Crain's Cleveland Business

By MICHELLE [email protected]

Before October 2010, SS&G Inc.employed no one in Chicago.

Following SS&G’s third Chicago-area merger in as many years, theWindy City now is the second-largestmarket for the Solon-based certifiedpublic accounting and business advisory firm.

A Jan. 1 deal with Silver, Lerner,Schwartz & Fertel — known by itsinitials, SLSF — added 45 people,

doubling SS&G’sChicago staff tonearly 90 andbringing its totalemployee countto more than 500.

The presenceof that many employees in theChicago marketmakes SS&G about

the 20th-largest accounting firmthere, when “two and a half yearsago, we didn’t exist in Chicago,” saidGary S. Shamis, SS&G’s managingdirector.

The deal is a true merger, execu-tives of both firms said. The share-holders of SLSF have exchangedtheir stock for stock in SS&G.

Michael L. Perlman, who beganhis career with SLSF in 1981, now ismanaging director of SS&G’s Chicago-area operations. The firm’s officesthere include what had been SLSF’sSkokie office, another suburban officein Des Plaines and a downtownChicago location.

All three locations were added toSS&G through mergers, the first ofwhich closed in October 2010, andthe second of which closed Jan. 1,2011.

SLSF executives had been deter-mined to stay solo, Mr. Perlman said.However, on the advice of an outsideconsultant and tasked with growinghis firm, Mr. Perlman started exploringpotential merger opportunities.

Talks between SS&G and SLSF

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601 ALSO INSIDE

A Painesville company that oncemanufactured only racing trailershas diversified and recoveredfrom the recession ■■ Page 3PLUS: OFFICE/INDUSTRIAL REAL ESTATEVACANCIES

NEW

SPAP

ER

Beyond the ElectionCrain’s reporters forecast

what to expect in seven sectorsvital to Northeast Ohio — realestate, health care, higher education, technology, manufacturing, small businessand finance — and predict howpolitical uncertainty may play arole.

PAGES 11-15

INSIDE: OUTLOOK 2013

Automakersget fuel rulehelp fromlocal steel

Shamis

MARC GOLUB PHOTOS

Cleveland Whiskey’s Tom Lix

A DRINK CLEVELANDCAN CALL ITS OWN

Local entrepreneur uses ‘radically different’ method of agingwhiskey that big-name restaurateurs are endorsing

By KATHY AMES CARRclbfreelancer.com

Tom Lix is just about ready totoast the commercial distri-bution of a premium bourbonhe has produced using tech-

nology that challenges centuries-olddistilling techniques.

Using a carefully controlled balance of pressure, time and othervariables, Mr. Lix’s patent-pendingmethod of aging whiskey compressesproduction of the spirit from about10 years into a couple of days.

“We use a radically different pres-sure-aging process that creates adeeper, bolder taste,” he said.

Cleveland Whiskey is closing in onentering the marketplace after re-cently receiving labeling approvalfrom the U.S. Alcohol and TobaccoTax and Trade Bureau — one of its final procedural requirements beforethe black bourbon can be stocked onthe shelves of bars, restaurants and retailers in Greater Cleveland andOhio.

Mr. Lix, Cleveland Whiskey’sfounder and CEO, eventually plans

to expand into national and interna-tional markets.

“This is a $20 billion worldwidemarket,” said Mr. Lix, who also is director of the Center for Entrepre-neurship at Lake Erie College. “China,India, Russia are importing morewhiskey, and as a country we have anobligation to manufacture productsthat people want.”

See WHISKEY Page 7See SS&G Page 7

See STEEL 8

ArcelorMittal’s lighter productmatches stringent efficiency lawBy DAN [email protected]

Steelmaker ArcelorMittal and United Steelworkers Local 979 both have high hopes for 2013, thanks to a newtype of steel that they’ll be producing specifically for thenation’s automakers.

“I’m feeling pretty good,” saidMark Granakis, president of Local979, in discussing the new prod-uct that will be made at the plantmanned by his union memberson Cleveland’s near West Side.

It isn’t the continued reboundof the automotive industry thathas Mr. Granakis and the companyso optimistic, though they saythat’s a huge plus as well. It’s because automakers soon willneed to lighten their vehicles in order to meet new, higher federalCorporate Average Fuel Economystandards, commonly referred toas CAFE standards.

Thanks to recent investmentsin its Cleveland Works, Arcelor-Mittal says it will be able to makea new type of steel in the first quarter of 2013. The metalwill be lighter and stronger than the steel the plant currently makes and which automakers stamp into carhoods, doors and other large stamped pieces. It also will be lighter and stronger than competitors’ products,according to the company.

Mergersboost SS&Gprofile inWindy City Chicago now firm’ssecond-largest market

“If they canmake some-thing lighterand stronger... that’s agreat thingfor Cleve-land.” – Ed Gonzales,owner, FerragonCorp.

INSIDE: Plastics,too, can play a partin reducing vehicleweight. Page 5

20130107-NEWS--1-NAT-CCI-CL_-- 1/4/2013 2:16 PM Page 1

2013 FINALISTS ANNOUNCED

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Check out Crain’s 2012 Year in Review■ Managing editor Scott Suttell takes a lengthy look at the year that was in Northeast Ohio business, from Macy’s pulling out of Parmatown Mallin January to the Rock and Roll Hall of Fame choosinga new CEO to replace longtime boss Terry Stewart.For the complete list, visit www.CrainsCleveland.com/2012Review.

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CONTRIBUTING FACTORSPrivate industry employers now spend more per employee hour worked for defined-contribution retirement plans — retirement plans that specify the levelof employer contributions and place those contributions into individual employeeaccounts — than they do for defined-benefit plans, which provide guaranteedretirement benefits based on a benefit formula. The U.S. Bureau of Labor Statistics reports that in March 2012, private industry employer costs for defined-contribution plans were 60 cents per employee hour worked comparedwith 43 cents for defined-benefit plans. Here’s a breakdown of the numbers:

Employer costs per employee hourDefined benefit Defined contribution

Management 72 cents $1.35

Sales/office 22 cents 43 cents

Service 9 cents 13 cents

Firms w/1-99 workers 23 cents 39 cents

... 100-499 workers 42 cents 65 cents

... 500-plus workers 99 cents $1.10


By STAN [email protected]

Northeast Ohio’s industrial realestate market continued humming,and the long-dour office marketgained a bit of spark last year, according to new statistics from theCleveland office of the NewmarkGrubb Knight Frank brokerage.

“It was a great year for absorbingindustrial space,” said Terry Coyne,executive managing director at New-mark Grubb. “If you don’t see spec-ulative industrial building, you willsee pricing pressure return to themarket. There are already no con-cessions in (industrial) leasing.”

Newmark Grubb’s data show industrial vacancy declined to 10.6%as of Dec. 31 from 11.75% a year ago.The decrease is no small achieve-ment in a market with about 300 mil-lion square feet of space owned orleased by manufacturing and distri-

bution-oriented concerns. The vol-ume of vacant industrial space fell9% to almost 32 million square feetas of year-end 2012 from 35 milliona year earlier.

Michael Petrigan, a NewmarkGrubb executive managing director,said the market benefited from pent-up demand for industrial space, par-ticularly in Lorain County.

Although vacancy statistics in theoffice market remain much higherthan in the industrial market, officetenants were more active than in recent years.

“There was much more leasing action” in 2012 than in 2011, saidBob Nosal, who heads NewmarkGrubb’s Cleveland office. The region’sappetite for office space grew morethan 200%, as the market absorbed500,175 square feet last year com-pared with 246,316 square feet in

By GINGER [email protected]

Since 1981, Bruce Hanusosky has held the wheel ofa Painesville company that produces custom trail-ers for carrying the vehicles and equipment of pro-fessional auto race teams.

But now, after surviving a turn for the worst during theGreat Recession, Mr. Hanusosky is leading a portfolio oftrailer-related companies, The Bruce Cos., serving a bevyof new markets.

He has hired back 55 of the 60 workers the companyonce had and plans to hire another 10 to 15 in the nextyear. Trailer orders alone are nearly halfway back to peaklevels and are supported by new revenue streams, al-though Mr. Hanusosky wouldn’t release specific figures.

“I was close to just giving up. We were in big trouble atthat time,” Mr. Hanusosky said of 2008. “I’m only happy wecan continue to grow. … I want my company better thanit ever was.”

The road to recovery has been in diversification. While the company previously served only the racing

business, which was hit hard by the recession as corpo-rate sponsors slashed budgets for racing teams, Mr. Hanu-sosky has tapped into the commercial, restaurant andmedical markets to sell new products.

Besides manufacturing racing semi-truck trailers andawnings, as it did since 1987, the Bruce Cos. now alsomakes smaller trailers for commercial and municipal cus-tomers; interior furnishings for commercial properties;heavy trucks, such as municipal trucks; and large-formatvinyl graphics and decals.

A wrong turnThe recession hit Bruce High Performance Trans-

porters — known at the time as High Tech PerformanceTrailers Inc. — hard. With 90% of its business tied to autoracing, the company didn’t have an answer to its revenuewoes when it went from receiving 20 to 30 trailer orders ayear — for about $300,000 apiece — to no orders in 2008.

INSIDE: A closer look at data fromCleveland’s industrial and office realestate markets. Page 16

JANUARY 7 - 13, 2013 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

INSIGHT

THE WEEK IN QUOTES“If they can makesomething lighter andstronger, that’s whatautomakers need.That’s a great thingfor Cleveland.”— Ed Gonzales, owner of Cleve-land-based Ferragon Corp., asteel toll processor. Page One

“This is a $20 billionworldwide market.China, India, Russiaare importing morewhiskey, and as acountry we have anobligation to manu-facture products thatpeople want.”— Tom Lix, founder and CEO,Cleveland Whiskey. Page One

Bill pushing uniform muny tax could returnBusinesses cheer potential for one set of rules, but cities fear effectsBy JAY [email protected]

As a businessman who until lastmonth was owner of SummersRubber Co., which has operationsin 15 communities across Ohio,Michael Summers has supportedthe Ohio Legislature’s efforts to

make municipal income tax filingrequirements more uniform.

But in his other role, as the mayorof Lakewood, Mr. Summers thinksthe General Assembly’s attempt lastsession at municipal tax reform,House Bill 601, went too far.

“You’ve got the state of Ohio saying one size fits all and (commu-

nities) saying, ‘That’s impractical,’”he said. “There’s a reason this stuffis at the local level, because it’scomplex and nuanced.”

Mayor Summers said there weresignificant differences between HB601 and Lakewood law with respectto the requirements for who paysthe tax and on what income. He

estimated HB 601 would have costLakewood about $160,000 annuallyand $600,000 in the first year of thechangeover.

HB 601 died with the end of thelegislative session as 2012 came to aclose, but a reworked version mightbe revived soon. Rep. MichaelHenne, a Dayton-area Republicanand a co-sponsor of HB 601 last ses-sion, told Crain’s Cleveland Businesslast Wednesday, Jan. 2, “I believe we

will re-introduce it later thismonth.”

Rep. Henne’s Republican co-sponsor, Cheryl Grossman of GroveCity, said the new bill will havesome “revisions and tweaks to makeit a really good bill.”

“This continues to be a majorchallenge for many, many businesses,”Rep. Grossman said.

See TAX Page 16

See VACANCIES Page 16

See RACING Page 18

“Chicago definitelyhas the potential to bethe biggest office interms of everything. Ifwe’re good at what wedo, then that probablyshould happen.”— Gary Shamis, managing director, SS&G Inc. Page One

“Of course you’re going to sit on cash.… Why should I startdeploying my cashnow if my customersaren’t going to bethere in 2013?”— Kevin T. Jacques, Boynton D.Murch Chair in Finance, BaldwinWallace University. Page 11

Industrial,office realestate datashow lifeVacancies drop in bothareas, with downtownCleveland the hottest

MARC GOLUB

Bruce Hanusosky stands in a 2013 NASCAR transporter for Joe Gibbs Racing.

RACING WITHTHE TIMES

Painesville company relaunches trailer business with several new offerings



The Cleveland Jet Center is a sub-tenant in an office building and freestanding airplane hangar at 26380 Curtiss Wright Parkway, Richmond Heights, Ohio 44143.

Sale is subject to Court approval, where is, as is, without warranty or representations.

Bids being accepted for a Receiver’s sale of the Cleveland Jet Center,

located at the Cuyahoga County Airport.

Receiver’s SaleCleveland Jet Center

For additional information contact via email: Tim L. Collins, Esq., Receiver Collins & Scanlon LLP 3300 Terminal Tower Cleveland, Ohio 44113 [email protected]

No telephone calls, please. Do not contact the Court.

Postmark Deadline for bids: January 15, 2013

McDonald Hopkins LLC600 Superior Ave., East, Suite 2100, Cleveland, OH 44114 • 216.348.5400Carl J. Grassi Shawn M. RileyPresident Cleveland Managing Member

Chicago • Cleveland • Columbus • Detroit • Miami • West Palm Beach

mcdonaldhopkins.com

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Volume 34, Number 1 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for com-bined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite310, Cleveland, OH 44113-1230. Copyright © 2013 by Crain Communications Inc. Periodicals postage paidat Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send addresschanges to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan48207-2912. 1-877-824-9373.

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Due to shale boom, search for truckers shifts into overdrive By TIMOTHY [email protected]

The flurry of activity in Ohio’s oiland gas sector has put an already-aggressive search for thousands ofnew truck drivers into high gear,and a handful of local academicprograms hope to be clutch in theeffort of filling that need.

The American Trucking Associa-tions suggests 100,000 new driversmust be recruited annually to keepup with the demand. Moreover, thetrucking industry in Ohio expects tocreate 9,130 jobs over the next fiveyears — a number that many in the

business say could balloon as theneed grows for drivers to haulequipment and materials to supportthe shale exploration boom takinghold throughout the Buckeye State.

Great Lakes Truck Driving School,a for-profit school in Columbia Station, recently inked a deal withthree publicly financed career centers, including Medina CountyCareer Center, to expand theircourse offerings that lead to a com-mercial driver’s license, or CDL. Thearrangement, which could handleas many as 200 students each year,allows students to do their class-room work at the career centers but

their in-truck training at Great LakesTruck’s Columbia Station location.

“Private schools partnering withthe public schools like this is goingto help alleviate that shortage andhelps us reach out into a larger marketing area,” said Doris Young,the truck driving school’s ownerand operator. “We’re looking atevery avenue to provide those ser-vices to the people.”

Industry observers say gas and oilcompanies aren’t necessarily in themarket for only traditional truckdrivers. Rather, many prefer non-driving personnel to have CDLsshould the need arise to transportmaterials. On the other hand,Chesapeake Energy Corp. — theOklahoma City-based energy giantresponsible for much of the state’snatural gas production — hired 69truck drivers in Ohio last year and

plans to fill an additional 16 posts.Despite strong demand for licensed

truck drivers, the number of peoplewith commercial driver’s licenses inthe state dipped in 2011 for the firsttime in at least a decade, accordingto the latest data available from theOhio Bureau of Motor Vehicles. Be-tween 2000 and 2010, the numberof people with commercial driver’slicenses rose by about 10%, to390,885 from 355,020. In 2011, thenumber edged down to 389,969.

It’s a shift educators say has led themto beef up their recruiting efforts.

Grads find workThe Medina County Career Cen-

ter, which offers vocational trainingfor area adults and high school students, explored the possibility oflaunching its own truck drivingschool before signing on with Great

Lakes Truck. The joint six-weekprogram, which quietly launchedlast fall, graduated in November itsfirst class of nine students — all ofwhom are now employed.

“We turn out unemployed peopleand get them back on the tax rollsand doing it in a way we’re notspending a lot of money to do that,”said Gary Searle, director of adultand continuing education at theMedina career center. “Great Lakesalready has the equipment and fa-cilities. What we do is maximize theuse of the classrooms.”

Cuyahoga Community College’struck driving academy trains between90 and 100 students each year, ac-cording to program manager KreighSpahr. The demand for training hasled Tri-C officials to increase theschool’s enrollment projections forthe program to 120 students. ■

Ohio may lead development of next AccordBy HANS GREIMELAutomotive News

TOKYO — A clean-sheet redesignof the Honda Accord just left the gates,but engineers already are planningits successor — and that eventuallycould mean more business for sup-pliers to the Marysville plant of theJapanese automaker.

Development of Honda’s next-generation flagship sedan, due in2016 or 2017, likely will be led fromOhio instead of Japan. The car may get a downsized turbocharged engine for better fuel economy. Andthe gasoline-electric hybrid variantwill be made in North America.

