Crain's Cleveland Business

$1.50/JANUARY 18 - 24, 2010

Manufacturers still skepticalNationwide, industry conditions favorable forimprovement, but struggle remains for localsBy DAN [email protected]

For the United States, variouseconomic indicators point to a rebounding industrial sector inwhich factory orders are on the riseand companies are becoming moreoptimistic about their futures. Buthere on the ground in NortheastOhio, there is no such consensus.

“There are a lot of positives for manufacturing. I can see at a national level the industrial produc-tion indicators turning positive,”said economist Ken Mayland, pres-ident of ClearView Economics inPepper Pike. “What I cannot say isthat I’ve got an indication here inNortheast Ohio that (the rebound)is being felt. I just don’t have thatanecdotal information.”

Dr. Mayland is a favorite of manylocal manufacturers who pay for hisprognostications. He relies on themfor anecdotal evidence of what ishappening at a micro level and below the radar of national indicators.

He spoke to Crain’s just days afterthe U.S. Department of Commercereported factory orders were upmore than 1% in November, andthe Institute for Supply Manage-ment reported a fifth straightmonth of improvement in the manufacturing sector’s sentimentsand prospects for growth. Both reports came out in early January.

Those numbers support Dr. Mayland’s belief that the conditionsare in place for manufacturing toimprove, even though that’s not yet what he’s hearing from manu-facturers.

Many local manufacturers saythey are seeing continued slow salesthat leave them questioningwhether the national numbers aretelling a true tale of what’s happeningin their sector.

“Listening to the economist I subscribe to, I (should) expect an increase in business this year over last.

SENDING A MESSAGEPrivate equityfirms anticipate amodest recoveryLocal agencies expect higher demand for their

mobile marketing services as device use proliferates

By KATHY AMES [email protected]

lease excuse Jason Therrien ifhe’s itching for 2010 to movealong.

As Blackberries, iPhones andother mobile devices become more ubiqui-tous, local marketing and advertising shopssuch as Mr. Therrien’s thunder::tech expectclients to tap increasingly into their mobilemarketing services.

“Mobile marketing will continue on a good growth base, but will really pop for usby mid-year,” said Mr. Therrien, president ofthe Cleveland-based marketing firm.

From smart phone apps to text messages,mobile is emerging quickly as a channelthrough which marketers can relay moretargeted messages to a growing user base.

INSIDEKent has big plans

Both the city and Kent State University plan to transform intomore attractive and user-friendlyplaces through renovation and redevelopment. Read ShannonMortland’s story on Page 3.

See OUTLOOK Page 7

See MOBILE Page 28

P

Vol. 31, No. 3

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Tight credit still affects deal flow

By ARIELLE [email protected]

Marginally better still isn’t good, but it is an improve-ment over what private equity firms saw in 2009, a yearwhen deal flow was tight and financing was sometimesimpossible to line up.

In 2010, Northeast Ohio’s private equity firms don’texpect a quick turnaround. However, they do see signsthat their businesses are moving in the right direction, allowing them opportunities to make investments or divest of their holdings.

David Given, managing partner of Blue Point CapitalPartners, said he already is seeing more activity than in2009, which he described as “an abysmal year.”

“I don’t think it’s substantially better,” he said. But, he added, “In general, you get the feeling things havebottomed out.”

The anticipation that the bottom has been reached fuels optimism, Mr. Given said, and pushes people to believe that they will get better value for their companies— either buying or selling — than they would have whenthe economy was still on its way down.

“Credit in our mind is still very tight, but it’s available,”said John Mueller, CEO of CapitalWorks LLC. “It’s stillgoing to be a difficult year to get things done. Good companies without a compelling reason to make a trans-action will stay off the market.”

Mr. Mueller and others said tight credit means privateequity firms aren’t able to borrow as much money for their deals, and instead must put more of their ownequity into the mix. For Blue Point, that means somedeals don’t get done because the firm can’t pencil out anacceptable return, Mr. Given said.

See FIRMS Page 28

20100118-NEWS--1-NAT-CCI-CL_-- 1/15/2010 4:53 PM Page 1

It’s still awfully rough out there, but the U.S. Bureau of Labor Statistics assures usthe job market eventually will grow, and when it does, two broad categories —professional and business services, and health care and social assistance — willsee the bulk of the activity.

22 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM JANUARY 18-24, 2010

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CORRECTION

CRAIN’S FAMILY BUSINESSCrain’s is introducing a new

recognition section in 2010.Family Business, slated for our

April 5 issue, will profile three familybusinesses in eachof three categories— second-genera-tion businesses,third-generationbusinesses andbusinesses in families for four generations ormore.

We’re looking forwell-run, financially stable businessesthat are regarded as good employ-ers and have earned the respect oftheir peers. Factors such as growthand a company’s involvement in its

community also will be considered.The deadline for nominations is

today, Jan. 18. An online nominationform can be found on our web site,

CrainsCleveland.com/familybiz.You also maysend an e-mailnomination to editor Mark Dodosh thatshould include thecompany’s name,how many genera-tions it has been

in business, and an explanation of nomore than a single page as to why itshould be recognized. E-mails [email protected] should say“Family Business” in the subject line.

THE EMPLOYMENT CRYSTAL BALL

Industry 2008-2018 change

Professional and business services 4,189,900

Health care and social assistance 3,996,900

State and local government 1,591,500

Construction 1,337,100

Manufacturing -1,206,000

Employment projections for major industries, 2008-2018

In a Jan. 11 Letter to the Editor,Kevin Jacques is the Baldwin-Wallace College finance professor

referred to by the letter writer. Dr.Jacques is the Boynton D. Murchchair in finance at B-W.


By JAY [email protected]

Amid the bleak economic newsof the last 18 months, Team NEOhas found at least a couple thingsit believes the region can puff itschest over.

The business attraction non-profit in its year-end quarterly report examines how the NortheastOhio economy has changed since

the severe recession of the 1980s.Among what might be consideredits more surprising findings:

■ Despite legitimate frustrationthat the regional economy isn’tgrowing, Team NEO points outthat since that earlier, harsh reces-sion, the economy has grown 65%in real dollars, despite the lack ofpopulation growth in the region.

■ Also in this recession, the report argues, the Northeast Ohio

economy is not as far off the paceof the national economy as it wasduring the earlier downturn. Thatdifference, Team NEO says, is a result of a diversification of the local economy away from manu-facturing and an improvement inthe education level of the regional

work force.The flip side of those arguments,

though, is that the region’s economystill lags the nation’s as a whole.

“We’re performing more simi-larly to the U.S. than in 1981,” saidTeam NEO president Tom Walter-mire. People with higher educa-tion levels, he said, “are makingNortheast Ohio closer to the U.S.in work force.”

Team NEO publishes this infor-

mation in a quarterly economic review that is the only source ofconsolidated economic informationon the 16-county region the organi-zation serves. Its region stretchesas far west and south as Lorain andRichland counties and east toAshtabula and Columbiana counties.

Team NEO sends this economicreview to site selectors, who repre-sent businesses looking for new

INSIDE: Team NEO data on the region’s shift away from manufacturing. Page 4

JANUARY 18-24, 2010 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

INSIGHT

THE WEEK IN QUOTES“Everybody let theirinventories go lowerthan they would ordi-narily. ... But now theyneed to replenish andenough are doing it atthe same time.”— Charlie Kerr, owner, Kerr-Lakeside. Page One

IT outfit Rosettazeroes in on oldNat City buildingFirm eschews others for Euclid Avenue locationBy STAN [email protected]

Rosetta, an information technologycompany in the midst of a much-watched search for a downtownCleveland office to replace threesuburban offices, is pursuing threefloors of empty office space in thebuilding housing the Holiday InnExpress Hotel & Suites, 629 Euclid Ave.

Three sources familiar with thesituation said the New Jersey-basedcompany that acquired the former

Brulant Inc., which had Beachwoodoffices Rosetta inherited, has nar-rowed its search to the buildingknown as the old National City BankBuilding. The sources said Rosettais pursuing an incentives packagefrom the city of Cleveland beforeinking a deal with MRN Inc., bestknown as the developer of the EastFourth Street entertainment andresidential district.

“(Rosetta executives) love EastFourth and what MRN has done

STAN

BULL

ARD

See ROSETTA Page 10

See OPTIMISM Page 4

In Team NEO report, reasons for optimism: more educated, diverse work force

“It’s a conversation wehave almost dailywith clients. Abouthalf ... are talking mobile, and the otherhalf, we’re trying toenlighten.”— Jason Therrien, president,thunder::tech. Page One

“This GI Bill is betterthan any GI bill sinceWorld War II.”— Joshua Rider, assistant director, Kent State University’sCenter for Adult and Veteran Services. Page 11

“There are no solutionsto health reform thatdon’t include a sub-stantial public healthpresence.”— Dr. Scott Frank, program director, Case Western ReserveUniversity’s Division of PublicHealth. Page 13

HEART OF THE CITY

‘TRANSFORMATIONAL MAKEOVER’ IN KENT

RENDERING PROVIDED

Fairmount Properties plans to spend $40 million to redevelop downtown Kent in an effort that includes 162,000square feet of retail, office and residential space. Meanwhile, Kent State University is planning a renovationinitiative estimated to cost $200 million to $250 million.

Kent State planning major campuswide upgrade, while other stakeholders focus on downtown revitalization efforts

By SHANNON [email protected]

It will take five yearsand $300 million ormore, but Kent StateUniversity and the city

of Kent plan to transformthemselves into more attrac-tive and user-friendly places.

The public university soon willsell up to $200 million in bonds tofund a campus construction andrenovation program that is projectedto cost $200 million to $250 million,said Lester Lefton, Kent State’spresident. It also plans to raisemoney through private donationsto help fund the projects, he said.

At the same time, numerousstakeholders plan to invest about$100 million to redevelop and enliventhe city of Kent’s downtown area.

“This is transformational, a really

extraordinary makeover ofthe city,” Dr. Lefton said.

Included in the city’s redevelopment plans arenew retail, office and resi-dential space, a new hoteland conference center, anda transportation hub thatwould include a bus depot,parking garage and a tie-in

to a bicycle path to the Ohio ErieCanal towpath trails. A new, $15million Portage County courthousealso is under consideration, but ithas not yet been decided if it wouldbe built in Kent.

Kent State is narrowing its longwish list of construction projects,which include new buildings for itsart and architecture programs, updated labs, the relocation of administrative services from manybuildings in the central part of the

MEANWHILE, ON CAMPUS ...

While a developer has eyes for adowntown Kent upgrade, KentState University also is planning amajor construction and renovationprogram.

Highlights of the $200 million to $250 million plan:

■ new buildings for art and architectureprograms;

■ replacing a long corridor of concretewith grass and trees for the campus;

■ updated labs;

■ moving administrative services outof the center of campus; and

■ renovating old and outdated buildingsby making them handicap-accessibleand replacing drafty, single-pane windows

See KENT 0

Lefton


“(The regional economy is) not as good as anyonewould like, but it’s better than what many people think.” – Tom Waltermire, president, Team NEO

office and factory sites. It’s designedto overcome the negative stereo-types associated with the Rust Belt.

In a briefing with Crain’s editorialstaff last Tuesday, Mr. Waltermireand Team NEO staff members laid out their case that the regionaleconomy is doing better than con-ventional thinking would suggestand that the economy here is moreclosely matching the national economy.

Team NEO research manager Jacob Duritsky said that while manypeople believe the region has stag-nated, information on the regionaleconomy provided to Team NEO byMoody’s economy.com, a leadingeconomic consulting firm based inWest Chester, Pa., indicates otherwise.

It beats going backwardThe economy.com data show that

between the middle of 1981 and theend of 2007, the regional economy


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Volume 31, Number 3 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for com-bined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July,the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland,OH 44113-1230. Copyright © 2010 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio,and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’sCleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. (888)909-9111.

REPRINT INFORMATION: 800-290-5460 Ext. 136

A SHIFT AWAY FROM MANUFACTURINGAccording to Team NEO data based on employment figures in a number of categories, Northeast Ohio’s economy hasdramatically shifted away from manufacturing since 1980.

Employment as percent of NEO economy: 1980 vs. 2007

0% 5% 10% 15% 20% 25% 30% 35% 40%

1980 2007

Health care and social assistance

Management of companies and enterprises

Professional, scientific and technical services

Finance, insurance and real estate

Trade

Manufacturing

All other

continued from PAGE 3

Optimism: Comparison to ’80s may be imprecise

expanded 65% in inflation-adjusteddollars, to $165 billion from $100billion, an average growth rate of2.5% a year.

“It’s not as good as anyone wouldlike, but it’s better than what manypeople think,” Mr. Waltermire said.

The centerpiece of the quarterlyeconomic review, however, is thecomparison of how the region is faring during the current recessionversus the 1981-1982 recession.

According to the report, sevenquarters into the 1980s recession,the number of people working nationwide was off 2.5% from thestart of the recession, while the decline in Northeast Ohio was 8.5%,a major difference of six percentagepoints. This time around, however,the report indicates that the gap between national and NortheastOhio employment levels has shrunksignificantly.

The data indicate the number ofpeople working nationwide wasdown 4.2% in the second quarter of2009 from the start of the current recession; that compared with a decline in Northeast Ohio of 5.8%over the same period, for a gap of1.6 percentage points.

Likewise, the production gap between the regional and nationaleconomies, as measured by comparing Gross Domestic Productwith the comparable Gross RegionProduct for Northeast Ohio, declined from seven percentagepoints seven quarters into the earlierrecession to 3.5 percentage pointsat the same point in the currentdownturn.

Team NEO attributes the closing ofthose gaps to a diversification of theregional economy away from old-linemanufacturing and to a work forcethat is becoming better educated.

The report shows that manufactur-ing employment, which had beennearly 30% of total regional employment in 1981, now accountsfor only about 12% of the region’swork force. At the same time, employ-ment has grown in other sectors, notably what Team NEO’s report callshealth care and social assistance.

Misery gets companyWhile this economic data give

Team NEO selling points when it triesto woo businesses to the region, other economic data suggests theregion is still struggling.

The December 2009 MetroMonitor,a report from the Metropolitan Policy Program of the Brookings Institution, groups the performanceof the economies of the three metropolitan areas in the TeamNEO 16-county footprint — Akron,Cleveland and Youngstown — inthe bottom half of its assessment of100 regional economies. Brookingsis a Washington, D.C., think tank.

And economists don’t universallyembrace all the comparisons betweenthe 1980s recession and the currentone.

Mark Schweitzer, a senior vicepresident and director of researchat the Federal Reserve Bank ofCleveland, agrees that the North-east Ohio economy gradually hascome to more closely mirror the national economy. But he believesan important reason the region hasclosed the gap is that this timearound other areas have been hurtbadly by a decline in the housing sector, a part of the economy thathas not grown significantly here.

William Polley, an associate professor of economics at WesternIllinois University, first comparedthe similarity of the job loss patternin the two recessions in his blog ayear ago. But he qualified that assessment in an e-mail to Crain’slast Thursday.

“In terms of job losses, I wouldsay that the current recession ismore similar to the early ’80s than itis to many other past recessions,” hewrote. “But I readily admit that is alittle like saying that an orange ismore similar to a grapefruit than it isto a pineapple. It’s true in some impor-tant ways, but not terribly precise.”

Mr. Polley notes the 1980s reces-sion was focused on manufacturingwhile the current dip affects “not onlymanufacturing, but finance, real estate, services and other sectors.” ■


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Solon military supplier seeks expansionHDT eyes corporateoffice near home, buthas option near D.C.

is negotiating several points with theprospective landlord, Chelm Proper-ties of Solon. He said the companywould not pursue the back-officeconsolidation if it is not satisfiedwith the outcome of its talks or if itdoes not receive incentives such ascorporate income tax credits fromthe state of Ohio.

“We’ve been in Solon a long time,”he said. “We want to help NortheastOhio and be here if at all possible.”

Vince Nardy, the longtime CEO ofHDT and its predecessor companyHunter, already is based in Solon. Atthe same time, Mr. Childress said,HDT has more employees in income-tax-free Virginia than here and couldpursue a back-office operation in theFredericksburg area. Such a location,he noted, would be closer to Wash-ington, D.C., an important consider-ation for a defense contractor.

The local incentive for the consol-idation here already is in place. Thecity of Solon has approved a 10-year,

job-creation grant that would offset40% of the city income taxes paid byadditional employees hired by thecompany with payments to HDT thefollowing year.

The measure would save HDT anestimated $320,000 over 10 years.The city would gain an additional$480,000 in tax revenue over thattime, said Peggy Dorfman, Soloneconomic development coordinator.

“It’s a great project for the city,”Mrs. Dorfman said. “We’re happy tosee a longtime Solon company expand like that, and hopefully do ithere. But it’s not a done deal yet.” AnOhio Department of Developmentspokesman said it could provide noinformation on HDT’s request.

As far as the landlord’s side goes,Joseph Greenberg, Chelm’s broker,issued an indirect no-comment: “AllI’ll say is have a Happy New Year anda great 2010.”

HDT Engineered, owned by private equity firm Metalmark CapitalPartners of New York City, became thenew name of Hunter Defense Technologies Group last summer as it realigned companies operating underthe Hunter name in a single brand.

“Once you rebrand the company,”Mr. Childress said, “it makes sense tomake changes from an operationsstandpoint.”

Mr. Childress said about 20 jobswould be moved from the currentHunter office across the street to thenew office and are not included in theestimated 70 jobs the company agreedto create to satisfy the city agreement.The 70 additional jobs, Mr. Childresssaid, will come from a mix of transfersand new hires. The company alsoplans to maintain its current workforce of 160 in Solon. ■

By STAN [email protected]

Seeking economies of scale after astring of defense industry acquisi-tions with another pending, HDTEngineered Technologies plans tocentralize corporate back-officework in a move that may add asmany as 70 jobs near its longtimeSolon home.

“We’re looking to expand in someoffice space to establish a corporatehome office,” said Doug Childress,HDT executive vice president andchief financial officer.

“It’s a typical roll-up situation,” hesaid. “We’ve made a number of acquisitions over the last five years. Wewant to have human resources, ac-counting, information technologiesand other functions in one officerather than five. There is (also) no rea-son to have full infrastructure at eachof the plants.”

The company’s military-orientedproducts range from developing robotic technology for prostheticlimbs to producing air filtration systems, power generators and mov-able enclosures for barracks and othermilitary needs.

Mr. Childress said HDT has agreedto lease 17,000 square feet at SolonBusiness Park, an office/warehousecomplex across the street from itsoriginal Hunter Manufacturing Co.plant at 30525 Aurora Road.

However, even with an agreementin place, Mr. Childress said HDT still

Japanese firm buys Timken arm, bets on autosBy DAN [email protected]

Someone believes in makinglong-term investments in the U.S.domestic auto market — and thatsomeone is Japanese.

