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$2.00/FEBRUARY 11 - 17, 2013
THE STATE BUDGET: HEALTH CARE ANALYSIS
Expansion of
Medicaid could
help employers
Businesses might
INSIDE
Utica is where it’s at
not have to pick
Companies
as
up tab for workers such
Momentum,
led by presiwith low incomes
dent and CEO
By TIMOTHY MAGAW
[email protected]
MARC GOLUB PHOTOS
Matt Cole’s Fat Head’s Brewery & Saloon has expanded four times since opening in North Olmsted in 2009.
THEY’RE BREWING
SOMETHING SPECIAL
Craft beer is a rapidly growing market; Ohio could
be home to 100 specialty pubs by the end of 2013
By KATHY AMES CARR
[email protected]
M
06
att Cole sees the glasses halfempty as a positive. It means
customers are sating their thirst
with one of his artisan beers.
Not that Mr. Cole hasn’t faced a challenge or two meeting consumer demand
since his Fat Head’s Brewery & Saloon
opened in North Olmsted in 2009.
The business has undergone four expansions, including the addition last April of a
$2 million, 22,000-square-foot production
operation in Middleburg Heights. Mr. Cole
is working with the building’s landlord to
keep vacant an adjoining 22,000 square
feet, which he expects to use in the next
two to three years.
“It’s insane, actually,” Mr. Cole said of
the company’s growth.
Mr. Cole’s situation is a refrain echoed
by craft brewers throughout Northeast
Ohio, who have been experiencing doubledigit and even triple-digit percentage
The brewing area at Fat Head’s Brewery &
Saloon in Middleburg Heights.
increases in craft beer output over the last
couple years.The momentum aligns with
national trends, which reflect craft brewers’ market share gains as more consumers
eschew the predictable Millers and Budweisers for more complex, flavorful beer.
“I don’t see the growth of craft beer
slowing down anytime soon,” Mr. Cole
said. “People are trading up because craft
beer is an affordable luxury.”
See BREWING Page 19
Republican Gov. John Kasich’s
decision to back the controversial
expansion of Medicaid under President Barack Obama’s health care
overhaul could prove beneficial to
some employers, though the entirety of the health care reform law still
might be a tough swallow for many
in the business community.
Gov. Kasich last week urged state
lawmakers to move forward with an
Frank Tsuru,
right, are
focusing their
shale drilling
efforts on eastern Ohio, where the
profits tend to be much higher.
Plus, a recap of the sold-out Shale
Summit. PAGES 3, 18
expansion of the government-run
health care program, which would
extend coverage to 366,000 uninsured Ohioans.
See MEDICAID Page 8
THE STATE BUDGET: SALES TAX ANALYSIS
Negatives could arise
from wider tax base
Providers of services
wary of dampening
effects on business
By JAY MILLER
[email protected]
While the cuts in state income tax
rates that Gov. John Kasich proposed last week as part of his 20142015 budget have met with strong
support in the business community, the other part of his tax reform
plan — to extend the sales tax to almost all business and professional
services — is drawing considerable
skepticism.
It’s too early for lobbyists to
descend on the Statehouse, because
few groups have had a chance to digest the entire tax package, unveiled
last Monday, Feb. 4. But some business executives are voicing concern
about the plan, while several of the
state’s key business associations
have issued “wait-and-see” statements, signaling they need time to
evaluate the net impact of the tax
actions on their members.
It is likely that state legislators will
face some of the most intense lobbying they have ever seen — after
all, one of the new business services
that will be taxed is lobbying.
See REFORM Page 6
0
NEWSPAPER
74470 83781
7
SPECIAL SECTION
SMALL BUSINESS
Many companies are hiring etiquette pros to help
their employees mind their manners ■ Pages 13-17
PLUS: THE RISE OF ARBORWEAR ■ TAX TIPS ■ ADVISER ■ & MORE
Entire contents © 2013
by Crain Communications Inc.
Vol. 34, No. 6
20130211-NEWS--2-NAT-CCI-CL_--
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CRAIN’S CLEVELAND BUSINESS
COMING NEXT WEEK
FEBRUARY 11 - 17, 2013
ON THE ROAD
Clevelanders, on average, spend 31 hours a year stuck in traffic, which is
the lowest figure among Ohio’s three largest cities, according to data published
by the Texas A&M Transportation Institute. The institute measured traffic
congestion data for 101 metro areas, producing metrics that tally the cost of
our time on the road. Washington, D.C., was the most-congested city. Here’s a
small slice of the data for Ohio metro areas (the stats are per auto commuter,
and the rankings are nationally):
Go shopping with us
Next week’s special section
will look at the future of retail,
including a look at the region’s
malls and the push to buy
local. We’ll also feature technology trends in retail, bargain
hunting and more.
City
REGULAR FEATURES
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What’s New..................23
Yearly delay
Rank
Congestion cost
Rank
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40 hours
25
$847
29
Cincinnati
37 hours
37
$814
33
Cleveland
31 hours
50
$642
57
Toledo
26 hours
71
$555
73
Dayton
24 hours
80
$507
81
Akron
23 hours
83
$483
85
SOURCE: 2012 ANNUAL URBAN MOBILITY REPORT; MOBILITY.TAMU.EDU/UMS
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20130211-NEWS--3-NAT-CCI-CL_--
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Page 1
FEBRUARY 11 - 17, 2013
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
3
Ferry Cap puts legal screws to union
Lawsuit alleges some employees have refused overtime in protest of relocation
By MICHELLE PARK
[email protected]
Facing what it calls “dire” financial impact if it cannot fulfill orders
in a timely manner, a Lakewood
manufacturer has sued some of its
employees and their union over
claims the employees are refusing
to work overtime because they oppose a relocation.
According to the lawsuit filed in
U.S. District Court last Tuesday,
Feb. 5, Ferry Cap & Set Screw Co. is
seeking an injunction against “an
illegal strike being waged” by employees in violation of a collective
bargaining agreement that con-
tains a no-strike clause and provides for arbitration of grievances.
Named as defendants are the
union, International Association of
Machinists and Aerospace Workers, AFL-CIO, District Lodge 54;
INSIGHT
union district representative Jack K.
Baker; and 12 men who are employed by Ferry Cap as operators of
its heading equipment, which is
used to form the heads of fasteners
such as screws.
Those men, Ferry Cap alleges in
its complaint, “have been engaged
See FERRY CAP Page 7
Original
goal was
slightly
off mark
Previous owners of
Accurate Group had
lofty hopes, which
have been exceeded
By CHUCK SODER
[email protected]
HAL STATA PRODUCTIONS
Frank Tsuru, president and CEO of M3 Midstream, known as Momentum, speaks at the Shale Summit on Feb. 5.
By DAN SHINGLER
[email protected]
MOMENTUM
H
IS BUILDING
M3 Midstream believes Utica region
is nation’s best investment in shale
ouston-based M3 Midstream is in the midst of
spending $1 billion across eastern Ohio in a rush to
bring pipelines and equipment online to process
natural gas from the Utica shale region, which the
company known as Momentum expects to be the star of the
nation’s shale gas and oil industry.
Drillers pursue the most profitable endeavors they can find,
and that means coming to the Utica shale, said Momentum
president and CEO Frank Tsuru, who spoke last Tuesday, Feb.
5, to nearly 600 attendees of Shale Summit 2013, an event organized by Crain’s Cleveland Business and public broadcasting organization ideastream.
See MOMENTUM Page 18
THE WEEK IN QUOTES
“I don’t see the
growth of craft
beer slowing down
anytime soon.
People are trading
up because craft
beer is an
affordable luxury.”
“We would have
rather found out
that there was a
character issue
then, than three
or five months
into that person’s
tenure.”
— Matt Cole, owner, Fat
Head’s Brewery & Saloon in
North Olmsted. Page One
— Ronald Fountain,
chairman of the board of
trustees, The MetroHealth
System. Page 4
“If you’re constantly
fixing your clothes,
you’re not paying
attention; you’re more
likely to get into an
unsafe situation —
that doesn’t happen
with the (Arborwear)
clothes.”
— Jim Skiera, executive director
of the International Society of
Arboriculture. Page 13
“The overall message is
that when you are eating
a meal, they really do look
at how you eat. I’m not
sure people realize that
you are judged on your
manners and your
handshake.”
— Laura C. Cessna, assistant director,
student development and leadership,
Office of Student Affairs, Northeast
Ohio Medical University. Page 14
Four years ago, the previous owners of Accurate Group gave Paul
Doman what might have seemed
like a lofty goal: Grow the company’s
sales to $50 million from $6 million,
and increase profits to $5 million by
2014.
Maybe they should have set the
bar higher. The provider of real
estate transaction services hit both
targets last year.
Accurate Group’s rapid growth
has led to the creation of 61 jobs at
its headquarters in Independence
since Evolution Capital Partners
bought a majority stake in the company in February 2009. It also generated a lot of cash for the Beachwoodbased private equity firm: An
investment group led by ABS Capital
Partners paid $55 million to acquire
a majority stake in Accurate Group
last December.
In the process, Evolution Capital
sold all its shares in Accurate Group,
and an undisclosed amount of money was added to Accurate Group’s
balance sheet. The company also
took on an undisclosed amount of
debt, said Mr. Doman, Accurate
Group’s CEO.
The influx of money, along with
advice from Baltimore-based ABS
Capital, should help Accurate Group
keep growing, Mr. Doman said. The
company aims to increase sales to
$75 million this year from $55 million last year.
“We’re expecting more growth
this year and next year, frankly,” he
said.
The company plans to hire more
managers, sales people, software developers and people to manage the
company’s information technology
infrastructure, Mr. Doman said. Accurate Group employs a total of 180
people nationwide, up from about
80 when Evolution Capital bought its
stake in the company.
See ACCURATE Page 8
20130211-NEWS--4-NAT-CCI-CL_--
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
MetroHealth is lining up
interviewees for CEO post
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MENTOR, OHIO
By TIMOTHY MAGAW
[email protected]
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The MetroHealth System plans to
bring in a slate of candidates “as soon
as possible” to interview for its CEO
post, and it hopes to have its next
leader in place by mid-year, according to Ronald Fountain, chairman of
the health system’s board of trustees.
After a nearly year-long search,
MetroHealth lost its top choice last
November when Dr. John Brennan,
CEO of Newark Beth Israel Medical
Center in New Jersey, suddenly reneged on his commitment to take
over the health system subsidized
by Cuyahoga County.
Dr. Fountain said the search for
Mark Moran’s replacement is on a
“pretty good path,” and the committee is lining up schedules to bring in
the candidates. Late last month, the
board installed Dr. Edward Hills, the
health system’s chief operating officer, as interim CEO after Mr. Moran
notified the board in December he
wouldn’t stick around until his permanent successor was named.
Dr. Fountain said the search
committee plans to bring in fewer
than 10 prospects — perhaps five to
seven, though he couldn’t provide
an exact number — to interview for
the post. He wouldn’t disclose the
identity of the candidates, but noted the search committee wouldn’t
turn away anyone who was qualified “whether they’re local or from
outside of the city.”
Dr. Fountain said MetroHealth is
sticking with its search firm, Witt
Kiefer, which brought Dr. Brennan
to MetroHealth’s attention. He noted there was nothing MetroHealth
or the search firm could have done
to predict Dr. Brennan’s decision to
back out of the job.
“We would have rather found out
that there was a character issue
then, than three or five months into
that person’s tenure,” he said.
Dr. Fountain said the search has
piqued the interest of candidates
who weren’t necessarily interested in
the post during the first go-around;
he noted that “the fact that somebody with Brennan’s profile was
committed to do the job and was interested in it, I think that helps.”
Dr. Brennan was poised to earn
an annual salary of $685,000 —
$135,000 more than his would-be
predecessor, Mr. Moran. The value
of Dr. Brennan’s total compensation package would have been be-
tween $750,000 and $1.1 million.
Dr. Fountain’s term on MetroHealth’s board will expire in March,
but he said he would continue to
assist with the pursuit for the health
system’s next leader should the
search committee need his help.
Books look better
Meanwhile, the health system’s finances, which have been dinged in
recent years due to the rising
amount of uncompensated care it
provides to the county’s indigent,
are on the upswing, according to Dr.
Fountain. Once the health system’s
2012 books are audited, he expects
MetroHealth to have met its goal of
posting a $10 million surplus.
In addition, MetroHealth’s books
for 2013 are expected to be buoyed
by an infusion of new dollars thanks
to federal regulators signing off recently on a complex legal maneuver
that could extend Medicaid coverage to as many as 30,000 people in
Cuyahoga County. The move will let
the health system receive some
compensation for care for which it
hadn’t been paid in the past.
Last year, the health system provided $130 million in uncompensated care.
■
Apartments owners are diversifying
investments with out-of-region buys
By STAN BULLARD
[email protected]
At a time when apartments are
the favored property type of investors and lenders as occupancies
swell and rents rise after the collapse
of the housing market, three local
apartment owners are finding places
to grow — outside Northeast Ohio.
Summit Multicapital LLC in
Akron announced Jan. 16 it has acquired the 169-unit Mosteller Mansion Estates in Hickory, N.C., for $18
million. Meantime, an affiliate of
Apollo Management in Pepper Pike
has bought the 327-unit Georgetown Apartments in Kettering, Ohio,
for $12.7 million from Connor
Group of Centerville, Ohio, according to the Dayton Business Journal.
