from an investor group led by USAParking of Cleveland, which will continueoperating it.
Jack Pasht, a Terra Park managing director,said in an email the purchase of the lot,which is nearly an acre, is the company’sfirst here. He said Terra Park is pursuingother downtown Cleveland parking lots thathe declined to identify.
Louis Frangos, USA Parking CEO, said he sold the property because his firm hadheld it a long time. He said he is impressedout-of-town groups are so interested in thecity; he sold another lot on Prospect last yearto a California-based buyer. — Stan Bullard
WHAT’S NEW
COMPANY: The Garland Co.,ClevelandPRODUCT: Tuff-Flash liquid flashingsystem
Garland said it has introduced a single-component, liquid-applied mastic that’s durableand easy to apply.
The Tuff-Flash liquid flashing system “providessuperior water protection and weathering capabilities,” the company says. It’s an asphaltpolyurethane that adheres to asphaltic mem-branes as well as a variety of metal surfaces.
Tuff-Flash is “well suited for complex or irregular roofing details that would present aproblem for traditional flashing,” accordingto Garland. The system requires no mixingand can be installed with a brush or trowel.It’s also environmentally friendly, with zeroVOCs and low odor.
Tom Stuewe, Garland product manager,said Tuff-Flash “is ideal for sealing difficultflashing details like an I-Beam or angle ironcoming through the roof. It skins over quickly inhours and completely cures in 10 to 15days, which helps reduce project disruptionsand duration.” (A reflective coating then canbe applied within 15 to 30 days.)
Garland has been in business for morethan 100 years. It makes roofing and buildingmaintenance systems for the commercial, industrial and institutional markets.
For information, visit www.GarlandCo.com.
REPORTERS’ NOTEBOOKBEHIND THE NEWS WITH CRAIN’S WRITERS
THEINSIDER
THEWEEK JANUARY 23 - 29
The big story: FirstEnergy Corp. said it’s retiring six coal-fired power plants, includingplants in Cleveland, Eastlake and Ashtabula, bySept. 1. The closures will affect more than 500employees. The decision to close the plants “isbased on the U.S. Environmental ProtectionAgency Mercury and Air Toxics Standards,which were recently finalized, and other envi-ronmental regulations,” Akron-based FirstEnergysaid. The other plants to be closed are in Oregon,Ohio; Adrian, Pa.; and Williamsport, Md.
Proper restraint: TransDigm Group Inc. ofCleveland agreed to buy AmSafe Global Hold-ings Inc., a supplier of proprietary safety and restraint equipment used primarily in the aero-space industry, for $750 million. The seller is agroup controlled by private equity firms Berk-shire Partners LLC and Greenbriar EquityGroup LLC. TransDigm said AmSafe, which isbased in Phoenix, had revenue of about $260million in 2011.
Take it to the bank: Cuyahoga County willuse part of its new, $100 million economic devel-opment fund to guarantee private businessloans that otherwise would not be bankable.County Executive Ed FitzGerald said a countyloan guarantee will be available for bank loansthat can’t be fully guaranteed by the U.S. SmallBusiness Administration. Lenders that alreadyhave agreed to participate are Charter OneBank, Citizens Bank, Fifth Third Bank, the GrowAmerica Fund, Huntington Bank, KeyBank, Lorain National Bank and PNC Bank.
Profit flow: The state of Ohio will get $1.4 billion upfront, and a share of profits down theroad, for selling its liquor business to JobsOhio,the nonprofit created by the Legislature to spear-head the state’s job creation effort. The expectationis that JobsOhio will control about $100 millionannually, its share of the liquor profits, to use forgrants and low-cost loans to companies thatagree to bring a business to Ohio or to expandexisting operations in the state.
