Opposition jolts DTE plansfor smart meter conversion
Opening a window onHanson’s marketing strategy
Top CFOs keep their coolwhen heat is on, Page 11
Tank work gets reprieveGeneral Dynamics Land Sys-
tems in Sterling Heights got apossible reprieve late lastweek on a proposal thatcould idle production workon the Abrams main battletank for nearly three years.
An amended version of theNational Defense Authoriza-tion Act for fiscal 2013 thatcleared the U.S. Senate ArmedServices Committee adds aproposed $91 million in fundsfor Abrams productionwork. That would translateinto several more months ofwork on the company’s pro-gram in Lima, Ohio. GDLSand members of Michigan’scongressional delegationhave estimated the Abramssupports about 225 Michigansupplier companies.
The Pentagon last year pro-posed discontinuing fundingfor Abrams production frommid-2013 until fiscal 2017.
— Chad Halcom
This Just In
CFO Awards
Page 3
BY SHERRI WELCH
CRAIN’S DETROIT BUSINESS
Gleaners Community Food Bankof Southeastern Michigan haslaunched a campaign to raise $13 million — within a year— tofund capital projects at its De-troit, Southfield and Pontiac dis-tribution sites, aimed at rampingup the amount of food it can dis-tribute.
One of the chief changes is thatthe nonprofit’s logistical hub willmove to Southfield to cut trans-portation costs. It will maintainits headquarters in Detroit.
The rapid pace of the campaignis directly tied to continued highdemand for emergency food as-sistance in metro Detroit, saidGerry Brisson, Gleaners’ seniorvice president of advancement.
Gleaners ex-pects to dis-tribute morethan 45 millionpounds of foodthis year, upfrom about 40million lastyear.
“We need toget our distrib-ution up to 60
million pounds or more to meetthe continuing need in the com-munity for more food,” Brissonsaid. But with current space allo-cation at Gleaners’ sites, he said,“Even if the food came, we’dstruggle with the space we have.”
The donation last fall of the92,000-square-foot former NewYork Carpet World building inSouthfield by the company’s for-mer owners, Irving Nusbaumand William Berlin, promptedthe food bank to do a space analy-sis, Brisson said.
“The big decision was didGleaners need to add infrastruc-
Gleanerslaunches $13 millioncampaignLogistics to shiftto Southfield
BY DANIEL DUGGAN
CRAIN’S DETROIT BUSINESS
The founder of Fossil Inc. haspicked Detroit as the site for awatch and bicycle manufacturingoperation, with hopes that thewords “made in Detroit” willmake the items more marketable.
Tom Kartsotis, founder of theRichardson, Texas-based watchand accessory company, hassigned a 30,000-square-foot lease in
the former Argonaut Building inDetroit’s New Center after a three-year search for space in the city.
A line of watches under the re-vived Shinola name are already un-der production in the Detroitspace and a line of bicycles are inthe prototype stage, according toan employee who asked not to benamed.
Kartsotis declined to commenton the deal, as did executives fromthe College for Creative Studies,
which owns the building, now theA. Alfred Taubman Center for DesignEducation.
The impetus for coming to De-troit, the employee said, is the De-troit name.
He said Kartsotis commissioneda study of pens in which subjectswere asked if they prefer pensmade in China, the USA or Detroitat price points of $5, $10 and $15 re-
Fossil founder digs the DWatchmaker winds up in CCS building
“A non-MBA approach to growing a business”
Manoj BhargavaCEO of Living Essentials LLC
KEYNOTE SPEAKER June 26DETROIT GOLF CLUB
To register, please visit
www.crainsdetroit.com/events
or call 313.446.0300
The creator of Five-Hour Energy
BY DUSTIN WALSH
CRAIN’S DETROIT BUSINESS
The Detroit Chevrolet Belle Isle Grand Prixreturns after a three-year hiatus to a cityin transformation. For area business lead-ers, politicians and race fans, the GrandPrix is part of putting the wheels back on arecovering economy.
The race stalled in 2008 after the region’sfoundering economy tanked sponsorships.But recent record earnings for metro De-troit companies put the Grand Prix back onBelle Isle, said Roger Penske, chairman ofPenske Corp. and owner of Penske Racing.
Chevrolet signed a three-year agreementto be the title sponsor of the Grand Prix —which operates as a subsidiary of the Down-town Detroit Partnership. Other major spon-sors are Crain’s sister entityShopautoweek.com and the Metro DetroitChevy Dealers.
Detroit takes the wheelSponsors, fans pave way for Grand Prix’s return
See Grand Prix, Page 23Brisson
Roger Penske says June 1-3, the week after the Indianapolis 500, isthe best possible spot on the calendar for the Detroit Chevrolet BelleIsle Grand Prix.
More than 100,000 spectators are expected to watch racers speed around the 2.07-mile loop on Belle Isle.
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LEGAL CHALLENGES LEGAL RESULTS
May 28, 2012CRAIN’S DETROIT BUSINESSPage 2
Report: Ex-Stryker CEO soughtboard’s OK for office romance
When Michigan Briefs reportedin February on the sudden resigna-tion of Stryker Corp. CEO StephenMacMillan, it noted that he citedfamily reasons for leaving the Kala-mazoo-based maker of medical de-vices. Last week, The Wall StreetJournal offered an explanation.
In its report, The Journal saidMacMillan, 48, was asked to leavein part because some Stryker boardmembers didn’t like his handling ofa relationship with a former flightattendant for the company’s jetswhile his wife was pursuing a di-vorce. MacMillan reportedlysought board approval to date theemployee and was told he could aslong as she quit. She did. But thedeal fell apart because of suspicionsthat the relationship began beforeshe left, The Journal said.
MacMillan is currently trying toland at Johnson & Johnson, where heworked for 11 years before Stryker.
Amway to use state incentive for$105M expansion, 250 jobs in Ada
Ada-based Amway Corp. plans tospend $180 million, most of it inWest Michigan, to expand its Nu-trilite brand of vitamins and di-etary supplements. The expan-sion will occur at two locations inAda, plus Buena Park, Calif., andQuincy, Wash.
In Ada, Amway will spend $81 million to expand productionof soft gels and tablets, creating 200jobs over three years. The compa-ny plans to spend $24 million on anew plant at its global headquar-ters for powder products, creating50 jobs. Amway employs about4,000 in Michigan.
The Michigan Economic Develop-ment Corp. last week approved a$1.6 million incentive for the pro-ject. Also receiving the MichiganBusiness Development Programincentive was Credit AcceptanceCorp., which plans to use its $1.8million from the state for a $10.2million expansion in Southfieldthat is expected to add 274 jobs.
Independent Bank sells 21 branches to Chemical Bank
Independent Bank has signed adefinitive agreement to sell 21 ofits branches to Midland-basedChemical Bank. The sale, expectedto close by the end of the thirdquarter, covers six locations in theBattle Creek area and 15 in north-east Michigan.
The transaction is expected totransfer about $420 million of de-posits and nearly $40 million ofloans to Chemical Bank. The de-posits represented about 19 percentof Independent Bank’s total as ofMarch 31. The transaction willleave Independent Bank, based in
Ionia west of Grand Rapids, with 80state branches. Chemical Bank willoperate 163 branches in the LowerPeninsula. Independent Bank is asubsidiary of Independent Bank Corp.and Chemical Bank a subsidiary ofChemical Financial Corp.
MICH-CELLANEOUS� The boards of the Holland and
Zeeland chambers of commerce
last week voted to merge and nowwill be the Michigan West CoastChamber of Commerce.
� Midland-based Dow ChemicalCo. said last week that an arbitra-tion panel ruled that Kuwait mustpay it $2.16 billion in damages aftercanceling a 2008 agreement to buya stake in Dow’s plastics business.The award by the International Courtof Arbitration doesn’t include costsor interest and is final and binding.
� The May 16 Crain’s MichiganBusiness email newsletter (sign upat crainsdetroit.com/getemail) re-ported on the car ferry S.S. Badger,which seeks permission from theU.S. Environmental Protection Agencyto continue releasing coal ash intoLake Michigan while it looks foran alternative energy source. TheBadger began its sailing seasonThursday, when Lake Michigan Car-ferry co-owner Bob Manglitz saidhis company asked the EPA to al-low it continue dumping ash forfive more years.
MICHIGAN BRIEFS
Whenever attention has been on Benton Harborin recent years, it’s the usual tale of a communitygoing through hard times. The town suffers fromhigh unemployment, and more than half of its chil-dren live below the poverty line.
The story, though, was different last week. NBCand the Golf Channel were on hand to cover the SeniorPGA Championship at the Golf Club at Harbor Shores inBenton Harbor. The nation saw shots of a Jack Nick-laus-designed golf course that features dunes andviews of the lake. Viewers heard how this course ispart of a massive community effort to rejuvenateBenton Harbor.
KitchenAid Inc. is the reason that the top senior play-ers and the networks descended upon the area. Thecompany has signed on as the presenting sponsor of
the Senior PGA from 2011 to 2014. The package in-cludes another Senior PGA at Harbor Shores in 2014.
KitchenAid’s Deb O’Connor, director for globalpartnerships, declined to reveal the cost of the spon-sorship, but industry sources peg the fee in the $2million to $3 million range. KitchenAid’s parentcompany, Whirlpool Corp., has its corporate head-quarters in Benton Harbor.
Homes are being built around the course. Thismonth, Harbor Shores announced plans for a $114-million project featuring a 105-slip marina, 70-roomboutique hotel and luxury condo buildings.
The course operates as a nonprofit, with someproceeds funding and operating new facilities forthe Boys and Girls Club in Benton Harbor.
— Ed Sherman, Crain’s Chicago Business
Course aims to help Benton Harbor’s subpar image
CORRECTION� Crain’s list of largest physician organizations, published May 14,should have included Jerome Finkel, in addition to Dirk DeLange, astop executive at Greater Macomb PHO. Jerome Finkel is medical director.
Find business news fromaround the state at crainsdetroit.com/crainsmichiganbusiness.
Sign up for Crain's MichiganBusiness e-newsletter at crainsdetroit.com/emailsignup.
The Ilitch family’s ongoing be-hind-the-scenes efforts to gathersupport for taxpayer dollars to aidconstruction of a new Detroit RedWings arena faces a possible stum-bling block — a lockout.
The National Hockey League in-formed its players union thismonth that it intends to seek a newor revised collective bargainingagreement when the current con-tract expires in September, insteadof allowing it to roll over for anoth-er year.
Labor strife won’t help the Ilitch-es as they develop a financing plan,including possible tax dollars, tobuild a new downtown home forthe team they’ve owned since 1982.The arena is expected to cost $300million to $400 million, typical ofrecent pro hockey arena projects.
“Public money requires politicalsupport, and you lose that by can-celing hockey games,” said Ray-mond “Skip” Sauer, an economicsprofessor at Clemson University. Hemaintains a blog called TheSportsEconomist.com.
The Ilitches benefited from morethan $100 million in local and statepublic funding for the constructionof Comerica Park, publicly ownedbut leased to the Ilitch-owned De-troit Tigers, in the late 1990s.
All involved remember whathappened the last time NHL own-
No goal? Alockout mayhalt Wings’arena pushLabor strife couldhurt finance plans
BY SHERRI WELCH
CRAIN’S DETROIT BUSINESS
Hanson’s Window and Construc-tion Inc. plans to set up shop atfour new malls and at events suchas the Woodward Dream Cruise thisyear in a bid to increase its visi-bility.
The expanded grassroots pres-ence is designed to help the Troy-based company sell more windowsand push 2012 sales up 13 percentto $52 million while cutting mar-keting costs, said founder andCEO Brian Elias.
“We’re looking to increase prof-itability by doing these events,”he said. “We can only handle somany appointments every day, sothe question is, how can we getour appointments cheaper than
in the past?”The company last year spent
about $9.2 million on marketingthe vinyl replacement windows,siding and roofing it sells forhomes. That’s about 20 percent ofrevenue, Elias said.
“We’re looking to be at 17 per-cent.”
More storesHanson’s is considering open-
ing its sixth Michigan location inPort Huron by the end of this yearand a third Ohio location inCleveland next year.
The company has grown fromthe one-man operation Eliasfounded in 1988, selling customerleads he canvassed, to 300 directemployees and 250 contractorsacross stores in Lansing, Sagi-naw, Kalamazoo, Grand Rapids,Toledo and Columbus, Ohio.
Hanson’s purchases the vinylreplacement windows and siding
Hanson’s to widen marketing windowCompany plans mall kiosks, to attend events
BY JAY GREENE
CRAIN’S DETROIT BUSINESS
DTE Energy Co. estimates that its $584million smart electric meter conversionprogram — which will allow DTE to wire-lessly collect power use data twice dailyfrom customers — will save the company$65 million annually when 4 million digi-tal meters are installed by 2016 and pro-vide customers financial and service ben-efits.
But a legal challenge to the company’spreviously approved 2010 rate increaseto fund $37 million in installation costs
could throw a monkey wrench into thecompany’s plans to recover part of itscosts from consumers and businesses.
In mid-April, the Michigan Court of Ap-peals asked the Michigan Public ServiceCommission to review its January 2010decision to grant a DTE rate increaseand ordered the commission to hold ahearing on the benefits to consumers.On May 1, the PSC asked the appellatecourt to reconsider its decision.
The court’s ruling came after the Birm-ingham-based Association of BusinessesAdvocating Tariff Equity, a group of large in-dustrial users of electricity, filed an ap-
peal of DTE’s 2010 rate increase. The 17-member association includes Ford MotorCo., General Motors Co., Chrysler Group LLC,Delphi Corp. and Dow Chemical Co.
This year, the PSC also launched an in-vestigation into smart-meter deploy-ment. It ordered utilities in Michiganthat are installing smart meters to pro-vide additional information on the costs,potential savings, benefits and environ-mental and health hazards to consumersfrom radio frequencies emitting from themeters.
DTE meter plan hits interference
BRIAN KELLY
Hanson’s Window and Construction now spends about 20 percent of revenue on marketing. Founder and CEO BrianElias hopes that increasing Hanson’s visibiity through mall kiosks and events can lower that to 17 percent.
Rate increase fought; court orders PSC hearing
The question is,how can we get our
appointmentscheaper than in
the past?Brian Elias, Hanson’s
Window and Construction Inc.
”
“
See Arena, Page 24 See Hanson’s, Page 25
See DTE, Page 25
Don’t let summer slip byCheck out what the weekend holds in store with“10 Things to Do in Detroit,” posted every Thursdayafternoon at crainsdetroit.com/tenthings.
DTE Energy Co.wants ratepayersto finance itsconversion to smartelectric meters,saying it will savecustomers moneyin the long run.
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May 28, 2012CRAIN’S DETROIT BUSINESSPage 4
Hospitals to improve hip, knee surgeriesBY JAY GREENE
CRAIN’S DETROIT BUSINESS
Blue Cross Blue Shield of Michiganand 13 hospitals, including seven inSoutheast Michigan, have begun anew program to improve the qualityof hip and knee replacements for pa-tients by developing best practicesfor the procedures.
As part of its value partnershipprogram with physicians and hospi-tals, the initiative is one of a dozensimilar programs that Blue Crossestimates has saved $232 million thepast eight years.
Savings from the hip and knee re-placement program could include areduction in additional surgeries toreplace or repair the implant, BlueCross said.
Data from participating hospitalswill be collected by the newlyformed Michigan Arthroplasty RegistryCollaborative Quality Initiative.
“Our data registry will first focuson how to improve outcomes rightafter surgery, helping reduce thenumber of infections and other com-plications,” said Brian Hallstrom,M.D., clinical leader of the arthro-plasty initiative and clinical assis-tant professor of orthopedic surgeryat the University of Michigan.
“Then we’ll also take a longer-term approach to see what changescould improve the outcome, such asimplant choice or other factors,”
Hallstrom said.The typical hip or knee replace-
ment surgery in Michigan costs$20,000 to $30,000. Re-replacement orrevision surgeries can cost three tofour times more and usually requirelonger hospital stays, he said.
National data shows in 2009 therewere 288,471 total hip replacementsand 621,029 knee replacements, saidthe U.S. Agency for Healthcare Re-search and Quality. Knee replace-ments have doubled since 1999.
In Southeast Michigan, the sixhospitals are St. John Providence Hos-pital and Medical Center, Southfield;St. John Providence Park Hospital,Novi; St. Joseph Mercy Hospital, AnnArbor; St. Joseph Mercy Oakland Hos-pital, Pontiac; University of MichiganHealth System, Ann Arbor; ChelseaCommunity Hospital; and CrittentonHospital Medical Center, Rochester.
Hospitals statewide include: Mer-cy Health Partners General Campus inMuskegon; McLaren-Greater Lansing;Mercy Health Partners-Hackley Campusin Muskegon; Mercy Hospital-Cadillac;Sparrow Hospital, Lansing; and Spec-trum Health Butterworth Hospital,Grand Rapids.
For information on Blue Crossvalue partnerships, see www.bcb-sm.com/provider/value_partner-ships.
Ex-Fieger partnersets up own firm in Buhl Building
Downtown Detroit Partnership seeksto expand on city’s success stories
BY NANCY KAFFER
CRAIN’S DETROIT BUSINESS
Downtown Detroit can point to anumber of isolated success stories.Among them: Residential occupan-cy is more than 90 percent. WholeFoods is expected to open in 2013 inMidtown.
And a major redevelopment oflong-distressed Capitol Park is un-der way.
The problem, for city officialsand economic developers, is howto turn those one-off wins intowidespread success for the city.
Underlying Detroit’s promisingdevelopments is a less upbeat in-frastructure: In most cities,bedrock economic developmentdoesn’t include passing ordi-nances to deter aggressive habitu-al panhandlers, or working to getthe downtown’s lighting system upand running.
Making connections betweensuccessful developments is cru-cial, said Downtown Detroit Partner-ship President and CEO DaveBlaszkiewicz.
“Density in the downtown, parkto park on Woodward Avenue isthe focus,” he said.
Blaszkiewicz points to the Capi-tol Park redevelopment, the DavidWhitney Building and the DavidBroderick Tower. The BroderickTower is under construction; theother projects are in the works.
“When you start to amass justthose three properties, they’re go-ing to transform more than justthe downtown,” he said. “Pair that
up with the work our corporationsare doing. … It doesn’t take a greatvisionary to start seeing what thefuture of downtown is going to be,more dense population on the com-mercial, more density on housingand more density on retail.”
Factors are coming together tomake downtown attractive to in-vestors, Blaszkiewicz said.
Capitol Park is a perfect example,he said. Infrastructure improve-ments were made to the area, a con-sortium of public sector investorspurchased key buildings and let aredevelopment project for bid.