Burton Carol Management LLC
in Warrensville Heights also added
to its portfolio of properties, which
are in Northeast Ohio, Michigan
and Florida, with the acquisition of
Beachwalk Apartments in Novi,
Mich., according to Joy Anzalone,
chief operating officer.
The 240-unit complex in suburban Detroit was purchased in a distressed sale from Huntington National Bank, Ms. Anzalone said.
The apartment owners are following the tried-and-true investment
strategy of tapping different geographies to diversify their holdings.
In Summit Multicapital’s case, it
is pursuing a plan to acquire properties in areas with population and
rent growth, according to Edward
Newman, Summit CEO.
“We’re buying in areas that are
growing because people are attracted by the lifestyle, areas where people want to live, and in secondary
markets,” Mr. Newman said.
The Hickory, N.C., property is in
the popular Lake Norman area outside of Charlotte, but it’s removed
from the Charlotte market itself
where Summit would need to compete with large, publicly traded real
estate investment trusts, Mr. Newman said.
Summit has been buying properties in North Carolina for the last six
years, and the Hickory property is
near a 312-unit property that it
owns in Mooresville, N.C., Mr.
Newman said. Summit also owns
about 800 units in the suburbs of
Denver, and this latest acquisition
means about half of its 3,250-suite
portfolio is in the Akron area and
the rest outside the region.
In Burton Carol’s case, it knows
the Detroit area from other properties it has owned there in prior
firms that it sold. It is a larger metropolitan area than Cleveland, but
within a two-hour drive or flight
that Burton Carol uses to define its
target markets, Ms. Anzalone said.
Although Beachwalk Apartments
was bank-owned, Ms. Anzalone described it as a gem because it is located on Walled Lake, an inland
lake near Detroit. Burton Carol had
to compete with 19 other offers for
the property.
“There is exuberance in the market, but you need to be methodical,” Ms. Anzalone said. “We had no
problem rising to the price. But you
want to buy at a price that will allow
you to own a property for years.”
Burton Carol is continuing to
look for other opportunities outside
the region, she said, but is shying
from one of its favorite markets,
Florida, because of the rise in selling prices there.
Apollo did not return two calls by
Crain’s deadline last Friday, Feb. 8,
on the Dayton acquisition.
Buying outside the region is a
perfect balance to Northeast Ohio’s
apartment market, which lacks
population growth and has rents
lower than in larger cities.
That’s the view of Michael Barron, a vice president for investments at the Marcus & Millichap
real estate brokerage, which has an
Independence office.
“In Northeast Ohio you get stability and cash flow,” Mr. Barron
said, because units are less costly
than in other areas, but the region’s
slow-grow apartment market frees
it from overbuilding typical in areas
with population growth.
“In other areas, you get price
appreciation for the units and rent
growth,” Mr. Barron said.
Ralph McGreevy, executive vice
president of the Northeast Ohio
Apartment Association trade group,
said owners of larger apartment
portfolios can compete effectively
for properties outside the region
because of the market’s current
strength. He considers the drive to
buy outside Northeast Ohio a road
well-traveled by property owners in
the past. It’s now being trod by another group of growing apartment
owners, Mr. McGreevy said.
■
Volume 34, Number 6 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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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
FEBRUARY 11 - 17, 2013
Congratulations to our Reform: Trade groups are cautious
2012 Top Producers
continued from PAGE 1
Lawrence F. Kell
Jack W. Drescher
Thomas K. Gustafson
Brian J. Lenahan
Lawrence A. Kell
Russell P. Rogers
Gregory B. West
Diana C. Golob
Kevin J. Kuczynski
Christopher J. Hondlik
+1.216-861-7200
www.ostendorf-morris.com
THE CLEVELAND ORCHESTRA
ˇ
DVORÁK’S
“NEW WORLD”
SYMPHONY NO. 9
FEB 21 -- 24
SEVERANCE HALL
| clevelandorchestra.com
216-231-1111
Some of the closest scrutiny will
come from providers of businessto-business services, such as
accountants and attorneys. But the
expansion would hit most service
businesses.
“That would really stink,” said
Jackie Koral, vice president of
Cleveland Cinemas, which operates
eight theaters in Ohio, many of
which already pay a city admissions
tax. “If they were to get rid of the
city tax and go to a state tax, that
wouldn’t be so bad. But to tack on
another tax, that would be horrible
because, of course, that gets passed
on to the consumer.”
Attorney Philip Eichorn, vice
chairman of the Ohio Chapter of
the American Immigration Lawyers
Association, said his organization is
taking a stand against expansion of
the sales tax.
“When you are a sole practitioner or small business entity, most of
your clientele is individuals,” Mr.
Eichorn said. “What (Gov. Kasich) is
doing is not just forcing a lawyer to
collect the sales tax, but increasing
the cost of legal services.”
Ed Sitter, a real estate broker in
Toledo and chairman of the legislative and government affairs committee of the Toledo Board of Realtors, also opposes the new tax on
his services. He worries that while
the increase in sales tax is accompanied, for now, by a drop in the income tax, that offset won’t last. Mr.
Sitter fears the income tax eventually will increase — but the sales tax
will remain.
He also questions how it would
work in practice.
“In the real estate industry, we’re
just starting to bounce back from
the housing debacle, and this will
Turns out the distance between
middle management and upper
management is one degree.
Executive MBA Open House
Thursday, Feb. 21, 2013
12:00 p.m. – 3:15 p.m.
Register at:
weatherhead.case.edu/emba
or call 216.368.6411.
“That would really stink.
If they were to get rid of
the city tax and go to a
state tax, that wouldn’t
be so bad. But to tack on
another tax, that would
be horrible.”
– Jackie Koral, vice president,
Cleveland Cinemas
add more cost to closing a house,
something we can’t necessarily afford to do right now because margins are so thin,” Mr. Sitter said.
“We … in the short run may have to
absorb those costs and not pass
them along to consumers.”
Details, details
Although he is not yet taking a
position on the governor’s proposal, attorney Larry Oscar, CEO of
Hahn Loeser & Parks LLP, said he
was concerned that the complexity
created by the broadening of the
sales tax would damage the governor’s campaign to brand Ohio as a
more business-friendly state due to
what Mr. Oscar called “unintended
consequences.”
Mr. Oscar wondered, for instance, how attractive it would be
for a multistate law firm to base
business in Ohio, where the sales
tax would apply, rather than initiating legal actions from other states
without a tax on legal services.
Big trade associations such as the
Ohio Society of Certified Public
Accountants and Ohio State Bar
Association so far are reacting in a
measured way to the governor’s
proposal, even though they long
have opposed expansion of the
sales tax.
“This is a pretty comprehensive
tax reform package that we want to
carefully consider,” said Barbara
Benton, vice president for government affairs for the accounting society. “We want our members to
have a chance to evaluate it.”
The bar association is similarly
cautious.
“While historically the Ohio State
Bar Association has opposed this
expansion of the sales tax as an undue burden on the consumers of legal services, we will examine these
new proposals before making any
decisions about them,” it said in a
prepared statement on its website.
“The devil may very well be in the
details, which is why understanding
the details is so important.”
Tradeoffs abound
At present in Ohio, only specific
services incur a sales tax, including
cell phone service, carpet cleaning
and laundry services, and printing
and photocopying services.
Under Gov. Kasich’s plan, all services would be taxed, except for a
few that specifically would be exempt. Exemptions would be focused mostly on services considered necessities of life, such as
medical and health care services, as
well as carpentry, plumbing and
other construction services, though
the exemptions would extend, less
obviously, to dance, tennis and other personal instruction services.
Businesses and consumers
would pay a sales tax on most other
business and professional services,
ranging from legal and accounting
services to debt collection and advertising agency services. The tax
also would apply to theater admissions, credit bureaus services and
bank service charges.
At the same time, the state sales
tax rate would drop to 5% from
5.5%. Locally imposed sales tax
rates also would be cut through a
formula designed to adjust most of
the gains that counties and transit
systems would see because of the
expansion of the tax base. The formula would give local agencies an
estimated 10% increase in tax collections.Gov. Kasich has said expanding the sales tax to services is a
recognition that the economy —
and the things people buy — have
shifted dramatically from goods to
services. Nationwide, some tax experts have argued that only by taxing services can the sales tax remain
a meaning source of revenue for
states, because the purchase of
goods has declined as a percentage
of household income, while the
purchase of services has grown.
Mark Engel, partner in charge of
the Cincinnati/Dayton office of
Columbus-based Bricker & Eckler
LLP, sees a big debate ahead.
Mr. Engel said because the sales
tax is a flat percentage tax on goods,
lower-income people tend to spend
a greater share of their income on
purchases and end up paying a
greater share of their income on
sales tax. He also sees arguments
that might be used to oppose the
sales tax expansion on business-tobusiness, or b-to-b, transactions.
“The situation on b-to-b is an interesting issue because there is a
train of thought out there that the
sales tax should only be on final
consumption,” he said.
“There is one train of thought
that any business-to-business
transaction is not final consumption and therefore any business
transaction ought not to be subject
to (sales) tax,” Mr. Engel said. “Fortunately or unfortunately, depending on your perspective, (there is
the idea that) business has to pay its
fair share of taxes.”
End to the goofiness?
Expanding the sales tax base to
lower income taxes has motivated
several states led by Republican
governors to take a look at broadening their sales taxes; notable among
them are Louisiana, North Carolina
and Virginia. They have embraced
the idea advanced by conservative
economist Arthur Laffer that cutting income taxes and raising consumption taxes such as the sales tax
will boost a state’s economy.
“We strongly disagree with that
presumption,” said Michael Mazerov, a senior fellow specializing in
state fiscal policy at the Center for
Budget and Policy Priorities, a progressive think tank in Washington,
D.C. “There are good reasons to
think it will be damaging to state
economies.”
The center argues that a sales tax
disproportionally can hurt lowerincome people more than an income tax.
One group that may welcome the
new tax for uniformity sake,
though, is landscapers. Right now,
said Matt Ellis, president of the
Ohio Lawn Care Association, some
landscaping services are taxed and
others are not.
“If we do a major landscaping,
we would (apply the sales) tax to
plant materials but not on the
pavers,” he said.
Similarly, a landscaper would apply the tax to putting in a trellis but
not a fence.
“It’s really goofy,” he said.
■
20130211-NEWS--7-NAT-CCI-CL_--
2/8/2013
2:02 PM
Page 1
FEBRUARY 11 - 17, 2013
WWW.CRAINSCLEVELAND.COM
CRAIN’S CLEVELAND BUSINESS
7
Ferry Cap: Two union members wrote letter opposing move in 2012
continued from PAGE 3
in a concerted refusal to work overtime to protest the company’s decision to transfer its heading equipment to a different facility.”
Ferry Cap makes critical strength
fasteners used primarily in the
heavy equipment and automotive
industries and employs an estimated 56 hourly production and maintenance employees at its Lakewood
operations, according to the lawsuit.
The company’s website says Ferry Cap was founded in 1906 and is
a supplier for companies such as
Caterpillar, Mack Trucks and John
Deere.
Ferry Cap’s lawsuit states that
the header operators’ refusal to
work overtime “jeopardizes the
company’s ability to fulfill customer orders in a timely manner.”
It adds that an inability to fulfill orders in a timely manner “will result
in Ferry Cap incurring significant
financial penalties under supply
contracts with customers, the loss
of goodwill and the loss of customers.”
“The potential overall financial
impact of the work stoppage on the
company is dire and could affect
the company’s ability to continue
business operations altogether,”
the lawsuit maintains.
An attorney for Ferry Cap
declined comment for this story,
and two phone messages left for
the company’s director of operations were not returned by Crain’s
deadline last Friday, Feb. 8.
Root of the dispute
About a year ago, on Feb. 16,
2012, Ferry Cap announced to the
union its intention to move its
heading equipment to the Nelson
Stud Welding plant in Elyria, which
is owned by Doncasters, the same
parent company of Ferry Cap.
Shortly thereafter, on March 9,
2012, two union members wrote a
letter to the parent company
protesting the move of that equipment, Ferry Cap’s lawsuit says.
A copy of that letter reveals the
authors of the letter worried that
moving the header group would
not achieve cost savings for the parent company, but instead would
cost Doncasters profits. They also
wrote that if any of the experienced
workers who set up and run header
machines were to decline to relocate to Nelson Stud, “we have more
than 50% chance of losing our main
customer base … due to lateness
from lack of experienced people.”
“We as a whole just hope that
this is not being done to enhance
another companies [sic] bottom
line that does not perform as well
as Ferry Cap,” the letter read.
“Something just doesn’t smell right
to us.”
In August 2012, the union filed a
grievance protesting the announced transfer of the heading
equipment.
Ferry Cap, the company says in
its lawsuit, has been and is now
ready and willing to process the
disagreement between the parties
through the grievance procedure.
Indeed, its lawyers wrote, the grievance is scheduled for arbitration
this March.
In support of the union’s grievance, Ferry Cap alleges, the header
operators “began to refuse to work
any overtime … to pressure the
company outside the scope of the
grievance/arbitration procedure.”
Ferry Cap responded on Jan. 18
by sending a letter to Mr. Baker, the
union representative, protesting
what it calls a “work stoppage.” It
also asked the union to inform the
header operators that the union
does not condone or support their
activity and that their “strike” violated the collective bargaining
agreement, the lawsuit says.
“The union should instruct the
header operators to resume their
normal work habits and accept
overtime in accordance with their
usual practice,” Ferry Cap’s letter to
Mr. Baker read.
