Fear isn't as much of a factor - Crain's Cleveland Business

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Fear isn’t as much of a factor Home equity loans are back on the rise, and bankers expect the trend to continue By MICHELLE PARK [email protected]

After a half decade of big, yearly declines in home equity lending, growing numbers of homeowners

are using their homes as piggy banks again, and bankers expect their ability and desire to tap their equity to keep growing. Nationwide, it was a long, steady descent for this breed of lending:

INSIDE: A comparison between the number of underwater mortgages per quarter since late 2011. Page 20 New home equity loans and lines, plus new draws on lines of credit, dropped 17.5% in 2007, another 18.9% in 2008, 28.5% in 2009, 18.2% in 2010 and 17.1% in 2011, according to SMR Research Corp., a financial services market research firm

in Hackettstown, N.J. By 2011, the annual amount of home equity originations had declined threefold from its historic peak in 2006, said Stuart Feldstein, president of SMR. Now, home equity lending is growing locally and nationwide as rising home values mean more homeowners actually have equity

INSIDE No hassles Spitzer Auto Group is taking negotiating away from buying a car. Vice president Allison Spitzer, right, and the company have developed computer software that updates the purchase and leasing prices every day. PAGE 3

See FACTOR Page 20

Company is positive EMS+ is effective Lower swipe rate helps mobile card reader stand out By CHUCK SODER [email protected]

Square. PayPal. Electronic Merchant Systems? The provider of payment processing services in Independence has released a device that lets people take credit cards on a smart phone or a tablet computer. The device puts Electronic Merchant Systems in competition with a roster of companies that have developed mobile card readers. But CEO Dan Neistadt says there’s plenty of room for one more. See EMS+ Page 19

MCKINLEY WILEY

Diamond Services owner JT Diamond, right, with his son, Greg. The elder Diamond said their business was saved from going bankrupt by movie companies.

STORIES STRAIGHT OUT OF HOLLYWOOD CONTRIBUTED PHOTO

18

A look at Electronic Merchant Systems’ mobile card reader.

Northeast Ohio businesses are getting superhero-size financial bumps from movies being shot in Cleveland

By JAY MILLER [email protected]

J

T Diamond loves the movies. And not just the flickering images that dance across a screen in a darkened room. He likes the part where he sends movie companies invoices and they pay their bills promptly. “They basically saved me from going bankrupt,” said the owner See HOLLYWOOD Page 21

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SPECIAL SECTION

INTERNATIONAL BUSINESS Finding an effective global strategy can be puzzling to some companies ■ Pages 13-17 PLUS: MIXING WITH OTHER CULTURES ■ STAFFING ■ & MORE

Entire contents © 2013 by Crain Communications Inc. Vol. 34, No. 18

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CORRECTIONS

Getting up to speed Crain’s will look at the business of driver’s education and how state rules affect it and much more in next week’s Small Business section.

REGULAR FEATURES Classified ....................21 Editorial ......................10 From the Publisher ......10 Going Places ...............12 Letter..........................10 What’s New..................22

■ The headline on an April 29, Page One story about the Cleveland Clinic’s Quality Alliance program mischaracterized the nature of the physician group. The roughly 5,100-member alliance is comprised of private practice physicians and the Clinic’s own medical group. The story also misspelled the name of Joe Martone, director of public relations for Buffalo Medical Group. ■ Owens & Minor Distribution Inc., which plans to move its hospital supply distribution center from Glenwillow into the city of Cleveland, will serve the University Hospital Health System and Summa Health System’s Robinson Hospital in Ravenna from the new building on South Marginal Drive. An April 29, page 3 story stated incorrectly that Owens & Minor also serves the Cleveland Clinic and all of the seven-hospital Summa system.

MAY 6 - 12, 2013

IT’S NOT OVER UNTIL WE SAY IT’S OVER The recession officially ended in June 2009, but it doesn’t feel that way to a large percentage of small business owners in Ohio and nationwide, according to the 2013 U.S. Bank Small Business Annual Survey. The survey of 3,210 small business owners, including 203 in Ohio, found most are “hesitant to make a significant investment because of uncertainty toward the economy, or the potential impact of tax and health care policies,” says Tom Zirbs, regional manager for Northeast and Central Ohio at U.S. Bank. Here are results of how they view the state of the economy:

Small business owners in ...

Ohio

U.S.

Believe economy is in recovery

45%

45%

Believe economy is in a recession

45%

43%

0%

1%

10%

10%

Believe it is time for expansion Unsure SOURCE: U.S. BANK

700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker ([email protected]) Editor: Mark Dodosh ([email protected]) Managing editor: Scott Suttell ([email protected]) Sections editor: Amy Ann Stoessel ([email protected]) Assistant editor: Kevin Kleps ([email protected]) Sports Senior reporter: Stan Bullard ([email protected]) Real estate and construction Reporters: Jay Miller ([email protected]) Government Chuck Soder ([email protected]) Technology Dan Shingler ([email protected]) Energy, steel and automotive Tim Magaw ([email protected]) Health care and education Michelle Park ([email protected]) Finance Rachel Abbey McCafferty ([email protected]) Manufacturing and energy Research editor: Deborah W. Hillyer ([email protected]) Cartoonist/illustrator: Rich Williams Marketing director: Lori Yannucci Grim ([email protected]) Events Manager/Operations & Logistics: Christian Hendricks ([email protected]) Events Manager/Promotions & Sponsor Relations: Jessica Snyder ([email protected]) Advertising director: Nicole Mastrangelo ([email protected]) Senior account executive: Adam Mandell ([email protected]) Account executives: Dawn Donegan ([email protected]) Andy Hollander ([email protected]) Lindsie Bowman ([email protected]) John Banks ([email protected]) Sales and marketing assistant: Michelle Sustar ([email protected]) Office coordinator: Denise Donaldson ([email protected]) Digital strategy and development manager: Stephen Herron ([email protected]) Web/Print production director: Craig L. Mackey ([email protected]) Production assistant/video editor: Steven Bennett ([email protected]) Graphic designer: Lauren M. Rafferty ([email protected]) Billing: Susan Jaranowski, 313-446-6024 ([email protected]) Credit: Todd Masura, 313-446-6097 ([email protected])

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G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-9911, or email to [email protected], or call 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777. Reprints: Call 1-800-290-5460 Ext. 125 Audit Bureau of Circulation

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INSIGHT

Ernst & Young Tower is raising the bar Building’s success in securing tenants is expected to spark more office development downtown, though likely on a smaller scale By STAN BULLARD [email protected]

With construction crews this month finishing Ernst & Young Tower, the first new multitenant office building in downtown Cleveland in two decades, the minds of real estate experts are turning to

when the next one might start and how big it might be. The short answer to the first part of the question is that there probably won’t be another 20-year gap until a new downtown office building goes up. However, any new building likely will be smaller than the downtown

skyscrapers of years past. Think of it potentially as a suburban office building on steroids. It could be just 250,000 square feet, which is about half the size of 23-story Ernst & Young Tower or a quarter the size of 57-story Key Tower. Surprising leasing success at Ernst & Young Tower has given

oomph to the idea of the next downtown office building. David Browning, managing director of real estate broker CBRE Group Inc., estimates the 487,000-squarefoot tower will open at 80% leased. The Wolstein Group and Fairmount Partners of Cleveland, developers of the Flats East Bank Neighborhood where the building is located, acknowledge a 65% occupancy rate so far, but real estate insiders expect more tenants to lease space soon. See TOWER Page 7

SETTING THE STANDARD A look at the office buildings along the Cleveland skyline that command the highest rent per square foot: Building x-Price % Leased Ernst & Young Tower $32 61.1 Key Center Tower $28 95.1 200 Public Square $25 80.0 One Cleveland Center $22 78.5 Fifth Third Center $21 78.2 North Point Tower $21 77.8 ■ x-Per square foot ■ Source: Jones Lang LaSalle

THE WEEK IN QUOTES “There are a lot of merchants out there. There are a lot of would-be merchants that this product truly appeals to. There’s enough there to go around.” — Dan Neistadt, CEO, Electronic Merchant Systems. Page One

“This (movie) industry has its own legacy and culture. You’ve got to figure out how to speak that language.” — Ivan Schwarz, president, Greater Cleveland Film Commission. Page One

JANET CENTURY

Spitzer Auto Group vice president Alison Spitzer says information, not negotiation, is the critical tool at the company’s car dealerships.

NO NEED TO HAGGLE S

By RACHEL ABBEY McCAFFERTY [email protected]

Spitzer is eliminating car price negotiations with software it’s selling to others

pitzer Auto Group has expanded its inventory by adding a new product to its portfolio: computer software. The Elyria-based dealership group had created for internal use Paymint, a software program that helps calculate and quickly update monthly lease and loan payments for vehicles in its inventory. However, Spitzer recently formed a holding company, CopperCloud LLC, to sell Paymint to other car dealers. See HAGGLE Page 8

Old Detroit is the domain of Spielberger With recent purchases, investor now owns most of business-laden road in Rocky River By STAN BULLARD [email protected]

After five years of gazing at them through the windows of his storefront office in Rocky River, John D. Spielberger recently shelled out

$1.1 million — in cash — for three buildings on the north side of Old Detroit Road. The buildings, which date from the 1920s and ’30s, joined eight other structures Mr. Spielberger’s JDS Properties Inc. has acquired over

ON THE WEB For a photo gallery of the JDS Properties in Rocky River, go to: tinyurl.com/bv9pbx8

the last 13 years; they include all the old buildings on the south side of Old Detroit in a part of Rocky River that has become a trendy enclave

for restaurants, art studios, galleries and women’s boutiques. Salmon Dave’s, the high-profile seafood restaurant, is in one JDS Building. Adesso, a retailer of stylish clothes for men, is in another. Studio St. Marie, a self-described “modern millenery” that sells new and vintage hats, is in a third. See SPIELBERGER Page 11

“Culture is an iceberg. … The more things you see — the food, the language, the dress — you’ll start to see more of it.” — Jerry Torma, director of international HR and compensation, Nordson Corp. Page 13

“It’s not just the big companies anymore; everybody is competing on a global market. Getting a work force ready to do their work and compete with a global perspective is critically important to a lot of businesses in Northeast Ohio.” — Larry Miller, longtime human resources executive, and president, French-American Chamber of Commerce. Page 17

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Aclara Technologies is shutting its manufacturing operations in Solon because its parent company wants to “protect and expand” Aclara’s profit margins in an environment where projects are being delayed, according to the parent’s CEO. Aclara, which makes automated meter-reading equipment and related software for utilities, plans to lay off 79 manufacturing employees by the end of March 2014. The cuts are part of a “profit improvement plan” underway at Esco Technologies Inc., a St. Louis company that makes products for utilities, fluid control systems and radio frequency shielding and test equipment. Other companies within Esco have cut costs as well, but Aclara needed to make cuts to address its own challenges, according to statements from Esco CEO Victor Richey. The market for advanced metering equipment “is not as robust today as it was a year ago,” Mr. Richey said

during an April conference call about the profit improvement plan. “We, along with all of our competitors, are experiencing project pushouts and delays of both new and existing customers,” he said. “I think this remains a good market, and I’m happy with our positioning, and quite frankly, with our pipeline. We remain frustrated with the inertia we’re all experiencing.” Aclara plans to cut its local work force to about 160 from 240 today, said Aclara president Brad Kitterman. The company’s office work force in Solon will be retained. The work likely will be moved to one of the contract manufacturers Aclara works with today, Mr. Kitterman said. Those companies have plants in the United States, Mexico, Asia and other parts of the world, he said.

A matter of money Using contractors to build Aclara’s automated meter readers should cost less than producing them inhouse, Mr. Kitterman said. Their overhead costs are more manageable because they’re spread across a larger

number of products, and contract manufacturers tend to have more automated production lines, he said. Aclara’s footprint in Solon will be “much smaller” when the manufacturing space closes, according to a statement from the company. Aclara has yet to decide what it will do with the remaining seven years on its lease, Mr. Kitterman said, adding that he didn’t know how big the manufacturing space was in terms of square feet. The entire Solon operation, with the office, measured 111,000 square feet in 2009, according to a Crain’s story published that year. Esco bought the local operations of Aclara in 2006. Sales of Aclara’s meter reading equipment were in the $100 million to $150 million range in 2010, up from $30 million to $40 million in 2006, according to a Crain’s story published in November 2010. That growth helped the company expand its Solon work force to roughly 300 people in November 2010 from 175 at the start of 2008, the story stated. The 300-employee figure likely included temporary employees not counted among the 240 people Aclara employs today. ■

Notre Dame pursues cash, big goals By TIMOTHY MAGAW [email protected]

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Notre Dame College’s enrollment has been on the way up for much of the last decade, and its fundraising appears to be following suit. Over the last year, the small, private college in South Euclid has secured a handful of significant gifts, including

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its largest ever last December — a more than $2 million commitment over 10 years from its caterer, Normandy Catering in Wickliffe. Notre Dame president Andrew Roth told Crain’s that the college was in the quiet phase of a $10 million fundraising effort — an effort that, if successful, could boost its endowment and bulk up its academic and financial aid programs. During the last 15 months, Notre Dame has brought in $4.4 million toward its goal, with a few million dollars of additional gifts in the pipeline. “This is the most successful fundraising the college has ever done in its history,” said Dr. Roth, who has had the helm of the institution since 2003. A priority of the fundraising campaign will be continued renovations to the Regina High School property, which the college acquired in early 2011 for about $2 million from the Sisters of Notre Dame, the Catholic order that operated the former high school. The property, which sits on eight acres, is located on South Green Road and now serves as the landlocked college’s new front door. Notre Dame plans to renovate parts of Regina that house the college’s burgeoning nursing program, which launched about seven years ago and has been major fuel for the school’s enrollment growth. The renovations will include new labs and faculty offices. Also, the college plans to renovate space in the building for its academic support center, which serves students with documented learning disabilities. “It’s a quality building, but it needs some work,” Dr. Roth said. “That’s what this campaign is about.” A few years ago, Dr. Roth floated the idea of constructing another res-

idence hall behind the Regina site, given that the college’s current housing is at capacity. However, he said the Regina renovations remain Notre Dame’s top priority, though once those are completed over the next three years, campus officials would take another hard look at building more housing, which could cost upward of $10 million. Dr. Roth said the college has had discussions with private developers about building the residence hall, which the university would manage. Similar construction arrangements have grown in favor at the region’s public universities, such as Cleveland State and the University of Akron. “Using someone else’s money is always attractive,” Dr. Roth said.