The Japanese manufacturerJTEKT Corp. has bought TimkenCo.’s needle roller bearing divisionin Canton for $330 million andmade it part of its Westlake-basedsubsidiary, Koyo Corp. of USA. Thedeal, announced last summer, wascompleted Dec. 31.

The move is aimed directly atgaining a bigger piece of the U.S.and European auto markets, saidKen Hopkins, president of the unit,now known as Koyo Bearings USA.Mr. Hopkins, who ran the unit forTimken and is transferring with thesale, said 75% of the new company’srevenues come from the automo-tive market, where it primarily sellseither directly to automakers or totheir Tier 1 suppliers.

As Timken is getting out of auto,JTEKT is getting further in, bothcompanies said — but for differentreasons.

Timken is seeking to diversify itsbusiness so that it will rely less onautomotive and more on industrialmarkets such as wind turbines andaerospace, where its business unitsearn a greater return, said Timkenchief financial officer Glenn Eisenberg.

JTEKT, meanwhile, is seeking adominant position among theworld’s auto suppliers, including inNorth America, where it believesthe market will make a long and

strong comeback after two years oflow production and dismal sales.

“It’s going to come back,” Mr.Hopkins said. “We’re predicting afairly robust return from the troughin 2009. We predict about a 10%compound (annual) growth ratebetween now and 2015 in NorthAmerica.”

As a unit of Timken, the needlebearings division lost $30.8 millionin the third quarter of 2009, accordingto Timken’s most recent financialfilings. The last time the unit was“marginally profitable” for Timkenwas 2007, before the U.S. auto marketfully crashed, Mr. Eisenberg said.

Singing a brighter tuneMuch of Northeast Ohio would be

happy to see the auto market comeback the way JTEKT predicts, andother auto-related manufacturerssay they believe and are planningaround similar projections.

“We think that’s very reasonable;absolutely, I couldn’t agree more”with the 10% annual growth projec-tion, said Kevin Cleary, president ofCleveland-based Soundwich, a company that sells heat- and sound-shielding materials and parts to automakers.

Mr. Cleary said a 10% growth rateis in line with forecasts he’s using toplan the company’s future.

Economist Ken Mayland, presidentof ClearView Economics in PepperPike, said the entire region standsto benefit as auto productionclimbs in the United States.

Domestic car makers are cur-rently producing vehicles at a pace

of about 11.2 million vehicles ayear, he said. That’s far less than thenearly 17 million vehicles that weresold in the United States at the industry’s peak in 2005, but substan-tially more than the approximately10.4 million vehicles sold last year.

A pickup in production “shouldbe important for Northeast Ohio,”Dr. Mayland said.

The whole enchiladaJTEKT wants a bigger slice of

what it expects to be a growing pie,and its acquisition of Timken’s needle bearing division gives it instant access to the North Americanand European auto markets that itdid not have before, said its presi-dent, Mr. Hopkins.

“They come in and get the wholedeal, lock, stock and barrel — thecustomer relationships, the inven-tory, the patents and the peoplethat make it happen,” he said.

To that end, Mr. Hopkins said thecompany has no plans to lay off orconsolidate any of its approximately3,400 new employees. That includesits 75 mostly white-collar employeesat the Canton headquarters, morethan 100 at a technical center inSouth Carolina and about 3,200employees spread across five plantsin the United States, one in Canada,one in China and five in Europe.

Life will be little different for Mr.Hopkins, as he’ll be working withand managing the same people hedid before the transaction.

“My biggest difference is I’ll bemaking a visit to Asia once a quarter,”he said. ■


“Business started picking up late secondquarter 2009. The uptick is from new customers, existing customers and ...from our special tool transfer program.”– Matt Hlavin, CEO, Thogus Products

(But) I do not expect a return to a normal growth pattern, as in returningto 2008 levels,” said Morgan McIntosh,CEO of AMFM Inc., a small manufac-turer in Willoughby that supplies metal hose makers.

“I am planning for a year that isbusier than 2009, but not by a great deal,” Mr. McIntosh said. “Mycustomers and those I speak to in myindustry seem no more sure than I. Infact, some are more skeptical that I am.”

Roger Sustar, owner and presidentof contract machining shop FredonCorp. in Mentor, might be countedamong those skeptics.

“Our sales for the last six monthsare down 22%, and orders are down30%,”Mr. Sustar said. “I still have notseen any rebound.”

Mr. Sustar generally has reportedfaring better than most throughoutmost of the recession. His business is largely geared toward defense contracts and medical devices — sectors that held up better throughout2009 than did automotive or consumer appliances. But even he andothers selling into what are oftenthought of as “recession-proof” mar-kets say they’ve been feeling the pinch.

“I’ve not seen any significant pickup,and we do aerospace and high-endcommercial work,” said BrendanSlabe, owner of Slabe Machine Prod-ucts in Willoughby, another contractmachining company.

Double dip fearedIndeed, some manufacturers are


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Outlook: Manufacturers still running conservativelycontinued from PAGE 1 NEW ORDERS

Month Value % change

November $365.3B 1.1%

October 361.4 0.8

September 358.4 1.6

August 352.8 -0.8

July 355.7 1.4

June 350.9 n/a

The U.S. Department of Commerce reports that new orders for manufacturershave increased in the last three monthsfor which data are available.

running well below 10 million vehicles per year before receiving a boost last summer from the government’s Cash for Clunkers program.

Inventories still are at extremelylow levels at retailers, distributorsand throughout the productionchain.

Those low inventories are boundto give the economy some bounce,while probably stressing manufac-turers’ supply chains at the sametime, Dr. Mayland said.

“No one’s taking any speculativeposition” by restocking their inven-tories, Dr. Mayland said. “They’rejust living hand to mouth. All thatmeans is that the rubber band isstretched even further, which meansit’s just going to snap back fasterwhen it does. … At some point,someone has to put in an order andsomething new has to be manufac-tured.”

Signs of hopeTo be sure, there are businesses

that are reporting increasing sales.Those increases sometimes are dueto inventories being restocked or rising demand, and sometimes

because they are taking businessaway from failed competitors.

“We see some upward movement,but we have a long way to go beforeI will say we are getting busy,” saidCharlie Kerr, owner of Kerr-Lake-side, which makes precision socketscrews in Cleveland for various industries.

“I think part of what is happeningis everybody let their inventories golower than they would ordinarily,which prolonged the sluggishness,”Mr. Kerr said. “But now they need toreplenish and enough are doing it atthe same time to cause the index tomove up.”

In Avon Lake, plastic molderThogus Products spent a good portion of 2009 taking in new moldsto make plastic parts for new customers. In the plastic molding industry, customers often own theirown molds, or tooling, which theythen lend to their suppliers of plasticparts to use.

In 2009, a lot of automakers andother big customers took their tooling away from struggling suppliersthey feared might fail. They trans-ferred that tooling to other, morestable companies, such as Thogus,allowing them to gain market sharein the down economy.

“Business started picking up latesecond quarter 2009,” said ThogusCEO Matt Hlavin.

The 60-year-old private companydoes not disclose its revenues, butMr. Hlavin said the fourth quarter“was Thogus’ best in history,” with

sales up 16% from a year ago.“The uptick is from new customers,

existing customers and specificallyfrom our special tool transfer program,”Mr. Hlavin said, referring to his efforts to get more molds transferredto his shop for production.

No doubt, most local manufacturersare not expecting to see record revenues in 2010. But, going forward,more should see their businessesimprove. It might take some time toconvince all the skeptics, but there isan actual recovery afoot and busi-ness will improve generally, promisesDr. Mayland.

“Nobody’s talking about it yet, butI’ve got to believe it will,” Dr. May-land said. “The question becomes, isit a real recovery or a flash in thepan?” he asked, adding, “It’s a realrecovery.” ■

reporting that rather than pickingup, business appears to be slowingagain. Mr. McIntosh, for one, said his business was improving in 2009until the end of the year.

“That uptick lasted into andpeaked in October and continuedinto November,” Mr. McIntosh said. “December was a slowermonth again for us. It is a little earlyto tell for January, (but) the first weekof the year has been off to a slowstart.”

Such reports raise the specter ofan economic recovery with no staying power — the dreaded “double-dip” recession. Dr. Maylandsaid, however, he’s not yet worriedabout a double dip, because thereare too many factors pushing theeconomy to grow.

For one, automotive sales have rebounded from their low levels of2009. Light vehicles were selling at apace of 11.2 million units per year inDecember, Dr. Mayland noted,which is up from a rate of 10.9 million vehicles per year in Novemberand above the 10.9 million vehiclessold in all of 2009. It’s an even betterimprovement, considering the paceof sales for much of 2009 was


By KEITH ASHMUS

Amajor component of the Senateversion of health insurance reform is an excise tax of 40% on“Cadillac” health care plans,

defined as plans that cost more than acertain amount. (The Senate’s decisionto use the term as shorthand for “waste-fully extravagant” is perhaps not the bestbrand management for the new owner ofGeneral Motors.) This tax has come under increasing fire for good reasons,although it started out as a sensible wayto level the playing field and avoid marketdistortions.

Our tax system exempts employer-provided health insurance from both income tax and payroll tax. This encour-ages substitution of tax-exempt health

insurance for taxable wages. In addition,the exclusion from taxation only for employer-provided health insurancemeans that the self-employed and thosewho buy coverage in the individual marketdo not share the exclusion.

Several years ago, Congress partiallyaddressed this disparity by giving an income tax deduction, but did not correctthe discrimination in payroll tax treat-ment. Accordingly, in the early stages ofthe health reform debate, several groups,including the National Small BusinessAssociation, urged that the tax treatmentbe made consistent, and that the exclu-

sion be limited to the cost of a basic benefit plan. Thus, there would be an exclusion for everyone, but it would notbe unlimited. Purchasing more insurancewould entail more tax, so that insurancewould be treated the same as wages andother benefits. People could then makerational choices on a tax-neutral basisamong health insurance and wages.

Some congressional analysts embracedthis concept. When resistance developed— chiefly from unions concerned abouttaxes for their members on their richbenefit plans, which have often requireddiversion of wages to those plans — theidea of taxing expensive plans survived,but the concept of making the tax directand transparent did not.

The tax was turned on its head. It

Mr. Ashmus is a founding partner of FrantzWard LLP. He serves as the 2009-2010chairman of the National Small Business Association.

These first weeks of the new yearhave signaled the start of thetransition of the governance ofOhio’s most important county,

as two men have announced their campaigns for the new post of county executive.

Their approach will be wildly different.And they likely will have morecompany soon.

In one corner, we have EdFitzGerald, a youngish one-term mayor and former citycouncil member in Lakewoodwhose political ambitions seemto run in disparate directions.Still in just his first term as mayor,the former FBI agent opposed Issue 6, the sweeping governmentreform measure that created thepowerful, $175,000 job that he now covets.

It seems that Mayor FitzGerald, a loyalDemocrat, stood with many of the otherofficeholders who felt threatened by theprospect of doing away with severalcounty elected positions and replacingthem with an elected council and electedcounty executive. He opposed Issue 6, a

measure that passed in a landslide, winning in every corner of the county.

Before the passage of Issue 6, MayorFitzGerald wanted to run for county auditor, an office that is among those tobe eliminated but for now is occupied byFrank Russo, a central figure in the ongoingpublic corruption probe here. Well, that

job’s gone, so it’s on to an election for what has been described as arguably the second-most powerful elected positionin the state.

Others, including Republicanstate Rep. Matt Dolan, report-edly are planning a campaignas well. However, last week’sannouncement by businessmanKen Lanci must have gotten theattention of all the potential

candidates for county executive.You see, Mr. Lanci, if elected, says he’ll

do the job for $1 a year. That’s right —one, single, solitary dollar.

And he vowed to take no campaigncontribution of more than $250.

And if elected, Mr. Lanci promisedthat he would accept no campaign con-

tributions from any county employee.And he’s running as an independent.Obviously, Mr. Lanci knows those

themes are sure to strike a chord with thefolks in this county who are sick of hearingabout county officeholders who haveused their offices as hiring halls, shakingdown their employees for campaigncontributions while loading up govern-ment with unqualified employees.

Mr. Lanci’s political experience hasbeen as a Northfield village councilmember in the 1970s, so his opponentsdoubtless will hammer away at his lackof political experience. Just as certain,Mr. Lanci will counter with a proven 40-year career starting and growingbusinesses.

If published reports are accurate thatMr. Dolan, a respected member while inthe General Assembly, has moved intothe county, this is already shaping up asa fascinating race. And you can bet thatwith this kind of power at stake, otherswill be joining the fray.

Cuyahoga County will indeed be a fardifferent place in 2011. And for politicaljunkies, an exciting place to be in 2010. ■


Tax caseN

othing is certain in life except death andtaxes, or so the old saying goes. However,there is a way to lighten some of your inevitable tax load, and that’s by moving

to a place where taxes aren’t as high. The people of suburban Brooklyn apparently

didn’t consider the latter possibility when they voted last spring to raise the city’s income tax to2.5% from 2%. Now, they face the potential loss ofAmerican Greetings Corp., the city’s largest employer,which cited the increased income tax burden on itsemployees as a key reason for kicking off a searchfor a new corporate headquarters site.

Only officials at American Greetings know forsure just how much the tax issue played in theirdecision to look around for a new place to locate thecompany’s 2,000 or so headquarters workers. Withthe real estate market as battered as it is, landlordssalivate for big tenants such as American Greetingsand would be willing to offer sweet deals to ink thegreeting card giant. Brooklyn’s mayor, RichardBalbier, also says the company has a substantialamount of unused space at its current, 1 million-square-foot building, an indication that it may wantto downsize through a move.

However, we have reason to believe AmericanGreetings spokeswoman Patricia Sadd when shesays the tax hike brought the headquarters issue to ahead. In an economy where raises aren’t easy tocome by, paying higher income taxes effectivelymeans a pay cut for workers. And that makes forunhappy employees.

The practice of people and companies voting withtheir feet to escape high taxes isn’t new. CuyahogaCounty has seen an outflow of both for years as taxpayers head to adjacent counties where propertyand sales taxes are significantly lower.

Like many government bodies, the city of Brooklynsaw its budget tightening and decided to addressthe problem by proposing a tax increase to raisemore revenue. As an unintended consequence, itmay lose a huge chunk of money should its No. 1employer head for the exits. It’s a tradeoff that othergovernment leaders should be mindful of as theyconsider how to deal with their own budget issues.

Lights out

Our town got a black eye from the blackoutthat idled Cleveland Hopkins InternationalAirport for several hours early last week.However, it’s hard to fault the city of

Cleveland, which owns the airport, or the airlinesthat support it for their decisions not to invest themillions that would be required to keep the wholeairport humming when the power goes down.

As airport consultant Roy Williams observed lastweek, it’s a tough call to spend tons of money for abackup power system that might be needed onlyonce in a decade, if then. That decision becomeseven harder in tough times such as these.

While we sympathize with the inconveniencedtravelers, we also see the flip side.

FROM THE PUBLISHER

PERSONAL VIEW

BRIANTUCKER

County exec race offers excitement

Tax on ‘Cadillac’ health plans misguided

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

EDITOR:Mark Dodosh ([email protected])

MANAGING EDITOR:Scott Suttell ([email protected])

OPINION

See VIEW Page 9


became an excise tax, to be paid notby those who make the choices ofwhat plans to purchase, but by theinsurers. The discrimination againstthe self-employed and individualpolicy purchasers remained intact.What is left is just about the worstsituation imaginable, whether viewedfrom a revenue-raising, administra-tive burden or economic incentiveperspective.

Here are just some of the prob-lems with this tax. First, it is not atax determined just on the healthinsurance policy. It is calculated uponthe total value of all the health-related programs. This includes thebasic health insurance plan, and alsoany vision plan, dental plan, flexiblespending account, heath reim-bursement account, health savingsaccount, and supplemental coverage,such as for special services.

National Small Business Associa-tion surveys indicate that even smallemployers have between four andseven plans that would have to beincluded in the calculation. Neitherthe insurers, the employer nor theemployees will know for certain iftheir portion of the plan will be subject to the tax until they hearwhether the total cost of all the ben-efits exceeds the cap.

Second, administration is a hugeburden. Who is supposed to figureout the tax? The employer.

Already struggling with regulatoryburdens, the employer will have tocalculate the amounts for each of its plans for each category of its employees, add them all up, and allocate the 40% tax among all theprograms in correct proportions. Ifany policy in the employer’s insur-ance plan renews in the middle ofthe year, multiple calculations willbe needed.

Third, the tax will continue to risedue to inflation, catching more andmore modest plans. The exemptionamounts for the tax are set to increase in the amount of base inflation plus 1%. However, insur-ance costs rise along with medicalinflation, which historically has beentwice as high as inflation generally.

This difference alone is estimatedby the Congressional Budget Officeto increase the tax by 10% to 15% a year from 2019 to 2029. In addition, there is no allowance forthe initial “shock” impact of thecurrent reform bills on premiumcosts.

Daniel V. Gardner, a lobbyist for the International Brotherhood of Electrical Workers, a supporter of the Senate reforms, recently assessed the impact of just three elements of the reform bills (elimi-

nation of annual and lifetime limitsand requiring longer coverage ofadult children). He said, “Together,these requirements will drive upcosts an additional $1,000 per mem-ber every year.”

Again, that is not a business lob-byist or insurance company makingextreme statements in an attemptto defeat the bill — he is a spokesmanfor a union that supports the bill.

Fourth, the excise tax will haveno helpful impact on consumer decisions because it is impossibleto know for sure at the time the purchasing decisions are madewhether there will be a tax assessedon that program or not. An insurerwho sells a modestly priced plan toone employer who has no other

health benefits might not face anyexcise tax, while if it sells the sameplan to a more generous employer,it will be taxed.

Once it prices a policy, it can’t goback and collect more from eitheremployer. It therefore has to assessan amount to every employer to cover the potential tax liability or riskhaving to “eat” the tax when reportstrickle in from its customers. Theemployers will not be able to avoidthese taxes being built into the costof every plan. This is yet anothersource of increased premium cost

associated with the Senate’s healthinsurance reform effort.

The news that the House andSenate are planning to skip the usualconference committee proceduresin an effort to avoid delays inherentin a more deliberative process maymake comments to legislators irrel-evant, but employers, especially smallemployers, owe it to themselves tomake their voices heard on this issue. The distortion of a good concept into the Cadillac plan excise tax is a lesson in legislationgone bad. At the very least, we mustmake sure that our legislators whovote for this tax as part of the finalbill cannot claim ignorance of itsdeficiencies. ■


WRITE TO USSend your letters to: Mark Dodosh, editor, Crain’s Cleveland Business,700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230e-mail: [email protected]

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THE BIG ISSUEDo you think the federal government should get involved in capping compensation for banks and Wall Streeters at bailed-out firms?

BEA WILFERTClevelandI disagree withcapping compensation atsuccessfulbanks. As far asthe bailed-outfirms, those people weren’tdoing their jobs.If the govern-ment caps compensation,they have to capit for everyoneand it’s not fair.