That is a preview of Honda Motor

Co.’s thinking from Shoji Matsui,large project leader of the Accord’scurrent redesign.

Mr. Matsui has led the Accordsince 2009. A good English speakerand self-confessed Disneylanddevotee, the jovial engineer wastapped for his expertise in developingcars for America.

He cut his teeth on earlier gener-ations of the U.S.-spec Accord andmost recently was chief engineer ofthe Odyssey minivan. His orders withthat vehicle: Seamlessly transferOdyssey lead development fromJapan to Honda’s American research-and-development center in Ohio.

With the ninth-generation Accord,which hit showrooms in Septem-ber, Mr. Matsui overhauled the carwith the American market in mind.The same strategy will apply for the10th-generation Accord.

The Accord is already one ofHonda’s most Americanized cars.But the company’s global tech cen-ter in Utsunomiya, north of Tokyo,still handles key engineering.

That will change with the nextgeneration, Mr. Matsui says.

“Technologically speaking, Ohiois fully capable,” Mr. Matsui toldAutomotive News. “As the futuretrend, it is for sure that the R&D isbeing transferred over there.”

Honda has said that the Ohiotech center will lead developmentof the next-generation Civic. Aspokeswoman says no decision hasbeen made for the Accord.

But President Takanobu Ito, in anOctober interview, said he wants togive America top responsibility forthe next Accord.

Now, about hybrids …Honda also aims to build the

hybrid version of the car in NorthAmerica. That shift would require abeefed-up R&D operation and anew supply chain for specialty partssuch as batteries.

Honda plans to make the plug-inand regular hybrid variants of thenew Accord at the company’s

Sayama plant north of Tokyo, atleast initially. The plug-in hits theUnited States next year.

But hybrid manufacturing shouldshift to the United States by 2015,within the Accord’s current genera-tion, Mr. Matsui said.

“We intend to produce themaround the world within the currentdesign of the vehicle,” Mr. Matsuisaid. “It’s not too far away. Rightnow in Ohio, they are looking into itand making studies.”

The start of hybrid manufacturingwould need to coincide with aChristmas or summer shutdown toallow for factory retooling, he said.That limits the window to twice ayear.

For the next generation, made-in-USA hybrids should be routine.Mr. Matsui also expects some drive-train tweaks next time around.

Motivated by MPGsBoosting fuel economy was key in

the recent redesign. To increase efficiency, Honda

considered using a downsized tur-bocharged engine. But Mr. Matsui’steam scrapped the idea because itfelt the turbocharger’s delayed kick-in wasn’t conducive to the smoothride the team wanted.

But Honda hasn’t forgotten the idea. “For the next-generation Accord,

it will get a downsized turbo for better fuel efficiency,” Mr. Matsuipredicted.

In the newest Accord, Mr. Matsuiopted to improve fuel economy by using a continuously variabletransmission.

However, there’s one problem:Those transmission typically deliv-er slower driving response than au-tomatic transmissions. But Mr. Itowanted the continuously variabletransmission to deliver bettertorque than an automatic at lowRPMs. ■

Hans Greimel is Asia editor for Au-tomotive News, a sister publicationof Crain’s Cleveland Business.


By DAN [email protected]

As it turns out, you can have gasand still break into the wind busi-ness, and vice versa.

When the manufacturing advo-cacy group WIRE-Net on Cleve-land’s West Side surveyed about 50Ohio manufacturers in December— including members of its GLWNwind manufacturers’ network,members of WIRE-Net and someunaffiliated companies — it foundalmost all those companies didbusiness in at least one energy-re-lated supply chain and most werein at least two. Wind and gas werethe most common sectors intowhich Ohio industrial companiessold their goods, the survey found.

The survey also revealed, per-haps more importantly, that mostof those companies were servingthe natural gas drilling, productionand processing business — andwhat they learned from the naturalgas industry often transferred andwas usable in the wind energy sec-tor. At the same time, some compa-nies found their experience in windenergy positioned them to servethe oil and gas market.

That synergy could be importantto Ohio manufacturers that hope tobreak into wind energy or into thestate’s growing natural gas drillingbusiness, the latter of which is seenas fueling growth in the state’seconomy both directly and byspurring manufacturing here.

“It shows that the future ofAmerican manufacturing is reallytightly intertwined with Americanenergy and American clean energy,”WIRE-Net president John Colmsaid of the survey’s findings. “Forthose concerned about jobs in thegas industry, this is not a bunch ofprojections from think tanks in

Cleveland or Columbus. It’s real.”About 84% of the companies

polled already sell into at least oneenergy market, though more wereproducing products for the naturalgas market than were selling intothe wind, solar, biofuel, fuel cell orhydroelectric energy sectors.

Skills put to diverse useWIRE-Net conducted the survey

on behalf of the Washington D.C.-based American Clean Skies Foun-dation, and had little trouble find-ing Ohio companies thatexemplified the trend of servingmore than one energy market withsimilar products and technology.

Take Elyria-based Norlake Man-ufacturing Co. and nearby ElyriaFoundry. Norlake makes trans-formers, which are used to powervariable speed pumps that helpmove oil and gas at well sites andthrough pipelines. It also makespower converters — another exper-tise that helped Norlake producepower management equipment forthe wind industry in 2010. Now it’sexpanding into solar energy.

Elyria Foundry makes complexgray and ductile iron castings, in-cluding compressor componentsthat it long has been selling to thenatural gas industry — the source ofa significant portion of its revenues,according to WIRE-Net’s report.Around 2008, it began using thatsame technology to cast compo-nents for the wind energy market, ittold WIRE-Net.

In Cleveland, Advanced Manu-facturing Corp. had been doingprecision machining and metalfabrication for the oil and gas mar-kets since at least the 1980s, but in2008 it applied those same skills toselling products to wind turbinemanufacturers.

And in Wadsworth, Ebnerfab Co.

has made heavy-duty metal prod-ucts for the wind and natural gasmarkets, including pipe and pres-sure vessels. Ebnerfab invested $2million in new vertical boring equip-ment in 2010, mainly to boost its capacity to process heavy steel forwind turbine towers. As it turnedout, that equipment also has enabled it to make heavy-walledpressure vessels for the natural gasindustry, it reported in the survey.

Such transfers of capacity havecome in handy for various manu-facturers, especially when one ener-gy sector has waned while anotherhas grown. That has been the casein the United States over the lasttwo years with wind energy andnatural gas production.

“Gas was taking a few years off,when wind came roaring in,” GLWNexecutive director Ed Weston said.“Now wind is slowing and gas isback. It’s a nice portfolio to have.”

More business, bit by bitSometimes, the connections are

not direct. For example, Ebnerfabalso sells to other companies thatsupply the natural gas business.

“I had a three-hour meeting todaywith a company, where we’re kind ofa tier two supplier, that sells to the

shale gas industry,” Ebnerfab vicepresident Jim Pugh recently toldCrain’s. “They’ve seen their businesstriple in the past couple of years.We’re a sub supplier to them, so we’reenjoying growth from that, too.”

The benefits of serving two indus-tries, as well as the benefits of thegrowing shale gas industry, were notlimited to companies in Cleveland oreastern Ohio, where most of theshale gas drilling is taking place.

In Franklin, between Cincinnatiand Dayton, Nation Coating Co.traditionally has been a small, high-tech company producing advancedcoatings that toughen materials foraerospace parts and other harshenvironments. It has been helpingto make better drill bits and otherproducts for the oil and gas marketsince the 1980s, and still does, butmore recently it’s also begun sellinginto the wind energy market.

Now, it is taking what it haslearned from all those other busi-nesses and doing experimentalwork on new drilling heads for theshale gas industry, company presi-dent Larry Grimenstein said. If itcan make shale drilling bits lastlonger, it would save drillers timeand money, because drill bits mustbe replaced many times during the

construction of a single well.“When they drill, it’s in a very

corrosive environment,” Mr. Gri-menstein said. “You have to pullthat whole damn rig up to get tothat drill bit to change it.”

Pipeline to growthLike Ebnerfab, Nation Coating is

enjoying some indirect growth aswell. It sells to companies such asRolls-Royce, which makes large engines and compressors used tomove oil and gas through pipelines.As more pipelines are constructed,more engines and compressors arerequired, which means more oftheir critical parts are sent to NationCoating for coating.

Messrs. Colm and Weston werepleased with the study’s results, butnot completely shocked. After all,they note, wind energy largely wasdeveloped at NASA Glenn ResearchCenter in Brook Park, before technol-ogy there was exported and adoptedin places like the Netherlands, Mr.Weston noted. And Ohio was one ofthe first states in the nation to havean oil boom about 100 years ago.

“A lot of these technologies werekind of birthed around here, so it’snot a surprise that these companiescan do both,” Mr. Weston said. ■

Ohio manufacturers thriving in gas, wind marketsJANUARY 7 - 13, 2013 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 5

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Fuel economy standardsplace onus on plastics

WIRE-Net survey shows many industrialcompanies do business in energy sectors

By BILL BREGARPlastics News

Companies will need to work together closely to meet aggressivecorporate average fuel economy(CAFE) standards and boost recy-cled content in cars, speakers fromJohnson Controls Inc. and BayerMaterialScience AG said at the recent Plastics in Lightweight Vehi-cles conference in Livonia, Mich.

“You feel like sometimes thateverything that needs to be devel-oped has been developed,” saidBruce Benda, who oversees theNorth American automotive andtransportation market for Bayer Ma-terialScience. That’s not the case,though, as government regulationsthat boost CAFE standards to 54.5mpg by 2025 will spur innovation.

Fuel efficiency has remained pret-ty flat since 1980, even though gasprices have risen 200% since then.

“Fuel economy, cost reduction isa reality for our business,” Mr. Ben-da said. “These are huge challenges

that the automakers and their sup-ply base have to deal with.”

Mr. Benda said automakers willremove as much as 600 poundsfrom the average vehicle to helpmeet CAFE. Ford Motor Co. an-nounced plans to reduce as muchas 750 pounds.

Mr. Benda said Bayer’s Bayflexpolyurethane, reinforced withmilled carbon fibers, is finding usein fenders, where it saves 35 poundsversus steel fenders.

One key will be new adhesives tolink composite and metal parts.“There needs to be new bonding con-cepts put together,” Mr. Benda said.

Dan Koester, director of newproduct technology at auto supplierJohnson Control, said a bioplasticproject with Ford is studying sevenbio-based materials for a door pan-el; the materials include polylacticacid and wheat straw. ■

Bill Bregar is a senior staff reporterat Plastics News, a sister publica-tion of Crain’s Cleveland Business.



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Deal for N.J. firm opensAmerichem to new markets

By FRANK ESPOSITOPlastics News

Color and additive concentratesmaker Americhem Inc. of CuyahogaFalls has acquired Infinity Com-pounding LLC, a producer of resincompounds based in Swedesboro,N.J.

The deal “makes sense on a number of levels,” Americhem CEORick Juve said in a Jan. 4 news re-lease. “We’re both about providinghighly reliable, technology-basedsolutions to our customers.”

For both Infinity and Americhem,the purchase also “broadens thetechnology base, opens new marketsand expands geographical reach,”Mr. Juve added. The purchase pricewas not disclosed.

Markets served by Infinity includemedical, electrical/electronic andbusiness machines. The companywill continue to operate indepen-dently under existing management,including president Carlos Carreno,who — along with sales and marketing

vice president Tim Carroll — foundedInfinity in 2005

“As part of Americhem, InfinityCompounding will be able to offernew products and technologies toour customers, including best-in-class color capabilities,” Mr. Car-reno said in the release.

During 2012, Infinity added itsfifth production line — a twin-screwextruder — and added six jobs. Thecompany now employs 35 and has annual production capacity ofabout 7 million pounds. Sales for2011 were around $15 million, with20% sales growth expected for 2012.

Americhem ranks as one of NorthAmerica’s 30 largest compoundersand concentrate makers. The acqui-sition is Americhem’s first since2005, when it bought materials firmColor & Additive Technologies Inc.of Dalton, Ga. Americhem operatesseven plants worldwide. ■

Frank Esposito is a senior reporterat Plastics News, a sister publica-tion of Crain’s Cleveland Business.

Cuyahoga Falls outfit makes first purchase since ’05

KA hits ‘rare’ third generationNationally knownarchitecture firm offers younger staffunique experience

from the ranks of the firm’s dozenemployee shareholders.

In a recent interview at the firm’stwo-story office at the Western Re-serve Annex building in Cleveland’sWarehouse District, the trio of exec-utive board members said they nowdrive the firm’s future collaborative-ly.

Asked who has the deciding role tosettle arguments, Mr. Burk said that ishis responsibility as president.

But Mr. Siliko said the firm’s exec-utive board has a decisive vote onmajor issues and always will be anodd number to prevent a deadlock.

A rare featReaching a third generation in an

architecture practice is exceptionalin Cleveland and the profession.

Cleveland architect Peter van Dijk,83, a retired — though still drawingprofessionally — name partner atthe firm now known as WestlakeReed Leskosky, described reaching athird generation in Cleveland as“something very rare.” Mr. van Dijk’sformer firm dates to 1905 and wasfounded by Abram Garfield, theyoungest son of the 20th president ofthe United States.

Henry “Hank” Reder, a Chester-land attorney and architect, said evennationwide, few architecture firmssurvive generational transitions.

“It’s the nature of the business,”Mr. Reder said. “Architecture is avery personal service. So many of theprincipals have design egos theyhave trouble delegating. When thatarchitect moves on, the goodwill he’sbuilt often moves on as well.”

In ka’s case, its structure meansno one person is in charge of every-thing, and younger architects overtime gain relationships with valuedreal estate development clients suchas Forest City Enterprises Inc. ofCleveland, Simon Property Group ofIndianapolis and Glimcher RealtyTrust of Columbus.

Today, Mr. Wasserman said, “Thebeauty of the structure is that we’ve


A new regime, and a new generationof leaders, has assumed the reins atKA Inc. Architecture, which goes by ka.

More management and owner-ship shifts also are ahead at the high-profile architecture firm, which isbetter known nationally than locallyfor designing enclosed shopping mallsand other large commercial structures.

The firm announced the lineuptoday, Jan. 7, as it unveiled its cur-rent management structure for thefirst time. The shift is as natural asgrowing older. Longtime presidentand shareholder James B. Heller hashit 65, the age the firm’s founder, thelate Keeva Kekst, instituted for exitingownership and management in 1996so the practice would survive him.

With the transition, the firm Mr.Kekst started in his attic in 1960reached its third generation. Thenew executive board members areJohn Burk, the firm’s chief operatingofficer and just-minted president,and shareholders Alan Siliko, itschief financial officer, and CraigWasserman, executive vice presidentand a studio leader.

Meanwhile, the two other execu-tive board members — Darrell Patti-son, director of design, and JamesBader, director of landscape archi-tecture — will hit age 65 by October.At that time, two new board mem-bers will join the executive board

all been here a long time so we understand things. Our strengthscomplement one another.”

Surviving the stormHowever, the style will be different.

The hard-driving Mr. Heller, who remains at the firm though the boardmembers could not apply a currenttitle to him, is a rainmaker knownnationwide in retail circles. Mr. Burk,a specialist in construction documents,said his role will be less public andmore internally focused.

The firm, which caters to real estatedevelopers, retailers and corporations,survived the downturn due to severalsteps, including staff cuts. Its staffnumbers 44 today, down 58% from105 in 2008, though it is up from alow of 36 in 2010.

Its staff is heavy with registered ar-chitects, 22, and their number is upfrom 16 in 2010.

“We were ready for the storm thathit us,” Mr. Siliko said, as the firmhad built up a reserve from profits instronger years, eschewing the ten-dency to pay it all out to shareholders.

The national firm also landed twobig projects — both local — thatwere crucial to carrying it through.

It serves as architect of record forthe New Haven, Conn.-based PickardChilton architecture firm on the $170million Eaton Corp. headquartersbuilding in Beachwood.

The firm also designed the $435million makeover of the HigbeeBuilding as Horseshoe Casino Cleve-land for the joint venture of RockGaming and Caesars EntertainmentCorp., and it’s at work on a Baltimorecasino for the same clients. ■

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For now, the entrepreneur is distilling and storing about a couplehundred gallons of the whiskey in a3,000- square-foot production areaat the incubator on East 25th Street inCleveland run by manufacturing assistance group Magnet.

Mr. Lix’s product already haspiqued the interest of brand-namerestaurateurs such as MichaelSymon — who said he plans to offerthe whiskey in all his eateries — SamMcNulty and Chris Hodgson.