Growth in cyberspace Notre Dame has about 1,330 fulltime, traditional-age students on campus — a number the college had been looking to grow to about 1,500. Given the need for more housing, Dr. Roth said the college is rethinking that strategy and instead focusing on growing its online presence. At present, Notre Dame has about 400 online students, a number that Dr. Roth would like to see climb to 2,000 over the next three to five years. To facilitate that growth, the college last year contracted with The Learning House Inc., a Kentucky company that manages the technical aspects and marketing for Notre Dame’s online degree programs. Dr. Roth said Notre Dame provides the “academic engine” of the online programs, and Learning House offers the technical infrastructure and marketing muscle through TV and radio spots and search engine optimization. “I’m very optimistic that we will get to that 2,000 mark,” he said. ■

Volume 34, Number 18 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2013 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

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Some like it hot. But most theatergoers don’t want to sweat through the show, which is part of what makes it such a big deal that Near West Theatre’s planned $6.8 million home — set to begin construction this summer — boasts a super-insulated “passive building” design that will keep the audience comfortable while curtailing energy consumption. There’s no air conditioning in Near West’s home of 35 years, a third-floor space of the St. Patrick Church social hall at West 38th Street and Bridge Avenue. So, on warm days, the performance is hot, and not in a good way. “There are people who love us but want no part of a summer show,” said Stephanie MorrisonHrbek, Near West’s founder and executive director. Of the hyper-energy-efficient, 275-seat theater that soon will house Near West at West 67th Street and Detroit Avenue in Cleveland’s Gordon Square neighborhood, Ms. Morrison-Hrbek said, “Our audience is so ready for this to work.” So are people who are eager to explore the edges of building design for reducing energy use significantly. The 24,465-square-foot theater will be the first performance hall in the world to use “passive building” design, said Adam Cohen, who operates a Roanoke, Va.-based consultancy called PassivScience and served as an adviser on the Near West project, which was designed by Richard Fleischman + Partners Architects of Cleveland. The international Passivhaus organization describes “passive building” as “the fastest-growing energy performance standard in the world.” However, nearly all the 30,000 to 40,000 residential and commercial structures using the method — which, generally speaking, involves outstanding thermal performance, exceptional airtightness and mechanical ventilation — are in Europe. Mr. Cohen says there are fewer than 300 passive buildings in the United States; most are homes and college dormitories. A performance hall is more of a challenge for the passive method, Mr. Cohen said, because it involves “burst levels of people” — actors, the crew and the audience — and equipment that includes heavy, hot theater lights. The Fleischman design, though, does an excellent job of mitigating those issues, he said. “This is an extremely cool project,” said Mr. Cohen, who described himself as “a crazy energy guy” driven to prove the United States can catch up to Europe by reinforcing the idea that “electrons work the same way on both sides of the ocean.” Among the passive building elements in the Near West structure’s design: ■ An 8-inch-thick insulating barrier will be laid under the basement slab. ■ A trench of geothermal tubing will surround the foundation. ■ Walls and roof will be a foot thick and almost airtight, with a con-

CONTRIBUTED PHOTO

A rendering of Near West Theatre’s energy-efficient building design. ventional steel frame surrounded by more wood framing, gypsum sheathing and mineral wool insulation. ■ A “heat recovery ventilation” system will pump fresh air in, stale air out, and, in the process, transfer heat between the two.

Savings add up Some of those elements might sound familiar to anyone who in 2011 visited the PNC SmartHome Cleveland, on the grounds of the Cleveland Museum of Natural History. That display home sought to showcase energy-saving architectural and design strategies, and many of those technologies are worked into the design of the theater, said Hans Holznagel, Near West’s chief operating officer. Mr. Holznagel said the building’s passive design elements are adding about $600,000 to its cost. But based on what Mr. Holznagel called a “conservative estimate” of 35% energy savings, the theater would avoid electricity costs of at least $1.2 million over 50 years through the use of passive design. He said other passive technology experts project energy savings of 44%, which would avoid $1.5 million in expenses over the same period. Mr. Cohen goes further and said the building eventually could hit 50% in savings — a figure made possible as LED lighting replaces standard theatrical lamps. When the theater is completed, Near West plans to prototype certification for the building from Passivhaus Institute U.S. On top of the theater’s passive design elements — literally, on top of — will be a 75,000-watt generating system powered by solar panels installed on the building’s southsloping roof. Mr. Holznagel said an investor will buy and own the solar panel system and will sell that electricity to Near West for 1 cent less per kilowatt-hour than the cost of electricity drawn from the utility grid. Mr. Holznagel said Near West has the investor in place but is not yet allowed to discuss details of that element of the plan. Plans call for construction to begin in late June or early July, after Cleveland Public Power removes a transformer on the 0.64-acre site. Near West expects its first performance in the building to take place in fall 2014. Financing for the project is coming through the $30 million Gordon Square Arts District capital cam-

paign. Judi Feniger, the new president of the Gordon Square Arts District, said about $26 million has been raised to date in the campaign, which has aided the renovation and reopening of the Capitol Theatre, renovations to Cleveland Public Theatre, the Near West building and streetscape improvements. Near West has reached 87% of its portion of the goal within the capital campaign, which concludes Dec. 31. Mr. Holznagel said Near West then plans more fundraising. A big gift to the project — $2 million — came from the Chuck and Char Fowler Family Foundation. Other donors that earmarked contributions to the Gordon Square capital campaign for Near West were the Gund Foundation; Tom and Sandy Sullivan; Eric Kennedy; and Jim and Anne Schoff.

Community values Benefits of the new theater building aren’t all about energy savings. Ms. Morrison-Hrbek said the building will give Near West flexibility in staging shows, because the 275 seats will be in movable sections. That feature will allow the theater to be converted to thrust or proscenium stages, or even theater in the round. There are other advantages, too. In the current theater space, there’s no elevator or backstage fly space for hauling scenery — two issues resolved in the new structure. Also a benefit: Performers will have bathrooms dedicated specifically for their use, so they “don’t have to break the fourth wall” by mingling with audience members during intermission, Mr. Holznagel said. Near West has been built by theater professionals who oversee huge casts — sometimes 30 or more — of volunteer actors, many of them youth. In its mission statement, Near West says it “builds loving relationships and engages diverse people in strengthening their sense of identity, passion and purpose, individually and in community, through transformational theater arts experiences.” The values expressed by the new building fit well with that mission, Mr. Holznagel said. “Our mission has to do with love, inclusiveness, continuity; ‘environmentalism’ isn’t explicitly one of them,” he said. “But it’s consistent with what we do … and we love that we’re doing something environmentally friendly.” ■

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Tower: Wolstein says Flats East Bank has plenty of room for more continued from PAGE 3

Tom Gustafson, a principal of Colliers International’s Cleveland office, said he and other downtown office brokers have been motivated by Ernst & Young’s success to scout locations for other office buildings in an effort to sway real estate developers. Rico Pietro, a partner at the Cushman & Wakefield Cresco brokerage in Independence, said Ernst & Young Tower shows the market what new space can look like. The excitement associated with a blank canvas for a company in a new building has been missing for a long time, he said. The other factor that could drive a new building is that Ernst & Young Tower is achieving strong rents for the downtown Cleveland office market. The developer acknowledges a stated asking rate of $30 per square foot, and brokers say tenants are signing deals at rates close to that figure.

Square. In an interview, Mr. Wolstein noted that he still has office space to lease at Ernst & Young Tower. The office building and adjoining Aloft Hotel are the opening salvos of a larger Flats East Bank project. Recent announcements from Flats East Bank have been focused on a second phase consisting of 200 apartments and more retail space on the site — not another office building. The next phase consists of apartments, Mr. Wolstein said, because that fits the concept of 24hour use at the reimagined Flats. Still, Mr. Wolstein said Flats East Bank has locations where it could add at least four more office buildings atop parking garages on the

24-acre site; it also has ground-level parcels. If a prospective tenant wants to support a build-to-lease structure that it primarily will occupy, he said Flats East Bank would consider. “We could do that for a tenant who wants their name on a building,” Mr. Wolstein said, “but it would be difficult to do much more.” That’s because lenders remain cautious about speculative offices, multiple sources say. Robert Roe, managing partner of Jones Lang LaSalle’s Cleveland office, has leased space on behalf of clients at Ernst & Young Tower and oversees tenant representatives who have done multiple deals there. The Flats building benefits

from an efficient design that allows tenants to move into new space, he said, but to lease less space than they occupied previously so they keep a lid on their costs. “This is not a fluke,” Mr. Roe said of the building’s space filling up. “It shows the benefit of a new office building in a market that has not had a new building for 20 years. Corporations are also serious about seeking space that meets green requirements.”

Smaller may be better Many prospects for a future building are law firms, Mr. Roe said, though the principals of their partnerships are unlikely to want to sign personally to lease space in

another new office building. Corporations or national tenants such as Ernst & Young and Wells Fargo, he said, are more likely to pay higher rents than locals. Robert Redmond, a managing director at the Cleveland office of Mohr Partners, said he thinks the diminishing number of large corporations based here and shrinking needs for office space as more workers telecommute means businesses may find virtue in smaller buildings. “Bragging about getting the next building that’s the tallest tower between New York and Chicago is not going to happen anymore,” Mr. Redmond said. “Something 200,000 to 400,000 square feet would be ideal.” ■

New price points Deirdre McGuane, research director at broker NAI Daus in Beachwood, recently tweeted that Ernst & Young Tower is setting a new price level that shows tenants are willing to pay more for downtown office space to support new construction. Previously, the best upper-end rents in downtown generally have been about $20 a square foot, Ms. McGuane said. Key Tower, which dominates the skyline, has commanded rents that towered over the city for years. The asking rate at Key Tower is about $27 to $29 a square foot. Two developers that are pursuing concepts for new office buildings in Cleveland see positives in the leasing news Ernst & Young Tower is generating. Greg Geis, an owner of Streetsboro-based Geis Cos., said in an email: “The market wants efficient new space. We believe the waterfront is the location for a company that wants to make its presence known.” Geis Cos. is pursuing potential anchor tenants for a proposed office building on the west end of Burke Lakefront Airport near North Coast Harbor. It also is constructing the new Cuyahoga County office building at East Ninth Street and Prospect Avenue. Mr. Geis said he is too busy to elaborate on his viewpoint. Likewise, Tony Panzica, CEO of Panzica Construction Co. in Mayfield Village, said, “I’m encouraged.” That’s because the leasing action at Ernst & Young Tower shows companies again have an appetite for new office space after the recession and are willing to move to get it, Mr. Panzica said. Mr. Panzica notes that he and joint venture partner Peter Rubin, CEO of Cleveland-based developer Coral Co., have attached an asking rent of $32 a square foot for office space atIntesa, a proposed office, apartment and parking complex they want to build at University Circle. The project would have about 120,000 square feet of offices.

View from the Flats Scott Wolstein, a partner in Ernst & Young Tower, is the only developer active downtown who participated in the 1990s office-building boom as he labored on what is now the US Bank Centre at Playhouse

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Going more places, more often.

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Haggle: Vehicle prices are reviewed and updated online daily continued from PAGE 3

Dealerships in Arizona, Oregon and Texas already have expressed interest, said Victor Vella, co-founder ofPaymint and e-commerce director for Spitzer. “It’s definitely been an amazing experience,” Mr. Vella said. Spitzer’s management team keeps track of competitors’ pricing and reviews prices daily, updating the vehicle prices listed online. Each store has an employee who then checks the software every morning, Mr. Vella said. If there is a change, the employee quickly can print out a new windshield sign listing the vehicle’s overall cost, monthly loan payment and monthly lease payment. The pricing model puts consumers first by helping customers find a vehicle that fits their needs and their budgets, members of Spitzer’s leadership team say. “The customers love it,” said Geoff Sansavera, general manager

of Spitzer Motor City on Brookpark Road in Brook Park. Spitzer’s software also makes it easy for a dealership to break down prices, simplifying a process that can be a daunting task in a lot with hundreds of cars. “They’ve taken it to another level,” Mark Rikess, CEO of Rikess Group, said of Spitzer’s commitment to transparency. Mr. Rikess started Rikess Group in the early 1990s to encourage auto dealerships to move away from negotiation-based sales. The consulting firm has helped about 150 dealerships make that transition so far, Mr. Rikess said.

Shifting sales gears Spitzer did away with negotiations at its dealerships about three years ago, vice president Alison Spitzer said, and began working with Rikess Group last summer to strengthen and standardize its sales training.

Training is critical to this shifting industry, Ms. Spitzer said. Information is the tool now, not negotiations, and the sales focus is on helping customers find the vehicle that fits them best. Spitzer even has moved away from commissionbased sales to a flat compensation rate for employees, so salespeople receive the same paycheck whether they sell the most or least expensive car on the lot. The company began putting monthly loan costs on vehicles last December, and added lease costs in January, Ms. Spitzer said. So far, 10 of Spitzer’s 16 stores are on board, including most of the Northeast Ohio locations. The Paymint program, which Ms. Spitzer said has both webbased and software components, has gone through beta testing and now is offered to other dealerships. Ms. Spitzer said she sees the new holding company, CopperCloud, as a think tank that can capitalize on

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changes in the car business. She said dealerships have been pushed to move away from negotiations in recent years, especially for used cars. There’s no cushion for dealers who want to mark up the prices, she noted. “The information is out there for anyone to see,” Ms. Spitzer said.