Despite the letter, “the union has
refused to take any action to stop
the concerted refusal of the header
operators to work overtime, thereby condoning this work stoppage,”
the company’s lawsuit alleges.
Ferry Cap warned the union that
it could face liability — and monetary damages — for a breach of the
collective bargaining agreement.
According to the lawsuit, the collective bargaining agreement provides that there shall be no strikes,
stoppages or slowdowns of work by
the union so long as the agreement
is in effect. The agreement is effective through Feb. 21, 2016.
The lawsuit also notes: “No provision of the agreement limits the
company’s ability to require employees to work overtime.”
Legal experts weigh in
One local labor and employment
attorney thinks Ferry Cap has a
strong case, provided that the facts
in the company’s complaint are
true.
“The employer seems to have all
their ducks in a row,” said Vincent
T. Norwillo, a partner in the Cleveland office of Gonzalez Saggio &
Harlan LLP out of Milwaukee.
“They would seem to have a legitimate shot at convincing the court
to issue at least a temporary restraining order.”
To obtain what Mr. Norwillo said
is “very rare relief” from the court,
Ferry Cap must show — and seems
to have shown — that a no-strike
clause exists, that its contract provides for the mandatory arbitration
of contract disputes and that
employees’ refusal to work overtime is damaging or will damage
the company irreparably.
“This doesn’t happen every day,”
“The employer seems to
have all their ducks in a
row.”
– Vincent T. Norwillo, partner,
Cleveland office of Gonzalez
Saggio & Harlan LLP
Mr. Norwillo said. “The right to
strike is the single most powerful
economic bargaining tool available
to a labor organization, and courts
have been loath to restrict the right
of unions. But since Boys Markets
(a 1970 lawsuit), they’ve recognized
this rare exception.”
Another local labor and employment attorney, David A. Campbell,
said he’s surprised Ferry Cap took
to suing the employees rather than
disciplining — and even firing —
them. He also said he was surprised
the collective bargaining agreement may not require mandatory
overtime because most union contracts do.
“I would simply handle it at the
plant and discharge for subordination,” said Mr. Campbell, a partner
in the Cleveland office of Columbus-based Vorys, Sater, Seymour
and Pease LLP. “Either this company doesn’t have the appropriate
contract … or they’re just simply
not responding the way a typical
employer would.”
In the company’s letter to union
rep Mr. Baker, Ferry Cap’s director
of operations wrote that the company is considering discipline of
the header operators up to and including termination.
One possible reason for Ferry
Cap’s decision to sue, rather than
terminate: Header operator jobs
are skilled jobs, and the manufacturing work force is not exactly robust right now.
“Companies like this — screw
companies — typically have rather
sophisticated machinery that requires some complex skill sets,
things like setting up the machine,
reading blueprints,” said Judith
Crocker, director of work force and
talent development for MAGNET,
the Manufacturing Advocacy and
Growth Network of Cleveland.
“Those people are not out there,
and the ones who are, are people
who used to work for less sophisticated companies (and) need training,” Ms. Crocker. “If they had vacancies to fill and they were on a
tight deadline, they would have a
challenging time finding qualified
workers to come in and immediately be able to do the job.”
■
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20130211-NEWS--8-NAT-CCI-CL_--
8
2/8/2013
2:56 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
FEBRUARY 11 - 17, 2013
Medicaid: Government will pay full tab Accurate: Business ‘exploded’
continued from PAGE 1
In his announcement, the
conservative governor cautioned he
still was “not a supporter of Obamacare,” but stressed the role of the
expansion in propping up the
finances of hospitals that care for
the uninsured as well as the importance of $1.4 billion in federal funds
that would flow into the state as
part of the deal.
Those broad strokes led the
Greater Cleveland Partnership, the
region’s chamber of commerce, to
throw its support behind the
expansion just a few days before the
governor’s announcement.
Business groups long have argued that the cost of caring for the
uninsured already has been shifted
to those with private insurance in a
“hidden tax” through premium
hikes. Without the expansion of
Medicaid, they’ve said, those increases could be even more severe.
“Who ends up paying for it? The
business community,” Joe Roman,
Greater Cleveland Partnership’s
president and CEO, said last week.
“All legs of the stool would have
seen undue harm as a result. There
was no ability to just stand back.”
More pointedly, however, if lawmakers approve the expansion,
local businesses employing a slew
of low-wage workers could steer
their employees toward Medicaid
rather than pick up the tab for their
health care, according to several
health care attorneys and benefits
experts that spoke with Crain’s.
“The more people Medicaid
scarfs up at the lower end, the less
people employers are going to have
to worry about,” said John McGowan, employee benefits attorney
with Cleveland law firm BakerHostetler.
Will they migrate?
If approved, the Medicaid expansion would provide health care coverage to adults living at up to 138%
of the federal poverty level, which
equates to about $32,000 a year for
a family of four and $15,400 a year
for an individual. At present, Medicaid for the most part covers children and the elderly.
The Affordable Care Act, or Obamacare, dictates that employers
with 50 or more full-time employees offer health insurance that
Kasich
Roman
meets certain requirements or pay
to the government a penalty of
$2,000 or $3,000 per employee. Employees have the option to select
the employer plan or, if their
income qualifies, Medicaid —
something many experts say lowincome employees might choose
given the costs they would need to
stomach for signing up for company-provided plans.
“I think it will definitely happen
because Medicaid is a no-cost option for these folks” said Paul
Nachtwey, vice president of Todd
Associates, an insurance brokerage
in Beachwood.
Employees also would have the
option of buying their insurance on
the public exchange — an online
portal where individuals can shop
for their own insurance. Their employers would be subject to the government penalty should they buy
insurance through the exchange.
However, should qualifying employees sign on with Medicaid, employers could skirt the penalty and
forgo the cost of providing health
care.
“That would have the immediate
effect of reducing costs employer
would have to bear,” Mr. Nachtwey
said.
Gregory Hubbell, senior vice
president in the Cleveland office of
Aon Risk Solutions, a large insurance brokerage, said the expansion
of Medicaid “certainly provides
more options for all of us as individuals, so the tricky part for the employer would be, ‘What does Medicaid mean to me and my existing
group health plan?’ Now there are
the public exchanges and Medicaid
— those are two wild cards that
people might gravitate to.”
Mounting concerns
The two pillars of health care
reform driving President Obama’s
goal of universal health care coverage are the Medicaid expansion
and the individual mandate, which
is the law’s provision that requires
most Americans to carry health insurance. To the delight of many
conservatives, the U.S. Supreme
Court last year ruled that individual
states could sidestep the Medicaid
expansion — a decision only a
handful of Republican governors
thus far have bought into.
Gov. Kasich’s decision to go forward with the expansion has been
seen by many as a sign the conservative movement is weakening in
its opposition to the Affordable
Care Act in the face of the president’s re-election. However, others
have suggested it would have been
irresponsible to forgo expanding
coverage in Ohio at no additional
cost to the state.
The federal government has
pledged to pick up the full tab for
the first three years of the Medicaid
expansion. Thereafter, the feds
would cover 95%, which declines to
90% over time. Gov. Kasich, however, promised to reverse his decision should the feds fail to come
through with the promised support.
“This is in no
way his endorsement of
Obamacare,”
said
Robert
Klonk, CEO of
Oswald Cos., a
Clevelandbased insurance
brokerage. “He Klonk
put
politics
aside and did what’s best for the citizens of Ohio. This was the only
choice he really had.”
Many people, however, are concerned that putting more low-income individuals on governmentfinanced health care programs only
will push premiums for private payers north, considering Medicaid reimbursements rarely cover hospitals’ costs of providing care.
Despite signaling its support for
the expansion, the Ohio Chamber
of Commerce said in a statement it
still had “serious concerns” about
the long-term financial stability of
the program
As Oswald’s Mr. Klonk put it,
“This is not going to drive down
costs at all. This is the hand we were
dealt, and we have to play it the best
way we can.”
■
all about
Ita’s
ter challenge
continued from PAGE 3
Plus, Accurate Group plans to start
looking for other businesses to buy,
Mr. Doman said. Though that process
hasn’t yet begun, he said he knows of
a few companies that Accurate Group
would consider purchasing.
Accurate Group “has just exploded” since Evolution Capital bought
a majority stake in the business in
2009, said Brendan Anderson,
co-founder and managing partner
of the private equity firm.
At the time, half of Accurate
Group was owned by First American Title Insurance Co., which
worked with Accurate Group to
manage various transactions needed to close on a home purchase.
Back then, the company was
focused mainly on serving customers in North Carolina, where it
was founded in 2003 as a home
appraisal company, and elsewhere
in the southeastern United States.
The investment by Evolution Capital was intended to help the company expand nationwide, with the help
an upgraded software system.
“That’s happened, and it’s been
wonderful,” Mr. Anderson said.
Change creates opportunity
As part of the 2009 deal, Mr.
Doman and Accurate Group chief
information officer Michael Cullen
left the Cleveland office of First
American, which provides title insurance and other services related to
real estate transactions, to lead
Accurate Group and establish its
new headquarters in Independence.
That year the company upgraded
its Magellan software so that a wider
variety of lenders could use the system, which allows them to send
work orders quickly to Accurate
Group and complete other tasks
needed to close a transaction. The
Automotive News publisher will retire;
a new management team takes shape
Peter Brown, vice president and
publisher of Automotive News, a sister publication of Crain’s Cleveland
Business and the leading publication covering the auto industry, has
announced his retirement effective
April 30.
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company integrated the software
with some of the systems used by its
larger clients, and it created a web
interface that has helped other customers access the software.
“We knew we could take the platform and scale it across the country,” Mr. Doman said.
Using Magellan, Accurate Group
helps clients manage property
appraisers, title agents and notaries;
conduct title searches; buy title
insurance; and estimate home
prices, among other functions related to home sales.
Mr. Doman said he knew it was
risky to join a real estate services
company so soon after the housing
market crash. However, he noted
that the recession drove a lot of competitors out of the business. Plus,
new regulations have helped increase demand for Accurate Group’s
services, and low interest rates have
boosted both home purchases and
refinancing transactions, he said.
“There was a lot of opportunity
created by all the change in the
marketplace,” Mr. Doman said.
More expansion opportunities
remain, said Phil Clough, managing
partner of ABS Capital.
Messrs. Doman and Cullen are
well-equipped to keep growing the
business, Mr. Clough said. For one,
they have “a ton of experience” in the
real estate services business, he said.
Plus, as former executives at First
American, they have the perspective
needed to manage the company as it
gets bigger, which Mr. Clough
described as one of the biggest challenges facing the business.
“Paul’s got a vision to make the
company much bigger, and we’re
investing in that vision,” he said.
How much bigger? The company
now has a new goal: Grow to $200
million in sales by 2017.
■
Mr. Brown, 64, joined Automotive
News as editor in 1989 after serving
4½ years as the founding editor of its
sister publication, Crain’s Detroit
Business. He joined Crain Communications from the Detroit Free Press.
Jason Stein, associate publisher
and editor of Automotive News, becomes publisher and editor. In this
role, Mr. Stein, 41, will oversee more
than 50 automotive reporters and
editors around the world and lead
the publication’s sales, marketing,
event and circulation departments.
During his tenure, Mr. Brown has
led Automotive News to dramatic
growth and global prominence with
a suite of print and online products
that cover the automotive industry.
He became publisher of Automotive
News in January 2010 after serving
as associate publisher and editorial
director since 1992.
Crain Communications vice
president KC Crain has been named
group publisher of the Automotive
Group, which includes Automotive
News, Automotive News Europe, Automobilwoche and Autoweek. Mr.
Crain, 33, will continue as publisher of Autoweek and group publisher
of Plastics News, European Plastics
News, Rubber & Plastics News, European Rubber Journal, Plastics and
Rubber Weekly, Tire Business, Waste
& Recycling News, and Urethanes
Technology International.
— Automotive News
20130211-NEWS--9-NAT-CCI-CL_--
2/7/2013
3:24 PM
Page 1
FEBRUARY 11 - 17, 2013
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
9
BRIGHT SPOTS
Bright Spots is a period feature in
Crain’s highlighting positive business
developments in the region.
To submit information, email Scott
Suttell at [email protected].
■ Cleveland-area entrepreneurs
are in a pretty good mood, according to a new survey conducted by
The Entrepreneurs’ Organization.
The survey of 143 local companies with at least $1 million in annual revenue found 42% expect to hire
more full-time workers in the next
six months, and 56% plan to hire
more part-timers in that time frame.
Those surveyed also say they
believe the economy is moving in a
positive direction, with 56% reporting positive feelings about starting
a new business in the next half year
and 63% believing in a positive
change in net profit.
“The results from the survey
underscore that Cleveland businesses are thriving despite the current economic climate,” said the
organization’s Cleveland chapter
president, James Benjamin. “We
expect our businesses to continue
growing, and we expect the market
to rebound in a positive way.”
The Entrepreneurs’ Organization
is a network of more than 8,000
business owners in 40 countries.
Membership in one of its 20 chapters is by invitation only; the average member is 41 years old with
annual revenues of $17.3 million.
■ The accounting firm of Crum,
Buchanan & Associates has merged
with Levin, Swedler & Co. to create
Levin Swedler Crum, Certified Public Accountants, located in Fairlawn.