“We’re definitely bringing Cleve-land Whiskey into our restaurant onceit’s available,” said Mr. Hodgson,chef and co-owner of Hodge’s indowntown Cleveland. “We’re waiting.We want some of the first cases.”

Against the grainMr. Lix, a serial entrepreneur who

moved in 2007 from Boston to Cleve-land, long had been toiling with theabridged distilling process in hisbasement before assuming incuba-tor space from Magnet in 2009. Mag-net provided access to its productdesign and development engineeringteam and lab space outfitted withwater chillers and heaters, tempera-ture and pressure sensors, water filtration and other test equipment.

The bourbon initially is aged innew white American oak barrels — alegal requirement to call it bourbon— for at least six months.

The pressure-aging process occurswithin computer-monitored stain-less steel vats. Oxygen is infused intothe tanks to accelerate the agingprocess of the bourbon, with oak inthe vats alternately absorbing andexpelling the high-proof raw liquid.

Traditional distilling using oakbarrels involves six to 10 years of aging,during which unseasonably warm orhumid seasons can impact the flavorof the spirit idling in warehouses.

“A couple of years ago, Knob Creekran out of its product and had to waitfor (the next batch’s) eighth birthdaybefore it could begin selling again,”Mr. Lix said of the Kentucky bourbonmaker. “They can’t just crank up theproduction like you can with cornflakes or computer parts.

“This process changes all that,” hesaid. “We can bring our qualitywhiskey to market faster and less expensively.”

David Crain, director of entrepre-neurial services at Magnet, describesCleveland Whiskey as a “perfect fit”for the incubator based on the startup’spotential to satisfy a strong marketneed using the advanced technology.

“I’m excited to see the product geton the shelves,” he said.

The venture has secured about $1million in financial support, including$125,000 from the Innovation Fundof the Lorain County CommunityCollege Foundation; $123,500 fromthe Cuyahoga County North CoastOpportunities Technology Fund;$15,000 from the Cuyahoga CountyNew Product Development and En-trepreneurship Loan Fund; and$405,000 in private investment.

Shake it upMr. Lix, who has six employees,

expects to produce 6,000 to 7,000cases of whiskey during his first year.His goal is to unveil other flavors andin five years dispatch 250,000 casesthroughout the nation and generate$54 million in revenue before enter-ing the international market.

began in February 2012; their exec-utives say the merger was attractivebecause both firms have extensiverestaurant practices and becausetheir cultures were similarly em-ployee-centric.

Plus, Chicago itself is the country’ssecond-largest financial market and“a really good restaurant city” wherethe firm’s people are starting to cor-ral opportunities, Mr. Shamis said.

Approaching the “magic number”of 100 employees in the Chicagomarket will give SS&G more lever-age as it pursues business, said Allan D. Koltin, CEO of KoltinConsulting Group, a Chicago firmthat specializes in the accountingprofession and has advised bothfirms in the past.

“There is a perception with referralsources (bankers and attorneys)and middle-market clients that at100 people, the firm has the neces-sary depth and resources to servicelarger” and more sophisticatedclients, Mr. Koltin said.

Moving up the chartsMr. Shamis expects SS&G will

crack the top 40 of the Top 100Firms compiled by Accounting Today, thanks to the SLSF merger.

The firm in 2012 ranked as the 41st-largest accounting firm in the UnitedStates with $70.7 million in revenue.

Now that SS&G’s acquisitionstrategy has achieved a “critical mass”in the Chicago area, its strategythere now will be one of growing internally, potentially with somesmall acquisitions, Mr. Shamis said.

“Chicago definitely has the potential to be the biggest office interms of everything,” he said. “Ifwe’re good at what we do, then thatprobably should happen.”

It is “not in the plan” to move theheadquarters to Chicago, he said.

Mr. Perlman is confident merginghis firm into SS&G will present opportunities for enhanced growthfor its professionals. Plus, his people won’t need to outsourceservices such as valuation forclients because SS&G has profes-sionals who can perform them.

Better integrating all three SS&GChicago-area offices is on Mr. Perl-man’s to-do list. So is developingcentralized marketing initiatives forSS&G in the region in order to takeadvantage of opportunities that Mr. Perlman said have emerged as other accounting firms consolidate.

Consolidation is up nationwideand in Chicago: Mr. Koltin said he is

working on five other CPA firmmergers in Chicago that probablywill close by the middle of next year.That pace reminds him, he said, ofthe 1998-99 merger frenzy in Chica-go, when public companies such asCBiz, American Express and H&RBlock acquired a half-dozen of thetop 25 CPA firms.

Coast-to-coast hungerWhile internal growth may be the

plan going forward in Chicago, acquisition remains SS&G’s strategyfor both the eastern and westernseaboards, specifically in and aroundNew York City and Orange County,Calif., Mr. Shamis said.

“If you’re servicing restaurants,why wouldn’t you want to have locations in those areas?” he said.

The plan is for SS&G to findcoastal partners over the next cou-ple years and to grow its annual rev-enues to roughly $100 million. Withthe addition of SLSF, SS&G is at annualized revenues of nearly $80million, according to Mr. Shamis.

Already, SS&G has an acquisitionin the works that it expects to closemid-year 2013 in one of its existingmarkets, which include Cleveland,Chicago, Akron, Cincinnati, Colum-bus and Raleigh, N.C. ■

SS&G: Chicago could be biggest marketWhiskey: Brand can hitmarket less expensivelycontinued from PAGE 1

continued from PAGE 1

While Cleveland Whiskey hasits sights set on the internationalmarketplace, a small but fledglinggroup of artisan craft distillersacross Ohio is taking advantageof the state’s agricultural resourcesand consumers’ increasing pen-chant for quality and are produc-ing their own designer spirits.

Portside Distillery in Decemberbegan selling a white rum at itsoperation in Cleveland’s Ware-house District.

Sam McNulty, owner of MarketGarden Brewery and other OhioCity brewpubs, plans to begindistilling a white whiskey, oldworld gin and a new world ginonce he receives the nod fromthe federal government. Mr. McNulty said he eventually willunveil a dark rum and agedwhiskey after they’ve been agedin barrels for a couple years.

Seven Brothers Distilling inLeroy Township, near Painesville,in 2011 began distilling a hand-crafted premium vodka. OwnerKevin Suttman expanded hisofferings to a silver rum and aspiced rum, all of which aredistributed throughout liquorstores in Northeast Ohio. Mr.Suttman in October won firstplace in a Council of Smaller Enterprises’ business pitchcompetition, which awarded him$20,000 that will help him createnew products and tap into privatelabel and retail opportunities.

There are 14 craft distillers located throughout Ohio.According to the AmericanDistilling Institute, there were234 distilling spirits plants in the United States in 2011, a sharpincrease from 24 in 2000. Bythe end of 2015, the institutepredicts more than 1,000 craftdistilling plants will be locatedthroughout the United States andCanada. — Kathy Ames Carr

Craft distillersabound in Ohio

Tim McCarthy, a ClevelandWhiskey minority investor andfounder of the Ashtabula-basedBusiness of Good Foundation, saidhe shares a similar vision.

“I have been through two full star-tups myself and have been involvedwith a couple dozen others,” he said.“I think Tom has something that inthree years will be a national con-sumer business, and in six years willbe an international (brand).”

Cleveland’s identity is part of whatmakes the brand appealing, at leastto an online test market of morethan 600 voters, said Mr. Lix, whoconducted a nationwide online pollover the summer to see which brandnames and bottle designs potentialcustomers preferred. “The Clevelandlabel and bottle scored the highest(among the choices),” Mr. Lix said.

A subsequent online concept testwith about 200 frequent bourbonpurchasers revealed they were inclined to buy the black bourbon,after reviewing pictures of the Cleve-land Whiskey bottle containing botha black bourbon and the lighter-col-ored counterpart they are accus-tomed to drinking. ■


One thing is certain about Cleve-land City Councilman MikePolensek: He’s always direct,regardless of whether you agree

with him.And on this one, it’s impossible to

disagree with him. His colleague, KenJohnson, must not be allowed to “double dip” his way into a paid“non-retirement.”

Councilman Johnson retiredin late 2012 at age 65 — in themiddle of his term — so that hecould guarantee himself an annual cost-of-living increasethat gets eliminated this year forpublic employees. He was quotedlast week in The Plain Dealer assaying he wanted his councilcolleagues, who have the author-ity to appoint his successor, to choose him.

That way, he would collect his retire-ment check and keep his $74,000 annualcouncil salary as well. It happens all thetime with school principals and superin-tendents, he reasons, so why not a coun-cilman?

Well, for one reason, it’s never been

done in City Council. The aforemen-tioned Mr. Polensek, the senior memberof the body, is collecting a pension and asalary, but he did so by “real” retirementand then running for — and winning —re-election to his Collinwood seat.

He believes Mr. Johnson should do thesame thing. No way will he vote to

appoint him to his old seat. Byasking to be appointed, Mr.Johnson “puts council in a terrible position,” CouncilmanPolensek was quoted as saying.“I’ve protected that institutionfor 35 years, and I will not votefor anything that violates thepublic trust.”

Mr. Johnson worked in thecity recreation department for15 years before being first elected

to council in 1980, and by most accountshas done a good job serving his ward.Now, he should simply do the right thingagain, by enjoying his retirement untilhe’s able to again run for election to hisold council job.

*****MANY EYEBROWS WERE RAISED

when The Wall Street Journal recentlypublished a story that said extractions ofAmerica’s shale oil deposits could turnour country into the world’s largest oilproducer in a short seven years.

That’s right: a bigger producer thanSaudi Arabia. And the production ofsuch plentiful deposits of natural gas iscausing atmospheric toxic emission levels to drop as electric utilities and othermanufacturers switch from coal. Imaginethe impact of such a shift in industrialpolluters such as China and India?

The job projections are stunning asthis new industry develops, but evenshale pioneers such as Houston’s GeorgeMitchell know we need a sensible bal-ance between adequate regulation andthe promise of an economic boom.

That’s one reason we’re including apanel discussion on the topic as one offour afternoon breakout sessions atShale Summit 2013 on Feb. 5. It will be aday-long, in-depth program with ourpublic broadcasting partners at ideastreamand will be held at Executive Caterers atLanderhaven. Details are on both crain-scleveland.com and ideastream.org. ■


Toll taleW

ill the Ohio Turnpike do for the state’sroads and bridges what the Ohio Lotteryhas done for education in the BuckeyeState?

We hope not. More importantly, it must not.Gov. John Kasich made the right call in deciding

not to raise money for needed highway and bridgeinvestments by leasing the Ohio Turnpike. Butwe’re not quite jumping for joy about his plan to usethe turnpike’s tolls as collateral for the sale of bondsthat would finance infrastructure improvements beyond the turnpike.

Why? Look no further than our state’s history withthe lottery.

Three decades ago, the Legislature earmarkedprofits from the Ohio Lottery to go toward education.People expected the lottery to produce a windfall forprimary and secondary schools across the state.

It didn’t work out that way.Rather than layer the lottery profits on top of the

money that had been designated for education inthe state’s general fund budget, the Legislaturesteadily reduced the percentage of the budget it ear-marked for schools as lottery proceeds grew. The bigwindfall for education never materialized; instead,lottery profits became a partial substitute for redi-rected general fund money that went to other partsof the budget.

Now along comes Gov. Kasich with his proposalto expand the authority of the Ohio TurnpikeCommission so that it can sell bonds for highwayand bridge projects that aren’t connected to theturnpike. The pitch is that future toll revenues couldbe used to finance the sale of $1.5 billion in bonds,with the state using that money to secure matchingfederal funds. The sweetener for the northern half ofthe state is that most of that money supposedlywould pay for projects in these parts, such as thesecond Inner Belt Bridge in Cleveland.

In a guest column submitted to media outletsstatewide, Ohio Department of Transportation director Jerry Wray said the governor’s plan “willfree up other funds to accelerate badly needed high-way projects statewide — delivering more projectsfaster.” But will Northern Ohio still receive its fairshare of state highway transportation dollars fromthe gasoline taxes its residents pay? Or will the cashgenerated from any sale of turnpike bonds reduce infull or in part the amount of money from the gas taxthat flows into the region for bridges and highways?

If the answers to the previous questions are “no”and “yes,” respectively, then the use of turnpike tollsfor non-turnpike roadway investments won’t be thebonanza for this part of the state that it may seem.

There are other ways to create more revenue fortransportation projects. One would be to adopt asuggestion we made 12 months ago: Apply Ohio’scommercial activity tax to the first $1 million in an-nual taxable gross receipts brought in by a business,rather than collect just $150 on that first million,and dedicate those added dollars to infrastructure.Another would be to raise the gasoline tax.

Each could yield hundreds of millions of dollars ayear in new money without risking a repeat of thelottery sleight of hand with the turnpike.

FROM THE PUBLISHER

PERSONAL VIEW

BRIANTUCKER

Stop this double dipper in his tracks

Changes benefit injured workers in stateBy STEVE BUEHRER

Two years ago, Gov. John Kasichasked me to lead the Ohio Bu-reau of Workers’ Compensationwith a simple aim — make the

system better for Ohio’s injured workersand businesses. In traveling the state hehad heard a common complaint; the sys-tem is too difficult to navigate and itscosts were a barrier to business growth.

Since then, we have made greatprogress in improving the system, bothfor our injured workers as well as Ohio’sbusinesses. Through better manage-ment and strong investments we’ve beenable to reduce costs so Ohio businessescan invest more in growth.

Rate reductions over the past twoyears have saved private businesses an

estimated $130 million and public em-ployers an estimated $40 million. In fact,the collectible rate for private employers(the amount BWC actually collects aftervarious discounts and adjustments) isthe lowest in 24 years. And for publicsector employers, it’s the lowest since atleast 1983. We’re also helping new busi-nesses. In its first year, our Grow Ohioprogram has saved 21,000 new businessesmore than $3 million.

These efforts are beginning to make adifference in how Ohio stacks up againstthe rest of the country. An example is the2012 Oregon Premium Rate RankingStudy, a biennial review of each state’sbase rates that is widely used as a national

benchmark. In the study, Ohio droppedfrom 17th to 28th in premium costs com-pared to 2010.

Even better news is that these im-provements go hand in hand with im-provements that are benefiting Ohio’sworkers. Everything we do at BWC canbe thought of in terms of prevention andcare. Working together, these two con-cepts ensure we are creating safer work-places to reduce accidents and gettinginjured workers healthy and back on thejob more quickly when accidents dohappen.

Consider how some of these changesbenefit both workers and business:

■ Our first formulary, centralized drugutilization reviews, and a pharmacymanagement program are ensuring

PUBLISHER/EDITORIAL DIRECTOR:Brian D.Tucker ([email protected])

EDITOR:Mark Dodosh ([email protected])

MANAGING EDITOR:Scott Suttell ([email protected])

OPINION

Mr. Buehrer is administrator and CEO of theOhio Bureau of Workers’ Compensation.

See VIEW Page 9

20130107-NEWS--8-NAT-CCI-CL_-- 1/4/2013 9:34 AM Page 1


BOB KROSKYNorth OlmstedI would probably guess the presidential election, because that’s all I heardabout for a year.

➤➤➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.

THE BIG ISSUEWhat do you think was the biggest news story of 2012?

DANA QUINONESParmaSandy Hook. It just involved children. It wasdevastating.

FORMADO ESPERTOCleveland(President Barack) Obamabeing elected, becausethat affects the next fouryears.

CHRIS ARNOLDBereaI think the catastrophicevents that just (shook)the nation: the SandyHook Elementary Schoolshooting, HurricaneSandy, the shooting at themovie theater (and in)Chardon.

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View: Return-to-work remains focusprescriptions intended to help recovery don’t lead down the darkpath of addiction. These changeshave shown early promise with a12% reduction in prescription nar-cotics and an estimated 2012 savingsof $12 million.

■ A new grant is helping businessesstart their own employee wellnessprogram, and an expansion in scopeand funding of local safety councilsis ensuring more Ohio companiescan focus on preventing workplaceaccidents.

■ A new program called Destina-tion: Excellence is estimated to savebusinesses up to $41 million annuallyby rewarding them for creating saferworkplaces and programs to transi-tion injured workers back onto thejob.

More challenges remain as wehead into 2013. For years, the num-ber of injured workers returning totheir jobs has been declining. Thistrend hurts workers and businessesalike, but it’s a trend we’ve begun toreverse.