In addition, Blaszkiewicz said, ahistoric tax credit was broadenedto cover the district, not just onebuilding in the district.
“It was a pretty innovative wayto disperse a tool over a large geog-raphy, and it was a terrific success.We’ve now bridged a lot of chal-lenging gaps that exists,” he said.
“Think of that development toolthat we bring to our developmentcommunity — we’ve got the build-ings amassed for you, we’ve gotclear title, here’s your due dili-gence, and we’ve bridged your gapsbefore even define them, and by theway, we’ve got five years of demandbuilt into our Live (Downtown resi-dential incentive) program.”
Another potential tool might bethe creation of business improve-ment districts, in which business-es would pay a fee for a higher lev-el of service, Blaszkiewicz said.
The DDP also hired the compa-ny Downtown Works to develop aretail strategy designed to bring
much-needed neighborhoodamenities downtown, he said.
The idea, he said, is to connectpockets of downtown developmentinto broad swathes of occupied res-idential and commercial buildingsand safe streets.
The DDP is working with thecity and the Detroit Police Depart-ment to restore lighting and to im-prove police presence. One key tar-get is aggressive panhandlers,Blaszkiewicz said.
The downtown police station iscollecting a list of name of individ-uals who are habitually disrup-tive, and making efforts to connectthose people with the type of ser-vice that can best help.
Business leaders are workingnot just to invest, but to target in-vestments where they make sense,said Cynthia Pasky, founder of De-troit-based Strategic Staffing Solu-tions and chair of the DDP.
Pasky said it’s important to dif-ferentiate between folks who causeproblems and the true homeless in-dividual, who is less likely to be dis-ruptive, more likely to spend timein a shelter and less likely to comeinto contact with law enforcement.
Still, she said, it’s just as impor-tant to make sure that the re-sources to help the homeless are inplace — and to guide business’charitable contributions to organi-zations that are effective.
“We need to support goodproviders and elevate the level ofservice,” Blaszkiewicz said.
Prominent attorney VenJohnson announced last weekhe moved his law firm, John-son Law PLC, to the Buhl Build-ing in downtown Detroit fromFarmington Hills.
Johnson, 50, is known forhis work at Southfield-basedFieger, Fieger, Kenney, Girouxand Danzig PC. There he servedon the high-profile cases oftalk show host Jenny Jonesand the capsized tourist boatin New York that killed sever-al seniors from SoutheastMichigan.
Johnson said he spent morethan $500,000 to build out thenew offices on the 26th floor ofthe Buhl Building. JohnsonLaw has five lawyers and ninestaffers in the location, ac-cording to the release.
Former partner since 2001and second in seniority to Ge-offrey Fieger, Johnson leftFieger’s firm in May 2011 fol-lowing differences over per-formance targets that includ-ed fines to lawyers who didn’ttry three cases annually.
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BRIEFLYDelphi announces offer to buyFCI’s motorized vehicle division
Troy-based auto supplier DelphiAutomotive plc said Thursday it hasmade an offer to buy FCI Group’smotorized vehicle division forabout $972 million.
The transaction is expected toclose by the end of 2012.
Delphi expects this will addabout 24 cents per-share to 2013earnings, excluding costs relatedto the acquisition. Its stock closedFriday at $23.45 and is up 32 per-cent this year.
FCI’s motor vehicle divisionwill become a part of Delphi’s elec-trical and electronic architecturesegment. The unit makes intercon-nection systems for safety re-straints, powertrains and electri-cal vehicles. The Gillingham,England-based company’s revenuetotaled about $1.08 billion in 2011.
Delphi Presi-dent and CEORodney O’Nealsaid that thedeal willstrengthen thecompany’s con-nector productportfolio andthat his compa-ny will be “bet-ter positioned to
further drive growth in electroniccontent in motor vehicles.”
The acquisition will broadenDelphi’s relationship with au-
tomakers around the world, par-ticularly in Europe and Asia.
FCI Group has more than 14,000employees in 30 countries.
— Meghana Keshavan
MEDC incentive allows expansionof Southfield credit company
The Michigan Economic Develop-ment Corp. on Wednesday said thatits Michigan Strategic Fund wouldprovide a $1.8 million MichiganBusiness Development Programincentive so Credit Acceptance Corp.could expand in Southfield.
The project is expected to gener-ate up to $10.2 million in new pri-vate investment and add 274 jobs,the MEDC said in a statement.
Credit Acceptance (Nasdaq:CACC), which provides credit toauto buyers with troubled credit,plans to add the employees at itstwo Southfield locations to meetfuture staffing needs, the releasesaid.
Michigan was selected over sitesin Nevada, India and Costa Rica,the release said. The city of South-field also is offering a tax abate-ment.
The Michigan Business Devel-opment Program replaced thestate’s previous Michigan Eco-nomic Growth Authority program.MEGA was a feature of the Michi-gan Business Tax, which was elim-inated in 2011.
— Bob Allen
Globe Building to become DNR public recreation center
The Globe Building on the De-troit waterfront will be redevel-oped as a discovery center for theMichigan Department of Natural Re-sources.
Crain’s reported in 2010 that thestate had devoted $9 million fromthe Michigan Natural ResourcesTrust Fund to build a public recre-ation center at the building. Previ-ously, a loft development had beenplanned for the site.
The Detroit-based Roxbury Groupwill renovate the site in a build-to-suit development, said James VanDyke, vice president of develop-ment for the firm.
The company will acquire thesite for $1, complete the $12.8 mil-lion project and sell it to the statefor about $11 million, Van Dykesaid.
The recreation center, whichwill include features such as aclimbing wall, an archery range,
kayak and water sports simulatorsand science classrooms, will openin fall 2013, Van Dyke said.
— Nancy Kaffer
New federal program funds jobtraining for unemployed veterans
A new federal program will cov-er the cost for unemployed veter-ans to get one year of job trainingin fields that are in high demandin Michigan.
Veterans ages 35-60 can receivean education stipend of $1,473 amonth or $17,676 for the year.
The Veteran Retraining Assis-tance Program is a joint effort be-tween the U.S. Department of Veter-ans Affairs and the U.S. Departmentof Labor.
About 703,000 veterans live inMichigan, the 11th-highest num-ber among the states. Of that total,about 11 percent are unemployed— the 47th-worst rate in the coun-try, according to the Labor Depart-ment’s Bureau of Labor Statistics.
Applicants must havebeen honorably dis-charged and be unem-ployed at the time theyapply. They must begintraining after July 1 in aVA-approved educationprogram in a communi-ty college or technicalschool. For more details,see www.benefits.va.gov/vow.
— Meghana Keshavan
The following businesses filed forChapter 7 or 11 protection in U.S. Bank-ruptcy Court in Detroit May 18-25. Un-der Chapter 11, a company filed for re-organization. Chapter 7 involves totalliquidation.Asmar Inc., 32825 Northwestern High-way, Farmington Hills, voluntaryChapter 11. Assets and liabilities notavailable.Global Commercial Investments M59 &Heydenreich LLC, 32825 NorthwesternHighway, Farmington Hills, volun-tary Chapter 11. Assets and liabilitiesnot available.Profinity Technology LLC, 555 FriendlySt., Pontiac, voluntary Chapter 7. As-sets: $14,034; liabilities: $81,093.
— Compiled by Ryan Kelly
BANKRUPTCIES
O’Neal
As natural gasdemand rises,Maxitrol plansan expansion
BY CHAD HALCOM
CRAIN’S DETROIT BUSINESS
Southfield-based Maxitrol Co., amaker of gas control systems,plans an expansion to its head-quarters on Telegraph Road northof Nine Mile Road.
Last week, Maxitrol said it isclose to deciding on a general con-tractor for a proposed 11,000-square-foot project to add researchand development, training and em-ployee space at its headquarters.
As global demand for naturalgas increases, the company sees agrowing market for its gas pres-sure regulators, combination con-trols and other components usedin gas fireplaces, direct vent gas-fired baseboard heaters, spaceheaters, wall furnaces and otherproducts, said Richard Bargert,Maxitrol vice president of market-ing and communications.
The renovation and expansion,valued at $2.5 million to $3 million,begins in August on an architectur-al design prepared by Landry + New-man Architecture PC in Birmingham.
Maxitrol will select a contractorshortly.
The expansion could allow thecompany to add up to 20 jobs at theheadquarters campus, Bargertsaid, and 70 or more at its produc-tion centers in Michigan.
“The natural gas industry weserve is becoming a more impor-tant energy solution for the worldeconomies,” President BonnieKern-Koskela said in a statement.“Maxitrol control systems current-ly under development are quitecomplex and research-intensive.These improvements to our facili-ties will greatly enhance Maxitrol’stesting and design capabilities.”
The company employs 55 peopleat the Southfield campus, whichincludes a 34,000-square-foot head-quarters building completed in1960, a laboratory added on the sitein 2005 and a storage center.
Maxitrol also has manufacturingcenters in Southfield; Blissfield,south of Ann Arbor; and Colon,south of Battle Creek, along with abranch office in Fort Worth, Texas.
Kimberly Vitale says that working with HealthPlushas been like having her own personal assistant—help is always available, claims are easy, service is responsive
companies. Most importantly, employees are very happy.
Is that something you’d appreciate, too?
1-800-332-9161 Kimberly Vitale, Human Resources ManagerEDAG FFT Group, Auburn Hills, Michigan
“Unlike bigger companies, they
May 28, 2012 CRAIN’S DETROIT BUSINESS Page 7
Report: Michigan hospitals’ margins up, but still trail U.S. averageBY JAY GREENE
CRAIN’S DETROIT BUSINESS
While Michigan’s 144 hospitalshave 5 percent lower average coststhan the national average, theiraverage operating margins of 2.8percent for 2010 were far below thenational average of 5.5 percent, theMichigan Health and Hospital Associ-ation says in a new report.
The lower average operatingcosts save employers and patientsabout $500 million a year.
But the report reveals a trou-bling trend in the provision of un-compensated care that includesbad debt and charity care. Eventhough many hospitals are intensi-fying efforts at collecting bad debtfrom patients, uncompensatedcare increased 17 percent to $970million in 2010, the last year datawere available statewide.
“You need 5 percent operatingmargins to be able to replace” plant,property and equipment, said PeterSchonfeld, the MHA’s senior vicepresident for policy and data ser-vices. “We are concerned our mar-gins are low and uncompensatedcare continues to rise.”
Still, Michigan’s hospital operat-ing margins and total margins havebeen rising the past several years,primarily because of efficiencygains and gains from alternativesources of income that include giftshops, parking, cafeterias, buildingleases and other nonpatient care-re-lated businesses.
For example, 2009 operatingmargins averaged minus 0.3 per-cent in Michigan, compared with4.4 percent nationally.
Still, hospitals survive finan-cially because of investment in-come. In 2010, total margins rose to4.9 percent in Michigan from 1.9percent in 2009, the year after thestock market tanked in the fall of2008. Nationally, hospitals aver-aged 7.2 percent total margin in2010 and 5 percent in 2009.
Experts think hospital totalmargins will fall in 2011 becausemany took big hits on investmentincome because of soft stock mar-ket performance.
Despite profitability’s ups anddowns, Michigan’s hospitals pro-vide a range of community benefits,up slightly in 2010 to $2.6 billionfrom $2.5 billion. Community bene-fits include uncompensated careand unreimbursed Medicaid costs.
“Our hospitals reach out tomany community groups” andsupplement county health depart-ments and physician offices withimmunizations and health screen-ings, Schonfeld said.
For example, hospitals provided$125.2 million in free care or dis-counted services to 7.5 million peo-ple in Michigan in 2010. Those ser-vices included adult and childimmunizations ($3.1 million to193,000 people), health clinics ($50.5million to 233,000 people), prescrip-tion drugs ($5.3 million to 108,000people) and family support services($20.4 million to 417,000 people).
As the state’s largest private sec-tor employers, Michigan’s hospi-tals, physician offices, nursinghomes and other health care-relat-ed companies employ 555,400workers, a 1.6 percent increasefrom 2009, the MHA said. Hospitalsprovide 222,000 jobs.
The health care employees also
collect $31 billion in wages,salaries and benefits and, alongwith their employers, pay $7.4 bil-lion in federal, state and local tax-es, a 12 percent increase from 2009.
“When the economy was down (in2008 and 2009), the health care indus-try remained a steadying influence
and contributed” to Michigan’s eco-nomic comeback, Schonfeld said.
One problem the report noted isthe state’s $5.8 million cut in grad-uate medical education support tohospitals last fall. Gov. Rick Sny-der originally proposed cuttingsuch support by 40 percent or $67
million, but the Legislature re-stored most of those cuts.
“We have a physician shortage,and these young doctors providelow-cost direct-care services tomany people and especially im-prove needed access for Medicaidpatients,” Schonfeld said. “By notfully supporting GME, the staterisks losing many medical schoolgraduates who might practice athospitals in residency programs.These are doctors we need here.”
Schonfeld said Michigan’s hos-pitals lead the nation in manyquality projects. One reason is theMHA’s Keystone Center for Pa-tient Safety and Quality. The cen-
ter funds and organizes a varietyof initiatives among hospitals, in-cluding improving rates of organdonation, reducing rates ofcatheter-associated urinary-tractinfections and improving newbornhealth and overall quality.
For example, more than 70 hos-pitals in Michigan have participat-ed in the Keystone ICU projectfrom 2004 to 2010, saving 1,830lives, avoiding 140,000 unneces-sary days of patient hospitaliza-tion and saving $300 million inhealth care costs.
ing up a Great Lakes ferry re-quires invention of a cold fusionreactor, given the rhetoric sur-rounding the future of the S.S.Badger (“S.S. Badger Ready to SetSail on Lake Michigan — But WillEnvironmental Pothole Make ThisIts Last Season?” May 9, crainsde-troit.com).
This last coal-fired vessel on thelakes is petitioning the U.S. Envi-ronmental Protection Agency andCongress to continue dumping atleast 3.8 tons of coal ash per dayinto Lake Michigan. This, despitehaving already been granted afour-year grace period by EPA in2008 to sort out how to redesign orremove the antiquated engines orreplace coal with a new fuelsource.
The Badger’s most recent gam-bit suggests a dubious future inliquefied natural gas for the ves-
sel. The article reported that theBadger’s owner — Lake MichiganCarferry — has a $75,000 grant toexplore the feasibility of a conver-sion to LNG. (The Great LakesMaritime Research Institute, withan $800,000 federal grant, also isusing the Badger as a test case intothe feasibility of converting GreatLakes ships to natural gas.)
Trouble is, this tomorrow de-pends on a fuel that isn’t available
today anywhere near either of theBadger’s port cities of Ludingtonor Manitowoc, Wis. Owners of theBadger have conceded that costsfor the shore infrastructure alonefor a natural gas conversion wouldbe in the “tens of millions” andcannot be done until other cus-tomers, presumably other LNG-powered ships, have a need for fuelin northern Lake Michigan.
While the article cited an $8 mil-lion cost for LNG, that numberdoesn’t reflect any of the nonexis-tent supply lines needed to actual-ly get the fuel to the vessel anddoes not address the lack of an es-tablished safety or regulatoryframework for LNG power. Assomeone who has worked for morethan a decade to get ballast treat-ment technology on board ships tostop invasive species, I can attestto the deliberate pace of the U.S.
Politicians, take note: VC is not a villain
isky Wall Street investments made with the impunitythat their financial houses were “too big to fail” are in-excusable. So, too, for many shareholders, is extraordi-
nary compensation for top executives that’s not tied to stellarcompany results.
But there’s an ugly, anti-business war on private equitybrewing in this presidential election year, and it is a big mis-take.
Vulture capital? Really? Michigan is hoping to attract private equity and other in-
vestments to help Michigan-based companies grow.We’re disappointed that U.S. Rep. John Dingell, D-Dear-
born, has joined in the fray. Dingell attacked Republican MittRomney last week as part of the open season on private equityfirms and their business models, invoking the “vulture capi-tal” analogy.
Dingell should know better.Private equity is an important source of financing for
many companies. Just ask Domino’s Pizza — which happensto be in Dingell’s district. Domino’s, now publicly traded, wasa Bain investment that is doing just fine, no thanks to partisancritics of free-market capitalism.
Reorganizing city serviceswould be a worthy cause
Word last week that Detroit officials may darken half of itsstreetlights — deliberately — sounded like a joke. After all,about 40 percent of streetlights aren’t working most of the timeanyway.
The notion is part of a plan to create a new lighting author-ity that would redesign the lighting system, concentrating onthe denser parts of the city. “We’re not going to light dis-tressed areas like we light other areas,” Chris Brown, Detroit’sCOO, told Bloomberg News.
Which should help persuade residents living in sparselypopulated regions to move elsewhere.
Improved lighting is on the to-do list attached to the con-sent agreement between Detroit and the state of Michigan.
With 138 square miles and a city population that hasdropped to the level of the early 1900s, these actions are amongthe tough decisions on the table that demand swift action.
Moving forward on reorganizing city services is smarterthan trying to create legal maneuvers to void the consentagreement.
A simple fix for ferry cleanup
I have known the head ofChrysler for quite a while, evenwhile he was busy turning Fiataround.
It was a great opportunity forFiat to get involved with Chrysler,and now, for all the world, it lookslike Chrysler is saving Fiat.
Sergio Marchionne was raisedin Toronto and picked up a law de-gree in Windsor, so Detroit is notunknown to him.
But what he is doing is quite re-markable and worthy of beingcopied by lots of other CEOs ofcompanies in Southeast Michigan.
If he chose to ignoreDetroit, it would be un-derstandable — and typ-ical of many CEOs. Buthis case is quite differ-ent.
He was willing to takeon the role of head ofthis year’s United Waycampaign. Then he gotlots of executives fromaround our area to signon with him. He’s theone holding meetings and partici-pating in this vital fundraiser.
He’s rented space in downtown
Detroit in a renamedbuilding, ChryslerHouse, and he plans tomove a few employeesdowntown.
And most important,perhaps, he has boughta house in our commu-nity. Which has to meanthat he’s planning tospend some time here.
Now, none of this wasnecessary for a guy
who’s been spending most of histime in Turin, Italy, or on an air-plane going to outposts around the
world. But he’s here.And his presence is a very im-
portant aspect of the success ofChrysler. Not unlike the now-fa-mous “Imported from Detroit” adsthat first aired during the SuperBowl in 2011, this is more than justgiving money.
The head of GM has made a hugecontribution to a nonprofit in De-troit, and I am sure that it is great-ly appreciated. But there is no sub-stitute for presence.
Sergio has created a real localpresence in Detroit, which is miti-gating the whole idea that this
American car company is now anItalian asset.
He is rapidly becoming a fixtureon the Detroit philanthropic scene.It’s very effective, and it’s very im-portant.