A 100% change Based on what Mr. Rikess said, the change in the purchasing process is especially relevant when dealers consider up-and-coming consumers. Millennials — which Mr. Rikess defined as consumers born between 1980 and the mid-’90s — spend about nine hours researching vehicles online and on social media before buying a car, he said. They buy about 20% to 25% of vehicles and shop for even more, including the research they do on behalf of family members. Studies have shown that growing market doesn’t like haggling, he said, and they’re accustomed to buying everything online. Mr. Rikess also said women aren’t fans of negotiating. Lou Vitantonio, president of the Greater Cleveland Automobile

Dealers Association, said the automobile business has “absolutely, 100% changed” because of the Internet. He said the shift sped up when pricing started to show up online about 10 years ago because people could compare prices on their own. Customers can look up more information than ever, Mr. Vitantonio said, and dealerships have expanded the ways they reach consumers, from conducting video tours to offering live chats and text messages. Consumers expect a response far more quickly now, he said. Ms. Spitzer said her company heard complaints from competitors when Spitzer started putting lease prices on vehicles. Ms. Spitzer brushed off those concerns, saying customers are likely to experience sticker shock anyway. Why not take care of that up front, she said. Mr. Vella said putting the lease prices on vehicles has led to an increase in the numbers of leases signed at Spitzer Motor City, where the buy and lease pricing first rolled out. Those numbers more than doubled in March 2013 from March 2012. ■

Cambria Suites finds a new home in Avon Construction for $10 million project begins this summer By STAN BULLARD [email protected]

Two local real estate development firms have joined forces to undertake something new, building a Cambria Suites business-oriented hotel in Avon on Detroit Road near state Route 83. Ceres Enterprises LLC of Westlake, a hotel and nursing home developer run by father and son Frank and David Crisafi, and Orlean Co. of Beachwood, an apartment and real estate company led by second-generation developer David Orlean, have formed Avon Hotel LLC for the $10 million project. They plan to start construction this summer and open next spring. The hotel would be the second Cambria Suites in the region, joining one in Green in Summit County. Choice Hotels International, a Rockville, Md.-hotel franchisor, developed the select service hotel chain to draw business travelers. Frank Crisafi, Ceres CEO, said Cambria Suites are designed to “have a boutique hotel’s style but the price of a Marriott.” The Avon hotel will have an estimated average daily room rate of $110. The firms formed the partnership because each brought something to the transaction. Ceres, which owns four hotels but has built several times that number, holds the Cambria franchise for the Avon site and will serve as the hotel’s developer and operator. Orlean brings to the party a twoacre site on the north side of its

“We liked that the Crisafis don’t just develop the hotel. They operate it. They don’t turn it over to a management company.” – Kenneth Lurie, chief operating officer, Orlean Co. Avon Marketplace, a cluster of retail stores and buildings on the 35500 block of Detroit. Kenneth Lurie, Orlean’s chief operating officer, said adding the hotel will make the property a mixed-use center and already has boosted interest in remaining sites. “We liked that the Crisafis don’t just develop the hotel,” Mr. Lurie said, “They operate it. They don’t turn it over to a management company.” The Cambria Suites in Avon is the second for Ceres, which has owned one in Noblesville, Ind., that it built in 2009. One thing missing is highway visibility. Frank Crisafi said the developers feel a highway location is less crucial than in the past because the industry is moving toward a lifestyle model, with patrons using online reservations to find locations with multiple restaurants nearby. Besides, David Crisafi said, “We don’t just wait for the 1-800 line to ring. We go out and sell to area businesses.” The Avon inn will have a 3,000-square-foot conference center because the Crisafis believe it helps win business bookings. The project has received approvals to proceed from Avon’s planning commission. Avon Mayor Jim Smith said the hotel will find customers in the city’s growing industrial district. ■

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PUBLISHER/EDITORIAL DIRECTOR:

Brian D. Tucker ([email protected]) EDITOR:

Mark Dodosh ([email protected]) MANAGING EDITOR:

Scott Suttell ([email protected])

OPINION

Do or die “K

ill all the school boards.” That was the suggestion from the Center for American Progress’ Matt Miller in 2008 as he outlined his vision for remaking how we govern education. It was a striking statement then, and it still is. But it’s also not nearly as far-fetched as it might sound. The above paragraph is from the start of a story headlined “Should School Boards be Expelled?” in this month’s issue of Governing magazine. The summary line on the story reads, “Local boards were designed to take politics out of education. But increasing politicization of the boards themselves has led to calls to eliminate them.” The story caught our eye not just because of the dysfunction seen in Strongsville, where an eightweek strike by teachers resulted from a determined school board locking horns with a resolute teachers’ union over a new contract. Our thoughts also turned to the outrage felt in Medina, where surprising revelations about the generous compensation awarded by the school board to superintendent Randy Stepp led to the head man going on paid leave. As the story in Governing relates, advocates of the school board structure contend it “gives communities a direct voice in governance and that members are held accountable through the election process.” But there’s an increasing sense among others that it may be time to eliminate school boards altogether, according to Governing. “The idea has crossed party lines,” Governing reports. The Center for American Progress — the group cited at the top of this piece — “is a generally liberal institution, but Chester Finn, president of the conservative Thomas B. Fordham Institute and a former assistant education secretary under President Ronald Reagan, has issued similar decrees,” the story states. “School boards are an aberration, an anachronism, an education sinkhole,” Governing quotes Mr. Finn as saying in 2006. “Put this dysfunctional arrangement out of its misery.” The big question is whether the governance of a public body as important to a community’s well-being as a school district should be left in the hands of individuals whose views, agendas and qualifications largely are unknown to most voters who elect them. The job of providing proper oversight to a school district is important, and not just to the families of students who attend a city’s schools. Anyone in Strongsville who either is selling or is thinking about selling their home the next few years can’t be happy. The black eye left by the major mess of the last two months likely will depress housing values in the city as families with school-age children think twice about moving into the district. So, where should governance of a school district belong? The type of mayoral control that exists in Cleveland may be the answer. At present, school boards are a lot like the old three-member board of commissioners in Cuyahoga County. It’s hard to hold individual members accountable for group decisions. Putting the authority —and the accountability — in the hands of one person makes clear where the buck should stop.

FROM THE PUBLISHER

GOP backs off ‘right-to-work’ fight pay dues to any organization and that ront-page headline last Wednes“each employee must be fully free to day: “Ohio Republicans introdecide whether to associate, orducing ‘right to work’ ganize, designate a representalegislation today.” BRIAN tive or join or assist an employee Inside headline the next TUCKER organization.” morning: “GOP leaders quickly Like other states in this part kill legislation to make Ohio a of the country that have enacted ‘right to work’ state.” similar laws, Ohio then would And who says the General Ashave prohibited the forcing of sembly can’t get things done? employees to pay union dues. Keith Faber, the Celina Current law enables them to Republican who’s president of reject union membership but the Ohio Senate, put the kibosh they are still required to pay on this ill-fated idea just hours union dues. after two of his party’s lawmakers introBut this time, in such a short window duced the legislation, saying, “The only of time after the GOP’s stinging defeat in purpose this discussion serves right now the fight over Senate Bill 5, Republican is to generate a bunch of breathless leaders wanted no part of another battle. fundraising appeals from the Ohio Reasonable people can agree to disagree Democratic Party.” over whether it helped or hurt Ohio’s I can only presume that the governor economy at this point in its history, but and House speaker, both Republicans, there’s no arguing the attitude of voters. were shaking their heads last Wednesday Last year’s SB5-inspired election as Democrats quickly organized a rally showed that Ohio’s labor forces still can outside the Statehouse. muster some firepower, and voters As introduced, the so-called “Worksoundly defeated an effort to restrict colplace Freedom” measure would prohibit lective bargaining for public employees. any requirements that employees join or

F

Gov. Kasich was a strong advocate of the reform, and since that defeat has been careful not to wade back into such potentially turbulent waters. So was this just a publicity ploy by Reps. Kristina Roegner and Ron Maag, who introduced this legislation? Hard to know. What is clear, however, is that their contention that the proposed legislation was “pro-worker” had little chance, at least in how most people consider such terminology. “We are standing up for working Ohioans because we believe that every employee should have the right for themselves whether to join a union or not,” Rep. Roegner was quoted as saying. Well, they do, either at the time of the first unionization vote or when they decide to take a job at a unionized company. Organized labor is at full retreat in this country, and economic forces could one day change things for Ohio if it’s surrounded by right-to-work states and starts losing employers. But for now, cooler heads prevailed in the state GOP leaders, who clearly — and quickly — decided they’d save their powder for other fights. ■

LETTER

Ditch term limits for state lawmakers ■ Thanks to Brian Tucker in his April 29 commentary for his astute comments about term limits for our federal representatives in Congress. However, the same applies for the state Legislature, and the faster we can get rid of that failed experiment, the better. Consider the following: Term limits reduce institutional memory and strengthen the role of staff, agency bureaucrats and lobbyists. With complex issues of regulatory or tax reform, emerging industries or education funding, where will voters find sound judgment, historical perspective and effective solutions? Term limits weaken the Legislature as an institution and its ability to develop solutions on its own and challenge, when necessary, the executive branch.

WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 441131230; Email: [email protected]

They create opportunities for abuse in trading off legislation for future employment options. Need help in moving over to the administration or support while pursuing another political office when the term limit deadline looms? When a legislator is backed into a corner, judgment and obligations to constituents are out the door. They encourage and reward hyperpartisanship: If you are a young legislator, the fastest way ahead is doing whatever an organized, entrenched lobbyist group tells you, no questions asked.

After all, you may be gone to higher office when things go sour. They discourage long-term thinking and planning. A legislator may be long gone when the full budget bill really comes due. Besides, you can blame those left behind with bad implementation, not poor legislative design or planning. The real voter protection against legislative abuse is at the ballot box. While you can’t get rid of bad legislators fast enough, you also can’t hold onto a good legislator long enough. A bad idea at the federal level is just as bad an idea at the state level. We need to get rid of term limits for state legislators. Kevin Cronin Attorney Cleveland

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An affiliate of JDS Properties of Rocky River recently purchased these buildings from 19064 to 19106 Detroit Road, from the trust of the late Otto Fuchs. They date from 1914 to 1920. For more pictures, see the gallery at tinyurl.com/bv9pbx8.

Spielberger: Thanks in large part to JDS, Old River has an eclectic mix of retailers continued from PAGE 3

The latest deals solidify Mr. Spielberger’s control of most of the art deco part of the city that is in the shadow of the former Westlake Hotel, which he does not own. It’s a luxury residential hotel that was painted a salmon color when it went condo in the 1980s. Workers already are transforming the latest acquisitions because the seller, the Otto A. Fuchs Trust, allowed Mr. Spielberger access to the buildings prior to the early April closing. On the second floor of the building at 19064-19106 Old Detroit, old office space — some of it empty 30 years — is undergoing conversion into two, two-bedroom lofts with an asking rent likely to be in the range of $1,000 monthly. JDS Properties owns another 20 apartment suites on the block, which its website says are full. Mr. Spielberger plans to repaint the exteriors, which have some peeling paint, in taupe and yellow with a variety of accent colors. JDS Properties will adorn windows with brightly colored awnings, some bearing initials of tenants. The budget for improvements is about $400,000. Kory Koran, Rocky River director of economic and community development, said with the latest purchases Mr. Spielberger owns most of the Old Detroit Road section of the suburb. Mr. Spielberger “is not shy about investing in his properties,” Mr. Koran said. “He fixes them up quickly and quietly. He’s an outstanding property owner. We don’t worry about vacancies there.”

Chagrin Falls West The situation today at Old Detroit is far different from 1980, when the suburb worried about the future of the aging commercial district. At that time, the then-new Detroit Road Bridge shifted Detroit Road south of the old commercial district. The stub of the old street became Old Detroit Road. The prior span emptied into the block JDS mostly controls now. A stub of the old bridge survived, adorned with an office building named the Bridge Building that was constructed in the 1980s. JDS owns that, too. Now, there is new life among the old structures, with a look reminiscent of Chagrin Falls. The city has branded the neighborhood the Old River Shopping Area, and has accented Old Detroit with antique light poles, signs and sidewalk improvements. Those upgrades are coupled with renovations by JDS and other property owners, who have attracted an eclectic mix of retailers. There are 25 tenants in JDS properties alone. Scott Wiles, a vice president and director of the retail group at Marcus & Millichap’s Cleveland office, said Mr. Spielberger “is the right guy for those properties” because of his attention to detail and his financial strength. Mr. Wiles said the Old River Shopping Area “offers a

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Consolidated ownership has led over time to a consistent look on the south side of buildings on Old Detroit Road from the current, newer Detroit Road in Rocky River. The area is branded the Old River Shopping Area. nice, unique, quaint shopping experience.” “Retailers see (Rocky River) as an attractive area exceeding national average incomes and greater-thannormal density,” he noted. Although JDS owns much of Old Detroit, those properties are just 10% of its portfolio. Its holdings range from standalone stores of national retailers to a 150,000square-foot shopping center in Appleton, Wis., anchored by a T.J. Maxx.

Self-made man Mike Petrigan, an executive managing director at the Newmark Grubb Knight Frank brokerage, grew up near Mr. Spielberger in Vermilion before Mr. Spielberger moved to Bay Village. “When you talk to him, his phone rings constantly with calls from brokers,” Mr. Petrigan said. “There’s not much he doesn’t see. When I think of a self-made man, I think of him.” Mr. Spielberger has worked full-time at real estate investing since 2005, when he sold C&S Limestone Inc., a construction materials supplier in Columbia Station, to Columbus-based Kokosing Materials Inc. However, he has been buying properties for 30 years. His son, John Spielberger Jr., now works with as a project manager with this father. Larger projects such as multimillion-dollar shopping centers may require bank loans, but with older properties, Mr. Spielberger said he likes to pay cash: it increases his flexibility, and there is no loan payment to make. “It takes a lot of effort to make old properties work,” Mr. Spielberger said. “But when you’re done, you have a good asset — and so does the city. This is also a wonderful market with a city that’s easy to work with.” Mr. Spielberger’s son has embraced the same local philosophy. Looking at Old Detroit Road, he said, “There’s always going to be someone who wants to put a little dress shop into Rocky River.” ■

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GOING PLACES JOB CHANGES ARCHITECTURE PERSPECTUS ARCHITECTURE: Vladimir Novakovic, Sal Rini and James Wallis to principals.

AUTOMOTIVE MAYFIELD COLLISION CENTERS: Lee Block and Matt Willmore to customer service managers.

CONSTRUCTION ALBERT M. HIGLEY CO.: Kathy Heflin to chief financial officer; Dionne Kuykendal to subcontractor relationship advocate; Amanda Kline to project engineer; Grace Sauline to project controls engineer; Cory Schiebel to safety manager; Zac Burgess to project engineer. GILBANE BUILDING CO.: Amanda Egut to marketing assistant.

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EDUCATION URSULINE COLLEGE: Gina Messina-Dysert to dean, School of Graduate and Professional Studies.

FINANCE FIFTH THIRD BANK, NORTHEASTERN OHIO: Charles R. Shaw to senior vice president, wealth management executive. OHIO COMMERCE BANK: Susan W. Chupek to assistant vice president, branch manager.

CONSULTING

FINANCIAL SERVICE

FLASHSTARTS INC.: Jennifer Neundorfer to managing partner, FlashStarts Accelerator Fund.

BEACON FINANCIAL PARTNERS: Kelly Bowman to client relations coordinator.

