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Vol. 33 No 47

Other than a parade, what makes Tony Michaels smile?

Page 3

Village Green’s Batayeh looks for growth

NOVEMBER 20 - 26, 2017

Ron Fournier. Page 8

Focus: Health Care<< Nurses want a limit to mandatory overtime, but hospitals cite nursing shortage. Page 10

Bi-partisan, three-bill legislative package on safe nursing sta� ng introduced in Michigan Legislature. Page 11

INSIDE

EconomicsManufacturing

Michigan’s changing economyExperts say best-prepared companies have invested

Next for Lear’s Simoncini? Rolling up his sleeves

By Lindsay VanHulleCrain’s Detroit Business/Bridge Magazine

By Dustin Walshdwalsh@crain.com

In 2006, Gudel Inc., based in Ann Arbor, sold more than 90 percent of its robots and automation equip-ment to the automotive industry.

Today, it’s closer to between 65 percent and 75 percent, according to Joe Campbell, its vice president of sales and marketing. Gudel has made inroads into the aerospace and ware-house and logis-tics industries.

It’s not that au-tomotive has be-come less im-portant. But after being “battered pretty badly in the downturn” a decade ago, Camp-bell said Gudel has made it a priority to diversify its customer base.

Here’s the truth about recessions: No one knows when they’re coming. � ey don’t come along simply be-cause it has been awhile since the last one. And since the data used to track the economy is based on events in the past, Michigan could slip into a downturn before anyone realizes it.

Employer groups say the best-pre-pared companies will be the ones that have used the economic recov-ery of the past eight years to invest — in people, technology and equip-ment — before a weakening economy causes companies to pull back.

“Knock on wood, right now we’re certainly not panicked,” Campbell said. “We’re aware it’s going to cycle. I would say we’re prepared as anyone can be.”

Recessions typically are triggered by one of two things — a policy choice, like the Federal Reserve’s de-cision in the late 1970s to raise inter-est rates to control in� ation; or some external shock to the system, like the dotcom bubble in the late 1990s or the � nancial crisis in 2007.

Matt Simoncini entered the corpo-rate boardroom at Lear Corp. on Wednesday evening to tender his res-ignation. It isn’t the last time he’ll enter

that room , but it was the best time.

Simoncini, 56, wants to hang up his traditional Italian suits after 11 years in the C-suite at the South� eld-based auto supplier — � ve as its CFO and six as its CEO — and trade them in for over-

alls. Preferably grease-stained. “Eleven years is a long time in the

C-suite of a major corporation; I’m tired, man,” Simoncini told me last Fri-day, only two days after he made the decision. “I’m only 56, but there are things in life I probably want to do more ... like the freedom not to be on the job 24/7. I want to spend time with my wife and kids. I want to � nd the best blues lead on my guitar. I’ve got a ware-house full of classic cars. I want to learn how to dissemble and re-assemble an engine. I want to wheel out the wagons and get dirty. I love that shit.”

� e unapologetically salty executive was, and remains, a titan in the auto-motive industry. He’s well known for his crass leadership style, his tumblers of whiskey and water and his relentless commitment to his hometown.

Simoncini was born on Detroit’s east side, attended Clark Elementary between Mack Avenue and Outer Drive, graduated from Wayne State University and remains one of the top fundraisers for the United Way for Southeast Michigan. He also serves on the boards of Wayne State University Foundation, Detroit Eco-nomic Club, Business Leaders of Michigan, the Michigan Opera � e-atre and � e Parade Co.

� ey’ve seized an Argentinian warship and picked a � ght with War-ren Bu� ett.

But no one outside the two compa-nies knows exactly what Paul Singer’s Elliott Management Corp. is seeking from Bloom� eld Hills-based Taub-man Centers Inc. now that the activ-ist hedge fund has bought a 3.8 per-cent stake in the luxury mall giant.

Yet one thing is certain: It’s likely to be a warpath Elliott marches as Taub-

man (NYSE: TCO), which has been controlled by its founding family for almost 70 years, battles the New York City-based fund at the same time it faces arrows from another activist in-vestor, Jonathan Litt of Connecticut.

“Singer doesn’t care if you hate

him. He doesn’t care if you hang him in e� gy,” said Erik Gordon, clinical assistant professor at the University of Michigan Stephen M. Ross School of Business. “His goal is to push com-panies, and even countries, into making changes that create wealth. � at’s it. � at’s all he cares about.”

Elliott, which launched a bitter take-over attempt of Compuware Corp. from 2012-14, is believed to be seeking chang-es that could include taking Taubman private or a sale, according to Bloomberg, which � rst reported Elliott Manage-ment’s stake in Taubman last week.

Bloom eld Hills luxury mall giant braces for a ght with head of activist hedge fund Elliott Management Corp.By Kirk Pinho and Dustin Walshkpinho@crain.com

dwalsh@crain.com

Real Estate

Why is this maneyeing Taubman Centers?

Need to know Taubman will face a formidable foe in Elliott

Activist hedge fund has bought a 3.8 percent stake in the luxury mall giant

Taubman has been controlled by its founding family for almost 70 years

JACOB KEPLER/BLOOMBERG

SEE TAUBMAN, PAGE 21

Inside Is Michigan ready for the next recession?Page 18

SEE RECESSION, PAGE 18

Matt Simoncini: Announced resignation.

SEE SIMONCINI, PAGE 20

2 C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7

More than 1.6M from Michigan plan travel for Thanksgiving

Dearborn-based AAA projects that more than 1.6 million people from Michigan will travel this month for the �anksgiving holiday.

�e auto club released its annual forecast last week for people travel-ing 50 miles or more, saying that’s up 3.5 percent from last year. AAA said it would be the eighth consecutive year of growth for �anksgiving travel in Michigan.

Nearly 90 percent of travelers plan to go by personal vehicle. �ose mo-torists are expected to see higher gas prices than last year, since Michi-gan’s current average of $2.70 is 67 cents higher than last year’s average. Most others will travel by air or train.

With over 128,000 Michigan resi-dents �ying to their holiday destina-tions, air travel is expected to in-crease about 6 percent.

AAA’s projections are based on economic forecasting by research �rm IHS Markit. �e �anksgiving holiday travel period is de�ned as Nov. 22 through Nov. 26.

Deer hunting brings promise of new spending

Opening day for Michigan deer

hunters Wednesday means thou-sands of people began setting out into the wilderness, but the season’s start also brings with it new spend-ing.

Last year, spending on leisure trav-el for hunting and �shing rose 7.2 percent to $364.5 million, according to data from D.K. Shi�et in a news release from the Michigan Economic Development Corp. Hunters' spend-ing on leisure travel rose by $500,000 to $124.3 million in 2016.

Around 500,000 (more than 90 percent) of hunters in the state are expected to participate in �rearm hunting for deer this season. �is segment of hunters by far generates

the most spending, the release said.Hunting generates a $2.3 billion

economic impact in Michigan, ac-cording to the U.S. Fish and Wildlife Service. �at �gure includes food and lodging expenses and equip-ment purchases totaling $1.3 billion.

�e average individual hunter spends around $2,237, the service found. �e state had around 81,000 new customers for hunting licenses in 2016, the release said. And those hunters are using new products and technology and spending more in re-cent years, Crain's reported.

“�roughout the year, but espe-cially over the next few weeks, hunt-ing drives travel within Michigan and

attracts sportsmen and women to this great state, generating economic impact for our communities and businesses,” MEDC CEO Je� Mason said in the release.

Michigan jobless rate rises to 4.5 percent

LANSING — Michigan’s unem-ployment rate rose by two-tenths of a percentage point to 4.5 percent in October as the number of people in the state’s workforce saw a slight de-cline of about 2,000.

Figures released last week by the Michigan Department of Technolo-gy, Management & Budget show Michigan’s October unemployment rate was four-tenths of a percentage point above the national rate but a half percentage point below the state’s October 2016 rate of 5 percent.

Bureau of Labor Market Informa-tion and Strategic Initiatives Director Jason Palmer said that 10 months into 2017 the state’s jobless rate has declined moderately from 2016, while payroll job gains remain steady.

�e department said October’s jobless rate increase was the third consecutive monthly rate gain since Michigan’s unemployment rate fell to 3.7 percent in July.

Cornerstone University president to step down

GRAND RAPIDS — Cornerstone

MICHIGAN BRIEFS INSIDECALENDAR 14

CLASSIFIEDS 17

DEALS & DETAILS 14

KEITH CRAIN 8

OPINION 8

OTHER VOICES 9

PEOPLE 16-17

RON FOURNIER 8

RUMBLINGS 22

WEEK ON THE WEB 22

University’s longtime president Jo-seph Stowell will step down from the Christian university in 2019.

School o�cials announced Wednesday that Stowell, who’s led the Grand Rapids school since 2008, informed its trustees of his plans earlier this fall. He’ll step down when his contract expires in May 2019.

�e Grand Rapids Press reports that after failing to persuade Stowell to remain as president, the trustees voted unanimously for him to serve in the role of chancellor once his successor is chosen.

Stowell said that role will allow him to serve the school’s next presi-dent by representing the university in various venues and helping with fundraising activities.

�e university has about 1,200 undergraduates and a total popula-tion of about 2,500 students that in-cludes graduate and seminary stu-dents.

STATE OF MICHIGAN About 500,000 hunters in Michigan are expected to participate in this year’s �rearm season for deer, according to the Michigan Department of Natural Resources.

From sta� and wire reports. Find the full stories at crainsdetroit.com

Our mission is straightforward: To provide leadership for the promotion and advocacy

care for the citizens of Michigan.

mahp.org

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C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7 3

Steep competition?Detroit’s facing challenges from other cities in its bid for a Major League Soccer expansion team. Page 6

The going rate is going upSome seats may be empty, but Red Wings, Pistons tickets see increase on the resale market. Page 4

A Crain’scelebrationFor the �rst time Crain’s honored Twenty in their 20s and Forty in their 40s at the same event. Page 5

MUST READS OF THE WEEK

LARRY PEPLIN FOR CRAIN’SDiane Batayeh is the new chief executive of South�eld-based Village Green Cos., one of the largest owners/managers of multifamily apartment complexes in the country.

Nonprofits

Trade Real Estate

Village Green CEO has her eye on growth

Accelerator seeks to grow Michigan- Israel investmentBy Dustin Walshdwalsh@crain.com

Diane Batayeh remembers the phone interview nearly 40 years ago.

“It was 20 minutes,” said Batayeh of the time she answered a newspa-per ad while attending the Universi-ty of Michigan, with the goal of go-ing to the University of California-Davis for law school.

�e daughter of a longtime Ford Motor Co. worker with what she de-scribed as an “underprivileged background,” Batayeh responded to the ad thinking it would be just a temporary gig to help get her through school in Ann Arbor.

She never made it to law school.

Instead, that job as an apartment leasing agent was her stepping stone to becoming a commercial real estate rarity: The female CEO of a large company. Batayeh is the new chief executive of South-field-based Village Green Cos., one of the largest owners/managers of apartment complexes in the coun-try, where she has spent her entire

professional career. When she �rst started as a leasing

agent in Ann Arbor, she recalled meetings in which she was the only woman in the room. Although times have changed since 1980, the com-mercial real estate industry is still overwhelmingly dominated by men.

“Part of the legacy model of the real estate industry in general is old-er, white males,” she said. “I’ve seen that as I came up in the business. But 37 years later, looking back, we’ve come a long way.”

According to a 2013 report from the Commercial Real Estate Devel-opment Association, a national orga-nization that has more than 18,000

members, fewer than one in seven senior executives in the industry are women.

In her nearly four decades in the business, Batayeh, a Fenton resident who grew up in Detroit as one of sev-en siblings in a 1,200-square-foot home, has commanded the respect of her peers.

“She is very well thought of in the industry,” said Matt Lester, founder and CEO of Bloom�eld Town-ship-based Princeton Enterprises LLC, which owns apartment com-plexes in 13 states, primarily Michi-gan. “She is widely respected and has a no-nonsense reputation.”

A local business nonpro�t is ex-panding to further Michigan’s reach into the growing tech sector in Israel.

After several successful leadership missions since 2015, the Michigan Is-rael Business Bridge is seeking public and private �nancing to become the Michigan Israel Business Accelerator to spur more investment between the two nations in manufacturing, mo-bility, defense and life sciences, among other sectors.

�e rebranded organization will begin operation on Dec. 1, with plans to add sta� and open an o�ce in

downtown De-troit in the �rst quarter of next year, said Mark Davido�, the Michigan man-aging partner for Deloitte and board member of the organization.

“We’re aiming to foster the en-ergy from the hard work done by the MIBB in recent years and take it to another level,” Davido� said. “With the current coordi-nation of tech and industry al-ready happen-ing, there ap-pears to be a great opportuni-ty to scale up our bandwidth.”

�e organiza-tion will seek a roughly $1 mil-lion operating budget, add sta� in Israel and de-velop new pro-grams to connect Israel’s startups with Michigan’s existing corpo-

rate infrastructure. Funding is ex-pected to come from various sources, including the Michigan Economic Development Corp. However, the public funding details have yet to be determined, MEDC CEO Je� Mason said.

Michigan has several ties to Israel, including Southeast Michigan’s large Jewish population as well as invest-ments through various organizations like Birmingham-based William Da-vidson Foundation, which is com-mitted to the cultural and economic vitality of the Middle East nation.

By Kirk Pinhokpinho@crain.com

Goodwill looks to buy companies for programsA prominent Detroit nonpro�t is go-

ing into acquisition mode.In an e�ort to expand capacity for its

workforce development programs, Goodwill Industries of Greater Detroit plans to hunt for businesses to add to its stable early in 2018. In some cases, the plan’s ultimate aim is to give the workers it trains a share of ownership in companies it acquires.

It hopes to close its �rst deal by the end of next year, targeting healthy companies that align with the new ar-eas of occupational training it plans to launch.

It will also seek other companies with owners looking to retire and open

to selling their company to Goodwill while it trains their employees to take over ownership.

“Folks in our community who are making a low wage, a minimum wage, one way to tackle that is to give those folks a share of the business,” Goodwill CEO Dan Varner said. “�ere are plen-ty of opportunities for low-wage work-

ers to actually earn a share of the pro�t as well as their wage and to have an asset on their personal balance sheet that they can take loans against to buy a house or buy a car.”

With assets totaling about $22 mil-lion at the end of last year, Goodwill is in a strong �nancial and operational position, so it has an opportunity to in-

novate, he said.�e nonpro�t, whose board is led by

retired JP Morgan Chase executive Jane Bowman, could �nance some ac-quisitions itself or take on debt for the right opportunity, Varner said.

It’s also a model that could be ripe for social investment.

By Sherri Welchswelch@crain.com

Need to knowJ Batayeh is the new chief executive of South�eld-based Village Green Cos.

J She’s a commercial real estate rarity: The female CEO of a large company

J Now she aims to grow Village Green

Need to knowJJ Goodwill to look for companies to buy

in the new year

JJ The acquisitions will give it new training grounds as it develops new programs

JJ The moves are part of a larger strategic plan aimed at reducing unemployment and supporting those in jobs

Need to knowJJ Michigan Israel

Business Bridge seeking �nancing to become Michigan Israel Business Accelerator

JJ Organization will spur more connection between Michigan and Israel’s growing tech sectors

JJ Israel has a hot innovation economy but few export channels; Michigan could be a link

Mark Davido­: Opportunity to scale up.

“Folks in our community who are making a low wage, a minimum wage, one way to tackle that is to give those folks a share of the business.”Dan Varner

SEE BATAYEH, PAGE 19

SEE ISRAEL, PAGE 19 SEE GOODWILL, PAGE 20

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Red Wings, Pistons tickets see increases on resale market

Despite images of un�lled seats making the news, the average list prices of Detroit Pistons and Red Wings tickets on the resale market have increased by double-digits since the teams moved into new Lit-tle Caesars Arena this season.

�e average ticket price for a Red Wings home game on the secondary market in 2017 has been $166, good for 10th-priciest among the 30 Na-tional Hockey League teams, accord-ing to data provided by New York City-based TicketIQ, which aggre-gates ticket resale prices via Stub-

Hub, TicketNet-w o r k , T i c k e t s N o w , eBay and hun-dreds of second-ary-market bro-kers.

�e Red Wings last season aver-aged $145 for secondary tick-ets, meaning they’re up 14 percent this sea-son over 2016-17.

�e Pistons, who have espe-cially come un-

der scrutiny for vast swaths of empty seats at the 20,000-seat arena, rank 27th in the 30-team National Basket-ball Association with a $101 average secondary market ticket price, ac-cording to TicketIQ. �ey’re up 19 percent over last year’s $85 resale av-erage.

“�e Pistons are de�nitely a result of the new arena and pricing moving up in general,” said Ralph Garcia, TicketIQ’s director of publisher rela-tions, via email.

Despite the action on the resale market, the story of the Pistons’ sparse home crowds at the glittering new arena now is drawing national attention from media such as �e New York Times.

Overall, the teams are doing as ex-pected for fan-to-fan ticket sales.

“Both teams are pacing according-ly. �e Red Wings are typically in the middle of the pack, while the Pistons are usually towards the cheapest tickets in the league,” Garcia said.

�e price of tickets in online fan-to-fan sales is one metric for a team’s genuine popularity, because it rep-resents public interest after the ini-tial face-value ticket sale by the team, often of season tickets that were sold before the season began. �e secondary averages include reg-ular tickets along with premium seating such as club seats and suites, which can serve to in�ate the overall average.

Resale ticket averages also are driven by the increase in the original face value of a ticket, and both the Red Wings and Pistons increased ticket prices to coincide with the new arena opening this fall.

�e Pistons average resale ticket price has increased 63 percent since 2013. �e Red Wings have increased 102 percent in that same time.

Both teams signi�cantly lag be-

hind the teams atop their respective leagues in average resale ticket price, the NBA’s Golden State War-riors ($351) and the NHL’s Toronto Maple Leafs ($317).