In the coming year, we will redou-ble our efforts to address return-to-work by engaging with businesses tohelp them understand their role inpreventing workplace accidents andhelping get those who are injuredback quickly. We’ll be working withour managed care organizations to

clearly define roles and responsibil-ities and emphasize care over bureaucratic processes. And we’llwork with our providers to ensureaccountability for working toward aspeedy recovery and return to work

for those who are injured.While there is certainly room for

improvement, I’m confident that byworking with all our stakeholderswe will continue in the right direc-tion. ■


Ancora adds Michiganoffice, first outside OhioBy MICHELLE [email protected]

Ancora Advisors LLC, one ofNortheast Ohio’s largest investmentadvisory firms, is opening 2013 witha second office and the launch of anew mutual fund.

Beachwood-based Ancora is leasingoffice space in Birmingham, Mich., aDetroit suburb, that will be staffed initially by Dan Thelen, who joined thefirm in September to launch and man-age a fund that will invest in small andmid-cap companies.

The new location is the first non-Ohio office for Ancora, which wasfounded in 2003. Ancora CEO FredDiSanto aims to grow the Michiganoffice to four or six people, includingadditional analysts, over the next 12to 18 months.

Led by Mr. Thelen, who left invest-ment firm Loomis Sayles & Co. in late2011 and now is senior vice presidentand head of small-mid cap strategyfor Ancora, the new fund will invest inthe stocks of companies with marketcapitalizations of $100 million to $10billion. It was launched Jan. 2.

Ancora executives, including Mr.Thelen, will have skin in the game:They are investing more than $1 mil-lion into the new fund themselves,Mr. DiSanto said. He expects to have$10 million to $20 million invested inthe fund within the first 30 to 60 days.

Many local investment advisersinvest clients’ money into nationalfunds; this new fund will be managedlocally, Mr. DiSanto said.

With more than $1.5 billion in assetsunder discretionary management,Ancora is Northeast Ohio’s largestindependent investment advisoryfirm, according to Mr. DiSanto. Its

Thelen DiSanto

clients include high-net-worth indi-viduals and institutional investorssuch as pension funds and endow-ments. Most of the assets Ancoramanages are for Ohio clients.

The new mutual fund is Ancora’sfifth mutual fund and will be bench-marked against the Russell 2500,which measures the performance ofthe small to mid-cap segment of theU.S. equity universe.

“We were able to attract a very tal-ented manager who came from awell-known firm where he was man-aging assets in this style,” Mr. DiSan-to said of Mr. Thelen.

And Mr. Thelen’s track record ofoutperforming the market with lowerrisk is “tremendous,” Mr. DiSantosaid. According to data from Interac-tiveMetrics and Bloomberg, the Rus-sell 2500 produced annualized returns of 4.85% over the five-year period that ended Dec. 31, 2010, whilethe accounts Mr. Thelen managed atLoomis produced annualized returnsof 9.65% over the same period.

Mr. Thelen’s strategy for the newfund will involve investing in stocksthat fall into one of three buckets:companies with a competitive ad-vantage that are mispriced tem-porarily; those that receive little orno Wall Street research attention;and companies undergoing sometype of corporate restructuring. ■

Survey: Temp employment will rise in ’13By STAFFING INDUSTRY ANALYSTS

More companies will hire tempo-rary and contract workers in 2013,according to a new survey by onlinejob site CareerBuilder.

CareerBuilder found that 40% ofemployers plan to bring in tempo-rary and contract workers next year,up from 36% in last year’s surveyand 34% in the survey two years ago.

In addition, 42% of employersplan to transition some temporaryworkers into full-time, permanentemployees over the next 12 months.

Employers also plan to increasehiring of full-time permanent em-ployees, with 26% saying they intend to boost hiring in 2013, up

from 23% in 2012 and 24% in 2011.The survey also charted three

trends to watch in 2013:■ Employers scouting talent at

other organizations: Nineteen per-cent of workers reported they havebeen approached to work for anothercompany in the last year when theydidn’t apply for a position with thatorganization. Sales workers were themost likely to report being courted,with 33% saying they were contact-ed. Professional and business ser-vices workers came next, with 31%saying they were contacted.

■ More employers willing to increase compensation: Seventy-two percent of employers plan toincrease compensation for existing

employees — up from 62% last year— while 47% will offer higher startingsalaries for new employees, up sig-nificantly from 32% last year. Mostincreases will be 3% or less.

■ Employers creating the rightcandidate instead of waiting for one:Thirty-nine percent plan to trainpeople who don’t have experiencein their particular industry or fieldand hire them for positions withintheir organizations, up from 38%last year.

The survey was conducted onlinewithin the United States by HarrisInteractive on behalf of Career-Builder among 2,611 hiring man-agers and human resource profes-sionals and 3,991 workers. ■


McMainBeemanPleasant

JOB CHANGES

ARCHITECTUREGPD GROUP: Darrin Kotecki topresident.

BIOTECHNOLOGYGANEDEN BIOTECH: Erin Miller tomarketing manager.

CONSTRUCTIONRUHLIN CO.: Tim Newberry to superintendent; Paul McCutcheonto licensed professional surveyor;Ryan Berkhouse to assistant safetydirector; Dave Ellenberger to infor-mation technology manager. TRI-C CONSTRUCTION: EricScherr to manager of business development.VISCONSI COS. LTD.: Alan D.Prince to chief financial officer.

DISTRIBUTIONJENNE INC.: Ryan Jozwiak to ser-vices business development manager.

EDUCATIONCASE WESTERN RESERVEUNIVERSITY: Bob Sopko to director,Blackstone LaunchPad.CUYAHOGA COMMUNITYCOLLEGE: Kimberly Pleasant to

executive director, marketing andcommunications.

ENGINEERINGTECHNICAL ASSURANCE: JackieSpector to database administrator.

FINANCECHARTER ONE/RBS CITIZENS:Sandy Centa and Jeremy Green tovice presidents; Eric A. White tocredit analyst. FIFTH THIRD BANK, NORTH-EASTERN OHIO: Warren P. Cole-man to senior portfolio manager, FifthThird Private Bank.OHIO COMMERCE BANK: Kristi L.Beeman to vice president, commer-cial lender.

FINANCIAL SERVICEBCG&CO.: Matt Klemann andTimothy J. Spencer to associates;Michelle Davis, Dan Leffler andSara G. Lucas to senior associates. CBIZ INC.: Andy Dambrosio to corporate controller. CENTURY FEDERAL CREDITUNION: Ronald Hongosh to chiefoperating officer and executive vicepresident.COHEN FUND AUDIT SERVICESLTD.: Aly Cottam, Lisa Downing


GOING PLACES and Chris MacLaren to senior managers; Michael Maimone andMegan Howell to managers; GordyJones and Todd Pence to seniorstaff accountants. COLLIER, PETRAS & ASSOCIATES:April R. McMain to financial adviser. GDK & CO.: Quinn E. Parker andRodney L. Strata Jr. to associates. MCMANAMON & CO.: Kyle A. Sonnen to senior associate. SS&G: Ross Vozar to associate director. WALTHALL, DRAKE & WALLACELLP CPAS: Richard L. Zahratka,James J. Czarney, Jon A. Briggsand Scott Preising to principals. WESTERN RESERVE PARTNERS:David P. Mariano to director.

HEALTH CAREELIZA JENNINGS SENIOR CARENETWORK: Kathleen Overy to clinical RN liaison.PARMA COMMUNITY GENERALHOSPITAL: David A. Cook to seniorvice president, chief financial officer;Michael Mainwaring to vice president,physician alignment and business development; Sharon K. Thomas tovice president, chief nursing officer.PRIORITY HOME HEALTH CARE INC.:Donna Berry to assistant administrator.SUMMA HEALTH SYSTEM: Dr. Susan M. Hong to medical director,

radiation oncology; Dr. CharlesKunos to medical director, radiationoncology and director, brachytherapy/radiosurgery, Summa Akron City Hospital.THE WEILS: Evan Lubline to admin-istrator.

INSURANCETHE HOFFMAN GROUP: LauraNoyes and Christine M. Podlogar toaccount managers, commercial lines.

MANUFACTURINGINTERLAKE INDUSTRIES INC.: LisaM. Habe to chairman. PRESSCO TECHNOLOGY INC.: DaveW. Cochran to chief financial officer.SPECTRUM DIVERSIFIED DESIGNS:Jeffrey R. Dolan to chief operatingofficer.

AWARDSAMERICAN ASSOCIATION FORTHE ADVANCEMENT OF SCIENCE:Jun Qin (Cleveland Clinic) to fellow.NATIONAL CENTER FOR ADOPTIONLAW AND POLICY: Betsie Norris(Adoption Network Cleveland) receivedthe Champion Award.

ScherrEllenbergerBerkhouse

McCutcheonNewberryMiller

CookOveryMariano

HabeLublineThomas

VozarStrata Jr.Parker

RETIREMENTALCOHOL, DRUG ADDICTION &MENTAL HEALTH SERVICESBOARD OF CUYAHOGA COUNTY:Cassandra Richardson effectiveDec. 31, 2012. GPD GROUP: Dave Granger, after39 years of service.

Send information for Going Places [email protected].


ECONOMICOUTLOOKBEYONDTHEELECTION2013

STATE OF AFFAIRSQuotes from each of our six

other Outlook stories:

■■ “Hospitals have been workingpretty aggressively how to respond to what is most certainlygoing to be a declining resourcepool or at least a resource pool notgrowing as fast as they’re used to.”

— Bill Ryan, president for the Centerfor Health Affairs, an advocacy group

representing area hospitals

■■ “How do you (change the formula)in a way where you don’t impactnegatively on institutional quality?”

— Ronald Abrams, president of the Ohio Association of Community

Colleges

■■ “If things go well, growth will likely exceed 2012, at least insome sectors.”

— Dan Berry, president of the Cleveland-based manufacturing

advocacy and consulting group Magnet

■■ “My best thought on 2013 realestate in Northeast Ohio is for avery modest increase in the num-ber of units to be sold and salesprices to be flat.”

— Carl DeMusz, CEO of NORMLS

■■ “I think small business ownersare really fearful. What’s happeningin Washington really has smallbusiness members concerned.”

— Roger Geiger, vice president andOhio executive director for NFIB

■■ “You have to grow the entireeconomy to be venture-capitalfriendly, and there are significantobstacles appearing.”

— Howard Bobrow, partner in theCleveland office of law firm Taft Stet-tinius & Hollister who advises private

equity funds and VC firms

FINANCEBy MICHELLE [email protected]

Don’t expect firms that aresitting on piles of cash toinvest in growth just yet.

Many Northeast Ohiobusiness advisers are not opti-mistic that companies, a numberof which are flush with capital, willspend that cash on hiring, capitalequipment and other expansion in2013 because they expect politicaland economic uncertainty to persist.

“Of course you’re going to sit oncash,” said Kevin T. Jacques, whofor 14 years worked for the U.S.Department of the Treasury and isthe Boynton D. Murch Chair in

Finance at Baldwin Wallace Uni-versity. “Why should I start deployingmy cash now if my customersaren’t going to be there in 2013?”

If consumers end up payinghigher taxes this year, they’re likelyto spend less, Dr. Jacques said. Allthe while, economic growth isslow, and other countries’economies remain weak, so a business isn’t likely to justify investment on the expectation ofrobust exports.

“At the end of the day, demandfor corporate production has tocome from somewhere, and thebig question for 2013 is where?”Dr. Jacques said. “Where is the demand for businesses’ productsgoing to come from?”

A recent KeyBank survey echoeshis pessimism.

When pre-election survey results are compared with post-election survey results, they revealthe percentage of middle-marketbusiness executives planning onincreasing cash reserves nearlydoubled, the bank’s latest MiddleMarket Business Sentiment surveyrevealed in mid-December.

Pre-election, 23% of respondingexecutives said they planned onincreasing “already robust cash reserves,” KeyBank found. Thatfigure increased by 23 percentagepoints, to 46%, in post-election results.

The survey also revealed thatmore than two-thirds of middle-market executives — defined asthose with $25 million to $4 billionin annual sales — have a fair topoor outlook for the U.S. economyin the next 12 months. Only 16% ofthose surveyed said they were

more confident in their businesses’potential to thrive post-election.

“The middle market will continueto sit on cash reserves and delayinvestment until there is proofpositive that our government canpull together and create a plan forrobust and sustainable growth,”said Cindy Crotty, KeyBank execu-tive vice president and head ofKeyBank’s commercial bankingsegment.

Cash richSome of Northeast Ohio’s

publicly traded corporations reported significantly more cashon hand at the end of the thirdquarter of 2012 than they had ayear earlier, according to data fromS&P Capital IQ.

Aerospace supplier TransDigmGroup Inc.’s cash and equivalentsas of Sept. 30 totaled $440.5 million,up from $376.2 million a year

See FINANCE Page 12

As much as the candidates them-selves, the economy took center stagethis past year during the election.

However, the spotlight on moneymatters didn’t fade with the closingof the polls. All eyes were on thenation’s capital as a last-minutecompromise was worked out toavert a fall off the fiscal cliff.

While always intertwined, politics

and the economy seem to be linkedeven more dramatically in today’spost-recession world. From taxesand health care reform to activity on the state level, politics will continue to play a leading role inNortheast Ohio’s economy as business leaders, health care execu-tives and higher education officialswork through uncertain times.


1122 CRAIN’S CLEVELAND BUSINESS JANUARY 7 - 13, 2013

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ECONOMICOUTLOOK2013

HEALTH CAREBy TIMOTHY [email protected]

With President BarackObama’s re-electionand the U.S. SupremeCourt’s affirmation of

the bulk of his hallmark healthcare reform legislation, many hadexpected the choppy waters guiding health care providers overthe last few years to calm.

Not so much, say local healthcare administrators and observers,as the industry’s finances over2013 will continue to be strained inthe face of likely reimbursementcuts from government and com-mercial payers. In addition, politicalgridlock in Washington and Ohio’sreluctance to move forward withmajor prongs of President Obama’shealth care overhaul continue tocomplicate matters for providerswho say it’s becoming increasinglydifficult to maintain their slim operating margins in the face ofsuch turmoil.

“The status of the economy andthe potential for lack of consensusin Washington could have a lot ofchaotic results that are much moreominous because they are reallyunknown,” said Dr. Michael No-chomovitz, president of UniversityHospitals Physician Services.“There’s nothing to plan for. Thereis more unknown in 2013 thanthere’s been in health care formany years.”

The fiscal cliff negotiations, forexample, threw a wrench into hospitals’ planning for 2013, asmany anticipated for multimillion-dollar cuts to the Medicare pro-gram. If Congress and the presi-dent couldn’t hash out a deficitreduction deal by the start of theyear, an estimated $10.7 billion inautomatic Medicare cuts werepoised to take effect. The movewould have dinged the ClevelandClinic, for instance, about $22 million.

Medicare, for one, often accountsfor 30% to 40% of a hospital’s revenue stream. Because Medicarereimbursements already fall shortof covering the cost of providingcare, hospital officials say any cuts

to the program — no matter howsmall — are a cause for concern.

Federal regulators already planto withhold a portion of Medicarepayments — starting at 1% lastyear and rising each year — forhospitals with 30-day readmissionrates that are above the nationalaverage for patients with certainchronic conditions. The pressureon the program is only expected tointensify as the feds look to rein incosts.

“Right out of the box, and clearly over the last two or threeyears, hospitals have been workingpretty aggressively how to respondto what is most certainly going tobe a declining resource pool or atleast a resource pool not growingas fast as they’re used to in order to care for Medicare patients,” said Bill Ryan, president for theCenter for Health Affairs, an advo-cacy group representing area hos-pitals.

A state of issuesWhile the health care sector

has been a political football ofsorts on Capitol Hill, the at-timescontentious debate over the meritsof Obamacare has swept its wayinto policy discussions on the statelevel.

Republican Gov. John Kasichand his administration have waffled on whether they’d moveforward on the expansion of Med-icaid eligibility in 2014 — a keycomponent of President Obama’shealth care overhaul that the U.S.Supreme Court ruled last year individual states could sidestep.The Kasich administration has argued such a move would expandcoverage to somewhere between250,000 and 319,000 — somethingstate officials contend they can’tafford.

Under the health care reformlegislation, however, the feds saythey will pick up the bulk of the billfor the expansion in its first fewyears — “a pretty good deal,” according to John Begala, executivedirector of the nonprofit Center forCommunity Solutions.

In a recent report, the Center estimated a total of 178,000 would

enroll were the expansion to takeplace. If the state doesn’t move forward with the expansion, Mr.Begala and other observers say thecost of paying for health care for theuninsured ultimately would bepassed on to employers throughpremium hikes.