BOENNING & SCATTERGOOD: Chris Chapman to director and Steve Weigand to analyst, Investment Banking Group. CANDLEWOOD PARTNERS: Kate Shafer to marketing and communications manager. IPLANGROUP: Whitney Kauffman to client relationship specialist. MCGLADREY LLP: Daniel Clark to director, health care advisory services. NYE FINANCIAL GROUP: Dan Griffin to financial adviser; Andrea L. Shanklin to director, client relations/marketing. WELLS FARGO & CO.: Michael P. Shiplett to senior relationship manager, commercial banking.

HEALTH CARE AKRON GENERAL PARTNERS PHYSICIAN GROUP: Dr. Weiquan Lu, hematologist/oncologist, to medical staff. FENG CLINIC: Dr. Liz O’ Donnell to professional clinical counselor, physical therapist and mental health and wellness coach.

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BENESCH: Jeffrey J. McCourt to associate. KADISH, HINKEL & WEIBEL: Karl E. May to of counsel.

MANUFACTURING LIBRA INDUSTRIES: Carol Brown to human resources manager. MIDWEST MATERIALS: Howard J. Lake to regional account manager. RPM INTERNATIONAL INC.: Arturo Hernandez to director, global compliance.

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Ingrid Angel, Director, El Barrio Colleen Arthur, Director, Integrated Defense Technologies, and Site General Manager, Lockheed Martin Akron Rebecca O. Bagley, President & CEO, NorTech Jacqueline Forestall, President, Alego Health Rep. Marcia Fudge, Ohio’s 11th District, U.S. House of Representatives Marcie Goodman, Executive Director, Cleveland International Film Festival Sharon Sobol Jordan, President and CEO, Centers for Families and Children Susan V. Juris, President, UH Ahuja Medical Center SueAnn Naso, President, Staffing Solutions Jeanette R. Preston, President and Lead Auditor, Smithers Quality Assessments Bethany Pugh, Managing Director, PFM Group Diana Richards, Founder, Owner and CEO, Vacuum Systems International Inc. Jan Roller, President, Global Cleveland Sharon Toerek, Partner, Licata & Toerek Denise San Antonio Zeman, President and CEO, Saint Luke’s Foundation

GENERATION FOUNDATION: Peter K. Ranney to president. HATTIE LARLHAM: Jackie LoPresti to communications/media relations coordinator. MORGAN ART OF PAPERMAKING CONSERVATORY AND EDUCATIONAL FOUNDATION: Walter H. Duvall to chief operating officer. NEW DIRECTIONS FOR LIVING: Michael Bloom to executive director.

REAL ESTATE TRANSACTION REALTY: Dionte Williams to sales associate.

STAFFING TORCH GROUP: Lora Zimmerman to senior account manager.

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TRANSPORTATION TRANSPORT SERVICES: Tina McCauley to lead corporate accountant.

BOARDS LAKE HEALTH FOUNDATION: Patricia A. Kuhar to chair; Mark Fosnaught to vice chair; Christopher Cook to treasurer; Beth Cassella to secretary. METAL SERVICE CENTER INSTITUTE, NORTHERN OHIO CHAPTER: Kevin Miller (Olympic Steel) to president; Gary Wasilewski to first vice president; Jack Gilbride to second vice president; Tony Zingale to treasurer; Mike Procop to secretary.

AWARD

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FEDERAL BUREAU OF INVESTIGATION: Fred Szabo (Cleveland Hopkins International Airport) received the FBI Director’s Community Leadership Award.

Send information for Going Places to [email protected].

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INSIDE

14-15 LEARN HOW FOUR LOCAL COMPANIES HAVE MADE IT WORK OVERSEAS.

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INTERNATIONAL BUSINESS

PUTTING THE PIECES TOGETHER With the right moves it’s possible to solve the global strategy puzzle By KIMBERLY BONVISSUTO [email protected]

P

eter Taunton was running a successful fitness franchise operation for three years when he had a revelation. “There’s a global INSIDE: A list of helpful movement for people resources for doing business to try to live a healthoverseas. Page 16 ier lifestyle,” Mr. Taunton said. “Everywhere we go there’s this movement — talk about obesity, living longer and quality of life.” He opened his first Snap Fitness club in Minnesota in 2003. Today there are about 2,300 Snap Fitness locations — including seven in Northeast Ohio — operating in 12 countries with more than 1 million members. He is opening clubs in Egypt and is in discussions to open additional locations in Russia, Poland and Europe. And while the topic of a healthier lifestyle is a global one, Mr. Taunton said there are all kinds of challenges to setting up a business overseas, including different banking structures, cultural differences, language barriers and political issues. See PIECES Page 16

TOP CHALLENGES OF DOING BUSINESS OVERSEAS ■ Know the market: Will your business be in a competitive position in the targeted market? Is there a demand for that product or service? ■ Infrastructure: Understand the technical, legal and regulatory requirements of operating in a foreign country. Regulatory environments can be difficult to predict and may shift unexpectedly. ■ Cash flow: Understand credit terms and currency exchange rates. ■ Find a trustworthy local representative: Having a local face to a company is critical to maneuver cultural nuances of business. ■ Intellectual property protections: U.S. patent does not apply in a foreign country. A European Union patent allows companies to sell products in multiple places. FOTOLIA ILLUSTRATION

It’s important to find the correct mix with other cultures Business tactics and casual conversation that work here might not internationally By JENNIFER KEIRN [email protected]

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here’s a cultural lesson to be found in peanut butter. Americans love it, but that sentiment is not universal outside our borders. So when Vitamix creates recipe books for its blenders sold in other countries, it often omits peanut butter in favor of local specialties, like the red bean paste prepared in many Asian countries.

“You can’t walk into any exchange in another country and expect them to perceive things the way you perceive them,” said Jodi Berg, president and CEO of Vitamix, which has distribution centers in 80 countries. “Our presentations are different, our style is different, what we expect to get accomplished in a certain period of time is different.” Being attuned more to learning than to selling is critical to navigating the cultural challenges of inter-

INSIDE: Required reading for talking with other cultures. Page 17 national business transactions, say Ms. Berg and other local pros. “A lot of knowledge is not necessary,” said Jerry Torma, director of international HR and compensation for Westlake-based Nordson Corp. But, he stressed, openness is essential. “Culture is an iceberg,” Mr. Torma said. “The more things you see — the food, the language, the dress — you’ll start to see more of it.” To encourage that kind of thinking, he tells every Nordson employee to remember three things. “There are other time zones

than your own; there are other languages than your own; there are other currencies than your own,” Mr. Torma said. “That keeps you open.”

Don’t give them the finger There’s a minefield of faux pas that Americans can make when working overseas. In many parts of the world, the American thumbs-up is like offering a middle finger, Mr. Torma said. Turns of phrase like “let’s get the ball rolling” or “you’ll be our guinea pigs” can prompt confusion or even insult. But many such missteps are forgivable and won’t kill a deal, said

Michael Mayo, a professor of marketing at Kent State University. “People underestimate that if you are new to the market, they will give you a lot of latitude,” Dr. Mayo said. “If you can relax and be more of an explorer, more curious, that’s something people outside the U.S. will appreciate.” For example, Chinese business culture is built on the concept of guanxi, said Steven Feldman, a professor at Case Western Reserve University’s Weatherhead School of Management and author of “Trouble in the Middle: AmericanChinese Business Relations, Culture, Conflict and Ethics.” See CULTURES Page 17

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HOW THEY DID IT …

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lobal business has really taken off for Ohio Citybased Voss Industries Inc. since the metal fabricator entered overseas markets 12 years ago. The maker of clamps, couplings and ducting for aerospace, defense and industrial customers has seen its exports business increase 54% in the last three years alone, said Daniel Sedor Sr., president and CEO. The company’s export sales are up 7% in the first quarter this year compared with the like period in 2012, and it is likely to climb to 12% by year’s end. Revenue has increased about 46% over the last three years. “Our success has come from exploiting our capabilities, but even more so because of listening to our customers’ needs and providing solutions,” Mr. Sedor said. The manufacturer generates about 40% of its business from the aerospace sector and has ramped up production for aviation giants Boeing Co. and Airbus, which are replacing older aircraft with newer models. The 300-employee company’s foray into the international marketplace began in 2000 with developing components for Airbus and its suppliers in the United Kingdom. Its ability to develop a concept through design, prototype, testing and production phases led to its expansion into additional markets, including western Europe, Brazil, Canada and China. Voss currently is manufacturing components for the Comac C919, the largest commercial airliner that has been designed and built in China since the 1970s.

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Voss Industries president and CEO Daniel Sedor Sr., shown last August, says the company’s export business has increased 54% in the last three years. “They’re outsourcing to Cleveland,” Mr. Sedor said. He said a key part of his operation’s growth has been through market diversification and building relationships. During the recession, when other companies reined in domestic and overseas travel to curb expenses, Voss forged ahead on fostering faceto-face connections. “While some (companies) backed off travel and did video

chats or conference calls, we said, ‘No, this is working. We shouldn’t stop traveling to save a few dollars,’” Mr. Sedor said. “You can’t leave interpretation to emails and voice mails.” Direct marketing and client education has paid off in growing its exports business, which currently represents about 20% of the company’s overall sales, compared with 5% a decade ago. — Kathy Ames Carr

HOW THEY DID IT …

tics operations and improve processing and performance of a variety of rubber and plastic parts. The 130employee Ivany operation has expanded its additives and dispersion sales to 32 countries after implementing its “JBRICK” exporting strategy of shipping to Japan, Brazil, Russia, India, China and Korea. “China is one of our largest,” Mr. Ivany said. “At this point, half of the world’s tires are produced there.” The company expects continued growth in Chinese and Japanese markets, and recently hired a director of international business who will focus on new opportunities in Brazil and India. “What we’re seeing is an overall globalization of the automotive market,” Mr. Ivany said. “We used to look at our business according to what happens in America. Now we think about how the whole world is using polymer materials.” — Kathy Ames Carr

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low Polymers’ products for the tire industry have entered multiple lanes of international commerce since the Cleveland operation in 2005 expanded in earnest its geographical footprint. Exports that year represented about 12% of overall revenue but have grown to 45% for the manufacturer of plastics and rubber additives and dispersions for tire, automotive, industrial and plastics markets. The company’s overall revenue is up 15% between 2011 and 2012. “For a little company from Cleveland, Ohio, it was a big step but a necessary one,” to accommodate the increasing shift from domestic to overseas tire manufacturing, president and CEO Mike Ivany said. “By selling to a majority of tire companies in the world, we have a good feel for the marketplace, which is important to our business.” Flow Polymers’ products are used to improve the durability of tires, reduce energy usage in plas-

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HOW THEY DID IT … Checkpoint Surgical Highland Hills

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SUBMITTED PHOTO

articipation at medical trade shows throughout the United States has served as an entry point into exporting for Checkpoint Surgical, which sells a neuro device that is in demand among both domestic and foreign distributors. The Highland Hills outfit’s global outreach began in June 2012, when two Australian distributors sought out Checkpoint’s stimulator/locator, which surgeons use to find and avoid nerves and to evaluate nerve and muscle function. “We have a heavy presence at a dozen-plus trade shows throughout the U.S., and we meet these foreign distributors who then

cold-call us for our product,” said Len Cosentino, president and CEO. Checkpoint subsequently exported its product to Cosentino South Africa, and most recently Canada. “We get a lot of Canadian surgeons at trade shows, many of whom have worked at U.S. hospitals and have used our device. They’ve said to me, ‘Let us know when (the product) is in Canada,’” he said. “We shipped our first order there (last month).” The 15-employee operation now is in discussions with distributors in South America and Europe, and is about to enter Kuwait.

“And we’ve gotten repeated requests from no less than 12 Turkish distributors,” Mr. Cosentino added. Checkpoint Surgical was launched in 2009 as the second spinoff of Highland Hills-based venture capital firm NDI Medical. Checkpoint sold “hundreds” of devices in 2010, the year of its pilot product launch, and is expecting to sell 10,000 units this year, Mr. Cosentino said. Year-over-year revenue growth has doubled in each of the last two years. Although exports remain a fraction of the firm’s overall business — at about 5% — Mr. Cosentino expects that figure to surge to 20% in the next three to four years. “We haven’t had to make overseas trips because the distributors

SUBMITTED PHOTO

Checkpoint Surgical’s neuro device come to us, but as this business grows, we’ll need to do that,” he said. “Our device is in prominent hospitals throughout the U.S., like the Cleveland Clinic, (University Hospitals), Mayo Clinic and Johns Hopkins. “That means a lot to these foreign distributors,” he said. — Kathy Ames Carr

TLC shows the effects of its bacteria product, which can clean such bodies of water as lakes and ponds.

HOW THEY DID IT … TLC Products Cleveland LC Products is treating new markets throughout the world with its environmentally friendly live bacteria products that clean lakes, ponds, aquariums and wastewater treatment systems. The Cleveland-based manufacturer saw an opportunity to cast a wider net beyond its domestic target market of small retail stores during the recession, when about 20% of those shops went out of business. Co-owners John Wong and Richelle Bell diversified their reach and made their products more efficient to export by concentrating the liquid to a powder, which lowered the weight and price. They then promoted their pondtreatment products, which represented about 30% to 40% of domestic business from May through July, into different climates. “We had better cash flow because our product could be used in the different seasons,” Mr. Wong said. The operation expanded into Australia, then advertised in Commercial News USA, a magazine that helps American companies find buyers and distributors for their products and services. The Ohio Department of Development saw the ad, Mr. Wong said, and directed the small business to exporting resources, which included in 2010 a $225,000 line of credit from Lorain National Bank, which was backed by the Small Business Administration’s Export Express program. Between 2010 and 2012, TLC Products expanded into about 11 countries, including Spain, China, India, Canada and Mexico. Gross sales doubled between 2009 and 2012. “We’re at a very rapid growth pace,” Mr. Wong said. “I wouldn’t be surprised to grow 50% this year over 2012, and the lion’s share is exports.” Indeed, in 2009, export sales represented about 5% of overall business, and surged to 25% in 2012. “We have already matched and will exceed that this year,” said Mr. Wong, whose customers range from small end users to large corporations. “We want to double that in a year.” The 11-employee operation is working on selling to fish farms throughout the world a new product that consumes ammonia produced by fish. The U.S. Department of Commerce’s Gold Key Matching Service also has helped the operation invest in new overseas markets by finding potential distributors, sales representatives and customers, Mr. Wong said. — Kathy Ames Carr

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Pieces: Choosing international rep a critical step continued from PAGE 13

Bob Chalfant, director of the Fitzgerald Institute for Entrepreneurial Studies at the University of Akron, said companies need to look at whether there is a market for their product: Are people in a given country buying a product, or will they? Eugene Laney, vice president of International Trade Affairs for DHL Express USA, said a big challenge for domestic firms is they aren’t aware there might be a need or demand for their product abroad. A recent DHL study found that small and midsize businesses selling in international markets are twice as likely to be successful than those that operate only within the United States. “A lot of companies are not aware that 95% of all consumers are outside of the United States,” said Dr. Laney, who is based in Washington, D.C. “As you grow your business, all of your future customers are abroad.”