�e Pistons, who’ve made the playo�s once in the past eight sea-sons, could see an uptick in crowd size and resale pricing if they con-tinue their torrid winning pace. �ey’re 10-3, including 7-1 at home, headed into a three-game road trip.

After eight home games, they’re averaging 16,276 fans at Little Cae-sars, which ranks 25th in NBA atten-dance. �at’s up a bit from last year’s 15,979 per-game average, but the only sellout this season was the opener. LCA’s Pistons sellout thresh-old is 20,491.

�e Red Wings are an NHL atten-dance juggernaut, at least on paper, and have a sellout streak that dates to December 2010. �ey rank third in NHL attendance this season and their 19,515 fans per game average is their o�cial sellout capacity. On the season, the Red Wings are 3-2-2 at LCA and 9-8-2 overall headed into home games Friday night and on Sunday.

Like the Pistons, there are images of Red Wings games with lots of emp-ty seats. Executives from both teams have cited fan interest in exploring the new arena, and its bevy of clubs, eateries, and shops luring fans away from the game, as reasons for the empty seats.

Both teams play 41 regular-season home games. �eir attendance data is tickets sold and distributed, not ac-tual through-the-turnstiles atten-dance, which is why sellouts can have seas of empty seats.

It’s unclear how much revenue ei-ther team may recapture from resold tickets. �e NBA and NHL both have deals with Ticketmaster’s sports tick-et exchange service, and sports teams often have individual relation-ships with secondary ticket market sites and apps such as StubHub and Flash Seats.

Bill Shea: 313 (446-1626)Twitter: @Bill_Shea19

By Bill Sheabshea@crain.com

Need to knowJ Red Wings, Pistons games meeting ticket resale expecta-tions

J Pistons seeing greater secondary market sales growth than Red Wings

J Resale market prices are a measure of team popularity

Secondary market pricing 2013-18These are the average resale ticket prices for the Detroit Red Wings and Pistons over the past �ve seasons as measured by New York City-based TicketIQ, which aggregates ticket resale prices across hundreds of sites:

JJ Red Wings 2013-2014: $82

JJ Red Wings 2014-2015: $94

JJ Red Wings 2015-2016: $86

JJ Red Wings 2016-2017: $145

JJ Red Wings 2017-2018: $166

JJ Pistons 2013-2014: $62

JJ Pistons 2014-2015: $67

JJ Pistons 2015-2016: $77

JJ Pistons 2016-2017: $85

JJ Pistons 2017-2018: $101

Source: TicketIQ

LARRY PEPLIN FOR CRAIN’SThe average list prices of Detroit Pistons and Red Wings tickets on the resale market have increased by double-digits since the teams moved into new Little Caesars Arena this season.

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PHOTOS BY AARON ECKELS FOR CRAIN’S2017 Forty Under 40. Back row, L-R: Brian Connors; Brandon Tucker; Emily Linn; Rebecca O’Reilly; Syed Ahmed Hussain; Libby Palackdhar-ry; Yolanda Williams; Rick Williams; Philipp Schramm; Chris Lambert; Jacob Bishop; Neal Gram; Awenate Cobbina; Dannis Mitchell; Eric Morris; Marc Nassif; Peter Van Dyke; Mariam Bazzi; John Paul Rea; Juliana Bernalostos-Boy; Quinn Kiriluk; Asha Shajahan; Harmony Faust; Kimberly Hoyle; Rachel Lutz. Seated, L-R: Clarinda Harrison; Angela Rogensues; Adam Bishop; Nicole Farmer; Jeena Patel.

Crain’s celebrates Twenty in their 20s and Forty Under 40 honorees

For the �rst time, Crain’s Detroit Business brought together the two groups for a joint celebration at the iconic Roostertail on �ursday.

For the �rst time, Crain’s Detroit Business brought together our 2017 Twenty in their 20s and Forty Under 40 honorees for a joint celebration at the iconic Roostertail on �ursday.

�e event celebrated and recog-nized the remarkable achievements of these rising leaders. It also created an opportunity for our 20s and 40s honorees, and their peers and friends, to mingle with each other, learn from one another and start a conversation about bridging generational gaps in their workplaces and in the region to move metro Detroit forward.

�e event included awards cere-monies for the two groups as well as a panel discussion between two 20s honorees, David Alade, co-founder and managing partner, Century Part-ners; and Sara Mahmood, senior ana-lyst, GTB; and two 40s honorees, Joce-lyn Benson, CEO, Ross Initiative in Sports for Equality; and Asha Shajah-an, M.D., medical director of commu-nity medicine, Beaumont-Grosse Pointe. �e panelists talked about how they have promoted understand-ing between generations in their ca-reers and communities and shared ideas for how we can all lead through the changes unfolding rapidly in our workplaces and in society.

Nominations are open for our 2018 Twenty in their 20s awards and will open for Forty Under 40 later this month.

The program featured a discussion about bridging generational gaps in the workplace with moderator Amy Elliott Bragg (le�), 20s honorees David Alade and Sara Mahmood, and 40s honorees Asha Shajahan, M.D. and Jocelyn Benson.

Forty under 40 honoree Mariam Bazzi (le�), judge of the 3rd Circuit Court chats with Tyrell Ross at the Twenty in their 20s and Forty Under 40 event last week.

2017 Twenty in their 20s. Back row, L-R: Ashley Hennen; Amanda Lewan; Adham Kassem; Darrin Camilleri; Emily Morris; Kevin Heard; Rick Shounia; Stacey Matlen; David Alade; Surabhi Pandit; Je� Sorensen; Clarke Lewis. Seated, L-R: Alexandra Clark; Celena Mancina; Amber Lewis; Sara Mahmood; Lauren Bealore.

6 C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7

As MLS expansion decision nears, Detroit faces challenges from other cities seeking teams

Detroit will learn the fate of its �rst shot at a Major League Soccer ex-pansion team in the days before Christmas.

�e MLS Board of Governors meets Dec. 14 and a decision on two of the four expansion markets will be announced between Dec. 18-20, according to the league. �ere’s still no timeline for when the �nal two expansion cities will be announced.

Twelve markets submitted expan-sion bids in January, and ESPN re-ported on Wednesday that Sacra-mento, Nashville and Cincinnati are the cities with the insider track for the �rst two expansion slots. �ey’ll begin play in 2020.

Detroit isn’t much mentioned by soccer insiders these days as a likely contender for the December deci-sion, especially after bid organizers Dan Gilbert and Tom Gores opted earlier this month to abandon plans to build a soccer-speci�c stadium at the un�nished downtown jail site and instead intend to use Ford Field. MLS prefers its new teams to play in soccer-speci�c stadiums of about 20,000 seats, although the expan-sion Atlanta United FC averaged a league-record 48,200 fans per game this season at 72,000-seat Mer-cedes-Benz Stadium.

However, if Detroit isn’t awarded a team in December, the city could still be granted a team in the second round of expansion that’s expected to be announced sometime next year.

MLS executives have said their criteria for expansion are the owner-ship, stadium plan, and the market’s �nancial capacity (i.e. corporate ability and willingness) to support a team. A market’s historic support for soccer also is a factor.

Here’s a quick update on the lead-ing competition for the �rst round of MLS expansion:

Sacramento

Sacramento may be the most MLS-ready city, and its bid backs up its con�dence with cash. Backers al-ready have begun site preparation work for a privately-�nanced $245 million soccer stadium that would be home to the Sacramento Repub-lic FC, the name of the city’s pro-posed expansion team.

�e e�ort is led by Sac Soccer & Entertainment Holdings President and CEO Kevin Nagle, who sold his Envision Pharmaceutical Services to Rite Aid Corp. for $2 billion in 2015. Also part of the ownership group are San Francisco 49ers majority owner Jed York and Hewlett Packard Enter-prise Co. President and CEO Meg Whitman.

�e 19,621-seat stadium will sit on 14 acres of a former rail yard that also will include a large medical center and new homes.

A wild card factor: California al-ready is home to two MLS teams: the San Jose Earthquakes and, starting next season, the new Los Angeles FC. Does it want a third so soon?

Nashville

Nashville’s chances got a boost when the 40-member Nashville Metro Council, the legislative body

for the city of Nashville and David-son County, on Nov. 7 approved $225 million in public funding for a $275 million soccer-speci�c stadi-um on eight acres of the city’s fair-grounds, �e Tennessean newspaper reported. Sales tax collected at the 27,500-seat stadium, a separate tick-et tax, and $9 million annually from the team’s owners will retire the debt. �e ownership group will pay $25 million in capital costs up front, atop the $225 million in public funds.

Nashville’s e�ort is led by John In-gram, the local billionaire owner of Ingram Industries. He and other in-vestors say they plan a further 10 acres’ worth of mixed-use develop-ment of housing, retail, restaurants, a hotel and o�ce space adjacent to the stadium. Some of those junior partners in the bid include the Wilf family that owns the Minnesota Vi-kings.

After Sacramento, Nashville is widely considered the most MLS-ready market. However, it’s only the 29th-largest media market. �at may be o�set by a strong corporate presence.

Cincinnati

Questions have arisen about soc-cer-mad Cincinnati’s bid in recent days because of uncertainty about where a team would play — a soc-cer-speci�c venue or Paul Brown Stadium, home of the NFL’s Cincin-nati Bengals. Questions also remain about stadium �nancing: �e own-ership group on Nov. 15 pledged to privately �nance a $200 million sta-dium on a former Milacron plant site, but wants $75 million from the city and Hamilton County for infra-structure work. No public subsidy has yet been approved for the pro-posed 21,000-seat pitch. County of-�cials have said they prefer an MLS team use the open-air, 65,515-seat

NFL stadium.�e proposed Cincinnati team al-

ready has a corporate jersey spon-sorship deal that would pay it $5 million annually.

�e city’s e�ort is led by the bil-lionaire Linder family whose for-tune stems from insurance and a dairy store chain. �ey own minor league FC Cincinnati that averaged more than 21,000 fans a game last season — MLS’ 22 clubs averaged a combined 22,106 per game this year. �at attendance makes the Queen City a strong contender, if it can get its stadium �nalized.

Phoenix

Perhaps the most unusual bid quickly emerged as a strong con-tender. �e Phoenix Rising FC minor league soccer club is seeking to be-come an MLS expansion team in a bid led by Turkish-born Berke Bakay, the CEO and president of the Kona Grill chain since 2012. His BBS Capital Fund is the restaurant’s larg-est shareholder. Bakay bought Phoe-nix Rising FC two years ago, and the team averaged more than 6,000 a game in 2017.

Bakay has a deal to privately fi-nance and build a 45-acre MLS soc-cer stadium and complex with the Salt River Pima–Maricopa Indian Community on tribal land not far from Arizona State University, Sports Illustrated reported. Gold-man Sachs has been hired to struc-ture the stadium financing. The 23,000-seat venue would be climate controlled in the dry desert heat.

The ownership group includes iconic international soccer star Di-dier Drogba along with music in-dustry personalities Diplo and Pete Wentz, and L.A. Dodgers pitcher Brandon McCarthy.

After Tampa/St. Petersburg (which also is seeking an team to replace the MLS club that folded in

2002), Phoenix is the largest U.S. media market without an MLS team. However, there are questions about the availability of corporate advertising dollars in the market.

Detroit

Detroit’s bid does include several helpful factors: MLS has acknowl-edged that it isn’t profitable, and Detroit’s chances could get a nod because not one but three billion-aires are behind it — Gilbert, Gores, and now Martha Firestone Ford, who is involved because of the switch in stadium sites from a pro-posed pitch at the unfinished Wayne County jail downtown to Ford Field.

No other bid has three veteran major league sports owners behind it.

When that group unveiled the decision to switch to the NFL stadi-um on Nov. 2, MLS issued a state-ment saying it hadn’t had a chance to review the revised bid, but it doubled down on its preference for soccer-specific stadiums.

“MLS continues to prioritize soc-cer-speci�c stadiums as a criteria for the selection of MLS expansion mar-kets,” the league’s statement read.

When asked if the league has ex-pressed any opinion on the stadium plan changes, a spokesman for the Detroit bid emailed a generic state-ment.

“We have been in regular commu-nication with MLS o�cials and they have not made any decisions re-garding expansion yet. We expect talks to continue throughout the up-coming weeks,” it read.

�e Gores-Gilbert bid pointed to the attendance success of Atlanta United FC in an NFL stadium, but that venue, home to the Atlanta Fal-cons owned by Atlanta United FC owner Arthur Blank, has a retract-able roof. Ford Field does not.

Gilbert and Gores unveiled a $1 billion plan in April 2016 to build a 22,000- to 25,000-seat soccer-specif-ic stadium on the stalled county jail site, and the project would include towers for residential, retail and of-�ce use. Gilbert still wants the site for commercial development, but the soccer e�ort is now focused on Ford Field.

�e entire Detroit bid has been predicated on the expansion team being able to play in 2020. Using Ford Field, which would need some level of retro�tting to accommodate a soccer team, makes that timing goal feasible. �e teams awarded in January are intended to play in 2020.

“Our hope is to be prepared so that when MLS makes its decision, we’re one of the �nalists,” Arn Tell-em, who’s handling the MLS bid for Tom Gores, told Crain’s in Septem-ber.

Detroit appears to meet the league’s criteria for soccer support. MLS has told Crain’s that it has mon-itored the success of high-pro�le soccer events in the Detroit market, including the International Cham-pions Cup match that drew 36,000 fans in July at Comerica Park, crowds of more than 100,000 at Michigan Stadium for past ICC matches and the crowds of 5,000-plus for semi-pro Detroit City FC in Hamtramck.

Detroit certainly has the corpo-rate presence to support a �fth ma-jor league sports team, being home to the automakers and suppliers, Quicken Loans, and larger medical, manufacturing, energy and educa-tion systems.

�e other cities with formal ex-pansion bids, which had to be sub-mitted by Jan. 31, are St. Louis; Tam-pa Bay/St. Petersburg, Fla.; San Antonio; Raleigh, N.C.; Charlotte, N.C.; Indianapolis; Phoenix, Ariz.; and San Diego.

Ultimately, MLS plans to have 28 teams. Los Angeles FC begins play next year as the 23rd club and the unnamed Miami team launches for the 2019 season.

�e expansion teams awarded in December will pay $150 million each to join the league. A fee for the �nal two clubs hasn’t been formally announced.

New MLS owners aren’t buying franchises. Instead, MLS is a sin-gle-entity business, meaning all teams are owned by the league and all players are its employees rather than employed by the club. MLS pays the players. Team “owners” pay an investment fee to MLS for the right to operate a team in a geo-graphic area. �ey become league shareholders rather than franchise owners in a league that has publicly acknowledged it remains unpro�t-able.

Teams keep their own books and budgets.

Bill Shea: (313) 446-1626Twitter: @Bill_Shea19

By Bill Sheabshea@crain.com

Need to knowJJ First two cities will be unveiled in

mid-December

JJ Detroit not among top markets mentioned by insiders

JJ Local bid has 3 billionaires involved

PS&EThis rendering shows Ford Field retro�tted as home of an proposed expansion Major League Soccer team. The 64,500-seat NFL stadium, home to the Detroit Lions since 2002, became the preferred home �eld option for the city’s MLS expansion bid.

ISON

THE

C TRUST, C SOLUTIONS, C US @ crainsdetroit.com/countdown

OUNTDOWN

crainsdetroit.com/countdown

8 C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7

OPINION

The economy of Detroit is get-ting better by the minute. If you listen, you can hear the

hammering. It is not even �anksgiving, and

they have started to build all the ex-hibits for next year’s North American International Auto Show at Cobo Center. �ere is probably nothing that adds to our economy year in and year out more than this international motor show.

�e bene�ts go on and on: We De-troiters get to attend a truly world-

class show, the likes of which is not seen anywhere else on this conti-

nent. �ousands of journalists come to

town and enjoy the hospitality of the car companies, and they will be look-ing for stories about all the new cars, trucks and SUVs, not to mention all the electric vehicles.

�ere may even be some sneak peeks at the autonomous vehicles that will be part of our not-too-dis-tant future. (Whether we will want them or not is another story.).

With all that and the adjoining hoopla, it’s like having a Super Bowl

every year. And like the Super Bowl, preparation for the auto show is a year-round e�ort — the construction of the glitzy displays is just the �nal stage of the planning.

�e auto show’s impact makes the best case possible for promoting our city to as many major conventions and shows as possible. �at kind of investment, like the millions of dol-lars poured into Cobo expansions and renovations over the years, pays huge dividends.

Sure, big events help �ll up hotels

and restaurants. But we are also em-ploying hundreds of workers who build these displays. Someone has to drive the trucks and unload the sup-plies to make it all work. And the tax-is, limos, buses and now the QLine have to help all the attendees get around.

Other cities would love to have our international auto show. But we have had it for the last three decades, and it belongs in the Motor Capitol of the World. Let’s make sure it stays here forever.

COMMENTARY

Other than a parade, what makes Tony Michaels smile?I didn’t know a parade could be

good for business.Or that a parade company

could be a good business.Until I met Tony Michaels. In

2009, the Detroit businessman be-came the president and CEO of The Parade Company, breathing new entrepreneurism and enthusiasm into a brand that had become as creaky as its warehouse headquar-ters.

A few days before the nonprofit’s signature event, America’s Thanks-giving Parade presented by Art Van, Michaels invited me to lunch at the warehouse in an out-of-the-way industrial east side neighbor-hood.

Once there, I walked past 130-foot floats and ginormous celebrity heads, beneath a leaky roof and around water puddles, to his small office, where two boxed lunches and two bottles of water sat on his rough, wooden desk.

Michaels greeted me with a smile. “We are getting slammed,” he said. “I’ve never had to say no to so many people in my life.” The Pa-rade Company’s annual pre-Thanksgiving carnival fund-raiser, Hob Nobble Gobble, had sold out, and Michaels said he needed to turn people away. That made him smile.