Should Gov. Kasich ultimatelynix Ohio’s Medicaid expansion,Northeast Ohio hospitals will continue to stomach millions ofdollars in bad debt brought on byproviding care for the uninsured.Moreover, reductions in subsidiesfor hospitals that care for a dispro-portionate volume of uninsuredpayments are expected to dry upunder Obamacare. So, should theKasich administration choose notto play ball with the feds, local hospitals could go without thosesubsidies or the additional Medicaiddollars.

The still-dismal economic situa-tion already has led to a surge inhigh-deductible health plans andsteeper co-pays, for which patients

before and from $234.1 million twoyears earlier. Likewise, diversifiedmanufacturer Eaton Corp.’s cashtotaled $425 million as of Sept. 30,up nearly 53% from $278 million ayear before.

“It’s really the trend that’s beenbuilding over the last coupleyears,” Ms. Crotty said. “They’redeleveraging and they’re sitting onmore cash. We would havethought at this point of the cyclethat we would have seen more investment in employment or expansion, or in plants or in acquisition. The economy hasn’trebounded as it typically wouldcoming out of a recession.”

And that situation puts thecountry at risk for another down-turn, said Mark A. Filippell, man-aging director of Western ReservePartners LLC, a Cleveland invest-

ment banking firm.“If corporations don’t put this

money to work, we cannot have asubstantial recovery and we mightflip back into a recession,” Mr. Filippell said. “It’s less jobs. It’sless growth. It’s less taxes. It’s lesseconomic activity. Those assets,those economic resources, are sitting on the sidelines.”

Everyone from shareholders tothe unemployed has a stake in corporate spending, or the lackthereof, local advisers say. If money stays on balance sheets, it’snot used to pay dividends or tohire, let alone to build bigger facili-ties or to expand through mergersand acquisitions.

If uncertainty continues, JerryKelsheimer, who leads Fifth ThirdBank’s Northeastern Ohio affiliate,predicts more of what’s alreadyhappening: companies using capital

FINANCEcontinued from PAGE 11

to buy back their own stock.“(It’s a way) to create value in

market cap, in overall stock price,without … putting capital at risk,”Mr. Kelsheimer said.

Staying activeA number of companies acceler-

ated into 2012 some of the dividendand share repurchase activity theyotherwise may have done in 2013 totake advantage of tax clarity in2012. That development leadsRandy Paine to anticipate that bothactivities may drop slightly in 2013.

Mr. Paine, executive vice presi-dent and head of corporate and investment banking at KeyBancCapital Markets, expects mergerand acquisition activity — anothermethod of deploying capital — thisyear will be in line with the activityof 2012, or slightly up.

The value of announced M&Adeals in the United States for thefirst three quarters of 2012 wasdown 28% from 2011, according toThomson Reuters. However, the total deal value of transactions inOctober and November 2012 was

POLITICS AT PLAY

The political wrangling over towhat extent the government shouldfoot the bill for the nation’s healthcare has been and will continue tobe a hot talking point through theyear.

Health care officials anticipate therate their institutions are reim-bursed by the government forhealth care services will continue to dwindle and, as such, they’ll continue to cut costs from theiroperations.

Adding to the turmoil on the federal level, Ohio hasn’t indicatedwhether it will go forward with theMedicaid expansion as outlined inPresident Barack Obama’s healthcare reform legislation. The U.S.Supreme Court ruled last yearstates could forego the program’sexpansion.

Local health care leaders suggestforegoing the Medicaid expansioncould negatively impact their bottom lines. Many had suggestedthe Medicaid expansion would extend coverage to thousands ofuninsured patients already comingto them for care and allow them tobe paid somewhat for the care theyprovide.

— Timothy Magaw

DON’T FORGET:Crain’s Cleveland Business on-line @CrainsCleveland.com

For all the latest business news...online


often can’t pay.“That becomes a challenge for us

because we have to collect thoseco-pays and deductibles from thepatients, many of which are havingfinancial hardships themselves,”said Cleveland Clinic CFO SteveGlass.

Hospital leaders also fear the Kasich administration’s decision topunt and ask the federal govern-ment to set up an online market-place, or exchange, where Ohioanscan shop for health-care coverageinstead of the state crafting its owncould delay many uninsured patientsfrom securing insurance.

“We’re for anything that getspeople insurance,” Mr. Ryan said.“We’re a little concerned about thatand how the feds will respond inspitting out these exchanges.”

Building burnout?Northeast Ohio’s health systems

have spent hundreds of millions ofdollars in recent years on new facilities and overhauling their existing digs, though many systemofficials and industry observers expect construction to slow overthe coming years.

“In Cleveland and Akron, thehealth systems seem to have the infrastructure in place they need forprobably the next five to sevenyears. I don’t anticipate any signifi-cant build out,” Mr. Ryan said. “Youcan never account for the fact adonor could come to your doorwith $100 million and expect a newbuilding.”

Mr. Ryan said further consolida-tion in the market, however, is expected. Summa Health System,for one, already has said it wasopen to selling off a minority stakeof its enterprise totaling roughly$1.6 billion in annual operating revenue.

Akron General Health System’sCEO Tim Stover said in an inter-view with Crain’s this fall it was inevitable the health system hesteers would become an arm of alarger health system.

“I think the more likely occur-rence than more building over thenext five years is some more con-solidation,” Mr. Ryan said. “IfCleveland is having a tough timefinding the population to sustain itsinfrastructure, what about thehealth systems in Akron? We talkabout it all the time. Smaller hospi-tals continue to partner up.”

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ECONOMICOUTLOOK2013

By JAY [email protected]

Ohio’s colleges and univer-sities — public and private— are going into 2013with Gov. John Kasich

and his plan to change the waypublic colleges are funded at thetop of their New Year’s watch lists.

In November, the governor unveiled a state college fundingplan that will reduce the amount ofstate aid to Ohio’s public collegesand universities. It also will dra-matically change the way the statecalculates how much aid a schoolwill get, taking into account gradu-ation rates and other indicators ofstudent success.

“That probably trumps every-thing else on people’s minds rightnow,” said Ronald Abrams, presi-dent of the Ohio Association ofCommunity Colleges. “How doyou (change the formula) in a waywhere you don’t impact negativelyon institutional quality?”

The University of Akron’s president, Luis Proenza, like hiscolleagues across the state, gavehis approval to the governor’s pro-posal. But he expects to spend theearly months of 2013, as the Legis-lature shapes the new plan as partof the next budget, watching care-fully the criteria that will be usedto measure university success.

Currently, most state aid isbased on enrollment; the morestudents a school has, the morestate money it gets. The publicschools rely on state financial support for as much as one-thirdof their annual budgets.

That will change. Under the Kasich plan, which was devisedwith input from Dr. Proenza andthe other presidents of the state’shigher education institutions, halfof all state funding would be basedon student success. Currently,graduation or other measures of aschool’s ability to produce suc-cessful students affects only 20% ofa school’s state aid formula.

“It’s about completion. It’s notabout rewarding people for beingwarm bodies,” said Ohio StateUniversity president Gordon Gee,

at a news conference announcingthe new policy. “It’s about rewardingpeople for completing what they’vedone and for us then making abright future for them.”

What is success?But neither Gov. Kasich nor Dr.

Gee, who led the university presi-dents’ group advising the governor,elaborated on how success wouldbe measured, and that is where Dr.Proenza will be watching. The planwill be a part of the new budget thegovernor will submit in Februaryto the Ohio General Assembly.

Drs. Proenza and Abrams hopethe plan that comes out of the Legislature will look beyond thetraditional completion yardstickused when success was less impor-tant. The traditional rule of thumbis the percentage of students whocomplete a degree within six yearsof their first admission.

“The measure that the state andfederal government are using ishighly flawed,” Dr. Proenza said,who is wary about the Legislature’sability to fine-tune the method bywhich success is measured whiletaking into account the nuances ofurban schools such as Akron. “Wegave the governor a pretty compre-hensive understanding, and I’mnot going to suggest that the Legis-lature understands what we gavethe governor.”

He said at urban colleges, only16% of the students are what he calls“first-time, full-time” students —those who enter the college and areexpected to finish at the same schoolin six years. Most are from otherschools, will transfer to other institutions before they get a degreeor simply may not be able to affordto finish school in six years.

“For the federal government andthe state to assume that (not grad-uating in six years) is an indicatorthat we are bad or that our stu-dents aren’t as good as those at Mi-ami (University) is nonsensical,” Dr.Proenza said.

Dr. Abrams said community colleges haven’t necessarily focusedon completion. Many of their students transfer out quickly to other institutions or they are in

up 31% over October and November2011, so the full-year drop shouldn’tbe as dramatic as the first ninemonths implied, Mr. Paine noted.

“The issue has not been capitalto finance deals,” he said. “The issue has been buyers’ and sellers’confidence to enter into transac-tions, given the economic and other uncertainties … we are expe-

riencing in the U.S.”Some advisers are predicting

companies will spend their cashon more mergers and acquisitionsthis year, in large part because internal growth is hard to achievewith consumer demand and grossdomestic product growth so ane-mic.

“I can’t imagine 2013 not being a

pretty robust year for M&A,” saidMark Mansour, senior managingpartner of MCM Capital Partners, aBeachwood private equity firm. “Theorganic growth is not sufficient todrive any significant internal investments, whether it’s capital investments or people.”

Mark B. Bober agreed there’s adesire by strategic and financialbuyers to pursue acquisitions. But,he noted, “the acquisitions have tomake sense.”

“There’s a lot of cash on the bal-ance sheets, there’s a lot of capitalwithin private equity groups lookingto be deployed, but the challenge isfinding high-quality deals,” said Mr.Bober, partner in charge of transac-tions and valuation services forBober Markey Fedorovich, anAkron-based accounting firm.

Similar to the way some compa-nies accelerated into 2012 divi-dends and buybacks they mighthave done in 2013, some companiessped up mergers and acquisitions,too, so Mr. Bober anticipates therewill be a lull in transaction activityat least early in 2013.

POLITICS AT PLAY

One local investment banker compares companies’ hesitance tospend their cash to a consumer’shesitance to buy new tires withoutknowing whether the forecast callsfor snow, rain or ice.

There’s more to corporate Ameri-ca’s wait-and-see attitude toward investing in growth than the fiscalcliff that loomed large at the end of2012. There’s another federal debtlimit looming in February, the federalbudget deficit, the risk of hyperinfla-tion and health care regulation, toname a few, insiders said.

Tax rates are a driving force. If a

new budget policy results in a signifi-cant difference between capitalgains tax rates and dividend taxrates, corporations are likely to respond in a manner that returnscapital to shareholders in the mosttax-efficient manner.

And increased regulation continuesto be a glacier for the finance sectorto watch, as there are still manyrules dictated by recent reform thathave yet to be written. All the while,the sector is grappling with thosethat already have been implementedand the costs of compliance.

— Michelle Park

programs that lead to certificates,not degrees. Still others are justdropping in to polish specific skills.

But, he said, community collegeswill work within the new system.“More and more (community) colleges are rethinking their tradi-tional missions to embrace successin addition to access,” he said.

On the chopping blockIn addition to changing criteria,

though, the schools very simply willbe facing cuts in state aid.

Cleveland State Universityspokesman Joe Mosbrook said CSUis looking at the prospect of losing $2million a year as soon as 2015 as thegovernor’s reimbursement formulachanges from counting warm bodieson campus to counting graduates.

Mr. Mosbrook said to avoid anydeeper cuts, the school is raisingthe stakes for admission, hoping toimprove its graduation rate — itsincoming freshmen will have ahigher grade point average andhigher test scores than in the past.

At least one private college presi-dent has accounted for the need tokeep students through graduation.

Tom Chema, president of HiramCollege, said private colleges likehis have understood the need tokeep students through graduationfor some time.

“Retention is a big deal, eco-nomically for institutions like us inthe private sector; that’s some-thing that’s not new,” he said. “Weknow, from an economic standpoint,that it is cheaper and more effi-cient to keep students and to havethem graduate than it is to recruit

somebody to take their place.”Mr. Chema is looking even further

ahead at demographic data thatshow an annual decline in the num-ber of 18-year-olds through 2017.

“There are 4,200 (nonprofit) colleges, and I don’t think all ofthem are going to survive this demographic downturn, at leastnot in their current form,” he said.“I think we’re going to see mergersand consolidations and schoolsdoing things they traditionallyhaven’t done.”

Those new things include onlinecourses, with which many schoolsare experimenting, and sharedcourses and even shared services.Dr. Proenza said he would like toexpand a program with LorainCounty Community College.

Not only do the schools shareclasses — Akron offers its accountingclasses at LCCC — but they shareservices, such as information technology, financial services andhuman resources. Stark State Col-lege in North Canton recentlyjoined the collaboration.

And while financial issues oftentake center stage, John Carroll University president, the Rev.Robert L. Niehoff, noted in anemailed statement that collegesand universities have much moreto watch for in the coming year.

“We offer more global programsthan ever before; our athletics de-partment just hired a new headfootball coach and JCU’s first var-sity lacrosse coach; and our cam-pus community continues to buildon its commitment to communityservice,” he said.

POLITICS AT PLAY

Gov. John Kasich intends to include a revamping of the state’shigher education funding formula inthe biennial budget bill he submits tothe General Assembly in February.

He will ask the Legislature to tiehalf of all college and university funding to the schools’ success atgraduating students, not simply onthe number of students enrolled. TheOhio Board of Regents allocatedabout $1.8 billion to the state’s 61college campuses in the 2013 fiscalyear.

Until this proposal, 80% of the“state share of instruction,” as thefunding is formally known, wasbased on the number of students

who completed courses with gradesof D or better.

Schools also would be rewardedfor keeping out-of-state students inOhio after graduation.

The college presidents also havebeen told to expect their piece of thestate funding pie to be smaller thanin the past.

The governor will have to send tothe Legislature a replacement forOhio Board of Regents chancellorJames Petro. The former state attor-ney general and native of Brooklynon Cleveland’s West Side announcedhe would retire Feb. 1 from the post.

— Jay Miller


1144 CRAIN’S CLEVELAND BUSINESS JANUARY 7 - 13, 2013ECONOMICOUTLOOK2013

MANUFACTURING

REAL ESTATE

By DAN [email protected]

If you liked 2012, you’ll probablybe happy with 2013 as well —assuming you’re the type thatthinks slow growth is better

than none at all, especially giventhe economy of the last four years.

So say area manufacturers asthey watch an economy in whichsome sectors are growing, othersare merely treading water and stillothers show little signs of reboundingany time soon. Adding to the un-certainty going into the new year,they say, is concern over future taxrates and whether the governmentcan continue to spend on thingslike defense.

“I’m cautiously optimistic aboutprospects for manufacturing in2013,” said Dan Berry, president ofthe Cleveland-based manufacturingadvocacy and consulting groupMagnet. “If things go well, growthwill likely exceed 2012, at least insome sectors,” he predicts.

Among the bright spots impor-tant to Northeast Ohio, the auto-motive sector is expected by mostobservers to continue its come-back in 2013. Growth won’t betremendous, they caution, but thesector is expected to produceabout 14.4 million cars this year —nearly as many as it was producingbefore the recession.

“This will be good for NortheastOhio because of the Ford andGeneral Motors presence — espe-cially if Ford adds market share asprojected,” Mr. Berry said, referringto Ford’s large presence in and

around Cleveland.What’s good for the automotive

sector tends to be good for the region generally since, as privateequity investor Steve Rosen pointsout, “it’s hard to have a manufac-turing company here in the Mid-west without some exposure to automotive.”

Via his role as managing partnerat Beachwood-based ResilienceCapital Partners, Mr. Rosen is aninvestor in several manufacturingcompanies, including Wisconsin-based Penda Corp., which makesparts for automakers. He believescontinued pent-up demand fornew cars and trucks, as the nation’sexisting fleet continues to age, willbuoy the auto industry in 2013.

Fuel to the sectorAnother source of growth for

area manufacturers is the oil andgas industry. As energy companiescontinue to find more hydrocarbonsand come up with new ways to extract them from shale depositsand other geologic formations, it’screating an opportunity for manu-facturers who supply drillers, gasprocessors and the rest of the oiland gas industry.

The effects often are indirect,too. For example, in Mentor, Roll-Kraft Corp. doesn’t sell itsroll-forming equipment directly toenergy companies, drillers or evenoilfield service companies. But itdoes sell tube-forming equipmentto companies that make pipingand other materials for the oil andgas industry. As a result, it’s seenannual growth of about 15% for

those products over the last yearor so, said company presidentChuck Gehrisch.