He is creating a great examplefor many other executives in South-eastern Michigan on just how im-portant it is to give your time andenergy as well as writing a check.More execs need to do all three.
He’s a charming, witty and veryeffective chief executive. He seemsto be a very philanthropic one aswell. And that’s a very good thing.
Crain’s Detroit Businesswelcomes letters to the editor.All letters will be considered forpublication, provided they aresigned and do not defameindividuals or organizations.Letters may be edited for lengthand clarity.Write: Editor, Crain’s DetroitBusiness, 1155 Gratiot Ave.,Detroit, MI 48207-2997.Email: [email protected]
ues in management-la-bor teams visitingplants and suppliers,looking for savingsthrough lean produc-tion that could reducethe need to cut wages orbenefits for workers.That kind of thinking isexactly what Detroitneeds.
“The more satisfiedconsumers are ... that’s job securi-ty,” Bob King told members of theMAC board last week. “We triedthe Jobs Bank, and that didn’t
work.”King acknowledged
that it was easier for anemployer to work withthree or five unionsversus 48 different bar-gaining units. In nego-tiations with the state,five separate unionsworked together in-stead of going their sep-arate ways to negotiatenew agreements.
He said that both thecontracts with the Detroit au-tomakers and new pacts with thestate of Michigan could be helpfulmodels as Detroit looks at new
ways of working with its unions.King also credited Roger Penske
with being the “first owner” whohelped King change his approach
to bargaining. Penske’s personalinvolvement in negotiations at De-troit Diesel more than a decade
ago led to “creative problemsolving” and a reduction ingrievances from 2,500 a yearto “maybe 10.”
Maybe Penske and Kingshould be the city’s chief ne-gotiators.
Mary Kramer is publisher ofCrain’s Detroit Business. Catchher take on business news at6:10 a.m. Mondays on the Paul
W. Smith show on WJR AM 760 andin her blog at www.crainsdetroit.com/kramer. E-mail her at [email protected].
Will going to war over right-to-work issues kill productive busi-ness-labor cooperation in South-east Michigan?
For two years, business leadersand labor union leaders have metquietly to create messaging to pro-mote the region for its skilledworkforce. The work began as a“to-do” item from the Detroit Re-gional Chamber’s 2010 MackinacPolicy Conference.
The chamber has been workingjointly with the Metropolitan Af-fairs Coalition (MAC), a nonprofitwhose board is made up of busi-ness, labor and government lead-ers. (Disclosure: I am a member ofthe board of both groups.)
Some leading business figures,including well-known RepublicanJohn Rakolta Jr., have been at thattable, even traveling to Italy on atrade mission with the UAW’s BobKing to lure Italian auto suppliersto Michigan.
Here’s the question: Can thiscoalition survive this fall’s battleto amend the state constitution toban any right-to-work laws like theone adopted recently by neighbor-ing Indiana?
I hope so. The UAW is particu-larly well-positioned to work withDetroit’s 48 municipal union bar-gaining units to navigate a produc-tive path through the city’s reorga-nization under state supervision.
The UAW’s flexibility on workrules, wage rates and other issuesmade it possible for Detroit au-tomakers to profitably producesmall cars in the U.S., and someoff-shore work is returning to
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LETTERS CONTINUED■ From Page 8
Coast Guard when evaluating thesafety of untested equipment onboard vessels.
Fortunately, we don’t need tobank on new pipes that serve a sin-gle ship and changes to maritimesafety law to solve this problem.There are much simpler and readi-ly available remedies to the Bad-ger’s coal ash dumping problem. Adiesel engine retrofit would costapproximately $14 million to $16million and requires only sixmonths — a single offseason — tocomplete.
Dirtier but even less costlywould be developing a means tostore the ash on board and disposeof it after the trip. Ash is unloadedfrom the boilers and transferredinto “ash receivers” for dumpingby hand now, so why not dispose ofit onshore instead?
Moving cargo and people byship on the Great Lakes is safe,fuel-efficient and economical. Itshould also meet a common stan-dard of cleanliness. Askingwhether or not the Badger will beshut down dodges that expecta-tion. A company that brings, by itsown estimates, $40 million or morein annual economic impact to itsport communities should be ableto secure financing to keep such avaluable asset running well intothe future. So cut the delay andstart today.
obert Naftaly has just about done it all inthe world of public accounting.
He worked on tiny accounts as ateenager for his uncle, was a managing part-ner and co-founder of his own CPA firm, hashad C-suite positions with major companies,was director of Michigan’s Department of Man-agement and Budget, and was on the board ofgovernors at Wayne State University.
Today, at 74, he’s still going strong.Naftaly serves on the board of Southfield-
based Sun Communities Inc., Southfield-basedMeadowbrook Insurance Group Inc., Troy-basedTalmer Bancorp Inc., the Michigan Tax Commis-sion, the Detroit-based UAW Retiree MedicalBenefits Trust and Troy-based Walsh College,the school from which he graduated in 1959.
His former corporation positions includevice president and general auditor at DetroitEdison; president and CEO of PPOM, a sub-sidiary of Blue Cross Blue Shield of Michigan;and COO and CFO of Blue Cross.
And, by all accounts, he is also one of thenicest guys in town, active in numerouscharities and mentor to many in the financecommunity.
For all of this and more, Naftaly will be hon-ored with the Lifetime Achievement Award atthis year’s Crain’s CFO of the Year event June12 at The Inn at St. John’s in Plymouth.
“What has been true for me, I know hasbeen true for many others that Bob has guid-ed over the years,” said Mark Davidoff,Michigan managing partner for Deloitte LLP.“Meeting Bob Naftaly changed my life.”
Davidoff met Naftaly in 1988. Naftaly wason the board of the Jewish Federation of Metro-politan Detroit and wanted some advice fromDavidoff, then CFO of the Mercy Services forthe Aging, on how the federation could bettermanage its two nursing homes.
Soon after, Naftaly recommended Davidoffas CFO of the federation, where he eventually
became executive director. Naftaly later intro-duced Davidoff to Tom Dekar, manager of De-loitte’s seven-state North Central region, andDekar recruited Davidoff to the accountingand consulting firm in 2005. Earlier this year,Davidoff was promoted to his current position.
“I owe Bob for a lifetime of opportunities,”Davidoff said. After joining Deloitte, David-off took Naftaly and his wife, Anita, to dinnerand presented him with a Louisville Sluggerbaseball bat with the engraving: “To RobertH. Naftaly, World’s Greatest Coach.”
“He’s got the biggest heart of anyone I’veever met,” Davidoff said. “He’s all abouthelping others quietly. And he’s always thesmartest guy in the room.”
Stephanie Bergeron, president of Walsh Col-lege, was one of this year’s CFO judges forCrain’s. She said she didn’t nominate Naftalyfor the lifetime honor, but when his namecame up, “I went ‘Oh, my God, that’s brilliant!’
“Two things make Bob unique,” she said.“One is people related, and one is number
May 28, 2012 CRAIN’S DETROIT BUSINESS Page 11
WINNERS AND FINALISTSIn addition to lifetime achievementwinner Robert Naftaly (profiled atright), here are the honorees inCrain’s CFO of the Year Awards:
Government� Winner: PeterProvenzano, director offinance, MacombCounty, Page 12
Health Care� Winner: FrancinePadgett, senior vicepresident, treasurerand CFO, MidMichiganHealth, Page 13� Finalist: PatrickMcGuire, senior vicepresident and CFO, St. John ProvidenceHealth System, Page 13
Corporation, over $1 billion revenue� Winner: Mark Yost,CFO and executive vicepresident, SeverstalDearborn LLC, Page 14� Finalist: MaximilianeStraub, CFO andexecutive vicepresident of controlling,finance andadministration, RobertBosch LLC, Page 14
Corporation, under $25 million revenue� Winner: KathleenBatherson, CFO,Computerized FacilityIntegration LLC, Page 17� Finalist: CornellBatie, CFO, MackAvenue Records, Page 17
JUDGES�� Tim Gargaro: CFO, ConstellationEnterprises LLC, Bloomfield Hills�� Jeff Blackman: CFO, ForeSeeResults Inc., Ann Arbor�� Rick David: COO, UHY Advisors,Sterling Heights�� Stephanie Bergeron: President,Walsh College, Troy
Ext ra
CFO Awards
Success breeds successAmong Naftaly’s accomplishments is helping others achieve
ne of the prevailing themes in this year’sslate of Crain’s CFO of the Year winnersis that they had to make hard choices to
navigate their companies through the recession.That included finding efficiencies, cutting jobsand, in some cases, putting in place financialcontrols where there had been none.
But as the worst of the economic downtownappears to have receded, CFOs are being calledupon to aid managing expansion and growth.
This year’s judges selected candidates whoovercame unique challenges and stood apart inthe ranks in recent years, especially in indus-tries hardest hit by the recession.
CFO SUMMITThis year’s CFOs ofthe year will behonored at an awards
and educational summit inpartnership with FEI Co. and MACPA1:30-9 p.m. June 12 at The Inn atSt. John’s in Plymouth Township,with speaker Lt. Gov. Brian Calley. Title sponsor is Rehmann LLC.Details: crainsdetroit.com/events.
Tried by fire, top CFOs keep their cool
JOHN SOBCZAK
Robert Naftaly has made it a priority to mentor others as his own career followed a wide-ranging path in public accounting.
R
See Naftaly, Page 12
Lifetime Achievement Award
O
20120528-NEWS --0011-NAT-CCI-CD_-- 5/25/2012 11:53 AM Page 1
related. I got to know him reallywell the last five and a half years atWalsh. He’s got soft shoulders whenyou need soft shoulders to lean on.
“On the numbers side, there’s noone better at seeing a set of num-bers and knowing a problem iscoming. He has an innate ability tosee a problem coming well beforeanyone else does, and to say, ‘Hereare the opportunities to solve it,’ ”she said. “That’s not to say I’m hap-py to hear everything he says, buthe’s almost always spot on.”
Bergeron can particularly ap-preciate Naftaly’s numbers skills.She is a CPA who held high-levelaccounting and finance jobs at Gen-eral Motors, Chrysler and Goodyear.
Naftaly said his willingness tomentor others grows from the wayhis uncle Sam Geller took him un-der his wing as a teenager.
“He said, ‘This is what you’regoing to do: You’re going to take abookkeeping course, and whenyou get out of high school, you’regoing to go to work with me and goto Walsh College at night to be-come a CPA,’ ” Naftaly said.
Naftaly was going to Detroit’sCentral High School. He took thatbookkeeping class and went towork for his uncle’s firm after grad-uating in 1956. After Naftaly gradu-ated from Walsh, he and his uncleopened their own Detroit firm:Geller, Naftaly, Herback and Shapero.
Naftaly shrugs off the kudos he’sgotten for being a serial mentor.
“I’ve tried to help people suc-ceed,” he said. “I care about peo-ple. I’m happy when people I’vehelped are successful.”
Tom Henderson: (313) 446-0337,[email protected]. Twitter:@tomhenderson2
PETER PROVENZANO� Director of finance, Macomb County� Claim to fame: Compiling the initialversion of County Executive MarkHackel’s proposed 2012 budget,which eliminated a projected fundinggap of more than $22 million for thiscalendar year.
It’s been a while since the word“surplus” entered budget talks inMacomb County, but the govern-ment briefly crested its break-even
point on Finance Director PeterProvenzano’s watch earlier thisyear.
Provenzano,38, was appoint-ed in March 2011by County Exec-utive MarkHackel. Hehelped preparethe administra-tion’s first bud-get for 2012 witha mix of revenuesupplements, position elimina-tions and labor concessions thatclosed a $22.8 million gap projected
last year for 2012.Officials even saw a surplus of
$48,336 as the year began, althoughrecent tax revenue adjustments andspending changes later eliminatedit. Provenzano was controller andassistant city manager in Rosevillefor six years before the Hackel ap-pointment, and he now oversees acounty staff of 97 after some recentdepartmental consolidation.
“It was a lot of little things,”Provenzano said. “There was noone silver bullet for balancing thebudget. A lot of small strides addedup to big results. Also, while we’restill seeing about a 5-6 percent de-
cline in taxable values, right nowwe’re looking at about a 2.5 percentdecline for 2013. There are still de-clines, but we see it slowing.”
The county, which has 2,439 full-time employee positions and a gen-eral fund of more than $190 million,recently eliminated 36 positions(most of them vacant) along withgaining concessions in health carecosts, longevity pay and furloughdays among its employees. Thosewill collectively save the countyabout $11.4 million per year.
Macomb also recently managedto eliminate a yearly budget fund al-location to the county-owned Martha
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May 28, 2012CRAIN’S DETROIT BUSINESSPage 12
Finance Extra: CFO Awards
WinnerT. Berry Medical Care Facility after therehabilitation and elder care centerbecame cash-flow positive. It alsosupplemented county revenueslightly with a new e-filing conve-nience fee for documents submittedonline to the county circuit court.
Macomb eliminated retireehealth care for spouses of formeremployees, and workers hired afterJan. 1 now become vested in thecounty pension plans after 15 yearsinstead of the previous eight — butProvenzano said these changes willtake awhile to yield more savings.
The county in January also con-solidated the Macomb County De-partment of Roads, formerly thecounty Road Commission, intoProvenzano’s department, allow-ing him to eliminate some redun-dant clerical positions, he said.
“I think the biggest success isworking well with the departmentheads. They are the ones runningday-to-day operations, and they’vedone a great job for us of buyingthings only when they need to andholding positions vacant as long asthey can,” he said. “Because weare a service business, our numberone expense is always employees.”
— Chad Halcom
GOVERNMENT
Naftaly: A mentor■ From Page 11
Provenzano
20120528-NEWS --0012-NAT-CCI-CD_-- 5/25/2012 10:48 AM Page 1
FRANCINE PADGETT� Senior vice president, treasurer and CFO,MidMichigan Health, Midland� Claim to fame: Saving $34 million for a newelectronic medical records system.
Francine Padgett’s original timeline for anestimated $84 million electronic medicalrecord system implementation was 3½ yearsfor MidMichigan’s four hospitals.
By working closely with clinical staff andtwo consultants, Padgett, asthe health system’s elec-tronic medical record sys-tem project manager, wasable to cut the total costs tounder $50 million.
“We finished implementa-tion (last December) in 28months,” said Padgett, a 22-year MidMichigan veteranwho has been CFO since2008.
“We should get $20 million back” from thefederal government over the next four yearsfor meeting electronic medical record systemstandards for meaningful use, Padgett said.“We are looking at a cost of about $100,000 perbed, which is considered very low.”
Working in health care was far from Pad-gett’s thoughts when she was an educationmajor at the University of Missouri.
“I realized my teaching skills were too nar-row to be a great teacher, so I focused my en-
ergies on becoming a CPA,” Padgett said.Shortly after graduating with an MBA from
the University of Cincinnati, Padgett relocated toMichigan in 1980, when she went to work forthe former Deloitte Haskins and Sells ac-counting firm, handling the audit for DowChemical Co.
Padgett, 58, oversees 150 staffers in severaldepartments and is in the midst of a corporateperformance improvement project, a programthat over the past two years has cut costs andincreased revenue by a total of $5.6 million.The hospital system expects to have $1.15 bil-lion in revenue this year.
“We didn’t have the methodology or the ex-perience to use Six Sigma or lean (process en-gineering),” said Padgett. “I used a simple 10-step process to improve corporateperformance,” and the results were positive.
Since early 2010, MidMichigan has used 27teams of 10 members each to work on specificprojects that include improving patient flow inthe emergency department. Each team has 12weeks to complete its project, with a goal of in-creasing revenue or cutting costs by at least$50,000.
“We were losing (the business of) people inthe ER because some were sitting there forfour hours” and then leaving, Padgett said.“We implemented a fast-track system” to seeminor-illness patients in another section ofthe ER.
Other projects have included managingsupply costs in the operating department andincreasing ambulatory surgery volume.
“Every dollar we save goes into patientcare, to employees or the facility.”
— Jay Greene
PATRICK MCGUIRE� Senior vice president and CFO, St. JohnProvidence Health System, Warren� Claim to fame: Secured a groundbreakingagreement with Blue Cross Blue Shield ofMichigan on a new performance-basedreimbursement model.
Some people dream to be a star centerfielder or quarterback. Patrick McGuiredreamed in high school of being eitheran accountant or a lawyer.
“In high school, I al-ways was really goodwith numbers,” saidMcGuire, 51. “It camevery naturally to me,and I had an aptitudefor it. It was a good ba-sic building block ofdoing things in busi-ness. It was eitherbusiness or law. Lawschool faded, and I de-cided to be an accountant.”
Out of the University of Michigan with abusiness degree in 1982, and after a stintat now-defunct Arthur Anderson andCo., McGuire was hired in 1986 as direc-tor of accounting by St. Clair Health Sys-tem (the predecessor company to St. JohnProvidence) and its two hospitals.
St. John Providence now is a diversi-fied health system with $2 billion in an-
nual revenue and five hospitals at sevencampuses. McGuire became CFO in2004.
Over the past two years, he has beenpart of a team developing programs toreduce costs and improve quality withphysicians and health insurers.
That included helping 2,300 St. Johndoctors form The Physician Alliance LLC, aphysician organization that joined withSt. John in a 50-50 joint venture to createSt. John Providence Partners In Care LLC, anew physician-hospital accountable-care organization.
“This will help us contract withhealth insurers and prepare for ACOs”under health care reform, said McGuire,who is responsible for 1,050 employeesin the areas of finance, revenue cycle,supply chain, real estate and managedcare.
Earlier this year, St. John signed acontract with Blue Cross Blue Shield ofMichigan to develop best clinical prac-tices with their physicians and preparefor a performance-based contract in 2013designed to lower costs and improvequality.
“We looked at the costs of (200,000 pa-tients under St. John care), and thetrend line went up 6 percent a year,”McGuire said. “Blue Cross could say (forexample), if you can manage that popu-lation to 2 percent of costs, we believethat is a 4 percent savings, and we arewilling to share costs savings withproviders in some way.”
— Jay Greene
May 28, 2012 CRAIN’S DETROIT BUSINESS Page 13
Finance Extra: CFO Awards
McGuire
Finalist
HEALTH CAREWinner
LIFETIME ACHIEVEMENTWINNER: Robert Naftaly, CPA, CGMA
Chairman, UAW Retiree Medical Benefits Trust
GOVERNMENTWINNER: Peter Provenzano Jr., CPA, CGMA
Director of Finance, Macomb County
$100 MILLION - $1 BILLIONFINALIST: Glenn Cole, CPA, CGMA
Executive Vice President & Chief Financial Officer, Ghafari Companies
$25 MILLION - $100 MILLIONFINALIST: Willow Schlachter, CPA, CGMAVice President & Chief Financial Officer, EEI Global Inc.