Michaels smiles when he talks about the parade. He smiles when he talks about Hob Nobble Gobble. He smiles when he talks about the Turkey Trot. He smiles when he talks about the Ford Fireworks. He smiles when he talks about his sponsors, especially Art Van (the parade), Ford Motor Co. (Hob Nob-ble Gobble and the fireworks), and Strategic Staffing Solutions (Turkey Trot). He smiles when he talks about his board and its chairman, Blue Cross Blue Shield CEO Dan Loepp. Dude probably smiles in his sleep.

I couldn’t dim the joy in Mi-chaels’ face, not even when I chal-lenged the business imperative of his parade: For all the nostalgia and fuzzy sentiments, does the Thanksgiving tradition help the Detroit business community?

“Absolutely,” he smiled. Mi-chaels took a bite from his turkey sandwich and motioned to a wall

strewn with sketches of floats, each more colorful and complicated than years past. “Look, the busi-ness community is beyond inter-ested in creating a vibrant, suc-cessful Detroit. The parade is a specific answer to bringing people together in a way that nothing else does.”

The parade is more than a three-mile path for clowns and corpo-rate-sponsored floats. It’s a cultural event that binds people to com-mon experience, that “brings the heart and soul together,” Michaels said. “How can you have a success-ful city without great things? You look at any great city and they have great events to lure people to the city. This is a great event.”

It’s also a successful nonprofit business.

When he took over eight years ago, Michaels challenged his team to raise its ambitions. “Take every aspect of this event,” he remembers telling them, “and make it bigger.”

Floats grew larger — from 40 feet to 90 feet to 130 feet and more.

Sponsorship deals grew longer — from one to three years.

Michaels courted and catered to corporate sponsors. “We are luna-tic about sponsor fulfillment,” Mi-

chaels said. Year after year, spon-sors got more media attention, more creative signage, and more white-glove treatment from Mi-chaels and his team.

The results are impressive. The Parade Company now has more than $4 million in annual sponsor-ships.

Its gross revenue is $7.3 million, up from $3.66 million eight years ago.

Hob Nobble Gobble has grown from 1,400 paid participants to 2,000.

The Ford Fireworks display lasts longer than ever and its fund-rais-ing party has grown from 1,300

participants to 2,000.In addition, Michaels has built a

substantial rainy-day fund to make sure The Parade Company can weather the next economic down-turn.

None of this is to say The Parade Company doesn’t need your sup-port — your attendance at the fund-raising events and donations from your company. “We can’t get that corporate support without get-ting bigger and better across the board,” Michaels said. “So we’ll keep getting bigger and better.”

I asked Michaels how that hap-pens; how he inspires his team to constantly reach for a higher bar. He said the most important attri-butes to leading any organization are consistency and passion — and he demonstrates both by asking his team to approach every major de-cision as if kicking a field goal.

In his mind’s eye, everything be-tween the goal posts is greatness. Anything outside the goal posts is mediocre or worse. If what you’re doing is not in the line of greatness, Michaels tells his team, it’s proba-bly not worth doing.

I wanted to know whether this allegory had actually seeped into his culture, so I asked Michaels to call Jessica Kaminskas into his of-fice. A former intern at The Parade Company, she is now the chief op-erating officer.

I asked her, “What’s the question you ask yourself before pursuing a new idea?”

“Is it in the line of greatness?” she replied.

What if it’s not?“We figure out how to make it

great.”What if you can’t?“We don’t do it,” Kaminskas re-

plied.I thanked her and told her she

had passed my little test. We chat-ted about her rise through the company and her dreams for a big-ger and better parade — 91 more years or so of greatness. Michaels smiled.

Ron Fournier is publisher and editor of Crain’s Detroit Business. Catch his take on business at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760.

And it is not even Thanksgiving

RON FOURNIER/CRAIN’S DETROIT BUSINESS In 2009, Tony Michaels became the president and CEO of The Parade Company, breathing new entrepreneurism and enthusiasm into the nonpro�t.

“How can you have a successful city without great things? You look at any great city and they have great events to lure people to the city. This is a great event.”Tony Michaels

KEITH CRAINEditor-in-chief

RON FOURNIERPublisher and Editor

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7 9

Contact Scott Alfree at sdalfree@varnumlaw.com

Focused on health care law for systems, physicians and payors in all market segments.

Third party reimbursement, public and private health care provider � nancing, and commercialization of physician inventions and ideas.

First Tier Ranking in Health Care Law

Health Care Experience In Your Corner.®

Detroit Novi Grand Rapids Kalamazoo Grand Haven Lansing Ann Arbor Hastings

Failing infrastructure buried no longerIt took driving on potholed roads

for years to awaken Michigan resi-dents to the need for infrastruc-

ture investment that was visible to the eye. �e same message about infra-structure we can’t see has gone un-heeded for years, despite Flint and Fraser.

Perhaps with the latest failure in Farmington Hills, the message will get through about water mains, pipes and valves that have been quietly ag-ing and deteriorating.

Several years ago, American Water Works Association launched a cam-paign called “Buried No Longer,” to emphasize the urgent need for rein-vestment in outdated community wa-ter systems, many of which have out-lived their lifespan of 50 to 100 years.

Like roads and bridges, water sys-tems need regular maintenance, up-grades and, sometimes, rebuilds in order to keep them in good working condition. As local municipalities struggle to fund so many pressing needs, the ones that are buried may be easiest to set aside for another year. Forgoing infrastructure mainte-nance in favor of more politically popular budget items is a dangerous practice that is bound to eventually have consequences.

With more than a thousand water systems across Michigan, the same scenario plays out over and over in communities large and small. Water professionals inform public o�cials that upgrades are needed. Public of-�cials shy away from unpopular rate hikes that could cost them in the next election. Without adequate budgets to replace and repair breaking and corroding systems, water profession-als cross their �ngers and hope for the best.

In every water system, the chal-lenge is the same — ensure that the rates water customers pay are ade-quate to cover the cost of annual op-eration, maintenance and repairs as well as necessary long-term capital replacement.

In communities where popula-tions are declining or where people responsibly conserve water, there is less revenue for utilities to sustain systems. Rates that don’t keep up with maintenance and capital re-placement costs can’t keep a water system functioning and providing safe drinking water.

Essentially, without investing in our aging water infrastructure, Mich-igan water customers will not be able to rely on the service level they have come to expect. Service outages such as those in Farmington Hills recently will become increasingly common.

Utilities need to adjust their invest-ment strategies. Public o�cials need to understand and support the need for appropriate rate hikes. Customers need to expect to pay more to have drinking water delivered to their taps 24 hours a day, seven days a week. Michigan residents currently pay less than $1 a day to have water delivered to their homes, schools and busi-nesses.

Failing more appropriate invest-ment — and we estimate we are cur-rently falling short about $1 billion a year in Michigan for water and sewer systems — we can all expect to expe-rience more undrinkable water days, more untreated sewage �owing into Michigan waterways and more head-

lines about water system failures. Flint, Fraser and now Farmington

Hills — our failing infrastructure is buried no longer.

Brian Steglitz chairs the Communication Council of the Michigan Section of American Water Works Association, an association of nearly 1,700 water professionals in Michigan.

OTHER VOICESBrian Steglitz

Increasing competition in Michigan’s health care must be team e�ortThe American Medical Asso-

ciation released its annual review of health insurance

competition and, again, Michigan ranks among the 10 least-competi-tive states in the nation for health insurance.

The HHI Index, utilized by the Department of Justice to review mergers for prevention of monopo-lies, ranks any state with a score above 2500 as “uncompetitive.” Michigan’s score was 4562 this year.

The HHI Index is a calculation that measures percentage of market share. Our dominant carrier in Michigan maintains a 66 percent overall market share and a 78 per-cent market share in the PPO mar-ket, which is most utilized by em-ployers, even after state regulatory, tax, and structural changes intend-ed to improve competition.

Michigan historically has thrived on competition. Competition in Michigan has helped our auto indus-try become more e�cient and inno-vative. In recent years, Michigan has made policy changes to encourage competition in the trucking, natural gas and telecommunications indus-tries, bene�ting consumers. �e statewide focus on competition needs to reach our health insurance area.

What do we do when such domi-nance exists by one carrier in a market that needs competition to innovate in uncertain times? It is

time to shop and shop smart. Michigan’s Health Insurance Ex-

change opened on Nov. 1 and clos-es Dec. 15. There are nine health plans participating on the exchange to deliver high-quality, affordable health care. Shop them all with an eye on customer satisfaction and quality. The National Council for Quality Assurance delivers neutral health plan rankings to help.

As an employer or employee, ask your agent partner to bid out and shop your benefits. See the innova-tive approaches and network strengths of all plans in the state. Bring plan representatives in and listen closely to how they may best serve your employees. A few min-utes of your time could mean lower costs or a better fit for your needs — or both.

In a state that historically thrives on competition, consumers’ and employers’ focus needs to shift to the health insurance market. The “easy button” solution is to select

the same PPO over and over. We ask you hit the “smart button” and shop value. Without your help, we can-not fix the health insurance quag-mire in this state.

Choices exist. Partner with your broker to shop for high quality, af-fordable health care that meets your needs this, and every, year and help make our market competitive. As Michiganders who compete worldwide in markets, increasing competition in health care must be a team effort from the consumer, agent, and employer.

Dominick Pallone is executive director of the Michigan Association of Health Plans.

OTHER VOICESDominick Pallone

In a state that historically thrives on competition, consumers’ and employers’ focus needs to shi� to the health insurance market. The “easy button” solution is to select the same PPO over and over. We ask you hit the “smart button” and shop value.

Forgoing infrastructure maintenance in favor of more politically popular budget items is a dangerous practice that is bound to eventually have consequences.

10 C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7

FOCUSSPECIAL REPORT: HEALTH CARE

GETTY IMAGES/ISTOCKPHOTO

What do nurses want?Nurses ask hospitals to hire more, restrict mandatory overtime; hospitals cite nursing shortage

Michigan has had more than its share of labor disputes between hos-pitals and nurses.

A high-pro�le walkout among nurses in Marquette, a public dispute at Huron Valley-Sinai Hospital in Commerce Township, and the for-mation of unions at two hospitals in 18 months are just part of the story.

�e con�icts have several causes, and are critical in an industry that’s being graded on dollars and cents but also on quality — and one where lives are at stake.

Higher pay isn’t at the top of the list of what nurses want, although that wish is in their top �ve. What they most ask hospitals for is a safer workplace, for themselves and their patients, where nursing shifts are limited to 12 hours or less, patients can count on su�cient numbers of nurses per shift and hospitals don’t regularly rely on nurses to perform housekeeping or patient transpor-tation duties in addition to patient care.

Crain’s interviewed nurses at sev-en hospitals, most of whom are in unions and involved in contract ne-gotiations. �ree hospital nursing executives also were interviewed.

Scott Balko, an operating room nurse at UP Health System-Mar-quette, said the No. 1 issue for nurs-es at the 300-bed hospital is manda-tory overtime driven by poor working conditions because of un-dersta�ng that he said discourages

nurses from applying for jobs and causes unnecessary turnover.

“We don’t have the number of nurses to do the job. �ey are work-ing longer shifts and putting pa-tients in unsafe conditions,” Balko said. “�ere are no regulations on hours for nurses like there are for truck drivers.”

Stephanie DePetro, an emergency room nurse also at UP Health, the former Marquette General Hospital, said nurses want speci�c nurse-pa-tient ratios for each department. “�ere are work standards for many professions, but there is no law for how many patients we are asked to care for,” she said.

Last month, 400 nurses went on a two-day strike in Marquette to pro-test working conditions and lack of solutions from management over a union contract under negotiation for �ve months. UP Health is a for-pro�t hospital purchased in 2012 by Nashville-based Duke LifePoint.

Tom Casperson, R-Escanaba, said he believes nurses when they tell

him how they are often left no choice but to work overtime when hospitals fail to properly sta� shifts. He said hospitals tell him the nursing short-age prevents them from hiring more nurses, a contention nurses dispute.

�e U.S. Bureau of Labor Statistics reports more than 100,000 regis-tered nurse jobs will be available an-nually until 2022.

But nurses such as Judy Moore, an intensive-care and step-down unit nurse also at DMC Huron Valley-Si-nai Hospital in Commerce Charter Township, question whether nurse sta�ng problems are caused by a

nursing shortage or simply because nurses don’t want to work at hospi-tals when they have few rights. A growing number of nurses have re-tired, changed occupations or be-come administrators in recent years, experts say.

“(Hospitals) tell us they can’t hire more sta� because of a nursing shortage,” Moore said. “�ere is not a nursing shortage. �ere are plenty going into colleges now. (Hospitals) are just not hiring.”

In March 2016, Huron Valley Sinai nurses voted in a union that is a�li-ated with the Michigan Nurses Asso-

ciation. But after 16 months of nego-tiations, the nurses are still without a contract.

Earlier this month, the Huron Val-ley nurses union released a scathing 38-page report that documented 240 incidents of poor patient care they say were directly related to insu�-cient numbers of nurses per unit. �ey asked for an investigation by the state Department of Licensing and Regulatory A�airs. �ey also �led a lawsuit in Oakland County Circuit Court over alleged public health code violations.

Moore said DMC has frozen nurse hiring, which has resulted in fewer �oor nurses because turnover continues at high rates.

Shawn Levitt, DMC’s chief nurs-ing o�cer, declined to address di�-cult contract issues. “We don’t ne-gotiate contracts in the media,” she said. Lori Stallings, Huron Valley chief nursing o�cer, said hospital management is making good prog-ress in the talks, but wasn’t sure when a contract might be signed.

Casperson, who joined to sup-port hundreds of nurses from all over Michigan in Marquette for the strike, is one of six legislators who are co-sponsoring the Safe Patient Care Act that is part of a three-bill, bi-partisan package (See story, Page 11).

“I am supporting the nurses be-cause when nurses work to exhaus-tion, it is a patient safety issue,” Casperson said.

By Jay Greenejgreene@crain.com

Need to knowJJ Nurses are asking hospitals to hire

more nurses, restrict mandatory overtime and improve overall working conditions

JJ Hospital executives say the nursing shortage and aging workforce prevents them from hiring su�cient nurses

JJ Nurses say hospitals are short-sighted because lack of nurses at the bedside drives medical errors and higher costs

LARRY PEPLIN FOR CRAIN’SJudy Moore and Kathleen Lehman are nurses at DMC Huron Valley-Sinai Hospital in Commerce Township.

SEE NURSES, PAGE 12

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7 11

concerns because he knows how working long hours can affect job quality and sometimes can be dan-gerous. His family owns Casperson & Son Trucking, a log trucking busi-ness, a company in which he was owner and operator for 12 years.

“My background in trucking for 27 years with the industry becom-ing more regulated got me thinking if regulations like limiting hours of service can make trucking safer, it can make hospitals safer by limit-ing hours nurses have to work,” said Casperson.

Casperson and Warren are co-sponsors of the bills and spoke with Crain’s about why they sup-port the bills. The other four co-sponsors include Reps. Aaron Miller, R-Sturgis; Joe Hune, R-Fowl-erville; Jon Hoadley, D-Kalamazoo; and Stephanie Chang, D-Detroit.

“I listened to nurses and how of-ten they are asked to work is quite alarming,” Casperson said. “They never once made an argument they aren’t paid enough. It is always hours of service. They came across as sincere. Something is wrong here.”

Warren said her background and understanding of nurses led her to a greater understanding and sup-port of the bills.

“I come from a family of nurses, my mother and sister are nurses and the concerns of nurses are not new to me,” said Warren. “We have a shortage of nurses, and I believe one reason is the working condi-tions at hospitals. States like Cali-fornia shows us the quality of life for nurses goes up so much when we make sure we are not doing mandatory overtime. There is not as much turnover; nurses are not burned out.”

Warren said when nurses are not tired and they have time to spend with patients, “there are fewer medical errors, less secondary in-fections, time to treat and prevent bedsores.”

A 2015 report by the MHA said that in 2014 there were at least 52,000 incidents, unsafe condi-tions, or near-misses at hospitals, or 1,000 per day. The MHA said the documented numbers were due to an increase in electronic reporting and improved safety culture. Ad-verse events can mean anything, ranging from missed medication to injurious falls to preventable fatal infections.

“Hospitals are saying themselves they know it is an issue,” Warren said. “I believe they want to do ev-erything they can to promote safe care.”

But Warren said nurses tell her that hospitals are paying lip service to safe staffing, and some hospitals are not serious about putting finan-cial resources into nursing.

In a survey last year, 20 percent of nurses in Michigan said they were aware of an incident in which un-derstaffing caused the death of a patient, said the report by Ander-son Robinson Research, which was commissioned by the Michigan Nurses Association.

The survey also found that 86 percent of nurses said patient care is suffering because they are as-signed too many patients, 45 per-cent said patients had longer lengths of stay, 49 percent said harm was caused, 53 percent said patients were readmitted and 57 percent said infections and compli-cations resulted from understaff-ing.

Numerous reports conclude that medical errors in hospitals cause unnecessary patient deaths. For ex-ample, a 2013 study in the Journal of Patient Safety said each year in the U.S. some 400,000 patients die because of medical errors. Michi-gan state health agencies don’t track medical errors.

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Panelists include top executives from Kelly Services, Michigan Department of Talent and Economic Development,

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SPECIAL REPORT: HEALTH CARESafe nursing sta�ng bills face uphill battle to get hearing

For the third consecutive year, a bipartisan legislative package on nurse staffing has been introduced in the Michigan Legislature that would improve patient safety and quality, save lives, and could poten-tially help ease the nursing short-age at hospitals, according to its sponsors.

The Michigan Health and Hospi-tal Association hasn’t taken an offi-cial position for or against the bills this year but has told individual legislators that they are unneces-sary, lawmakers say. MHA officials declined interview requests with Crain’s.

State Sen. Mike Shirkey, R-Clark-lake, who is chair of the Senate health policy committee, told Crain’s he will not hold a hearing on the bills. House health policy chair Hank Vaupel, R-Handy Town-ship, also said the safe staffing bill package hasn’t been scheduled for a hearing, and it is unlikely it will be with few committee days left.