ADAM KLEINClevelandI believe the executive compensationpackages shouldbe withheld onthe bonuseswhile they stillowe money tothe government.… But theyshould be ableto collect bonuses on therevenue post-bailout repayment.

MARCIEPHILLIPSClevelandI personally believe in as littlegovernment involvement aspossible … butconsidering howinvolved they’vealready gotten,that might be agood plan of action.

DAVIDFANKHUSERChagrin FallsYes and no. Aslong as the banksowe the govern-ment, at least onthe higher rung,the executivesshould not be getting bonuses.… Bonusesshould be pro-rated to theamount of timethey were gettingfederal money.


View: Insurers forced to build possible costs into employers’ plansThe distortion of a good concept into the Cadillac plan excise tax is a lesson in legislation gone bad.


there,” one of the sources said, notingthe old National City Bank buildingis “vanilla, and they really want todress it up.”

Another source said Rosetta hasnot signed a lease but has suspendedother negotiations to focus on theold National City Bank Building.

However, Rosetta is keeping itsplans for its 400 employees in theregion to itself — for now.

Curt Holstein, who runs Rosetta’soperations here and carries the titleof “executive,” said the companyhopes to announce its plans forCleveland soon. He said the company is continuing to weighoptions. He declined to commenton whether the old National CityBank Building is of particular interest.

If Rosetta winds up at the building,it would occupy space that was noton the market when the companylaunched its site search more thana year ago. It since has reviewed,and passed on leasing, space at ThePlain Dealer building, 1801 SuperiorAve., and in the former AmeritrustCorp. headquarters complex, whichis owned by Cuyahoga County buthad been the centerpiece of a now-abandoned makeover plan bydeveloper K&D Group.

Rosetta is focused on about60,000 square feet formerly occu-pied by units of PNC Financial Services Group Inc. that recentlywere moved to offices the bankleases in the adjoining NationalCity-East Sixth Street Building andNational City Center. All threebuildings connect; together, theyformed the headquarters heart of the troubled National City Corp., which Pittsburgh-based PNC acquired at the end of 2008.

Terry Coyne, director of Grubb &Ellis Co.’s industrial unit and Rosetta’sbroker in its search, declined tocomment. PNC spokesman FredSolomon would not confirm the movesthat open up the space for Rosetta.

Ari Maron, spokesman for family-owned MRN, did not return three e-mails requesting comment.

The largest of Rosetta’s currentCleveland-area offices is 33,000square feet of the former Brulantspace at 37000 Park East Drive, theformer headquarters building ofdefunct trucking company Lease-way Corp. that now is owned by

ORG of Beachwood. Jonathan Berns,a principal of ORG, which convertedthe headquarters to a multitenantbuilding with Brulant as an anchor,said he does not know Rosetta’splans. Mr. Berns said ORG was unable to accommodate Rosetta’sexpansion needs.

However, the Park East Drivebuilding highlights one big hurdleto Rosetta moving downtown: Mr.Berns said Rosetta has a long-termlease in his building.

“We’d love for them to stay, andwould like to see them expanding inthe region so long as they honortheir obligations,” Mr. Berns said.However, he declined to specifyhow much rent Rosetta owes or theremaining term on its lease there.

Rosetta also occupies space atanother Beachwood office and inIndependence that it would consol-idate into one location with themove. The sources asked not to beidentified because they are familiarwith the deal but not authorized byRosetta or other principals in thetransaction to discuss it. ■

“We’d love for them to stay, and would like to see themexpanding in the region.” – Jonathan Berns, principal, real estate owner and developer ORG


GOING PLACESJOB CHANGES

ARCHITECTUREKACZMAR ARCHITECTS INC.:Christopher J. Kaczmar to president;Kevin A. Oliver to director of design. URS CORP.: Ashley Arvin to regionaldirector for energy/sustainability services.

EDUCATIONCLEVELAND METROPOLITANSCHOOL DISTRICT: Linda Neiheiserto manager, psychological services. NORTHEASTERN OHIO UNIVERSITIESCOLLEGES OF MEDICINE ANDPHARMACY: Cristine Boyd to directorof public relations and marketing.

FINANCECHARTER ONE: Richard Bertmanto mortgage loan officer.

FINANCIAL SERVICEBRUNER-COX LLP: Melissa A.Bentley to general services supervisor;Jennifer Grossman and Michelle L.Thompson to general services seniorassociates; Lisa M. Hilling to generalservices senior manager; Navneet K.Kaur to tax supervisor; Crystal Brincat to senior associate; NicoleM. Hemmert to tax associate. ZINNER & CO. FINANCIAL SERVICES:Courtney Ockenden and ColleenHall to accounting and tax servicesseniors; Christopher Valponi to auditsenior; Patty Garven to accountingand tax services manager.

HEALTH CAREAKRON CHILDREN’S HOSPITAL:Rebecca Dean to injury preventioneducator. CLEVELAND CLINIC CHILDREN’SHOSPITAL: Aletta Sinoff to director,Center for Autism.

HOSPITALITYINTERCONTINENTAL HOTELSCLEVELAND: Todd Thompson toassistant director of food and beverage. TABLE 45: Mary Margaret Grotheto restaurant manager.

INSURANCEDAWSON INSURANCE INC.: Kyp L. Ross to president; Mark N. Coleman to chief operating officer;David A. Voight Jr. to president,Sandusky division.

LEGALBAKER & HOSTETLER LLP: Guenther Karl Fanter, Eric R.Goodman and Lora M. Reece topartners; Adam L. Fletcher, GillianGray Lindsay, Chad W. Makuch,Conor T. McCarthy, S. Colin G.Petry and Sara L. Witt to associates. BONEZZI SWITZER MURPHY POLITO& HUPP CO. LPA: Steven J. Huppto managing director; Joseph T. Ostrowski and Donald J. Richardson

to shareholders. DAY KETTERER LTD.: Jude BeldenStreb to equity member. HAHN LOESER & PARKS LLP: RoccoI. Debitetto, Michael J. Gleasonand Amanda H. Wilcox to partners. JONES DAY: Tricia Eschbach-Hall,Joseph M. Sauer, Louis A. Chaitenand Dustin B. Rawlin to partners.MANSOUR, GAVIN, GERLACK &MANOS CO. LPA: Amy L. Kullik topartner and shareholder. TUCKER ELLIS & WEST LLP:Thomas W. Baker and Irene M.MacDougall to partners; Jeffry L.Weiler to counsel. ULMER & BERNE LLP: Thomas L.Anastos, Jason P. Conte, Jodi B.Rich and Jeffrey R. Schaefer topartners; Jeffrey S. Dunlap to management committee. WESTON HURD LLP: Matthew C.Miller and Melanie R. Shaerban toassociates.

MANUFACTURINGHORIZONS INC.: Bob Miller andMike Rish to co-presidents.

NONPROFITTHE GREATER CLEVELAND NEIGHBORHOOD CENTERS ASSOCIATION: JoAnn C. Hirsh todirector of business services and CFO.KENDAL AT OBERLIN: Christa Cervantes to director of nursing. NATIONAL ASSOCIATION OF COLLEGE STORES: Jeff Pavic tovice president, business development;Malcolm S. Karl to director of business development for associations/nonprofits.

REAL ESTATENAI DAUS: Westley Sabroff to associate. NORTHSTAR TITLE SERVICES LLC:Karin Topliff Williams to regional account manager. TRANSACTION REALTY: JasonRose to sales associate.

Send information for Going Places [email protected].

BakerBertmanArvin

SabroffWeilerMacDougall

Rosetta: Expansion at current site impossiblecontinued from PAGE 3


HIGHER EDUCATIONI N S I D E

JANUARY 18-24, 2010 CRAIN’S CLEVELAND BUSINESS 11

13 KENT STATECREATES COLLEGE OFPUBLIC HEALTH.

RUGGERO FATICA PHOTO

Nathan Lehota is a 25-year-old veteran attending Kent State University’s School of Journalism and Mass Communication. Mr. Lehota is amongmany local veterans taking advantage of the educational benefits offered through the Post-9/11 GI Bill.

A SALUTE TO SCHOOL

VETERANS BENEFIT FROM POST-9/11 GI BILL

Local colleges experience influx of veterans who are reaping educational benefits of Post-9/11 GI Bill

By DAN [email protected]

Today’s soldiers are trained like nonewho came before them — in colleges and universities across thestate and nation, thanks to perhaps

the most generous education benefits everbestowed upon veterans.

With the Post-9/11 Veterans Educational Assistance Act of 2008 — more universally andaffectionately known as the Post-9/11 GI Bill —soldiers are returning from places such as Iraqand Afghanistan to find that their service haspaid for a college education, whether it’s theirown or that of their children. Provisions of thenew GI bill went into effect in August.

Changingtimes callfor 3-yeardegrees Area universities entice students withfast-track programs By SHANNON [email protected]

At a time when tuition issoaring but bank accountsaren’t, more colleges arecreating programs to

enable students to earn a bachelor’sdegree in only three years.

Local institutions that have created three-year programs or areconsidering them include Baldwin-Wallace College, Hiram College,Lake Erie College, the University ofAkron and Ursuline College — all ofwhich hope to enable students tosave time and money by enteringthe work force sooner.

“Students are always asking:‘How can I get credentials sooner?How can I get out in the workingworld sooner?’” said Alison Benders, dean of graduate and professional studies at Ursuline.

Ursuline answered such calls bycreating programs that will allowstudents to earn a bachelor’s degree in education or business inthree years, starting next fall, shesaid. While there is no tuition breakfor the three-year programs, stu-dents are expected to save moneyon room and board by entering theworking world a year ahead of theirtraditional classmates, she said.

Under the new programs, students will go to school year-round and will take a very heavycourse load for three years, Dr. Benders said.

“It’s heavy, but if you think of itas a 16-credit-hour semester, it’sdoable. That’s four or five classes”at a time, she said.

Though the three-year programsprimarily are aimed at adult learnerswho are going back to school, Dr.Benders said Ursuline would welcome high-caliber students intothe program right after high school.

Akron is recruiting such high-achieving students for a new programit will launch next fall. Students in the

See DEGREES Page 12

See VETERANS Page 14

“Students are alwaysasking: How can I getcredentials sooner?”

– Alison Bendersdean of graduate and professional

studies, Ursuline College

The new benefits under the Post-9/11 Veterans Educational Assis-tance Act of 2008 came as apleasant surprise to many veteranswho signed up for service beforethe benefits were in effect.

Nathan Lehota, for example, didn’t even think about educationbenefits when he joined the Navystraight out of Mantua High Schoolin 2003. When he did begin thinking about going to school afterthe service, he assumed he’d getwhatever benefits he was entitled tounder the old system.

The rules changed in 2008, ayear before Mr. Lehota received hisdischarge. He had far more thanthe required 36 months of post-9/11 service to reap the new bill’sbenefits, and says he’s gotten morethan he bargained for now that his

education and living expenses arepaid for.

So, at 25, Mr. Lehota does nothave to worry about paying for hisdegree in broadcast journalism atKent State, living expenses orbooks.

“I get the full benefits for thezoned area of Akron, so I receive$1,007 a month,” he said. “ I’m getting the maximum (availableamount) for books, so I get $687for books” per semester.

And there’s another benefit, atleast in Mr. Lehota’s case. While hesays he “was not a very good stu-dent” in high school, he said the mil-itary left him far more disciplinedthan he was at 19 — and betterable to attend and succeed in thoseawful early morning classes .

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program can complete in three yearsa bachelor’s degree in natural sci-ences, with a concentration in poly-mer chemistry, before going on toearn a master’s degree in two years,said Mark Foster, associate dean forprograms, policy and engagement inthe College of Polymer Science andPolymer Engineering at Akron.

Students in that program will receive a full tuition waiver whileearning a bachelor’s degree, and astipend while completing theirgraduate work, he said. Two similar programs in applied mathand physics/chemical physicshave been launched and, although students could choose to stop at abachelor’s degree, they will bestrongly urged to stay in school toobtain their master’s degree aswell, he said.

With its three-year bachelor’sdegree in biomedical humanities,Hiram targets students who planto spend many years in college topursue careers in medicine, saidShawn Brown, a spokesman for thecollege. Four students graduatedfrom the program last May and the program currently has ninestudents enrolled, he said.

Students in the Hiram andAkron three-year programs attendschool in the summers.

Doing their homeworkAs those programs forge ahead,

Baldwin-Wallace and Lake Erie arecontinuing to weigh the pros andcons of three-year bachelor’s degree programs.

Though Baldwin-Wallace currently offers an accelerated

program in which students canearn a bachelor’s degree in threeyears in organizational leadership,it is not forming another group ofstudents to graduate from thatprogram, said George Richard,Baldwin-Wallace’s vice presidentof college relations. One group ofstudents will graduate from theprogram this year and another in2011, he said.

Next month, the school’s boardof trustees instead will further discuss the possibility of creating atrue three-year program for yet-specified majors, meaning students still would have time offin the summers, he said.

Though three-year programsslowly are catching on, only a fewschools across the country are believed to have three-year programs that do not require summer attendance, said TonyPals, a spokesman for the NationalAssociation of Independent Colleges and Universities in Wash-ington, D.C.

Though more students are expressing an interest in earningan undergraduate degree in threeyears, only 4.2% of all undergradu-ates generally earn their degrees insuch a short time period, he said.

“You have to go into college witha clear idea of what your major isgoing to be and to stick to it,” Mr.Pals said.

Of course, there are drawbacksto such a fast-paced curriculum,and schools are being careful toconsider the disadvantages.

“Any time you have an acceleratedprogram, you have to give some-thing up,” Akron’s Dr. Foster said.

For instance, going to school year-round forces students to give up vacations, jobs and internships, saidRobin McDermott, Lake Erie’s vicepresident for enrollment manage-ment and student affairs. Other activities, such as a semester abroad,also would be canceled as studentsattend classes and participate in research during what would havebeen their time off, added Dr. Foster.

For those reasons, Lake Erie thisyear will begin surveying studentsto gauge their interest in three-yeardegree programs and their willing-ness to give up their summers off,Ms. McDermott said.

Lake Erie also is examiningwhether students can afford to go toschool year-round, Ms. McDermottsaid, because students would missout on working in the summers tosave money for tuition and living expenses. In addition, students onlyget a certain amount of financial aideach year, so there are questions as to whether the annual financial aidallotment would cover the entireyear, she added.

Time for changeStill, three-year degree programs

could work in some instances and,with a higher education system thathasn’t been overhauled in more thana century, it’s an idea that is longoverdue, B-W’s Mr. Richard said.

“(In accelerated programs), students kill themselves for threeyears and they lose the rest of theircollege experience,” he said. “It’sreally time for a strong differentia-tion, not just compression coursesand accelerated courses.” ■

Degrees: Programs still evolvingcontinued from PAGE 11

Winning sports teamsadd bonus points touniversity profilesBy JOEL [email protected]

It may be basketball season,but the University of Akronand its athletics departmentstill are basking in the success

and nationwide exposure its men’ssoccer program earned this fall.

The Zips on Dec. 13 came withinone goal of beating the Universityof Virginia in the College Cup final,the culmination of a steady rise forthe program. UA spent the first 11 weeks atop the National SoccerCoaches Association of America/adidas poll, the final eight unani-mously; it finished No. 2 after theloss to Virginia.

Since 2000, the Zips have won141 games (68.8%), six Mid-AmericanConferenceregular-season championshipsand five MAC tournament titles,and the team hasmade seven appearances inthe NCAA tourna-ment.

That successhas been a boonfor the Zips’ athletic department:Typically considered a nonrevenuesport, UA men’s soccer averaged2,137 in attendance for 13 homedates, more than double the averagefrom 2008, when the team went 17-2-4. Six times this year the Zipsbroke the previous attendancerecord at Lee Jackson Field. The previous high was 2,319 in 2005, butthe Zips this season drew crowds of2,443, 2,473, 2,439, 2,700, 2,806 and4,254.

“Any time you have a nationalprogram in athletics, it’s a wonderfulthing for the entire university,”said Akron athletic director TomWistrcill. “It provides an incredibleamount of recognition nationwide:‘Akron’ is on the ticker for days,and it really exposes a lot of peoplefrom outside the community to theUniversity of Akron.”

Short of the goalOpinions differ on the impact

that success in traditionally under-the-radar sports has on schools.

Success in football and men’sbasketball likely make more of animpact on the entire university,said Mark Rosentraub, a formerCleveland State professor and nowthe endowed chair of the depart-ment of sport management at theUniversity of Michigan.

Akron’s football team had a surprising MAC championshipgame win over Northern Illinois and Motor City Bowl appearance in 2005.The basketball team has played in apostseason tournament in three ofthe past four years, including lastseason’s NCAA tournament.

“Soccer is still a niche sport; itseffects on student applicationswould have to be considered quitemarginal and nothing compared tofootball and men’s basketball,” Mr.Rosentraub said. “With attendanceat college soccer relatively low and

its television exposure also rela-tively obscure, to suggest that anoticeable effect on applicationswould be observable would be inmy view a bit too optimistic andprobably unrealistic.”

Take, for instance, the Universityof California, Santa Barbara, another athletically under-the-radarschool that has made its mark inmen’s soccer: The Gauchos lost inthe College Cup final in 2004, beatUCLA in 2006 to win the champi-onship and average about 4,000fans per game, said Diane O’Brien,an assistant athletic director.

It’s a nice boost for the school andthe athletic department, but the uni-versity as a whole has other thingsdriving enrollment — the PacificOcean and perfect weather, to name

two — and, with-out a footballteam, it needs theschool’s basket-ball teams to drive revenuewithin the athleticdepartment.

“As a nonrev-enue sport, (soc-cer) definitely of-fers a boost,” Ms.

O’Brien said. “But it’s not some-thing the university uses to attractmore students to the school, andfor the athletic department, thegate still isn’t what you get frombasketball.”

No such thing as bad PROthers say any exposure is good,

no matter the sport.Cleveland State University’s

men’s basketball team earned theschool plenty of time in the spot-light in March, when it won theHorizon League tournament overhighly ranked Butler and then, as aNo. 13 seed, upset No. 4 seed WakeForest of the powerful AtlanticCoast Conference in the first roundof the NCAA tournament.

The returns have been plentiful,said assistant vice president formarketing and admissions RobSpademan. The school, though Mr.Spademan couldn’t quantify it, received a bump in giving andheard from many new studentsthat the basketball team was partof their decisions to attend CSU.

And while the Vikings’ successwas in the ultra-popular “MarchMadness,” any success is good, Mr.Spademan said.

“Successful athletics or athleticteams bring good things to theuniversity,” Mr. Spademan said.

Akron media relations directorLaura Massie said while she couldn’tspecifically connect any enrollmentuptick based on the Zips’ soccer success, she said UA admissionscounselors frequently cite the team’snational profile in talking withprospective students. Mid-AmericanConference commissioner JonSteinbrecher, too, said the men’ssoccer exposure is a great benefit.