We love to see our members
shine
MACPA congratulates our members recognized by Crain’s
for the 2012 CFO Awards
www.michcpa.org | 248.267.3700
Padgett
20120528-NEWS --0013-NAT-CCI-CD_-- 5/25/2012 11:52 AM Page 1
May 28, 2012CRAIN’S DETROIT BUSINESSPage 14
Finance Extra: CFO Awards
MARK YOST� CFO and executive vice president,Severstal Dearborn LLC
� Claim to fame: Led steelmakerSeverstal through $6.9 billion indeals, including acquisitions aheadof the economic downturn, thendivestitures and modernizationprograms to stabilize the company.
Mark Yost became CFO of Sever-stal Dearborn in 2008, at the mosttumultuous time of its young exis-tence.
Four years after Russian steel-maker Severstal OAO acquired RougeSteel, Yost was charged with ramp-ing up production, leading the ac-quisitions of several U.S. steelplants totaling $2.7 billion in trans-actions. The expansion increasedSeverstal’s production from 2.5 mil-lion tons in Dearborn to 11.4 milliontons of steel production capacityacross the U.S.
Then the recession slashed theauto industry’s growth and sent
Severstal’s production spiralingdownward. Yost was charged withrestructuring the organization.
“We made big acquisitions justin time for the bottom to fall out,”Yost said. “We shiftedfrom integration andgrowth to a turn-aroundfocusandgainingstabili-ty.”
Yost,39, spent2009 sta-bilizingSever-stalDearborn’s working capital. In2010, he led the $1.2 billion divesti-ture of its plants in Maryland,West Virginia and Ohio to NewYork investment firm The RencoGroup.
The deal reduced Severstal’soverhead — dropping 8,000 em-ployees, down to 2,000 — and al-lowed it to shed 7.3 million tons ofsteelmaking capacity. Severstalused the new capital to modernize
its Dearborn and Mississippi plantsin a $3 billion project.
“The idea was simple: Modern-ize these facilities to give us a bal-ance in the market and create a
good value-addedniche in our keymarket,” he said,referring to the au-tomotive sector.
The downturnand modernizationcame at a cost. Sev-erstal Dearborn’srevenue dropped to$3.4 billion in 2011,down from $8.2 bil-lion in 2008.
Now the steel-maker, along with
Yost, stresses cost competitive-ness, growth and talent retention,Yost said.
“We’re out of crisis mode, andnow it’s all about changing themindset of our workforce,” hesaid. “I’m focused on creating verygood intelligence within the com-pany and … on emerging productsso we can get the margins we wantto achieve in our mills.”
— Dustin Walsh
MAXIMILIANE STRAUB� CFO and executive vice presidentof controlling, finance andadministration, Robert Bosch LLC,Farmington Hills� Claim to fame: Managing thereturn of automotive for the Germansupplier’s North American arm bymaintaining a reduced cost structureand creating internal talent.
Maximiliane Straub had the lux-ury of becoming an automotiveCFO after the industry collapse in2008-09. But managing the NorthAmerican financials of the world’slargest supplier, post-downturn,isn’t elementary.
Straub was tasked with increas-ing profitability at minimal capaci-ty while maintaining low overheadcosts.
“I came in at a very fragiletime,” she said. “Stabilization (ofthe industry) was just beginning,and we had to look at growth in avery conservative way.”
Straub, 47, made it a priority topush funds toward the supplier’smanagement development pro-gram and financial training for itsemployees.
“We had to teach every one ofour associates what liquiditymeans, because we were still in adifficult situation,” Straub said.“But I also made sure there wasmoney for growth projects even indifficult times. We watch over theprograms more closely, so they re-main intact.”
Straub said the company em-ployees are her passion. In 2011,Bosch hired 1,000 employees inNorth America across its variousbusinesses, including automotive,software technology, solar and
Winner
Finalist
We made bigacquisitionsjust in time
for the bottomto fall out.
Mark Yost”
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Straub isone of fewwomen toreach theCFO level inthe automo-tive industry,and she saidshe’s commit-ted to attractingother women to thefield.
She’s a memberof Detroit-basedwomen’s profes-sional development group Inforum.
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20120528-NEWS --0014-NAT-CCI-CD_-- 5/25/2012 11:51 AM Page 1
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Finance Extra: CFO Awards
CORPORATION$100 million-$1 billion
CAMERON BREADY� Executive vice president and CFO, ITCHoldings Corp., Novi� Claim to fame: Spearheaded a multibillion-dollar acquisition that makes ITC one of thelargest electric transmission companies in thecountry.
Cameron Bready joinedNovi-based electrical trans-mission companyITC Holdings Corp. in2009 with aims topare down opera-tional costs andhelp grow its pres-ence nationally.
Last December,Bready coordinatedITC’s acquisition ofNew Orleans-basedEntergy Corp.’s electrical transmission busi-ness. The $1.78 billion deal more than dou-bled ITC’s transmission footprint, addingabout 750 employees and nearly 16,000miles of high-voltage transmission lines inArkansas, Louisiana, Mississippi andTexas. The company now operates about30,000 miles of electrical wire in 12 states.
“We have a very stable, predictable busi-ness, which attracted capital even duringthe worst of the downturn,” he said. “That
affected the market’s confidence in us as acompany, which allowed us to make majorinvestments in the business.”
During the recession, Bready, 40, led aninternal effort that reduced costs to cus-tomers by more than $50 million — about 8percent.
“Even though we were somewhat insulat-ed from the recession, we felt compelled tocut costs for the benefit of our customerswho were struggling,” he said.
He said his teamof 60, with a $25 mil-lion budget, com-pletely restructuredits approach to in-vestor relations.
“We really tried toshift our focus frombeing a reactive or-ganization to onethat used investorrelations strategical-ly,” he said. “We im-proved communica-tions and reworked
our messaging and worked harder to havethe investor community understand our ap-proach to building our company.”
Bready’s efforts contributed to an overallincrease in ITC’s market capitalization,from just over $2 billion in 2009 to about $4billion this year. In this time frame, ITChas performed strongly, delivering a totalshareholder return to investors of morethan 20 percent for 2009, 2010 and 2011.
— Meghana Keshavan
GLENN COLE� Executive vice president and CFO, GhafariAssociates LLC, Dearborn
� Claim to fame: Navigating the intricacies offoreign business to grow Ghafari’s presenceglobally.
Glenn Cole has beendeveloping country-spe-cific financial strategiesfor Ghafari Associates LLCsince he joined as CFOin 2009. The architec-ture and engineeringfirm did work in 14countries last year,with offices in Asia andthe Middle East.
Before he joined, themajority of Ghafari’srevenue came from theU.S. auto sector. By 2007,the company began shift-ing its focus, and today half of its businesscomes from abroad. Cole has been instrumen-tal in guiding this process.
Cole, 52, said much of his work involves ne-gotiating compliance matters, tax positionsand insurance requirements abroad.
“A lot of the tax policies abroad are moreguidelines than rules; there’s a lot of grayness,and a lot of room for interpretation,” he said.
“The downside is you might never know quitewhere you stand, but if you’re creative and ag-gressive enough, you can usually improveyour position enough in respect to taxation.”
Cole said that last year he negotiated a newinsurance plan for Ghafari with British firmLloyd’s of London, since the company’s previousinsurer couldn’t keep up with Ghafari’s rapid-ly growing global presence. Costs fell by 35percent, and the new carrier is better
equipped to “respond andreact to our unusual situ-ations abroad,” he said.
Ghafari’s newly diver-sified offerings includedesigning heavy indus-trial factories, airporthangars and schoolsaround the world. Thecompany is doing workon the new Wayne Coun-ty jail.
Cole, who has 20staffers, said the dollarsbrought in by Ghafari’sinternational expansionhelped buffer it from therecession. Revenue did-
n’t grow much at first, but he said the compa-ny was able to stay even and profitable. Asthe automotive industry rebounds, Ghafari’srevenue — $125 million last year — continuesto increase, he said.
“Diversifying was important, but the autoindustry will continue to be a very importantpart of our ongoing growth profile,” he said.
— Meghana Keshavan
We really tried toshift our focusfrom being a
reactiveorganization.
Cameron Bready”
“The auto industry
will continueto be a veryimportant
part of our ...growth
profile.Glenn Cole
”
“
Winner Finalist
20120528-NEWS --0015-NAT-CCI-CD_-- 5/25/2012 10:54 AM Page 1
WILLOW SCHLACHTER� CFO, EEI Global Inc.,Rochester Hills
� Claim to fame: Guided thecompany’s restructuring during therecession and aided its return toprofitability.
Rochester Hills-based eventmarketer EEI Global Inc. was in adangerous spot at the dawn of therecession in 2008, with so much ofits business tied to the automotiveindustry.
“In one year, our revenue wascut in half, and three of our largestclients went into bankruptcy,”said CFO Willow Schlachter, whojoined the firm in 2002. EEI hadbeen diversifying, but its back-bone remained displays primarilyfor automotive and advanced man-ufacturing clients.
EEI faced an existential deci-sion.
Schlachter and her team got ad-vice from a financial expert aboutoptions to partially or fully liqui-date the company. Interest rateson EEI’s loans had gone up be-cause banks were afraid to workwith companies tied to automo-tive, she said, further straining fi-nances.
After weighing the best- andworst-case scenarios, it was decid-
ed to keep the company together,and eventually, it returned to prof-itability.
That required job and salarycuts, unpaid furloughs and othercontractions to reduce costs —steps that reduced the firm’sbreak-even point by $14 million.
“We felt like we were doing theright thing and didn’t want to giveup on the company,” saidSchlachter, 52, who directly over-sees about 15 employees.
EEI had $35 million in 2011 rev-enue, and Schlachter said she’snow into strategic planning for ex-pansion that guards against anoth-er downturn.
She currently is helping EEIopen a new production location inLas Vegas and a sales office in LosAngeles. She said she is cautiousabout the venture because of theadded costs, but added, “If you’retoo cautious, you can’t grow.”
— Ryan Kelly
CRAIG SPRINKLE� CFO, ePrize LLC, Pleasant Ridge
� Claim to fame: Openedcommunication at ePrize to makesure everyone worked from thesame metrics.
Communication and trans-parency became top prioritieswhen Craig Sprinkle stepped inas CFO at Pleasant Ridge-based on-line promotions and sweepstakesfirm ePrize LLC five years ago.
The company, which last yearhad revenue of $53 million, did notopenly share financial details withits employees. Sprinkle wanted tochange that.
“I wanted to ensure numberswere both available and clearly ex-plained to team members so theywould become invested in the com-pany’s success,” he said via email.
Sprinkle, 42, launched a new re-porting process for middle man-agers to increase visibility of teamfinancial and operating metrics.Last year, he championed develop-ment of the company’s first inter-nal dashboard, which shows em-ployees metrics such as sales andproduction, average contract size,number of promotions launched ina given month and average rev-enue from them.
“There wasn’t really any flashytechnology behind it,” Sprinklesaid. “It was really about gettingthe information out to all the em-ployees so they could see and un-derstand what’s going on.”
To improve efficiency, he
launched a new resource planningsystem that integrated ePrize’squoting, sales order entry andtime reporting.
“Significant efficiencies havebeen gained in sales, productionand finance, as well as improve-ments in the accuracy and opera-tional controls of key data used inthe creation of our financial state-ments,” he said.
He also shifted the majority ofePrize’s employee compensationplans to a commission-based sys-tem. That was the last step in al-lowing the company’s employees,which now number about 370, tohave further control of the compa-ny’s performance, he said.
Sprinkle strengthened the bal-ance sheet last year by retiring $2 million in debt, used to financeoperations from 2005 to 2007, aheadof schedule.
— Ryan Kelly
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May 28, 2012CRAIN’S DETROIT BUSINESSPage 16
Finance Extra: CFO Awards
Winner
CORPORATION$25 million-$100 million
Finalist
It was really aboutgetting the
informationout to all theemployees
so theycould see
and understandwhat’s going on.
Craig Sprinkle”
“
If you’re toocautious,you can’tgrow.
Willow Schlachter”
“
20120528-NEWS --0016-NAT-CCI-CD_-- 5/25/2012 10:53 AM Page 1
� Claim to fame: Figuring out asystem that analyzes a massiveamount of data and organizes it in away that gets the right data to theright people in her company so theycan use it most effectively.
As Computerized Facility Integra-tion LLC has continued to grow itsclient base and revenue, KathleenTigue Batherson’s responsibilitieshave increased.
In the pasttwo years, shehas added over-sight of recruit-ing, trainingand administra-tion of clientcontracts to herduties, in addi-tion to her pre-vious tasks ofoverseeing human resources andgeneral accounting. She has eightstaffers.
“I have an incredible supportteam that I heavily rely on, andtherefore I am able to spend timeworking on new initiatives to helpCFI’s growth,” she said.
CFI is a facilities managementand technology consulting firmthat, despite the recession and itsaftermath, has had a compoundedannual growth of 23 percent in thepast six years, to revenue of about$17 million in 2011. Head countalso is up over six years by about140 percent, to 120 employees.
CFI helps companies track theirleases, reduce costs for mainte-nance, heating and cooling, andbetter organize floor plans.
Following stints as accountingmanager for the Detroit-based lawfirm of Honigman Miller Schwartzand Cohn LLP and controller ofMadison Heights-based KnoppowWindows and Blinds, Bathersonjoined CFI as director of financemore than 16 years ago.
She was named CFO three yearsago, an interesting time, to say theleast, given the local and nationaleconomies.
CFI already was well into diver-sifying away from a reliance onauto and tech companies, whichhelped it to thrive.
“Our business model haschanged more to recurring busi-ness and longer-term contracts,”she said.
Batherson, 49, credits the collab-orative culture at CFI and hercalm demeanor with helping tomanage the challenges of a weakeconomy and a growing business.
“I’m level-headed,” she said. “I
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CORNELL BATIE� CFO, Mack Avenue Records,Grosse Pointe Farms, and DetroitInternational Jazz Festival, Detroit
� Claim to fame: Created financialsystems for the annual jazz festivaland the record label.
GretchenValade, perhapsbest known aschairwoman ofDearborn-basedclothier CarharttInc., liked howCornell Batiecleaned up themessy book-keeping of theDetroit Interna-
tional Jazz Festival, so in 2009 sheasked him to do the same for herlocal record label.
At the time, the record label hadjust acquired three jazz recordcompanies, putting it on a muchlarger stage, but it had a hard timemanaging growth.
Batie, 41, simplified the compa-ny’s financial system by categoriz-ing and organizing the way inwhich it handled income, expensesand collections. He also createdpolicies for how to deal with rev-enue tracking, profit-and-lossstatements, accounts payable andhuman resources.
That’s similar to what Batie haddone for Valade at the largest freejazz festival in the country. Valadeis the Detroit festival’s chair andone of its chief financial benefac-tors.
Batie joined the nonprofit festi-val in 2006 as its finance manager,charged with ensuring the artistswere paid the agreed-upon fees fortheir performances, somethingthat had not been happening be-fore Batie joined the festival.
He said the festival had few inter-nal financial controls and no set op-erating budget, so he drew on hisbackground as a financial managerto create one. In 2007, he was pro-moted to CFO of the jazz festival.
In that role, Batie created a fi-nancial structure for the festival,ensuring all employees in charge ofmaking financial decisions for thenonprofit had a baseline to helpthem make financial decisions.
Batie’s goal is to ensure the festi-val’s long-term success. Last year,it generated $3 million in revenueand is expected to hit the same fig-ure in 2012.
— Nathan Skid
Batie
try to remain calm. I try to see thebig picture and what is happening.”
As for company culture, shesaid: “We have an open-door policyhere, and we share a lot of finan-cials with employees. Our founderand CEO, Robert Verdun, has anexecutive committee in place andwe meet regularly. As a team, wework really well together. There’sa lot of communication.
“As the CFO, I need to be avail-able to explain: ‘Here’s the data. Ifyou do this, then this will happen.’ ”
— Tom Henderson
Batherson
20120528-NEWS --0017-NAT-CCI-CD_-- 5/25/2012 10:56 AM Page 1
tourism-oriented, there are op-portunities to explore here and alot of local content,” she said.
The county put up more than$15,000 to fund the initial phase ofthe “Make Macomb Your Home”campaign, with promotionalvideos prepared by MacombTownship-based Mad Habit Mediafeatured on Comcast Corp. cableprogramming ads and as trailersin MJR Theatres since shortly afterState of the County.
The second phase, at about halfthe first-phase budget, will befunded by the two chambers andother community organizations,said Nick Posavetz, associateplanner in planning and econom-ic development. Mad Habit also isassembling the website with con-tent from the county and the con-tributing businesses.
“The charter requires that it’sthe responsibility of the execu-tive to make that promotion (ef-fort). But that’s not something Isee as a responsibility or a chal-lenge. I have a passion for it,”Hackel said. “There’s a lot of in-terest in Macomb County rightnow, and we’re going to capital-ize on it.”
The website may also featuresome upcoming county-spon-sored economic development ini-tiatives, but Hackel said there areno plans for the campaign to ad-dress any political issues in thecounty.
Macomb County rolls out thenext phase of its “Make MacombYour Home” promotional andmarketing campaign this week,with new billboard advertisingand Web hosting supported bythe local business community.
The campaign launch — timedto coincide with the Detroit Re-gional Chamber 2012 MackinacPolicy Conference Tuesdaythrough Thursday — includes anew billboard along I-75 targetingtravelers en route to the confer-ence, plus two local signs fundedby the Macomb County Chamber ofCommerce and Sterling Heights Re-gional Chamber of Commerce & In-dustry.
The county on Tuesday alsolaunches www.makemacomby-ourhome.com (and companionURL mmyh.org), which offers re-sources on available real estate,tools to help grow local business-es through the county Planningand Economic Development Depart-ment, and information on cultur-al assets, dining, parks and otherrecreational opportunities.
Some content is also con-tributed through cooperationwith the Nine Mile Merchants Asso-ciation; Troy-based Nino Salvag-gio International Marketplace,which has stores in ClintonTownship and St. Clair Shores;and the Huron-Clinton MetroparksAuthority.
“It’s going to be extremelyuser-friendly, (and) the supportwe’ve had from the private sectorand schools for this has been in-credible,” said County ExecutiveMark Hackel.
“The biggest challenges herein this county have been in hav-ing someone understand it,brand it and market it effective-ly. Much of that effort previous-ly never really came directlyfrom us, and that was a disad-vantage. And that’s what we’reworking to develop for ourselvesright now.”