Company principals Gary Levin,
Steven Swedler and Kevin Crum
have more than 100 years of combined experience. The new firm
serves business, individual and nonprofit clientele in Northeast Ohio. It
offers audit services, tax planning,
tax preparation, accounting, estate
planning, and consulting services.
“Combining our expertise, technology, resources and dedicated
teams has allowed us to provide a
new level of excellent service to our
clientele,” Mr. Crum said in a state-
ment. “We have a shared
mission, and that is to
continue to utilize all
of our resources most
effectively for the
benefit of the clients
and community we
serve. Merging with
Levin, Swedler & Co. has
allowed us to take meaningful steps to sustain our current
rate of growth as specialized solution providers.”
Mr. Levin founded Levin Swedler
& Associates in 1986. Crum
Buchanan was founded in 1996 by
Mr. Crum.
The merged firm plans to emphasize its expertise and experience in the areas of nonprofit organizations
and
audits
of
profit-sharing plans. Mr. Crum will
manage the nonprofit practice; the
profit-sharing plan audit practice
will be managed by Todd Kennedy.
■ Business-to-business marketing
firm Clayman Advertising Inc. has
changed its name to Clayman Marketing Communications Inc. and
moved into new offices at 1245 S.
Cleveland-Massillon Road in Akron.
“The name change is something
we have thought about for some
time,” said Margie Clayman, the
firm’s vice president of client services, in a statement. “Even though
we are still a full-service ad agency,
our services are now so much broader than just advertising that we felt
the new name was much more
indicative of what we do today.”
This is the fourth move in the
firm’s 59-year history. It was founded in 1954 by Henry J. Clayman and
now is headed by Larry Clayman. It
serves clients throughout Northeast
Ohio as well as in Illinois, Kansas,
Michigan, Tennessee, and Oregon.
with an extensive background
in sales and marketing.
He served as the sales
director at Event Merchandizing, managing
that firm’s work for
events such as the Live
Earth environmental initiative and the 2012 London
Olympics. He was responsible
for providing all promotional merchandise and revenue-generating
ideas as well as giveaways and
advertising campaigns.
In the London office, Mr. Garnelas will offer brand and graphic
communications services through
promotional products, commercial
printing, and business documents.
■ Akron personal injury law firm
Kisling, Nestico and Redick LLC
said it has hired five attorneys and
opened a Columbus office.
The expansion brings the firm to
a total of 22 attorneys and 40 support staff.
Attorneys Antonio Magnone and
Brian Zaber joined Kisling Nestico’s pre-litigation team, while
Christopher Corrigan, Michael
Maillis and Walter Messenger
joined the litigation group.
Messrs. Corrigan and Zaber work
in the main office in Akron. Messrs.
Magnone and Messenger joined
attorney Paul Steele in the new
Columbus location. Mr. Maillis represents the firm in Youngstown.
■ Digital forensics company Digits LLC of Buffalo, N.Y., said it is expanding with the opening of offices
in Cleveland and Rochester, N.Y.
The Cleveland office at present is
a virtual operation that is seeking
permanent physical space for up to
three employees, a company
spokesman told Crain’s Cleveland
Business in an email.
“Our new offices in Rochester
and Cleveland will help … better
meet the needs of our clients and
help them respond to corporate
compliance challenges, litigation,
and stay more secure from the
ever-changing cyber threats corporate America faces every day,” said
Michael McCartney, president and
CEO of Digits, in a statement.
“We feel that our presence in
these cities will help to bring additional awareness of the significant
corporate risks effecting business
owners,” he said.
The company, founded in 2006,
specializes in digital forensics, data
recovery, corporate computer
investigations, network security
advisory services and litigation
support services.
■ Visual Evidence Corp., a trial
presentation and courtroom evidence firm that has done business
in Northeast Ohio for more than 27
years, said it has moved its offices
to Valley View from downtown
Cleveland.
The move to 4,200 square feet at
8555 Sweet Valley Drive, Suite A, in
Valley View means Visual Evidence
will be able to “offer clients a new,
state-of-the-art videoconferencing
room that can accommodate 20
attendees, as well as free parking,”
said Manfred Troibner, principal
and co-founder of the firm. In addition, he said, “our new location
offers easy access to clients
throughout Northeast Ohio as we
serve pre-eminent law firms in
Akron, Canton and Youngstown, as
well as in Cleveland.”
Company principal Daniel D.
Copfer Sr. added, “Our staff of
nine, as well as our trial evidence
production studios, has moved to
facilitate the continued expansion
of services we offer our litigation
clients. We outgrew the space we
were sharing, and will now be able
to deliver more services to legal
teams preparing for trial.”
A sister company, VeDiscovery
LLC, is remaining downtown at its
current West Ninth Street location.
Crain’s is Cleveland Business
■ Proforma Promotional Solutions of Cleveland has opened its
first European office, in London.
The company said David Garnelas joined Proforma to increase
its international presence and to
expand the Proforma brand into
new markets worldwide.
Mr. Garnelas comes to Proforma
Flow Polymers to expand
By FRANK ESPOSITO
Plastics News
Strong sales growth in plastic additives will lead Flow Polymers LLC
of Cleveland to install a new production line by the end of the year.
Sales of SureFlo-brand additives
made by Flow Polymers grew 40% in
2012, president and CEO Mike Ivany
said in an interview last Tuesday,
Feb. 5. The company had planned to
add the new production line during
2012, but Mr. Ivany said Flow Polymers personnel were able to get
more production out of the existing
line, which started up in 2009.
SureFlo’s growth has come from
several areas, but Mr. Ivany said the
material recently has provided the
biggest benefit in blow-molded
parts used in landscaping and trash
removal. SureFlo is a proprietary
mix of hydrocarbon resins that can
increase flow and line speed, and
can allow different resins to be
reprocessed together.
During 2012, Flow Polymers also
moved part of its rubber-based business to an 83,000-square-foot plant
about four miles from its existing
plant on Cleveland’s East Side. The
additional space was needed after
Flow Polymers closed a smaller plant
in Connecticut in late 2011 because
of environmental issues from a previous business at that site.
Adding the second site and overall sales growth allowed Flow Polymers to add 25 jobs during 2012,
Mr. Ivany said. More jobs might
need to be added in 2014 after the
second SureFlo production line
comes on later this year.
Flow Polymers’ main business
has been rubber additives and dispersions since it was founded in
1984 by Cleveland entrepreneur
Dan T. Moore. In late 2010, Mr.
Moore’s Dan T. Moore Co. sold a
stake of about 75% in Flow Polymers to Chicago private equity firm
Geneva Glen Capital LLC.
The existing SureFlo production
line is in a 100,000-square-foot building that was used to manufacture torpedoes during World War II.
■
Frank Esposito is senior staff
reporter with Plastics News, a sister
publication of Crain’s Cleveland
Business.
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Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
FEBRUARY 11 - 17, 2013
PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker ([email protected])
EDITOR:
Mark Dodosh ([email protected])
MANAGING EDITOR:
Scott Suttell ([email protected])
OPINION
Come on
F
iddle-dee-dee. Fans of the movie “Gone With
the Wind” will recognize the phrase as the
one Scarlett O’Hara uttered whenever she
was frustrated by something or someone.
Gov. John Kasich had a fiddle-dee-dee moment
recently when he teed off on the organization pursuing a legal challenge to JobsOhio, his pet economic development program. Only his catchphrase isn’t
quite as catchy. It’s simply, “Come on.”
An exasperated governor spoke those words as he
challenged the motives of ProgressOhio, a left-leaning public policy group, for its lawsuit that looks to
derail JobsOhio on constitutional grounds.
“There’s no legitimacy to this,” he said during a
Jan. 31 news conference. “Constitutional issue?
Come on. This is a political issue designed to wreck
the progress we’re having in Ohio.”
Our response to the governor?
Come on. Or, if you’d prefer, fiddle-dee-dee.
The organization that has put the roadblock in
the governor’s way definitely doesn’t share his politics, but that doesn’t make its lawsuit illegitimate.
ProgressOhio opposes the shift of Ohio’s economic development duties from a state agency —
the former Ohio Department of Development — to
JobsOhio, which the governor established as a private entity. Its lawsuit alleges the legislation that
cleared the way for this transfer of authority violates
the Ohio Constitution in a handful of ways. Among
them are that it would funnel public money — profits from the state’s liquor operations — to JobsOhio
for its operations and would lend the credit of the
state to a private corporation.
The constitutional issues raised by ProgressOhio
deserve to be debated in a court of law. However,
the substance of the lawsuit has yet to be heard, as
two lower courts have ruled that ProgressOhio does
not have legal standing to bring the action before
them.
It’s now up to the Ohio Supreme Court to determine whether ProgressOhio can bring its case. Our
hope is that the Republican-dominated high court
won’t serve as the governor’s surrogates and simply
reject ProgressOhio out of hand, but instead will
give fair and honest consideration to the matter.
That’s cool
R
ight about now, most residents of Northeast
Ohio already have had their fill of winter.
While warm weather isn’t just around the
corner, here is sure sign that spring is on the
way: Pitchers and catchers report this week to the
Cleveland Indians’ spring training camp in
Goodyear, Ariz.
And if that thought doesn’t do enough for you, in
nine more Mondays the Tribe will hold Opening
Day festivites at Progressive Field April 8 against the
New York Yankees. Fans may need to wear parkas to
the game, but it won’t be long before cool spring
evenings give way to sultry summer nights.
Hold that thought.
FROM THE PUBLISHER
Balance essential in Ohio’s newest industry
and oil, and that means that some peohis is how ironic life and the
ple will try to latch onto those riches, by
attendant news business can be.
whatever means possible. Most
In a week that saw
of them are interested in legitiCrain’s and ideastream BRIAN
mate business or investment
draw 600 people to a sold-out TUCKER
opportunities. But as with any
summit on Ohio’s new energy
other economic boom, there
industry, a Youngstown comwill be corner-cutters and
pany gave that same industry’s
crooks.
opponents a gift-wrapped reaMr. Hofmeister, former presson for being.
ident of Shell Oil, told the crowd
An oft-repeated message at
that Ohio and the nation stand
our summit last week at Execuat a pivot point, and that the
tive Caterers at Landerhaven
next few decades could mark
was balance. From the mornAmerica’s return as a dominant energy
ing keynote speaker, John Hofmeister,
superpower. But, he urged, there is legitthrough the end of the day, speakers disimate need for regulation and, he precussed the economic promise of Ohio’s
dicted, the technology will only get betrich Utica shale but urged a balance with
ter and better and safer and safer,
appropriate regulation.
because of that regulation.
And at the same time, someone was
There are risks, he said. This is a dandumping — against state laws and all
gerous, messy business, and safety needs
common sense — 20,000 gallons of
to be forefront in the minds of those enfracking wastewater into a storm sewer
gaged.
in Youngstown.
“Let me tell you,” he said, “you wouldHerein lies the problem with a sudden
n’t want to be on an active drilling site. It
abundance of money. It creates mistakes
is noisy and messy.”
springing out of greed, stupidity, or both.
That said, if the companies adhere to,
National energy interests are spending
and even support, the efforts of regulabillions of dollars in Ohio to find, extract,
tors, the advent of shale oil and gas could
process and transport these new gases
T
guarantee America’s national security
for decades to come.
But this dumping incident raised concerns that should trouble anyone interested in this new industry.
It’s clear that this new industry is
enticing because of its scope and
promise for Ohioans. Our state’s unemployment rate is a point below the national average, and there is little other
reason other than the manufacturing,
transportation, road-building, excavation and all the other work that accompanies the start of widespread drilling
in the Utica shale.
But as Mr. Hofmeister and others
noted throughout the day, this is a business that is risky, dangerous and messy.
It needs — and we should demand —
stringent oversight so that it continues to
change the economic landscape of the
Buckeye State and its citizens.
Gov. John Kasich and his administration have been aggressive in their calls
for appropriate levels of taxation on the
energy industry. Regardless of what
those taxes end up being, some of that
money should be spent on the safety
measures needed to protect Ohioans
now, and in the future.
■
PERSONAL VIEW
Place bets on technology with an edge
By HERB KLEIMAN
I
t is still a formidable challenge.
Northeast Ohio continually seeks
economic growth similar to other
regions of the country. Leveraging
lessons learned elsewhere can contribute to refocusing our efforts and refining the way we invest.
Northeast Ohio can focus on improving investments in technological
research and development. As ideas
move up the chain to a viable startup,
how can we identify the most promising
ones and vigorously back them?
Sometimes our efforts may lead us
down the path of the “law of large numbers.” Most problematic, picking winners and losers is tricky and elusive. And
Mr. Kleiman is president of Kleiman
Associates, a marketing relations firm
serving high-technology companies.
there is always the continuing competition for funding of such worthy programs, as schools, police and fire, and
the like. What to do?
The effort proposed should focus on
technological R&D funding. Keep in mind
that the more radical the innovation, the
more difficult it is to predict future sales
and particularly its profitability. However, history shows payoffs can be huge.
The methodology consists of looking
for three different markets. Admittedly,
the lines between them are blurred and
they tend to merge. Still, a theoretical
approach may prove to be beneficial.
A company conceives a product that
in its initial years has no competition. It
needs vigorous patent protection and
the capacity to grow, sometimes quickly.
Even a lead of just a few years will be
most beneficial.
A prime example is provided by Xerox.
The company introduced the first dry
printer with plain paper in 1961. The
market it was entering was relatively
small — especially when compared with
the market it would eventually create.