“For (Akron), it’s a tremendous accomplishment that brought signifi-cant visibility to the soccer program,and to the school itself,” he said. ■

“Any time you have anational program inathletics, it’s a wonderfulthing for the entireuniversity.”

– Tom Wistrcillathletic director, University of Akron



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HIGHER EDUCATION

Kent State addresses demand for public health sector needs University joins other state counterparts in offering program to help sustain growing field By CHUCK [email protected]

If the experts are right andthere really does turn out to bea national shortage of publichealth professionals by 2020,

don’t go blaming Ohio’s collegesfor ignoring the problem.

Today there are a total of sevencolleges or groups of colleges inOhio that offer degrees in publichealth — up from zero at the startof the 1990s.

The newest of the group is KentState University’s College of PublicHealth, which in July became thefirst college of public health inNortheast Ohio and only the secondin the state. Kent State’s college willaccept its first students this fall.

Ohio State University, whichwas the state’s first college of public health, began offering public health degrees in 1992.Since then, schools across the statehave shown much more interest in training students to treat thepopulation, not just the patient.

That’s because the need for public health professionals — whomonitor health statistics, work inhealth care administration, studythe impact of the environment onhealth, shape community emer-gency medical response plans andotherwise work to ensure that thepopulation at large remains healthy— is becoming more apparent, according to officials from severaleducational institutions.

Over the past decade, concernsover terrorist attacks, natural disas-ters such as Hurricane Katrina andthe spread of swine flu and other illnesses have helped fuel interest inthe field. Plus, concerns overlifestyle-related health problemssuch as obesity will continue to keeppublic health issues in the spotlight,said Dr. Scott Frank, program direc-tor for Case Western Reserve Uni-versity’s Division of Public Health.

“There are no solutions to health

reform that don’t include a substantial public health pres-ence,” Dr. Frank said.

Because of rising demand and apending wave of retirements in thefield, the United States is on paceto need an additional 250,000 public health professionals by2020, according to a February 2008study by the Washington, D.C.-based Association of Schools ofPublic Health. To avoid such ashortage, colleges would have totriple their output of public healthstudents, the report stated.

Healthy growthOhio schools, however, are

working on the problem. Not onlyhas Kent State formed its College of Public Health to offer multiple degrees in the field, but master’sprograms offered by CWRU and aconsortium of eastern Ohio schoolshave grown in recent years.

Plus, since 1992, other publichealth degree programs have beencreated by Wright State University,the University of Cincinnati and apartnership between BowlingGreen State University and theUniversity of Toledo.

Dr. Frank, for one, has watchedCWRU’s public health programgrow from nine students 10 yearsago to 110 today.

“There clearly was a pent-up demand in the city of Cleveland forpublic health education,” he said.

The program has reached maximum capacity for the timebeing, said Dr. Frank, who also isdirector of the Shaker HeightsHealth Department.

The school is, however, growingits involvement in public health byapplying for federal stimulus moneyto further develop its health infor-matics program, which includeselements of public health.

Plus, earlier this month, CWRU,the Northeastern Ohio UniversitiesColleges of Medicine and Pharmacyand the Mahoning County District

Board of Health received a $90,000grant from the Robert Wood Johnson Foundation that they willuse to build a network among public health agencies throughoutthe state. The network will worktogether to study the best ways todeliver and finance public healthservices.

The Consortium of Eastern OhioMaster of Public Health program— a collaboration that today

involves NEOUCOM, ClevelandState University, the University ofAkron, Youngstown State University and Ohio University —also is building on its 10-year-oldprogram, said program directorDr. Amy Lee.

The group of colleges, whichteaches 100 public health master’sstudents, has been considering offering more dual degrees, giventhat public health courses can be

useful in careers ranging from hospital administration to law toscientific research. The group alsois making it easier for students tosign up by offering more onlinecourses and working with hospitalsto make it easier for resident physi-cians to fit classes into their busyschedules.

The consortium’s students havehad little difficulty finding jobs, butDr. Lee noted that some govern-ment public health agencies havehad to lay off employees recentlybecause of constrained budgets.

“The economy has made it verytough,” she said.

Supply vs. demandThe economy isn’t the only prob-

lem, said Michael Bisesi, associatedean of academic affairs for the College of Public Health at OhioState. Public health for many yearshas been underfunded, so some ofthe increased need for professionalsin the field has gone unmet, said Dr.Bisesi, who sits on two committeesfor the Association of Schools of Public Health.

Schools, however, are doingwhat’s necessary to meet future demand, he said. Today, there are43 accredited colleges of publichealth in the United States, which isabout 10 more than there were fiveyears ago, he said.

Other regions may still needmore educational capacity, butOhio at this point has plenty, atleast when it comes to master’sprograms.

“In my opinion the state of Ohiohas reached a comfortable thresh-old,” he said. ■

IN GOOD HEALTH

While most public health programsoffer master’s degrees, the new KentState University College of PublicHealth offers an 18-credit hour certifi-cation in public health as well as thestate’s only bachelor’s degree in thefield.

It also has proposals before theOhio Board of Regents to offer master’s and doctoral degrees.

The university expects to admit 75to 100 new bachelor’s students forits first class this fall, and it aims tobring in 75 graduate students eachyear once those degrees are approved, said Ken Slenkovich, assis-tant dean of the College of PublicHealth. He noted that 46 studentshave expressed interest in theschool’s graduate programs, eventhough they have yet to be finalized.

“We’ve already got folks who havesaid, ‘As soon as you get these degrees approved, we want to applyfor it,’” Mr. Slenkovich said.

Kent State created its own collegeafter spending several years as partof the Consortium of Eastern Ohio

Master of Public Health program, acollaboration that today involves theNortheastern Ohio Universities Colleges of Medicine and Pharmacy,Cleveland State University, the University of Akron, YoungstownState University and Ohio University.

Kent State president Lester Leftonand provost Robert Frank wanted tocreate the college because of theirfocus on preparing graduates for thework force while also expanding theuniversity’s research capacity, Mr.Slenkovich said.

Being a full college of public health means the university not onlywill offer a variety of public health degrees, but it also will conductmore research in the field.

“It’s a draw for bringing faculty, research dollars and subsequentlystudents,” he said.

The growing demand for publichealth skills also should generate student interest, Mr. Slenkovich said.

“They’re rewarding careers.They’re high-paying jobs,” he added.

— Chuck Soder

Akron is about tobecome a major testcenter for the futureof citizen journalism.

The Akron Community Foundationsaid it plans to launch a digital media academy that “will train com-munity members to become citizenjournalists.” The John S. and JamesL. Knight Foundation will support theproject with a $350,000 grant, “withthe ultimate goal of connecting resi-dents at the neighborhood level whilepromoting digital literacy throughoutgreater Akron,” according to theAkron Community Foundation.

The Akron Community Foundationhas committed to the project$100,000 of its own funds, whichwill be combined with the KnightFoundation grant for a total of$450,000.

Citizen journalism is the concept of members of the public taking anactive role in collecting and dissemi-

nating news. It istaking hold as traditional media

wither due to forces including therise of the Internet and collapse ofthe advertising market.

The academy “will equip citizenswith the tools and training they needto tell their stories through videos,news reports, blogs and visual de-sign projects,” the foundation said.

Tina Boyes, vice president of com-munications for the foundation, saidthere’s not yet a timetable for launch-ing the academy. Four local journal-ism and technology professionalswho helped develop the concept —writer, editor and web publisherChris Miller; video producer Chris“Blue” Green; new media specialistTodd Volkmer; and multimedia com-munications specialist Joanne Green— are working on the curriculumwith partners that include The AkronBeacon Journal. — Scott Suttell

Akron foundation invests in citizen journalism

ON THE WEB Story from www.CrainsCleveland.com


“It’s fantastic,” said Joshua Rider,assistant director for Kent StateUniversity’s Center for Adult andVeteran Services. “This GI bill isbetter than any GI bill since WorldWar II.”

It may, indeed, be better.“I had one student switch from

the old GI bill to the new one, andnow he doesn’t have to take outloans anymore; he was living onloans before,” said Rebecca Dinnen,director of transfer and interna-tional admission at John CarrollUniversity in University Heights.

The pre-9/11 GI bill, expandedinto the Montgomery GI Bill in1985, has been a boon to soldierssince World War II. It’s still in useand provides veterans with monthly

payments of about $1,300 to beused for tuition and other generaleducation expenses. For certainsituations, such as veterans withother scholarships, the old GI billstill is available and is sometimesthe best choice, say Mr. Rider andothers.

But the new GI bill is far moregenerous for most veterans: It pays100% of tuition and fees at publicuniversities, such as Kent State andthe University of Akron. In addi-tion, it provides a monthly livingstipend and $500 per semester forbooks.

Little wonder Kent State nowhas about 900 students using GIbenefits to attend classes. That’sstill a small portion of the 38,000students who attend classes in


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HIGHER EDUCATION

Veterans: New GI bill offers more benefits, choicescontinued from PAGE 11

EVENT INFO

Kent or at its seven satellite campuses, but it’s up sharply fromrecent years.

It’s especially high on the satel-lite campuses, which is under-standable because many veteransare caring for families and thosecampuses serve more commuterstudents than the main campus inKent, Mr. Rider said.

But even on the main campus,the number of veterans attendingclasses on GI benefits, of all types,has risen to about 450 students,out of a total of about 25,000 —and Mr. Rider attributes the increase to the new benefits.

“That’s really high,” said Mr.Rider. “We have typically in thepast had 280 to 300 (veterans at themain campus on GI benefits), sothat’s just a huge spike.”

At Lakeland Community Collegein Kirtland, veteran enrollment isup and rising, with 262 veteransenrolled in the spring semesterthat started Jan. 16, said Lakelandveterans affairs coordinator TerriDietz.

“It’s an exciting time. We’vebeen so busy — it’s wild,” Ms. Dietz said.

Of the 262 veteran students, 76are receiving benefits under thenew GI bill and the number of students using the new bill’s bene-fits is up 40% from the fall of 2009.Ms. Dietz expects that number torise as more veterans becomeaware of the program and moreare discharged with eligibility.

Tying a yellow ribbonThe benefits under the new GI

bill are based on factors such asthe local cost of living and the costof public schools in the state wherethe veteran lives. But, unlike theprevious GI bill, this one also has aprovision that enables veterans toattend pricier, private schools, including John Carroll.

Often, such schools were finan-cially off limits to many veterans,said John Carroll’s Ms. Dinnen —until the military and privateschools began working together inthe Yellow Ribbon GI EducationEnhancement Program.

Yellow Ribbon uses a mix ofcontributions from the schoolsthemselves with extra benefitsfrom the U.S. government to closethe gap between what GI benefitsnormally cover and what privateschools actually cost.

“We were just trying to find ascholarship for veterans, and thenYellow Ribbon popped up and wesaid, ‘Hey, this is even better,’” Ms.Dinnen said.

Ms. Dinnen explained that, hypothetically, GI benefits mightcover $15,000 in tuition expensesfor a certain period based on whatpublic schools cost in a given state.Tuition at John Carroll or anotherprivate school might cost more,though, say $30,000. If the schoolparticipates in Yellow Ribbon, itagrees to pay for 30% to 50% of thedifference, and the governmentcontributes a matching amount. Inthe case of John Carroll, the schoolpays 50% and the governmentpays the other 50%, completelypaying for the student’s tuition,Ms. Dinnen said.

Only four of John Carroll’s 3,000students are receiving Yellow Rib-bon support and GI benefits at themoment, but Ms. Dinnen saidshe’s seeing “more and more peo-ple who are interested in using itand are planning to come.”

“Some are still on active duty,

though,” Ms. Dinnen said.

Win-win situationSeemingly everyone involved in

working with the new GI benefitssings their praises. But they also saythe benefits help more than just theveterans.

Just as with the previous GI bill,the benefits can be transferred to adependent — which means that aservice member essentially can payfor a complete college education forone child, or split up the benefitamong multiple children.

But they say the schools also arebenefiting. For one thing, they’reenrolling students who come complete with their own financingstream that represents money forthe schools.

But they also say they are gettinggood, mature students, often just alittle older than the traditional college students, who are a greataddition to campus.

“Because of their experience,they add a little needed diversity tothe classroom,” Ms. Dinnen said.“Especially with their experience —they’ve got some pretty worldly experience that most students justdon’t have.”

Those administering veterans’services hope the new GI bill doespretty much what the first GI billdid in terms of educating the nation’s veterans.

“The first GI bill, and the educa-tional revolution it spawned, sawour veterans as point men in bring-ing to bear the vast infusion of fed-eral dollars into higher education,”U.S. Veterans Affairs secretary EricShinseki said in a November 2009speech at the University of SouthFlorida. “For this latest generationof veterans, history is poised to repeat itself in the Post-9/11 GI Bill.It has every potential to have anequally resounding impact on ournation.” ■

“It’s an exciting time. We’vebeen so busy — it’s wild.”

– Terri Dietzveterans affairs coordinator, Lakeland Community College

Crain’s Cleveland Business, aspart of its Business Breakfast Series, will present on Jan. 28 “Talent Pipeline — Connecting Higher Education with RegionalBusiness Opportunities.”

Sponsored by the Northeast OhioCouncil on Higher Education, JohnCarroll University and Maloney +Novotny LLC, the event will be from7:30 a.m. to 9:30 a.m. at Double-tree Cleveland Downtown Lakeside.

Panelists include Robert Reffner,vice president, legal, FirstEnergy andboard chairman of the NortheastOhio Council on Higher Education;Karen Schuele, dean of the BolerSchool of Business at John Carroll University; and Timothy G. Novotny,shareholder in charge of not-for-profitservices at Maloney + Novotny LLC.

Attendees will receive “Higher Education Showcase,” a resourcehighlighting higher education and talent opportunities in NortheastOhio published by the NortheastOhio Council on Higher Educationwith support by The Cleveland Foundation.

Tickets are $35, and corporate ta-bles of 10 are $300. Tickets mustbe purchased in advance. For info,go to www.CrainsCleveland.com/marketing/bizbfast.html.


Crain’s Cleveland Business Custom Publishing

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Continued from Page S-1

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Jim Marra, director of businessdevelopment at the private equityfirm Blue Point Capital Partners,agrees that it’s unusual for a cityCleveland’s size to be home to adozen or more private equity firms.

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Pioneers of PEMr. Marra explains that the

private equity industry began herebefore the term “private equity”even existed.

“It started with Frank Linsalata,David Morgenthaler and those earlyprivate equity guys in the late ’70s

and early ‘80s who thought itmade sense to buy companies on aleveraged basis,” he says.

Cleveland always has had astrong industrial base, whichmakes it fertile ground for invest-ment opportunities. In addition,Cleveland has had people withsignificant wealth who wanted toparticipate in such deals.

“It was a confluence of theunique,” Mr. Marra says. “Therewere companies to buy, money willing to be devoted to acquisi-tions, and some pretty smart guyswith a vision of what private equitycould do.”

One of those visionaries wasDavid Morgenthaler, who found-ed the eponymous firm morethan 40 years ago. Today the pri-vate equity and venture capitalfirm has $3 billion in funds undermanagement and has funded 300companies.

“Private equity firms have beenhere a long time,” says Al Stanley,co-managing director of Morgen-thaler ’s private equity practice.“Cleveland’s a strong player in thelower-to-middle segment of the private equity market.”

Mr. Stanley says that the early beginnings of private equity happened here because Clevelandhad both a strong industrial and astrong banking base. Other middle-market transaction services spunoff from this core of operators andfinanciers.

Powerhouse“Cleveland as a deal-making

powerhouse is more than privateequity,” Mr. Marra notes. “Privateequity is the nucleus, but there

are many more components —other capital, senior and mezza-nine debt, major banks who areexperienced lenders in that mar-ket, and so on.”

The presence of three big banks [National City Bank, nowpart of PNC; AmeriTrust and Society (now Key)] also supportedprivate equity, Mr. Freeman says. In fact, he notes, Blue Point itself spun off from Key EquityCapital.

Add into that mix about adozen law firms with the neces-sary experience and capabilitiesplus Big 4 accounting firms andstrong regional accounting firmsthat can audit portfolio compa-nies and help in acquisitions.

“All the services that buyers of businesses need have reallygrown up here in Cleveland,” Mr. Marra says. “When you havethese components and can pull in others such as environ-mental and risk managementconsultants then you can rightlycall yourself a deal-making powerhouse.”

Stewart Kohl, co-CEO of TheRiverside Company, says the professional community in Cleve-land is remarkably developed andsophisticated.

“We can bring all the special-ists we need to complete a deal,including attorneys, accountants,insurance, environmental advisersand others,” Mr. Kohl explains.“Cleveland has broad and deepbenches, much more so than inour peer cities. It’s an embarrass-ment of riches.”

One advantage to operating inCleveland is that there are a lotmiddle-market-type companies,

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Mr. Freeman says. Prior to themost recent economic downturn,the biggest accounting firms didn’t pay much attention to themiddle market, but other firms,such as Grant Thornton, were paying attention.

About half of Grant Thornton’sclients in Cleveland fall into the$50 million to $250 million rangeand are owned by private equitygroups, he says.

Grant Thornton finds more companies are switching the auditand tax work that they historicallysent to Big 4 firms to regionalfirms with a national presence. “Acompany in California owned by aprivate equity firm in Clevelandcan use our services. The privateequity firm likes to have one pointof contact that is local and this isone of our core strategies,” Mr.Freeman says.

Other Attractions Riverside, Morgenthaler and

Cleveland’s other private equityfirms have offices and deals outside the area, which meansthey travel a lot. Thus, having aContinental Airlines hub at Cleve-land Hopkins International Airport is a big plus, both Mr.Kohl and Mr. Stanley say.

Having a hub means our staffdoesn’t have to change planes asfrequently, Mr. Kohl says. Havingcontent employees is critical forthe firms’ success.

Riverside finds Cleveland is agreat location to attract sophisti-cated professional talent who appreciate the quality of life theycan have in the area.

“I love it when kids who grewup in Cleveland, spent time onthe coasts and intentionally comeback in their 30s because theywant to raise a family here,” Mr.Kohl says.

Mr. Stanley concurs. “Clevelandis a great city. There’s somethingabout a Midwest reputation that isreassuring to sellers.”

That regional reputation canhelp when Morgenthaler is doingdeals too. Although the firm doesn’t intentionally promote itsroots, sellers perceive the Midwest location as a signal the firm isdown to earth and trustworthy.That’s especially appealing for family businesses deciding tosell, Mr. Stanley says.

But that doesn’t mean Morgen-thaler limits its investments to theMidwest. “Our portfolio goes fromMaine to California. We look fordeals everywhere,” Mr. Stanley says.

Riverside invests globally too.As for Ohio-related deals, River-side has a special place in its heart.“There are a lot of great entrepreneurs here,” Mr. Kohlsays, adding he sees big growthpotential locally in the healthcare sector, including medical servicesand biotech enterprises.