The two chambers paid for thebillboard displays at I-696 nearSherwood in Warren and on HallRoad near Van Dyke Avenue, butsome funding for “Make MacombYour Home” also came from sur-plus sponsorship revenue raisedfrom Hackel’s State of the Countyaddress last December, said Ma-comb Chamber CEO GraceShore.
“The website is going to bevery robust and comprehensive,with different features for peopleto live, work and play. If you’re
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CRAIN’S EXPANDSCOOL PLACES TO WORK
Crain’s Cool Places to Workawards returns this year as CoolPlaces to Workin Michigan,reflecting theexpansion ofthe programfrom coveringbusinesses inSoutheastMichigan tobusinesses inthe entire state.
For the revamped program,Crain’s is working with BestCompanies Group of Harrisburg, Pa.,to manage the program. In additionto an employer questionnaire ashas been done in the past, BestCompanies will survey employees ofparticipating companies. Thecombined, weighted results of thetwo will determine who qualifies forCool Places designation.
Best Companies supplies allparticipating companies —regardless of whether they win theCool Places recognition — with aBest Companies Group EmployeeFeedback Report based onemployee responses to the 72-question survey. The report canhelp company executives identifystrengths and weaknesses in theircompany culture and practices.
To be considered for Cool Placesto Work in Michigan, companiesmust register at www.coolplacestoworkmi.com by June 15.
Once registered, companies willbe invited to participate in thesurveys. Up to 400 employees willbe surveyed, depending oncompany size. The vetting processruns from June through August,with honorees receiving notificationat the end of August.
Businesses and nonprofits canapply. Applicants must have aminimum of 15 employees workingin Michigan and have been inbusiness at least one year, amongother criteria.
Companies pay a fee based oncompany size to Best Companiesto cover survey costs. The costranges from $605 to $890 foronline surveying, and $735 to$1,630 for paper surveying.Crain’sDetroit Business will feature therecognized companies in the Nov.5 issue and recognize theirsuccess at a Nov. 15 event atEmagine Theatre in Royal Oak.
Program details and samples ofthe employee surveys are availableat www.coolplacestoworkmi.com.
20120528-NEWS --0018-NAT-CCI-CD_-- 5/25/2012 11:50 AM Page 1
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BUSINESS DIARYCALENDARACQUISITIONS
Lumerica Corp., Madison Heights, aprovider of energy-efficient LED light-ing products, acquired the LED light-ing business of LumaSmart Technolo-gy International, Macomb Township. Lear Corp., Southfield, a global suppli-er of automotive seating and electricalpower management systems, hassigned an agreement to acquire Guil-ford Mills, Wilmington, N.C., a suppli-er of fabrics to automotive and spe-cialty markets, from Cerberus CapitalManagement LP, New York City.
CONTRACTSThomson Reuters’ Integration Discov-ery, Ann Arbor, powered by CareEvo-lution Inc., Ann Arbor, has been se-lected by FirstHealth of the Carolinas,Pinehurst, N.C., to provide clinical in-teroperability across its health caresystem. WXYZ-TV, Southfield, and the Detroit Li-ons announced a four-year agreementto bring Lions football to fans aroundthe country through various platformsincluding on-air, online and mobile,beginning with the 2012 season. Alcantara S.p.A., Milan, a producer ofpremium automotive interior materi-als, has selected AutoCom Associates,Bloomfield Hills, as its public relationsagency of record in North America.Jvis USA LLC, Sterling Heights, willsupply its in-vehicle wireless charg-ing for consumer electronics to threeChrysler Group LLC models as part ofthe automaker’s Mopar division. The2013 Dodge Dart will be the first vehi-cle to offer Jvis’ station. The two othervehicles have not been announced. Rubicon Genomics Inc., Ann Arbor, acompany developing and commercial-izing pre-analytical processes to im-prove the capabilities and perfor-mance of DNA and RNA analyticalplatforms, signed a supply agreementwith Kreatech Diagnostics NorthAmerica, Durham, N.C., a moleculardiagnostics company, for use of Rubi-con’s OmniPlex-D whole genome am-plification technology. Duffey Petrosky & Co. LLC, Farming-ton Hills, has been named agency ofrecord by Bagger Dave’s FranchisingCorp, Southfield, for Bagger Dave’sLegendary Burger Tavern’s advertis-ing and marketing communicationsservices. Danlaw Inc., Farmington Hills, a glob-al provider of automotive electronicsand embedded engineering services,has signed a three-year, multimillion-dollar manufacturing contract for itsGen 2 DataLogger Telematics Devicewith Odyssey Electronics Inc., Livonia.Care Solutions Group LLC, Royal Oak,a health care management services or-ganization, selected Helping HandHome Health Care LLC, Grand BlancTownship, to provide in-home skillednursing and therapy services for pa-tients discharged from hospitals andskilled nursing facilities to home.
EXPANSIONSVisteon Corp., Van Buren Township,announced that its automotive cli-mate joint venture with Fawer Auto-motive Parts Co. Ltd. in China, FawerVisteon Climate Control Systems, hasopened a plant in Chengdu in south-west China to produce aluminum ra-diators for vehicle manufacturers.Website: www.visteon.com.Glacial Energy of Michigan Inc., St.Clair Shores, a licensed alternative-electric supplier, has launched a retailelectricity program targeting residen-tial customers in the Detroit Edisonand Consumers Energy service terri-tories. Website: www.switchtoglacial.com.MagneGas Corp., Tampa, Fla., devel-oper of technology that converts liq-uid waste into a hydrogen-based metalworking fuel and natural gas alterna-tive, has begun Michigan operationsand has added new customer AjaxPaving Industries Inc., Troy. Magne-Gas has completed the installation of
its 300kw refinery in Michigan andhas obtained the necessary permits tobegin operations. Website: www.magnegas.com.
MOVESLambert, Edwards & Associates Inc.moved from Troy to a temporary loca-tion at 1407 Randolph St., Suite 200,Detroit. Telephone: (313) 309-9500.Website: www.lambert-edwards.com.
NEW SERVICESFathead LLC, Detroit, a brand of offi-cially licensed sports and entertain-ment graphic products, launched theFathead Big Shot app, which lets con-sumers see on their iPhone how a Fat-head, a life-sized, adhesive wall graph-ic, will appear on their wall. The BigShot app was created by Detroit LabsLLC, Detroit, a tech company that cre-ates iOS, Android, and Web applica-tions. Website: www.fathead.com.
WEDNESDAYM A Y 3 0
Five Keys to Achieving FiscalFitness. 8 a.m.-noon. Fifth ThirdBank. Michigan Small Business &Technology Development Center.An advanced financial planningworkshop for established businessesdesigned to help the business ownerachieve fiscal fitness. TechTown,Detroit. $25. Contact: Brian King, (313) 967-9295; e-mail:[email protected]; website:www.misbtdc.net.
Everything … About Military Con-tracting. 8-11:30 a.m. With Rep. Can-dice Miller, R-Harrison Township;Col. Robert Schumitz; Connie Paron,vice president, new development forQualified Consulting; and CindyRhodes Victor, managing partnerwith the Victor Firm. Macomb Inter-mediate School District, Room 100B,Clinton Township. $10 advance; $20at the door. Contact: AmandaGougeon, (586) 731-5400, ext. 11,[email protected]; website:www.suscc.com.
THURSDAYM A Y 3 1
Social Media: Protecting Your Brandand Other Legal Considerations.Noon-1 p.m. Macomb-OU Incubator.With Kathy Ossian, principal andleader of Miller Canfield’s informa-tion technology team and deputyleader of the litigation and disputeresolution practice group. Macomb-OU Incubator at Velocity, SterlingHeights. Free. Contact: Joan Car-leton, (586) 884-9324, [email protected]; website: www.oakland.edu.ESD Open House. 4-6 p.m. Engineer-ing Society of Detroit. ESD Head-quarters, Southfield. Free for mem-bers, RSVP required. Nonmemberscan sign up for a $54 membership.Contact: Lori Birman, (248) 353-0735,ext. 120; email: [email protected];website: www.esd.org.
COMING EVENTSCyberAwareness Breakfast Confer-ence Series. 9-10 a.m. June 5. Engi-neering Society of Detroit. This serieswill provide updates to the MichiganCyber Initiative for citizens, businessand industry. The Henry, Dearborn.$15 per attendee per location, $10 perattendee per location InfraGard orMI-ISAC members. Contact: LeslieSmith, (248) 353-0735, ext. 152; email: [email protected]; website:www.esd.org.
The Art of Networking: Traditionaland Power Networking. 11:30 a.m.-1 p.m. June 5. Automation Alley.With Charles Gifford, president, Lo-cal Business Network. AutomationAlley headquarters, Troy. Memberspreregistration $20, at the door $30;nonmembers pre-registration $40,at the door $50. Contact: (800) 427-5100; email: [email protected]; website: www.automationalley.com.
Selling Smart Workshop Series. 9-11a.m. June 6. Ann Arbor Spark. Theseries will be held the first Wednes-day of the month. Spark Central, AnnArbor. Free, registration required.Contact: (734) 372-4071; email: [email protected]; website:www.annarborusa.org/events.
Home Refinancing Options Seminar.5-6 p.m. June 6. Engineering Societyof Detroit, Credit Union ONE. WithLaura Hoag, director, real estate lend-ing, Credit Union ONE. ESD head-quarters, Southfield. Free; RSVP byJune 1. Email: [email protected];website: www.esd.org.
Detroit Economic Club. 4:30-7 p.m.June 7. With Peter Karmanos Jr., ex-
ecutive chairman of the board, Com-puware Corp. Compuware worldheadquarters, Detroit, $45 DECmembers, $55 guests of members,$75 nonmembers. Contact: (313) 963-8547; email: [email protected]; web-site: www.econclub.org.
Michigan Energy Forum: FinancingCleantech Energy Ventures. 5-7 p.m.June 7. Ann Arbor Spark. WithPatrich Jett, national director, auto-motive and manufacturing group,Colliers International; and others.Spark Central, Ann Arbor. Free.Contact: (734) 761-9317; website:www.annarborusa.org.
Marketing Roundtable: CreativeStrategy in Action. 5-7 p.m. June 12.Ann Arbor Spark. With Paul Koch,creative strategist, Q LTD. SparkCentral, Ann Arbor. Free. Contact:(731) 761-9317; website: www.annarborusa.org.
IP in Product Development. 8-11 a.m.June 12. Automation Alley Technol-ogy Committee. With Azam Khan,deputy chief of staff, U.S. Patent andTrademark Office; and others. Au-tomation Alley headquarters, Troy.Members preregistration $20, at thedoor $30; nonmembers preregistra-tion $40, at the door $50. Contact:(800) 427-5100; email: [email protected]; website: www.automationalley.com.
Inforum Emerging Leaders Meet &Greet Kickoff. 5:30-7:30 p.m. June12. Inforum Michigan EmergingLeaders Affinity Group. With Bet-tye Daly, independent real estateprofessional, Real Estate One.Black Finn Royal Oak. $10, RSVP byJune 10. Contact: StephanieSquires, (248) 231-3648; email:[email protected]; web-site: www.inforummichigan.org.
June Membership Reception. 5:30-7:30p.m. June 14. Detroit Regional Cham-ber. Infinity and Ovation Yacht Char-ters, Detroit Port Authority — DetroitRiverfront. $15 chamber members;preregistration required. Contact:Lauren Rimmell, (313) 596-0384; email:[email protected]; web-site: www.detroitchamber.com.
JUNE 26 CRAIN’S SALUTEHONORS ENTREPRENEURSJoin Crain’s Detroit Business andFifth Third Bank, in partnershipwith the Entrepreneurs’
Organization andthe MichiganEconomicDevelopment Corp.,as they honor the winners of Crain’s ninthannual Salute toEntrepreneurs, 7:30a.m.- 1 p.m. June 26at the Detroit GolfClub.
Manoj Bhargava, CEO of LivingEssentials LLC and creator of 5-Hour Energy, will share his “non-MBA approach to growing abusiness,” and award winnerswill join a panel to discuss theirexperiences.Tickets are $50 for current CDB subscribers, $45 for Small Business Association ofMichigan members and groups of 10 or more, $75 fornonsubscribers and $74.50 witha special CDB subscription offer.For discounted group rates, call(313) 446-0300. For moreinformation, go towww.crainsdetroit.com/events.Entrepreneur winners will beannounced in the June 18 issueof Crain’s Detroit Business.
20120528-NEWS --0019-NAT-CCI-CD_-- 5/25/2012 11:49 AM Page 1
ENTERTAINMENTSarah DeCiantis to director, corporatepartner activation and services,Palace Sports & Entertainment LLC,Auburn Hills, from account director,McCann Erickson, Birmingham.
FINANCEMichelle Crisen-bery to mortgageloan officer, Sea-way CommunityBank, St. Clair,from mortgageloan consultant. Don Heath to se-nior vice presi-dent and teamleader, Associat-ed Banc-Corp.,Birmingham,from senior vicepresident andmarket execu-tive, Bank ofAmerica, Troy.Also, KathyBozek to commer-cial real estate re-lationship man-ager, from seniorvice president, se-nior debt prod-ucts officer, Bankof America, Troy.
HEALTH CARENoah Rosenberg, M.D., to chief medicalofficer, Esperion Therapeutics Inc., Ply-mouth, from executive medical direc-tor, head of cardiovascular metabo-lism, clinical development, ForestResearch Institute, Jersey City, N.J.Samuel Flanders, M.D., to executivevice president of quality, safety and
clinical effectiveness, BeaumontHealth System, Royal Oak, from chiefquality officer and interim executivevice president of operations. Also, Sub-ra Sripada to executive vice presidentand chief administrative and informa-tion officer from senior vice presidentand chief information officer; ThomasBrisse to executive vice president of op-erations, from president, Beaumont
INFORMATION TECHNOLOGYBrad Wilkerson to director, cyber se-curity practice, OpTech LLC, Troy,from senior cyber security specialist.
LAWMary Kucharek to partner, BeierHowlett PC, Bloomfield Hills, from as-sociate.
MEDIAKaren Marderosian to vice president,regional manager, Detroit ad sales,The Weather Channel Companies,Troy, from account executive, Discov-ery Communications, Troy.
NONPROFITSRenee Peck to chief advancement offi-cer, Think Detroit Police AthleticLeague Inc., Detroit, from senior devel-opment officer, office of philanthropy,Henry Ford Health System, Detroit.
REAL ESTATEJohn Arthurs to senior adviser, Princi-pal Associates LLC, Southfield, fromvice president, Grubb & Ellis Co.,Southfield.
Luke Buikema to operations manager,DartAppraisal.com Inc. Troy, fromgeneral manager for the Midwest andPuerto Rico regions, Aramark Clean-room Services, Burr Ridge, Ill. John Godwin and Paul Kerber to seniordirectors, national retail group, Mar-cus & Millichap Real Estate Invest-ment Services Inc., Detroit, from di-rectors.
SERVICESDebra Pomorskito vice president,finance and ad-ministration,Gongos ResearchInc., AuburnHills, from con-troller, Gail &Rice Inc., Farm-ington Hills. Also,Cindy Boozer to fi-nance manager,from accounts re-
ceivable manager. Denise Renton and Laura Vavrek toproject managers of learning and per-formance support solutions, Innova-tive Learning Group Inc., Royal Oak,from freelance contractors. Alex Horvath to vice president, busi-ness strategy and IT consulting, Ac-cretive Solutions Inc., Troy, from di-rector, program project management.
May 28, 2012CRAIN’S DETROIT BUSINESSPage 20
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IN THE SPOTLIGHTBorgWarner, Auburn Hills, hasnamed Ronald Hundzinski as CFOand James Verrier to the newposition of president and COO.Hundzinski succeeds Robin Adams,who has been appointed to vicechairman of the board of directorsand will remain executive vicepresident and chief administrativeofficer.Hundzinski, 53, most recentlyBorgWarner’s corporate treasurer,will remain a member of thecompany’s management board. Heearned a bachelor’s degree infinance from Western MichiganUniversity and an MBA from theUniversity of Colorado and is a CPA.Verrier, 49, had been president andgeneral manager of BorgWarner’s
automotive chain division MorseTEC. All unit presidents and supplychain management will report tohim. He earned a degree inmetallurgy and materials sciencefrom West Midlands College and anMBA from the University ofGlamorgan, both in the UK.
VerrierHundzinski
20120528-NEWS --0020-NAT-CCI-CD_-- 5/25/2012 10:31 AM Page 1
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May 28, 2012 CRAIN’S DETROIT BUSINESS Page 21
Startup offers app development coursesBY TOM HENDERSON
CRAIN’S DETROIT BUSINESS
Michael Vichich, a former se-nior manager in the corporatestrategy practice at the accountingfirm Accenture, has founded Devel-op Detroit LLC, a for-profit companythat will offer 12-week courses inmobile app development.
The first class begins June 11,with enrollment closing June 3.Vichich hope to enroll about 25.Classes will be in the Chase Build-ing, one of the buildings recentlypurchased by Dan Gilbert.
The 12-week program, which in-cludes a demonstration day Aug. 29for the new developers to showcasetheir apps to local companies andinvestors, costs $4,000. For more in-formation, go to www.devdet.com.
Vichich recently raised $500,000
in seed capital from two Michiganangel investors for his own mobileapp company, Detroit-based GlyphInc., which helps customers maxi-mize reward programs for theirvarious credit cards.
Vichich will instruct students onbusiness development. Other in-structors are Dave Koziol, presi-dent of Arbormoon Software Inc., oneof the leading mobile app develop-ers in Southeast Michigan; ChrisAdamson, a former writer and as-sociate producer at CNN who has de-veloped numerous mobile apps forApple’s App Store and written twobooks on programming; and TomCrawford, an adjunct professor ofmobile app development at Michi-gan State University.
Koziol also founded CocoaHeads,a networking group in Ann Arborfor software developers, and has
more than 20 apps at the App Store.“There’s such a need for this,”
said Paul Czarnik, chief technolo-gy officer at Detroit-based Com-puware Corp. “Everybody is havingtrouble finding mobile app devel-opers. “I’m meeting with Mike thisweek, and we may end up doingsomething with him.”
Czarnik said mobile app devel-opers are in such demand that Sili-con Valley firms are offering$100,000 and more a year to collegestudents before they graduate, andthat demand far exceeds supply.
He said he and officials at Quick-en Loans Inc. have been meetingover how to get local universitiesto train more software developersof all types.
Tom Henderson: (313) 446-0337,[email protected]. Twitter:@tomhenderson2
Effort to void consent agreementcould snag other Detroit contracts
BY NANCY KAFFER
CRAIN’S DETROIT BUSINESS
If a move by the Detroit Law De-partment to void the consent agree-ment that the city signed lastmonth succeeds, the city’s abilityto borrow funds and receive grantmoney conveyed by contract — aswell as its future financial outlook— could be in jeopardy.