The so-called “safe staffing” bill package has three parts: it limits the number of patients who can be assigned to nurses based on indi-vidual clinical departments and se-verity of patients’ illnesses; re-stricts the use of mandatory overtime; and requires basic trans-parency, mandating that hospitals disclose on their websites depart-ment nurse-patient ratios to the public.

In early 2016, the MHA opposed a similar bipartisan bill during a house regulatory reform committee hearing held by Rep. Ray Franz, R-Onekama, when he was commit-tee chair. However, there have been no hearings yet this year in the Michigan House or Senate on the proposed Safe Patient Care Act. With nine days remaining in the session, time is running out.

Shirkey, who has served many years on a hospital board of trust-ees, said he is opposed to the nurs-ing bill.

“Hospitals and other providers are keenly sensitive to quality and safety,” Shirkey said. “With growing competition in this field, coupled with much demanded increases in transparency by patients and pay-ers, it’s simply not necessary for government to get this deep into operations.”

Crain’s interviewed nursing exec-utives at three hospitals and they all expressed concerns and opposi-tions to the bills. One nursing exec-utive at the University of Michigan, however, said the nurse-patient staffing ratio transparency bill is a good idea.

While the MHA refused to do an interview with Crain’s on the bills, Rebekah Warren, D-Ann Arbor, said talks she has had with MHA representatives make it clear to her that hospitals are opposed to the nursing bills.

“They tell me they already do this at hospital level,” Warren said. “They set internal goals about safe nurse staffing. They also talk about costs associated with hiring more nurses and putting more on shifts when volumes are down.”

Sen. Tom Casperson, R-Escana-ba, said he understands the nurses’

By Jay Greenejgreene@crain.com

Need to knowJJ Bi-partisan, three-bill legislative

package on safe nursing stang introduced in Michigan Legislature

JJ Senate and House health policy leaders say no hearings will be held

JJ Supporters say research shows quality and patient safety improved and costs reduced with sucient nurse stang

Tom Casperson: Co-sponsor of the nursing bill.

Mike Shirkey: Opposes nursing bill.

SEE BILLS, PAGE 12

In the CapitolSeveral active bills in Michigan’s Legislature would address nurse stang at hospitals:

Senate Bill 387/House Bill 4629 — Creates mandated nurse sta�ng ratios based on each department and the acuity, or sickness level, of patients under care.

SB 388/HB 4630 — Allows nurse to refuse to work more than a 12-hour shi� without threat of termination or job action. Exempts such situations as unforeseen emergencies like a mass shooting or casualty incident.

SB 389/HB 4631 — Mandates hospitals to publicly disclose nurse-to-patient ratios.

Source: Michigan Legislature

12 C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7

Nurses speak out

Kathy Lehman, an emergency nurse at DMC Huron Valley-Sinai, said a reduction in nurses and sup-port sta� has been plaguing the for-pro�t hospital and many others across Michigan.

“We have seen a reduction in sta� in ancillary care, patient care techni-cians, sitters, environmental services and patient transporters,” said Leh-man, a nurse for 17 years, the last 11 at Huron Valley.

Moore said hospital consolidation and for-pro�t ownership has led to bigger lobbies but fewer caregivers at the bedside. A nonpro�t hospital un-til 2011, Huron Valley-Sinai is part of DMC, which is owned by for-pro�t Tenet Healthcare Corp. of Dallas.

Levitt said Huron Valley sta�s nurses and others based on daily pa-tient counts and industry standards. Stallings cited “A” grades since 2012 that Huron Valley has received from the Leapfrog Group for patient safety.

Moore said Huron Valley nurses “have lost our voice at the hospital, as far as what we feel is best for the pa-tient.”

But Levitt said Huron Valley is also a magnet hospital certi�ed by the American Nurses Association that has a shared governance model

Michigan hospitals have an up and down record of patient safety, ac-cording to �e Leapfrog Group. For example, Michigan ranked 21st na-tionally for percentage of hospitals with “A” patient safety grades in 2015, but dropped to 36th in 2017. Michi-gan has 19 hospitals with A grades in 2017, compared with 29 in 2016.

But Warren said people are admit-ted to hospitals every day and they

are many times put at risk because of low sta�ng and tired health care workers.

“You take loved ones to a hospital to get quality care and you can’t get it because nurses are working too

many hours,” Warren said. “We are talking about medical errors that lead to decreased quality of health for people and loss of life. If I were at a hospital, I wouldn’t want to talk about it if my own policies are caus-

ing that.”Despite what hospital administra-

tors say, Casperson said nurses’ con-cern for patient safety is not an exag-geration.

“I have lived it. When you put in those many hours, you are not at your best. �ey want to be on their ‘A’ game,” he said. “�ey are consistently asked to do this. �ey know after 16 hours, they are tired and have to go home and rest. If we can regulate other professions for safety, we can do this for patients.”

Casperson said he knows as an

employer that companies are usually in the best position to set work hours. “�ere is a moral code you have to follow,” he said. “When forcing these kinds of conditions on these people, there is a respect level that is missing. Government can play a role here.”

Moreover, when he talks with pa-tients, they agree with him and nurs-es. “But I don’t believe they know what exactly is happening. �ey wouldn’t care for it if they went to a hospital and it was understa�ed.”

If the three-bill package is ap-proved, John Armelagos, president of

“You take loved ones to a hospital to get quality care and you can’t get it because nurses are working too many hours.” Rebekah Warren

SPECIAL REPORT: HEALTH CARE

Nurse strikes rarein Michigan

A nursing strike is an extreme event that doesn’t happen often in Michigan. But nurses say it illustrates the growing rift between nurses and management over key issues that in-volve patient and nurse safety, sta�-ing, pay and respect.

Two top hospital executives told Crain’s they believed sta�ng and pa-tient care issues are exaggerated by nurses and what they really want is higher pay. But nurses pushed back and said that may have been true in the past, but now the primary issue is too few nurses per shift and manda-tory overtime that pushes many nurses to work 16-hour days.

Crain’s research has found six strikes since 1979 at hospitals in Michigan, a 1994 strike at Marquette General, the one this year and two at the University of Michigan Hospital in the 1980s.

�e longest strike and dispute went on for nearly three years start-ing in November 2002 at the former Northern Michigan Hospital in Peto-skey, now McLaren Northern Michi-gan.

In 1979, nurses at St. Francis Hos-pital in Escanaba struck for 120 days before it was settled with help from a federal mediator. Nurses nearly struck four times since 2000 at Genesys Regional Medical Center in Grand Blanc Township before set-tling on contracts.

In the past 18 months, nurses have formed unions at Huron Valley-Sinai and Munson Medical Center in Tra-verse City.

Share same goal

Nurses interviewed by Crain’s said they believe more hospitals in Michi-gan are voting for unions or consid-ering ones to help argue their case for better patient care to management. Nursing councils or committees are not strong enough voices, they say.

Hospitals have waged intense bid-ding wars to �ll nursing vacancies. �ey have o�ered nurses huge sign-ing bonuses and even sport-utility vehicles and vacations to the Baha-mas. However, those e�orts often only served to exacerbate turnover, spurring nurses to remain in jobs just long enough to claim the prizes be-fore moving to other hospitals with better incentives, several nurses told Crain’s.

At the same time, hospitals also have engaged in various methods to hold down nursing salaries. In settle-ments from 2009 to 2015, eight health systems in metro Detroit paid about $90 million to settle a class action

lawsuit over nurse wages that spanned 2002 to 2006 and involved more than 20,000 nurses, Crain’s re-ported in a story in September 2015.

Some systems that settled includ-ed Detroit Medical Center, Beau-mont Health, Henry Ford Health Sys-tem, Trinity Health and St. John Providence Health System.

On the �ip side, many hospitals have taken steps to improve relations with nurses. Some have been certi-�ed as “magnet” hospitals from the American Nurses Association and the Institute of Healthcare Improve-ment.

So far, more than 300 hospitals na-tionwide, including Beaumont Health, the University of Michigan and 12 other hospitals in Michigan, have been credentialed as magnet hospitals.

A 2013 study by the University of Pennsylvania found that magnet hospitals have 14 percent lower mor-tality risk and 12 percent lower fail-ure to rescue rates. Magnet hospitals

are more likely to o�er more �exible hours, lower caseloads and pay for advanced training and give nurses more authority.

Nurses tell Crain’s they want to be fairly paid, but they really want better working conditions that would allow them to o�er better patient care, said John Armelagos, president of the MNA and nurse for 30 years at the University of Michigan Hospitals.

Armelagos said nurses are at the front lines in patient care and act as advocates for patients and their fam-ilies.

“We need to ensure there are enough nurses to take care of pa-tients on every unit and every shift so we can respond and monitor our pa-tients,” said Armelagos, who works in inpatient psychiatric adult and ado-lescent units. “When there are not enough nurses to take care of pa-tients, peer review research shows that patients su�er, outcomes are more negative and mortality increas-es per patient.”

In the 1980s, Armelagos said UM nurses twice struck for safer sta�ng and higher wages. Since then, nurses and management have worked much more closely together to resolve dif-ferences, he said.

Marge Calarco, chief nursing o�-cer at the University of Michigan, said UM and its nurses agree that safe sta�ng enables nurses to care for pa-tients in a cost-e�ective way that pro-duces the best outcomes. But she said nurses also want to be treated with respect by management and valued for the service they provide to society.

“Gallup (polls have shown consis-tently that) nursing is the most trust-ed by the population,” said Calarco, who has been a nurse more than 30 years, the last 15 years as UM’s chief nurse. “Every year except for 9-11 when �re�ghters were recognized, we are the most trusted profession. We are closest to families and pa-tients, 24 hours, seven days per week. We provide exquisite care and are the heart of health care in many ways.”

Calarco said more than 15 years of research shows that hospitals that have adequate nurse sta�ng have lower mortality and morbidity. UM works closely with its nursing union to ensure each department has su�-cient number of nurses for each shift, she said.

“Nurses want to practice in an en-vironment where they are required to take care of sicker and sicker popula-tions,” Calarco said. “Populations in hospitals today, 30 years ago would not have survived. Acuity is growing, and expertise is critical. If you don’t have safe sta�ng, you can’t do it.”

But Calarco said she is not a pro-ponent of mandated nurse-patient ratios because they don’t allow hos-pitals su�cient �exibility to take into account patient acuity levels that

vary from day to day.“We at UM take sta�ng very seri-

ously and do it very well,” said Calar-co, adding that “there are many plac-es in Michigan and across the county that do not to have the resources for safe sta�ng.”

Calarco acknowledged that some hospitals look �rst to reduce costs by cutting nursing sta�, which is the largest workforce at hospitals. She said she understands these hospitals set the stage for nurse unions to form and for calls for mandated nurse-pa-tient ratios.

“Some hospitals, faced with eco-nomic challenges, cut nurse sta�ng,” Calarco said. “We know, the data is clear, that once nurse sta�ng is cut to unsafe levels, you see decreases in patient outcomes and increases in mortality. I have always seen it is shortsighted, and I have advocated for strong sta�ng here.”

Echoing what �oor nurses tell Crain’s, Calarco said hospitals actu-ally lower costs when they have safe sta�ng. “Hospitals don’t always un-derstand that. (When hospitals have fewer nurses) they have more over-time, need more premium labor, more agency nurses, just to get the work done,” she said, adding that quality also diminishes when regular nurses aren't available. “It is a short-term �x that isn’t good for the long run.”

Nurses’ main issues

Cindy Rydahl, a surgical services nurse at Munson Medical Center in Traverse City, said nurses need a larger voice in decisions hospitals make on sta�ng and patient care.

“We want safe sta�ng because the acuity of our patients is sicker than they used to be,” Rydahl said. “Our nurse patient ratios need to be im-proved. We are seeing more emer-gency patients and they need more care. Acuity is the biggest problem.”

In August, Munson nurses ap-proved a union for its 1,200 nurses through the Michigan Nurses Associ-ation. Negotiations are expected to start soon on a contract.

“We want a voice. We want to be listened to and heard,” said Rydahl, who has been a nurse for 33 years. “We are at the bedside and know what patients need because we care for them and listen to the families.”

She said the hospital and nurses have a shared governance commit-tee, but nurses decided to form a union because the committee has been ine�ective in resolving issues.

Loraine Frank-Lightfoot, Mun-son’s vice president of patient care services and chief nursing o�cer, said Munson has been taking steps the past 16 months since she has been at the hospital to address sta�-ing ratios in various departments.

“I agree that the old shared gov-

ernance structure was not as effec-tive as could have been. When I went to meetings, there were not a lot of front-line nurses there,” said Frank-Lightfoot, who has been a nurse for 32 years. “I am very par-ticipatory, and we now have 150 front-line staff involved with com-mittees.”

Frank-Lightfoot said she under-stands how di�cult it is for nurses to work with insu�cient sta�ng. She said many nurses have been hired in the past year and the vacancy rate has been cut to 3.3 percent, far below than the national average of 8.8 per-cent, she said.

“�ere have been key areas that have been harder for us to recruit — OR, ER and critical care,” she said. “We lost a lot of (nurses who worked) in the OR, and it is a steep learning curve” for new nurses.

But Frank-Lightfoot said she be-lieves the major issue at Munson for the nurses is pay.

“Mandatory overtime and safe sta�ng are not the real issues,” she said. “I believe the issues are around compensation. �at is the key.”

Frank-Lightfoot acknowledged that Munson fell behind market wag-es for nurses in the past. “We have put $18 million in sta� wages, and we are catching up,” she said.

NURSESFROM PAGE 10

GETTY IMAGES/ISTOCKPHOTO

BILLSFROM PAGE 11

the MNA and nurse for 30 years at the University of Michigan, said patient care and outcomes will be improved.

“Depending on the unit, research has borne out that one nurse cannot take care of more than four patients at one time. �at is the safe limit. If those patients are very sick, it could be two to one,” Armelagos said. “Lives would be saved. �ere would be less urinary tract infections, less falls, and less recidivism with pa-tients. Patient care outcomes im-proved.”

In California and Massachusetts,

Nurse sta�ngResearch on safe sta�ng over the past decade shows the following:

Each additional patient per nurse on medical-surgical units was associated with a 5 percent lower likelihood of surviving an in-hospital cardiac arrest (Medical Care, 2016).

The risk of death in the intensive care unit was increased by a factor of 3.5 when the patient-to-nurse ratio was greater than 2.5 to 1 (Critical Care Medicine, 2015).

Higher numbers of nurses per bed are associated with better survival rates among patients in intensive care, and the bene�ts are greatest among the very seriously ill. A study determined that seven additional lives would be saved for every 100 patients if nurse numbers increased from four to six per bed (Nursing Standard, 2014).

An increase in a nurse’s workload by one surgical patient increased the likelihood of an inpatient dying within 30 days of admission by 7 percent. The di�erence between death rates in hospitals with lighter nurse workloads can be up to 30 percent (The Lancet, 2014).

Cutting nurse to patient ratios to 1-to-4 nationally could save as many as 72,000 lives annually (Medical Care, 2005).

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7 13

Nurses speak out

Kathy Lehman, an emergency nurse at DMC Huron Valley-Sinai, said a reduction in nurses and sup-port sta� has been plaguing the for-pro�t hospital and many others across Michigan.

“We have seen a reduction in sta� in ancillary care, patient care techni-cians, sitters, environmental services and patient transporters,” said Leh-man, a nurse for 17 years, the last 11 at Huron Valley.

Moore said hospital consolidation and for-pro�t ownership has led to bigger lobbies but fewer caregivers at the bedside. A nonpro�t hospital un-til 2011, Huron Valley-Sinai is part of DMC, which is owned by for-pro�t Tenet Healthcare Corp. of Dallas.

Levitt said Huron Valley sta�s nurses and others based on daily pa-tient counts and industry standards. Stallings cited “A” grades since 2012 that Huron Valley has received from the Leapfrog Group for patient safety.

Moore said Huron Valley nurses “have lost our voice at the hospital, as far as what we feel is best for the pa-tient.”

But Levitt said Huron Valley is also a magnet hospital certi�ed by the American Nurses Association that has a shared governance model

where nursing practice issues are brought forward and worked out.

Lehman con�rmed that Huron Valley has a professional nurse coun-cil, but suggestions have been put on hold. “We are a magnet hospital and should be sitting in on decision-mak-ing, but it isn’t happening,” she said.

Moore said nurses have commit-tees for pharmacy, �nances and quality. “But they have taken nurses’ voices away from hospitals and are making decisions based on pro�t,” she said, adding: “Patients were nev-er at risk when we were nonpro�t. Decisions aren’t local anymore. �ey are always made at the corporate lev-el.”

On the other hand, nurses like Moore and others interviewed by Crain’s insisted they would do their job and go beyond normal sta�ng to take care of patients.

“I am here at Huron Valley because I love taking care of the community. No matter what is going on, the nurs-es work really hard so patients are not compromised,” Moore said.

Tom Hall, a multi-department �oat nurse at McLaren Lapeer Hospi-tal, said the MNA-sponsored union has been negotiating a new contract with the hospital since May. �e Lap-eer nurses signed their �rst union contract in the mid-1990s and have a

range of issues to iron out with the McLaren hospital, including su�-cient number of employed nurses.

Hall said Lapeer nurses want lower sta�ng ratios, which have been in-creasing the past �ve years as the Af-fordable Care Act has cut Medicare reimbursement rates.

“How would you feel to be the sixth, seventh or eighth patient for a nurse working 16 hours?” said Hall.

Sheila Kahn-Monroe, vice presi-dent of labor relations with McLaren, said the 12-hospital system allows local hospitals to set nurse sta�ng policies, although corporate policy is focused on ensuring safe sta�ng and that the nursing workforce has the right skill mix.

Kahn-Monroe said the McLaren Lapeer contract talks are fairly typical and she expects a signed deal by the end of the year. “We are using a col-laborative, interest-based approach and working through discussions,” she said. “Nurses want lower nurse-sta� ratios.”

Kahn-Monroe said 10 of McLar-en’s 12 hospitals have nursing unions. �ree are engaged in con-tract talks, including Lapeer, Bay and Macomb hospitals, she said.