Technology has allowed firmsto grow globally and remain basedin Cleveland. As Mr. Marra, whojoined Blue Point in 1991, explains: “Twenty years ago, itwas harder to buy a company thatwasn’t in your footprint geographically. We looked at operations outside Ohio, but weweren’t looking far afield.”

As private equity grew, it becameobvious to Blue Point that it neededto expand its horizons if it were tohave the best portfolio possible.

Through technological advancessuch as videoconferencing, the

Internet, e-mail, and cell phones,Blue Point has been able to stay inCleveland and do deals aroundthe globe.

“Ohio remains an importantpart of our portfolio as a dealsource,” he says. “I doubt that willchange because we’re in constantcontact with a number of compa-nies. It’s still easier to keep intouch in town.”

Private Equity EvolutionAnother deal-making evolution

has been the growth of intermedi-aries such as Brown Gibbons Langand Western Reserve Partners,who serve as deal connectors between buyers and sellers.

Twenty years ago, a $50 millioncompany without a strategic (corporate) buyer didn’t have many

options, Mr. Marra says. It had tofind the private equity firm andcoax it into buying business.

In the 1990s, buyers would signletters of intent without the cash andthen approach private equity firms.

As private equity investmentsproduced unusually large returns,new firms organized and the inter-mediary function grew. “Ourworld is a lot more competitive,”Mr. Marra says.

Cleveland’s private equity firmshave their own specialties so thecommunity has an excellentbreadth to tackle all types of mergersand acquisitions, Mr. Freeman says.

Mr. Kohl says that Cleveland’sprivate equity community hasheld on well during the last down-turn even when a significant number of firms disappeared. “I’m

not aware of any in Clevelandclosing,” he says.

In fact, Mr. Freeman says, aCleveland-based private equityfirm was created in these challenging times.

Supply Chain Equity Partners is the only private equity firm in the world that focuses exclusively on the distribution industry. “They have a great management team that really understands this space,” he says.

Another Cleveland firm posi-tioned itself well to tackle thedownturn opportunities. ResilienceCapital always has focused on un-derperforming companies. So nowis a great time for the firm to play ina space that it already understood,Mr. Freeman says. “They’re prettybusy right now,” he adds. ■




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Middle-market M&A looks for a slow recovery in 2010

Like the Indians’ andBrowns’ seasons, the middle-market merger & acquisition (M&A) world

suffered its woes in 2009, saysJoseph Carson, managing directorat Western Reserve Partners, aCleveland-based investment banking firm.

Year-to-date through Septem-ber, he says, total transaction volume for the middle market(deal values between $25- $250million) was down 55 percentyear-over-year, and total transac-tion value was down 59 percent.

And there was no pickup in thethird quarter. Activity fell fromsecond quarter levels as totaltransaction volume decreased 19percent and total transaction value decreased 23 percent.

“The new normal is a reductionin valuation multiples from thehighs of 2007 and 2008,” says Mr.Andrew Petryk, managing director at Brown Gibbons Lang &Co., a Cleveland-based investmentbanking firm.

Mr. Carson says, “Limited credit availability is one of the pri-mary drivers of this decline.” Total

Gibbons Lang currently is workingwith a Mexico-based client buyinga U.S. business and is handling at least three other foreign trans-actions.

BGL is seeing consistent acquisi-tion interest from credible andwell-capitalized western Europeanbuyers.

Slow Improvement“A lot, though, is driven by the

credit market. It’s still choppy,”cautions Jim Hill, partner and executive chairman of Benesch,the Cleveland-based law firm.However, he sees deal activity improving in 2010.

Mr. Hill says lender consolida-tion and several non-regulatedlenders pulling out of cash-flowlending have constricted the market for borrowers but that willchange slowly, too, in 2010.

However, compared with the recent more robust times, lenderswill continue to be wary about to whom and how much theylend.

Mr. Petryk adds that there is increased scrutiny from sellerswho are concerned about buyers’ability to actually finance a dealgiven the tough credit markets.

Mike McMahon, managing director of M&A Advisory at Key-Banc Capital Markets, believes thequality of assets coming to marketis improving.

In addition, large publicly traded or privately owned compa-nies are beginning to think strate-gically again. During the last 12 to18 months, companies were mak-ing divestitures out of necessity toshore up over-levered balancesheets, he says.

Now they are beginning to return to strategic divestitures toshed non-core assets, freeing upcapital to make strategic acquisi-tions.

“They have been deep intrenches focusing on survival –now they can look at strategy,”says Mr. McMahon. “There’s noth-

“Not surprisingly, when these depressed multiples are applied to deteriorated earnings, buyer and

seller expectations diverge.”—— JJoosseepphh CCaarrssoonn,, WWeesstteerrnn RReesseerrvvee PPaarrttnneerrss

prices — in some cases, involun-tarily.”

To be sure, there are exceptions,adds Mr. Carson. Financiallysound companies with compellingstories still attract well-capitalizedstrategic buyers and financialsponsors. In these cases, acquisi-tive interest has been robust, andsome sellers have received premi-um valuations. In particular, saysMr. Carson, foreign strategic buyers have become increasinglyactive in the acquisition of U.S.companies, leveraging favorableexchange rates.

Mr. Petryk says though interna-tional opportunities were limitedlate last year and in early 2009,the volume has appreciably increased thru year end. Brown

ing like a recession to encourageexecutives to increase their focuson their long-term strategy.”

Creative SolutionsMr. McMahon says he thinks

financial buyers will be more active in 2010 even if they need touse creative solutions to get thetransactions done, such as puttingmore equity into deals or invest-ing in non-control situations.

Mr. Carson concurs. “Despitethe tight credit availability, finan-cial sponsors who are flush withcapital and hungry for good dealshave shown their willingness tobridge financing gaps by contributing additional equity,turning to mezzanine financing,or structuring seller notes with aclear path to liquidity.”

Mr. Hill also expects continued,creative financing structures byprivate equity firms in order to getdeals done now.

“The fund managers expect thatas lending gets looser in the nextcouple years, they will refinanceand get out some of that equity,”Mr. Hill explains. “When you lookat history, the most successful acquisitions in terms of return oninvestment are bought during recessions.”

Peaks and Valleys Mr. Petryk advises that while

the market cycles through peaksand valleys, he expects the valleysand peaks to be wider through thenext cycle as the market turnsmore slowly. Though cautious, hesees a brighter future.

“I’m a lot more optimistic todaythan I was six months ago,” hesays.

Mr. Hill points out that whilemarkets cycle and the relative advantage between strategic buy-ers and financial sponsors fluctu-ates, the generational influence onselling is a constant. Time and tidewait for no man.

Mr. Petryk concurs, noting thatvalue multiples are obviously akey driver of deal activity, but other considerations are equallyimportant such as business risk associated with the potential for aprolonged economic downturn orno-growth environment, antici-pated increases in capital gains orjust being the right time for theprivate equity firm or family.

“Are you better selling today for

leverage for the middle marketdropped from a high of 4.4 times EBITDA (earnings before interest taxes, depreciation and amortization) in 2007 to approximately 3 times today, henotes.

Middle market loan issuance inthe third quarter was down 46percent year over year and 13 percent from second quarter levels.

Significantly, he notes, of thisamount, 80 percent was used forgeneral corporate purposes ratherthan transaction financing.

And credit spreads widenedthrough September as lendersaligned return requirements withmarket conditions and highercosts of capital.

Understandably, Mr. Carsonsays, the tightening credit marketnegatively affected EBITDA multi-ples.

“Not surprisingly, when thesedepressed multiples are applied todeteriorated earnings, buyer andseller expectations diverge,” hesays. “This has caused transactionsto be delayed, canceled or completed at reduced purchase




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TRANSACTION SERVICESin tune with the middle market

$75 million or waiting and maybegetting $100 million at somepoint in the future?” says Mr.Petryk.

Some owners looking to cashout now are saying no to the wait,especially given the potential forhigher tax rates on capital gainsand dividends.

“You would really have to significantly increase EBITDA (tostill be ahead) if the capital gainstax rate goes to 25 percent or 28percent,” as compared with 15percent now, Mr. Hill says. “This will create significantly greaterdeal flow in the second half of2010.”

Investors Gain Comfort“Despite the challenges, the

overall market has shown signs ofimprovement and should gainmomentum as we enter 2010,”says Western Reserve Partners’ Mr.

Carson. “Credit spreads havetightened as investors have gainedcomfort with the economy andearnings visibility. In the privatemarket, high-quality credits (BBBpublic equivalent) are now issuingat less than 6 percent.”

Mr. Carson also notes that theapproximately $400 billion overhang of un-invested capitalsuggests the potential for an M&Arebound.

“However, middle-market trans-action activity will likely remainsoft through the first quarter of2010, while the credit markets andeconomy slowly recover,” he says.“Though multiples will recover,middle-market M&A participantsshould expect tempered attitudes.

“As with the beginning of everynew Indians and Browns season,hope springs eternal,” he says.“Let’s just hope the market faresbetter than our summer and fallsports teams have.” ■

The coming cash trap

As sales volumes taperedand profits declined ordisappeared over the past18 months, companies re-

sponded in two ways, says LloydBell, director, with the Cleveland-based accounting firm Meaden &Moore.

First, they cut back on expenses.Existing inventory was used to fillnew orders. In addition accountsreceivable from past sales were being collected, albeit a little moreslowly than before, but at a ratethat exceeded new sales.

This resulted in positive cashflow, but lower accounts receiv-able levels. So companies werefunding themselves from the cashtrapped in the balance sheet in the form of inventory and accounts receivable rather thanprofits.

“You can only squeeze the cashout of the balance sheet for solong,” says Mr. Bell.

As companies find their under-lying markets improving in 2010,they will see varied opportunitiesfor growth, he says.

“The problem for many of these

“I think thesurvivors are goingto be the companiesthat ... can adapt tochange quickly.”

—— LLllooyydd BBeellll,, MMeeaaddeenn && MMoooorree

companies will be liquidity,” Mr.Bell explains. Cash needed to fund a build-up of working capitalor to invest in new fixed assetswill be unavailable without current access to capital. So financing will be the primary challenge for companies whosemarkets are improving just as itwill be for those companies whosebusinesses are not rebounding.

“I would expect limited assis-tance from banks in fundinggrowth opportunities, much less

refinancing existing obligations,”he says. “Businesses will need tocontinue to use as few resources aspossible to conserve availablecash. Ensure credit facilities are in compliance. If they are not,communicate with the bank immediately. Find out which customers are truly profitable afterall costs are considered. And see ifprice increases or softer creditterms are possible.”

How companies manage the recovery will be as critical as howwell they managed the downturn.Mr. Bell says.

“I think the survivors are goingto be the companies that are nimble and can adapt to changequickly. Companies need to workon developing shorter cash cycles,which will reduce the amount ofcapital required. Business ownersneed to recognize that equity has a cost too, and it’s higher than the cost of debt. Reducingthe total amount of capital required and finding the rightblend between debt and equity isparamount to maximizing share-holder returns.” ■

WHAT BUYERS AND SELLERS NEED TO KNOWRon Stepanovic, national

head of the private equity prac-tice at Cleveland-based BakerHostetler, offers this perspectivefor buyers and sellers.

BUYERS SHOULD KNOW:—- Deals will take longer to

consummate than in the recentpast.

—- Both lenders andseller will conduct moredue diligence, so buy-ers should have theirown house in order andbe ready for this addi-tional scrutiny beforeapproaching sellers andlenders.

—- Deal costs as apercentage of the pur-chase price will in alllikelihood increase as a result ofadditional due diligence andhigher financing costs.

—- Buyers cannot rely on thesignificant level of leverage thatwas available before the new“normal.” Deals will require moreequity.

—- Yields for buyers will con-tract unless they squeeze addi-tional yield from the seller in theform of a reduced purchaseprice.

SELLERS should adjust theirexpectations, be more flexible ingeneral and know:

—- Market uncertainty means abuyer cannot take a chance bypaying an aggressive multiple onthe seller’s forward-looking earn-ings estimate or even historicearnings.

—- Deal multiples havefallen, and sellers shouldnot expect them to in-crease in the near future.

—- Deal terms haveswung in favor of thebuyers.

—- Indemnity periodsare longer. Indemnitybaskets are smaller. Indemnity caps are higher and indemnity

escrows as a percentage of thepurchase price are greater.

—- Buyers will seek to bridgevaluation gap by asking sellersto finance a portion of purchaseprice or accept an earn-out.

—- Buyer and buyer’s lenderswill conduct enhanced due dili-gence and scrutiny becausethey want assurance that theearnings stream is for real andthat cost-containment measuresare in place.

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Credit market reversalsover the past 18 monthshalted one of the mostfavorable sellers’ markets

in M&A history. Methodical conservatism now rules the day,with buyers calling the shots. Aseller unable to withstand rigor-ous scrutiny need not apply.

Once a company makes the decision to explore a sale or recapitalization, one of the firststeps in this process: seller-sidedue diligence, advises Brian M.O’Neill, chair of the business/taxdepartment at Cleveland-basedUlmer & Berne LLP.

Seller-side due diligence is theprocess of a seller reviewing andshoring up its own financial, busi-ness and legal records in prepara-tion for a buyer’s discerning eye.

“While all businesses have weaknesses, latitude for seller mis-steps has become razor thin,” Mr.O’Neill says. “One unexpected obstacle or financial statement dis-crepancy can ruin a deal. Advanceddue diligence allows a company toidentify, and if possible eliminate,these types of problems before abuyer becomes involved. This inturn allows the parties to stay focused on the quality of earningsand other value drivers of the business. The key is to leverage thevalue drivers.”

With M&A activity consider-ably slowed, most companies arechoosing to delay taking them-selves to market, says Tom Bechtel,director of the Transaction Services Group at the Cleveland-based CPA and consulting firm,Cohen & Company.

“Now is time to get the housein order to prepare for a saledown the road,” he says. Ulti-mately these are things youshould be doing, but now youmay have the time to do them.”

Mr. O’Neill explains that advanced preparation will notonly make the seller’s businessmore marketable, but will helpmaximize the price paid for thebusiness. Early investigation, including the use of third partiesto perform financial and legaldue diligence, gives the sellerboth credibility and the opportunityto clean up issues that could beused against it later in the process.

Wary Buyers“A potential buyer may be wary

of even beginning the due dili-gence process knowing that theseller has never had the benefit ofhaving the financial statementsand other key elements of its busi-ness independently reviewed,” Mr.O’Neill says. “Any buyer willing tolook past an unprepared and disor-ganized seller is sure to apply a discount to offset any (real or perceived) concerns.”

Mr. Bechtel, who typically advises on the buy side, says buyers look for several key factorsthat focus on quality of earnings,quality of assets and human

capital.As to quality of earnings,

buyers will want to identify thecompany’s profit sector by sector.He advises prospective sellers todo everything they can to controlcosts and manage away from unprofitable sectors.

“As much as possible, get fixedcosts to be variable,” Mr. Bechtelsays. For example, a companyshould consider staffing alterna-tives such as using temporaryhelp instead of rehiring full-timeemployees or implementing tem-porary furloughs to reduce costs.

“It’s about controlling costsand managing the timing of expectations,” Mr. Bechtel says.“Ultimately the buyer will ask,‘How did this company respondto difficult market conditions?’”

Quality of assets is another areascrutinized by buyer, says Mr.Bechtel. Sellers should examinetheir inventory and move itrather than hold on in hope ofhigher prices in the future. Holding less inventory may alsoenable the company to cut thecost of storing inventory.

As for human capital, the economic downturn means a lot ofquality displaced people are in thejob market, says Mr. Bechtel. “Thatkey ‘A player’ you’ve always wantedmay now be available,” he says.

House in OrderGet all your documents in one

place, says Mr. Bechtel. Set up adata site now so the company canjust update it quickly when it’sready to sell. Information to beloaded onto the site includes topcustomer, vendor and other perti-nent data as well as updated keycorporate agreements.

“When an opportunity doesbecome available, you’ll be moreready and responsive to buyer’sneeds,” Mr. Bechtel says.

Joe Juster, co-chair of the corporate practice group at theCleveland-based law firm Calfee,Halter & Griswold, agrees. “Don’tscramble to set up a data site atthe last minute,” he says. At thatpoint in the process, manage-ment should be focused on responding to requests for detailsfrom prospects. Anticipatingneeds, not hurrying around,highlights the managementteam’s credibility, which can affect the price.

“When you go in and every-thing is in disarray, it’s a big negative for the buyer,” Mr. Bechtel says. They ask, ‘What elsedon’t we know?’”

Mr. Juster advises that ownersshould operate as if their businessis for sale, seeking to consistentlyincrease sales and earnings. “Ifyou can show consistent salesand earnings growth, you’ll get ahigher valuation,” he says.

A major advantage for privatecompanies over publicly tradedcompanies is that they don’t have to respond to the quarter-to-

“While all businesses have weaknesses, latitudefor seller missteps has become razor thin.”

—— BBrriiaann OO’’NNeeiillll,, UUllmmeerr && BBeerrnnee




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quarter volatility of the public markets. They can take a longer-term view, sometimes sacrificingmargin to capture market share ormaking significant investments inthe business. Companies should,however, be careful to documentthose investments as one-timeevents so EBITDA can be positivelyadjusted at sales time.

Mr. Juster offers this example.A company purchased capitalequipment in 2008 to improveits operations or enter a newmarket. The investment impactedits earnings for the year. However,proper documentation persuadedthe buyer that some of the expense can be added back tothe 2008 earnings on which themultiple is paid to determine afair sales price.

Check That Agreement “Business is about relation-

ships,” says Mr. Juster. “In everyrelationship there is both oppor-tunity and risk.” Owners shoulddo a check-up involving all thecompany’s key relationships. Doemployees have non-competeagreements? Dokey customersand suppliershave writtenagreements thatspell out whathappens in a dispute? Do majority ownershave agreementswith minorityshareholders totake them alongin the sale?

As Cohen &Company’s Mr.Bechtel says,“Address yourcompany’s skeletons before aprospective buyer does.”

“It’s all about getting thehouse in order and eliminatingobstacles” says Ulmer & Berne’sMr. O’Neill.

Remember too, it’s not justthe property, plant and equip-ment numbers that matter.“Now balance sheets are farmore nimble,” Mr. Juster says.“It’s intellectual property that’scritically important to the buyerin maximizing value.”

Privately owned companiesalso should pay attention to

ownership issues such as succes-sion planning and buy-sellagreements. Once a sale oppor-tunity arises, those issues canprevent a company’s ownersfrom maximizing their invest-ment, Mr. Bechtel says.

Uncle Sam’s ShareWhen it comes to maximizing

the selling price of a business,“It’s not necessarily what youget, but what you keep,” Mr.Juster says. He, of course, is referring to Uncle Sam and thetax implications of the sale. After the sale is completed is notthe time to determine how tominimize the tax impact.