A lot of companies are enjoyinggrowth from oil and gas, assumingthey can find a way to sell into thatindustry. Mr. Rosen, for example,includes among his firm’s portfoliocompanies one that mines andsells sand used in hydraulic frac-turing or fracking. For that prod-uct, growth has been very strongas drillers have continued theirmarch into the nation’s variousshale gas and oil deposits, and demand should continue to bestrong in 2013, Mr. Rosen said.

“It might slow down, but I don’tsee it shutting down,” Mr. Rosensaid of the shale gas and oil sector.“The Utica alone is enough to driveOhio’s economy for some time.”

Mr. Berry agrees. “In NortheastOhio, expect to see continuedgrowth in companies that are de-veloping products and equipmentfor the shale oil and gas market,”he predicts.

Not-so-stable foundationBut other sectors, such as

construction, either are laggingbehind or very spotty in theirgrowth, say manufacturers. Andone of Northeast Ohio’s most important areas of manufacturing— the making of equipment, toolingand other stuff used by the makersof end-products — might beamong the most susceptible toseeing growth curtailed by govern-ment policy.

That’s because too many busi-nesses are putting off capital

equipment purchases due to uncertainty about not only theeconomy, but about governmenttax policies and regulations, theysay.

Roger Sustar, owner of Mentor-based Fredon Corp. and a manu-facturer of everything from defensesystem components to medical devices, said he recently bought$400,000 worth of equipment forhis new plant — but he made hispurchase largely to take advantageof tax benefits that expired at theend of 2012. Looking forward, he’sless than certain about the envi-ronment in which he’ll have to work.

“National debt at $16 trillion isonly the beginning — what happenswhen the Federal Reserve raisesrates? Right now it’s almost zero.(There is) too much uncertainty forthe future right now,” Mr. Sustarsaid. “I, plus millions of other busi-ness owners, have no idea what’sgoing to go on except we will paymore taxes.”

Mr. Gehrisch also worries aboutfuture taxes and regulations, buthe said he’s come to believe thereal pain won’t begin until 2014,while 2013 will bring some growth,even if it is slower than in reallygood times.

“I think 2013 is going to be asteady year, but I don’t see that it’sgoing to be a major uptick,” Mr.Gehrisch said.

Mr. Gehrisch said he’s resignedto seeing taxes go up and probablyfor government spending to be cut,given the nation’s deficit — andexpects both of those factors tolimit growth for years to come.

Mr. Sustar also worries aboutthe debt, but as a defense contrac-tor perhaps worries more aboutspending cuts in defense next year,which he says would “hurt every-one.”

PNC Bank economist WilliamStone might have summed thingsup best with his 2013 outlook,which he titled, “Living at StallSpeed.”

“Heading into 2013, we believethe theme of fighting headwinds isappropriate, and the year is likelyto be one of continued rolling crisis,” he warns. “But the U.S.economy has come far and is onmuch firmer footing than it was in2008. It is our view that the U.S.economy will continue on a pathof recovery through 2013. Still, werecognize the need for investors tobe agile and diligent,” he wrote inDecember.

POLITICS AT PLAY

There are a number of hot-buttonpolitical issues that manufacturerswill be watching closely in 2013.Among them are:

■ Future tax rates that could curtail business spending, especiallyon capital equipment made here forother producers.

■ Cuts that could affect defensecontractors and those with whomthey do business.

■ Regulations or environmental

policies that could curtail oil and gasdrilling, which has become a majorsource of business for many manu-facturers.

■ Interest rates that many believe eventually will rise, especiallyif the government does not rein in itsdebt.

■ A lack of confidence on the partof businesses, due to fear of in-creased regulations and taxes.

— Dan Shingler


Just do not screw this up.

That sums up the sentimentthe region’s real estate sectoris expressing toward govern-

ment types as the fog lifts fromthe 2012 election and worries set inabout possible changes in tax policyrelated to home ownership andcapital gains.

The sentiment arises as the realestate business finally shakes offthe effects of the Great Recessionand achieves a semblance of normality for the first time in ahalf-decade, though the volume ofactivity remains at paltry ratescompared to normal times.

Consider the plight of residentialreal estate agents. In 2012, theirworry in some communities becamefinding available homes for sale —a big change after years of slowsales. Sales volumes and pricesstarted climbing out of the cellar,although at a slower rate thanrecord-low mortgage interest rateswould have provided in the past.

So what happens? The long-sa-cred deduction on home mortgageinterest gets in the sights of federalbudget cutters, a move that wouldundercut the tax benefit of homeownership. Although the deductionmade it unscathed through the last-minute federal tax deal, the rise ofserious risk to it adds another chal-

lenge to the once-sacred value ofhome ownership.

Howard “Hoby” Hanna IV, Ohiopresident of the Pittsburgh-basedresidential brokerage of the samename, said the risk to the mortgageinterest deduction was consideredserious enough that industry tradegroups hoped it would just getnicked.

The tax scrutiny surfaced as thehousing market is starting to regainits footing. An analysis of NorthernOhio Regional Multiple Listing Service (NORMLS) data show unitsales of homes in five NortheastOhio counties had plunged 34% to13,561 units in 2011 from a peak of20,524 in 2005. In 2012, unit salesthrough October had climbed forthe first time since 2005, to reach15,842 in the first 10 months of 2012.

“The downturn was worse thanwe thought,” said Carl DeMusz,CEO of NORMLS, who looked atdata from Cuyahoga, Geauga,Lake, Lorain and Medina counties.

Mr. DeMusz’s forecast: “I justhope we can ride the momentumwe gained in 2012. My best thoughton 2013 real estate in NortheastOhio is for a very modest increase inthe number of units to be sold andsales prices to be flat.”

Taxing issuesMeanwhile, government action

— or inaction — produced a levelof uncertainty in the commercial

market, particularly as favorable taxtreatment for capital gains was dueto expire Dec. 31. The commercialmarket includes office, industrial,retail and apartment properties.

Several observers expected to see arush of sales concluded by the end of2012 as some property owners, particularly of smaller properties thathave held them for years, try to sellrather than risk a higher capital gainsrate, which looked to rise to 20%from 15% for high-income filers un-der the last-minute federal tax pact.

Michael Glass, vice president and Ohio regional manager of theMarcus & Millichap brokerage,which has an office in Indepen-dence, said uncertainty over capitalgains and a sense that federal taxeswill rise in the future made moreowners interested in selling in 2012.

David Browning, managing direc-tor of CB Richard Ellis’ Cleveland office, said he believes tax concernswere motivating several sellers in2012, which is a change from quietDecembers the last few years.

The bottom line, Mr. Browningsaid, is the recovery remains fragilewhen it comes to real estate.

“My gut reaction is that in 2012 wesaw a return to what I consider a nor-mal level of activity,” he said. “Notthe exuberance of 2006 to 2008 or thedownturn since, but the market of2005.”

Tenants on the moveThe change in activity is filtering

down to users of space, too.Tom West, director of office

services at the Cresco brokerage inIndependence, said any moves byoffice tenants the last few years “were

defensive rather than optimistic.”“Two years ago, everyone was

going into a hole and pulling thegrass over the opening behindthem,” Mr. West said. “Now, usersare looking for opportunities tomove, update their space, reorga-nize their businesses and updatetheir communications. There is abig difference in the market.”

Bob Garber, a principal at Crescowho works in industrial real estate,said the industrial market has tight-ened up so much that prospectivetenants are making multiple offersdaily for competitive buildings, aswitch from the recent past.

Presidential slowdownIn years past, real estate agents and

property owners traditionally lookedforward to presidential election yearsas good years: interest rates wouldstay low and things would get done.Conversely, Vicki Maeder, a longtimeinvestment sales vice president atCBRE, said the closer the election got,the more things slowed down. Sheblames uncertainty as the culprit.

Yet while federal tax issues havemuddied real estate’s waters, localdevelopments have improved them.

With the opening of Cleveland’scasino last year, completion expected next spring of the firstmultitenant office building inCleveland in 20 years with theErnst & Young Tower at the FlatsEast Bank project, and the adventnext summer of the new ClevelandMedical Mart and Convention Center, Geoffrey Coyle, CEO of Ostendorf-Morris Co., is excited about 2013.

He expects it to be a better year

POLITICS AT PLAY

■ Property owners in areasserved by the Northeast Ohio Regional Sewer District will startpaying fees as of Jan. 1 to handlethe drainage of storm water. Theauthority has a link on its website todetermine how much an affectedproperty owner owes at http://www.neorsd.org/stormwaterfeemap.php

■ The Financial Accounting Stan-dards Board in spring 2013 againwill take up proposed FASB 13. Therule change may alter the way somecompanies, particularly public ones,treat real estate leases and personalproperty leases. Companies mayneed to capitalize the cost of thelease up front rather than over time.Cleveland attorney Norman Gut-macher dubs FASB 13, “Fiscal cliff II.”

■ The $465 million ClevelandMedical Mart and Convention Centerwill open after two years of con-struction. With its first conventionsin the fall, the 1 million-square-footproperty is designed to resurrectdowntown’s convention business.

■ Cuyahoga County governmentwill continue planning to streamlineits property portfolio and update itsheadquarters.

■ Northern Ohio will gain videogaming venues at Thistledown racetrack in North Randall and at North-field Park in Northfield.

— Stan Bullard

than its predecessor.You heard few real estate types

say that the last few years, evenwhen the feds were trying to stimu-late the economy.


JANUARY 7 - 13, 2013 CRAIN’S CLEVELAND BUSINESS 15ECONOMICOUTLOOK2013

SMALL BUSINESS

TECHNOLOGY

By GINGER [email protected]

In looking ahead at the comingyear, small business ownershope No. 13 isn’t as unlucky asmost think. But they’re not

optimistic. That’s because in 2013 they are

in for a year of higher taxes, healthcare costs and levels of regulation,local experts say. And, while manybusinesses are on firm financialfooting, they fear decisions made inWashington will hurt their bottomlines.

“Economically, firms are moreconfident about their own pros-pects,” said Steve Millard, executivedirector of the Council of SmallerEnterprises, a small business advocacy group in Cleveland.“Those who made it through (therecession) have made it throughsome very difficult times. They feelgood about their ability to with-stand some very difficult times.”

But they’re also worried the biggovernment approach in Washing-ton will hurt their opportunities tosucceed, those in the sector say.

Their concerns are evident inthe National Federation of Inde-pendent Business’ Small BusinessOptimism Index. Apart from readings in the last recession, theindex in November 2012 recordedits lowest monthly reading since1986 — an indication the confi-dence of small business owners isat its lowest level in 26 years.

Roger Geiger, vice president andOhio executive director for NFIB,

attributed that fear largely to theresults of the presidential election.

“I think small business ownersare really fearful,” Mr. Geiger said.“What’s happening in Washingtonreally has small business membersconcerned.”

It’s all in the detailsMr. Geiger said the Obama ad-

ministration has pushed through a“tremendous” amount of new reg-ulations for business owners, withnew rules on the books of govern-ment bodies ranging from the Environmental Protection Agencyand the Occupational Safety andHealth Administration to departmentswithin the Department of Labor.

Many of those regulations arecrafted as one-size-fits-all mea-sures, meaning small businessesmust comply with the same stan-dards as big businesses, whichhave more resources, he said.

Mr. Geiger estimated that smallbusinesses generally spend $50,000per year on processing federal paperwork, a figure that doesn’teven include compliance. He saidsmall businesses typically pay 20%to 25% more than their larger coun-terparts in compliance costs simplybecause they don’t have the in-house staff to handle the regula-tions.

Russ Masetta, owner of NatureStone, a stone and epoxy flooringcompany based in Bedford, saidhe overall is “cautiously optimistic”about his business’ prospects in2013. However, he also said the future remains uncertain given the

infighting in Washington.“If both sides don’t stop their

continuing politics of business asusual, and their outright refusal tocompromise for the good of thecountry, then I believe we will con-tinue to be negatively impacted andthe downward spiral will continue,”said Mr. Masetta, whose companyemploys about 40.

During the fiscal cliff negotiations,one of the big sticking points between the president and Republicans was the level at whichBush-era tax rates would be applied to individuals. In the deal,lawmakers voted to increase theincome tax rate from 35% to 39.6%for individuals annually making$400,000 and married couplesearning $450,000.

The decision impacts many smallbusinesses because a number ofsmall business owners operate theirbusinesses as pass-through entities,whereby the income of the business,when it comes to income tax, is considered the income of the owner. So, even if a small businessowner’s actual salary is less than thelevel determined by legislators to besubject to higher tax rates, the owner still will be forced to paymore in taxes because of the company’s income.

On top of the higher taxes, smallbusinesses also are worried aboutthe cost of implementing the federal Patient Protection andAffordable Care Act.

Starting in 2014, businesses with 50 or more employees will berequired to offer health insurance

to all their employees or pay apenalty to the government. Becauseof that threshold, some companiesthat are close to 50 employees arelooking at strategies of how to keeptheir employment below that level,Mr. Millard of COSE said.

“I do think that a lot of smallbusinesses will begin to turn to theindividual markets to provide solu-tions,” rather than offering healthinsurance in-house, Mr. Millard said.

The more, the merrierJerry Grisko, president of CBiz

Inc., an Independence-basedprovider of accounting and otherbusiness services to small and

mid-market companies, saidthere’s generally less optimismamong his clients in NortheastOhio than at this time last year. Buthe attributes that situation mainlyto the fiscal cliff, which — until adeal was reached — left many business owners unsure of what toexpect in the coming year.

Despite the prevailing sentiment,Mr. Grisko said, small businessesare in a position to do better in 2013than in 2012 because unemploymentlevels are down, consumer spendingis up and the housing and manu-facturing sectors are improving.

Meanwhile, more would-be entrepreneurs as of late have beentaking the plunge into businessownership as the economy’s recov-ery continues to be slow, creating abevy of new small businesses, Mr.Millard of COSE said.

Through November 2012, 81,093new businesses filed to operate inthe state, according to the OhioSecretary of State’s office. That’s anincrease of 6.5% from the like period in 2011, when there were76,138 new business filings.

“Technology is a great enabler ofpeople to take almost any idea anddo something they couldn’t do before,” Mr. Millard said.

The U.S. Small Business Admin-istration also for the last two fiscalyears has been guaranteeing loansat pre-recession levels. In fiscal2012, which ended Sept. 30, the SBAguaranteed 1,423 small businessloans totaling $430 million, downonly slightly from the 1,434 loanstotaling $444 million it guaranteedin fiscal 2011.

“This is an indication that theeconomy in Northern Ohio contin-ues to grow,” Gil Goldberg, district di-rector of the SBA’s Cleveland districtoffice, said in a statement.

■ Small business owners areconcerned about changes in Bush-era tax rates in 2013. Many ownersoperate their companies as pass-through entities, and will be subjectto higher income tax rates, as out-lined in the deal reached by legisla-tors.

■ After the presidential election,it became clear to small businessesthe Patient Protection and Afford-able Care Act would be enacted asplanned. That means businesseswith more than 50 employees willneed to choose to provide health in-surance to their employees or paypenalties for failing to do so.

■ Small businesses are watchingclosely to see what new regulationsthe federal government decides toroll out. New regulations on environ-mental, labor and safety issues arecostly to implement for smallercompanies and could play a big rolein how well a company can performin 2013. — Ginger Christ

POLITICS AT PLAY

By JOEL [email protected]

In the mid- to late 1990s, whenthe region’s manufacturingbase had all but bottomed out,a shift to a technology-based

economy, rooted in the region’swealth of research institutions,was under way.

And while massive gains havebeen made and many bright spotshave appeared in the interveningyears, an impatience with the development of Northeast Ohio’stech economy has some investorsand stakeholders a bit concernedheading into 2013.

The maturation of companiessuch as OrthoHelix Surgical Designsof Medina, a medical device makerthat was sold in August to a Dutchcompany for $135 million, point toa ripe climate for more exits for thosebusinesses that have entered thelater stages of the “ecosystem” towhich so many in the industry refer.

But some local investors worrythat the expiration of some financingsources could limit the ability ofother young startups being nurturedin Northeast Ohio to follow the pathof OrthoHelix; it had raised about$21 million in venture capital since2005 from sources including Cleve-land-based Mutual Capital Partners.

Among the most prolific venturecapital sources is the state-estab-lished Ohio Capital Fund, which isdone making investments from its$150 million pot and has hit a road

block in the Ohio Senate for con-tinued state support. Plus, theOhio Technology Investment TaxCredit, a $45 million program thatgave investors in tech-oriented firmsa credit on state income tax returns,also apparently won’t be extended.

“The development of a venture-receptive economy is beginninghere, but it takes a substantialamount of time,” said Howard Bobrow, a partner in the Clevelandoffice of law firm Taft Stettinius &Hollister who advises private equityfunds, venture capital firms andstartups.