The Xerox 914 ushered in an entirely new
demand. For the decade of the 1960s it
had no competition, and growth was
phenomenal. When its initial patent expired, the Japanese flooded the market,
particularly with smaller versions, and
Xerox first encountered competition.
See VIEW Page 11
20130211-NEWS--11-NAT-CCI-CL_--
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Page 1
FEBRUARY 11 - 17, 2013
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
11
THE BIG ISSUE
What do you think of the U.S. Postal Service’s decision to stop delivering letters and other mail on
Saturdays, but to continue to handle packages six days a week?
CORRIE FIDDLER
ELLEN KRAMER
ALEX CAVELLI
AL PAL
New Philadelphia
Brecksville
Mentor
Wadsworth
I don’t think it’s that bad
of an idea. … I don’t
usually pick up my mail on
Saturday, anyway.
It’s unnecessary to deliver
on Saturdays. … I’m
phasing out (traditional
mail), but not completely.
I don’t think it’s that big
a deal. On Saturday, I
don’t think people are
really looking for mail. It’s
something they’re looking
for right after work.
If people are running small
businesses, it could be
negative to them. But as
far as the average guy who
works Monday through
Friday … I don’t think it
makes a difference.
Need to get past the Gatekeeper?
CALL TODAY, 440 575-7000
➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.
W W W . S A L E S C O N C E P TS I N C.C O M
SELL MORE.
LETTER
Summit is just the start of big shale events
■ Crain’s Shale Summit last Tuesday at Executive Caterers at Landerhaven was a day to remember. A
real palpable sign of what is coming
to our region and what the transformative potential might be. Congratulations to your entire staff.
One major takeaway for me was
the sense permeating the entire
venue that something big is coming — like a storm you can sense,
but cannot yet clearly see. Everyone
knows it is coming, but there is no
consensus of the exact form it will
or should take.
There is a tangible positive energy, long absent in Northeast
Ohio. There was much discussion
of the need to “get it right.” The
need for transparency. The need to
make certain that when development comes, it provides maximum
benefit, economic and otherwise,
with minimum disruption to the
land and ecosystems.
People are eager to be involved,
be part of the process and get a
piece of the action. But, most don’t
know how to connect.
Crain’s and its Shale magazine,
particularly, are perfectly positioned to be the vehicle of connectivity between all the various stakeholders.
Accurate and actionable information, as always, will be key to
making smart decisions. A good,
unbiased clearinghouse is clearly
needed. I look forward to Shale
magazine providing regular updates of plans and participants in
shale-related
developments. A
one-stop source for connecting the
dots will be a very valuable resource.
Steven A. Belman
Owner
Manufacturers Wholesale Lumber, Cleveland
Troymill Wood Products, Middlefield
WHAT IGNITES YOU?
E D U C AT I N G P H Y S I C I A N S , P H A R M A C I S T S
A N D H E A LT H C A R E R E S E A R C H E R S
View: Apple has always been innovative
continued from PAGE 10
Another product that was truly
innovative was the Polaroid camera
introduced in 1946. It offered
instant photography, breaking the
monopoly then held by Kodak. For
about 10 years, as Polaroid built up
its manufacturing capabilities, it
grew quickly. It competed with
Kodak in many of the traditional
markets, and it opened new ones.
Polaroid won a patent suit against
Kodak in 1986 giving it sole status in
instant cameras. Later, Polaroid
senior management did not respond quickly enough to the growing threat of digital photography.
More typically, markets are characterized by a “price elasticity of
demand.” When price decreases,
demand goes up. Price may go
down for any of several reasons,
such as the manufacturer’s learning
curve. Most industrial and especially the consumer markets follow
these laws.
The transistor typified this principle. At relatively high prices, it was
designed into expensive military
and high-end systems. As its price
was reduced, the volume of applications toward the lower end grew
greatly. Transistors were invented
in 1947 by Bell Telephone Labs and
first manufactured by Western
Electric, the manufacturing arm of
AT&T. In 1952, it decided to license
the product to all comers.
Personal computers have been
available since the mid-1970s. They
were sold as kits, and their future
was in doubt. Then with introduction of Macintosh by Apple Computer, the consumer became interested.
Competition emerged from new
vendors such as Dell. As price kept
descending, the personal computer
crossed the “magical” point of
$1,000. Sales expanded rapidly. At
the same time, manufacturers of
known integrity entered, such as
IBM and Hewlett-Packard, giving
the industry needed respectability.
A company may choose the market that is characterized by its high
quality of products and, therefore,
its higher price. Success in this type
of a market is relatively hard to
achieve. The company must be able
to differentiate the product.
Sony Corp. decided many years
ago to serve its customers high-end
products. It first established itself in
this enviable position with the introduction of the Trinitron color receiving tube. It utilized a three-gun
configuration, which resulted in a
higher quality image and more distinguishable colors. From 1966, the
higher-end color TV market was
dominated by Sony. The company
has maintained its position ever
since.
Apple has consistently priced its
products at the high end of the
range. This was personified by its
late CEO, Steve Jobs. Since its
founding in 1977 Apple has brought
out many innovations, including
the mouse, which became an industry standard. As added product
lines were offered, Apple eventually became the world’s most highly
valued technology company.
■
n e o m e d . e d u
Meet technology innovators who
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Awards & Networking Gala
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20130211-NEWS--12-NAT-CCI-CL_--
12
2/7/2013
4:50 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Attn: Manufacturers & Warehouses
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ARCHITECTURE
VAN AUKEN AKINS ARCHITECTS
LLC: Kevin Kennedy and Christopher Dewey to associate principals;
Sara Shonk to project architect,
Revit manager; Hillary Lyon to
marketing coordinator.
Wolfgang
Gamber
Kotheimer
Drinkard
Gurbach
Kimmel
Kucharson
Hoy
Shandor
Kaminski
Krewson
Wensink
CONSTRUCTION
GILBANE BUILDING CO.: Scott
Orr to district manager; John
Coughlin to project engineer.
CALL TODAY!
DISTRIBUTION
Turnkey project by
GREAT LAKES PETROLEUM CO.:
Louise Kirk to chief financial officer.
ROI Energy
www.ROI-Energy.com
ENGINEERING
330-931-3905
S
GOING PLACES
JOB CHANGES
LIGHTING CASE STUDY
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FEBRUARY 11 - 17, 2013
WHEATON SPRAGUE BUILDING
ENVELOPE: Todd T. Wolfgang to
project manager.
HALEMAGAZINE.COM
News, insight and analysis of shale drilling in Ohio
The promise of shale drilling.
The power of Crain’s.
WISS, JANNEY, ELSTNER ASSOCIATES INC.: Nathan Gamber
and Michael Kotheimer to senior
associates.
FINANCE
FINANCIAL SERVICE
MARKETING
FIRSTMERIT CORP.: Sandra E.
Pierce to vice chairman; chairman,
CEO, FirstMerit Michigan.
SPERO-SMITH INVESTMENT
ADVISERS INC.: Erica Aber to vice
president, portfolio manager.
THUNDER::TECH: Craig Israel to
creative director; Marissa Mendel
to communications coordinator;
Erika Port to search engine
optimization specialist; Nathan
Smetana to web developer.
HEALTH CARE
ELIZA JENNINGS SENIOR CARE
NETWORK: Denise Gannon to vice
president, operations and COO.
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FUTURE: Karen Mozenter to director of funder engagement.
SUMMA WESTERN RESERVE
HOSPITAL: Julia Drinkard to volunteer/human resources specialist.
SHIPPING
LEGAL
BENESCH: Matthew D. Gurbach,
Lisa M. Kimmel, M. Casey
Kucharson and Amanda M. Miller
to partners; Kelly M. Hoy to of
counsel.
DAY KETTERER LTD.: Steven D.
Shandor and John S. Kaminski to
members.
JACKSON LEWIS LLP: Patricia F.
Krewson to
partner.
MANSOUR,
GAVIN,
GERLACK &
MANOS CO.
LPA: David W.
Hildebrandt to
senior associate.
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GREAT LAKES SHIPYARD: Paul
W. Deterding to vice president, general manager; David Dudley to shipyard foreman, new construction and
repair; Paul M. Hendricks to assistant vice president, new construction.
STAFFING
ALLIANCE SOLUTIONS GROUP:
Rob Sable to chief information officer.
ON SEARCH PARTNERS: Glenn G.
Anderson Jr. to partner.
TECHNOLOGY
MCPC INC.: Jim Gehring to director,
managed services-sales; Jeff Wisniewski to director, managed servicesoperations; Jason Fant and Roger
Mitan to managed services engineers;
Paul Stancil to partner manager.
Berliner
MCDONALD
HOPKINS:
Katherine E.
Wensink to of
counsel.
THACKER
MARTINSEK
LPA: Stacy RC
Berliner to
shareholder.
DIAGNOSIS
NONPROFIT
Rooney
THOMPSON
HINE LLP: Emily
S. Huggins
Jones, Jared E.
Oakes and
Curtis L. Tuggle
to partners.
BOARDS
SHOES AND CLOTHES FOR KIDS:
Scott Simon (North Pointe Realty
Inc.) to chair; Allan C. Krulak to
chair emeritus; vic gelb, Rockette
Ewell and Terence J. Uhl to life
directors; Dennis Rose to vice chair;
Gerald Broski to secretary; A.
Lamont Mackley to treasurer.
YOUTH CHALLENGE: Ernest E.
Vargo (Baker Hostetler) to president;
David L. Lowery to vice president;
Colleen C. Murnane to secretary;
Thomas J. Fraser to at large.
AWARDS
MANUFACTURING
CUDELL IMPROVEMENT INC.:
Walter E. Martens Jr. (Martens &
Sons Funeral Home) received the
Walter & Pauline Martens Lifetime
Achievement Award; Timothy J.
McGinty (Cuyahoga County)
received the Exellence in Government
Award; Linda Collins and Tom
Hoover received Service Awards.
CARDPAK: Lisa Biber to senior
accountant.
Send information for Going Places to
[email protected].
WICKENS,
Swearingen
HERZER, PANZA,
COOK & BATISTA: Malorie A.
Rooney and Douglas J.
Swearingen to associates.
20130211-NEWS--13-NAT-CCI-CL_--
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4:04 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
FEBRUARY 11 - 17, 2013
INSIDE
15 TAX TIPS: KEY
ASPECTS OF IRS’
VOLUNTARY
COMPLIANCE
PROGRAM.
13
SMALL BUSINESS
MINDING THEIR
P’S AND Q’S
SHARON SCHNALL
Arborwear
establishes
roots with
strong gear
Bainbridge Township
company generates
more than 50% of its
sales via outdoor pros
By SHARON SCHNALL
[email protected]
and Corporate Protocol.
More employers are realizing their
employees are an extension of their
businesses, and they are calling on
etiquette consultants to smooth over
the rough edges.
After 22 years in corporate sales,
Mrs. Harding said she is all too aware
At one time, Arborwear’s rugged
clothing was sold out of a truck bed.
These days, not only is Arborwear a
booth regular at tree care industry
trade shows, it’s a well-known and
respected special events sponsor
and online vendor.
And, with the company’s
relocation and consolidation to
Bainbridge Township from several
other Geauga County locations,
more opportunities for growth,
visibility and brick-and-mortar
retail are possible.
Arborwear specializes in clothing
designed for arborists, tree climbers
and utility workers.
“The clothes are designed to
work with someone who moves
their body — who works in the dirt
and in the woods,” said Melissa
LeVangie, a U.S. Department of
Agriculture tree climbing inspector
based in Massachusetts, who scales
trees from 20 feet to 120 feet each
workday.
Arborwear
was founded in
Northeast Ohio
in 1997 by Paul
Taylor. Mr. Taylor and Bill Weber, 44, who formally joined the
business in 2001, Weber
previously owned
respective tree service businesses.
“Back when we were climbing
trees, there were no clothes designed specifically for what we did,”
Mr. Weber said.
Arborwear introduced durable
garments that allowed a full range
of movement. In 2008, Mr. Weber
became sole owner.
“Bill and Paul were respected.
They understood the business.
See ETIQUETTE Page 14
See ARBORWEAR Page 16
MARC GOLUB
Colleen Harding, founder of the Cleveland School of Etiquette and Corporate Protocol, is shown at Westwood
Country Club in Rocky River.
Whether it’s with casual conversations or formal introductions,
etiquette consultants stress importance of putting best foot forward
By KIMBERLY BONVISSUTO
[email protected]
T
he average person decides
whether they like you within
seven seconds — 60% is
based on appearance, 30%
on voice and 10% on the content of
conversation.
INSIDE: The Northeast Ohio Medical
University has prescription for
improving student behaviors. Page 14
And if someone doesn’t like you,
chances are they aren’t going to buy
what your company is selling, according to Colleen Harding, founder
of the Cleveland School of Etiquette
20130211-NEWS--14-NAT-CCI-CL_--
2/7/2013
4:05 PM
Page 1
14 CRAIN’S CLEVELAND BUSINESS
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continued from PAGE 13
of how important it is to present
oneself in a favorable light.
Mrs. Harding, who started her
company five years ago, said in
general she is seeing a rising number of calls to her Bay Village firm
from companies eager to shape
their employees into more favorable company representatives.
Similarly, Catherine Holloway,
owner of Etiquette Consulting Services in Beachwood, said requests
can come in from business owners,
concerned spouses or civic and
professional groups — all looking
for an edge in the marketplace.