The type of entity – C corp., Scorp. or LLC – and how a deal isstructured – asset sales, stock sales,mergers – affects the net proceeds.In addition, whether you receiveall-cash at closing, take a sellernote or have an earn-out willhave an impact on present value.

“There are tremendous oppor-tunities before the sale to do creative planning to avoid estatetaxes,” Mr. Juster says. Significant

value can be savedand transferred tochildren, grand-children, a grantortrust or a charita-ble foundation,thus reducing theestate tax impact.“You can do goodand do well withcareful foresight.”

But advanceplanning is critical. It allowscompany ownersto bring in appraisers to set avalue for family

and charitable gifting purposesThese appraisals need to be donewell before a sale occurs.

“Once you have a letter of intent, it’s harder for an appraiserto come in and say it’s notworth that,” Mr. Juster says.

Despite the considerable effortrequired, the entire seller-side duediligence process is worth it, Ulmer’s Mr. O’Neill says. “A well-prepared seller can expect that thehuman capital and monetarycosts incurred in this process willbe offset by the advantages it willhave in today’s market.” ■

A major advantage for private

companies ... is thatthey don’t have torespond to the ...volatility of the public markets.

Brian O’Neill, partnerat Ulmer & Berne LLP,says the optimal seller-side due diligenceshould include:

ACCOUNTING TEAM:Accountants should review and verify thecompany’s financial information and prepare pro-forma interim and trailing 12-month financial state-ments. Establishing thequality of financial information is crucial tomaximizing the value of the company. The accounting team should analyze possible adjustments to EBITDA as ameans to maximize the value of the company.

LEGAL TEAM: Counsel should review the company’s records and contracts and clean upoutstanding issues. The legal team should workwith the seller to develop a strategy to deal withtypical concerns of buyers such as third-party assignments and consents, regulatory and employee matters and environmental and tax issues.

INVESTMENTBANKER: For largermore sophisticatedtransactions, an investment banker isan integral part of thedeal team and will take the lead to provide estimates ofvalue, develop a marketing strategy,and eventually drive of-fers from prospectivebuyers.

DEAL STRUCTUREAND TAX PLANNING:

Preliminary deal structure and tax issues shouldbe addressed by the legal, accounting and invest-ment banking teams. As part of this process, theaccounting and legal teams should also provideadvice on possible estate planning strategies tocreate the most efficient tax structure for wealthtransfer.

DATA ROOM: Organizing due diligence information, including legal documents, financial statements and business reports in a secure online data room can speed up the due diligenceprocess and lower both sides’ transaction costs.

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Companies find Northeast Ohio a good place to grow

Afew years ago, Bob Fritzconsidered selling hisfamily business, AvtronManufacturing Inc., a 56-

year old technology company. Independence-based Avtron designs and manufactures electricalcontrol and test equipment foraerospace, industrial automationand other applications.

As he was exploring his options, he found and came torely on the Cleveland-based investment banking firm WesternReserve Partners to help him inthe sales process. “You don’t justwing it — doing it right takestime,” Mr. Fritz says.

He was amazed at the deal-making resources to be found inCleveland. “I’ve lived here all mylife and didn’t realize the deal-making infrastructure available,”he says.

Ultimately, Mr. Fritz sold thecompany to the Morgenthaler,one of Cleveland’s long-standingprivate equity firms. He says heliked that the firm understoodmanufacturing and wasn’t just

“New York financial guys.”Mr. Fritz’s experience illustrates

one reason why Northeast Ohiois a good place for owners ofsmall and mid-sized companies togrow their business and ultimatelyrealize value from their invest-ment.

The region offers access to capital, professional services anda skilled workforce, along with acentral location and the technicaland scientific resources of leadingcolleges and universities.

Deal Structure Works Mr. Fritz was pleased to be able

to structure the deal so manage-ment received stock options andhe would stay on as CEO. “Beforeprivate equity that wasn’t possi-ble,” he says.

Weekly phone meetings andquarterly board meetings havebecome part of the routine, and achief financial officer, Rich Garcia, was brought in to providemore strategic overview of the financial side of operations.

“Properly handled and man-aged, private equity is a goodthing for a company,” Mr. Fritzsays. “We didn’t lose a single employee due to the acquisition.”

Employees are a critical compo-nent at Avtron, which differentiatesitself with the long-term support itprovides to its customers.

That wasn’t always the case.When Mr. Fritz joined the company in 1974, about 20 yearsafter his family opened a smallplant in Cleveland, turnover washigher.

The workforce caliber has improved in part because employees are compensated welland receive excellent benefits,

including profit sharing, what Mr.Fritz has been told is a “Cadillac”health plan.

Top Talent RequiredAvtron employs more than 400

people, many of whom are engi-neers and other professionals.

Top talent is essential becauseAvtron produces highly engi-neered products that cannot beproduced by unskilled people.

“We now hire impact players,”Mr. Fritz says, noting one hirebrought in $2 million in businessand now has customers requesthim.

“Avtron is able to grow year in, year out with low turnover,and we can find quality peoplewhen new hires are needed,” Mr. Fritz says. Even that success,though, doesn’t mean the employeeswould be willing to pick up andmove if Avtron did.

“If I walk in and say we’re going to move to Georgia, theyprobably would not go,” Mr. Fritzsays, noting the company isn’tasking them to make that decision.

Avtron will continue to operate from its five plants in

Independence and Valley View.It does so with a global view.

About 30 percent of its customerbase is outside the United States.The company shipped to 78 countries in 2009.

Avtron also has experiencedsales records for five or six years through 2008 and expects to post an all-time profit recordfor 2009 even though salesdipped.

“We’ve grown rapidly. As you grow, your culture and outlook change. Morgenthaler hashelped us in that process,” Mr.Fritz says.

Concept Fills a VoidWhen Richfield-based Construc-

tion Labor Contractors had its first40 people on the job, they poppedthe champagne cork. If they did that today, they would bepopping corks more than 20 timesa day.

“On an average day we have850 full-time workers on the job,”says Vice President Rob Reese.

Construction Labor Contractorsis another Northeast Ohio successstory.

The company provides skilledlabor to construction contractorsand industrial project managers.By leasing craftsmen, contractorscan control their costs while delivering high quality construc-tion work.

Founder and CEO Tim Cherottisays the company was created tofill a void. Although non-unioncontractors comprise about 85percent of the labor pool, they didnot have a “union” hall where thejobs were distributed.

“The non-union sector needed abetter way to provide skilled laborto ‘merit’ construction contrac-tors,” he says.

Operating from 15 offices innine states, Construction Laborbuilt its own corporate headquar-ters in Richfield four years ago. In2008, the company posted itsmost successful year with $40 million in revenue.

That’s a long way from 1997when Mr. Cherotti started thecompany with just $100 and an

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ACG Clevelandcongratulates

the winners of the14th Annual

Deal Maker Awards

216-696-8484 • 216-696-2582 [fax]1120 Chester Avenue, #470 • Cleveland OH 44114

www.acg.org/cleveland • [email protected]

2010 Award Recipients

Cliffs Natural Resources Inc.Dealer Tire, LLC

TransDigm Group Inc.

SPONSORS

office in his basement. He took the leap following four

to five years of experience workingfor staffing and headhuntingfirms.

“I decided I could do it on myown,” he says. I felt I understoodthe industry, had the experience, abit of luck and the good hires tobe successful.”

Mr. Reese joined six months after his former fraternity brotherat Kent State University started thecompany.

“It worked out well,” Mr.Cherotti says. “Long tenure is part of our corporate philosophy.We treat employees as if they’refamily.”

Longevity RewardedThe results speak for them-

selves. Over half the corporatestaff has worked at the companyat least five years.

Mr. Reese says the Ohio officestaff serves as an example for theentire company.

The Akron manager has workedthere 11 ½ years.

The Columbus manager hasbeen there nine years, and theCincinnati manager has beenthere seven.

Longevity is rewarded by Construction Labor, which pays100 percent of health care costs after an employee has been withthe company five years.

Mr. Reese says Construction Labor is not really a temp agencybecause full-time employees have benefits, such as paid holidays and vacations, 401(k)participation.

Employees would not find thoseopportunities working for a traditional temp agency or a smallconstruction firm.

A construction company with20 employees can’t offer the same benefits package that a largercompany like Construction Laborcan.

In 2008, Construction Laborsent about 2,000 W-2 forms. Inaddition, Construction Labor’s5,000-plus clients mean employ-ees won’t experience the layoffs they could working for a singleemployer who hits a down cycleand doesn’t have enough work.

Both Mr. Reese and Mr. Cherotti say that the secret behind Construction Labor’s success is how it treats its employees and its clients.

“A labor company is all about relationships,” they say.Without relationships, the company would be a commodityand pricing would be client’s onlyconsideration.

“The reason we’re so successfulis because we create a pleasantwork environment,” Mr. Cherottisays. “We put employees andclients first — it really promoteslongevity and only adds to stability. It’s rare we lose an employee we didn’t want to lose.”

Although 2009 brought disap-pointments due to the economy,Construction Labor already is

seeing an uptick for 2010. In fact, the recession has helped

their clients recognize the full value the company offers.

In a construction boom people turned to us when theyneeded more hands,” Mr. Reesesays.

“Now they realize ConstructionLabor Contractors can help themsave money too.” ■

The region offers access to capital, professionalservices and a skilled workforce, along with a

central location and the technical and scientificresources of leading colleges and universities.

FEBRUARY 9Dinner Sandy Cutler, CEO, EatonCorp., (Joint meeting with FEI)

MARCH 17BreakfastSpeaker to be announced

APRIL 22BreakfastTom EmbresciaSecond Generation Ltd. — The Embrescia Companies

APRIL 29Afternoon WorkshopTopic to be announced

MAY 20BreakfastChris ConnorCEO, Sherwin-Williams

JUNE 15Social and Networking ReceptionThe Shoreby Club

SEPTEMBER 8-9

ACG Great Lakes Capital ConnectionRenaissance Hotel

OCTOBER 4

Annual Golf OutingFirestone Country Club

JANUARY 2011

Deal Maker Awards DinnerMarriott at Key Center

All events at The Union Club unless otherwise specified

ACG CLEVELAND EVENTS

For more information, contact ACG Cleveland at (216) 696-8484 or www.acgcleveland.org




www.bglco.com

When the M&A and Financing

Markets get tough, the tough

work harder.Corporate Finance Experts From Your World™

Contact Michael E. Gibbons (216) 241-2800

www.globalma.com

Over 20 years of trusted corporate financial advisory services. Mergers & Acquisitions Debt & Equity Placements Financial Restructurings Valuations & Fairness Opinions

12 Deals in the Last12 Months

What do You Value?

Creating Value.

To reach our Cleveland Office call 216.241.3272 or visit www.meadenmoore.com

Audit

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Employee Benefits Audits

Investigative Accounting

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Tax

Wealth Center

Turbulent times bring management challenges

Successful businesses arefounded and funded on thepremise of growth and anoptimistic view of the

future. But a deep and enduringrecession like this one turns thoseaccepted notions on their head.Here are some views from thosepitching in on the front lines.

DENNIS KEBRDLE PARTNER, CHIKOL EQUITIESINC., GRANGER, IND.

“Our traditional practice of

tuck-in company with balancesheet issues but good operationsthat can be added to an existingplatform at a three to four multiple at the bottom of the cycle or for senior-secured debt values. The key to this opportunity is the relationshipwith secured lenders and the supporting cast of attorneys andconsultants.

“By working together to limit or reduce the lender’s loss or expo-sure, equity players can becomewelcome guests again in bankoffices.”

DAN D’AGOSTINOPRINCIPAL/GENERAL MANAGER, DEFINITY PARTNERS,CLEVELAND OFFICE

“Despite the tremen-dous pressures businessesare under today, we stillsee too many leaderssquandering precioustime and accepting a slug-gish pace of progress intheir organization. Theyare waiting for employeesto ‘get it’ and rise to theoccasion, or putting offacting in the hopes thatthings will improve ontheir own.

“The reality is thatmoving quickly will uncover the real prob-lems in the organization.Problems in decision-making, sense of owner-ship, teamwork, account-ability and motivationwill surface when the organization is asked tomove quickly.

“When people investthe time to make improvements and theresults are not seenquickly, people will behesitant to prioritize improvements in the future. However, when achange is made and thebenefits are realized within days,managers and employees willreadjust priorities.”

MICHAEL GERBASIMANAGING PARTNER, SAGERCOMPANY, CLEVELAND

“For 25 years, my company hasserved private-equity groups in recruiting top executives for man-agement teams. Lucrative returnslured risk-inclined entrepreneurswho remained dedicated through-out a deal—even the tumultuousones. That was then.

“Traditionally, private equitygroups literally banked on the loyalty of their key partners who

invested personal sweat and equity into a deal. As deals dragout and fears rise that things maygo south, these key players areever-more willing to leave invested

time and money for lessrisky, lower return deals.

“Now, some private equity groups are scram-bling to retain humancapital. The pot sweeteners that persuade management to stay arenot always monetary. Onthe flip side, we’ve been capturing fleeing talentand placing them with groups that are compatible.”

JEFF SCHWABM&A PRACTICELEADER, OSWALDCOMPANIES, CLEVELAND

“Even though the economy is bad, the risksthemselves haven’tchanged. Exposure to risk,though, may actually begreater because people are looking for any deeppocket. Some people gothrough an acquisitionthinking they don’t needto worry about insurancedue diligence. Meanwhile,

claimants may be thinking abouthow to make money by filing claims.

“Potential buyers should beaware of how targeted companiesare operating their insurance programs; professional due dili-gence would detail the choice and impact those programs. Forexample, a cash-flow-basis insur-ance program may be a liabilityfor the buyer if not explored thoroughly. In a cash-flow plan,the company pays a certain percentage of premiums andprospective claims at the begin-ning of the year. If losses aren’t as great as expenses, the companygets a refund. However, it’s a potential liability that the company will be paying more as

‘valuate, turn around and help implement long-termchanges’ has become one of ‘stabilize if possible and movethem out.’

“Our greatest fear today is thatthere is not enough time beingspent preserving enterprise valueand that equity is looking at it allthrough 2008 glasses. Those daysare over.

“With that as a backdrop, wecontinue to believe that buyerscan take advantage of the currentsituation to find bargains andbuild value. You can find a

DAND’AGOSTINO

Crain’s Cleveland Business

Custom Publishing staff

Ad director:Mike Malley([email protected])

Page designers:Kathy Carr ([email protected])Joel Hammond ([email protected])

Contributing writer:Ann Gynn, Wise Group

CONTACT USFor more information about Custom Publishing with Crain’sCleveland Business, please contact advertising sales directorMike Malley at 216-771-5070 [email protected].

MICHAELGERBASI

JEFFSCHWAB




Ulmer & Berne LLP Salutes the

Association for Corporate Growth

2010 Deal Maker Award Winners.

We congratulate our client

and all of the other

ACG Award Winners on their achievement.

Cliffs Natural

Resources Inc.

www.ulmer.com

Brian M. O’Neill

Peter A. Rome

216.583.7004

[email protected]

216.583.7124

[email protected]

claims accrue in the year. “This is especially true today.

We’re seeing employee makinggreater use of their health plans tomaximize its value. The effect isannual insurance rate increasesrising above 10 percent andgreater use of plans.

“As for property and casualtyinsurance costs, we see those asflat or even reduced in the coming year. However, financialcoverages and directors & officersinsurance is now typically moreexpensive thanks to the recent financial failures and scandals likeBernie Madoff, Stanford Invest-ments, etc.

“Don’t forget the role of suretybonds, which are especially neces-sary in a distressed environment.When buyers load up with debt,they must be mindful that theystill want to be bondable and thatis driven by the company’s finan-cials.” ■

ACG CLEVELAND 2009-2010 BOARD OF DIRECTORSPRESIDENT

Patrick GallagherEdward Howard

PRESIDENT ELECT

Theodore WagnerLibman, Goldstine, Kopperman & Wolf

EXECUTIVE VICE PRESIDENTS

Randy MarkeyCapital Acceleration PartnersJames P. MarraBlue Point Capital PartnersAl MelchiorreMelCap Partners

TREASURER

Joseph F. MaslowskiRoetzel & Andress

VICE PRESIDENT — PROGRAMS

Sean McCauleyPNC Business Credit

VICE PRESIDENTS — GOLF EVENT

Rudy BentlageChase Business CreditTerry R. LardakisMillisor & Nobil

VICE PRESIDENTS — SPECIAL PROGRAMS

Daniel G. BerickSquire, Sanders & Dempsey

Eric M. KuhenMarshScott SeelbachPrimus Capital FundsKaren TuletaMorgenthaler

VICE PRESIDENT — DEAL MAKER AWARDS

Murad A. BegLinsalata Capital Partners

VICE PRESIDENT — MEMBERSHIP

Daniel P. FilippiR. R. Donnelley & SonsMartin S. GatesCalfee, Halter & GriswoldHenry E. SeibertPorter, Wright, Morris & ArthurPeter J. ShipleyResources Global Professionals

VICE PRESIDENTS — GOVERNANCE

Jeffrey LeonardFirst Communications Corp.ACG CupDouglas K. WingetFirst Merit

VICE PRESIDENT — OUTREACH

Moses R. JhiradPNC Bank

VICE PRESIDENT — ECONOMIC DEVELOPMENT

Donald W. MajcherOhio Aerospace Institute

VICE PRESIDENTS — GREATLAKES CAPITAL CONNECTION

Timothy G. HealyLinsalata Capital PartnersJames M. HillBenesch, Friedlander, Coplan & AronoffJames P. MarraBlue Point Capital Partners

Al MelchiorreMelCap Partners

VICE PRESIDENT — TECHNOLOGY

David HadleyDavid Hadley Corporation

VICE PRESIDENT — NOMINATIONS

Mathew J. HansonEmprise Partners

ASSISTANT TREASURER

Scott R. SmileyConsultant

SECRETARY

M. Joan McCarthyMJM Services

DIRECTORS AT LARGE

Guy C. FabePricewaterhouseCoopersTom FreemanGrant ThorntonWendy S. NealGlobal M & A




Congratulations to ACG Deal Maker Award

winners and our clients

TransDigm Group Inc.Dealer Tire

Our attorneys work with deal makers to design and implement transaction structures, tax efficiencies, risk management measures and negotiating strategies. We bring together tax, antitrust, environmental, international, real estate, employee benefits, employment, executive compensation, intellectual property, technology and litigation lawyers to provide the necessary breadth and depth of representation.