“You have to grow the entireeconomy to be venture-capitalfriendly, and there are obstaclesappearing,” Mr. Bobrow said.

The half-full glass Officials from JumpStart, the

Cleveland-based nonprofit thatsupports early-stage companies inthe region, acknowledge its portfo-lio companies have benefited fromthe Ohio Capital Fund. But thegroup and officials connected tothe Ohio Third Frontier programnonetheless are bullish on the cli-mate for later-stage deals in 2013.

JumpStart president John Dear-born said “companies that are 3, 4 or5 years old are gaining strength andresources” and as a result are lessrisky for investment. He and otherscite the Third Frontier’s Pre-SeedFund Capitalization Program as evi-dence of programs filling the gap.

Under that program, Case West-

ern Reserve University, the ClevelandClinic, Lorain County CommunityCollege Foundation and JumpStart,among others, raised funds that thenwere matched by state money.

“These new funds are springingup and growing on their own, with-out direct encouragement from thestate,” said Lisa Delp, executive director of the Ohio Third Frontier.

Biotechnology continues to be aleader locally, as BioEnterprise, anonprofit that advises and attractshealth care companies to the region,reports record deal growth. InterimBioEnterprise head Aram Nerpounisaid health care deals have grownfrom five to 10 in 2009, to 30 to 35 in2012, with a five-fold increase, toabout $150 million, in investments inthe industry.

Outside of biotech, that institutionalwealth, along with an improvingeconomy also has afforded Jump-Start’s clients more opportunitiesfor development collaborations,Mr. Dearborn said. Private-sectorcompanies more often are ap-proaching JumpStart with requestsfor assistance from tech startupsthat can help fuel a larger company’score competency with new and innovative ideas. It’s another formof less obvious financing.

An important piece to the financ-ing continuum is outside or follow-on dollars: Firms such as Edison Ven-tures, Arboretum and RiverVestVenture Partners each received OhioCapital Fund money and hired Ohio-based representatives to oversee in-vestments in the state, but without afund renewal, those funds’ future in-vestment in Ohio are uncertain.

And venture capital funds andventure-backed companies are anticipating a more difficult fund-

raising climate in 2013: Among therespondents to a mid-DecemberNational Venture Capital Associa-tion/Dow Jones VentureSourcesurvey, 44% said they expected amarket contraction, with another42% expecting a concentration ofcapital raised by fewer funds.

That concentration is somethingDan Berick, a partner at law firmSquire Sanders who advises venturecapital firms, also has seen. But Mr.Berick said the infrastructure alreadyin place will help in withstandingthat trend locally. “The fund forma-tion climate is a difficult one be-cause the market is heavily weightedin bigger and more established ven-ture funds,” he said. “It’s harder forfirst-time fund guys to raise capital,as opposed to bigger VC names.”

Still, investors say any concentra-tion in bigger venture capital funds— coupled with the loss of estab-lished programs such as the OhioCapital Fund and the Ohio Technol-ogy Investment Tax Credit — couldsend the wrong signal to outsiders.

“In early-stage investing, WestCoast and East Coast investorswant to have local venture part-ners to work with that they knowand trust,” said Mike Stubler, man-aging director of Draper TriangleVentures LP of Pittsburgh, whichreceived Ohio Capital Fund cash.

Mr. Stubler noted that whensimilar Pennsylvania programswere not renewed, there’s was adecline in the number of active in-vestment firms, which weren’t ableto raise new funds. In Pittsburgh,Mr. Stubler said, early- stage in-vesting is at “historic lows.”

But area stakeholders cite thepre-seed capitalization programand the Third Frontier program it-self as evidence of the region’splace in the venture capital world.

“That’s very impactful,” Jump-Start’s Mr. Dearborn said. “It’s a sig-nal to entrepreneurs that the statehas stepped up and we’re evolvingin a direction that’s very positive.We’ve created an area that’s very at-tractive (to other investors).”

POLITICS AT PLAY

Congress’ ongoing negotiationspotentially could have a big impacton NASA Glenn Research Center andthe research budgets at area univer-sities. Even as President BarackObama and Congress agreed to adeal, big cuts still could be imple-mented.

At NASA Glenn, the sides’ failure toagree would have meant $70 millionin cuts — about 10% of NASA Glenn’sbudget — and that reduction wouldneed to be implemented in the lastthree quarters of the research cen-

ter’s fiscal year, which began Oct. 1. At the area’s higher education

institutions, meanwhile, researchmostly is financed by federal dollars,meaning cuts to those programscould result in graduate student layoffs and, at worst, shutting downentire research projects, university officials said.

“There’s no question that this isscary,” said Walter Horton, vice president for research and dean ofgraduate studies at NEOMED.

— Joel Hammond


2011, Newmark Grubb estimates.Moreover, Mr. Nosal added,

“This is the hottest I’ve seen thedowntown office market since the1990s.”

Migrating from the ‘burbsA combination of attractive rental

rates and a desire among employersto help their recruiting by locatingnear entertainment and downtownapartments attractive to youngeremployees is boosting downtown’scurrency with business owners, Mr.Nosal said.

Newmark Grubb estimates officevacancy in downtown Clevelandslid to 20.25% at the end of 2012from 21.25% on Dec. 31, 2011. Thevolume of vacant downtown officespace dipped 5%, sitting at 4.4 millionsquare feet as 2012 ended versus 4.6million square feet a year before.

The drop was no surprise, asmoves downtown from the suburbsby firms such as relocation specialistDwellworks, insurance broker Brit-ton-Gallagher and digital marketingfirm BrandMuscle made headlineslast year. Moreover, several down-town tenants laid plans to moveand expand in 2013.

“The growing attractiveness of

downtown offices to tenants did notjust happen,” Mr. Nosal said. “It’sthe culmination of a lot of planningand investment in downtownsports and entertainment districts.”

Reflecting a much stronger performance than in the past, New-mark Grubb reported 218,166 squarefeet of office space downtown wasoccupied by new or expanding tenants last year compared with282,009 square feet in the suburbs.

The amount of available officespace downtown also came down,as some building owners decided toexit the high-vacancy office marketto tap into downtown’s hot apart-ment market, where the occupancyrate is 94%.

At year end, the Hanna BuildingAnnex was undergoing conversionto apartments, as are five floors ofthe Rosetta Building, 629 EuclidAve., and most of the four-floorChester Commons Building, 1120Chester Ave. Bigger conversion pro-jects, such as the one envisioned for

“This is the hottest I’veseen the downtown officemarket since the 1990s.”– Bob Nosal, Newmark GrubbCleveland

Market 10.6% 11.8%


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NEW IN 2013!

HB 601 would have imposed a setof uniform rules on municipalitiesthat tax income and would havecreated a standard definition ofwhat income is taxable for busi-nesses and individuals. It alsowould have established a uniformmethod for how employers file employee withholding paymentsand it would have created a stan-dard municipal income tax form.

The push for state legislation tobring uniformity to local taxationhas been led by the Municipal Income Tax Uniformity Coalition,which includes the Ohio Chamberof Commerce, the Ohio Society ofCPAs and NFIB/Ohio, an affiliate ofthe National Federation of Inde-pendent Businesses.

The coalition argued that HB 601would have made municipal tax filing requirements less onerous forbusinesses.

In hearings before the HouseWays and Means Committee, repre-sentatives from coalition memberscomplained that Ohio — unlike theother nine states that allow cities totax income — allows communitiesto create their own definitions of income and set all other regulationsfor municipal tax filing.

Because nearly 600 communitieshave their own muny tax laws, it isunnecessarily expensive for evensmall businesses to comply witheach community’s law, they argued.

However, the bill drew strong opposition from many municipali-ties that maintained the measurewas not revenue-neutral.

Counting the costIn a Nov. 12 memo to member

communities of the Central CollectionAgency, a city of Cleveland agency,tax administrator Nassim Lynch es-timated that the changes mandatedby HB 601 would have cost Cleve-land $1.6 million annually. Othercommunities have offered similaranalyses.

The losses would come from subtlechanges in the way wages are taxed.

As an example, HB 601 had set alimit on the maximums that can becharged as penalties and interest forlate filing and late payment. It setthe interest rate on unpaid taxes at10%. Many communities now charge

more.A number of communities across

the state, including Brunswick,Cleveland Heights and Lakewood,have passed resolutions opposingthe Legislature’s muny tax plan.

In its analysis of HB 601, the OhioLegislative Service Commission, anonpartisan arm of the state Legis-lature, said various provisions of thebill would have resulted in incomegains for some municipalities andlosses for others. But, the commis-sion said in its Nov. 27 fiscal analysis,“Though total revenue losses tomunicipalities are undetermined,they may be significant, potentiallymillions of dollars annually.”

Divided over uniformityDaniel Navin, assistant vice pres-

ident of tax and economic policy forthe Ohio Chamber of Commerce,testified before the House Ways andMeans Committee last May 23 onthe need for the uniformity HB 601would have provided.

“(T)here is confusion, inconsis-tencies and unclear responsibilitiesemanating from essentially 550-plus, locally imposed taxes … andfrom state laws that only partiallyaddress or clarify the complianceduties of employers and taxpayersfor those local income taxes,” Mr.Navin said. “The solution must ulti-mately come from a single, uniformset of rules applied to all municipal-ities statewide.”

They also argued that this thicketof muny tax laws is making the stateunattractive to businesses scoutinglocations for new operations.

Mayor Summers, putting on hisbusinessman’s hat, said he wouldlike to see some uniformity; heagrees with the legislative intent tocreate standardized municipal taxforms and filing deadlines.

Kent Scarrett, a spokesman andlobbyist for the Ohio MunicipalLeague, which will be quarterbackingthe opposition to a new bill, said hehopes there will be a greater level ofcompromise in the new bill than he saw in HB 601, though he isn’t expecting substantive changes.

“They (lawmakers) know exactlywhere we are,” Mr. Scarrett said as towhat the municipal league’s mem-bers would find acceptable. “It’s justwhether they are willing to get there.” ■


Tax: Revenue lossescould be in millions


Vacancies: Eaton departure poses challenge IN THE MARKET

A look at office and industrial realestate data for 2012 and 2011:

Office 2012 2011Downtown 20.3% 21.3%

Market 20.3% 21.4%

Industrial 2012 2011Northeast 10.8% 11.4%

Northwest 18.7% 18.8%

S. central 11.7% 12.0%

Southeast 9.2% 11.3%

Southwest 11.6% 13.1%

Calif. outfit buysRichfield solidwaste specialist

Tetra Tech Inc. of Pasadena, Calif., said ithas acquired solid waste

management specialist Ameri-can Environmental Group Ltd. in Richfield.

Tetra Tech did not say what itpaid for American EnvironmentalGroup, which provides environ-mental, construction and mainte-nance services to solid and haz-ardous waste, energy, utility andindustrial clients. The companyhas more than 500 employeesand approximately $95 million inannual revenue.

American Environmental Groupis joining Tetra Tech’s Remedia-tion and Construction Manage-ment segment. Tetra Tech antici-pates that the acquired companywill contribute about $50 millionin revenue and, after intangibleamortization and integrationcosts, 1 cent to 2 cents to dilutedearnings per share in fiscal 2013.

ON THE WEB Story from www.CrainsCleveland.com.

the 1717 E. Ninth St. Building, oncethe East Ohio Gas Co. headquarters,are in the planning stages.

The Eaton acid test Although there are positive devel-

opments downtown, challenges loom.A big one is the pending exit of EatonCorp.’s headquarters from down-town to a new office campus inBeachwood. The shift will put300,000 square feet at Eaton Center,1111 Superior Ave., on the market.

However, Jeffrey Cristal, whoheads Newmark Grubb’s Clevelandoffice practice, noted Eaton Center’shigh-rise floors have terrific views ofthe lake and city.

“They have always been occupiedby Eaton,” Mr. Cristal said, so its departure will offer the marketsomething new. ■



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Six Sigma Green and Black Belt training programs begin in February at Lorain County Community College.

BRIGHT SPOTSBright Spots is a period fea-

ture in Crain’s highlighting posi-tive business developments inthe region. To submit informa-tion, email Scott Suttell at [email protected].

■ Jergens Inc., a Cleveland-based tooling components maker,is growing — in Ohio and Illinois.

The company on Dec. 31 acquiredJohn M. Allen Co. of Brook Park, anindustrial distributor, and purchaseda 15,000-square-foot building nearChicago to expand the manufac-turing operations of its subsidiary,Acme Industrial Co., an Illinois-based manufacturer of precisionmachined components. Terms ofthe deals were not disclosed.

Jergens by the end of this monthwill fold the eight-person John M.Allen into its JIS (formerly JergensIndustrial Supply) operations onSouth Waterloo Road in Cleveland.While he wasn’t yet sure how manypeople would transfer to Jergens,Jack Schron, president of Jergens,said a number of employees wouldmake the move, including seniorleadership.

Added Matt Schron, generalmanager of JIS and the son of JackSchron, “The biggest thing that attracted us to the company was theopportunity for us to really expandour sales.”

Matt Schron said the company’stechnical sales staff and local cus-tomer base were attractive sellingpoints. The acquisition is the divi-sion’s second in two years. Thecompany in December 2010 pur-chased the industrial supply divi-sion of The George Whalley Co.

“We are continuing to look for acquisitions,” Matt Schron said.“We continue to want to grow ourbusiness.”

JIS will look for other companiesboth in Northeast Ohio and outsidethe area, he said.

Jergens’ building purchase inCarpentersville, Ill., is the start ofwhat likely will be a continued expansion, Jack Schron said.

The acquired building is adjacentto Acme Industrial’s 40,000-square-foot building and will give the com-pany the ability to merge the twostructures. Acme Industrial will moveadministration space and automaticretrieval warehousing to the newbuilding and expand its manufac-turing operations in the open spaceat its existing location.

In the future, Acme Industrial couldexpand its building to 70,000 or80,000 square feet, Jack Schron said.

■ Visual Evidence Corp., a trialpresentation and courtroom evi-dence firm that has done businessin Northeast Ohio for more than 27years, has moved its offices to ValleyView from downtown Cleveland.

The move to 4,200 square feet at8555 Sweet Valley Drive, Suite A,

means Visual Evidence will beable to “offer clients a new,state-of-the-art videocon-ferencing room that canaccommodate 20 attendees,as well as free parking,”

said Manfred Troibner, prin-cipal and co-founder of the firm.

In addition, “our new location offerseasy access to clients throughoutNortheast Ohio as we serve pre-em-inent law firms in Akron, Canton andYoungstown, as well as in Cleveland.”

Company principal Daniel D.Copfer Sr. added, “Our staff of nine,as well as our trial evidence produc-tion studios, has moved to facilitatethe continued expansion of serviceswe offer our litigation clients. Weoutgrew the space we were sharing,and will now be able to deliver moreservices to legal teams preparing fortrial.”

A sister company, VeDiscoveryLLC, is remaining downtown at itscurrent West Ninth Street location.

■ Scott Rolf, chief informationofficer of Cleveland law firm TuckerEllis LLP, was named the 2012“Emerging Technologies Champion”by the International Legal Technol-ogy Association (ILTA) at the orga-nization’s third annual awards cer-emony in Washington, D.C.

The honor is one of ILTA’s “Dis-tinguished Peer Awards,” recognizingILTA peers “who have deliveredgreat business value and transfor-mational impact through their innovations and implementationsor have been champions in specificareas of focus for their organizations,”according to the law firm.

The “Emerging TechnologiesChampion” recognizes an individualwho provides value to his or her organization in managing or ad-ministering emerging technologiesand new trends and technologies,including cloud technologies, Enter-prise 2.0 and open-source softwareand standards.

Mr. Rolf received his degree inelectrical engineering technologyfrom Fairmount State University.He is a captain of ILTA’s ConferenceCommittee.

■ Goodman Real Estate ServicesGroup LLC of Cleveland said it com-pleted a deal to bring Gold Guys toMontrose Center III in CopleyTownship.

Gold Guys is a precious metaldealer that offers instant compen-sation for gold jewelry, scrap goldand gold coins. It’s based on Akronand has grown to five locations inNortheast Ohio.

Separately, Goodman announcedit represented Nicole Kay’s in theleasing of 3,000 square feet at Mid-way Market Square in Elyria.

Nicole Kay’s is an upscalewomen’s boutique specializing infashion accessories, including jew-elry and handbags.