Buddy up Before taking the plunge into the global marketplace, many entrepreneurs say the most important step is finding someone from that country to represent the

company and the product. “Having a local representative is critical. You can have someone in or near the country who can be your voice while you’re not there,” Mr. Chalfant said. George Young, a founding partner of the Cleveland-based consulting firm Kalypso, in 2004 started the company and in 2005 opened European operations. He said the company’s growth in Europe can be attributed to finding the right person to head up its European operations. He said a business owner has to know as much as possible when entering a different market or have someone they know and trust to lead the company into that new market. “Most of our clients, themselves, are global. It was important even from a very early point in our existence that we had to be able to serve our clients globally,” Mr. Young said, adding that he had a former client looking to do something different, and there was demand for his services in Europe. “He became our lead partner in Europe, and we built that business around him.” Mr. Young said “trust” is an intangible word, but it’s one of the

most important factors in establishing a business relationship overseas. Snap Fitness’ Mr. Taunton said he travels extensively into different cultures and attends global trade shows to meet people from every corner of the world and learn more about different markets. When thinking about global expansion, Mr. Taunton’s advice is to make that first foray into an English-speaking country. “It’s one thing to expand into another country. It’s another thing when you have a complete language barrier,” he said. “And be patient because some people move at an entirely different pace than we do and it’s easy to become frustrated.” When negotiating leases and looking at properties, Mr. Taunton said cultural negotiating styles can be entirely different from what someone is accustomed to in the United States. He also said to do research on other U.S. brands in that country — if there aren’t any in the region where you are looking to expand, there probably is a reason. “A lot of people think entrepreneurs are people with high risk tolerance. Successful entrepre-

neurs are actually the most risk averse people on the earth,” Kalypso’s Mr. Young said. “You don’t do anything unless you know it’s going to work. “It’s the Warren Buffet school of investment — invest in what you know,” he said.

Baby steps Karl Schamotta, a senior market strategist with Western Union Business Solutions and president of the Association for Financial Professionals Canada, suggests “dipping a toe” into the global market and taking small steps before throwing all of a company’s resources into global sales. He goes so far as to suggest creating a formal business partnership with a person located in the targeted overseas market. This strategy helps a U.S. company more effectively think in terms of the foreign location, giving it an inherent competitive advantage. “It comes down to how your sell your product, and the currencies you accept when you do sell in that country,” Mr. Schamotta said. “It’s important to try to put yourself in your partner’s shoes and understand where they are coming from before you move forward.” Mr. Schamotta said the key to operating and expanding into the global marketplace is infrastructure — the ability to move goods and money. “Ideally, every small business should be accepting foreign currency rather than pricing goods in U.S. dollars for the entire world,” he said, adding that there is risk involved when receiving foreign currencies. “You’re going to be in a much better competitive position relative to other American companies selling in U.S. dollars.” Mr. Schamotta said a prolonged financial crisis in the United States, during which growth rates and demand have collapsed, is creating opportunities for small to midsize businesses to venture into international markets, where demand is higher for some products.

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The Internet, Mr. Schamotta said, has played a major role in global business, lowering the cost of communicating and shipping, which, in turn, lowered the barriers

RESOURCES ■ U.S. Export Assistance Center of Northern Ohio provides counseling, advice and advocacy to U.S. firms looking to do business overseas. http://export.gov/ohio/north ernohio/. ■ U.S. Trade and Development Agency — www.ustda.gov — links U.S. businesses to export opportunities through funding assistance. ■ Small Business Administration — www.sba.gov — offers loan programs that enable small business exporters to increase global competitiveness. ■ Overseas Private Investment Corporation (OPIC) — www.opic.gov — helps U.S. businesses invest overseas. ■ Export-Import Bank — www.exim.gov — is the official export credit agency of the United States. to entry for midsize companies. “You used to have a situation where only a large company could be a multinational,” Mr. Schamotta said. “You had to have infrastructure in place and economy of scale. What we’re seeing now is a change from a mass producing model to a mass customization model. Specialized companies are making more specialized products and being part of the global supply chain.” Midsize companies are becoming the norm, he said, referring to them as micro-nationals. Things began to change in the 1990s and gained momentum in the last 10 years as e-commerce capabilities became available to almost anyone. “Technology has allowed the homemaker in Peru to be part of the global economy to sell to someone in the United States, and vice versa,” Mr. Schamotta said. “It’s a remarkable phenomenon that’s happening. We’re seeing a disintegration of that top-down structure we had in the global economy.” Mr. Laney added that the emergence of the Internet creates a platform that bridges the gap between the small business running out of a Chicago garage and an interested Singapore businessman. “It’s a huge shift going on now,” Mr. Laney said. ■

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Global companies need diverse staff By CHRIS SWEENEY [email protected]

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hen a company decides to set up shop or do business in a new country, it must adapt. And one of the most important areas it needs to beef up is its staff. Customers expect the company to have a look and feel that they’re used to, which means a U.S. company will have to ensure any field office is staffed with employees who make the customer feel comfortable — employees who speak the language and understand the customs. The same is true of having a diverse representation present within the company as a whole. It’s important for employers to hire for those skills, say those who have worked internationally. If all things are equal, most employers should opt for the person who has more cross-cultural skills and international experience. “It’s one of their most important HR issues: Creating diversity in their organization so that the organization has the look and feel of the company worldwide,” said Larry Miller, current president of the French-American Chamber of Commerce and a longtime human resources executive who has advised many international companies, including Lubrizol Corp. “Global competitiveness is increasingly important,” Mr. Miller said. “It’s not just the big companies anymore; everybody is competing on a global market. Getting a work force ready to do their work and compete with a global perspective is critically important to a lot of businesses in Northeast Ohio.”

Recruiting the world Eaton Corp., a $22 billion company with U.S. headquarters in Cleveland, does business in 176 countries with 50% of its revenues coming from outside the United States. That means the chance that someone within the corporation will interact with someone from another country is extremely high. And as such, Eaton goes to great lengths to find candidates with an international mindset. “With respect to international relations, I think we look at hiring employees who have the capability to learn,” said Deborah Lauer, vice president of talent management and organizational effectiveness at Eaton. “We’re very much about being a learning organization and having a culture that really supports learning.” Popular ways of recruiting such talent include reaching out to a variety of groups. Colleges or universities generally have established diversity organizations as part of their

CRAIN’S CLEVELAND BUSINESS 17

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campus offerings. Internships also are golden in developing young talent toward an international strategy. “You just have to make a commitment to (diversity),” Mr. Miller said. “You have to make sure that all of your leaders understand the importance of that diversity, that they buy into it and that they’re held accountable for it.” Eaton provides a number of classes for its employees to learn about culture and language. As a U.S. company, there is an expectation that its employees will be able to communicate in English. Some departments overseas have a day during which they’ll only speak English to one another. “Our departments outside of the United States, particularly in a place like China, understand that this is important,” Ms. Lauer said. “They are part of an American company and they know that their capability to express themselves has to be done in English. They know in order to progress their careers, they have to become better at that.”

Experience isn’t everything As far as hiring goes, having international experience and speaking multiple languages always is a plus. But Rad-Con Inc.’s primary objective is to hire strong engineers and groom them toward international relations. To that end, Rad-Con will invite its international clients to its Cleveland headquarters for face-to-face meetings, which ultimately gives newer employees a global taste on their home soil before sending them off to do business overseas. Rad-Con is a global supplier of industrial furnaces. The company has grown its exports significantly and now they account for more than 70% of its business. It routinely sends engineers out of the country for three weeks at a time to assist in setting up its equipment. “We hire people who don’t have (international experience) but could be good engineers,” said RadCon president Chris Messina. “He’ll probably meet the customer first here in the U.S. and subsequently will go with somebody, one of our staff who has experiences. And then the third touch he may be soloing on his own over there.” Language often can be perceived as the biggest barrier to doing business internationally. But, at least in Mr. Miller’s experience, knowing the customs and traditions of a foreign country is far more important. “A lot of people think it’s all about language,” Mr. Miller said. “Creating the kinds of relationships we need to have inside the company, and certainly between the company and its customers, requires much more careful attention to the relationship to culture.” ■

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Cultures: Relationships need to develop continued from PAGE 13

It’s a term that describes the network of trusted peers with whom Chinese like to do business, and earning that trust takes time. “Many of the major mistakes I’ve seen, sometimes very costly financially, are aggressive, entrepreneur-type executives going in there and trying to do a deal quickly,” Dr. Feldman said. “It’s a relationship-based culture, and it takes time to develop over months or even years.” Large Fortune 500 businesses carry a certain amount of inherent guanxi, he said, but not so for small businesses. “For a small business, it’s open season,” Dr. Feldman said. “Culturally, they don’t attribute importance to them. … It’s even more important to have a good middleman to help this process.” It does fall to employers to prepare their people for such cultural challenges, but the employee must bring just as much to the learning process, said Jim Kuhn, a longtime expert in international HR who now runs recruitment firm Kuhn Global Talent in Hudson. “They should be driven person-

REQUIRED READING ■ “Kiss, Bow or Shake Hands,” Terri Morrison and Wayne Conaway ■ “Essential Do’s and Taboos: The Complete Guide to International Business and Leisure Travel,” Roger E. Axtell ■ “Trouble in the Middle: American-Chinese Business Relations, Culture, Conflict and Ethics,” Steven Feldman ■ CultureGrams online database of insider reports on 200-plus countries, www.culturegrams.com ally to quest for this information themselves,” Mr. Kuhn said. “You can’t pick them based only on technical knowledge because they might not have the right interpersonal skills.”

The little things Start with language. English may be widely spoken overseas, but “a little bit of language goes a long way (in cultural interactions),” Mr. Kuhn said. “Write five words on the back of your business card and remember them.”

He works with clients on the core competencies needed for success in international business, which include cross-cultural agility, resourcefulness, sensitivity and humility. It helps to know a bit about how Americans are stereotyped overseas, Mr. Torma said. “We are (considered) too results-oriented and not enough process-oriented,” he said. “We are generally honest and forthright, but we’re a bit too informal, too quickly. (We say) ‘Just call me Jerry!’ Some cultures aren’t comfortable with that.” “Think about cultural sameness instead of differences,” said Dr. Mayo. “Ask, ‘I see you have soccer trophies for your son. What’s it like being a soccer dad?’ … Hit on something they love and they will spend the next 20 minutes talking to you about it.” That’s an easy one for Vitamix — everyone shares a need to eat, said Ms. Berg, and a connection to how what they eat makes them feel. “People want to help you understand their culture and who they are,” she said. “That’s part of human nature.” ■

Hawken School proudly announces its membership in the distinguished Global Online Academy. Albuquerque Academy (Albuquerque, N.M.) Catlin Gabel School (Portland, Ore.) Cranb Schools (Bloomfield Hills, Mich.) The Dalton n School (New (N York, N.Y.) Germantown Frien (Philadelphia, Pa.) Head-Royce School (Oakland, Oakland, Calif.) King’s Kin Academy (Madaba-Manja Lakeside School (Seattle, Wash.) Punahou ou School (Hono (Honolulu, HI) Sidwell Friends Schoo ington, DC) The Blake School (Hopkins, Minn.) nn.) Greenh Greenhill School (Dallas,, TX) Hawken Scc (Cleveland, and, OH) International School o of Beijing eijing (Shunyi, Beijing, China) na) Isidore Newma Newman n (New Orleans, rleans, La.) Jakarta International School Sch (Jakarta, Indonesia) nesia) Latin School of Chi cago, Ill.) Noblee and Greenough (Dedham, Ma Mass.) The Westminster tminster Schools (Atlanta, G querque Academy demy (Albuquerque, N.M.) Catlin Gabel School (Portland, Portland, Ore.) Cranbrookk (Bloomfield Hills, Mich.) The Dalton School (New York, N.Y.) Germantown Friends Scho o E s t a(Oakl b l i s h e dCalif.) 1 9 1King’s 5 delphia, Pa.) Head-Royce School (Oakland, Academy demy (Madaba-Manja, Jord d side School (Seattle, Wash.) Punaho Punahou School (Honolulu, ) Sidwell Friends School (Waa Forward focused preparation for the realHI) world. DC) The Blake School (Hopkins, M Minn.) Greenhill School (Dallas, TX) Hawken School (C (Cll OH) International al School of Beijing (Shunyi, Beijing, China) na) Isidore Newman School (Nee leans, La.) Jakarta International ternation School (Jakarta, Indonesia) ia) Latin School of Chicago (Ch h A leading Noblegroup and Greenough (Dedham, edham, Mass.) TThe Westminsterr Schools (Atlanta, Ga.) Albuqu u Academy schools (Albuquerque, N.M.) Catlin Gabel School Sc (Portland, Ore.)) Cranbrook School Schools of 19 partner field Hills, Mich.) The Dalton School chool (New York, N.Y.) Germantown Friends riends School (Phila ( dedicated to providing Pa.) Head-Royce School (Oakland, and, Calif.) King’s Academy Academ (Madaba-Manja, anja, Jordan) Lake Schoolinternational (Seattle, Wash.) Punahou u School (Honolulu, HI) HI Sidwell Friends ds School (Washin (Wa enhanced, The Blake School (Hopkins, Minn.)) Greenhill School (Dallas, TX) Hawken ken School (Clevel ( learning opportunities unyi, Beijing, Chin n School (New O International School of Beijing (Shunyi, China) Isidore Newman a, Indonesia) Latin School of Chicago go (Chicago, (Chi Ill.) in the Jakarta sharedInternational traditionSchool (Jakarta, estminster Schools (Atlanta, Ga.) Albuquerque buqu Greenough (Dedham, Mass.) The Westminster Aca of academic excellence. ol (Portla buquerque, N.M.) Catlin Gabel School (Portland, Ore.) Cranbrook Schools (Bloomfield H erma The Dalton School (New York, N.Y.) Germantown Friends School (Philadelphia, Pa.) Hea School (Oakland, Calif.) King’s Academyy (M (Madaba-Manja, Jordan) Lakeside School (Seat Hawken School was uniquely Punahou School (Honolulu, HI) Sidwell Friends School (Washington, DC) The Blake Sch