The consent agreement signedwith the state is widely seen as thecity’s last, best hope to avoid anemergency manager or bankruptcyand the resulting consequences.
Two weeks ago, Law Departmentchief Krystal Crittendon wrote aletter to Gov. Rick Snyder and stateTreasurer Andy Dillon saying theconsent agreement between thecity and state is void because De-troit’s charter bars the city fromentering into a contract with an en-tity that’s in default to it.
The city considers two outstand-ing bills in default, Crittendonwrote: a $4.7 million bill resultingfrom a broken water main at thestate fairgrounds and $220 millionin revenue sharing the city says thestate owes because of an agreement
made under Gov. John Engler.Snyder has said his administra-
tion isn’t bound by deals madewith previous governors.
As for the $4.5 million, it’s thesubject of an administrative hear-ing, Dillon wrote in a letter to Crit-tendon, and thus not in default.
A previous Law Department let-ter, from 2006, said the $220 millionwasn’t a legally enforceable claim.
If the city obtained a court rul-ing that it could not enter into acontract with the state, that wouldapply to all contracts.
It’s unclear how many contractswould be affected. Naomi Patton,press secretary for Detroit MayorDave Bing, referred comment toCrittendon. Crittendon said therewere other contracts but declinedto comment further.
Caleb Buhs, a Michigan Depart-ment of Treasury spokesman, said,“We’re not in default with the cityand therefore have not looked intothe issue further with other con-tracts.” Still, Buhs said debt issuedby the city in recent years is se-cured by a contractual arrange-ment with the state.
“The (Detroit) bonding that has
gone through the Michigan FinanceAuthority in the past few years, alot of that has been set up so it’sguaranteed by revenue sharing,”Buhs said. “So the revenue shar-ing is intercepted by the state andsent to the trustee to make bondpayments. The city has signed anagreement for that arrangement.”
Voiding that contract would im-pede not just the city’s ability topay its debt but also its future abili-ty to borrow because investors willrequire a similar arrangement toguarantee payment.
Grant funds distributed to thecity by the state are conveyed bycontracts, a city hall source said.
Voiding the consent agreementalso could affect the city’s long-term credit rating outlook.
Detroit has a below-investment-grade rating. Recent reports byratings agencies have suggestedthat the safety net provided by theemergency manager law, whichalso authorizes consent agree-ments, is one of the only brightspots on the city’s credit horizon.
Auto parts, steel retirees await benefits sign-upBY JAY GREENE
CRAIN’S DETROIT BUSINESS
Thousands of retired Michiganworkers in the auto parts and steelindustries will soon begin to signup for health benefits with twonew VEBAs, or voluntary employ-ee benefit association trusts. Bene-fits will begin July 1.
The Auto Retiree VEBA Trust wasset up to provide benefits to retireesof Plymouth-based Metaldyne Corp.
Retirees who also are eligible forthe VEBA include those whoworked for Allis-Chalmers, Amcast,Collins & Aikman, Delphi and Hayes-
Lemmerz International in Michigan,Ohio or Wisconsin and have theirpension trusted by the PensionBenefit Guaranty Corp.
The Steel Retiree VEBA Trust alsowill begin enrollment in June witha July 1 effective date. Two Michi-gan steel companies included arethe former Michigan Specialty TubeCo. and Midland Steel Products Co.
Employees from more than 100companies will be eligible for theauto and steel VEBAs, Cone said.
Information meetings on thenew VEBAs will be held in South-field on June 8 at the Marriott De-troit Southfield, said Cathy Cone,
managing partner of Houston-based Cone Insurance Group LLC,which is handling enrollment.
Sessions will be held June 4 inGrand Rapids, June 5 in Kalama-zoo, June 6 in Saginaw and June 7in East Lansing.
Cone said information meetingsalso will be held in Ohio, Pennsyl-vania and Wisconsin to explainthe benefits and to enroll peoplewho worked in the auto or steel in-dustries in those states.
Conservancy seeks biz support in fight against invasive speciesBY SHERRI WELCH
CRAIN’S DETROIT BUSINESS
The Nature Conservancy hopes toelevate the issue of invasivespecies in the Great Lakes from anenvironmental concern to astatewide — and Midwestern —business concern.
To that end, it commissionedEast Lansing-based Anderson Eco-nomic Group LLC to help tally theeconomic impact of the issue. An-derson reviewed other studieslooking at impact specifics such asaverage management costs forpower plants and the amount theGreat Lakes Fishery Commissionspends on research and controls.
The new report’s tally: Invasivespecies cost significantly morethan $100 million a year to waterindustry stakeholders. Some be-lieve that figure, while hard to es-timate, actually is much largeronce costs are extrapolated.
The costs are borne by industri-al, utility and municipal organiza-tions that draw water from thelakes for operations and bytourism and fishery industries.
Also included in the estimatesare costs to nonprofits working inrelated areas and homeownersspending money on private abate-ment.
The report, The Costs of AquaticInvasive Species to Great LakesStates, is available at www.na-ture.org/greatlakes.
There are multiple reasons theissue is getting more attention.
There are a growing number ofspecies in the Great Lakes — cur-rently estimated at 186, accordingto the Michigan Department of Envi-ronmental Quality. In addition, thelost revenue by companies is be-coming a more documented issue,and the International Joint Commis-sion’s water quality board has de-cided to focus this year on LakeErie’s invasive species and elevat-ed phosphorus levels.
“We’re looking for business toactually engage in the discussion,”said Rich Bowman, director of gov-ernment relations for The NatureConservancy’s Michigan chapterand policy lead for the Great LakesProject.
“We think there are some op-portunities to put in place someprograms that reduce the likeli-hood invasive species would be in-troduced, to put in place some pro-grams that do early detection andrapid response on a broader basis.
“It’s that whole idea of spending
a little money to be proactive andto reduce future costs,” he said.
Also on The Nature Conservan-cy’s wish list is a coordinated re-gional approach to the issue.
“That’s one of the things we real-ly hope to see in the coming years... because with some of these prob-lems, you have to coordinate yourresponse,” given the connectivityof the waters, Bowman said.
Impacting water-based industriesThe industries most acutely af-
fected by aquatic invasive speciesinclude sport and commercial fish-ing, water treatment, power gener-ation, and industrial facilities us-ing surface water and tourism,according to the report. Collective-ly, these companies employ morethan 125,000 workers in the GreatLakes region.
Public utilities, power compa-nies and manufacturers that drawwater from the lakes for drinking,cooling and other processes havethe largest quantifiable directcosts, Bowman said.
“One of the big impacts is thecost of continuously having toclear their intake pipes of zebraand quagga mussels, he said.
Other invasive species such asphragmites, a reed that can growto 12 feet or more, are taking overcoastal and wetland areas as birdsspread the seed from region to re-gion. It can pose a security con-cern near sites such as DTE EnergyCo.’s Fermi nuclear plant — and afire hazard when dry in the fall.
“This ultimately becomes a uni-versal problem,” Bowman said.“When businesses incur costs,they have to pass that on to theircustomers.”
DTE spends $500,000 to $1 mil-lion each year on controls andchemicals to combat phragmitesnear its plants, said CEO GerryAnderson, who is a trustee of theconservancy’s Michigan chapter.
Periodically, the company alsohas to make capital expendituresat its power plants to combat inva-sive species, he said. For example,it spent $2.5 million a couple ofyears ago to install strainers infront of pumps and other equip-ment at its Trenton Channel Pow-er Plant in Trenton.
Anderson said he has concernsabout invasive species not only be-cause of the toll they take on hiscompany’s operations, but also forwhat they could cost Michigan.
“If there’s an asset we should beconcerned about for the long-termwelfare of the state, it’s the GreatLakes” and their importance to theattractiveness of the state fordrawing and retaining residentsand for tourists, he said.
In addition to lowering water-front property values and decreas-ing local tax bases, phragmites hurtthe tourism and recreation indus-tries by hampering boating and oth-er water sports, Bowman said.
Non-native species also take a tollon Michigan’s fishing industries.
Zebra and quagga mussels eatplankton, starving the small fresh-water shrimp that serve as a foodsource to many small fish. The is-sue moves up the food chain to larg-er fish, which die off for lack of food.
The Great Lakes Fishery Com-mission spends about $34 millioneach year on efforts to researchand control aquatic invasivespecies to reduce damage, accord-ing to the Anderson report.
Biz offers leadership, fundingThe issue of invasive species in
the Great Lakes is already a con-cern for some business leaders.Many serve on conservancy Michi-gan chapter’s board of trusteesand/or corporate advisory board.
They include well-known lead-ers such as DTE’s Anderson; NeilHawkins, vice president, sustain-ability and environment, DowChemical Co., Midland; Patricia Lit-tle, executive vice president andCFO, Kelly Services, Troy; James M.Nicholson, vice president, PVSChemicals Inc., Detroit; Milton Ro-hwer, president, Frey Foundation,Grand Rapids; Alan Steinman, di-rector, Annis Water Resources Insti-tute, Grand Valley State University;Lloyd Semple, dean, University ofDetroit Mercy School of Law; andPeter Walters, chairman, GuardianIndustries Corp., Auburn Hills.
Some companies are also sup-porting the conservancy’s effortswith grants.
DTE last year awarded the con-servancy a $1 million grant towork on remediation and manage-ment of invasive species in thewestern basin of Lake Erie, fromdownriver to Toledo and fromthere along the shoreline to San-dusky, Ohio.
Grand Rapids-based Meijer Inc.and its foundation have also pro-vided hundreds of thousands ofdollars in grants to help managebaby’s breath, a Lake Michiganshoreline invasive species typical-ly found in floral bouquets.
“Half of our stores are in Michi-gan,” said Meijer President MarkMurray. “The Great Lakes defineMichigan.”
They also provide fish sold inMeijer’s stores. The chain sellswalleye from the Lake Erie fishery,Murray said, which means it has apersonal stake in seeing that Michi-gan’s fisheries are not damaged.
“And we don’t want (the fish-eries) damaged for sport fishing, ei-ther, because that’s part of the pros-perity for the state,” he said.“Retailers want more prosperity be-cause it’s good for our business.”
From a broader perspective, thehealth of the Great Lakes and quali-ty of life in Michigan attract newjobs and new business, Murraysaid.
The issue of invasive species inthe Great Lakes is already con-cerns members of the MichiganChamber of Commerce and localchambers along the state’s GreatLakes shorelines, said Presidentand CEO Rich Studley.
Typically, the chamber is wary of
new state regulations, but it hassupported state regulation of thetreatment of ballast waters being re-leased into the Great Lakes, he said.
“All of our leading industriesare impacted either directly or in-directly by questions related to wa-ter quality,” Studley said. “It’sclearly an economic issue thatshould be of concern to employersas well as employees.”
State lawmakers actThe Legislature in December
passed bills creating a council to up-date the current invasive speciesthat pose a threat to the Great Lakesand to make recommendations tolegislators on the best ways to man-age those threats, said Patty Birk-holz, director of the DEQ’s Office ofthe Great Lakes. The new councilhas already met twice.
“It’s my opinion … that aquaticinvasive species are a huge threatto the state of Michigan and oureconomy,” she said.
“I don’t think everyone gets it,frankly, how at risk we are (and)the harm they are doing to theecosystem of the Great Lakes.There are not enough solutions todeal with all of the issues we havewith aquatic species right now.”
The issue is also garnering in-creased federal attention.
Through the federal Great LakesRestoration Initiative, the Obama ad-ministration is directing signifi-cant resources to the issue, Bow-man said. It provided $475 millionin 2009 and $300 million in 2010 andin 2011 for a number of projects.Those include cleanup of contami-nated sites such as harbors, man-agement of Asian carp and all in-vasive species, and programs toreduce polluted runoff, mainly inLake Erie, and to some extent inGreen Bay and Saginaw Bay.
The International Joint Commis-sion’s water quality board is focus-ing solely on Lake Erie this yearand what appears to be a new deadzone (areas where fish are deplet-ed) created by non-native zebraand quagga mussels and phospho-rus runoff from agriculture andsewer systems, said Birkholz, amember of the commission’s waterquality board.
“We have 20 percent of theworld’s fresh water,” she said. “Ifwe can’t drink our water and useour water, we’re in big trouble.”
COSTS OF FIGHTINGINVASIVE SPECIESAquatic invasive species arecosting Michigan and other statesin the Great Lakes regionsignificantly more than $100million each year, according to areport from the East Lansing-basedAnderson Economic Group LLC,commissioned by The NatureConservancy.Among the costs cited:� $50 million in lost revenue dueto decreased demand for industryand tourism in the Great Lakes.� $18 million spent by the GreatLakes Fishery Commission tocontrol sea lamprey. � $34 million spent by the fisherycommission on control andresearch.� $1.2 million spent each year bya power plant to monitor andcontrol zebra mussels.� $1.97 million spent by a LakeMichigan paper plant to removezebra mussels.� $144,000-$685,000 annualcost for an industrial plant tomonitor and control zebramussels.� $353,000 annual cost of zebramussel control for a municipalwater treatment facility.� $1,040-$26,000 cost per acrefor water milfoil removal forwaterfront homeowners.
spectively.“People picked the Chinese pen
over the USA pen because it wascheaper,” he said. “But when of-fered the Detroit pen, they were will-ing to pay the higher price point.”
Kartsotis’ presence in Detroitwill add a new member to Detroit’screative community, as he has noprior ties to the city.
He is best known for foundingFossil, the maker of watches, ap-parel and sunglasses.
Kartsotis, 53, served as CEO of
the company from 1984, when hefounded the company, until 2000when he stepped down from the topspot. However, he kept his chair-manship until May 2010. His broth-er, Kosta, now runs the company.
Tom Kartsotis has been paringdown his ownership stake.
He owned 23 million shares in thecompany in 2002 and has been sell-ing at a steady pace since then, cut-ting his stake to 18.4 million sharesin 2004 and 12.2 million in 2007, ac-cording to data from Bloomberg.
He’s made a significant sum ofmoney selling over the years, withcash proceeds of $167 million onhis trades over the past three yearsalone.
And he still owns 4.5 percent ofthe company, or 2.9 million sharesvalued at $206 million, accordingto Friday’s midday trading price of$71.55 a share.
Since leaving Fossil, Kartsotishas created Bedrock Brands, whichhas been involved in several re-cent ventures.
In November, Bedrock paid$14.5 million for a New Yorkbuilding to launch a line of retailproducts under the once-familiarname Shinola. The company willproduce shoe polish, cosmetics,handheld electronic devices, jew-elry, leather goods, clothing, toysand sporting equipment, accord-ing to a November Wall StreetJournal story.
The Shinola watches will bemade in Detroit and available forsale, possibly, by July, according
to the employee interviewed byCrain’s. And the bicycles could beavailable by the end of the year.
Custom bicycles will be assem-bled in the Detroit space, and fu-ture plans could include an ex-panded manufacturing space inthe city.
The company is also seeking aretail presence in Detroit, but nolease has been signed.
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Cadillac, Quicken Loans Inc.,Strategic Staffing Solutions Inc. andothers purchased “turn” sponsor-ships — logos on walls aroundturns at the track. Turn sponsor-ships cost $25,000 to $50,000, saidMerrill Cain, director of communi-cations for the Grand Prix.
Other local sponsors include ArtVan Furniture Inc.; Blue Cross BlueShield of Michigan; Carhartt Inc.; thecity of Windsor, Ontario; Com-puware Inc.; Detroit Medical Center;Flagstar Bank Corp. Inc.; MGM GrandDetroit; Meijer Inc.; MotorCityCasino; Charter One; and Pure Michi-gan.
Sales of corporate luxurychalets — featuring food, bever-ages and private entertainment —are up this year compared with2008 when the last race was held,said Cain. The Grand Prix had sold40 of its 45 chalets as of Fridaymorning.
Chalet rentals range from$57,500 to $100,000.
Andiamo Catering & Event Manage-ment is the official caterer ofevents on the island.
Cain said it is Grand Prix policynot to comment on the cost of spon-sorships beyond the turn andchalet sponsorships.
Novi-based Cooper-Standard Auto-motive Inc. is the transportationsponsor. Attendees will not be al-lowed to park on the island duringthe events and will take shuttles tothe racetrack.
Cooper-Standard, which spon-sors Penske Racing driver BradKeselowski in the NASCAR Camp-ing World Truck Series, spon-sored the event to back Penskeand the city of Detroit, saidSharon Wenzl, vice president ofcorporate communications for thesupplier.
“We are supporters of the revi-talization of the city, and the raceis good for the city, to bring peopledowntown (and spend money),”she said. “We’re involved withPenske Racing, and this is a natur-al extension for us to support him(Penske) and extend our reach inthe racing community.”
Wenzl declined to reveal the costof its sponsorship.
Shuttle riders will also watch avideo featuring Penske, IndyCarracer Helio Castroneves and MitchAlbom, rallying for race fans to en-joy the city during their visit.
Also during race days, a ferrywill transport attendees everyhour from the Port of Detroit pub-lic terminal along Atwater Streeton the Riverwalk to Belle Isle.
The round-trip cost for bus or fer-ry transportation is $10 for adultsand $5 for children 12 and under.
The June 1-3 event — featuringthe Grand-Am Rolex Series, PirelliWorld Challenge Series, FirestoneIndy Lights Series and IZOD Indy-Car Series races — is expected todraw more than 100,000 attendees.
Ticket sales are ahead of pacefrom the 2008 race, Cain said. Hedeclined to reveal current ticketsales figures.
Tickets cost from $25 to $65 for aone-day pass and up to $155 for athree-day pass.
The Grand Prix is expected tohave an economic impact of $50 mil-lion to $75 million, said Penske.
The Grand Prix generated near-ly $53 million in economic impactfor metro Detroit in 2007 and more
than $55.2 million in 2008, accord-ing to estimates from the DetroitMetro Convention & Visitors Bureau.
It’s certainly benefitting the West-in Book Cadillac, which is sold outfor Friday and Saturday, said ScottStinebaugh, director of sales andmarketing for the 453-room hotel.
“We’re sold out on Friday andSaturday as a direct result of therace, with a myriad of businessfrom (race) teams, broadcast me-dia and corporate sponsors,” hesaid. “Really, it’s also helped to in-crease the occupancy on Thursdayand Sunday, as well. The four-daystretch has increased our revenuestream significantly year-over-year.”
Brembo North America Inc., the Ply-mouth-based subsidiary of Italianauto supplier Brembo SpA, is usingthe Grand Prix to get its divisionstogether and entertain customers.
Brembo, the exclusive supplierof brakes to the IZOD IndyCar se-ries, hosts a party this week withthe Italian American Alliance for Busi-ness and Technology for automak-ers, suppliers and Grand Prix dri-vers.