“Each facility looks at census and whether they need to move resourc-es” into clinical departments based on volume and acuity changes, Kahn-Monroe said. When volume or acuity levels rise, hospitals bring in additional nurses to maintain good patient care, she said.

However, Kahn-Monroe said hos-pitals review patient activity every four hours and if volume dips, nurses could be sent home. “We balance that to make sure they get the hours they need,” she said.

Obamacare impact?

One of the biggest problems nurs-es some hospitals have faced under Obamacare is how executives react when their hospital Medicare quali-ty scores dip and they don’t qualify for higher federal reimbursements under value-based payment formu-las.

“If the hospital doesn’t get all 9s or 10s, we don’t qualify for reimburse-ment, and the nurses are belittled and given more work to get the scores up,” Hall said. “It sometimes adds two to three hours of di�erent work every day just to get the reimburse-ment. We don’t get extra help.”

Hall said one bad patient experi-ence can lower Medicare patient sat-isfaction scores. “If they provided enough nurses to do the extra work, we could more easily get the scores,” he said. “If you are that eighth patient you will write the bad score. If we had enough nurses where you are the fourth patient, we have more time to do a good point.”

Kahn-Monroe said she does not

believe that McLaren Lapeer blamed nurses for lower than expected pa-tient satisfaction scores.

“Lapeer does need some work, but it isn’t just nurses. I take exception that nurses are being singled out,” said Kahn-Monroe, adding that when patient satisfaction scores dip the entire patient care team is asked to improve. “We go back to sta� and ask how we can improve,” she said.

Rydahl said Munson nurses often agree to overtime because paper-work requires an extra 30 minutes to an hour to complete after a 12-hour shift. “We have too many patients who needed nursing care,” she said. “I would be abandoning my patients if I left. It is a scheduling problem as well as higher acuity.”

Munson often schedules too few nurses in hospital departments, said Rydahl, and that often requires nurs-es to do many non-nursing duties. �ey include patient transportation, housekeeping and patient sitting, she said.

Moore said DMC Huron Valley-Si-nai also has cut sta� in patient trans-portation, environmental services and housekeeping.

“We are leaving the �oor to trans-port patients, to take out the garbage and sweep the �oors,” Moore said. “Patients are asking where the help is. We want to care for patients, and we are not getting support.”

Armelagos said UM nurses ad-dressed the issue on non-nursing du-ties years ago in their contracts. “Hospitals are foolish when they have nurses doing non-nursing tasks,” he said. “�e work is compre-hensive enough not doing the work as a clerk. But when something needs to be done in the hospital and there is nobody else do it, nurses do it. Hos-pitals know this and cut support sta� on purpose.”

Lehman said nurses have several complaints about how Huron Val-ley-Sinai schedules nurses. When pa-tient volume drops during the day, the hospital sends nurses home. “It is called ‘K’ time. You go home without pay or you can use vacation hours,” said Lehman, adding that except for the operating room and cardiac cath-eter laboratory there is no on-call schedule.

“We work three 12-hour days, and sometimes much longer,” Lehman said. “What every nurse wants is some kind of a �oor. We want to know how many nurses are on call

during a day and keep to a safe sta� ratio. You have to take into consider-ation emergencies because we need to be able to see patients safely.”

For example, Lehman said often in the emergency department nurses face short-sta�ng when trauma cas-es mount up, increasing typical 4-1 patient to nurse ratio up to 7-1 or more.

While Hall said mandatory over-time is limited in the Lapeer nurses’ current contract, the hospital does not always abide by sta�ng guide-lines for every department.

“We do have some nurses who will stay voluntarily. It is not considered mandated hours because a nurse has volunteered,” Hall said. “If no one will stay, that is when they go to man-datory.”

�e last two years, however, Mc-Laren Lapeer has been unable to hire enough nurses, Hall said.

“�ey like to say it is because of the nursing shortage. But we have sever-al schools that produce 40 to 60 nurs-es per semester,” said Hall, noting that there are three hospitals in Flint that also hire nurses. “We deal with issues of competitive pay. If you pay lower wages than other hospitals, you won’t get as many nurses.”

Hall said he knows several nurses at Lapeer who have graduated from nursing school and decided to go into home health or health insurance because of pay and working condi-tions at hospitals.

Kahn-Monroe said McLaren Lap-eer recently hired a number of nurses to �ll vacancies. “We had some turn-over there, but we were able to hire people in,” she said.

Calarco said nursing shortages are cyclical and often based on geogra-phy, with rural hospitals sometimes having more trouble attracting nurs-es than suburban hospitals because of pay and other factors.

But Calarco said hospital vacan-cies are sometimes created when there is low nursing sta� and nurses become overworked and dissatis�ed. She said there is no shortage of nurs-es in Ann Arbor, partially because nurses want to work at UM.

“You have a downward spiral when you create more vacancies to �ll,” she said. “Nurse recruiting and retention is impacted by practice en-vironment of hospitals.”

Jay Greene: (313) 446-0325Twitter: @jaybgreene

employer that companies are usually in the best position to set work hours. “�ere is a moral code you have to follow,” he said. “When forcing these kinds of conditions on these people, there is a respect level that is missing. Government can play a role here.”

Moreover, when he talks with pa-tients, they agree with him and nurs-es. “But I don’t believe they know what exactly is happening. �ey wouldn’t care for it if they went to a hospital and it was understa�ed.”

If the three-bill package is ap-proved, John Armelagos, president of

“Populations in hospitals today, 30 years ago would not have survived. Acuity is growing, and expertise is critical. If you don’t have safe sta�ng, you can’t do it.”Marge Calarco

ernance structure was not as effec-tive as could have been. When I went to meetings, there were not a lot of front-line nurses there,” said Frank-Lightfoot, who has been a nurse for 32 years. “I am very par-ticipatory, and we now have 150 front-line staff involved with com-mittees.”

Frank-Lightfoot said she under-stands how di�cult it is for nurses to work with insu�cient sta�ng. She said many nurses have been hired in the past year and the vacancy rate has been cut to 3.3 percent, far below than the national average of 8.8 per-cent, she said.

“�ere have been key areas that have been harder for us to recruit — OR, ER and critical care,” she said. “We lost a lot of (nurses who worked) in the OR, and it is a steep learning curve” for new nurses.

But Frank-Lightfoot said she be-lieves the major issue at Munson for the nurses is pay.

“Mandatory overtime and safe sta�ng are not the real issues,” she said. “I believe the issues are around compensation. �at is the key.”

Frank-Lightfoot acknowledged that Munson fell behind market wag-es for nurses in the past. “We have put $18 million in sta� wages, and we are catching up,” she said.

GETTY IMAGES/ISTOCKPHOTO

the MNA and nurse for 30 years at the University of Michigan, said patient care and outcomes will be improved.

“Depending on the unit, research has borne out that one nurse cannot take care of more than four patients at one time. �at is the safe limit. If those patients are very sick, it could be two to one,” Armelagos said. “Lives would be saved. �ere would be less urinary tract infections, less falls, and less recidivism with pa-tients. Patient care outcomes im-proved.”

In California and Massachusetts,

which have approved nurse sta�ng legislation, patient care has im-proved, experts say.

California’s nurse-patient sta�ng ratio law was approved in 1999 and over time led to an additional half-hour of nursing per adjusted patient day beyond what would have been expected without the law. Hospital operating costs have risen some-what, but nursing turnover has slowed and burnout reduced.

Massachusetts became the second state in the nation in 2015 to limit the number of patients who can be as-

signed to a nurse. For example, no more than two patients can be as-signed to a single nurse in all inten-sive care and burn units. �e state also requires hospitals to post sta� ratios on websites.

Floor nurses Judy Moore and Kathy Lehman at Huron Valley said if the state Legislature wants patient care at hospitals to improve, legisla-tors should vote for the bills. �ey say patient care and quality has im-proved in Massachusetts and Califor-nia where safe sta�ng statutes have been approved.

“Nurses and patients would know exactly what you are getting when you walk into a hospital. We would know how many patients we have to take care of and patients would know, too,” said Moore, an intensive care nurse.

Marge Calarco, chief nursing o�-cer at the University of Michigan Health System, said she is not a pro-ponent of mandated nurse-patient ratios because they don’t allow hos-pitals �exibility to take into account patient acuity levels that vary from day to day.

“We at UM take sta�ng very seri-ously and do it very well,” Calarco, adding that “there are many places in Michigan and across the county that do not to have the resources for safe sta�ng.”

But Calarco said hospitals that cut nursing costs for �nancial reasons of-ten end up paying more in the long run for agency or travel nurses. Short sta�ng also can reduce quality care, she said.

Jay Greene: (313) 446-0325Twitter: @jaybgreene

14 C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7

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MONDAY, NOV. 20The Role of In-novation in Meeting 21st Century Hous-ing Challenges. 11:30 a.m.-1:30 p.m. Nov. 20. Timothy J. M a y o p o u l o s , Fannie Mae pres-ident and CEO, will talk about the role of innovation

in meeting 21st century housing chal-lenges. Westin Book Cadillac. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org

UPCOMING EVENTSJVS Business Connections: Why You Should Take Arti�cial Intelli-gence Personally. 7:30-8:45 a.m. Nov. 29. Stephen Couchman, presi-dent and CEO of LivePicture, will talk about machine learning, natural lan-guage processing, computer vision and machine reasoning. He will also speak about emerging business op-portunities and market trends and how to respond to the technology. Jewish Community Center, West Bloom�eld. Free, but registration re-quired. Contact: Angela Bevak, phone: (248) 233-4482; email: abev-ak@jvsdet.org

CREW Detroit Presents Carla Har-

ris. 11 a.m.-2 p.m. Nov. 29. Commer-cial Real Estate Women Detroit. Carla Harris, Morgan Stanley’s vice chair-man, managing director and senior client adviser, shares her “Tools for Maximizing Your Success.” �e Re-serve, Birmingham. $75 member; $125 nonmember. Contact: Kelly Ster-nberg, phone: (248) 436-5520; email: kelly.sternberg@bartonmalow.com; website: crewdetroit.org

The Voice of Business in America — Regaining Trust in Our Institu-tions. 11:30 a.m.-1:30 p.m. Nov 30. George Barrett, chairman and CEO of Cardinal Health, is the speaker. Westin Book Cadillac. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org

Michauto Summit: A Conversation on Culture & Careers. 9:30 a.m.-4:15 p.m. Dec. 6. Detroit Regional Cham-ber. College students and emerging industry leaders meet with Michigan’s automotive and mobility companies around career opportunities and the culture of the business. College for Creative Studies. $150 members; $200 nonmembers. Contact: Jordan Yagie-la, phone: (313) 596-0384; email: jy-agiela@detroitchamber.com

What is GDPR? The New Privacy. 8-9 a.m. Dec. 7. Bodman PLC. In May 2018, the European Union’s General Data Protection Regulation becomes e�ective and will apply to many U.S. organizations providing products and

services to EU residents. Charles Russman, Bodman’s Data Privacy and Security Practice Group leader, will discuss how GDPR applies to busi-ness; the legal implications if a com-pany is not compliant and how to pre-pare for the requirements. Bodman PLC at Ford Field. Free. Contact: Pa-mela Iacobelli, phone: (313) 530-8033; email: pmiacobelli@gmail.com; web-site: bodmanlaw.com

A Third Century of Public Im-pact. 11:30 a.m.-1:30 p.m. Dec. 11. University of Michigan Presi-dent Mark Schlis-sel looks at what’s ahead for public research univer-sities as the Uni-versity of Michi-

gan marks 200 years. Westin Book Cadillac. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org

Global Business Outlook for 2018 and Beyond. 8-11 a.m. Jan. 11. Auto-mation Alley. Keynote presentation from Paul Traub, senior business economist, Federal Reserve Bank of Chicago, Detroit Branch, on the shift-ing dynamics of the global economy and how companies can best position themselves to do business in the U.S. and overseas. Topics to include: the impact of interest rate hikes; deregu-lation; tax reform; health care; poten-tial stock market corrections; geopo-litical risks and how these will a�ect Michigan’s business and industry cli-mate. Automation Alley. $99 mem-bers; $125 nonmembers. Contact: Lisa Lasser, email: lasserl@automa-tionalley.com

To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. �en, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

CALENDAR

DEALS & DETAILS

Timothy Mayopoulos

Mark Schlissel

Ann Arbor startup gets $2.2M in funding

Ann Arbor-based Give and Take Inc., a tech startup that allows em-ployees at companies to better collab-orate and share knowledge, has raised a seed funding round of $2.2 million and launched the beta version of its software platform, called Givitas.

�e company said last �ursday that it raised the money from Ann A r b o r - b a s e d RPM Ventures, Grand Rap-ids-based Grand Ventures, De-troit-based Invest Michigan, angel investors and Larry Freed, who has become the CEO.

�e funding will be used to

continue development of the Givitas platform, marketing and sta�ng.

Give and Take is based on research at the University of Michigan and the Wharton School at the University of Pennsylvania. Its founders are Wayne Baker, a professor at the Ross School of Business at UM; Cheryl Baker, Wayne Baker’s wife and co-creator of the Reciprocity Ring, an organization-al exercise that has been sold to For-tune 500 companies and top business schools; and Adam Grant, a professor at Wharton.

Freed was the founder of ForeSee Results Inc., an Ann Arbor-based Web analytics company founded in 2001 as a joint venture of UM and De-troit-based Compuware Corp. It was sold in 2013 for 22 times its original investment.

�e next year, Freed and former members of his management team at ForeSee founded 2nd Stage Partners in Ann Arbor to help growing compa-nies go from early stage to business maturity. According to Crain’s esti-mates, ForeSee had revenue of about $42 million in 2013.

“Fortune 500 companies lose more than $31.5 billion a year when em-ployees fail to share knowledge e�ec-tively, and two-thirds of Americans

are not engaged at work, costing up to $600 billion each year,” Freed said in a news release. “�ese are issues that hit close to home for every business leader. Smart companies understand that empowering and enabling em-ployees to share knowledge and infor-mation easily, e�ciently, and e�ec-tively not only fosters a giving culture, but also speeds up response times, drives employee engagement and im-proves business outcomes.”

“We’ve been helping companies leverage the concepts of generalized reciprocity and social capital to im-prove business outcomes since 1999,” Wayne Baker said. “It’s exciting that we can now use technology to scale these concepts and bring them to a much wider audience.”

“Michigan has an incredibly rich startup environment, and Larry and his team have proven they know how to build and deliver best-in-class technology solutions,” said Tony Gro-ver, a managing partner at RPM Ven-tures, the lead investor. “Give and Take is poised to bridge the gap be-tween existing knowledge manage-ment platform and collaboration soft-ware, making it easy and natural to ask for or give help in less than �ve minutes a day.”

By Tom Hendersonthenderson@crain.com

Larry Freed:Companies lose when employees aren’t engaged.

Need to knowJ Give and Take Inc. allows employees to better collaborate

J ForeSee founder Larry Freed becomes CEO at tech startup

J Company launches beta version of its so�ware platform Givitas

“Michigan has an incredibly rich startup environment, and Larry and his team have proven they know how to build and deliver best-in-class technology solutions.” Tony Grover

MyWMU

TO OUR 2017 NATIONAL PHILANTHROPY DAY DINNER SPONSORS!

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SILVER SPONSORSChildren’s Hospital of Michigan FoundationCranbrook Educational CommunityPresbyterian Villages of Michigan FoundationWalsh College

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BRONZE SPONSORSForgotten HarvestGirl Scouts of Southeastern MichiganGraphics EastLawrence Technological UniversityLeader Dogs for the BlindMacomb Community College FoundationMcLaren Macomb FoundationMission ThrottleMotown DigitalOakland University

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THANK YOU

16 C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7

Chad M. DuschinskyAssociate

Tamara TodorovicAssociate

Gallagher Sharp LLP

The law firm of Gallagher Sharp announces that Chad M. Duschinsky has joined the firm’s Detroit Office as an Associate. Mr. Duschinsky received his law degree, cum laude, from Michigan State University College of Law in 2017. He received his undergraduate degree from Michigan State University James Madison College in 2013. He is a member of the State Bar of Michigan. Visit www.gallaghersharp.com for more information.

Gallagher Sharp announces that Tamara Todorovic has joined the firm as an Associate. Tamara received her law degree, cum laude, from Michigan State University College of Law in 2017, where she served as Associate Editor of Michigan State Law Review. She received her undergraduate degree, With Distinction, from the University of Windsor in 2014, where she received the Board of Governors Medal. She is a member of the State Bar of Michigan.Visit www.gallaghersharp.com for more information.

LAW

Kurt SiebenallerPartner

Baker TillyNationally recognized accounting and advisory firm Baker Tilly Virchow Krause, LLP (Baker Tilly) is

pleased to announce the addition of Partner Kurt Siebenaller to the Michigan office. Siebenaller brings more than 25 years of experience in public accounting. His extensive knowledge of tax planning, tax minimization, business planning and compliance matters allows him to offer value-added services to clients in the manufacturing, construction and real estate industries.

ACCOUNTING

Ron StefanskiManaging Director for Corporate Education

Penn Foster GroupPenn Foster, a leading skills

solutions organization focused on building a talent pipeline for individuals and corporations, today announced it has named Ronald Stefanski as Managing Director for Corporate Education. This move will be instrumental in helping employers and other partners upskill their workforce to fill talent gaps through Penn Foster’s network. Stefanski brings a wealth of directly relevant experience, most recently as former executive director of ed2go.

EDUCATION

Jay HowardSenior Vice President, Wealth Management Advisor

Fifth Third BankHoward will work closely with individual, business

and institutional investors within Fifth Third Private Bank to help them build their wealth and achieve their financial goals. Howard brings more than 20 years of financial services experience to Fifth Third Bank. Most recently, he was an executive director and market team lead for JP Morgan Private Bank in Birmingham. He began his career in public accounting and has held numerous roles including advising, accounting, and investment management.