Both Mrs. Harding and Mrs. Holloway offer everything from group
seminars to one-on-one coaching,
depending on the situation and
request. They also might work with
business professionals one day and
young children the next.
“When a company hires someone, it says to the market I approve
of this individual and think they can
represent my company in the market in a favorable manner,” Mrs.
Harding said. “A lot of times they
don’t realize they are not representing themselves, but the corporation, when they are in the market.”
A different generation
Subscribe to Crain’s Cleveland Business
Call toll-free at 1-877-824-9373 or on-line @
CrainsCleveland.com Click on “Subscribe Now.”
Mrs. Harding said although the
millennial generation grew up
thinking everyone has the same
opportunities, the boss isn’t going
to name them the general manager right out of the box to be fair.
“Our current graduates just
spent eight years in sweatpants
and hoodies and wearing
flip-flops to school,” she said.
“They grew up in a generation
where everyone got a trophy and
everyone was a winner; and now
they have to report to a guy who
looks like Lee Iacocca.”
On the flip side, people who
entered the business market in the
’60s, ’70s and ’80s were brought up
in the era of IBM, during which
everyone wore a blue or gray suit,
good shoes and good pantyhose.
Put the two generations together and there inevitably can be a
communication problem.
Since people judge according
to their own standards, Mrs. Harding said it’s important for companies to teach their employees —
whether they are fresh out of
college or in the work force for 30
years — what is expected.
Robert J. Pacanovsky, owner of
Robert J. — Training & Design in
TOP 5 RULES FROM THE ETIQUETTE PROS
■ Dining:
Dining is done in a
certain environment. Everything
is done methodically and is controlled. Eating is
what people do
when they are hungry. There is a difference, according to Colleen Harding, founder of
the Cleveland School of Etiquette
and Corporate Protocol.
■ Grooming: How you dress is a
language that speaks to the eyes,
Mrs. Harding said. Casual Friday
does not mean it’s OK to throw on a
pair of yoga pants and flip-flops.
■ Introduction: Be able to introduce yourself, carry a conversation
and sell your company in the best
way possible. Catherine Holloway,
owner of Etiquette Consulting Services, said there is a correct way to
Akron, added an etiquette consulting specialty in 2012 after seeing a
need for such a service in the
course of running his events and
catering business. Indeed, he sees
proper etiquette as a way to brand
yourself and your company.
“Wherever you go, once you
identify yourself, the next question
is what do you do or who do you
work for? Once you answer that,
you’ve branded yourself and your
company for the rest of the event,”
Mr. Pacanovsky said, adding that
the soft skills of etiquette can
potentially make or break a career
and a company’s success.
“There is a lot of competition
out there for business, and everybody has the same thing,” he said.
“I still believe business is all about
relationships and, more importantly, the personal relationships.”
How do you do?
Mr. Pacanovsky said part of the
problem is that society has become more casual.
“I love technology, but I do
believe it’s outpacing us at times,”
he said. “People are so reliant on
technology they forget how to act
in a formal manner.”
Turning a cell phone off during
an interview, and refraining from
checking text messages or answering emails at a business lunch,
may seem like common sense, but
today’s graduates have grown up
with technology at the ready and
enter and exit a
room while conveying professionalism
and confidence.
■ Interpersonal
& Electronic
Communications:
Use proper English
in all correspondence. Emoticons and abbreviated
words are not appropriate. Proof an
email before sending it, and pay
attention if others are copied on the
response. It’s not OK to have your
cell phone on the table or to send or
answer text messages or emails
while with a client.
■ Image: Does a client need to
move papers and boxes to sit
down? Does your car resemble a
trash can? Presenting a neat and
clean image to a client — whether
in the office or in the car — goes a
long way in the workplace.
think nothing of throwing a cell
phone on the table.
Mrs. Holloway, who started her
business in 1994, said people
come to the workplace with a lot
of baggage — good and bad — that
goes back to how they were raised
and the circumstances they faced
in becoming an adult.
Over the years, Mrs. Holloway
has worked with PTA groups, corporate clients, children, public
and private schools, and even
college and university employees.
She said the key is to speak to the
appropriate age level, gender and
economic background of her
clients to ensure success.
One of the top requests
etiquette consultants are asked to
cover with employees are introductions.
Mrs. Holloway said professionals want to walk into a room
with confidence — not like a
tornado. She said it can be a
challenge for some people to
maneuver through a networking
event and hold conversations.
Regardless, she said it’s a choice
for individuals to step outside of
their comfort zone and learn the
appropriate behaviors.
“I think that once you come out
of college and are in the work force,
you realize people are doing things
differently,” she said. “You either
rise to the occasion and learn the
skills to play with the big boys, or
you stay where you’re at.”
■
Medical school offers dose of good manners
Dr. Elena M. Rossi, an adviser
for medical students at the
Northeast Ohio Medical University
(NEOMED), took matters into her
own hands, coming up with the
idea of doing an etiquette program
with medical students after taking
a group out to dinner.
One student ordered the most
expensive item on the menu, while
another dipped his breadstick into
the unity butter dish and promptly
placed it in his mouth.
While some behaviors would
make Miss Manners and Emily
Post blush, Dr. Rossi said sometimes it’s just a matter of not
knowing how to act appropriately.
“They still don’t know certain
things,” said Dr. Rossi, associate
chairwoman of pediatrics at Akron
Children’s Hospital, chairwoman
of pediatrics at St. Elizabeth
Health Center in Youngstown and
a clinical professor of pediatrics at
NEOMED. “They don’t know the
table setup; they don’t necessarily
know where everything goes. They
don’t know what to do with the
bill. They don’t get the alcohol and
cell phone question correctly.”
Her idea grew into the annual
NEOMED Business Etiquette
Dinner and Professional Fashion
Show for College of Medicine,
College of Pharmacy and College
of Graduate Studies students.
Laura C. Cessna, assistant direc-
tor of Student Development and
Leadership in the Office of Student
Affairs at NEOMED, said the
program, which began in 2010,
provides students with an opportunity to learn proper dining and
dress etiquette for clinical, business and social occasions.
“This is a tool to help them do
the right thing,” Dr. Rossi said.
“Medicine is a business.
“The overall message is that
when you are eating a meal, they
really do look at how you eat. I’m
not sure people realize that you
are judged on your manners and
your handshake.”
— Kimberly Bonvissuto
20130211-NEWS--15-NAT-CCI-CL_--
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3:14 PM
Page 1
FEBRUARY 11 - 17, 2013
CRAIN’S CLEVELAND BUSINESS 15
WWW.CRAINSCLEVELAND.COM
SMALL BUSINESS
Worker reclassification program eligibility expanded
A
little more than a year
ago, the IRS announced
a new voluntary compliance program to offer
employment tax relief to businesses that improperly classify workers
as independent contractors.
Two IRS notices issued in
December expand the program in
several meaningful ways. Some of
these expanded benefits expire in
a very short timeframe, so business owners should examine any
worker classification issues now to
determine whether they can benefit from the expanded program.
Some businesses may improperly characterize workers as independent contractors in order to
avoid paying employment taxes,
but more often that not, such classification occurs because business
owners are simply not sure what
types of workers need to be
treated as employees.
If workers treated as independent
contractors should instead have
been classified as employees under
the tax law, this creates a significant
tax risk to the business. There has
been significant focus by the IRS
and other governmental agencies
over the last few years on whether
businesses are appropriately characterizing workers as employees or
independent contractors.
Legislation has been proposed
from time to time over the last
several years to enhance penalties
for failure to make the appropriate
classification, and to take away the
benefit of some of the exceptions
to these penalties.
Recognizing that part of the misclassification problem is caused by
employers who believe that they
may have misclassified a worker,
but who are reluctant to change the
classification due to the exposure to
additional taxes, the IRS announced a program in late 2011
called the Voluntary Classification
Settlement Program, or VCSP.
Under the VCSP, employers
who voluntarily change the classification of their workers from
independent contractors to employees going forward essentially
will not be penalized and will not
be subject to audit for prior years.
Under the original program,
two of the requirements were that
the business must:
■ have satisfied the Form 1099
reporting requirements for these
workers for the three years preceding the year that a request for participation in the program is filed; and
■ not be under audit by the IRS.
The recent announcements
make beneficial changes to the
program relating to these requirements. First, the IRS makes it clear
that taxpayers can apply for this
program even if they are under
IRS audit for a different issue.
Many businesses do not focus on
the worker classification issue, so
often the issue only comes up when
advisers are consulted to deal with
other parts of the IRS audit. The rule
continues to be that no participation is allowed for taxpayers who
are currently being examined by the
IRS or other government agency
specifically with respect to worker
classification issues. The incentive is
therefore to obtain this relief before
the issue comes up on audit.
The most significant change announced provides an exception to
the requirement that Form 1099s
CARLGRASSI
TAX TIPS
have been filed for the prior threeyear period. That is no longer required. This relief is only available
through June 30 of this year. The
IRS was made aware that many
businesses wanted to participate in
the VCSP but had not filed some or
all of the necessary Forms 1099.
These businesses can now
participate as long as they furnish
to the workers and electronically
file with the IRS all required Forms
1099, consistent with the nonemployee treatment, with respect
to the workers being reclassified
for the previous three years prior
to executing the closing agreement with the IRS.
The cost of this expanded program is more than the cost for an
employer who did file the appropriate Form 1099s. However, this
cost is still dramatically less than if
the IRS determines upon audit that
the workers were misclassified.
Many advisers have appropriately advised their clients to exercise caution with their decision to
participate in this program. A
business considering relief under
this program must realize that it is
not binding on any state or other
governmental agency.
There was some concern that the
IRS would share the information
provided in the VCSP application
with such agencies. Surprisingly,
the IRS has indicated in its FAQ
publication that it will not share the
information with the Department
of Labor or any state agency.
The expansion of this program
is very favorable, especially with
respect to businesses that previously did not qualify, either because they were currently under
audit by the IRS or had not filed
Form 1099 for the workers at issue. The terms of the expanded
program should be considered by
any business using independent
contractors whose status as such
may be in doubt.
■
Mr. Grassi is president of
McDonald Hopkins LLC.
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20130211-NEWS--16-NAT-CCI-CL_--
2/7/2013
16 CRAIN’S CLEVELAND BUSINESS
3:23 PM
Page 1
WWW.CRAINSCLEVELAND.COM
FEBRUARY 11 - 17, 2013
SMALL BUSINESS
Arborwear: Retail store
possible at new location
continued from PAGE 13
They came from the business; they
did the business. They could speak
the same language to the professionals,” said Ms. LeVangie, who
also is a certified arborist and owns
Trees New England, a Barre, Mass.,
tree care consulting company.
The clothing product line
includes: tree-climbing pants;
heavyweight sweatshirts; jackets;
high-visibility outerwear; and rain
gear. Prices range from $9.95 for
a stocking cap to $179.95 for
ascender pants.
Branching out
SHARON SCHNALL PHOTOS
Arborwear has attracted other followers such as horseback riders, motorcyclists, stone masons and rock climbers.
All clothes are conceived and
designed in-house and manufactured in overseas and U.S. factories; tailored design and flexible
features contributed to crossover
use by mainstream consumers.
Purchases for outdoor professionals — including monogrammed uniforms — represent
50% of the company’s 2012 gross
revenues, which were under $10
million. And although Mr. Weber
declined to discuss specifics about
his company’s revenues, he did say
he anticipated a 30% increase in
2013.
Lake Metroparks utilizes Arborwear products for operations and
natural resource staff, but especially the tree care crews. The
clothes give employees a uniform
and professional appearance, said
John Grantham, director of park
operations. The Lake Countybased park district encompasses
more than 8,100 acres.
“You can walk through prickers
and briars,” Mr. Grantham said.
“The pants wear like a pair of blue
jeans, but they function like a pair
of coveralls.”
Arborwear has attracted other
niche followers: horseback riders,
motorcyclists, stone masons, ceramicists, rock climbers, carpenters and hikers, Mr. Weber said.
The company serves customers in
all 50 states and in Canada and
Europe; their largest online
accounts include Dick’s Sporting
Goods, Amazon and Cabela’s.
Last September, Arborwear
moved operations to 18,500 square
feet of 10-year leased space —
formerly a U.S. Post Office branch.
Previously, the 15 full- and parttime employees utilized 12,000
square feet of rented and owned
space in several Newbury and
Burton locations.
Renovation and relocation costs
totaled $100,000 to $150,000 and
were financed by landlord and investor loans — investors have been
involved since the company’s
inception, Mr. Weber said.
This headquarters location features ample warehouse and office
space; a training center for offering
continuing education courses to
tree care professionals; and for the
first time — a retail store.
The store’s floors feature hardwoods of different species. The
counters, display units and dressing rooms also highlight different
woods: mulberry, basswood, black
walnut and even sweet gum from a
tree that once graced Yale University’s campus in Connecticut.
“The pants wear like a pair
of blue jeans, but they
function like a pair of
coveralls.”
– John Grantham
director of park operations,
Lake Metroparks
Adding to the rustic atmosphere
are vintage chainsaws, some
customer donated, others owned
by Mr. Weber.
True to its roots
The retail portion was dubbed
“man heaven” by one customer,
said Mr. Weber. Perhaps, but the
intent is about paying homage to
the business’s roots in the tree care
industry and the loyal customer
base — tree care professionals.