“It will be an exciting week forus and a great opportunity for us,”said Dan Samberg, president andCEO of Brembo North America. “Itwill be a field day for Brembo be-cause we’re getting all of our busi-ness groups together to entertainour customers.”
Brembo North America generat-ed revenue of $300 million in theU.S. last year.
The city and the Grand Prix arebenefitting from moving theevent’s date to June from August,when the 2008 race was held,Penske said. The Detroit ChevroletBelle Isle Grand Prix is now theweekend after the IndyCar cir-cuit’s biggest race, the Indianapolis500.
“By having the first race afterIndianapolis, we have the bestdate,” he said. “It’s great for thesummertime, because people stillhaven’t gone on their vacations.”
Penske led the effort, as a racingteam owner and area business-man, to bring the Grand Prix back
to Detroit in 2007. Bud Denker,Penske Corp.’s senior vice presi-dent, serves as the Grand Prix’schairman.
The races will receive nationalTV and radio coverage.
The 2012 Chevrolet Indy GrandPrix on Sunday will air on ABC,IMS Radio Network and Sirius/XMRadio channel 94. The ChevroletGrand-Am 200 at Belle Isle on Sat-urday will air on the SpeedChannel, MRN Radio Network and Sir-ius/XM Radio channel 90.
Attendees might also spot acelebrity: “Grey’s Anatomy” starPatrick Dempsey and his raceteam will compete in the Grand-Am Rolex Series race Saturday.
Roughly 150 workers from localcompanies spent the past sixweeks on the island, completingsetup for the Grand Prix, Cain saidin an email.
Crews have been setting up 4million pounds of concrete barrierwalls, 13,600 tires for barriers and50,000 feet of temporary fencingalong the 2.07-mile, 14-turn street-circuit track.
Local companies involved in theGrand Prix setup include GibbardElectric Inc., Future Fence Co., PollardConcrete Services Inc., Red CapTransportation Inc., Graff ConcreteCutting Inc., Rocky’s Painting Inc., Ex-press Plumbing, Kehrig Steel Inc.,Bush Brothers Asphalt Paving Inc.,Michigan Joint Sealing Inc., MobileMini LLC, Brand Scaffolding, RegionalGeneral Contracting LLC, Lieblich’sTowing and McDonald Modular Solu-tions Inc.
Much of the labor went intopatching track surfaces, at a costof $300,000 to $400,000, Penske said.
During the weekend, 450 peoplewill work on the island, along with1,100 volunteers, Cain said.
Kirk Lewis, chief of staff for De-troit Mayor Dave Bing, said theimpact of the Grand Prix is aboutmoney, but also about showing itsworkers and attendees Detroit’stransformation.
“The Grand Prix highlights thecity’s rich automotive heritage,and it gives the world a windowinto the beauty of this city and the
Grand Prix: Sponsors, fans pave the way for race■ From Page 1
The courseis a 2.07-mile loop
50,000 feet of temporary fencing
Expected attendance is more than 100,000: Food consumption (projected):
4 millionpounds ofbarrier wallsare used around thetrack.
A 2.2-liter V6 IndyCar engine can produce12,000 rpm and morethan 750 hp.
NOMINATIONS SOUGHTFOR HEALTHIEST EMPLOYERS
Michigan companies willhave an opportunity to berecognized for their healthyworkplace practices in a newawards program.
Priority Health, with Crain’sDetroit Business and MiBiz asmedia sponsors, is seekingnominations for Michigan’sHealthiest Employers awards.
The awards recognize bestpractices used by employers tocreate healthy workplacesacross Michigan asdetermined by Indianapolis-based Healthiest EmployersLLC, which has used itshealthiest employersmethodology in 40 citiesacross 25 states.
Companies can enter byfilling out a survey found atcrainsdetroit.com/nominate.There is no entry fee.
Southeast Michigan winnerswill be announced Oct. 16 at abreakfast preceding the fourthannual Health Care LeadershipSummit. A similar event will beheld in West Michigan by MiBizto recognize winning WestMichigan companies.
All winners will be profiled ina special supplement to run inCrain’s Detroit Business andMiBiz on Oct. 29.
The deadline to enter isAug. 13. Questions about theawards program can bedirected to Crain’s DeputyManaging Editor DanielDuggan at [email protected] (313) 446-0414.
Sources: Chevrolet Detroit Belle Isle Grand Prix, Andiamo Catering and Events
Arena: A lockout could halt push for a new Red Wings arena■ From Page 3
ers and players squared off: The2004-05 season was canceled afterteam owners locked out the play-ers for 310 days. The National Hock-ey League Players Association agreedin July 2005 to a new deal that in-cluded a 24 percent pay cut and asalary cap for player payroll. Theplayers, in return, got guaranteedcontracts.
Following the lockout, the NHLsuffered in popularity, with atten-dance and revenue declines whenhockey resumed.The consensus ofseveral sports economists contact-ed by Crain’s, and media reportsby The New York Times and otherpublications, is that apportion-ment of the league’s annual rev-enue will be the central focus ofthe forthcoming labor showdown.
Steve Fehr, the NHLPA specialcounsel, told Sports Business DailyMay 15 that the union will fightany cut to the players’ share ofhockey revenue.
Under the current deal, the play-ers get 57 percent of the revenuepool, which the league on April 12predicted to be $3.2 billion for thecurrent season.
Neither side has yet floated aproposal, and no contract talks arescheduled. It’s not yet known if theowners will want an entirely newagreement, or just revisions to thecurrent contract.
A shift to a 50-50 revenue splitseen in recent major sports leaguenegotiations would mean $22.4 mil-lion in additional revenue perNHL franchise — likely an attrac-tive number for a league that hasseen the Phoenix Coyotes go bank-rupt in 2009, the money-losing At-lanta Thrashers relocate to Win-nipeg last year and the New JerseyDevils reportedly on the verge ofbankruptcy.
The Devils, now playing in theEastern Conference finals, willlose $20 million this season, andprincipal owner Jeff Vanderbeekhas $80 million in overdue teamdebt, the Toronto Star reportedMay 18.
The Red Wings had $16.3 millionin operating income for the 2010-11season, according to a Novemberestimate by Forbes.com, on rev-enue of $127 million.
Last year saw the National Foot-ball League and National BasketballAssociation successfully extractbetter revenue splits from their re-spective player unions by lockingout the players.
“The fact that the players’ sharein both the NFL and NBA agree-ments is around 50 percent is al-most certain to be a goal of NHLowners. It gives them a strongbenchmark for bargaining,” saidBrian Goff, a professor of econom-ics at Western Kentucky University. “Ican see the owners locking theplayers out for that if they aren’twilling to agree to something atleast close to 50 percent before thedeadline.”
Back in the newsThe rise of the labor issue comes
as the Detroit arena project re-turned to the spotlight.
It took another step toward real-ity last week when reportsemerged that the Ilitches havehired venue architects.
Chris Ilitch, president and CEOof Ilitch Holdings Inc., picked Dallas-based stadium designer HKS Inc.and Cambridge, Mass.-based ar-chitectural firm Chan Krieger NBBJas the architects for a new down-town hockey arena, according to areport from industry trade maga-zine Sports Business Journal.
The team and the Ilitch organi-zation declined to comment.
The Red Wings have played atcity-owned Joe Louis Arena since1979. Ownership hasn’t disclosedany details about the arena pro-ject, such as the location or financ-ing plan.
The Ilitch companies have acombined $2.4 billion in annualrevenue, and the backbone is theLittle Caesars pizza chain.
Speculation for several years
has been that the Ilitches are look-ing to build on land they own inone of three locations: the areanear the Fox Theatre, betweenGrand River and Cass avenuessouth of I-75 or west of WoodwardAvenue north of I-75.
They want a new arena becauseits luxury boxes and amenitieswould boost the Red Wings’ bot-tom line. A new arena could gener-ate $5 million to $8 million annual-ly in additional team revenue,Rodney Fort, a University of Michi-gan sports economics professor,previously told Crain’s.
The city of Detroit and WayneCounty have confirmed talks withthe Ilitches about some type of fi-nancial aid for a new arena.
Gov. Rick Snyder’s office did notspecifically answer when twiceasked whether the state has hadany talks with the Ilitches abouthelp for a new arena.
Instead, Snyder press secretaryGeralyn Lasher issued this state-ment via email: “The administra-tion is very supportive of revitaliz-ing downtown Detroit and has hadnumerous discussions regardingvarious economic developmentproposals. The Ilitch family histo-ry is one of investing and expand-ing in Detroit. We believe in thecity and the family’s contributionsto that city are a continued sourceof pride.”
Snyder said while a candidatetwo years ago that he opposes any-thing but loans for stadium pro-jects.That’s a shift from the lastround of sports arena construc-tion, when the state spent directlyon projects.
The Michigan Strategic Fund, anautonomous board under the aus-pices of the Michigan Economic Devel-opment Corp., paid $55 million for in-frastructure work in 1999 duringthe construction of Comerica Park,where the Ilitch-owned Detroit Tigersplay, and for adjacent Ford Field,home of the Detroit Lions.
The strategic fund is funded byrevenues from the state’s oil and
natural gas leases and 8 percent ofits revenue from casino slot ma-chines. Both stadiums are ownedby the public Detroit-Wayne CountyStadium Authority, leased to WayneCounty and subleased to theteams.
The authority issued $85 millionin 30-year bonds for ComericaPark’s capital costs. Those bondsare being repaid through a 2 per-cent rental-car tax and 1 percenthotel tax approved by voters in1996. With interest, the authoritywill pay about $176 million on thebonds by 2027, said Steve Collins,assistant corporation counsel forWayne County and the specialcounsel to the authority since itsinception.
Detroit’s Downtown DevelopmentAuthority and Wayne County alsoprovided $60 million for the stadi-ums. The Ilitches financed theirshare of Comerica’s constructionwith a $145 million loan financedby a bank syndicate led by Japan’sSumitomo Bank Ltd., now SumitomoMitsui Bank.
Convincing the city’s DowntownDevelopment Authority and WayneCounty to provide tax dollars foran arena — as was done in the past— may be more politically difficulttoday because of the recession,sports economists say, and pri-vate-sector help for stadiums ismore difficult in the wake of WallStreet’s difficulties.
“It’s much more difficult forbank financing than before 2008,”said Andrew Zimbalist, a profes-sor of economics at Smith College inMassachusetts and author of sev-eral sports finance books. “I don’tsee how you end up with somekind of public support for a newsports facility in Detroit.”
End game unknownThe NFL and NBA lockouts
were settled in 2011 with new col-lective bargaining agreements, al-though NBA teams lost 16 regular-season games from their
schedules. The NFL lost one pre-season game.
Both of those leagues extractedrevenue share concessions fromthe player unions: In the NFL, play-ers now get 49 percent of theleague’s $9 billion in annual rev-enue, down from nearly 60 percent;in the NBA, it fell to an approxi-mate 50-50 split between ownersand players. The players previous-ly got about 57 percent of the NBA’s$4 billion in yearly revenue. TheNHL owners may be trying to capi-talize on hard-line positions takenby the NFL and NBA owners lastyear — and there’s little that can bedone to sway either side, Sauersaid.
“Collective bargaining in NorthAmerican sports leagues is a bilat-eral monopoly situation, with nooutside options or values to con-strain the negotiations,” he said.
Major League Baseball, whichdoesn’t have a salary cap, reached anew five-year labor deal in Novem-ber without any work stoppage.
The NHL’s more modest financesdifferentiate it from pro footballand basketball, Zimbalist said.
“The NHL is not overall a prof-itable league. In a good year, the sixCanadian teams, the Red Wings,the New York Rangers and the Chica-go Blackhawks are profitable.Maybe one or two others.”
The rest of the teams likely loseanywhere from $5 million to $40million per season, Zimbalist said.
He predicted there likely will bea lockout, but it’s not for certain atthis point. Nor is it clear who mightwin. The NHL players will rely onunion Executive Director DonaldFehr to advance their case. Heheaded baseball’s players union formore than 20 years, and was suc-cessful in gaining payouts and oth-er concessions from team owners.
“He’s the Mariano Rivera of la-bor negotiations,” said Fort, theUM sports economics professor.
Gleaners: $13M campaign launched to add cupboard space ■ From Page 1
ture? Would the need last?” he said.The food bank decided the an-
swer to both questions was yes,Brisson said.
Detroit-based Albert Kahn Associ-ates should finalize the best use ofspace at the Detroit and Southfielddistribution sites by the end ofJune, Brisson said. But early plansare emerging.
Gleaners’ capital campaign willfund projects at its Detroit, South-field and Pontiac sites that will en-able it to move its central food dis-tribution network and truck fleet toSouthfield, give it space to doublethe 32,000 volunteers it had in 2011and allow it to handle growing do-nations of produce and other food,such as new donations of damagedyet edible foods from Kroger Co.
Reallocating its use of space alsowill provide room to establish anew client choice pantry and othersupportive services in Detroit andSouthfield, pickups for pantriesand shelters and space for largevolunteer groups at each location.
Gleaners is developing plans forthe new pantries with CapuchinSoup Kitchen in Detroit and anunidentified nonprofit in OaklandCounty. The client choice pantrieswould resemble a grocery store,where “shoppers” pick out thefood they need instead of each get-ting a pre-packed box.
Capuchin is waiting for the ar-chitectural plans, but it hopes touse about 30,000 square feet ofspace at Gleaners’ Detroit site tohouse the new pantry, distributionof clothing and appliances to fami-lies in need, meeting and educa-tion space and storage for equip-ment used in its EarthworksUrban Farm, behind Gleaners’site, said Brother Jerry Smith, Ca-puchin’s executive director.
Capuchin’s preliminary projec-tions call for contributing $1 mil-lion to $2 million to help retrofitthe space, Smith said. Capuchinwill decide whether to proceed af-ter receiving the architecturalplan, he said.
To better serve its service terri-tory in Wayne, Oakland, Macomb,Livingston and Monroe counties,Gleaners plans to move its fooddistribution and truck fleet hubsto Southfield from Detroit, likelyin 2013, Brisson said.
“To all the five counties weserve, Eight Mile and Telegraph isalmost dead center. … So when welooked at logistics, the actual costof transporting food,” the movemade sense, he said.
Gleaners also has distributionsites in Taylor and Howell and ajoint site in Warren with the Salva-tion Army, Eastern Michigan Division.
Early plans call for about $5.5million worth of renovations andupdates to the Southfield buildingto establish it as the central distri-bution point for the food bank withinstallation of storage and coolingspace, Brisson said.
Gleaners hopes to begin work onthe Southfield site this fall.
Gleaners plans to maintain itsadministrative and financial oper-
ations, food stamp outreach, nutri-tional cooking classes, volunteeractivities and pickups by foodpantries at its Detroit site.
“The truth of the matter is thatit’s probably more important andcheaper for us to maintain theheadquarters in Detroit becausewe won’t have to set up the offices,main IT hub with servers, etc. inSouthfield,” Brisson said.
“It would cost a lot of money tomove all that stuff, and there’s noreal benefit to it.”
With a new space plan in placeand about $7 million in capital im-provements that will cover retro-fits for a planned client choicepantry, among other things, theDetroit site will be able to handleseveral hundred volunteers at atime and make volunteer activitiesmore efficient by not having tomove food and boxes around allthe time, Brisson said.
Three emerging leaders fromthe Ford Leadership Training In-stitute are expected to come to
Gleaners in June to also help itlook at its internal processes anduse of space, Brisson said.
Gleaners expects to spend about$500,000 at its Pontiac site to expandthe parking lot for volunteers and toadd new conveyors and technologyto help sort several new truckloadsof food from Kroger each month.
Through a new arrangementbrokered by Kroger Michigan CFOKevin Trombley, a member ofGleaners’ board, the food bank willsort through damaged cans andboxes to determine which shouldbe shipped back to manufacturersto meet requirements for replace-ment and which it can keep to dis-tribute to the region’s hungry.
“This is good for Kroger andgood for us and good for hungrypeople,” Brisson said. “It’s a greatexample of how we put together aprogram that will bring more foodat minimal added cost.”
www.crainsdetroit.comEDITOR-IN-CHIEF Keith E. CrainPUBLISHER Mary Kramer, (313) 446-0399 [email protected] EDITOR Cindy Goodaker, (313) 446-0460 or [email protected] EDITOR Jennette Smith, (313) 446-1622 or [email protected] MANAGING EDITOR Daniel Duggan, (313)446-0414 or [email protected] EDITOR Bob Allen, (313) 446-0344 [email protected] MICHIGAN EDITOR Matt Gryczan, (616) 916-8158 or [email protected] EDITOR Gary Piatek, (313) 446-0357 [email protected] DESIGNER Jeff Johnston, (313) 446-1608or [email protected] EDITOR Brianna Reilly, (313) 446-0418,[email protected] EDITOR Gary Anglebrandt, (313) 446-1621,[email protected] SUPPORT Robertta Reiff (313) 446-0419, YahNica Crawford, (313) 446-0329NEWSROOM (313) 446-0329, FAX (313) 446-1687 TIP LINE (313) 446-6766
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CRAIN’S DETROIT BUSINESS IS PUBLISHED BYCRAIN COMMUNICATIONS INC.CHAIRMAN Keith E. CrainPRESIDENT Rance CrainSECRETARY Merrilee CrainTREASURER Mary Kay CrainExecutive Vice President/OperationsWilliam A. MorrowGroup Vice President/Technology,Manufacturing, Circulation Robert C. AdamsVice President/Production & ManufacturingDave KamisChief Information Officer Paul DalpiazChief Human Resources OfficerMargee KaczmarekDirector of Audience Development Operations Michelle RothG.D. Crain Jr. Founder (1885-1973)Mrs. G.D. Crain Jr. Chairman (1911-1996)EDITORIAL & BUSINESS OFFICES:1155 Gratiot Ave., Detroit MI 48207-2732; (313)446-6000Cable address: TWX 248-221-5122 AUTNEW DETCRAIN’S DETROIT BUSINESS ISSN # 0882-1992is published weekly, except for a special issue thethird week of August, and no issue the third weekof December by Crain Communications Inc. at1155 Gratiot Ave., Detroit MI 48207-2732.Periodicals postage paid at Detroit, MI andadditional mailing offices. POSTMASTER: Sendaddress changes to CRAIN’S DETROIT BUSINESS,Circulation Department, P.O. Box 07925, Detroit,MI 48207-9732. GST # 136760444. Printed inU.S.A.Entire contents copyright 2012 by CrainCommunications Inc. All rights reserved.Reproduction or use of editorial content in anymanner without permission is strictly prohibited.