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CREDIT UNIONS

RANKED BY DEC. 31, 2012 ASSETS

Name Address Rank Phone/Website

Assets (millions) Dec. 31, 2012 Dec. 31, 2011

% change

Loans (millions) Dec. 31, 2012

Shares & deposits (millions) Number of Dec. 31, 2012 members

Membership groups

Top executive Title

1

Seven Seventeen Credit Union 3181 Larchmont Ave. NE, Warren 44483 (330) 372-8100/www.sscu.net

$829.9

$775.7

7.0%

$518.9

726.9

70,418

Live, work, worship, attend school in Trumbull, Mahoning, Columbiana, Portage or central Stark County communities

Gary Soukenik CEO

2

Century Federal Credit Union 1240 E. Ninth St., Room 719, Cleveland 44199 (216) 535-3200/www.cenfedcu.org

$338.3

$315.0

7.4%

$212.2

308.5

27,768

Open to federal government agencies and any Northeast Ohio business, association, municipality or educational institution

Sharon Churchill president, CEO

3

Firestone Federal Credit Union 31 Hanna Parkway, Akron 44319 (234) 352-1100/www.fofcu.com

$223.2

$233.4

-4.4%

$35.7

189.5

12,285

Bridgestone/Firestone employees

Wayne A. Chapman president, CEO

4

GenFed Financial Credit Union 2492 Wedgewood Drive, Suite B, Akron 44312 (330) 784-5451/www.genfed.com

$193.6

$182.6

6.0%

$129.2

160.1

20,572

Lorain, Erie, Summit and Medina counties; Ford, ASW, Reiter Dairy, Quality Mold, Rubbermaid, other local companies

Joyce R. Jones president, CEO

5

Firefighters Community Credit Union 2300 St. Clair Ave., Cleveland 44114 (216) 621-4644/www.ffcommunity.com

$193.5

$178.1

8.7%

$138.2

169.2

27,507

Open to everyone in Cuyahoga and Lake counties

Ben Laurendeau president, CEO

6

CSE Federal Credit Union 1380 Market Ave. North, Canton 44714 (330) 452-9801/www.csefcu.com

$172.3

$149.4

15.3%

$132.4

153.6

34,314

Open to persons who live, work, worship or R. Stanley Barnes attend school in Stark County CEO

7

Cardinal Community Credit Union 8500 Westport Drive, Mentor 44060 (440) 266-2200/www.cardinalcu.com

$171.0

$156.2

9.5%

$117.9

151.1

19,273

All who work, live, attend school or worship Christine Blake in Cuyahoga, Lake, Geauga and Ashtabula president, CEO counties

8

BFG Federal Credit Union 445 S. Main St., Akron 44311 (330) 374-2990/www.bfgfcu.org

$160.7

$161.8

-0.7%

$91.6

144.4

29,046

Individuals who live, work, worship, volunteer or attend school in Summit County

Michael J. Owens president, CEO

9

Ohio Catholic Federal Credit Union 13623 Rockside Road, Garfield Heights 44125 (216) 663-6800/www.ohiocatholicfcu.com

$154.1

$155.9

-1.2%

$97.3

140.2

16,781

Any person connected with the Catholic Diocese of Cleveland and/or Diocesan parishes, schools, or organizations

Todd R. Turner CEO

10

VacationLand Federal Credit Union 2409 E. Perkins Ave., Sandusky 44870 (419) 625-9025/www.vlfcu.org

$147.7

$139.3

6.1%

$94.0

126.2

16,009

Lives, works, worships or attends school in Bryan P. Myers Erie County CEO

11

Associated School Employees Credit Union(1) 1690 S. Canfield Niles Road, Youngstown 44515 (330) 792-4000/www.asecu.com

$147.1

$144.5

1.8%

$59.8

132.5

17,689

Lives, works, worships or attends school in Michael Kurish Mahoning, Trumbull or Columbiana counties president, CEO

12

Lormet Community Federal Credit Union 2051 Cooper Foster Park Road, Amherst 44001 (440) 960-6600/www.lormet.com

$146.9

$145.7

0.8%

$75.1

128.6

20,047

Lorain County residents

Daniel R. Cwalina president, CEO

13

School Employees Lorain County Credit Union Inc. 340 Griswold Road, Elyria 44035 (440) 324-3400/www.selccu.org

$139.0

$136.3

2.0%

$60.9

127.3

11,736

Employees and students of educational entities in Lorain County, other miscellaneous employer groups

Brent T. Binkley president, CEO

14

Ohio Educational Credit Union 2554 E. 22nd St., Cleveland 44115 (216) 621-6296/www.ohecu.com

$121.5

$118.0

3.0%

$86.6

110.5

18,731

Employees, students and alumni of public and private schools and colleges in Ohio

Jerome R. Valco CEO

15

PSE Credit Union Inc. 5225 Regency Drive, Parma 44129 (440) 843-8300/www.psecreditunion.org

$115.8

$112.4

3.1%

$45.9

103.5

21,674

Anyone who lives, works, worships or attends school in Cuyahoga or Medina counties

Janice L. Thomas president, CEO

16

Towpath Credit Union(2) 2969 Smith Road, Akron 44310 (330) 664-4700/www.towpathcu.com

$114.2

$114.0

0.2%

$46.6

101.0

20,826

Lives, works, worships or attends school in Rose Bartolomucci Akron, Fairlawn, Cuyahoga Falls, Bath and president, CEO townships of Copley and Richfield

17

Stark Federal Credit Union(1) 4100 Dressler Road NW, Canton 44718 (330) 493-8325/www.starkcu.org

$102.7

$100.7

2.0%

$36.4

91.3

13,733

Anyone who lives, works, worships or attends school in Stark or Carroll counties

18

Best Reward Credit Union 5681 Smith Road, Brook Park 44142 (216) 367-8000/www.bestrewardcu.coop

$95.5

$95.4

0.1%

$30.7

75.8

12,852

Live, work, worship or attend school in J. Shirilla Cuyahoga, Lake, Geauga, Medina, Summit, John president, CEO Lorain and Portage counties

19

Golden Circle Credit Union(1) 4118 Lincolnway E., Massillon 44646 (330) 479-3130/http://goldencirclecu.com

$92.6

$96.6

-4.2%

$31.5

76.9

13,147

Live in Stark County

Jeffrey J. McClain CEO

20

Cleveland Selfreliance Federal Credit Union 6108 State Road, Parma 44134 (440) 884-9111/www.clevelandselfreliance.com

$89.7

$86.8

3.4%

$39.6

75.0

4,167

Ukrainian American community

Orest Liscynesky treasurer, manager

21

Lakeview Federal Credit Union 2909 State Road, Ashtabula 44004 (440) 998-2707 /www.lakeviewfcu.com

$86.3

$79.2

9.0%

$48.3

76.1

8,495

Live, work or worship in Ashtabula County

Sherry S. Cornell president, CEO

22

Buckeye State Credit Union 155 E. Voris St., Akron 44311 (330) 253-9197/www.buckeyecu.org

$82.3

$77.4

6.3%

$39.6

73.7

17,465

Community membership in Shaker Heights and Summit, Stark, and Lake counties

Norma S. Preston CEO

23

Unity Catholic Federal Credit Union 5839 Ridge Road , Parma 44129 (440) 886-2558/www.unitycatholiccu.org

$70.0

$68.3

2.5%

$31.4

63.3

11,665

Parishioners, families, students, employees Tamlyn M. Straightand organizations within the Catholic Schervish Diocese of Cleveland and the Eparchy of CEO Parma

24

Community First 2043 E. Prospect Road, Ashtabula 44004 (440) 997-5919/www.hereforeveryoneonline.com

$69.9

$67.8

3.1%

$23.5

58.5

6,300

Live, work, worship in Ashtabula County

Mike Riesterer CEO

25

Taleris Credit Union Inc. 1250 E. Granger Road, Cleveland 44131 (216) 739-2300/www.taleriscu.org

$69.2

$69.7

-0.8%

$44.8

56.0

9,736

Individuals who live, work, worship or attend school in Cuyahoga County and select groups and organizations

Robin D. Thomas president, CEO

26

Medina County Federal Credit Union 1353 Reimer Road, Wadsworth 44281 (330) 334-1023/www.mcfcu.com

$66.5

$61.8

7.5%

$22.7

58.7

7,755

Open to anyone who lives, works, worships Bud Herrle or educates in Medina County chairman

27

Community One Credit Union of Ohio 6583 Frank Ave. NW, North Canton 44720 (330) 305-3050/www.c1cu.com

$66.1

$61.1

8.3%

$30.3

60.5

6,135

Serving Stark County

Evelyn L. Canterbury president, CEO

28

Eaton Family Credit Union 333 Babbitt Road, Euclid 44123 (216) 920-2000/www.eatonfamilycu.com

$55.5

$52.1

6.5%

$38.6

49.9

13,336

Eaton Corp, City of Euclid, Lake County, Cuyahoga County

Michael Losneck CEO

29

Community Star Credit Union 832 Cleveland St., Elyria 44035 (440) 365-7342/www.commstar.org

$51.1

NA

NA

NA

NA

NA

Membership is open to the public

Ernie Jackson president, CEO

30

Emerald Group Credit Union Inc. 13201 Granger Road, Garfield Heights 44125 (216) 581-5581/www.emeraldgcu.com

$50.4

$48.7

3.5%

$32.6

45.2

8,315

Individuals who live, work, worship or attend school in Cuyahoga County

John R. Martin CEO

Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Information is from the National Credit Union Administration, www.ncua.gov. (2) Information from creditunions.com.

Nino J. Gemma president, CEO

RESEARCHED BY Deborah W. Hillyer

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EMS+: Company is targeting small businesses to grow product “For the very, very small merchant, we didn’t have the solution that would make accepting credit cards a viable option for them.”

continued from PAGE 1

“There’re a lot of merchants out there,” Mr. Neistadt said. “There’re a lot of would-be merchants that this product truly appeals to. There’s enough there to go around.” Electronic Merchant Systems started offering the EMS+ mobile card reader to a small group of customers about six months ago. The average size of each transaction processed with the reader is about twice what Electronic Merchant Systems thought it would be. And that’s good for the company: Part of the 2.25% credit card processing fee that comes out of each transaction goes to Electronic Merchant System. There’s already a lot of demand for the EMS+ reader among the company’s existing customers, according to Mr. Neistadt, who said the number of customers signing up to receive readers is “beyond what we anticipated.” There are several other card readers on the market. The most popular is made by Square Inc., a company started by Twitter co-founder Jack Dorsey. Intuit, the company behind TurboTax, makes GoPayment. Then there’s PayPal Here. Bank of America has Mobile Pay on Demand. ProPay sells the Jak and the Flash. North American Bancard has PayAnywhere. Like most other readers, EMS+ works like this: You download an app onto your smart phone or tablet. You plug the reader into the

– Dan Neistadt, CEO, Electronic Merchant Systems, on the company appealing to merchants that process releatively few transactions via credit card

CONTRIBUTED PHOTO

Electronic Merchant Systems’ EMS+ mobile card reader charges a processing fee of 2.25% per transaction, which is lower than many of its competitors. headphone jack. You use the app to enter the purchase price and email the customer a receipt. And like many of the other readers, the EMS+ device and the app are free. So why would a customer choose EMS+ when they could choose so many other readers? For one, Electronic Merchant Systems offers the lowest swipe rate of all the companies listed above. For instance, Square’s swipe rate is 2.75%. However, some companies lower their rates if customers opt to pay other fees. Electronic Merchant Systems also offers customer support by phone 24 hours a day — a service

that some companies are offering to stand out from Square, which focuses more on answering questions online.

Appeal to the little guy However, the company, which has 250 employees, isn’t aiming to take over the mobile reader market any time soon. Mr. Neistadt said he expects EMS+ to account for only a small portion of Electronic Merchant Systems’ sales over the next few years, though the company expects the revenue stream to grow over time. Unlike Square — which last year secured a $25 million investment

7KH%XVLQHVV5HVRXUFH IRU$YRLGLQJ&XVWRPHUV :KR'RQ·W3D\

from Starbucks Corp., which uses the Square reader in its stores — Electronic Merchant Systems plans to grow EMS+ with its resources on hand: It’s marketing the product through its existing sales team, and instead of launching a big marketing campaign, it’s trying to win new customers by targeting groups of small businesses on Facebook, Twitter and LinkedIn. Because EMS+ and other mobile readers don’t require businesses to pay monthly fees or buy expensive equipment, they’re particularly appealing to businesses that process relatively few transactions via credit card — businesses Electronic Merchant Systems previously found hard to serve. “For the very, very small merchant, we didn’t have the solution that would make accepting credit cards a viable option for them,” Mr. Neistadt said.

A disciple in Idaho They also can be handy tools for

people who want to accept credit cards wherever they go. For instance, the maintenance team at Advanced Heating & Cooling in Meridian, Idaho, was able to take credit cards before the company started using EMS+, but its members had to write a customer’s credit card number on the invoice or give the number to someone at the office, via phone. Then the company had to send the customer a receipt. Those methods were slow and prone to error, said Alana Lane, office supervisor at Advanced Heating & Cooling. EMS+ also helped the company save money on fees — enough that it could add a fourth technician. The EMS+ reader, which is made for Electronic Merchant Systems by a contractor, didn’t work with the ZTE Optik tablets the technicians were using. Electronic Merchant Systems gave Advanced Heating & Cooling a separate card reader that could communicate with the EMS+ app wirelessly. That problem has occurred with a few tablets, especially older ones, but it is rare and easy to fix with a separate reader, said Brendan Bowers, social media manager at Electronic Merchant Systems. It didn’t bother Ms. Lane. She has told other contractors to use EMS+, and if she has her way, the National Association of Women in Construction will use it, too. “I’m trying to get them signed over to EMS right now,” she said. ■

7KHPRVWFRPPRQLVVXHIDFLQJDOOEXVLQHVVHV LVQRWJHWWLQJSDLGIRUVHUYLFHVUHQGHUHG Gain the advantage by knowing your customers - be they companies or individuals - before it’s too late.