© 2010 Baker & Hostetler LLP

CHICAGO CINCINNATI CLEVELAND COLUMBUS COSTA MESA DENVER HOUSTON LOS ANGELES NEW YORK ORLANDO WASHINGTON, DC

www.bakerlaw.com

For more information, please call (216) 589-0900 or visit www.wesrespartners.com

has been acquired by

a division of

The undersigned acted as exclusive financial advisor to Cranel, Inc. in this transaction

ACG Cleveland honors top deal makers

The capstone of the ACGCleveland program seasonis the annual Deal MakerAwards dinner. Now in its

14th year, the event recognizesNortheast Ohio’s engines of cor-porate growth and deal-making.The 2010 awards program willhonor three companies on Thurs-day night, January 21:

TransDigmThis Cleveland-based global

designer, producer and supplierof aircraft components has grownsales from $48 million at its for-

mation in 1993 to $762 milliontoday. During that time Trans-Digm has acquired 27 businesses,including six in the last twoyears. In October 2009, Trans-Digm (NYSE: TDG) completed asuccessful $425 million notes of-fering as part of a capital restruc-turing that also included a one-time special cash dividend of$7.65 on each outstanding shareof common stock. TransDigmwas recognized recently by Fortune and Forbes magazines.Fortune ranked TransDigm No. 51on its 2009 list of the 100 FastestGrowing Public Companies in

America, while Forbes ranked itNo. 25 on its 2009 list of the BestMid Cap Stocks in America.

Cliffs Natural Resources

Cliffs Natural Resources (NYSE:CLF, Paris: CLF) is an internation-al mining and natural resourcescompany whose Cleveland rootsgo back to 1847. Following a series of strategic transactions beginning in 2002, Cliffs emergedas the largest producer of iron orepellets in North America, a major

supplier of iron ore out of Australia,and a significant producer of metallurgical coal. The companyhas continued to actively executea strategy designed to achievescale in the mining industry, focusing on serving the world’slargest and fastest-growing steelmarkets. Over the last two yearsthis has included more than $1billion in deals and an attempted$10 million merger with AlphaNatural Resources. Most recently,Cliffs announced a successful$240 million contested bid to acquire Canadian chromite explorer Freewest Resources Canada Inc. and the buyout of its three joint venture partners’73.2% interests in a Canadian ironore mining operation.

Dealer TireDealer Tire stands as one of the

most impressive corporate growthstories in Northeast Ohio over thepast two decades. Formed in the early 1990s to address the tire needsof automotive dealer, Dealer Tire’sfoundation rests on more than 80years of success in tire retailing asMueller Tire and Brake. In 2000, theMueller family sold the retail stores to

Nominate your favorite Deal Maker

Nominations for the 2011 ACGCleveland Deal Maker Awardsmay be submitted to ACG at anytime during the year. Each November, a selection committeereviews the nominations and selects the award winners. For anomination form, contact ACGCleveland at (216)-696-8484 or [email protected].

focus on Dealer Tire. From 2004 to2008, Dealer Tire grew 229 percent.Today it is the number one supplierof tires and wheels to U.S. automo-tive dealers and has programs inplace with Mercedes-Benz, BMW,Lexus, Toyota, Kia, Chrysler and numerous other automakers. In2009 Dealer Tire entered into a minority recapitalization of thecompany with the Boston-based private equity firm TA Associates.The transaction provided liquidityto previous institutional owners andmanagement investors along withan expanded debt facility for futuregrowth and acquisitions. ■



LARGEST ARCHITECTURAL FIRMSRANKED BY LOCAL REGISTERED ARCHITECTS

Local registeredarchitects

Local office revenue(millions)

Rank

Name of firmAddressPhone/Web site 12-1-2009 12-1-2008

Totalstaff 2009 2008 Major current projects

Top local executiveTitle

1Westlake Reed Leskosky925 Euclid Ave., Suite 1900, Cleveland 44115(216) 522-1350/www.wrldesign.com

42 40 150 $24.0 $25.7PlayhouseSquare Theatres; Cleveland Clinic Twinsburg Medical Campus andHillcrest Hospital expansion; Oberlin College, Litoff Building; Parker Hannifin,European Headquarters, Switzerland

Paul E. Westlake Jr.managing principal

2Herschman Architects Inc.25001 Emery Road, Suite 400, Cleveland 44128(216) 223-3200/www.herschmanarchitects.com

22 20 61 $7.0 $13.0Retail projects: HH Gregg, Dick's Sporting Goods, Gold's Gym, Best Buy, FredMeyer Jewelers. Shopping centers: Odessa, Texas, Hagerstown, Md., Solon.Shoreway renovation Cleveland; Vieng's Restaurant Westlake

Mike Crislippresident

2Middough Inc.1901 E. 13th St., Cleveland 44114(216) 367-6000/www.middough.com

22 21 725 $95.0 $110.0The Ohio State University, central power plant water treatment; Wal-Mart StoresInc., multi-level store, Grundy, Va.; V & M Star, administrative offices, Girard/Youngstown; Bridgestone U.S.A., Smyrna, Tenn.

Charles L. Krzysiakvice president

4ka1468 W. Ninth St., Suite 600, Cleveland 44113(216) 781-9144/www.kainc.com

21 26 55 NA $18.8Westfield San Francisco Centre, Calif.; Icon in the Gulch, Tenn.; The Village atGulfstream Park, Fla.; Annapolis Towne Centre, Parole, Md.; Avery DennisonNortheast Ohio facility

James B. Hellerpresident

5Bostwick Design Partnership2729 Prospect Ave., Cleveland 44115(216) 621-7900/www.bostwickdesign.com

20 18 33 $6.1 $7.3Marymount Hospital, surgery expansion; Cleveland Clinic Las Vegas,development plan; The Ohio State University College of Medicine; ClevelandPublic Library, Rice Branch

Robert L. Bostwickpresident,director of design

6Braun & Steidl Architects Inc.1041 W. Market St., Akron 44313(330) 864-7755/www.bsa-net.com

18 21 44 $5.0 $8.4Cleveland State University, new student center; Cuyahoga Community College,Career Center; Faith Family Church; Cuyahoga Valley Christian Academy; St.Columba Cathedral, restoration

Chas Schreckenbergerpresident

6Dorsky Hodgson Parrish Yue23240 Chagrin Blvd., Suite 300, Cleveland 44122(216) 464-8600/www.dorskyhodgson.com

18 31 51 NA NAThe Promenade at Coconut Creek, mixed-use, retail, office, Coconut Creek, Fla.;The Plaza at Southpark, Strongsville; The Weils Rehab Pavilion, Bainbridge;Overtown Transit Village, office buildings, garage, Miami, Fla.

William Dorsky, chairmanCornelia C. Hodgson,president

8Hasenstab Architects Inc.190 N. Union St., Suite 400, Akron 44304(330) 434-4464/www.hainc.cc

17 19 30 $5.3 $6.7ODMH - Northcoast Behavioral Hospital; The University of Akron, NationalPolymer Innovation Center; Akron Public Schools, National Inventor's Hall ofFame School; Akron Zoo, conservation carousel

Mark A. Ohlingerpresident

9Richard L. Bowen + Associates Inc.13000 Shaker Blvd., Cleveland 44120(216) 491-9300/www.rlba.com

16 17 85 NA NA Mayfield Village, Police Station; CMHA, Outhwaite Building; RTA, CliftonBoulevard enhancement; Cuyahoga County College, Brunswick campus

Richard L. Bowenpresident

9URS Corp.(1)1375 Euclid Ave., Suite 600, Cleveland 44115(216) 622-2400/www.urscorp.com

16 14 711 $105.4 $39.0Cuyahoga Community College, Health Career and Technology Building, HighlandHills; Digestive Disease Consultants, medical building, Brunswick; Cleveland-Cuyahoga County Port Authority, marina/park relocation study

Gary R. Hribar, vicepresident, URS division;William Colt, sr. vicepresident

11Bialosky + Partners Architects LLC2775 S. Moreland Blvd., Cleveland 44120(216) 752-8750/www.bialosky.com

14 16 30 NA NA GCRTA, Brookpark Station; Mandel JCC; Tri-C, downtown culinary; SchofieldBuilding; EnVision Apartments; One of a Kind Pet Rescue

Jack A. Bialosky Jr.senior principal

12Domokur Architects4651 Medina Road, Akron 44321(330) 666-7878/www.domokur.com

13 9 29 $3.3 $2.2 JM Smucker Co.; Kent State University; Bowling Green State University;Cleveland State University; FirstMerit

Michael Domokurowner

12Perspectus Architecture13212 Shaker Square, Suite 204, Cleveland 44120(216) 752-1800/www.perspectusarch.com

13 11 22 NA NAThe Ohio State University Medical Center; Veterans Affairs Medical Center; TheJames Cancer Hospital & Solove Research Institute; Canterbury Golf Club;Cuyahoga Community College; John Carroll University

Lawrence FischerWilliam Ayarsprincipals

12TDA4135 Erie St., Willoughby 44094(440) 269-2266/www.thendesign.com

13 13 27 $4.4 $4.2Bailey Building, restoration; Dalton Local School District, GaREAT SportsComplex phase 3; Garfield Heights City School District; Lake County MR/DD,renovations; Mayfield City School District; Perry Local School District

Robert A. Fialamanaging partner

15Burt Hill3700 Park East Drive, Suite 200, Beachwood 44122(216) 454-2150/www.burthill.com

12 12 22 $5.1 $4.5NASA Glenn Research Ctr., centralized office bldg.; Cuyahoga CommunityCollege, Westshore Campus phase 1; Nazareth College, lab building; Baldwin-Wallace College, Thomas Family Ctr. for Science and Innovation

Michael ReaganMichael R. Carterprincipals

16GPD Group520 S. Main St., Suite 2531, Akron 44311(800) 955-4731/www.gpdgroup.com

11 11 NA $33.0 $33.0 NA Dave Grangerpresident

16Vocon3142 Prospect Ave., Cleveland 44115(216) 588-0800/www.vocon.com

11 12 63 $14.0 $15.6KeyBank, retail branches; Hospice House West; KeyBank, Cleveland ServicesCenter; Cuyahoga County Juvenile Justice Center; Huntington Bank; MorganStanley; Willis; Cuyahoga Community College; Jones Day

Deborah V. Donleyprincipal

18Robert P. Madison International Inc.2930 Euclid Ave., Cleveland 44115(216) 861-8195/www.rpmadison.com

10 10 21 $2.5 $3.0 Center for Creative Arts; Willson School; Anton Grdina; Mt. Zion CongregationalChurch; Kappa II Housing (HUD)

Robert P. Madisonchairman, CEO

19ADA Architects Inc.17710 Detroit Ave., Lakewood 44107(216) 521-5134/www.adaarchitects.cc

9 7 35 NA NA NA Robert Acciarripresident

19CBLH Design Inc.7850 Freeway Circle, Cleveland 44130(440) 243-2000/www.cblhdesign.com

9 11 21 NA $3.1Mercy Medical Center; University of Akron; Ritter Library; Ohio State UniversityMedical Center; Bowling Green State University; Cuyahoga Falls Library;Veterans Affairs Medical Center; Cleveland State University

Marc B. Bittinger, Timothy S.Hunsicker, Michael D. Liezert,principals

19HWH Architects Engineers Planners Inc.1300 E. Ninth St., Suite 900, Cleveland 44114(216) 875-4000/www.hwhaep.com

9 10 90 NA NAGeneral Electric Nela Park; Goodyear, Lawton Okla.; Cleveland MetroParks,headquarters; City of Cleveland, various projects; General Electric Energy,Greenville, S.C.

Peter P. Jancarchairman

22The Austin Co.6095 Parkland Blvd., Cleveland 44124(440) 544-2600/www.theaustin.com

8 7 85 $44.6 $39.0Hills Pet Nutrition, Emporia Kan.; Mitsubsihi Power, Savannah, Ga.; FedExGround, Kansas City, Mo.; Lance, Ashland; Bimbo Bakeries, Horsham, Pa.;Pfizer, Portage, Mich.

Patrick B. Flanaganpresident

22Burgess & Niple1300 E. Ninth St., Suite 612, Cleveland 44114(216) 241- 9600/www.burgessniple.com

8 7 54 NA $10.3General Instructional Building, Ft. Lewis, Washington; Hubbard Schools, K-12campus, Hubbard, Ohio; Company Operations Facilities, Ft. Campbell, Kentucky;Child Development Center, Ft. Bliss, Texas

Charles J. Zibbeldirector,Great Lakes region

22Harris/Day Architecture3722 Whipple Road, NW, Canton 44718(330) 493-3722/www.harrisday.com

8 6 20 $2.5 $2.2 Wayne County Schools Career Center; Bridgestone Technical Center R. Jeffrey Daypresident

22Herman Gibans Fodor Inc.-Architects1939 W. 25th St., Suite 300, Cleveland 44113(216) 696-3460/www.hgfarchitects.com

8 8 18 $2.3 $2.5Emerald Alliance V, 70-unit supportive housing building, Cleveland; Kendal atOberlin, expansion and renovation; Squire Sanders, interior renovation; MountSaint Joseph Home, 100-bed skilled nursing home, Euclid

James G. Hermanpresident

22Makovich Pusti Architects Inc.111 Front St., Berea 44017(440) 891-8910/www.mparc.com

8 8 13 NA NAVeterans Administration, surgery, surgical intensive care; Fairview Hospital,pediatric behaviorial health; Richmond Medical Center, behaviorial health, criticalcare, stepdown

Ronald J. Makovichpresident

22Richard Fleischman + Partners Architects Inc.1020 Huron Road, Suite 101, Cleveland 44115(216) 771-0090/www.studiorfa.com

8 6 26 $1.7 $2.2A.J. Celebrezze Federal Building; J.W. Peck Federal Building; MYCAP Mahoning-Youngstown Community Action Partnership; University Circle Methodist Church(Oil Can)

Richard Fleischmanpresident

22Sandvick Architects Inc.1265 W. Sixth St., Cleveland 44113(216) 621-8055/www.sandvickarchitects.com

8 9 17 $1.8 $3.2 Cleveland Institute of Art; Gospel Press Jonathan Sandvickpresident

29Array Healthcare Facilities Solutions3201 Enterprise Parkway, Suite 495, Beachwood 44122(216) 292-7950/www.arrayhfs.com

7 6 14 $2.9 $3.0Community Health Partners, master plan and implementation, Lorain; UH CaseMedical Center, parking facility, Cleveland; UH Rainbow Babies & Children'sHospital, master plan, Cleveland

Christopher Trottavice president,managing principal

29City Architecture Inc.3634 Euclid Ave., Suite 100, Cleveland 44115(216) 881-2444/www.cityarch.com

7 8 23 $4.1 $4.4 Collinwood, Recreation Center; Mayfield, RTA Station; University of Akron,Administrative Services Center; Garden Valley Apartments; Lakefront West

Paul J. Volpepresident

29Holzheimer Bolek + Meehan Architects7227 Chagrin Road, Chagrin Falls 44023(440) 247-9800/www.hbmarchitects.com

7 7 12 NA NAAmherst Pubic Library; Roanoke County Library, Va.; Wichita Central Library,Kan.; Newton Public Library, Kan.; Warren Civic Center & Library, Mich.;Pickaway County Library

Dan Meehan, DavidHolzheimer, Peter Bolek,partners

29TC Architects Inc.755 White Pond Drive, Suite 401, Akron 44320(330) 867-1093/www.tcarchitects.com

7 9 20 NA NANEOUCOM, campus research and academic expansion; Akron MetropolitanHousing Authority, Edgewood Homes Hope VI, elderly housing developmentcorporation, numerous projects

Robert C. Chordarpresident

Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to ourlists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) URSacquired Washington Group in 2007. The 2009 local office revenue includes the acquistion, the 2008 revenue is for URS only.

RESEARCHED BY Deborah W. Hillyer



Firms: Tax rules may change

Mobile: Some clients wary of investing in technology

While Mr. Mueller said Capital-Works likes to do about three dealsa year, it didn’t do any in 2009. Still,he said he expects CapitalWorks toclose its first deal of 2010 in the next30 to 45 days, and to hit its goal ofthree deals for the year.

No sprinters in the fieldStewart Kohl, co-CEO of The River-

side Co., also expects more compa-nies to put themselves up for sale asthey become confident that they canfetch a good price. Purchase pricesand multiples will begin to “creepup,” he said, but not skyrocket.

Likewise, investors are starting toinch back into the fray. “They’re surenot sprinting,” Mr. Kohl said.

While Mr. Kohl said Riverside’s 70-company portfolio did “surprisinglywell” for the year, down just about 5%in sales and earnings for 2009, thefirm completed about half as manydeals in 2009 — a total of 14 — as ithad in 2008, when it did 31.

Mr. Kohl said he saw both 2008 and 2010 as bookends, though, andexpects that just as 2008 started theyear strongly then ended in turmoil,2010 will finish with the year on anupswing after a slow beginning.

“We went into 2009 with almostnothing in the pipeline,” he said. “Inthe second half, the pipeline began torebuild. I think we’re going into 2010with the world significantly better.”

John Nestor, senior managingpartner of Kirtland Capital Partners,said he is beginning to field calls frombankers who once again are interestedin talking about the possibility ofmaking loans for private equity trans-actions. Mr. Nestor said bankerspared down their portfolios to get ridof poor performers and now arelooking for more opportunities.

Linsalata Capital Partners seniormanaging director Eric Bacon saidhe’s looking for 2010 to be a “par”year, with two or three acquisitions,where 2008 and 2009 were both sub-par. Mr. Bacon said he expects

2010 to be a good year for private equity firms to clean up a backlog ofdistressed companies.

Cash needs will drive dealsSteven Rosen, co-CEO of Resilience

Capital Partners, said deal flow for his firm, which deals in turnaroundcompanies, was up considerably lastyear. The pace will be even greater in2010, Mr. Rosen expects, as compa-nies continue to be interested in rein-vesting in their business, but need tobring in new partners who have themoney to do so.

Mr. Rosen expects refinancing todrive some deals, but said it is likelysellers still will want to retain somestake in their businesses to take advantage of potential upsides as theeconomy improves.

“When the economy recovers is themost difficult time for companies thatdon’t have access to capital,” he said.

Private equity firms also see thepossibility of regulatory and taxchanges on the horizon. Mr. Muellersaid a potential tax change could im-pact firms’ business models as theywork to keep returns high.

Now, Mr. Given said, general part-ners’ 20% take of profits in the fundsare taxed as capital gains, at a 15%rate. A new proposal would tax thegeneral partners’ share of profits asearned income, potentially morethan doubling the tax rate for thoseearnings.

Mr. Given said he doubted if fundswould try to pass the increase on toinvestors, but Mr. Mueller said somefunds might try to cut back in otherways to keep returns high.

There also are proposed changesthat would call for private equityfunds to register themselves, thoughmany fund CEOs and managing part-ners said either that they hadn’t yetstarted paying attention to the pro-posals or that the necessity wouldhave little impact on them, as eitherthey have registered voluntarily orhave dealt with increased regulationfor various reasons in the past. ■

“There’s a real shakeup in the industry,” said Mike Strauss, vicepresident of interactive at MarcusThomas in Warrensville Heights. “Ithink in general, 2010 is going to beconsidered the year of mobile mar-keting.”