FINANCIAL SERVICES

Scott CraneVice President, Client Executiver

HylantHylant, one of the nation’s largest family-owned insurance brokerages, has named Scott Crane Vice President, Client Executive. In this position, Scott will continue developing relationships primarily within the automotive, alternative risk and private equity sectors. He will also mentor Hylant’s newest client

executives: A role, says Detroit President Patrick McDaniel, that exemplifies Scott’s commitment to “our core values of family, hard work, honesty, respect and empathy.”

INSURANCE

Manuel AmezcuaPresident, CEO

MassMutual Great LakesManuel Amezcua wasappointed firm President, CEO of MassMutual Great Lakes, a General Agency of Massachusetts Mutual Life Insurance Company.Amezcua brings 14 years of experience building successful financial services teams. With the agency positioned as a leading provider of insurance & wealth management, Amezcua will focus on increasing brand awareness serving business owners & corporations. Amezcua is committed to setting a new standard as the most advisor-centric firm in the region.

FINANCIAL SERVICES

Alan C. YoungChairman MICPA Board of Directors

Alan C. Young Associates PC

The Michigan Association of Certified Public Accountants has elected Alan C. Young as Chairman of its board of directors for 2017-2018. Mr. Young founded Alan C. Young and Associates PC in Detroit in 1983 and brings 40 years of experience as a CPA to his new role. Mr. Young is a member of the Cass Technical High School Alumni Board, the Detroit Regional Chamber of Commerce and board of directors for First Independence Bank. He has also been appointed to the Michigan State Board of Accountancy.

ACCOUNTING

Brian L. DavisManaging Director of Advisory & Private Equity Coverage

Ducker Worldwide

Ducker Worldwide (Ducker) formally announced that Brian Davis has joined the firm as Managing Director of Advisory & Private Equity Coverage. Davis will represent Ducker’s key service offerings, including proactive transaction and target identification, due diligence, transaction management, post-merger/acquisition integration and value creation. Davis joins Ducker with more than 15 years in senior positions from companies such as TPG Growth, Sentinel Capital Partners, and McColl Partners.

FINANCIAL SERVICES

KNOW SOMEONE ON THE MOVE?For more information or

questions regarding advertising in this section,

please call Lynn Calcaterra at (313) 446-6086 or email:

lcalcaterra@crain.com

www.crainsdetroit.com/onthemove

ADVERTISING SECTIONTo place your listing or for more information, please call Lynn Calcaterra at (313) 446-6086 or email lcalcaterra@crain.com

ADVERTISING SECTION

Contact: lmelesio@crain.com • 212-210-0707

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C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7 17

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SENIOR SOFTWARE TEST ENGINEERJob Duties: Guide the team. Perform SW valida for BT/Connect, Speech, HMI,Navigation, Tuner, Vehicle Interface domains on auto infot module Work with proj, req,dev, test & cust team for success release delivery U’stand SW Arch design docs &req study Sprint plan & task creation Lead SW test & Integration team Func Req rev.Dev & Manag Automation Test Framework. Identify Test scena based on Func & busireq. Create & rev test Scenario & Test Cases based on req Exe test cases & perfvalidation. Defect log, track & manag ticket. Manag smoke Sanity & Regression Test.Requirements: Bach’s degree (foreign Equiv) in Comp Sci, Eng, Info Tech,Elect/Telecom or related & 5 Yrs of Overall prog exp in IT of which 3-5 yrs of Exp intoAuto Infotainment Test is acceptable. Exp in manag team in distri envi with mult projPerf SW white/black box test (i.e. validation) on automotive infot module. Reco, proces& analy data with PC based tools & test instru. Exp with auto test tools & frameworksExp with Defect mgmt Tools, Test case mgmt tools Exp in Auto or Embedded Dom.Tools and Technologies : C++, Java, Java Plugins, Code Sonar, QNX, Windows, MSOffice.

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CRAIN’S DETROIT BUSINESSPage 2 November 20, 2017

BANKING/FINANCEJ Molly McLaughlin to human re-sources manager, Cole, Newton & Duran CPAs, Livonia, from human resource generalist, CrossFire Group LLC, Auburn Hills.

EDUCATIONJ Bart Bronk to head of school from interim head of school, University Liggett School, Grosse Pointe Woods.

LAWJ Nicole Meisner to electronic pay-ments associate, Ja�e Raitt Heuer & Weiss PC, South�eld, from attorney, Fuerst Ittleman David & Joseph PL, Miami, Fla.

MANUFACTURINGJ Jay Goldbaum to general counsel from legal director, Horizon Global Corp., Troy.

NONPROFITJ Jacqulyn Hippe to counselor and community advocate, LGBT Detroit, Detroit, from volunteer coordinator, Turning Point, Mt. Clemens.J Sean O’Neill to associate program o�cer, American Cities Practice, �e Kresge Foundation, Troy, from senior manager, strategic retention and analy-sis, HR Talent Management Team, Denver Public Schools, Denver, Colo.

To submit news of your new hires or promotions to People, go to crainsdetroit.com/peoplesubmit and �ll out the online form.

PEOPLE

Snyder names Tukel to Michigan appeals court

Gov. Rick Snyder last week an-nounced the appointment of Jona-

than Tukel to the Michigan Court of Appeals.

Tukel suc-ceeds longtime Judge Henry Saad, who noti-�ed appeals court employees in May that he would retire from the bench

e�ective Nov. 30.Tukel, 56, will serve in the Court

of Appeals’ 2nd District, which cov-ers Oakland, Macomb and Genesee counties. He will need to seek elec-tion in November 2018 for a two-year term, according to the release.

Tukel has been an assistant U.S. attorney with the Department of Justice since 1990, most recently serving as chief of the national se-curity unit supervising investiga-tions and prosecutions with nation-al security implications.

“Jonathan Tukel has a long and distinguished career as a thought leader in the law,” Snyder said in a news release.

Tukel also lectures at the Univer-sity of Michigan Law School, from which he received his degree in 1988, according to the release. He also earned his bachelor’s degree from UM.

Previously, Tukel was an associ-ate for Honigman Miller Schwartz & Cohn LLP, chie�y in antitrust law, labor and white collar criminal de-fense, the release said.

Carhartt names its �rst chief brand o�cer

Carhartt has named its �rst chief brand o�cer, promoting its senior

vice president of marketing, Tony Ambroza, to the post.

E�ective im-mediately, Am-broza, 46, will head brand en-gagement strat-egies to build identity with its c u s t o m e r s

through TV commercials, social media, events, retail marketing and other mediums. �e goal will be to

advance Dearborn-based Car-hartt’s identity as a brand for hard-working people, it said in a new re-lease.

Ambroza joined Carhartt in 2010 and his marketing work has helped the 128-year-old retailer “succeed in a new age of selling,” President and COO Linda Hubbard said.

Ambroza previously was director of marketing at Baltimore-based Under Armour Inc. and brand mar-keting at Beaverton, Ore.-based Nike Inc. He holds economics and political science degrees from Co-lumbia University, and a sports management and marketing mas-ter’s degree from Indiana Universi-ty.

Carhartt has yet to replace the vice president of marketing.

Ann Arbor fest names new executive director

�e Ann Arbor Summer Festival board of trustees has named a new

executive direc-tor for the non-pro�t.

Mike Miche-lon, 29, was pro-moted from gen-eral manager of the festival to the executive posi-tion e�ective im-mediately, the board an-

nounced �ursday. He replaces Amy Nesbitt, who left the group Aug. 1.

Ann Arbor Summer Festival is a three-and-a-half-week display of performing arts and outdoor enter-tainment in Ann Arbor.

Michelon, a University of Michi-gan graduate, joined the nonpro�t in 2014 as general manager. He will work to �ll that position in the com-ing months.

AccessPoint names president and COO

Farmington Hills-based Access-Point LLC has promoted Luis Perez to president and its �rst COO, the re-cruiting company announced Wednesday.

Perez, 53, joined AccessPoint in December 2016 as a consultant, the company said in a news release. He assumed his post leading the compa-ny’s growth and acquisitions strate-gies on Aug. 1. Perez replaces owner and CEO Greg Packer as president.

Jonathan Tukel

Tony Ambroza

Mike Michelon

18 C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7

Economists point to any number of events that could cause economic shock, including overheating in Chi-nese real estate, Brexit, the rising threat posed by North Korea or Presi-dent Donald Trump’s desire to rene-gotiate international trade deals.

But experts told Bridge the next re-cession is at least a few years away, with no imminent bubble about to pop in the U.S. economy.

“What we’ve been forecasting is for a slowdown in job growth in Michigan this year, especially relative to the last few years. But that’s di�erent than a recession,” said Gabriel Ehrlich, an as-sistant research scientist in economics at the University of Michigan and di-rector of U-M’s Research Seminar in Quantitative Economics.

“What we’re seeing now is the new normal, which is going to be slow-and-steady growth,” Ehrlich said.

Other factors, such as Michigan’s aging workforce, are more related to demographics than the length of the business cycle, he said.

�ose trends, plus a skills gap be-tween what employers need and what job candidates know how to do, have put pressure on employers that will only intensify in a recession.

On the plus side, the state has diver-si�ed its economy since 2006. Exclud-ing government, manufacturing was the second-largest industry by num-ber of employees that year after trade, transportation and utilities, according to data from the Michigan Bureau of Labor Market Information and Strate-gic Initiatives.

By 2016, education and health ser-vices and professional and business services sectors had surpassed manu-facturing, according to the state.

Even so, manufacturing is “still par-amount to the importance of this state,” said Je� Guilfoyle, an economist and a vice president at Public Sector Consultants. �e auto industry has transitioned toward more research and development on mobility and ve-hicle technology, Guilfoyle noted, but

“assembly plants still employ a lot of people.”

Tier one auto suppliers — compa-nies that generally supply directly to automakers — likely will be able to weather any change in the automotive business model because many have shifted into new vehicle technologies, said Laurie Harbour, president and CEO of South�eld-based Harbour Re-sults Inc., a consultant to the auto sup-ply chain.

It’s the smaller �rms that make parts for larger suppliers, such as tooling companies, she worries about. �at group often is made up of fami-ly-owned companies with aging own-ers, often in their late 50s, who more likely would retire than go through an-other recession.

Manufacturers too reliant on any one product or business sector are “without a doubt” the most vulnerable to �uctuations in the economy, said Chuck Hadden, president and CEO of the Michigan Manufacturers Associa-tion, a Lansing-based trade group.

Many now seek new markets for their products, Hadden said. A com-pany that makes a fuel pump might also look at building water or other pumps, for instance.

Gudel, the U.S. subsidiary of Swiss-based Gudel Group, has entered more geographic markets to increase pro-ductivity at its Ann Arbor factory, mainly in Mexico and South America, Campbell said.

Company leaders also prepare more detailed business forecasts than they used to, looking at all projects in the pipeline, to get a better picture of the market.

Gudel’s 88-person workforce is at least 30 percent bigger than it was at the worst of the recession, he said. Gu-del’s U.S. operation makes $40 million in revenue annually, he said, while its Swiss parent has sales between $300 million and $350 million annually.

Wages remain stagnant

Business leaders’ con�dence in the economy, however, depends on who you ask.

Business Leaders for Michigan, the

state’s business roundtable made up of executives from the state’s largest companies, found in a recent survey 58 percent of employers were optimis-tic about the state’s economic growth over the next six months.

Yet employers in a new survey by the American Society of Employers were less optimistic, with just 29 per-cent saying they expect better busi-ness conditions over the next six months. Still, 89 percent of companies said they believe hiring will stay the same or increase compared to the past six months.

�at disparity shows why “business con�dence can be a terrible leading indicator,” said Mary Corrado, presi-dent and CEO of the American Society of Employers, a Livonia-based mem-bership organization representing

nearly 800 companies in Michigan. “How do you feel today? Next week you might land that huge contract, and all of a sudden your optimism changes a bit.”

Any optimism hasn’t translated into higher wages, however.

Corrado’s group released Septem-ber survey results that showed em-ployers expected to pay 3 percent av-erage wage increases this year and next, a �gure that hasn’t changed since 2009.

�e �ndings illustrate a trend that has puzzled economists: Low unem-ployment should be triggering em-ployers to raise wages signi�cantly to attract talent. �at hasn’t happened.

One explanation could be that em-ployers are choosing other ways to in-vest, such as training and develop-

ment or bene�ts designed to recruit “the best and brightest,” Corrado said. A company may not o�er 5 percent raises each year, but instead o�er a more family-friendly workplace or pay for workers’ health care.

Some employers remain cautious, the pain still fresh from the last reces-sion.

“I do think companies are kind of keeping as much cash as they can in anticipation” of the next downturn, Corrado said. “�e time is right for us to have another dip in the economy, so we’re all kind of holding our breath wondering when it’s going to be.”

Nationally, U.S. companies report-edly are sitting on more than $1 tril-lion in cash; public �rms are choosing to spend money on shareholder divi-dends, buying back shares to boost their stock prices and acquiring other companies, noted Charles Ballard, an economist at Michigan State Universi-ty.

“None of those does anything to improve the productive capacity of the economy, and none of them does anything for wages,” he added. “�is is all part of what I call, and others call, the ‘�nancialization’ of the U.S. econ-omy.”

Ballard added that Michigan busi-nesses didn’t need to pay more to at-tract talent during the recession be-cause so many people were unemployed.

“Employers got very accustomed to modest wage increases, and I don’t know how long that will take to change,” Ballard said. “�ere’s almost been a culture shift.”

Guilfoyle said one possible advan-tage to a long, slow expansion is that some places that have not felt the ef-fects of the recovery so far still might before the next down cycle comes.

As the labor pool continues to tight-en, he said, employers will have more of an incentive to help draw people back to work, including by making more of an e�ort to �nd workers who faced job barriers in the past, such as parolees.

Lindsay VanHulle: (517) 657-2204Twitter: @LindsayVanHulle

RECESSIONFROM PAGE 1

The Changing Economy Michigan has almost exactly as many people working as a decade ago, but the shape of that workforce has changed. People employed in Michigan Industry 2006 2016 % change

Health care and social assistance 507,200 591,000 16.5%

Professional and technical services 257,900 295,700 14.7%

State government 170,600 188,200 10.3%

Transportation and warehousing 128,400 137,400 7.0%

Administrative and waste services 275,100 293,200 6.6%

Accommodation and food services 352,300 374,400 6.3%

Nondurable goods 143,600 148,300 3.3%

Wholesale trade 170,600 172,000 0.8%

Finance and insurance 158,900 160,000 0.7%

Utilities 20,500 20,100 -2.0%

Educational services 76,100 73,900 -2.9%

Real estate and rental and leasing 54,900 52,900 -3.6%

Federal 54,100 52,100 -3.7%

Management of companies and enterprises 63,900 61,100 -4.4%

Retail trade 496,000 472,200 -4.8%

Arts, entertainment, and recreation 54,600 51,300 -6.0%

Durable goods (manufacturing) 494,100 451,900 -8.5%

Mining 6,500 5,500 -15.4%

Local government 440,600 360,400 -18.2%

Total nonfarm 4,326,800 4,325,600 <0.1%

Source: Bureau of Labor Statistics

Is Michigan ready for the next recession?Until the last one, Paul Robertson Jr.

hadn’t really minded a recession.Sure, his family’s Bloom�eld Hills-

based home building company, Rob-ertson Bros. Co., would build fewer homes, but he’d lay o� a few employ-ees and ride it out until the market re-covered and he could bring them back. Robertson inevitably would have fewer competitors for his busi-ness afterward, since a downturn forced some builders to go under.

�en came 2007. Robertson’s com-pany’s sales volume went into freefall — from $60 million to $3.5 million over two to three years — and he slashed his workforce from 68 to just six.

“We went down so far, so fast with everything that happened that this re-covery is just getting us back to where we were before,” said Robertson, who thinks he could hit his pre-recession sales level by 2018. “I don’t feel any overheating. I don’t feel any overreach in what’s going on.”

�at Robertson, a home builder, maintains con�dence in an economy that a decade ago devastated home-owners is partly because his company no longer does business the way it

used to. He waits to hire new employ-ees until it’s necessary. He restrains annual wage increases. And, most im-portantly to him, he has lessened his exposure to risk by building smaller projects and borrowing less money.

�ose changes, necessary when his company was hanging on, may now be the foundation that Robertson says will protect his business from the next recession. His cautious approach is being adopted by other businesses, which have been slow to raise wages during the economic recovery; that may be prudent should economic winds shift, even as some workers feel the expansion has left them behind.

Several Michigan-based econo-mists say that while the economy doesn’t show imminent signs of crash-ing, it’s unlikely the state’s extended recovery can continue for several more years, based on past experience.

�at educated guess — and it is a guess, since recessions can’t be pre-dicted with certainty — is rooted in a national expansion that is now over eight years old, the third longest on re-cord. In less than two years, this recov-ery cycle, if it lasts, will become the longest recovery since the 1850s.

Warning signs are starting to ap-

pear. Domestic auto sales, which have an outsized in�uence on Michigan’s car-heavy economy, are beginning to plateau. Automakers also are nearing the end of a several-year cycle of up-dating their cars and SUVs, which will have e�ects up and down the supply chain as the need for retooling slows.

Forecasters expect state revenue won’t grow as fast over the next few years. And since unemployment re-mains low in Michigan — the state’s seasonally unadjusted jobless rate for September was 4.5 percent — the state is unlikely to experience signi�cant job growth that would yield more in-come tax revenue.

“I certainly don’t see anything at the moment where I feel like the economy is in signi�cant trouble,” said Je� Guil-foyle, an economist and a vice presi-dent at Lansing-based Public Sector Consultants. “Often, that’s a risk in and of itself, is that you start thinking ev-erything’s OK.” (PSC performs con-sulting for �e Center for Michigan, which includes Bridge Magazine).

Guilfoyle and other economists say they believe Gov. Rick Snyder will be able to escape o�ce at the end of next year without having to face a reces-sion. But the state’s next governor may

not be so lucky, making the economic strategy of Snyder’s successor an issue in the 2018 campaign.

�e Snyder administration has tak-en numerous steps to shore up the state’s �nances, from balancing bud-gets to boosting Michigan’s rainy-day fund, which Guilfoyle said should make it a smoother transition for Sny-der’s successor than it was when the former venture capitalist and busi-nessman became governor in 2011.