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A report is expected by June 29.Over the past several months, at
least nine locales in Michiganhave approved moratoriums orasked for studies on potentialhealth hazards from smart meters’wireless radio frequencies. Theyinclude Sterling Heights,Brighton, Shelby Township, OakPark, Southfield, Warren,Rochester Hills, Rochester and Yp-silanti Township.
Bob Sitkauskas, DTE’s managerof advanced me-ter infrastruc-ture, said thewireless metersemit very lowamounts of ra-dio frequenciesand are notharmful. Theyare below feder-al standards andare equivalentto a garage door opener or a re-mote TV controller.
Consumers Energy Co., the state’ssecond-largest utility, plans to be-gin a $750 million-plus smart meterinstallation program in August.The Jackson-based utility said itsseven-year program to move 2 mil-lion gas and electric customers tosmart meters will save customers$2 billion over 20 years.
Roger Morgenstern, SmartGridcommunications coordinator forConsumers Energy, said the com-
pany has recouped some future in-stallation costs from customersover the past several yearsthrough higher rates.
“It is our intent to charge cus-tomers for the smart meters,” Mor-genstern said. “We are saying thesmart grid programs will mitigatefuture rate increases with energysavings. There also will be otherbenefits for customer services.”
Sitkauskas said DTE’s smartmeter program also will keep rateincreases lower than they wouldbe without the meters becausethey will pass on operational sav-ings.
For example, he said, smart me-ters will allow DTE to employ few-er meter readers and generate ac-curate meter readings. Over thepast two years, DTE has reducedits workforce of meter readers toless than 160 in Southeast Michi-gan, primarily through attrition.
Because some meters are locat-ed inside homes, where they can’talways be read, 96 percent ofmonthly bills are estimated, re-sulting in bill adjustments thatsometimes cause customer confu-sion, Sitkauskas said. With morethan 760,000 smart meters in-stalled in Southeast Michigan,smart meters’ actual read rateshave increased to more than 99percent, he said.
DTE’s smart meters also are de-signed to report power outages di-
rectly to the company, cutting thetime it takes to dispatch repaircrews, Sitkauskas said.
“Customers can see daily andhourly usage of the prior day bylogging on to our website” and canadjust their power usage at peakhours to reduce their bills,Sitkauskas said. The energy datawill be provided through DTE’sSmartCurrents program.
But Robert Strong, an attorneywith Clark Hill PLC in Birmingham,who represents the Association ofBusinesses Advocating Tariff Equity,said DTE has failed to prove thatsmart meters will provide finan-cial benefits to customers.
“They are a waste of resources.(DTE) says they say they haveproven benefits. We think thecosts are far beyond any benefits.If there are benefits, they accrue tothe company and not customers,”Strong said.
“We represent a large group ofindustrial companies and they arevery much concerned about theprice of electricity, which is al-ready higher in Michigan thanother states,” he said.
Michigan Attorney General BillSchuette also has said DTE hasfailed to prove a net economic ben-efit to consumers that would justi-fy higher rates.
“To a significant extent, the as-serted potential benefits to utilitycustomers depend upon assump-
tions that a customer will consideradditional real-time data on elec-tricity usage provided by smartmeters and adjust their electricalconsumption to achieve cost sav-ings under variable pricing pro-grams that do not yet exist,”Schuette said in a May 18 letter tothe commission.
The commission also asked util-ities to come up with a plan forcustomers to opt out of the smartmeter program.
Sitkauskas said DTE has not yetdetermined the cost to consumersfor removing the smart meter andany additional monthly charge formanual meter reads.
“We would have to charge some-thing to take them out and to goout and read the meter,” he said.
Strong said DTE’s electricalcustomers are already payinghigher rates to fund the programeven if they do not have a meterinstalled.
“There have been several rateorders that have done into effect.We only challenged one,” he said.
DTE spokesman Scott Simonssaid the company has been payingfor the smart meter installationprogram through higher rate in-creases that amount to 0.5 percentof monthly bills approved by thePSC over the last three years.
it sells to homeowners from Associ-ated Materials LLC, based in Cuya-hoga Falls, Ohio, and the roofingproducts it sells from Wayne-basedWimsatt Building Materials, Eliassaid.
Sales are picking up after aslight dip last year, as federal taxcredits for energy-efficient instal-lations of roofing, windows andother products expired. Homeown-ers who are making improvementsto homes they can’t sell are alsohelping sales, Elias said.
Hanson’s sales dropped to $46 mil-lion in 2011 from $48 million theyear before.
To mitigate the costs of cus-tomer acquisition, Hanson’s hasincreased its Internet advertising10-fold, launched contests givingaway a house full of windows andembarked on text-message cam-paigns.
Over the past year and a half, italso began opening more kiosks atevents that have a large concentra-tion of people coming through in ashort period of time, such as Arts,Beats & Eats, the Novi Home Im-provement Show and KalamazooHome Expo.
“What we learned is when weexpose ourselves to more peopleand they’re able to see the work wedo (through) pictures, they’remore apt to do business with us,”Elias said.
Open-minded buyers Everyone has a home repair
they want to do, he said. The ques-tion is when they want to get itdone.
“We want to catch them earlierin the buying cycle,” Elias said.
As Hanson’s gained experiencebuilding business through localevents and festivals, it startedlooking for more permanent kiosklocations so it could yield consis-tent new business leads month inand month out, Elias said.
The company leased kiosks atfour area malls — Oakland, Lake-side, Twelve Oaks and Laurel Park— and hired part-time employeesto staff the kiosks during themalls’ busiest hours. Total invest-ment was about $50,000 per yearfor each kiosk.
Both strategies are yielding pos-itive results, Elias said. The fourkiosks brought in just under $1million in revenue in 2011, whileevents brought in about $1.8 mil-lion.
Hanson’s plans within sixmonths to set up kiosks at four ad-ditional malls: Great Lakes Cross-ing in Auburn Hills, MeridianMall in Lansing, Fairlane TownCenter in Dearborn and Briar-wood Mall in Ann Arbor.
It’s also planning to attend newevents such as dog shows, theMichigan International Women’sShow, the St. Mary’s Polish Coun-try Fair and the Woodward Dream
Cruise. “We’ve found the more places
we (can) be … with large amountsof people … we (are) able to pullmore business out,” Elias said.
Hanson’s still advertises on tele-vision, he said. But the plan is thatby going out to engage customersface to face, the company can bringdown its costs to acquire a cus-tomer. “TV is easy — they call,you go, that’s it.”
Meeting customers at eventsand area malls takes more work,Elias said. “I get to the people ear-lier on in the buying cycle beforethey’ve started calling (around).”
Wallside Windows Inc., whichHanson’s considers its largest lo-cal competitor, dabbles in events,said vice president StanfordBlanck.
“We’re always looking to in-crease our lead flow. … We dosome shows, maybe a half dozen orso a year. Any time you can get infront of a customer is a good wayto engage,” he said.
But Wallside has been in busi-ness since 1944, and its name is al-ready well known, he said. “Wordof mouth is probably 50 percent ofour business.”
The Taylor-based company,which also serves the Michigan
and Ohio markets, relies heavilyon television advertisements andsponsorships of the morning traf-fic reports on WDIV-Channel 4 andWXYZ-Channel 7 and the pitchingchanges during Detroit Tigersgames to keep its name out there,Blanck said.
“What might work for (Han-son’s) doesn’t necessarily work forsomebody else,” he said.
“We’ve been doing this for years… television and word of mouthhave been very, very successful”for Wallside.
Blanck declined to give revenuefor the company his father founded.
But industry trade magazineWindow & Door included Wallsidein its 2012 ranking of North Ameri-ca’s 100 largest manufacturers ofresidential windows, doors andskylights, listing it in the $40 mil-lion-$50 million sales category.
Referrals are always going to bethe most successful way to gener-ate new business, said MichaelO’Brien, president and CEO at theWashington, D.C.-based Window &Door Manufacturers Association.
“But the largest to smallest com-panies are exploring as many waysas possible to meet the consumer,”looking at everything from TV adsto social media to shopping mallkiosks as additional ways to getthe word out, he said.
Still, a company’s brand recog-nition and reputation have a bear-ing on how successful it is in en-gaging customers with the otherstrategies, O’Brien said.
Southfield titlefirm ordered to stop sellinginsurance
he Michigan Office of Fi-nancial and InsuranceRegulation has ordered
Southfield-based G.I.A.F. Inc.to stop selling title insur-ance or any other type of in-surance because it doesn’thave a state license.
The order was promptedby a complaint from a clos-ing agent. Failure to complycould bring a civil penalty ofnot more than $25,000 foreach knowing violation for amaximum fine of $250,000for all violations.
ON THE MOVE� Eastern Michigan Univer-
sity has named Michael Tid-well, dean of the BloomsburgUniversity of PennsylvaniaCollege of Business, to suc-ceed David Mielke as dean ofEMU’s College of Businesseffective July 1.
� Tim Marshall, presidentand CEO of the Bank of AnnArbor, was named chairmanof Ann Arbor Spark. He re-places Stephen Forrest, vicepresident of research at theUniversity of Michigan, whowas named chairman ofSpark’s business develop-ment committee.
� Former WXYZ-Channel7 investigative reporterSteve Wilson will return totelevision news in the samerole with First Coast News inJacksonville, Fla.
COMPANY NEWS� Art Van Furniture Inc.
has entered into an agree-ment to purchase a formertheater complex near Tole-do in its first move to ex-pand outside Michigan.
� Taubman Centers Inc.said it is close to announc-ing its first retail invest-ment in China, but Chair-man and CEO RobertTaubman would not say thecity being considered for amall project.
� General Motors told theU.S. Securities and ExchangeCommission that it failed toreport a $600,000 deal givento advertising agency Moth-er New York where the wifeof a top GM executive is apartner, the Detroit FreePress reported. GM said itrecently learned about the2011 contract.
LANSING NEWS� Struggling businesses
would be able to use partialunemployment benefits tosupplement the pay of work-
ers whose hours have beenreduced, under a bill passedby the Michigan Senate andheading to the House.
� Michigan AttorneyGeneral Bill Schuette saidthe state has no legal au-thority to withhold uniondues from payments issuedto home help providersthrough the Michigan Med-icaid program because theyaren’t public employees,AP reported.
� The Michigan House hasvoted to let hockey fans buybooze at Michigan Stadiumwhen the home of Wolver-ines football hosts the Na-tional Hockey League’s Win-ter Classic game betweenthe Detroit Red Wings andToronto Maple Leafs on NewYear’s Day.
� A plan requiringschool employees to paymore toward their pensionsbut not force new teachersinto a 401(k)-style systemwas approved by a Michi-gan House committee. ASenate-approved planwould switch all new hiresinto a 401(k)-style plan.
� Gov. Rick Snyder andRepublican legislative lead-ers worked out a budgetagreement that would al-low for a small cut in indi-vidual income taxes, twiceas much money for filmcredits, a slight increase ineducation funding and adown payment on schoolemployees’ health carecosts in retirement.
COURTS� The Detroit financial
review board isn’t requiredto hold open meetings un-der Michigan law, theMichigan Court of Appealshas ruled, AP reported. In arelated story, Ronald Golds-berry, auto industry consul-tant and ex-Ford Motor Co.vice president, has beennamed to the review board.
� The U.S. Supreme Courtruled unanimously thatthree families cannot sueDetroit-based Quicken LoansInc. for allegedly chargingthem a loan discount feewithout giving them a low-er interest rate. The deci-sion backs earlier rulingswhich said the lawsuit wasimproper.
OTHER NEWS� RecoveryPark, the $220-
million urban farming pro-ject planned to open in Au-gust 2013 on Detroit’s neareast side, has named GaryWozniak president.
� Andrew Arena, specialagent in charge of the FBIoffices in Detroit, is expect-ed to take over in June asdirector of the nonprofit De-troit Crime Commission. Are-na is to step down from hisFBI post at the end of May.
� The Michigan attorneygeneral’s Charitable Trust
Section has ordered theWest Bloomfield Town-ship-based nonprofit Veter-ans of America Foundation,which also operates as theMichigan Veterans of Ameri-ca VOA Foundation, to stopsoliciting donations inMichigan, after reportsthat it was using deceptivetactics.
� The Michigan EconomicActivity Index, compiled byComerica Bank, fell half apoint in March, to 101.7,more than 10 points higherthan the 2011 average and42 points, or 70 percent,above the cyclical lowreached during the reces-sion in March 2009.
� The Macomb CountyBoard of Commissioners vot-ed unanimously to file anappeal against a judge’sruling that favored CountyExecutive Mark Hackel in aFebruary lawsuit in whichhe contended that theboard’s January decisionto review county contractsabove $35,000 limited hisexecutive capabilities.
� Blair Bowman, ownerof the Suburban CollectionShowplace in Novi, present-ed a plan to the Novi CityCouncil to hold a GreatLakes State Fair at his siteover Labor Day weekendand donate the use of theexpo, conference and ban-quet center, The DetroitNews reported.
� Detroit will try tonudge residents into asmaller living space byeliminating nearly half its88,000 streetlights. MayorDave Bing’s plan would cre-ate an authority to borrow$160 million to upgradeand reduce the number ofstreetlights to 46,000, leav-ing distressed areas unlit.
� Legislation sponsoredby Sen. Virgil Smith, D-De-troit, would allow ownersof blighted and neglectedproperty to be jailed up toa year if they fail to complywith repair orders, the De-troit Free Press reported.
� A federal judge is re-fusing to delay the Septem-ber corruption trial of for-mer Detroit Mayor KwameKilpatrick and his father,Bernard, in an allegedscheme to take kickbacksand bribes to steer citybusiness to certain con-tractors, especially BobbyFerguson, AP reported.
� The U.S. Senate ArmedServices Committee elimi-nated proposed Air NationalGuard cuts that would havecost Michigan bases hun-dreds of jobs, AP reported.The full Senate next takesup the bill.
OBITUARIES� Herb Abrash, who ran
Andrews Brothers producebusiness, died May 13 ofcomplications from kidneydisease. He was 79.
RUMBLINGS WEEK ON THE WEBF R O M W W W . C R A I N S D E T R O I T . C O M , W E E K O F M A Y 1 9 - 2 5
Blues await court date in ’13
Big namesstep up forUnited Way
T
BEST FROM THE BLOGSR E A D T H E S E P O S T S A N D M O R E A T W W W . C R A I N S D E T R O I T . C O M / B L O G S
Construction is setto begin on a rooftop barcalled Topless, whichwill be built on top of TheDetroit Pub on theoutskirts of Greektown.... And even though itsname would suggest it, itis not a topless bar.”
“Topless isn’t what you think
Blue Cross BlueShield of Michigan willhave its day in court in afederal antitrust actionover controversial clausesin reimbursementcontracts ... (in) 2013 —six years after some ofthose agreements wentinto effect.”
“
wo big auto nameswent to bat for theUnited Way for South-
eastern Michigan last Thurs-day and hit a home run.
The ecumenical gather-ing saw Bill Ford Jr. andChrysler Group LLC’s SergioMarchionne sharing thestage at The Henry Ford inDearborn.
The goal was to bring inpotential major donors whowould contribute personal-ly as well as host workplacecampaigns.
Marchionne, who’s head-ing the United Way cam-paign this year, reportedlyis cold-calling top execs allover town and asking themto participate. The crowdThursday was teeming withauto suppliers, too.
Check out the “Stati-sticks” animated feature onthe nonprofit’s website,liveunitedsem.org.
Produced in-house, thisshort feature packs a lot ofpunch, with statistics like:4,200 metro Detroit kinder-gartners can’t write theirown names; 66 percent ofkids who can’t read by theend of third grade will endup in jail or on welfare; and6,351 students will drop outof high school in Detroitthis year.
Pierce leaving Charter OneBank on her own terms
What was the real dealwith the surprise an-nouncement last week thatSandy Pierce was steppingdown as president and CEOof Michigan operations forCharter One Bank?
When executives leave
high-profile jobs to pursuethose proverbial “other op-portunities,” that can meanjust about anything. Theyreally may be looking for
new worldsto conquer,or they mayhave beentold by an-gry bossesto get whilethe gettingwas good.
WhenCrain’s
asked Pierce if the depar-ture, effective June 30, washer idea, she responded,with typical Pierce enthusi-asm: “Oh, my God, yes. Yes.”
Pierce laughed when re-minded that “pursuing oth-er opportunities” is oftencode for paying the price forscandal or intrigue of onekind or another.
“I’m sorry, but there’s nodrama, no scandal. I don’thave a hot story for you,”she said.
“It’s all really good. It wasmy choice. The bank wasdisappointed, but they un-derstood. I gave my noticelast November and reallyworked with the organiza-tion to do it the right way inthe right time frame.”
Pierce said she had heldnearly every conceivable po-sition in the world of bank-ing in her 30-year career,which began as a teller whileshe attended Wayne State Uni-versity, and was eager to takeon a new challenge.
“I just turned 54, and it’stime for the next chapter inmy life. I’m stepping downon June 30 because I wantto go out and have conver-
Pierce
Reporter Nathan Skid’s Detroit-area restaurant blogcan be found at www.crainsdetroit.com/skid
Reporter Chad Halcom’s blog on the legal businesscan be found at www.crainsdetroit.com/halcom
sations about what to donext without sneaking outthe back door. I don’t re-spect people who are lookingfor the next thing while stilldoing the current thing.
“I want to take the skill setI have and the connections Ihave in the community anddo something great here forthe next 20 years. I’m very,very excited,” she said.
Regatta kickoff benefitsmultiple local charities
A new fundraiser hostedby Detroit’s Bayview YachtClub on June 30 will benefitsix local charities as a kick-off for the 2012 Bells BeerBayview Mackinac Race.
The “Acura Sailing Underthe Stars Charity Preview”will include live music fromtwo stages at the privateyacht on the Detroit River.
Featured will be food do-nated from more than 25metro Detroit and PortHuron eateries, includingMajestic Café, Blue Fin Japan-ese Steakhouse & Sushi Bar,Zumba’s, Detroit What Crepeand River Crab to Shields Pizzaand BD’s Mongolian BBQ.
Attendees can choosewhich of these charitiestheir ticket price will bene-fit: Autism Speaks, Childhelp,Gleaners Community FoodBank of SoutheasternMichigan, Juvenile DiabetesResearch Foundation, MatrixHuman Services or Rose HillCenter.
Each charity has pledgedto sell 50 tickets, but they be-lieve they’ll sell 75 to 100,said local event producerJonathan Witz of Pontiac-based Jonathan Witz & Associ-ates, who is organizing thefundraiser.
“We think we’ll net$40,000 or more,” to benefitthe charities, he said.
Tickets are $75 each andavailable at sailingun-derthestars.com.
The annual Lake Huronregatta is scheduled for July14 and starts just north ofthe Blue Water Bridge inPort Huron.
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