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Factor: The number of underwater mortgages keeps dropping continued from PAGE 1

UNDERWATER AND UPSIDE-DOWN

against which they may borrow. Though SMR still is calculating last year’s numbers, the firm estimates a 2.3% increase in home equity and related lending in 2012 over 2011, Mr. Feldstein said. “That tiny, tiny increase in home equity lending doesn’t get us anywhere near what it used to be,” he said. “It just means there’s been a turning point.” The April Beige Book report from the Federal Reserve Bank tells a similar story for the Fed’s Fourth District, which includes Cleveland. “Reports on consumer credit … showed a small rise in demand, mainly for home-equity products and auto loans,” the Fed stated. The Beige Book also reported that sales of new and existing single-family homes were higher than a year ago and that list prices of new homes have edged up 1% to 2% this year. And where there are improving prices, there is improving equity, sources say. Roughly 200,000 more residential properties returned to a state of positive equity in the fourth quarter of 2012, according to the most recent report by CoreLogic, a

A look at the number of residential mortgages where borrowers owe more on their mortgages than their homes are worth: Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 % change over four quarters Nationwide Ohio

10.4M

10.7

10.8

11.4

12.1

-14%

535,972

511,426

520,357

529,834

573,008

-6%

Source: CoreLogic provider of information, analytics and business services out of Irvine, Calif. That improvement marked the fourth consecutive quarter of decline in underwater mortgages, or those where more is owed on the loan than the home is worth. At the end of 2012, the number of residential properties with negative equity nationwide stood at 10.4 million, or 21.5% of all residential properties with a mortgage — the lowest it has been since at least the third quarter of 2009, CoreLogic data show. Things are worse in the Cleveland area, though, where 30.4% of residential properties were under water as of Dec. 31.

‘Fear factor’ lifts Despite more pervasive negative equity locally, banks operating in

Northeast Ohio are doing more home equity business. After years of decline, KeyCorp reported its footprint-wide home equity loan balance reached $10.2 billion in 2012, up 4.9% from 2011. Its first-quarter 2013 numbers were up 5.2% over last year’s quarter, too; by comparison, its home equity loan balance was down 2.8% in the first quarter of 2012 versus the year-earlier period, said Todd Hays, senior vice president and retail executive for Key in Northeast Ohio. U.S. Bank in Northeast Ohio closed 54% more home equity loans last year than it did in 2011, said Tom Zirbs, regional manager for nearly 100 local locations. That 54% jump, though, is coming off a low base, a spokeswoman qualified. And while its first-quarter home

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equity line of credit originations were fairly flat at $2 million, First Federal of Lakewood closed 2.5 times the number of home equity loans in the first three months of 2013 than it did in the first quarter of 2012, said Thomas J. Fraser, president and CEO. At the end of March, home equity loan originations for the year to date at First Federal totaled $10 million compared to $4 million for the like period a year ago, and a little more than $1 million in the first quarter of 2011. “Home values are starting to stabilize — and even are on the upswing — and I think people are seeing that there’s equity in their homes to borrow and lock in low rates,” said Ronald R. Webb, First Federal senior vice president and chief lending officer. SMR Research’s Mr. Feldstein sees reasons other than rising home prices for the increases in home equity lending. For one, the “fear factor” is lifting, he said. “The lenders got afraid of making the loans for some time because they were losing money on them,” Mr. Feldstein said. “They’d make investor presentations, and the investors would go, ‘Why’d you even get into that business? What’s wrong with you?’ “There was some fear among consumers as well,” Mr. Feldstein added, citing concerns such as, “Will it (the economy) get worse? How will I ever pay it back? I don’t want to get tossed out of my house.” Now, with increases in home values accelerating and consumers’ debt declining, people are increasingly confident, he said. The amount outstanding that people owe on home equity loans still is decreasing even as borrowing picks up, Mr. Feldstein noted, because refinanced mortgages remain “all the rage” and people typically pay down their existing home equity loans in the refinancing process.

Hello, Home Depot? Paying down debt is a common reason why people are borrowing against their homes again, bankers say. Home equity interest rates tend to be much lower than those of credit cards. Most of all, bankers say homeowners are using their equity to remodel their properties. As the owner of a company hired to do such work, Steve Klotzbach says, “I hear it all the time.” “They (homeowners) are saying, ‘We bought our house, now it’s not worth what we paid for it, now we have a little equity in it, (so) we’re going to turn it into what we want,’” said Mr. Klotzbach, who does business as Klotzbach Custom Builders and Remodelers in Fairview Park. The real surge in remodels began about mid-summer 2012, he said. “I think it’s just going to get better,” he said of remodeling demand. “I think the days of jump-

ing from house to house just to get a new bathroom or kitchen are gone.” KeyCorp also sees more small business clients leveraging their home equity to invest in their companies, Mr. Hays said. “The biggest thing we’re hearing from customers is they’re feeling more comfortable with obtaining credit, where they see the economy going,” he said. However, one thing home equity borrowing is not being used for today, insiders say, is lavish luxuries. Lenders are tougher, Mr. Feldstein said, and they’re looking for people with high credit scores. “With tighter credit standards, I think the people who would use home equity loans for no good reason are largely excluded from the market, which probably was not true for a while,” he said.

ATMs no longer Not every bank’s data reflects the turnaround. Some, including Fifth Third Bancorp and LNB Bancorp Inc., posted another full-year decline in their home equity balances in 2012. Many, though, expect the growth to spread and continue. “Equity in the housing stock is rising at a faster pace in 2013 than it was in 2012,” SMR’s Mr. Feldstein said. Plus, he said, “when mortgage interest rates rise, everything’s going to change. People will no longer refinance because huge numbers of borrowers are locked into historically low interest rates. So, if they need cash, they’ll use home equity loans. “The home equity loan revival we’ve seen so far is quite modest (compared) to what we will see down the road,” Mr. Feldstein predicted. A tougher lending environment also will push home equity borrowing upward, predicted Lou Tisler, executive director of Neighborhood Housing Services of Greater Cleveland, a nonprofit that provides programs and services around homeownership. “We still see a very constrictive market for first mortgages, and therefore, if you have an equity position, you’ll … have an easier time accessing a (home equity) loan for $20,000 than you would (a mortgage) for $60,000 or $100,000,” Mr. Tisler said. Still, most lenders don’t expect home equity lending to catapult to the levels seen before the credit crisis. “Equity has to rebuild for many homeowners since we had such a large fall,” First Federal’s Mr. Fraser said. “The pool of eligible properties and borrowers is smaller than it would have been a decade ago.” And most dismiss the notion that bankers will return to the practice of lending up to 100%, or even more, of home values. James Thurston, a spokesman for the Ohio Bankers League, said he’s hearing that 85% is the highest most bankers will go, a figure echoed by local bankers. Mr. Tisler has heard the same, and he’s glad. “It makes it a pretty good bet for the banks, and it’s good for the homeowner because they’re not overextending themselves,” Mr. Tisler said. “I think that the banks are working hard to not move back to where your home is your ATM.” ■

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Hollywood: ‘Captain America,’ ‘Draft Day’ begin filming here soon “They pay their bills, which is great, and they pay a fair price.”

continued from PAGE 1

of Diamond Services of Westlake, an environmental assessment and cleanup company, about the film production companies he says gave his young business a critical shot in the arm. Diamond Services is one of dozens of businesses that benefit when motion pictures such as Marvel Productions’ “Captain America: The Winter Soldier” bring actors and their entourage to town to film. With the introduction of the state motion picture tax credit in 2010, Ohio became a more attractive location for film producers. In its first two years, filmmakers spent $73 million in Ohio, according to a Cleveland State University study commissioned by the Greater Cleveland Film Commission. About 25% of that amount was in wages, while hotel rooms, car and equipment rentals, location fees and payments for a variety of other services, such as those from Diamond Services, made up the rest. In addition to “Captain America,” Summit Entertainment will be shooting a football movie, “Draft Day” in Cleveland this month and in June. In all, according to the film commission, the two films will generate 95 production days. Four years ago, when Mr. Diamond lost his job with a company that did environmental cleanups, he struck out on his own. He expected to make a living doing the inspections property owners and would-be property owners need to uncover the asbestos, mold and other hazardous materials that infect older buildings.

– Bernard Doyle, vice president, Fast Signs Cleveland, on movie companies “So when ‘The Avengers’ came to town, they wanted to film in a couple old buildings,” Mr. Diamond said. “Movie companies love filming in old buildings.” Marvel Productions, which shot parts of “The Avengers” in Cleveland in 2011, hired Mr. Diamond to assess one building for asbestos, mold and lead paint. He found a variety of problems. “So they said, ‘OK, can you clean that up and can you get steel plates to cover the holes in the floor?’ ” he recalled in a telephone interview last week. “That turned into, ‘Can you cut a hole in the cement and can you fix up this muddy spot for a parking lot where we want to park our trailers? “So I called up Ontario Stone and got some gravel and spread it around with a (tractor), and this turned into weed whacking, and then I was pressure washing Public Square,” Mr. Diamond said. “I was their go-to guy. For the two months they were here, I did $130,000 in business, and it was the shot in the arm that got my business going.” Last week, Mr. Diamond was working around the clock fixing a building the producers of “Captain America” are using to keep their pyrotechnics safe as they begin shooting later this month. Next up is covering over some graffiti and

pressure washing some concrete that’s covered with slippery mold and moss. Today, May 6, he said he would be in Detroit to assess the condition of an old auto plant for a different film studio. One of that film’s production staffers worked for Marvel when “The Avengers” was shooting and remembered him. “It’s completely changed how I do business,” he said.

Speak the language Mr. Diamond’s film industry success certainly is atypical. But it’s a vivid example of the kind of spending film companies bring to their location shootings and of the kind of company they like to do business with — those that are willing to be on call 24/7 and respond to last-minute requests by saying, “No problem.” With the filming season beginning, the film commission and the Council of Smaller Enterprises small business advocacy group are holding a free workshop tomorrow, May 7, to help local businesses learn what it takes to break into pictures. The film companies provide work for caterers, dry cleaners and equipment rental companies — and, of course, actors and extras. The film companies also rent cars, stay at hotels and eat in local restaurants. “This industry has its own legacy and culture,” said Ivan Schwarz, the film commission’s president and a former film company location manager, about the value of the workshop. “You’ve got to figure

out how to speak that language.” Kazell Pugh is still learning that language. His TLC Spring Water Co. has made a few sales to film companies and, he said, “We’re trying to do a lot of business with them.” The company provides bottled water to the movie crews. “It’s in the summer and it’s hot out there, and they need it when they need it,” Mr. Pugh said. While the film companies have earned a reputation as demanding customers, they pay promptly and are less price-conscious than most buyers. Mr. Schwarz also noted that the structure of the film tax credit encourages them to spend money with local businesses and professionals. A production company is eligible for a tax credit equal to 25% of the production expenditures, and a 35% credit for wages paid to Ohio residents up to a preset maximum. An individual production can get a maximum credit of $5 million, and the state can grant as much as $20 million in credits per year. “It’s a great business opportunity,” said Mr. Pugh, who attends film commission events to learn more about the business and meet production crews. “What you really have to do is build a relationship.”

Toss normal out the window Northeast Ohio has been courting film companies for more than a decade, but the activity got turned up several notches after the state Legislature approved the tax credit, which attracts film companies to a location like bees to honey. Like any tax credit, the film credit is somewhat controversial,

because it offsets state taxes the film companies might pay when they work in Ohio. However, Mr. Schwarz argues that bringing film production companies to Northeast Ohio is helping to build a local film industry and training local people for careers in fields such as animation, design and construction and videography. It’s even paying off for a sign maker, Fast Signs Cleveland. Vice president Bernard Doyle estimated his St. Clair Avenue print shop has made signage for eight movies in the last few years, including “The Avengers,” Spiderman” and “Against the Ropes,” a boxing movie that starred Meg Ryan. For “The Avengers,” Fast Signs made six dated travel posters for a set that would stand in for a long-closed travel agency in Switzerland. “When they come to town, I hand them my cell phone and home phone numbers and I tell them they can call me 24/7,” Mr. Doyle said. “If they call me at two in the morning, they obviously need something.” He recalled coming in at 4 a.m. one Saturday and working until 4 p.m. so a film company would have the signs for shooting on Sunday. “If you want to play in the movie business, a lot of the normal stuff goes out the window,” Mr. Doyle said. The reward comes later. “They pay their bills, which is great, and they pay a fair price,” Mr. Doyle said. “It’s a great business; it’s a lot of fun. It’s a breath of fresh air from ‘No Parking’ and ‘Stop’ signs.” ■

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15.0+ acres Ft. Myers, Florida

Site is located next to Gulf Coast Medical Center, part of Lee Memorial Health Systems, a leader in hospital services in southwest Florida. Property has been zoned and permitted for commercial development. Price - $8,750,000 OR Minimum 2.0 acres = $625,000 per acre Please write to: ATTN: Property Sale MAR-CO-HIO Box 668 Hartville, OH44632

PUBLIC NOTICE Requests for Proposals The City of Cleveland Heights has issued Requests for Proposals for development of 5 vacant City-owned properties : Lee Rd b/t Meadowbrook & Tullamore, Euclid Heights Blvd near Lee, SW corner of Cedar & Coventry, Noble Road near Greyton & “Turkey Ridge” site on Edgehill Road. RFPs at www.clevelandheights.com/index.aspx?page=365 or contact K. O’Donnell, [email protected] or 216.291.4885.

For daily on-line updates, sign up @ CrainsCleveland.com/Daily

Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card BUSINESS OPPORTUNITIES Thinking of Selling?

Seeking to Acquire Businesses

18 years Experience Free Market Analysis No Upfront Fees See our listings at www.empirebusinesses.com 440-461-2202

Locally based corporation seeks profitable businesses for sale in Northeast Ohio area with annual revenues between $200,000 and $5,000,000. Ready to pay between $500,000 and $2,000,000 cash. Present management invited to stay if they desire. All discussions will remain strictly confidential. Brokers welcome. Please contact us at 216-496-2843.

BUSINESS FOR SALE Mfg Co.: Consumable & Hi-tech Metal Products. Profit $625,000. Ask $3.4M. Service Bsns in Stark County: Highly-automated. Profit $275,000. Ask $850K. Don Dreisig - 330-492-6294

Crain’s Executive Recruiter Citizens Leadership Academy (CLA) seeks an Associate Head of School. The Associate Head of School will be responsible for all business operations associated with running and managing the school. CLA needs a leader with strong management and administrative experience. Qualified candidates should send their resumes and cover letters to [email protected]

BUSINESS SERVICES Mid Ohio Asphalt and Concrete Inc. Specializing in asphalt, concrete, and sealcoat work. We do commercial and residential work. 35 years experience, licensed, bonded, and insured

330-467-1378 or 330-963-4165

BUSINESS SERVICE OWNERS! Submit your business card to promote your service. To find out more, contact Denise Donaldson at 216.522.1383

20130506-NEWS--22-NAT-CCI-CL_--

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5/3/2013

2:30 PM

CRAIN’S CLEVELAND BUSINESS

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WWW.CRAINSCLEVELAND.COM

MAY 6 - 12, 2013

THEINSIDER

THEWEEK APRIL 29 - MAY 5 The big story: Gov. John Kasich isn’t letting a huge defeat in court suffered by the Ohio Bureau of Workers’ Compensation stop him from proposing a $1 billion rebate of workers’ comp premiums to public and private employers that pay into the system. Under Gov. Kasich’s proposal, about 210,000 employers would receive rebate checks; the rebates would be equal to about 56% of employers’ most recent annual premiums. The governor put forth the rebate proposal despite a March 20 ruling by Cuyahoga County Common Pleas Judge Richard McMonagle that a group of more than 270,000 Ohio employers that are part of a class-action lawsuit are entitled to $859 million in premium overpayments.