And yet, Michigan remains vulnera-ble to a downturn in a few ways: J �e state’s economy has yet to re-cover all the jobs lost over the �rst de-cade of the 2000s. And despite ex-panding other sectors since the economy hit bottom, Michigan still relies heavily on manufacturing, which was among the hardest-hit in-dustries a decade ago.J Michiganders increasingly are giv-ing up looking for work. �at makes the state’s jobs picture look rosier than it really is, since those who are not ac-tively seeking work are not counted in the unemployment rate.J Michigan’s general fund will be fur-ther squeezed in coming years, the re-sult of diverting tax dollars to fund road repairs starting in 2019, expand-

ing a homestead property tax incen-tive and phasing out a personal prop-erty tax on industrial equipment, to name a few.J Employers have complained of a tal-ent shortage for years, in part because not enough Michigan workers have the skills companies say they need.J Roughly 40 percent of Michigan’s households can’t a�ord to cover basic expenses, according to a 2017 study of the state’s working poor from the Michigan Association of United Ways. Combined with strict limits on wel-fare bene�ts and Michigan’s status as a low-education state, many residents remain vulnerable in another down-turn.

“All the things that make it di�cult to sustain an expansion in previous ex-pansions, all of those are present now,” said Charles Ballard, an economist at Michigan State University.

“In 2012, of course the expansion was going to continue because there was low-hanging fruit,” said Ballard, referring to the ability of employers to �nd workers left jobless after the 2007 �nancial crisis; Michigan now is close to full employment, meaning nearly “all the low-hanging fruit has been picked.”

By Lindsay VanHulleCrain's Detroit Business/Bridge Magazine

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950 West University Drive / Suite 300 / Rochester / Michigan / 48307 / (248) 841-2200 / www.millerlawpc.com (248) 841-2200 www.millerlawpc.com

Leaders in Complex Business Lawsuitsand Class Action Litigation

And now she aims to grow Village Green, which traces its roots to 1919, when former CEO Jonathan Holtz-man’s grandfather, Joseph, started one of the �rst licensed single-family homebuilding companies in Michi-gan. Jonathan Holtzman accepted a buyout in June 2016 and began City Club Apartments, which is develop-ing new multifamily buildings in De-troit and other cities. Batayeh, who had been president and COO, began running the company at that time and was named CEO in March.

In the next several years, she plans to get Village Green to an ownership/management portfolio of between 50,000 and 60,000 units, which she said is the company’s “sweet spot.”

“Over the next couple years, we are absolutely pushing our brand more in markets that we aren't currently in,” she said. “Today we are as far

northeast as Rhode Island and as far southwest as Scottsdale, Arizona.”

Look for the company to turn its eyes westward and elsewhere into markets like California and the Northwest, she said.

�e University of Michigan gradu-ate — who has a photo of legendary UM football coach Bo Schembechler (“I don’t think there is any better leader that ever lived,” she said) hanging on one of her o�ce walls —

has already left her mark. She took the company from its

longtime home in Farmington Hills to a new, larger 32,000-square-foot office in Southfield off Northwest-ern Highway. Part of that was be-cause the old office was too small; the other part is that one of Village Green’s divisions, its corporate housing arm, was in a different lo-cation. Now the whole company is under one roof.

Village Green is the 28th largest owner/operator in the country with nearly 43,000 units last year, ac-cording to the most recent rankings from the National Multifamily Housing Council. Batayeh says it has about 40,000 units currently. (Bloomfield Hills-based Edward Rose & Sons is 12th largest, with ap-proximately 60,500.)

“I de�nitely see our trajectory con-tinuing upward,” she said.

Kirk Pinho: (313) 446-0412Twitter: @kirkpinhoCDB

BATAYEHFROM PAGE 3

Israel is only the 19th largest im-porter to Michigan, representing only 0.3 percent of total imports, but its knowledge-based economy presents unique opportunities, Da-vidoff said.

Israel produces an impressive number of successful startups for a country of just 9 million people — roughly the same as the state of Michigan. It’s often referred to as “Startup Nation,” thanks to a grow-ing list of entrepreneurial activity in its major cities like Tel Aviv.

Israel kick-started its tech boom with tax cuts in the mid-1980s. A govern-ment initiative started in 1993 called Yozma of-fered tax incen-tives to foreign venture-capital investments in Israel as well as matching funds

from government coffers. The move exploded VC-backed investments in the country — from $58 million in 1991 to $4.43 billion in 2015.

IBM, Google, Apple, Microsoft and Facebook have all opened re-search and development hubs in the nation. Its mobility and defense sector, with ties to Michigan com-panies, have also drawn huge price tags. In March, Intel Corp. acquired Jerusalem-based autonomous driv-ing hardware and software supplier Mobileye for $15.3 billion. Several local suppliers and automakers use Mobileye’s products.

TowerSec, a cybersecurity start-up based in Ann Arbor and Tel Aviv, was acquired last year by Harman International’s automotive division in Novi. In September, Henry Ford Health System started a $75,000 de-velopment contest for Israel-based startups to boost patient care by us-ing artificial intelligence.

Israeli Prime Minister Benjamin Netanyahu has also expressed to Gov. Rick Snyder in recent mission trips that the American Center for Mobility, a federally-designated, connected- and autonomous-vehi-cle test hub at Willow Run in Ypsi-lanti, could serve as a magnet for Israeli startups.

“There are 5,000 startups in Isra-el today; it’s a culture of innova-tion,” said Beth Gotthelf, president of MIBB and partner at law firm Bu-tzel Long PC in Bloomfield Hills. “A lot of those innovations are touch-ing areas close to us, such as manu-facturing and defense. It’s a small country that can’t sell to its neigh-bors (in the Middle East). They need export channels and we can link them with Michigan, which has a heritage in these industries.”

ISRAELFROM PAGE 3

Beth Gotthelf: Culture of innovation in Israel.

Mary Kramer named group publisher for Crain’s New York, Crain's Chicago Business

Crain Communications Inc., the parent company of Crain’s Detroit Business, continues to expand its national media foot-print. Longtime company exec-utive Mary Kramer has been named group publisher of Crain’s New York Business and Crain’s Chicago Business, add-ing to her roles at Crain’s De-

troit Business and Crain’s Cleve-land Business.

Kramer joined the De-troit-based company in 1989 as the editor of Crain’s Detroit Business and in 2012 became group publisher for the Detroit and Cleveland publications. She is a member of the Interna-tional Women’s Forum and the

Michigan Journalism Hall of Fame.

As other prominent news or-ganizations scale back their lo-cal coverage, Crain’s Detroit Business continues to serve as the leading source of informa-tion on the Detroit economy and the companies, industries, institutions and innovators

driving the city’s growth. Crain’s remains committed to the highest standards of journal-ism, connecting businesses and delivering top-notch ser-vices that enable our advertis-ers, sponsors and partners to reach in�uential audiences in Southeast Michigan and other top markets across the country.Mary Kramer

VILLAGE GREEN HOLDINGS LLCVillage Green Holdings moved its headquarters from Farmington Hills to a 35,000-square-foot o�ce in the One Northwestern Plaza building in South�eld.

“A lot of those innovations are touching areas close to us, such as manufacturing and defense. It’s a small country that can’t sell to its neighbors (in the Middle East).” Beth Gotthelf

20 C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7

“We think our model can provide a little bit of a social return for those folks and at the same time accomplish the social mission that’s important to Goodwill.”

�e planned acquisitions are just one of the strategies Goodwill is rolling out with its new strategic plan aimed at workforce and personal development.

Among other things, it’s looking to expand its current business lines of manufacturing, industrial recovery and upscale thrift stores; develop an em-ployee retention program; and increase its service sites in the suburbs.

New strategies

Goodwill has been really good, Var-ner said, at the basic training that sets people up for jobs, including resume building, interview skills, professional-ism and communication. It’s done some occupational training but wants to do more.

It serves 10,000 people each year and 900 companies.

Currently, Goodwill operates three businesses that provide job training op-portunities and revenue to support its mission: its familiar thrift stores; Green Works Inc. industrial recycling; and light assembly and kitting as a tier-one automotive supplier. In line with its goal to reduce unemployment, Good-will has begun e�orts to expand its business in each of those lines.

�is summer, it moved into e-com-merce, selling select items from its thrift shops in the region on shopgoodwill.com, a national website o�ering items from around the country. So far, the early returns have been good, Varner said, but it’s a tricky business model. “You don’t want to do too much online, because then you destroy the treasure hunt in the stores.”

But the e-commerce and retail busi-nesses could provide an opportunity to help �ll the jobs Amazon will be bring-ing to town with its new warehouse and ful�llment sites, Varner said.

“We’re doing e-commerce — not Amazon style e-commerce, but it’s e-commerce,” Varner said. “We can train people to actually go work with Amazon.”

Goodwill is continuing to seek new customers in its industrial asset recov-ery business which has long served DTE Energy Co. but expanded to serve about 20 Midwest companies in recent years. And it’s looking for opportunities to move into other manufacturing seg-

ments, Varner said. “Nobody knows where automotive is

headed exactly. ... We just think it makes sense to explore other manufac-turing training opportunities for the folks we are serving,” he said.

The acquisition game

Even as it looks to expand its current business lines, Goodwill is looking to acquire new ones.

“We’re not prepared to double down on any one right now, but we are inter-ested in expanding and touching on many going forward,” Varner said.

Focus areas include health care, manufacturing, construction, informa-tion technology, retail, hospitality and entertainment, as well as are other ar-eas, Varner said.

�e businesses it buys in those train-ing areas would provide both short-term training opportunities for people like those returning from prison who need to show a recent work history and long-term training and jobs for people who need them, Varner said.

“We serve populations living with developmental (and physical) disabili-

ties and mental illness who are not transitioning into work quickly but do eventually want to transition into (per-manent) work,” he said.

�at could mean looking for a busi-ness that allows Goodwill to employ those people for two or three years so that those clients can have the neces-sary transition period to move into competitive employment.

Goodwill also plans to look for busi-nesses it can own for three to �ve years while it trains employees to be own-er-operators and then sell the business to them.

Deborah Groban Olson, executive director of the Center for Communi-ty-Based Enterprise, said in an October column published in Crain’s Detroit Business that 400,000 jobs are at risk as Metro Detroit business owners without a succession plan look to retire.

“Many owners are interested in ... sell(ing) to their employees but choose not to, ultimately, because the process can be long and complicated,” Varner said.

Goodwill can serve as an intermedi-

ary owner of the business until employ-ees are trained to be owner operators, he said.

Expanded mission

�e Detroit-based agency’s mission has long been to put people with em-ployment challenges to work. It’s tweaked that, now, to focus on co-cre-ating independence and dignity through the power of personal and workforce development.

“Our assumption when somebody gets a job is that they are headed down the path toward independence, dignity, �nancial security, self esteem and those kinds of things,” Varner said. “But it’s not a given, and sometimes you’ve got provide some additional support in order to make that happen.”

Goodwill is developing an employ-ee-retention program modeled after �e Source in Grand Rapids, a nonprof-it employee support organization.

Supported largely through employer contributions, Goodwill’s retention ser-vice would help entry-level, low-wage employees overcome barriers they face to keep their jobs.

Employers could expect to see a re-turn of more than 200 percent on their investment in the program through re-duced employee turnover costs, Varner said.

Goodwill is recruiting employers now and plans a formal launch of the program sometime in the �rst quarter.

As it develops new personal and workforce development programs, Goodwill plans to take its programs even further into the suburbs.

�e nonpro�t does a lot of work in Detroit and Oakland County but not as much in Macomb, Livingston and Washtenaw counties.

“We’re cognizant of that shift taking place … and we want to be responsive to it,” he said. “We’ve got an obligation to serve those areas just like founda-tions do.”

As it looks to expand its programs, Goodwill is also looking to build a cul-ture of philanthropy, something new for a nonpro�t that has long relied on social enterprise to produce revenue in support of its mission.

“Goodwills are … really good at solic-iting clothing donations. But we’re not great at fundraising; never have been,” Varner said.

“We don’t want that to eclipse our core DNA which is that of a social enter-prise, but we want to get better at fund-raising.”

Sherri Welch: 313 (446-1694)Twitter: @SherriWelch

GOODWILLFROM PAGE 3

Agencies form alliance to coordinate workforce development programs

A group of local workforce develop-ment agencies are meeting informally to look for ways to better coordinate the region’s workforce development sys-tem.

�at starts with getting to better know one another and to learn from one another, said Paul Blatt, executive vice president and COO at JVS, one of seven agencies making up the group.

�e others groups meeting as part of the Workforce Alliance are: ACCESS, Focus: Hope, Goodwill Industries of Greater Detroit, SER-Metro, Southwest Solutions and United Way of South-eastern Michigan.

United Way is not a workforce agen-cy, but as a community convener, it brings perspective in terms of where

the needs are and where resources are �owing in the community, Blatt said.

“We have all re-spected each oth-er but not looked at how we do (our work) collective-ly.”

When you’re talking to founda-tions looking to

make that large impact on the commu-nity, “they want to know the organiza-tions are all working towards the same thing,” he said.

Coming together marks a shift for or-ganizations that traditionally have worked independently of one another, despite their common mission of trying to get more people ready for jobs and into stable employment.

�e Workforce Alliance, as the non-pro�ts are now calling themselves, gathered for the �rst time during the Detroit Regional Chamber Policy Con-ference on Mackinac Island this past summer at the behest of Je� Donofrio, director of workforce development for the city of Detroit.

�ey decided to continue to meet af-ter that and have convened three times this fall after tight summer schedules loosened up.

“We decided to start getting together on our own to start to build our collec-

tive voice, a collective plan, to the ex-tent that one can be developed, and to help inform the workforce develop-ment e�orts of the region,” said Good-will CEO Dan Varner.

�ere are about 400 organizations in Detroit providing workforce develop-ment-services ranging from youth de-velopment, work readiness and mental health to literacy and �nancial literacy services — in a scattershot approach that doesn’t always produce needed re-sults, David Meador, vice chairman and chief administrative o�cer at DTE En-ergy Co. and member of the Detroit Workforce Development Board, told Crain’s last year.

�e workforce development board is a broad coalition of executives and oth-ers from the private, nonpro�t, educa-tion and other sectors.

�ere’s been frustration that there’s no coordination among all of those agencies, Varner said.

“Of course we can coordinate them more e�ectively. It’s not impossible. ... We certainly have the will, and I would argue we have the resources as a com-munity,” he said.

�e conversations are in an early stage, but one of the things the group is discussing is how to include other workforce agencies in the conversa-tion, Varner said.

Discussions about which agency plans to take on or retain which type or types of job training is one thing that could easily emerge from the conversa-tions, he said.

But it could also go the other way, with agencies deciding to all go into welding, health care and IT, to spread investment and business exposure risk and share best practices, Varner said.

“�at’s the kind of thing we’re talking about and evaluating both possibilities to �gure out how ... we can collectively be way more e�ective going forward,” Varner said.

By Sherri Welchswelch@crain.com

Need to knowJ Local workforce agencies meeting to improve regional system

J Meetings mark shi for nonpro�ts that have traditionally worked solo

J E�ort will also build collective voice of workforce agencies

Paul Blatt: Learning from one another.

At Lear, he led the company to open its $10 million Detroit Innovation Center last year, an idea to boost tech-nological transformation for the com-pany and a return to the city in which it was founded as American Metal Products in 1917.

Simoncini joined Lear in 1999 after the supplier acquired competitor United Technologies Automotive, where he served in senior �nancial roles.

During the 2008 economic down-turn, Lear’s value fell by as much as 90 percent due to collapsing pickup and SUV sales. Its stock price fell to $3 per share and the company �led for Chapter 11 bankruptcy in July 2009.

Simoncini, under Lear’s former CEO, the late Bob Rossiter, worked tirelessly to create a prepackaged plan that was approved by Lear’s custom-

ers, union and bondholders hours be-fore a major bond payment was due.

“We worked around the clock,” Si-moncini told Crain’s in 2011. “At 1 a.m., we received the last commit-ment from our bondholders, putting us over 51 percent (approval). We knew with very little uncertainty that this was the watershed moment for our plan.”

At the time of the deal, Lear’s stock was trading at around 40 cents. �e prepackaged reorganization convert-ed $3 billion of debt into a combina-tion of new debt, convertible stock and equity warrants. Shareholders were totally wiped out during the pro-cess, but Lear stock has since skyrock-eted, trading a little above $173.72 per share in early morning trading Friday.

“Leaving the company at a time when it has a great path, it’s going to be better next year than we did this year, is the right time to leave,” Simon-cini said. “�e team is stable and ex-perienced. A CEO really should have

an opportunity to manage in that en-vironment.”

Ray Scott, 52, will replace Simonci-ni as Lear’s CEO and board member when he formally steps down on Feb. 28. Scott currently serves as an execu-tive vice president and president of Lear’s seating business unit. Scott has served in management roles at Lear since 1988 and is a local, with degrees from University of Michigan and Michigan State University.

“�e hardest part is leaving this team and this corporation right here in my hometown, but Ray’s the real deal,” Simoncini said. “He’s a product guy, he grew up in operations and worked all around the world. Ray is equipped to run this company in the direction it’s going.”

�at direction is digital. In 2015, Lear bought the intellectu-

al property and technology of Santa Rosa, Calif.-based Autonet Mobile Inc., an Internet-based telematics and app service provider for the automo-

tive market, and acquired Troy-based automotive connectivity supplier Ara-da Systems Inc., which supplies vehi-cle-to-infrastructure technology on roadways, including in the city of De-troit.

Lear is also building a plant on part of a massive former manufacturing site in Flint, the �rst major auto sup-plier plant built in Flint in three de-cades. �e roughly 33-acre, $29.3 mil-lion investment development, on the former home of Buick City, is expect-ed to start production in April and employ about 600 workers when it reaches full production. �e Flint plant is Scott’s passion. He’s from Flint, Simoncini said.