See what’s in store: Constantino’s Marketin March plans to open a grocery store in theUniversity Circle area with the help of a $2 mil-lion federal loan. The location at 11451 Euclid Ave. will be part of the Uptown apartment
and retail complex that MRNInc. is building, said Constan-tino’s owner CostasMavromichalis. He said he ex-pects to get some businessfrom the apartments, but themain reason he wanted to openthe store is because he seespent-up demand for a grocerystore at Case Western ReserveUniversity.
Credit for card maker: American GreetingsCorp. secured an increase and extension of itsrevolving credit agreement. The amendment extends the term of the agreement to January2017 from June 2015, increases the amount thatcan be borrowed under the credit line to $400million from $350 million, reduces the commit-ment fee due on undrawn borrowings, and lowersthe margins paid on borrowings.
They have some nerve: SPR TherapeuticsInc. closed on a $2.2 million Series A investmentround that it will use as it works to win regulatoryapproval for a product designed to alleviate painthrough neurostimulation. The company inHighland Hills expects in the second quarter towin approval to sell its first product, the Smart-patch Peripheral Nerve Stimulation System, inEurope. The startup expects to gain approval tosell the product in the U.S. in early 2013.
JANUARY 30 - FEBRUARY 5, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 19
BEST OF THE BLOGSExcerpts from recent blog entries onCrainsCleveland.com.
Cleveland Fed helps employees get ahead■ Corporate spending on worker training is up, according to Forbes.com, and theFederal Reserve Bank of Cleveland was citedas one employer that does an exemplary jobin building a “learning organization.”
Josh Bersin, who runs Bersin & Associ-ates, a research firm focused on the needsof HR and training leaders, wrote that afterfour years of budget cuts, “spending on cor-porate (learning and development) increasedby 9.5% last year.” He said this shows companies “now realize that they simplycannot find the skills they need in the workforce and have to reinvest heavily in corpo-rate training.”
Mr. Bersin then laid out five “keys to suc-cess in building a learning organization,”and the Cleveland Fed was mentioned in asection about promoting and rewarding expertise.
It gives its examiners a seven-yearapprenticeship program “to helpthem develop into senior bank examiners,” Mr. Bersin wrote.They’re “continuously trainedthrough apprenticeship and pre-sent the results of their work tomore senior practitioners.”
He wrote that such programs “tell theorganization that ‘expertise matters’ and‘we are willing to invest in your own skills.’”
As Detroit goes, sogoes the Midwest■ Auto industry employment in the UnitedStates is predicted to jump by about one-third — to 756,800 in 2015 from 566,400 in2010 — The Wall Street Journal reported.
Most of that increase will be in Michigan,
according to the Center for Automotive Research in Ann Arbor, though Great Lakesstates including Ohio will see significantbenefits. The Journal said while the projec-tion “falls well short of the 1.1 million workersemployed in the sector in 1999, it indicatesthe hemorrhaging has been stanched.”
Indeed, the newspaper said the “buoyantauto industry is helping to boost the Midwest hiring outlook.” Staffing companyManpowerGroup “estimated a net 10% ofMidwest employers plan to hire in the firstquarter, after factoring in companies thatsaid they would cut jobs.”
Another new project?Why thanks, boss■ It’s probably a fair guess some of youhave faced the dilemma described in a NewYork Times Career Couch column headlined,“When You’re the Worker Who Can’t Say No.”
The column started with this question:Your plate at work is full, but your boss has
asked you to take on yet another assign-ment. You say “yes” even though you
know you don’t have time. Why? Tres Roeder, president of
Roeder Consulting, a projectmanagement consultancy inCleveland, recommendedstarting with an expression of
gratitude that you’ve been asked totake on something new. After all, it
means your boss believes in you.He told The Times that if you think you
may already have more work than you canhandle, tell your boss that, because you’rejuggling other time-sensitive projects, youneed to examine the details of this new taskto determine if there’s some way you can fitit in.
You may find that you won’t be able to,but automatically responding “no” withoutany consideration gives the impression youjust don’t want to deal with it, he said.
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