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“It’s definitely CAFE standard-driven,” said Mark Kovach, Arcelor-Mittal’s Cleveland division manager.“By 2025, it’s on the books that theaverage car will have to get 54 mpg.In order for us to get to 54 mpg, acouple of things have to happen —you have to lighten the weight ofthe car and change the powertrain.Where we come in is in lighteningthe weight of the car.”

Steel often has competed withother materials, such as plastics andcomposites, as automakers havesought to make more componentsout of lighter materials. That’s notnew, and the plastics industry expects that trend to continue, to itsbenefit.

But not all that is automotive canbe plastic, because plastic can’t beeasily stamped the way steel canand it does not generally havesteel’s toughness, which is impor-tant in many automotive uses. So,ArcelorMittal wants to bring tomarket a product that is still steel,with all its benefits, but a lightersteel than currently is available.

And not just a little lighter, either.“Twenty five percent (lighter) is

the number we’re putting outthere,” said Blake Zuidema,ArcelorMittal’s director of automo-tive product applications in South-field, Mich.

Chain reactionThat reduction means the weight

of the body panels that typically

make up about one-third of a vehi-cle’s weight can be reduced by one-fourth. But, just as importantly, itmeans many other parts of the vehicle can be made lighter in turn,Mr. Zuidema said — somethingcalled “secondary mass decom-pounding” in the auto industry.

The industry phrase means that,because the vehicle itself now islighter, it requires less power tomake it go and less braking powerto make it stop.

As a result, engines, transmis-sions, brake systems and othercomponents can be downsized andmade lighter as well.

If all goes as planned, Arcelor-Mittal’s new steel not only will sellwell for traditional uses, but alsocould compete with other materialsthat once beat out steel because oftheir lighter weight, Mr. Zuidemasaid.

The new steel is the result of tensof millions of dollars of investmentinto the Cleveland Works by Arcelor-Mittal over the last few years. It is theresult of metallurgy that produces alighter, stronger alloy, combinedwith new heat-treating and galva-nizing lines installed at the plant,Mr. Zuidema said.

Happy union bossIt’s too early to say how well the

product will sell, but if ArcelorMit-tal’s claims are accurate, the lightersteel has a chance of being an impor-tant new product for automakers,said Ed Gonzales, owner of Cleve-

land-based Ferragon Corp.As a steel toll processor, Mr. Gon-

zales’ company treats and cuts steelfor customers ranging from steelmills to end users, including somein the automotive industry, wherehe said lighter is almost always better.

“If they can make somethinglighter and stronger, that’s what automakers need,” Mr. Gonzalessaid. “That’s a great thing for Cleve-land.”

On top of the weight savings,ArcelorMittal has another sellingpoint for its new steel — it can produce more parts per ton. That’sbecause steel is sold by the ton andshipped in rolled coils. BecauseArcelorMittal’s new steel can berolled thinner while possessing thesame strength as older, thickersteel, more car doors, hoods andother parts can be stamped fromeach coil, Mr. Kovach said.

The Steelworkers’ Mr. Granakis ishappy because the new steel shouldmean job security for his more than1,100 members who work in theCleveland mill.

The union does not expect themill to hire more people; it’s prettymuch at full staff and, with each tonof steel only requiring one man-hour of labor, the Cleveland Worksis one of the most efficient plants inthe world.

However, the product shouldkeep the plant busy and should helpavoid slowdowns and layoffs in thefuture, Mr. Granakis predicts. ■


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Vendors are also encouraged to register with the County’s BuySpeed Ven-dor Registration Program on the Internet at www.opd.cuyahogacounty.usto receive notices of future bid opportunities [Phone: (216) 443-7200].Awarded Contractors must be registered with the Cuyahoga County Inspec-tor General. Information can be accessed on the Internet at www.inspec-torgeneral.cuyahogacounty.us

The RFP must be obtained directly from the Cuyahoga County Office ofProcurement & Diversity. Obtaining documents from any other sourcedoes not make the vendor a plan holder of record. Responses received fromvendors other than plan holders of record will be deemed non-responsive.

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Revenue dried up, and the companyslashed its work force to four in mid-2009. The company in September2009 formed a joint venture withKentucky Trailer, a Louisville-basedbusiness that for years had producedthe body shells for Bruce’s racingtrailers, in order to weather the economic storm. The plan was tobuild trailers in Kentucky — wherelabor and tax costs were lower — andto operate a service center at its85,000-square-foot building on HighTech Avenue in Painesville.

By 2011, it was clear to Mr. Hanu-sosky that the partnership wasn’tworking because he was fieldingcomplaints about quality. He soldKentucky Trailer the naming rightsto High Tech Performance Trailersand exited the venture, ready tolaunch Bruce High PerformanceTransporters in Northeast Ohio.

On the right trackTo relaunch his company, Mr.

Hanusosky took to the road andwent door to door marketing thebusiness, just like he did more than30 years ago, when he founded thecompany. But this time, he had anew product up his sleeve. Using themoney he received from selling theold likeness of his company to Ken-tucky Trailer, he was able to financeresearch and development efforts todesign a new trailer series.

Bruce High Performance Trans-porters in January 2012 introducedthe trailer series, the Stealth Series, to

the marketplace. The Stealth, unliketypical trailers, features a completelywelded body shell, which is more labor-intensive to manufacture butmore resistant to rust.

In addition to innovating on theracing trailer front, Mr. Hanusoskyfound other ways to attract sales. Heintroduced a line of smaller enclosedtrailers that can be used as munici-pal command centers; started pro-ducing full-size and small trailers forcorporate customers such as ParkerHannifin Corp. in Mayfield Heights,which takes trailers full of valves andcomponents to manufacturers na-tionwide to showcase its products;and vertically integrated his company,bringing in-house a number of func-tions it had contracted out.

The company began making fur-niture and interior décor for com-mercial customers, extending be-yond the trailer world. And it beganproducing its own vinyl graphicsand adhesives, which are used bothon the trailers and awnings it sells.

“The economy is a little better,but not great,” Mr. Hanusosky said.“I think diversity helped a lot.”

The auto racing segment alreadyis down to 80% of the company’soverall sales, and Mr. Hanusosky an-ticipates that percentage will contin-ue to fall as the company developsand markets its new offerings.

“The industry as a whole is on therebound, showing growth acrossmost types of trailers,” said JeffSims, president of the Truck TrailerManufacturers Association. ■

continued from PAGE 3continued from PAGE 1

Steel: Other components can be lighter Racing: Trailer series is key


Four presidential terms later, a change at Taft■ For the first time since 1996, the Clevelandoffice of the Taft law firm has a new partner-in-charge.

Effective Jan. 1, Kevin Barnes replacedStephen M. O’Bryan, who led the office for16 years and will continue practicing as a

partner with the firm.Appointed to his newrole by Taft managingpartner Thomas Terp,Mr. Barnes will overseethe operations of the localoffice, which employsnearly 100, including 53attorneys.

Mr. Barnes joined Taftas a partner via the 2008

merger of Kahn Kleinman LPA into the firm.He received his law degree from HarvardLaw School in 1979 and has practiced for 33years with a focus on finance, internationaltransactions and mergers and acquisitions.

Mr. Barnes is no stranger to leadershiproles: He filled a role similar to his new oneat Kahn Kleinman before the merger, andcontinues to lead as board president of Hiram House Camp, a nonprofit that worksto enrich the lives of children throughcamping.

Early goals, Mr. Barnes said, are to continuethe growth of Taft in Cleveland and to raisethe visibility of the Taft name in the businessand legal communities. He also aims to attract attorneys to the firm and help the

firm’s lawyers build their books of business.— Michelle Park

A cool reason to sleep with your smart phone■ Snow and ice in the forecast? You mightwant to keep your cell phone on the night-stand.

The days of the beloved “phone tree”could be on their way out, as Northeast Ohioemployers increasingly use text messagingto notify their employers of closures or delays due to inclement weather.

According to new data from EmployersResource Council, a human resources ser-vice organization in Mayfield Village, 20% ofNortheast Ohio companies surveyed notifytheir employers of delays or closures by textmessage — an increase of 11 percentagepoints from 2010’s numbers. In addition,29% of those surveyed notify employers byemail, an increase of seven percentagepoints since 2010.

“These methods help employers notifyemployees more quickly, hopefully preventingpeople from travelling unnecessarily duringdangerous weather and hazardous roadconditions,” said Margaret Brinich, ERC’smanager of surveys and research, in anemail.

Still, braving the snow-covered roads likelyisn’t going to garner you much other thanthe potential for an accident or a thankfulnod from your supervisor. Only about 17%of companies surveyed offer those strong-willed employees braving the weather perks

such lunch or gift cards. — Timothy Magaw

Far off the beaten path■ Diversification really is key at The BruceCos., a Painesville company known for pro-ducing hulking automotive racing trailers.

The company, which this past year re-branded itself as a maker not only of racingtrailers but also of awnings, interior décor,and vinyl graphics and decals, also housestwo other disparate companies within thewalls of its manufacturing operation onHigh Tech Avenue in Painesville — BodShotz and Nature in the Nude.

Bod Shotz produces life-size wall appliqués and cardboard cutouts (think Fat-heads) by teaming up with local photogra-phers. The company doesn’t sell licensedproducts, instead catering to high schoolsports teams and the wedding market.

Bruce Hanusosky, president of The BruceCos., said Bod Shotz, which he launched lastsummer, gives the company stability in caseits vinyl graphics sales slow down.

Nature in the Nude is an enterprise run byMr. Hanusosky’s daughter, Caity Hanusosky.Using a tucked-away lab in the building, Nature in the Nude makes a line of seven all-natural men’s and women’s skin careproducts. The 2-year-old company alreadyhas products in grocery stores, salons andyoga studios in one-third of the country,and Ms. Hanusosky within the year plans tohave products across the United States andin Canada. — Ginger Christ

WHAT’S NEW

THE COMPANY: The Garland Co.,ClevelandTHE PRODUCT: WhiteKnight Metal Primer coating

Garland describes the coating as “an all-purpose aromatic urethane with non-liftingproperties that make it an ideal primer forurethane topcoats.”

The primer “is very durable and offers excellent adhesion to properly prepared metal surfaces,” according to the company.Its resistance to mild industrial fumes andlight chemical conditions make it particularlysuitable for aging industrial roofs in need ofrestoration, Garland says. It’s designed forapplication to stainless steel, galvanized met-als, Galvalume-coated metals, copper, alu-minum and Kynar-coated metal roof systems.

When applied under a WhiteKnight top-coat,White-Knight Metal Primer coating “providesa durable foundation for a sustainable roofsystem that is easily maintained,” accordingto Garland. The company says long-term benefits associated with the primer includelower life cycle costs and energy savings.

For information, visit www.garlandco.com.

Send information about new products to managing editor Scott Suttell at [email protected].

REPORTERS’ NOTEBOOKBEHIND THE NEWS WITH CRAIN’S WRITERS

THEINSIDER

THEWEEK DECEMBER 31 - JANUARY 6

The big story: DDR Corp. announced the acquisition during the fourth quarter of twoshopping centers in North Carolina for $151 mil-lion and the sale of seven of what it termed“non-prime operating assets” for $255 million,of which DDR’s share was $62 million. The realestate investment trust bought Carolina Pavil-ion in Charlotte, N.C., from Blackstone Real Estate Partners VII for $106 million. The852,000-square-foot shopping center is 94%leased. Poyner Place in Raleigh, N.C., was pur-chased for $45 million. The 434,000-square-footshopping center is 96% leased.

Tooling around: Lincoln Electric HoldingsInc. acquired Tennessee Rand Inc., a privatelyheld manufacturer of automated welding systems

and tooling that’s based inChattanooga, Tenn. The Euclid-based producer of weldingequipment and supplies didnot disclose what it paid forTennessee Rand, which hasannual sales of about $35 million. Lincoln Electric saidTennessee Rand serves a widerange of automotive and metalfabrication customers. “Ten-

nessee Rand strengthens our already strong position as a market leader in welding automa-tion in North America,” Lincoln Electric CEOChristopher L. Mapes said.

Moving up: DDR Corp. said senior executivevice president and chief financial officer DavidJ. Oakes was named president of the real estateinvestment trust, effective Jan. 1. Mr. Oakes willremain CFO of the company and continues toreport to Daniel B. Hurwitz, DDR’s chief execu-tive. Mr. Oakes joined DDR as executive vicepresident of finance and chief investment officerin April 2007. He was promoted to senior execu-tive vice president of finance and chief invest-ment officer in December 2008, and CFO in February 2010.

Way to go: Timken Co. purchased Wazee Cos.,a Denver-based provider of motor, generatorand industrial crane services to end markets thatinclude oil and gas, wind, agriculture, materialhandling and construction. The Canton-basedproducer of bearings and steel did not disclosewhat it paid for Wazee, which had trailing 12-month sales through December 2012 of $30million. Wazee operates out of four locations —two in the Denver area, one in Pasco, Wash., andanother in Casper, Wyo. It has more than 100employees.

In control: CBiz Inc. bought certain assets ofDiversified Industries Inc., which does businessas Payroll Control Systems. The Independence-based provider of accounting and other businessservices did not say what it paid for Payroll Control, which is headquartered in BrooklynCenter, Minn., and provides payroll and humanresources services to more than 1,400 small andmidsize clients. CBiz said the acquisition is expected to add 37 employees and about $6 million to its annualized revenue.

Rush job: Rush Enterprises Inc. of San Antoniosaid it acquired various commercial truck andbus dealerships owned by The MVI Group inOhio for $107 million. MVI Group operates com-mercial truck and bus dealerships in Ohio underthe names of Miami Valley International, CenterCity International, CCI North Coast and BuckeyeTruck Centers. The acquisition by Rush includesMVI Group locations in Akron, Cincinnati,Cleveland, Columbus, Dayton, Findlay and Lima.

For a month-by-month look at Northeast Ohiobusiness news in 2012, please visit www.CrainsCleveland.com/2012review.


BEST OF THE BLOGSExcerpts from recent blog entries onCrainsCleveland.com.

This business is going up■ The pace of skyscraper construction issoaring, Bloomberg reported, and a Cleve-land company noted that this trend meansgood things for the elevator industry.

Bloomberg reported that as many as 24skyscrapers approaching 1,000 feet may becompleted in 2013, compared with nine in2012, according to the Council on TallBuildings and Urban Habitat.

The recovery in skyscraper demand isgood news for companies that make elevators. Bloomberg said Cleveland-based researcher Freedonia Group estimates theglobal elevator market will grow 6.4% annu-ally to $90 billion for five years ending in2015.

A winning formula■ Why can’t more U.S. companiesemulate Euclid-based Lincoln Elec-tric Co.?

That’s the question posed in aMotley Fool piece that notes themaker of welding products on Dec.14 announced the 2012 bonus for itsroughly 3,000 American employees— something it has done for 79straight years. The average 2012bonus was $33,915 per worker, theaverage employee earned $82,300(including the bonus), and no one atLincoln was laid off in 2012, The Foolsaid.

Since February 2010, Lincoln and its for-mer CEO, John Stropki, have been profiledby The Wall Street Journal, NPR, HarvardBusiness Review and many others.

Despite that exposure, The Fool said, “noone at (Mr. Stropki’s) elite level of Americanbusiness — or lower, for that matter — has

asked him a single question about LincolnElectric’s phenomenal track record.”

“Why haven’t CEOs besieged Stropki byphone or dropped by his Cleveland office?,”The Fool asked. “His matter-of-fact answeris that running a company with a no-layoffpolicy is hard and big firms would have ahard time changing their operating stripes.”

The piece concluded that CorporateAmerica “is suffering from a near-criminallack of imagination. Lincoln Electric pre-sents convincing and reassuring evidencethat it is possible to run a very profitable,very large multinational business in NorthAmerica by respecting your customers, employees, investors, and society at large.All of them.”

Hot in Cleveland■ Enjoying the increasingly freaky weatherbrought on by global climate change? Get

used to it, because more is on the way,and Cleveland will be among the U.S.cities most affected by the changes.

So wrote TheAtlanticCities.com in apiece based on data from a recentstudy by researchers at the Universityof Tennessee, published in the journalEnvironmental Research Letters. Thestudy “used a high-resolution climatemodeling system to project bad newsdown to an impressively local level, examining what we might see in the 20largest cities east of the Mississippicome the late 2050s,” according to thewebsite.

The researchers calculated that heatwaves in New York City could be 3.58

degrees Celsius hotter in intensity than they are now, with the average one lastingnearly two days longer. Cleveland “has it theworst, with a heat wave temperature in-crease of 3.71 degrees Celsius,” TheAtlanticCities.com noted, followed by Philadelphia(3.69).

Mapes

Barnes


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