“I kind of choked a bit at the
cost,” said Ms. LeVangie about her
latest personal purchase of Arborwear pants. Any lingering reservations were addressed the day she
accidentally walked into a barbed
wire fence; the reinforced pants
were not cut, neither was she.
Safety features — albeit attractive — are purposeful: pocket
angles prevent catching on tree
limbs; breathable fabrics reduce
fatigue; zippered exterior pockets
maximize easy access to tools;
mid-leg fiber panels prevent tearing by belt-slung chainsaws.
“If you’re constantly fixing your
clothes, you’re not paying attention; you’re more likely to get into
an unsafe situation — that doesn’t
happen with the (Arborwear)
clothes,” said Jim Skiera, executive
director of the International Society of Arboriculture (ISA). ISA is a
21,000-member arborist-certification and tree care education organization, based in Champaign, Ill.
Beginning this month, Arborwear is offering discounted clothing to ISA members featuring the
ISA logo. Additionally, attracting
new customers to the store,
growing the brand and reaping the
benefits of the relocation and
consolidation are on the agenda.
“Our goal is to maximize the
changes we’ve made, to smooth
out the wrinkles,” Mr. Weber said.
“It’s been a big transition.”
■
20130211-NEWS--17-NAT-CCI-CL_--
2/7/2013
3:18 PM
Page 1
FEBRUARY 11 - 17, 2013
CRAIN’S CLEVELAND BUSINESS 17
WWW.CRAINSCLEVELAND.COM
SMALL BUSINESS
How companies can best measure up SMALL Business is
At the end of 2012, the Internal
Revenue Service released a new set
of regulations to “provide guidance
… with respect to the shared responsibility for employers regarding employee health coverage.”
As most of you know, the employer is required to provide health coverage to its employees or pay a tax.
This only applies if the employer
has 50 or more full-time employees or full-time equivalent employees. Employers are required
to track that number monthly.
As the proposed regulation
points out, however, “determining
full-time employee status on a
monthly basis may cause practical
difficulties for employers. …”
To provide assistance with this
problem, the proposed regulations
adopt a look-back safe harbor
period that a business can use to
more effectively determine year to
year its number of employees.
Here’s how it works for a firm
with regards to its current employees. Employers in 2013 determine
an initial “measurement period,”
which can be no less than three
months but no more than 12
months. During the measurement
period, employers must determine
whether employees work a
minimum of 30 hours per week.
The employees who are determined to be full-time during the
measurement period are then
treated as full-time employees in
the subsequent “stability period,”
DANIELCLEVENGER
ADVISER
the duration of which must be
greater than six months or the
length of the measurement period.
This means once an employee is
determined to be full-time during
the measurement period, that
employee is considered full-time
for the subsequent stability period
regardless of hours.
Employers also will be permitted to elect an administrative period of no more than 90 days between the measurement period
and the stability period.
This period may not, however,
reduce or lengthen the measurement or stability periods. However, to prevent the administrative
period from creating potential
gaps in coverage, it must overlap
with the prior stability period.
Also, an employer may change
its measurement and stability
periods for subsequent years but
may not change the measurement
or stability periods once the
measurement period has begun.
If you are an employer that uses
a fiscal year plan instead of a calendar year, the proposed regulations allow for transitional relief.
If an employer provided a fiscal
year plan as of Dec. 27, 2012, that
employer will avoid any applicable
penalties so long as the applicable
employee is offered affordable, minimum value coverage no later than
the first day of the 2014 plan year.
The measurement and stability
periods must be uniform for all
employees, but the employer may
apply different measurement,
stability, and administrative periods
to each group of collectively
bargained employees covered by a
separate collective bargaining
agreement; collectively bargained
and non-collectively bargained
employees; salaried employees and
hourly employees; and employees
whose primary places of employment are in different states.
The IRS also provides guidance to
employers on how to apply the
look-back period for high-turnover
employees, new hires and variablehour employees — those employees
whose hours an employer cannot
determine at the date of hire.
The proposed regulations contain
a number of requirements and this
is only meant as a general road map.
For more details, you should consult
an attorney or benefits provider. ■
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20130211-NEWS--18-NAT-CCI-CL_--
18
2/8/2013
2:10 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Summit
expresses
hope for
balance
Momentum: CEO says rich gas
in Utica is much more valuable
continued from PAGE 3
Seminar speakers
believe both sides
can reap benefits
in shale business
By DAN McGRAW
[email protected]
Those expecting another seminar on how water molecules break
up rocks or ways to dissect a 40page mineral rights lease might
have gotten a surprise at Crain’s
Shale Summit 2013. While there
was ample talk of engineering and
economic opportunities, many attendees said they were surprised
by the themes of “collaboration”
and “community” that dominated
much of the event.
“I expected this to be an industry meeting mostly, with just a lot
of people talking about how to
make more money off drilling,”
said Bruce Murphy, a commercial
painter and a member of the Russell Township Zoning Commission. “But it was interesting to
hear people in the industry talk
about environmental issues and
how we should be doing this right.
“Now, we’ll see if they do it,”
Mr. Murphy said laughing, noting
that he was drawing a lot of attention with his beard and ponytail in
a crowd of mostly clean-shaven
business types.
The theme of the summit was
“Getting It Right,” and nearly 600
attendees were attracted to the
event, which was presented by
Crain’s Cleveland Business and
public broadcasting organization
ideastream with Huntington National Bank as chief sponsor.
The summit’s keynote speaker
was John Hofmeister, former president of Shell Oil Co. and founder
and chief executive of Citizens for
Affordable Energy. Mr. Hofmeister
emphasized that Ohio’s position
atop the Utica shale’s abundant
reserves of oil and natural gas is
both a curse and a blessing when
it comes to managing the drilling
industry’s impact and also capitalizing on the economic opportunities it presents.
“The curse that you are embracing is complexity, a kind of complexity that will test you,” said Mr.
Hofmeister, who also is chairman
of the National Urban League.
“The blessing is prosperity, which
is an economic value creation. …
(There are) opportunities here
that aren’t in other parts of the
world.”
Exploiting the Utica shale responsibly will be a challenge for
Ohio’s drillers as well, he said.
“The burden comes back to the
(energy) companies,” he said.
“They should be compelled to engage, and that always hasn’t been
the case. They must embrace sustainability and corporate responsibility, and they also have to make
a commitment to explain a very
technical process and dispel mis-
FEBRUARY 11 - 17, 2013
HAL STATA PRODUCTIONS
Former Shell Oil Co. president John Hofmeister was the keynote speaker at
the Shale Summit on Feb. 5.
ON THE WEB For photos
and videos from the
Shale Summit, log on to
www.crainscleveland.com
information.”
Avoiding a battlefield
Also speaking at the summit
was Rich Cochran, president and
CEO of the Western Reserve Land
Conservancy, a nonprofit conservation organization that controls
or protects about 35,000 acres
from Sandusky to western Pennsylvania.
In his speech, titled “Land Conservation as an Economic Development Tool,” Mr. Cochran
announced that the conservancy
will set up a steering committee
made up of representatives of the
energy industry, local business
and political leaders, and environmental preservation groups to
deal with drilling issues and environmental concerns.
The goal of the steering committee, he said, will be to affect
how drilling and related infrastructure is planned and executed
across the Utica shale region in
order to protect resources such as
surface water, prime soils and
wildlife habitat. Rather than
digging in its heels to universally
oppose drilling, the conservancy
hopes to build collaboration, Mr.
Cochran said.
“There are no real winners and
losers when an oilfield becomes a
battlefield. … The oil and gas
always gets extracted, the opposition loses and businesses spend
more money to make less money,”
Mr. Cochran told the attendees.
“What are we left with? An old battlefield … on which the environmental and social devastation is
sometimes bad enough to create
ghost towns overnight.”
Mr. Cochran said he has been
watching and visiting other shale
plays, including the Eagle Ford in
south Texas, which geologists say
has resources much like those
found in the Utica. He also has
been keeping a close eye on what
has been happening close to
home.
“Having studied this situation in
eastern Ohio for more than two
years now, we have drawn the
conclusion that if this oilfield becomes a battlefield we will all lose
because during battles it is impossible to be deliberate, cooperative,
and constructive,” Mr. Cochran
said. “Everyone is angry. Things
get destroyed.”
“The curse that you
are embracing is
complexity, a kind of
complexity that will test
you.”
– John Hofmeister, former
Shell Oil president, during his
Shale Summit keynote speech
Calls for collaboration
Shale Summit 2013 also featured six different panel discussions on topics ranging from upto-date information on Ohio’s
oil-and-gas development, the
impact of drilling on Northeast
Ohio businesses, and community
leaders sharing their experiences
and concerns with regards to shale
development thus far.
Dennis Saunier, president and
CEO of the Canton Regional
Chamber of Commerce, said
many of his city’s leaders have
gone from being skeptics of
drilling to supporting it, as they’ve
seen the Canton area benefit economically from drilling. Tax
receipts are up, while unemployment and commercial real estate
vacancy rates are down in Canton,
he said.
“We have increased our hotel
taxes by 17% over the previous
year,” Mr. Saunier said. “There are
so many skilled-labor jobs, companies can’t always fill them —
and we are working to regenerate
neighborhoods as more housing
becomes needed.
“Events like this are a great way
to show how we can work regionally and collaboratively in common interests that will have economic benefits that the entire
region will be participating in,” he
said.
Al Heher, an attorney with the
Buckley King law firm in Cleveland
who will lead a one-day seminar
March 2 at Lakeland Community
College on the legal issues of hydraulic fracturing drilling, said he
was surprised by the “cohesive”
message that was put out by the
speakers and panels at the summit.
“I really like to see that there is a
conscious effort to do the right
thing, for all the interests,” Mr.
Heher said. “I think this is a real
positive step to know we are all in
this together, whether it be the
blue-collar laborers or the property owners or the cities or the energy companies. Working together
on developing the energy industry
on Ohio can keep the collateral
damage low and provide benefits
for the entire community.”
■
Based on their well results to date,
Utica drillers are on track to achieve
an internal rate of return of 91% over
the life of their wells, Mr. Tsuru said.
That’s well above the next-best shale
play, the Eagle Ford in south Texas,
where rates of return are about 60%
as drillers extract oil and “wet gas” —
which consists of components such
as natural gas, ethane, butane and
other chemicals that are helping
drive drillers’ revenues and profits.
The rate of return in the Utica shale
also is leagues beyond the returns offered by pure “dry” natural gas plays
such as Arkansas’ Haynesville region,
where a paltry rate of return of about
4% essentially has brought drilling to
a halt, Mr. Tsuru said.
It’s all because the Utica region is
yielding not only dry methane gas,
but also oil and an abundant mix of
“wet gas” components. While the
price of natural gas has plummeted in
recent years, the price of oil and
natural gas liquids has held up, Mr.
Tsuru said.
“The rich gas in the Utica is worth
(more). For 1,000 cubic feet of rich
(wet) gas, it’s worth about $5 when
you include the methane and all the
liquids, as opposed to 1,000 (cubic)
feet of dry gas, which is worth about
$3.30.” Mr. Tsuru said.
The big differential is why drillers
are flocking to eastern Ohio, and why
Mr. Tsuru is focusing on the Utica as
well.
Big bucks are flowing
Much of Momentum’s Utica
investment already is under way near
Carrollton and should be online by
the middle of this year, Mr. Tsuru
said. Its investment includes a large
pipeline project to help gather gas
from wells that have yet to come online, or even to be drilled, and three
large processing facilities that will
separate dry methane gas from
ethane, propane, butane and other
valuable components.
“We’re planning on spending, in
phase one, $1 billion in eastern Ohio,
and this is only going to grow,” Mr.
Tsuru said.
The initial investment will create facilities that cryogenically can process
800 million cubic feet of wet gas per
day, separating methane from a mixture of more valuable liquids. It also
will include the capacity to refine further about 135,000 barrels of those liquids per day, producing “purity products” such as refined ethane, propane,
butane and other ingredients used by
a variety of industries, Mr. Tsuru
said.The processing plants are under
construction near Kensington and
near Leesville Lake, with Kensington
the larger of the two, Mr. Tsuru said.
The Kensington and Leesville plants
will be connected by 36 miles of
24-inch pipeline, which will serve as a
main gathering line to bring gas from
wells in the area to the plants for processing, as well as to move gas back
and forth between the two plants.
In addition, Momentum is constructing a large processing, storage
and shipping facility near the tiny
town of Scio, which will be able to
store 200,000 barrels of refrigerated
liquids, along with additional pressurized storage facilities. The Scio facility, also known as the Harrison
Hub, occupies 600 acres and includes
7,400 feet of rail-line frontage and another 40,000 feet of its own internal
rail lines to manage shipping.
Momentum has designed and will
operate the facilities, and has agreements with Chesapeake Energy Corp.
to supply it with gas for processing,
Mr. Tsuru said.
More investment awaits
Those are only some of the Ohio
developments taking place in the oil
and gas industry’s “midstream” sector. They range from the $3 billion or
more that Shell Oil plans to spend on
an ethane processing facility just
across the Ohio River in Pennsylvania
to natural gas gathering and gas
transportation lines built by companies besides Momentum.
Momentum itself is involved in
other pipeline projects within 50
miles of the Ohio-Pennsylvania border, though those are primarily to
deliver gas from the Marcellus shale
region, Mr. Tsuru said.