According to online researchfirm eMarketer, U.S. mobile adver-tising spending — comprising display ads, search and message-based advertising — will grow 85%to $593 million this year from $320million in 2008, and it’s projectedto hit $1.6 billion by 2013. Advertisingfalls under the umbrella of marketing,along with anything else from promotions and contests to inter-active games. Likewise, the numberof U.S. web visitors using a mobiledevice climbed 34% over a one-year period, to 56.9 million visitorsin July 2009 from 42.5 million inJuly 2008, according to The NielsenCo.

And those numbers are translatinginto more business for marketerswhose clients are eager to ride the mobile wave. As an example,thunder::tech is working with theWinking Lizard restaurant chain,which is based in Bedford Heights,

to develop an iPhone app that allows users to rate and review the200 beers Winking Lizard sells. It’sthe restaurant’s first entry into mobile marketing.

“If you spend a lot of time at our14 locations, you’ll see people playing with their cell phones alot,” said Jon Gross, WinkingLizard’s director of development.“It’s a way for us to interact withour customers.”

Mr. Gross said the WinkingLizard has not advertised throughtraditional media, but sees the potential in expanding its mobilemarketing beyond the app, whichis expected to be rolled out inMarch.

Cleveland-based DigiKnow alsoexpects an influx of business, notonly via smart phone apps but alsofrom mobile web sites, text messagingand mobile advertisements, saidScott Chapin, director of consultingservices. In anticipation of demandfor its expertise, the marketing firmlaunched this month a new page onits web site for information on itsmobile services.

Similarly, thunder::tech thismonth is launching a mobile versionof its desktop web site.

Narrowing the target

Ray Davies, managing director of the Cleveland office of public relations and marketing agency j. simms, said mobile marketing isa valuable investment because it ismeasurable and “pennies on thedollar” compared with marketingthrough more traditional media.

The San Diego-based j. simmsworks with clients to develop text-messaging campaigns, which areappealing to marketers because therecipients actually must sign up toreceive the message.

Mr. Davies estimates the textread-through rates at about 96%,while only about 25% to 30% oftheir clients read through e-mail.

“Marketing has shifted from massmedia to relevance media,” meaningthe message is more targeted, Mr.Davies said.

In December, for example, j.simms helped Painesville-basedRDP Motorsport USA, which re-stores vehicles and upgrades theirperformance, launch a text-mes-saging campaign that allows RDPto send to its customers messagesthat include discounts, videos orspecial event invitations. Clients

signed up for the service throughRDP’s Facebook, Twitter andLinkedIn pages.

“We had 300 to 400 people registerto receive our messages,” said RDPfounder Steven Leerentveld. “Weused social media to put out ourmessage, but we didn’t really knowwho or how many people read it.Now we know exactly who is receiving our texts.”

Hurdles aheadMobile marketing does not come

without its challenges, however. For one, it can be difficult to

retrofit an app to each smart phone— whether it’s the Android, iPhoneor Blackberry, said DigiKnow’s Mr.Chapin.

“I don’t believe marketing willsustain all these different smartphones,” he said. “Today, I wouldstill recommend to clients onbuilding an app for the iPhone. Sixmonths from now, that answer maybe different.”

Agencies also say it can be diffi-cult to convince marketers who arejudicious about spending money toinvest in a technology that is under-going a daily metamorphosis.

“It’s a conversation we have

almost daily with clients,” Mr.Therrien said. “About half of ourclients are talking mobile, and theother half, we’re trying to enlighten. Mobile is becoming a mainstay.”

Marketers also are concernedabout return on investment, whichsocial media, another marketingphenomenon, does not alwaysyield — at least in dollar signs.

“It depends on how the companymeasures success,” said MarcusThomas’ Mr. Strauss. “Return oninvestment is not always revenue.The return could just mean that thecompany now has an app.”

As marketing strategies adapt toincorporate mobile, and on abroader scale, digital marketing ingeneral, investment in more tradi-tional media, such as radio, TV andprint, likely will be scaled back.

Still, industry practitioners caution against a full-out foray intomobile at the expense of other media channels.

“The challenge is making sureyour target audience has the appro-priate mobile habits,” Mr. Strausssaid. “Not all folks with mobilephones use them to their full capacity. Mobile marketing has value,but it can’t stand on its own.” ■




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campus to its outer ring, and reno-vation of some old and outdatedbuildings, Dr. Lefton said. Spacefreed up by administrative officeswill be renovated and used as aca-demic space, he noted.

University leaders have beenmeeting with architects and designersto determine what projects are mostneeded and feasible and what willtop the priority list. Remodelingbuildings to be handicap-accessibleand replacing drafty, single-panewindows is a necessity, Dr. Lefton said.

“We have a lot of buildings thatwere built in the ’50s, ’60s and ’70s,when nobody worried about peoplein wheelchairs,” Dr. Lefton said.“We’ve got a lot of buildings thatjust haven’t been given the attentionthey should have over the years.”

Though a modern, glass-enclosedbuilding totaling 50,000 square feetis planned as the new entryway tothe school’s science buildings, Dr.Lefton said architects have beentold to take a more classical approachwhen planning other new buildings.

Among the first projects likely tobe constructed is a new building forthe architecture program, which isone of Kent State’s centers of excel-lence, Dr. Lefton said. A building to

house art programs also is a highpriority because those programscurrently are spread throughout sixlocations on campus.

The Kent State campus also willreceive an updated and friendlierlook by replacing a long corridor ofconcrete with grass and trees, Dr.Lefton said. The transformationwill give students an outdoor placeto relax, interact and study.

Throwing a HaymakerIf students and employees want to

leave campus to patronize shops andservices in downtown Kent, they’llsoon be able to cross the busy Hay-maker Parkway on an “esplanade,”or walkway, that will connect thecampus and the Main Streetbusiness district, Dr. Lefton said.

The multilane Haymaker Park-way now encourages people to drive the short distance betweenthe campus and downtown, saidRandy Ruttenberg, a principal atCleveland’s Fairmount Properties, adeveloper that plans to spend $40million to redevelop downtownKent.

“Given that Haymaker Parkwaywas built in a way that really createsa barrier between downtown andKent State, this esplanade will go a

long way,” he said.Mr. Ruttenberg said three planned

buildings totaling 162,400 squarefeet will add new space for retail, office and residential units todowntown Kent. He currently is intalks with tenants to fill each of thethree-story buildings, but he saidseven tenants either have signedletters of intent or are in advanceddiscussions to locate in the refur-bished downtown Kent.

Mr. Ruttenberg would not disclose possible tenants, but hesaid he is in talks with four restau-rants, a microbrewery, two clothingshops, a 10,000-square-foot book-store and a store relating to out-door sports. His firm also is in the final negotiating stages with two office tenants.

A project that is ready to moveforward is a long talked-about hotel and conference center inKent. Its developer is Pizzuti, aColumbus-based development firmwhose owner, Ron Pizzuti, is a KentState graduate.

Expected to cost in the range of$12 million to $14 million, the 115-room hotel is planned for theintersection of Haymaker Parkwayand Depeyster Street, said Shannon Hamons, director of special projects

at Pizzuti. The conference center willbe built across Depeyster Street butwill be connected to the hotel, mostlikely via a covered walkway, headded.

The conference center will feature 8,000 to 12,000 square feetof meeting space in the form of medium-size rooms, which currently are not offered in Kent,Mr. Hamons said. The hotel willprovide a place to stay for visitorssuch as parents of students andguest speakers, who currently muststay as far away as Hudson or Stow.

Kent State has committed to providing up to $3 million for theconstruction of the hotel and con-ference center, but Dr. Lefton saidthose details have not yet been ironedout.

Noted Mr. Hamons, “The univer-sity will be partnering with us insome fashion, whether that’s as aninvestor or as a partner.”

A different downtownFor its part, the city has designed

the $21 million Kent Central GatewayTransit Center to accommodate theadditional traffic that is expecteddowntown when construction is completed, said Daniel Smith, economic development director for

the city of Kent. The three-story site will include a

300- to 400-space parking garage, abus depot for people taking busesinto Akron and Cleveland, retailand office space, and a connectionto the bike path, he said.

The city has applied for a $21million federal grant to fund thecenter, and Mr. Smith said the cityshould know whether it will receivethe money by Feb. 17. Groundwould be broken in late summer orearly fall, he said. If the federalmoney does not come through, thecity would try to fund the projectthrough other transportation grants,which would delay the groundbreaking by six to eight months, hesaid.

Kent’s downtown area has beenon a slow decline for probably thelast 30 years as shopping habitschanged and mainstays such asbanks and a drugstore closed, Mr.Smith said. However, universitytowns are hot right now, andthey’re faring better than others, hesaid.

“We weren’t able to attract a lotof renovation and new innovationfor probably three decades,” hesaid. “But I really think we’re goingto get it done in 2010.” ■

Kent: Transit center to accommodate expected uptick in downtown trafficcontinued from PAGE 3


Fleischman’s firm gets the point■ Richard Fleischman + Partners ArchitectsInc. recently clicked on the lights at its newoffices in the Osborn Building, the structureshaped like a slice of pie at the intersectionof Huron Road, Prospect Avenue and EastNinth Street near Progressive Field in down-town Cleveland.

Known for namesake architect RichardFleischman’s modernist designs, the firm justmoved into a triangular office at the point ofthe building. It occupies space that has remained dark since the 1898-vintage OsbornBuilding became apartments in the mid-2000s.

Mr. Fleischman pooh-poohs the designcontrast between the spaces his firm createsand the one it now calls home. He said theEuropean modernist architects he studiedbefore launching his firm in 1961 often located in old buildings in Italy and Germany.

“We’re all about openness and light,” Mr.Fleischman said, and the first-floor formerretail space offers both in abundance.

Still visible from his worktable is the firm’sformer home, a building at 1025 HuronRoad that it converted to a studio in 1988and sold in 2007. Mr. Fleischman said hecould not come to terms with his buyer-turned-landlord, so he found less expensivespace at the Osborn Building. He would notdisclose the rent.

Despite a recession that has been deadlyfor architects, the firm remains busy; currentjobs range from a $27 million updating of aUniversity of Cincinnati dormitory complexto a redo of the landmark Epworth-Euclid

United Methodist Church at University Circle. The firm occupies the same amount of

space as before, about 5,400 square feet, buthas added two registered architects this pastyear, giving the firm eight in a staff of 26.

Mr. Fleischman said business cycles arepart of the design life.

“Architects have been at work for thou-sands of years,” he said. “We’ll be here.” — Stan Bullard

Mr. Whipple (not that one)would love to hear from you■ Cleveland State University students whoare preparing for a research trip to Londonnext spring are looking for five local busi-nesses to partner with beforehand.

A group of 15 students from CSU’s NanceCollege of Business Administration in Maywill go to London as part of an internation-al marketing and business research class.However, they’re hunting for local business-es to begin working with to design research

projects based on issues facing NortheastOhio companies.

While in London, the students will visitbusiness libraries, contact businesses andconduct interviews to gather marketing information that will benefit those NortheastOhio companies.

Last year’s class analyzed the competitionand market for steel tube and bar productsfor Timken Steel, assessed the potential fora new product from Snap-On Business Solutions, and surveyed the off-site fabricationbusiness for PCX Corp., which makes pre-fabricated electrical centers.

Companies interested should contactThomas Whipple, chairman and professorof marketing at the Nance College, at 216-687-4770. — Shannon Mortland

Circling the carcassfor opportunity■ Office buildings and parking lots aren’tthe only properties that people watching thebankruptcy of AmTrust Financial Corp. arekeeping an eye on.

The former holding company of AmTrustBank also owns a piece of vacant land in Arizona, about 50 or 60 miles from Phoenix.Robert Goldberg, a director of the company,said in a meeting with creditors that thecompany had owned the land for two orthree years with the intent of using it for solarenergy.

The company also owns a Euclid Avenueparking garage and office buildings on Cha-grin Boulevard and in Rocky River. —Arielle Kass

WHAT’S NEW

REPORTERS’ NOTEBOOKBEHIND THE NEWS WITH CRAIN’S WRITERS

THEINSIDER

THEWEEK JANUARY 11 - 17

The big story: Cleveland public relations firmEdward Howard & Co. soon will be on its own nomore. Directors of Columbus-based Fahlgren Inc.,one of the nation’s largest marketing communi-cations companies, and majority shareholders ofEdward Howard announced that Fahlgren plansto acquire Edward Howard. The acquisition isexpected to close during the first quarter of 2010,“although integration and coordinated newbusiness and marketing efforts will begin imme-diately,” according to a news release issuedjointly by the two companies. Fahlgren operatesFahlgren Mortine Public Relations, and it’sthose two businesses that will be combined,though both brand names will remain.

Cap’n pay: The next president of the Cleve-land-Cuyahoga County Port Authority willmake less money than the last port boss. A PortAuthority committee effectively has pegged the

top salary for the new chief at slightlyless than $220,000. The agency had

been paying Adam Wasserman$283,000 until his departure last November. The Port Authority’stransition committee is recom-

mending to the port board that ithire Boyden Global Executive

Search of New York to find the best candidate forthe job. Boyden’s fee will be a maximum of$65,000, based on 30% of the new president’sfirst-year salary. That fee was set because the PortAuthority is expecting to pay the new presidentno more than $220,000.

Recycler recycled: The sale of compounderand recycler Michael Day Enterprises Inc. toItalian plastics maker Radici Group was approvedby a U.S. Bankruptcy Court judge in Akron.Radici was the stalking horse bidder in the dealand will pay $5.7 million for the assets ofWadsworth-based Michael Day. Michael Dayfiled for Chapter 11 bankruptcy protection lastNov. 10, citing assets and liabilities each valuedat between $10 million and $50 million.

To their wealth: Dawson Wealth Manage-ment of Rocky River merged with Rehmann, anintegrated accounting, business consulting andwealth management firm based in Michigan, tocreate a company with more than $1.3 billion inassets under management. The new entity willremain in Rocky River and operate under theRehmann name. Dawson Wealth Management,formerly a unit of Dawson Cos., has servedclients in Northeast Ohio and across the state fornearly two decades.

The government, here to help: With theaid of a federal program created as part of thegovernment’s stimulus plan, the MetroHealthSystem sold $75 million in bonds, the proceedsof which it will use for capital projects throughoutthe system. While MetroHealth will have access tothe $75 million raised through the bond sale, italso will receive from the U.S. Treasury a portionof the interest that it pays on the bonds underthe Build America Bond program. Under theprogram, state and local government bodies thatissue bonds receive a direct federal subsidy pay-ment for a portion of their borrowing costs equalto 35% of the total interest paid to investors.

This and that: CBiz Inc. acquired NationalBenefit Alliance, an employee benefits firm inMidvale, Utah. National Benefit has 16 associ-ates and recorded about $2 million in revenueduring the past 12 months. … Ferro Corp. saidits Ferro Electronic Materials unit, a supplier ofmaterials for producing photovoltaic solar cells,was awarded $1 million by the Ohio Departmentof Development to develop advanced durabilitysealing systems for solar cells.

To keep up with local business news as it happens, visit www.CrainsCleveland.com


Excerpts from blog entries on CrainsCleveland.com.

BEST OF THE BLOGS

Where there’s a Will,there’s an argument■ Forest City Enterprises CEO Charles Ratner upbraided columnist George F. Willfor a recent Washington Post column that

attacked the company’scontroversial AtlanticYards project in Brook-lyn, N.Y.

In a Jan. 12 letter toThe Post, Mr. Ratnercomplained that Mr.Will “never contactedthe developer — mycompany — or supporters

of the project, who include the governor, themayor and the Brooklyn borough president,”and that the columnist misrepresented theuse of eminent domain in the project. (Mr.Will said eminent domain “has becomeelastic in the service of avarice.”)

“At the start of this project, mycompany announced that it wouldtry to avoid the use of eminent domain,” Mr. Ratner wrote. “To thatend, we bought properties in thefootprint, many of which were aban-doned warehouses and empty lots. Agroup of holdouts announced early onthat they were opposed to the develop-ment and pledged to sue often. Theykept their word — but lost every battle.”

Now Mr. Ratner has something incommon with environmental advocateswho say Mr. Will consistently misrep-resents things in columns on climate change.

Greener pastures in reachfor Cleveland initiative■ The Economist lauded the efforts of theEvergreen Cooperatives of Cleveland to

“create 10 green, for-profit businesses thatlocal residents will own and operate.”

The magazine spoke with MienyonSmith, a 31-year-old mother of five whoworks at Evergreen Cooperative Laundryand for the first time in her life is makingmore than minimum wage. After eight yearswith the company, Ms. Smith could own astake worth $65,000.

A little bit of this,A little bit of that■ Here’s a staggering statistic, according to ananalysis by The Associated Press: Of 128 man-ufacturing plants in North America closedsince 1980 by the Detroit Three automakers and their largest suppliers, threeof every five now sit idle. Those 128 plants hada payroll of 196,000 workers at the time theyclosed, the AP reported. “Today, only 36,500people work at those sites that have been re-developed, and at only three of the revivedplants does the number of employees match

or exceed the number in their carmakingpast,” according to the AP.

■ The world is getting a little bigger forCleveland’s Great Lakes Brewing Co.The Washington Post reported that abar called The Big Hunt has become thefirst establishment to offer Great Lakes’award-winning beers on draft in D.C.Credit here goes to Big Hunt general

manager Dave Coleman, a Cleveland na-tive. Now you know where to go for ataste of home the next time you’re in thenation’s capital.

■ A Wall Street Journal piece on thehistory of the “Gatorade shower” called theCleveland Browns’ Jan. 3 celebration forhead coach Eric Mangini “one of the mostquestionable decisions in dousing history.”Hey, if fans and players can’t get excitedabout four consecutive Browns wins, whenare we ever going to do so?

COMPANY: Audio-Technica U.S. Inc.,StowPRODUCT: AT-LP120-USB Direct-Drive Turntable System

This is not your grandfather’s turntable.The AT-LP120-USB includes a direct-drive

turntable, PC- and Mac-compatible software, aUSB cable and other accessories. Audio-Technica says it’s “rugged and durable to meetthe demands of professional use, and providesconsumers with the flexibility to enjoy top-quality vinyl playback and easily transfer recordsto digital media files and CDs.”

“With the continuing popularity of enjoyingrecords and dubbing them to digital media,we recognized the time was right to intro-duce a true high-performance USB turntablesystem that combines exceptional recordplayback performance and sound quality withtotal ease of use,” says Crystal Griffith, Audio-Technica’s consumer marketing manager.

The turntable features a high-torque, direct-drive motor for quick startups with both forward and reverse “back-cueing” play capability, the company says.

It’s available online or through Audio-Technica authorized retailers at a suggested re-tail price of $429.

For more, visit www.audio-technica.com.

Send new product information to managingeditor Scott Suttell at [email protected].

Ratner

STAN BULLARD

Architect Richard Fleischman in his company’sOsborn building space in downtown Cleveland


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