Simoncini will remain an adviser to Scott following his retirement through the end of the year.

�e thorn in Simoncini’s side may be that he was never able to open a new plant in the city of Detroit, an idea Lear has kicked around for years.

But he’s not pining over it.

“I’m at peace,” he said. “For the �rst time in my life, I don’t have a plan.”

Speculation over Simoncini’s next move has run amok on social media. �e popular theory is that he is enter-taining a gubernatorial run, a rumor that has been churning for years. Sev-eral business and political leaders have urged him to do so, but he’s not taking the bait.

“I’m not running for governor. ... I doubt I’ll ever work a ‘job’ again,” he said. “I want to focus on myself, to get back in shape, which is impossible when you’re on the road like I am, and really I look forward to spending time with my wife.”

In Simoncini’s Warren warehouse waits the 1979 Lincoln Town Car he drove on his �rst date with his wife, Mona. He said the car is ugly, but to him it represents something Lear could never o�er: Freedom.

Dustin Walsh: (313) 446-6042Twitter: @dustinpwalsh

SIMONCINIFROM PAGE 1

“You don’t want to do too much online, because then you destroy the treasure hunt in the stores.”Dan Varner

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�at could even include the evic-tion of the pioneering mall compa-ny’s founding family from their namesake company.

For Michael Mazzeo, dean of the School of Business Administration at Oakland University, just the fact that Elliott Management even disclosed its 3.8 percent stake at all when it wasn’t legally obligated to — that’s not required until a 5 percent stake is achieved — is telling.

“�ey are signaling that they are in play,” said Mazzeo, who specializes in mergers and acquisitions. “While it’s not really clear what they are seeking at Taubman, since there are two com-peting aggressors in this case, that would suggest that this company is undervalued. �ey may be taken over and then split apart, or they may keep what’s good and sell what’s bad.”

Part of the concern about Taub-man, which declined comment for this story, has been that its stock pric-es haven’t re�ected its asset perfor-mance.

�e company’s stock has fallen by 21.48 percent in the last 13 months, from $71.17 the day Litt’s takeover bid was revealed in October 2016 to $55.88 on Nov. 15, the day after Elliott Management’s bid was. To be sure, stock prices for other major mall real estate investment trusts have fallen, substantially underperforming the S&P 500, but not as much as Taub-man’s, Bloomberg reported.

�at’s even as the company handi-ly dominates its peers in key perfor-mance measurements like sales per square foot; Taubman’s malls have $802, while its nearest competitor, Macerich Co., is $659, according to Bloomberg.

“When a company comes in the crosshairs of Elliott and Paul Singer, that company most likely will suc-cumb to Elliott,” Sudip Datta, T. Nor-ris Hitchman endowed chair and professor of �nance in the Mike Ilitch School of Business at Wayne State University, said in an email.

“He will eventually most likely suc-ceed in this battle, substantially re-structure the board and change man-agement. … Taubman may be forced to go private to restructure and then go public again when it gets its act to-gether. �ere is substantial board and management changes in the cards for Taubman.”

Alex Calderone, managing direc-tor of Birmingham-based corporate advisory �rm Calderone Advisory Group, said Elliott thinks it can do better.

“(Elliott has) formulated an invest-ment thesis that assumes sharehold-er value will increase by shifting con-trol away from the incumbent leadership team … but we don’t yet know what they want,” Calderone said. “Is it something short of (CEO, president and board chairman Rob-ert) Taubman stepping down? Do they want the company sold? It’s too early to tell.”

Beating back outsiders

For the last year, Taubman has also been �ghting o� investor Litt, who has argued that the company’s stock is undervalued compared with the value of its luxury mall assets across the world, as well as its REIT compet-itors.

His recommendations included halting any major external growth initiatives such as new development; exploration of “management-led pri-

vatization or a sale of the company to a third party;” selling assets and buy-ing back Taubman stock; monetizing its Asia business in a joint venture, spin-o� company or outright sale; and a sale of the Beverly Center in Los Angeles.

Gordon said Taubman’s inability to shake Litt has made the ground fertile for Elliott Management.

“By not taking the heat o� that ket-tle, by letting Litt keep that kettle boiling, Litt has now attracted Elliott, and that’s a game changer,” Gordon said, adding that he anticipates with-in a year or two that Elliott will have radically altered Taubman’s board and forced the family to sell o� a sub-stantial portion of its ownership stake.”

Litt, who was not made available for an interview last week, has also argued that the board is too en-trenched and lacks diversity.

Since then, Taubman has seated a new board member, Cia Buckley Marakovits, and accepted the resig-nations of Peter Karmanos Jr. and Graham Allison, who will be replaced by Mayree Clark and Michael Embler.

Karmanos did not return a mes-

sage last week seeking comment. Litt’s attempt earlier this year to

get himself and Charles Elson, direc-tor of the John L. Weinberg Center for Corporate Governance at the Univer-sity of Delaware, on the board failed this summer.

But where Litt fell short, Gordon says Elliott Management will prevail.

“Out of Taubman’s top 10 institu-tional investors, Elliott’s going to have worked with 10 of them,” he said. “He has the power, the guts and he also has the reputation with them. �ey listen very carefully when Singer talks.”

Taubman, under family control since A. Alfred Taubman started the company in 1950, has withstood out-siders before — in one case, with an assist from Lansing.

In 2003, Taubman thwarted a hos-tile takeover attempt by Simon Prop-erty Group, the largest U.S. shopping mall owner, and West�eld America Inc. to buy Taubman for $4.25 billion, or $20 a share.

�e Taubman family resisted the Simon Property Group/West�eld buyout, a move which was aided by an amendment to Michigan law signed by Gov. Jennifer Granholm on Oct. 7, 2003, that prompted the com-panies to withdraw their o�er the fol-lowing day.

�e family maintains control of the company through about 25 million shares of Series B Preferred Stock, which gives it about 30 percent of the shareholder vote.

But that control is the subject of Litt’s federal lawsuit, which alleges the family owns 29.3 percent of vot-ing shares, while the charter restricts ownership at 8.23 percent. It’s un-clear how many shares each individ-ual family member owns.

“I believe that even with Taubman family’s 30 percent ownership, Paul Singer will have a very good chance

to make the changes to turn around this poorly performing real estate company. My money is on Elliott,” Datta said.

The warship repossession

Elliott has a history of high-pro�le scu�es, some of international mag-nitude. Elliott spent 15 years trying to wrangle billions from the South American country of Argentina for lapsed debt payments.

�e tactics Elliott employed in-cluded attempts to overtake con-tracts between the government and Elon Musk’s SpaceX program and the seizure of an Argentine Navy ship pulled into port in Ghana in 2012.

�e hedge fund convinced a Gha-naian court to seize the three-mast vessel as an avenue to collect on its debt. �e maritime court eventually released the ship after two months of court battles.

�e Argentine government even-tually agreed last year to a settlement to pay Elliott $2.4 billion for its bond obligations, �e Washington Post re-ported in March 2016. Elliott had ac-quired the bonds more than a decade earlier for $117 million.

Calderone said right or wrong, El-liott usually gets what it wants.

“�is situation (at Taubman) is likely to become highly contentious, but Elliott is no stranger to operating in that type of an environment,” Cal-derone said. “�is is everyday busi-ness for Elliott, and while I think it’s too early to know what this might mean for the Taubman family, the one thing I know for sure is there is going to be one hell of a �ght.”

Kirk Pinho: (313) 446-0412Twitter: @kirkpinhoCDBDustin Walsh: (313) 446-6042Twitter: @dustinpwalsh

TAUBMANFROM PAGE 1

Peter Karmanos:Has resigned from Taubman board.

Robert Taubman:CEO, president, board chairman.

Jonathan Litt:Attempted takeover bid.

Michael Mazzeo:Elliott signaling they are in play.

Erik Gordon:Singer’s goal is to push companies.

Sudip Datta:Singer will most likely succeed.

TAUBMAN CENTERSGreat Lakes Crossing Outlets in Auburn Hills is among the properties Taubman owns in Michigan.

“This is everyday business for Elliott, and while I think it’s too early to know what this might mean for the Taubman family, the one thing I know for sure is there is going to be one hell of a �ght.”— Alex Calderone, managing director of Calderone Advisory Group

22 C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 0 , 2 0 1 7

Interim RTA CEO leaving for new position

�e Regional Transit Authority of Southeast Michigan held o� on hir-ing Ti�any Gunter as full-time CEO for the past eight months, and on �ursday she opted to quit for anoth-er job.

Her last day will be Jan. 2. She de-clined to say what her next job will be other than it’s a government position in the area.

Gunter, 38, has been interim CEO since Michael Ford was �red in March over questions about his ex-penses.

Her departure comes amid the RTA’s ongoing quest to craft a region-al transit plan agreeable to the re-gion’s often-at-loggerheads elected leaders, and then get a tax approved by voters in 2018 or 2020. How her departure will a�ect those e�orts isn’t immediately clear. Deputies for the elected leaders have been hold-ing meetings to work out plans them-selves rather than relying on the RTA sta� to assemble a master plan.

“�e direction of RTA is still in ne-gotiations by the regional leaders. Our board really cannot move for-ward without support of the regional leaders. So, here we are in continued uncertainty. In the meantime, Ti�a-ny got an o�er she couldn’t refuse,” RTA Board Chairman Paul Hille-gonds said last week. “I’m really sor-ry we’re losing her.”

Carmine Palombo, deputy director at the Southeast Michigan Council of Governments regional planning agency, will act as interim CEO until a replacement is hired, the RTA said. SEMCOG provides the RTA will o�ce space and support.

BUSINESS NEWS

J Detroit native and Motor City Match winner Dana White expanded her Paralee Boyd Salon to Detroit on �ursday with the launch of its sec-ond salon. �e Midtown location at 3939 Woodward Ave. will serve as the beauty parlor’s �agship store as White prepares to take the brand na-tional.J Duo Security Inc. and Llamasoft Inc. were recognized by the Michigan Venture Capital Association for their achievements in Michigan’s entre-preneurial and investment commu-nity. Dug Song and Jon Oberheide, founders of Ann Arbor-based Duo Security, were named Entrepreneurs of the Year during the 2017 MVCA Annual Awards Dinner at Little Cae-sars Arena in Detroit. J JPMorgan Chase & Co. announced that it is giving $900,000 in grants aimed at sustainable infrastructure, as part of the global banking �rm’s $150 million committed investment in Detroit. J Pot + Box owner Lisa Waud plans to open her botanical design shop’s �rst permanent Detroit location in the Fisher Building in New Center next month. Waud has been partici-pating in the building’s Fridays at the Fisher food truck series with the Pot + Box �ower truck as she searched for a brick-and-mortar spot. J Plum Market will be the o�cial food service provider for the Detroit Pistons and open a cafe and market featuring Zingerman’s products in its

new Henry Ford Detroit Pistons Per-formance Center in the New Center area. �e Farmington Hills-based grocer is the �rst retailer announced for the $65 million facility that is ex-pected to open in 2019.J Livonia-based Trinity Health is combining its St. Joseph Mercy Health System and Mercy Health into one statewide system. �e new entity will join the two systems based in the southeast and west parts of Michigan made up of 10 hospitals and about 22,500 employees.J �e former University Motel on Second Avenue in Midtown is slated to be turned into micro apartments, a hotel and �rst-�oor retail space.J Troy-based Kirco has created a new commercial real estate business with West Palm Beach, Fla.-based Hedrick Brothers Construction. J Duluth Trading Co. is expanding its Michigan presence with a location opening near Grand Rapids last week and a Wixom store scheduled to open Nov. 30.J Detroit’s three casinos reported higher aggregate revenue in October, down 0.9 percent from September but up 1.7 percent from a year ago, the Michigan Gaming Control Board announced Tuesday. MGM Grand Detroit, MotorCity Casino Hotel and Greektown Casino-Hotel reported aggregate revenue of $112.7 million in October.

J Wayne State University’s new inno-vation and entrepreneurship hub launched Wednesday. �e Wayne In-novation Hub will include expanded programming and certi�cation oppor-tunities.J Plans are moving ahead for a new visitor center and administration building at the Edsel & Eleanor Ford House in Grosse Pointe Shores. �e nonpro�t-run historic estate broke ground Tuesday on the project.J Under new ownership following a $55 million purchase this summer, the former Troy O�centre has a new name and, soon, new upgrades. It is now named the PentaCentre after its �ve interconnected buildings.J �e Empowerment Plan has found a new home at 7640 Kercheval Ave. be-tween Van Dyke and East Grand Bou-levard will provide �e Empowerment Plan with space to double its employ-ees.

OTHER NEWS

J �e Detroit Wayne Mental Health Authority board of directors has select-ed a new president and CEO, after pre-viously picking one who wound up re-jecting the job. Joy Calloway was approved for the executive position at the Detroit Wayne prepaid inpatient health plan.J Wayne State University President M. Roy Wilson will serve as board chair of the Association of American Medical Colleges. His one-year term began Nov. 7. J �e state’s new Flex Route system on U.S. 23 near Ann Arbor began opera-tions this morning. �e Michigan De-partment of Transportation opened the special lanes for the �rst time in an attempt to ease tra�c congestion caused by rush hour or crashes.J Shri �anedar, a Democratic candi-date for governor and Ann Arbor busi-nessman, has been sued by the buyer of his former company, alleging he misrepresented the business’ �nances leading up to the sale.J Detroit City Council postponed a vote on the land swap agreement that would put Wayne County in better po-sition to forge a deal with Dan Gilbert for the Wayne County Consolidated Jail site on Gratiot Avenue. Citing the need for more review and details, City Council tabled the vote until this week.

OBITUARY

J Prominent metro Detroit architect Irving Tobocman was killed in a car accident Friday in Bloom�eld Town-ship, police said. He was 84.

KURT NAGL/CRAIN’S DETROIT BUSINESSCadillac Square is set to host some of the more than 30 vendors operating in Downtown Detroit Markets this season.

Grosse Pointe Park businessman Sandy Pensler plans to formal-ly enter the U.S. Senate race on

Monday. His experience running and advising small and large businesses will be a hallmark of his campaign for the Republican nomination.

Pensler, 61, joins Detroit business-man John E. James and former Michi-gan Supreme Court Chief Justice Rob-ert Young Jr. in seeking the GOP nomination to take on incumbent Democratic Sen. Debbie Stabenow in the November 2018 general election.

He is founder and president of Pens-ler Capital Corp., which operates four manufacturing plants that make dish-washer detergent and household cleaning supplies for major brand name sellers, including the Korex Companies plant in Wixom.

Pensler told Crain’s he plans to self-�nance his campaign and praised President Donald Trump’s e�orts to overhaul the tax code for busineses and renegotiate the North

American Free Trade Agree-ment.

Pensler has been exploring a campaign for the Senate seat since September.

Pensler didn’t say how much of his own wealth he would spend

seeking the Senate seat. But he empha-sized self-�nancing the campaign could be an advantage in competing with Stabenow, who had $6.9 million in cash on hand in her re-election ac-count at the end of September, accord-ing to a campaign �nance report.

“Republicans have been at a disad-vantage against Stabenow because they couldn’t e�ectively �nance their message,” Pensler said. “I certainly in-tend to make sure that we have enough funds available to get our message out to the general public.”

More than 30 small busi-nesses are popping up in downtown Detroit for

winter holiday markets in an initia-tive that decorates the city center and brings in a variety of retailers to boost the city’s core.

�e Quicken Loans family of com-panies doubled its investment in this year’s Downtown Detroit Market to create a holiday hub.

“�e goal was to make sure this was the longest season possible for peo-ple to enjoy,” said Helen Davis John-son, vice president of strategic invest-ments for Rock Ventures LLC, one of the Dan Gilbert-owned companies.

Johnson said planning for the proj-ect began in July and set up started last Friday. She said the markets and gar-nishments — at Spirit Plaza, Capitol Park, Cadillac Square, 1001 Woodward Ave. and along Woodward Avenue — will be �nished just in time for Detroit’s tree lighting ceremony Friday evening. �e markets run through Jan. 7.

She did not disclose how much money Quicken Loans invested in the markets.

More than 30 entrepreneurs, 20 of which are based in Detroit, have pop-ups at the market.

Tee Capel, 33, who runs an online fashion business called Fly Behavior, said presence at the market will in-crease her brand’s exposure. “�e market is allowing me to tap into the new, vibrant energy of downtown and giving me the opportunity to connect person-to-person with my customers,” she said.

�e market includes retailers sell-ing everything from clothing and ac-cessories to ornaments and real Christmas trees: Greystone Gardens is selling Michigan-grown �rs in Cap-itol Park for $20-$100.

For $1,000, the vendors get a 130-square-foot glass booth with electrical, some lighting, heaters and security, the application details said. Indoor market booths ran $500-$1,000.

Market hours are 11 a.m.-7 p.m. Monday-�ursday; 11 a.m.-8 p.m. Friday and Saturday and noon-5 p.m. Sunday. It will be closed �anksgiv-ing and Christmas days.

Businessman Pensler to enter Senate race

Markets transform Detroit into holiday hub

THE WEEK ON THE WEB RUMBLINGSNOVEMBER 10-16 | For more, visit crainsdetroit.com

COBO CENTERAn observation area is planned to allow visitors to Cobo Center in downtown Detroit to view the facility’s living green roof. O�cials said installation of the observation area is scheduled sometime next year. The 10,000-square-foot green roof was installed as part of a $279 million renovation of the convention center. It creates a natural habitat for birds and insects. The roof also provides insulation to cool and heat the building.

Detroit digitsA numbers-focused look at last week’s headlines:

$8.89 millionHigh bid during a three-day online auction that ended and didn’t meet the undisclosed minimum price the owner wanted for the Film Exchange Building in downtown Detroit.

8The number of banks Troy-based Flagstar Bancorp Inc. agreed to buy from Pasadena, Calif.-based East West Bancorp Inc.

$1.2 millionThe bequest Ronald McDonald House Charities-Southeastern Michigan recently found that it had been named the bene�ciary of — an amount exceeding the charity’s $1 million budget this year.

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