Community-minded: Lev Gonick was named the new CEO of OneCommunity, a nonprofit broadband provider he helped start a decade ago. Dr. Gonick will leave his current position as vice president of information technology and chief information officer at Case Western Reserve University. At OneCommunity, he replaces Scot Rourke, who stepped down to return to the private sector. Time for a change:

With another moneylosing quarter in the books, Diebold Inc. announced what it termed “a multiyear global realignment plan” involving near- and longterm actions aimed at reducing its cost structure by $100 million to $150 million. The maker of automated teller machines, bank security equipment and electronic voting machines said it expects to reinvest part of the savings “in research, development and the systems and infrastructure necessary to drive long-term growth and execute on electronic security and financial self-service strategies.”

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

A chance to get Smart at a smart price

Clinic tapped for its IT prowess, too

■ The Chapter 11 bankruptcy of Cleveland Corporate Services Inc. has entered its next chapter: liquidation. And those who buy Smart-brand whiteboards with any regularity know this turn of events presents a rare opportunity: In the liquidation auction begun last Thursday, May 2, dealers and end users can snap up Smart inventory at a price not determined by the whiteboard company. “Smart (Technologies) controls its product distribution and its dealers’ gross margin by maintaining strict price lists,” said Andy Babcock, director of inventory strategies for Tiger Group, which is handling the online-only auction. “It’s a highly controlled supply chain, low margin, and to buy at auction is a unique opportunity,” he stated in an email. Cleveland Corporate Services, which was in the process of creating a multimilliondollar headquarters when it filed for bankruptcy protection last Nov. 26, specialized in audiovisual sales and rentals for more than two decades. It was among Smart’s largest North American distributors. Live until 10:30 a.m. this Wednesday, May 8, the auction involves a range of whiteboards used in educational settings, as well as computers, service vans, office furniture, power tools and other assets of Cleveland Corporate Services. Bidders must register through Tiger Group’s website, www.soldtiger.com. For those who want to see what’s for sale, a preview is scheduled today, May 6, and tomorrow from 9 a.m. to 4 p.m. at 1821 E. 40th St. in Cleveland. — Michelle Park

■ The Cleveland Clinic’s brain power goes far beyond its medical expertise, as other health systems across the country now are asking the medical behemoth for help implementing their own electronic medical records. Glens Falls Hospital in Eastern New York said last week it had signed a consulting contract with the Clinic to help it put in place the Epic electronic medical record platform throughout its system. Glens Falls Hospital bills itself as the largest health care provider between Albany and Montreal “It’s actually a great relationship, and they can benefit from our experience,” said Jonathan Straffon, executive director of the Clinic’s MyPractice Healthcare Solutions, the group leading the work. “We’re a health care provider, not your typical consulting group.” The Clinic was one of the first health care systems in the country to install the Epic electronic medical record system, and the Clinic is credentialed by Epic to do this sort of work. The Clinic will offer Glens Falls Hospital on-site and remote support as the hospital works to fully deploy its electronic health record. Mr. Straffon said the Clinic has done bigpicture consulting in the electronic medical record realm for other health systems, but this is the first time it will put its own people on the ground to help with an installation. — Timothy Magaw

WHAT’S NEW

BEST OF THE BLOGS

Meeting of the minds: Lorain County Community College and Austen BioInnovation Institute in Akron formed a partnership that the groups suggest will accelerate the commercialization of medical technologies. Together, the organizations will expand access to capital to move medical discoveries to market by exploring the creation of a pre-seed fund, which would be built on the success of LCCC’s Innovation Fund, which gives startups grants. The fund would provide money to qualifying technologies developed through the research and development work of the two organizations.

Lights out: Joseph Kaveski is out as CEO of Solon-based Energy Focus Inc., a maker of energy-efficient lighting products. The company said Mr. Kaveski stepped down as CEO and that directors appointed James Tu — previously the nonexecutive chairman of the board — as executive chairman. Energy Focus’ board also appointed Eric Hilliard as president, a role he assumes in addition to his current job as chief operating officer. No lighting up: Smokers need not apply for a job at the MetroHealth System, as the taxpayersubsidized health system is the latest employer in Northeast Ohio to pledge not to hire tobacco users. The new policy doesn’t apply to current employees. External job applicants will need to confirm they don’t use tobacco products when applying for jobs at MetroHealth. New hires will be tested for tobacco use as part of the health system’s regular pre-employment health screenings.

Going public:

John Carroll University launched the public phase of a $100 million fundraising campaign, an aggressive push that already has brought in $57 million in cash and pledges to the private Jesuit university in University Heights. The campaign, dubbed “Forever Carroll,” will support scholarships, academics, campus upgrades and outreach opportunities that align with university’s Jesuit heritage.

Excerpts from recent blog entries on CrainsCleveland.com.

Keeping up with the Joneses

COMPANY: Buyers Products, Cleveland PRODUCT: Smooth Aluminum Barn Door Toolboxes Buyers Products, a maker of products for mobile equipment, says its new toolboxes come in both smooth and polished diamondtread aluminum and feature significant design improvements. For instance, the toolboxes now have a full perimeter D-bulb seal that protects against leaks. The underbody boxes that are 18, 24 and 30 inches wide have a single, left-swing door with a single point latch, the company says. Models that are 36 inches or wider have double barn doors and feature full access openings with no center post. A locking three-point, T-handle compression latch with low-friction roller also provides secure storage, according to Brian Smith, marketing manager at Buyers Products. The toolboxes boast TIG-welded corners for optimum finish. They’re available in 0.1inch thick, polished diamond tread aluminum or 0.125-inch thick smooth aluminum. Oversized 1/4-inch pins with 1-inch knuckle aluminum hinges are bolted and riveted for easy service, the company says. Visit www.BuyersProducts.com for information.

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

■ It looks like the Mayo Clinic has a case of Cleveland Clinic/Johns Hopkins envy. The Wall Street Journal reported that the Mayo Clinic, in Rochester, Minn., “has big plans to join other topflight medical centers in an expensive fight for well-heeled patients,” but it faces a problem: Its sleepy hometown needs a facelift. Mayo is proposing to invest $3 billion to $3.5 billion over 20 years to transform its big operation in Rochester into a “destination medical center.” But the clinic “thinks Rochester needs some major upgrading as well,” and Mayo officials “want Minnesota taxpayers to kick in $585 million to revamp the city’s infrastructure over 20 years to make Rochester more attractive for development.” The story noted that Johns Hopkins Hospital in Baltimore last year opened a $1.1 billion building partly financed by the president of the United Arab Emirates, Sheikh Khalifa bin Zayed al Nahyan and New York Mayor Michael Bloomberg. The Cleveland Clinic “has spent $712 million on expansion since 2011,” and the new facilities have helped attract patients from across the world, a Clinic spokeswoman told The Journal.

Make the most of these delays ■ Cleveland Hopkins International Airport won a little praise in a MarketWatch.com feature about airports that do a good job helping flyers pass the time during flight delays. In a section on fitness, the website has this to say: “Work out the frustration of a delayed flight with a turn at the speed bag or a soothing asana. San Francisco International

Pay is looking up for interns

■ Rejoice, budding young professionals — Northeast Ohio employers appear to be giving their interns a pay bump in 2013. The average pay rate for an internship in 2013 hovers at $13.27 an hour, up from $12.30 in 2012, according to a recent survey produced by the Employers Resource Council, a human resources service organization in Mayfield Village, and the Northeast Ohio Council on Higher Education. Pay had remained stable from 2011 to 2012. In addition, 85% of organizations with an existing internship program that responded to the survey said they plan to maintain or increase the size of their internship programs in 2013. That’s up slightly from 83% in last year’s survey and 77% in 2011. Engineering interns, according to the survey, are poised to be the highest paid in 2013, with an average hourly rate of $15.51. Internships in the nonprofit and human services sector weren’t as lucrative, with wages averaging $9.21 an hour. ERC and NOCHE first launched the survey in 2009. It so happens Crain’s is offering an extended internship to a promising business journalist. If interested, contact editor Mark Dodosh at mdodosh @crain.com. Did we mention it’s paid? — Timothy Magaw

and Dallas–Fort Worth International are among the airports offering free yoga classes, while Minneapolis-St. Paul International and Cleveland Hopkins International offer walking paths,” according to the story. “Others, including O’Hare International in Chicago and Detroit Metropolitan Wayne County, offer day passes to the fitness facilities at on-site airports (a Hilton and Westin, respectively) for under $20,” MarketWatch.com said. Features at other airports include aquariums, casinos, nap rooms and movie theaters.

Gitmo gets more complicated ■ Carlos Warner, a federal public defender in Cleveland, was quoted in a recent Reuters story about an escalating hunger strike by prisoners at the Guantanamo Bay prison camp. “The U.S. military counted 84 of the 166 prisoners as hunger strikers on Monday and was force-feeding 16 of them liquid meals through tubes inserted in their noses and down into their stomachs,” Reuters reported. They are protesting their open-ended detention at Guantanamo. “It’s escalated because the men are desperate and they’ve hit a breaking point,” said Mr. Warner, who is part of a team representing 11 Guantanamo prisoners. “Really what is behind all this is the president abandoned his promise to close Guantanamo,” Mr. Warner said. “The men know that. They’re desperate.” More than half of Guantanamo’s prisoners have been cleared for release, Reuters said, but Congress has put stringent restrictions on transfers.

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5/2/2013

2:18 PM

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All New Redesigned 2014

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Mercedes-Benz of North Olmsted is a part of The Collection Auto Group *Financing or leasing through Mercedes-Benz Financial is subject to tier one credit approval. 2014 E350 – 36 months, 10,000 miles per year. 25¢ per mile thereafter. $4,464 due at signing (1st payment $619, acq.fee $795 and down payment $3,050). $250 doc fee, tax and title additional. $54,400 MSRP. No security deposit. In-stock units only or while supplies last. Lease offer expires 5/31/13. Available to qualified customers only. © Mercedes-Benz USA, LLC. †Based on MBUSA YTD regional sales results 3/31/13.

©2013 Porsche Cars North America, Inc. Porsche recommends seat belt usage and observance of all traffic laws at all times. Vehicle shown includes optional equipment available at additional cost.

Prepare for sunshine’s long-awaited return. Lease a new Boxster for $599/month.

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$599 per month for 24 months at 5,000 miles per year, .30¢ per mile after 10,000 miles, $1,494 due at signing (First payment $599, acq. fee $895 and $0 cash down). Tax, title and doc fee additional. Payment or upfront fees do not include sales or county tax. Financing is subject to credit approval. Stock# PD114520. MSRP $55,300. Security deposit waived. Offer good through 5/31/13.

20130506-NEWS--24-NAT-CCI-CL_--

5/3/2013

2:49 PM

Page 1

The BMW X1 xDrive28i. Sporty. Sophisticated. Eco-Savvy. Say hello to the efficient side of the X1. It's easy to embrace your green side with fuel-saving technologies like Brake Energy Regeneration, Auto Start-Stop and ECO Pro mode. And the best part? You get great fuel economy without ever sacrificing performance.

Lease $ From:

/ 36 mo. lease* 359 mo.

240 horsepower, 2.0-liter, TwinPower Turbo, inline 4-cylinder engine, xDrive, intelligent allwheel drive.

BMW Cleveland

BMW Cleveland

6135 Kruse Dr. • Solon • 1-866-210-6710 www.BMWCleveland.com Lease financing available on 2013 BMW X1 xDrive28i vehicles, at BMW Cleveland on leases assigned to BMW Financial Services NA, LLC/Financial Services Vehicle Trust through May 15, 2013. Loyalty Cash is a $750 credit against the MSRP of the loan or lease on a X1 xDrive28i through May 15, 2013. $750 Loyalty Cash available for returning BMW customers only. Total due at signing $3,658.00 includes monthly lease payments of $359.00 for 36 months, $2,500 down payment, $799 acquisition fee. Based on MSRP of $38,395.00. Excludes tax, title, license and registration fees. Program available to qualified customers and not everyone will qualify. Subject to credit approval At lease end, lessee will be liable for disposition fee ($350.00), any excess wear and use as set forth in the lease agreement and excess mileage charges of $0.20 per mile for miles driven in excess of 30,000 miles. Purchase option at lease end for $22,653.00 excludes taxes.

BMWCleveland.com 440-542-0600

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LAND ROVER SOLON 6137 KRUSE DR., SOLON • 1-866-210-6707

4235 total out of pocket.

www.landroversolon.com

CLEVELAND * 42 month lease/10,000 miles per year. $2,995 down plus bank fee, plates, doc and applicable sales tax. MSRP $59,645 $4,719 cash or trade due at delivery plus tax. With tier 1 credit thru Jaguar Financial Services. Good until 5/31/13.

6137 KRUSE DR., SOLON (440) 542-0601 www.jaguarcleveland.com

* Lease rates shown for Range Rover Sport Sport to qualified buyers through US Bank. $1,995 down plus bank fee, doc fee, license fees and tax. Total due at delivery $3,120 plus local taxes. Actual rates and terms may vary. All amounts shown are estimates, retailer sets actual amounts. Lessee responsible for insurance, maintenance, excess wear and excess mileage over 40,000 miles at $0.30 /mile. Based on MSRP of $63,145 (including destination and delivery). Lessee has the option to purchase vehicle at lease end at price negotiated with retailer at signing. For special lease terms, take new vehicle delivery from retailer stock by 5/31/13. Termination fee may apply. See your Land Rover Retailer or call 1-800-FIND-4WD for qualifications and complete details. ©2013 Jaguar Land Rover North America, LLC.

6135 Kruse Dr. • Solon • (440) 542-0600 • www.DavisAutomotive.com