But Mr. Tsuru said he is aware of
pipeline projects in the works to ship
natural gas and its liquids from the
Utica region to processors on the Gulf
Coast, refineries in the Philadelphia
area, and to the western United
States and Canada, where natural gas
products will be used in sand and
shale oil production.
In the Utica shale, the construction
of this midstream infrastructure will
guide the progress and timing of its
development, said Ned Hill, dean of
the Maxine Levin College of Urban
Affairs at Cleveland State University,
which has been studying the Utica
and its economic ramifications.
While Momentum will have some
facilities operational later this year,
the bulk of the infrastructure needed
will take longer to build, but is being
planned — and drilling will continue
to increase as more infrastructure
comes online, Dr. Hill said.
“The major uptick in the drilling
activity will take place once the midstream facilities are largely in place,”
Dr. Hill said. “I see that as a two, twoand-a-half year period before those
investments are on the ground.”
Only the beginning
The prospect that most excites Dr.
Hill and other economic development experts is the effect they believe
the gas and its byproducts ultimately
will have on Ohio industries.
Drilling already is giving a tremendous boost to Ohio’s steel industry,
which produces pipe, tubing and other materials that drillers use. But in
the long run, the new resources will
have a profound effect on industries
such as specialty chemicals and plastics, which rely on natural gas and its
components for their raw materials,
Dr. Hill said.
“In about three years, you are going to see an increase in investment
by the users of the natural gas liquids,” Dr. Hill said. “When that takes
place, you’re going to see our nascent
plastics industry do much more compounding here, much more formulation here.”
Mr. Tsuru said he is only beginning
to make investments in Ohio. Backed
by large private equity investors that
have pumped more than $1 billion
into Momentum already, Mr. Tsuru
said there is no shortage of resources
to process and ship, nor a shortage of
capital to build more midstream
operations.
“It’s going to look like a house that
you’ve added on to 10 times,” he said
of his company’s ultimate network of
facilities and pipelines in Ohio.
“I think we’re going to be here a
long time.”
■
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11:50 AM
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FEBRUARY 11 - 17, 2013
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
19
Brewing: Industry grew about 14% in one year
continued from PAGE 1
According to the nonprofit Brewers Association, there are 2,126
craft breweries in the United States,
more than there have been since
1890. About 1,000 more are in the
works. Craft brewers sold about
11.5 million barrels of beer in 2011,
up about 14% from 10.1 million
barrels in 2010.
Ohio has 84 licensed breweries,
with nine pending permits, including Granite City Food and Brewery
in Lyndhurst, according to the Ohio
Division of Liquor Control.
The state has added 50 craft
breweries since 2007.
Even pioneer brewer Jack
McAuliffe, who in 1976 founded
New Albion Brewing Co. in California — considered the first modern
microbrewery in the country —
recently expressed interest in opening a brewpub in Cleveland.
“I look at 2013 as the year Ohio
tops 100 craft breweries,” said John
Najeway, vice president of the Ohio
Craft Brewers Association.
SUBMITTED
Paul Benner is the owner of the
Cleveland Brew Shop, which is
the area’s first home brew hub.
Tremont shop
specializes in
home brewing
Beer drinkers who want to
craft their own recipes can do
so at Cleveland Brew Shop,
which opened in November as
Cleveland’s first home brew
hub, at 2681 W. 14th St. in
Tremont.
Cleveland Brew Shop offers a
variety of supplies for home
brewers and vintners, including
hops, grains, brewing equipment, fermentation vessels, and
wine- and beer-making kits.
The shop conducts monthly
beer-making classes; the next
one is scheduled for March 2.
Owner Paul Benner also is
working with Fresh Fork Market,
a local community-supported
agriculture program, to hold
both a beginners’ and advanced
brewing class for that CSA’s
subscribers.
“We would then have an
Oktoberfest party for members
and unveil the (home brews) that
were created by the participants,” he said.
Mr. Benner, who is director of
admissions for Chamberlain
College of Nursing’s Cleveland
Branch, said he’s considering
applying for state permits that
would enable him to sell bottled
beers and function as a
small-scale brewery.
For store hours or more
information, visit:
clevelandbrewshop.com.
— Kathy Ames Carr
Not your parents’ frig
A larger age demographic has become more quality conscious and
connected to the creative, independent craft brewers, said Mr. Najeway, owner of Akron-based Thirsty
Dog Brewing Co., which has seen
its capacity surge from 7,000 barrels
a year in 2010 to 25,000 currently.
“When I was growing up, the
Strohs and the Buds were in my
parents’ refrigerators,” he said.
“Many of the 20-somethings now
were raised with craft beer in their
fridges, so that’s what they’re
choosing to drink.”
That market is part of what is driving Thirsty Dog’s production
swell, though Mr. Najeway, like
many of his Northeast Ohio artisan
brethren, are controlling their
growth. Thirsty Dog is currently in
14 states, and although other markets have their hands out for his
beer, Mr. Najeway is refraining.
“We want to continue to satisfy
market penetration in our existing
footprints,” he said. “We don’t
want to double distribution just to
double it.”
Fred Karm of Hoppin’ Frog
Brewery in Akron, which recently
was rated the 17th-best brewery in
the world by RateBeer.com,
emphasized similar thoughts of
methodical growth, even as
demand for his beer outpaces its
current capacity.
“We’ve been expanding our production by a factor of two since
2010,” Mr. Karm said. “We can pick
and choose our markets. It’s not
about trying to sell a million gallons
a year, but making sure we’re making a superior beer that we can go
home and drink with our friends
and family at night.”
Customers of the Brew Kettle in
Strongsville over the years also
have spanned a larger age range,
said founder Chris McKim. He noted his customers mainly were educated, middle- to upper-middle
class consumers when Brew Kettle
opened in 1995 as Ohio’s first brewon-premise microbrewery where
customers can make their own
brew.
Brew Kettle has expanded five
times since then and has logged
100% output growth, from 2,500
barrels in 2011 to 5,000 in 2012.
The brewery is on pace to double
capacity again this year.
JANET CENTURY
John Najeway, the owner of Thirsty Dog Brewing Co. in Akron and vice president of the Ohio Craft Brewers Association,
says his beer is being sold in 14 states, and there is demand for more.
“We’ve had a constant problem
of trying to keep up with production,” Mr. McKim said. “It’s terrifying sometimes. It’s like you keep
going down a roller coaster hill, and
you’re not sure when it’s doing to
stop.
“You just keep picking up
speed,” he said.
Great Lakes in a can? Maybe
Expansions and investments are
part of the brewing vernacular at
Great Lakes Brewing Co., which
now is at a point where it is landlocked because of its inability to
continue adding production capacity to its 65,000-square-foot brewhouse in Ohio City, said co-founder
Patrick Conway. The nation’s 18thlargest brewer is “working closely”
with the city of Cleveland to identify as much as 160,000 square feet
for additional production and
warehousing, Mr. Conway said.
“We need to expand, but we
don’t have room to expand,” Mr.
Conway said.
Great Lakes Brewing last year
maxed out its tank farm capacity
with the addition of three fermentation tanks, to bring to 38 the
number of 300-barrel stainless steel
vessels on premises. The current
annual brewing capacity of 200,000
is double its production of about
103,000 barrels in 2010, although it
expects to roll out 150,000 barrels
this year.
The challenge for his company,
Mr. Conway said, is “how do we get
to 300 or 400” thousand barrels per
year.
But expanding the company’s
brewing capacity isn’t the only
potential investment on Mr. Conway’s mind. Other investments
could include opening brewpubs in
other markets, producing larger,
750-milliter bottles and purchasing
a canning line to put its brew in
something other than bottles.
“We’re hurt in the summer when
our bottles can’t be in ball parks,
golf courses and other venues,” Mr.
Conway said.
A palace of fermentation
A couple blocks over from Great
Lakes Brewing, another Market
District stalwart is planning for production increases and other investments. Sam McNulty, owner of
Market Garden Brewery & Distillery
and four other area beer-centric
spots, said Phase I construction will
begin this year on the 43,000square-foot Culinary Market Building on West 24th Street, which he
bought last year for $800,000.
Phase I will include retrofitting
the building for additional brewing
and distilling, a retail store and a
charcuterie, the latter of which will
integrate cheeses, vinegars, pickles,
yogurt and any other foods tied to
fermentation.
“We may call it the Fermentation
Palace,” Mr. McNulty said.
The expenditure still is uncertain, but will be higher than the $4
million investment associated with
the Market Garden Brewery & Distillery on West 25th Street. The “Fermentation Palace” also will conduct workshops and tours.
His brewpub tanks in 2012 nourished the area with about 1,600 barrels of beer, and in 2013 he expects
to reach a capacity of producing
2,000 barrels annually. He plans to
produce “several multiples” of that
current target at the new facility.
“We want to grow methodically
and intentionally remain a boutique operation,” Mr. McNulty said.
The growth strategies Mr. McNulty and other area brewers are
deploying suggest that demand for
craft beer still may outpace supply
for years to come, according to
those who work in the industry,
which means more microbreweries
likely will continue to pop up
around Northeast Ohio.
“I hope so,” Mr. McNulty said. ■
20130211-NEWS--20-NAT-CCI-CL_--
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2/8/2013
11:46 AM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
FEBRUARY 11 - 17, 2013
NE OHIO SOFTWARE DEVELOPERS
RANKED BY LOCAL FULL-TIME EMPLOYEES
Number of local
full-time employees
Name
Address
Rank Phone/Web site
Full-time
local
1-1-2013 1-1-2012 programmers Industry specialization
Software products
Year Top local executive
founded Title
1
Hyland Software Inc.
28500 Clemens Road, Westlake 44145
(440) 788-5000/www.hyland.com
1,168
1,000
294
Health care, higher education,
government, financial services, insurance,
manufacturing
OnBase, enterprise content management
software suite
1991
Bill Priemer
president, CEO
2
MRI Software LLC
28925 Fountain Parkway, Solon 44139
(800) 321-8770/www.mrisoftware.com
320
266
NA
Business solutions for commercial and
residential property management and real
estate portfolio management
MRI Commercial, MRI Residential,
Workspeed, Bostonpost, VaultWare
1971
David M. Post
CEO
3
Snap-on Business Solutions Inc.
4025 Kinross Lakes Parkway, Richfield 44286
(330) 659-1600/www.sbs.snapon.com
240
230
65
Global electronic parts catalogs
Global EPC
2006
Timothy L. Chambers
president
4
TMW Systems Inc.
21111 Chagrin Blvd., Beachwood 44122
(216) 831-6606/www.tmwsystems.com
230
207
109
Trucking and logistics software
TMWSuite, TL2000, TruckMate, Innovative,
IDSC Netwise, IDSC ExpertFuel, TMT Fleet
Maintenance
1983
David W. Wangler
president
5
OEConnection
4205 Highlander Parkway, Richfield 44286
(330) 523-1800/www.oeconnection.com
197
202
36
Online parts and service exchange in the
automotive original equipment parts
business
OEC 2.0, D2DLink, CollisionLink,
RepairLink, LinkIQ
2000
Charles Rotuno
president, CEO
6
Turning Technologies
255 W. Federal St. , Youngstown 44503
(330) 746-3015/www.turningtechnologies.com
158
170
9
Assessment delivery and data collection
solutions including student and audience
response technology
TurningPoint, Triton Data Collection
System, ResponseWare, RemotePoll,
PresenterWare, QuestionPoint
2002
Mike Broderick
CEO, co-founder
7
BrandMuscle Inc.
1100 Superior Ave., Suite 500, Cleveland 44114
(216) 464-4342/www.brandmuscle.com
145
154
21
Marketing solutions
BrandBuilder, BrandPlanner,
BrandWorkshop, BrandLibrary, Digital
Asset Manager
2000
Philip Alexander
president
8
Fleetmatics Group(1)
31500 Bainbridge Road, Suite 1, Solon 44139
(888) 837-7243/www.fleetmatics.com
122
101
15
HVAC, telecom, cable, construction,
plumbing and security industries
Mobile Control
2003
Dennis Abrahams
COO
9
Virtual Hold Technology LLC
3875 Embassy Parkway, Suite 350, Akron 44333
(800) 854-1815/www.virtualhold.com
108
100
26
Technology, software, telephony, virtual
queuing, multichannel customer
experience
Conversation Bridge
1995
Wes Hayden
CEO
10
Explorys Inc.
8501 Carnegie Ave., Suite 200, Cleveland 44106
(216) 767-4700/www.explorys.com
78
50
40
Health care transformation, health care IT
EPM: Explore, EPM: Measure, EPM:
Registry, EPM: Engage
2009
Charlie Lougheed,
president, chief
strategy officer;
Stephen McHale, CEO
11
Knotice
526 S. Main St., Suite 705, Akron 44311
(800) 801-4194/www.knotice.com
75
88
13
Data management, analytics and digital
messaging solutions
The Knotice Platform
2003
Brian Deagan
CEO
12
Foundation Software
150 Pearl Road, Brunswick 44212
(800) 246-0800/www.foundationsoft.com
72
58
12
Accounting software for construction
Foundation for Windows
1985
Fred Ode
chairman, CEO
13
MIM Software Inc.
25200 Chagrin Blvd., Suite 200, Cleveland 44122
(216) 455-0600/www.mimsoftware.com
67
61
NA
Medical imaging
MIM, Mobile MIM, MIMcloud, MIM
Symphony, MIM Encore, MIM Maestro
1999
A. Dennis Nelson
CEO
14
Software Answers Inc.
6770 W. Snowville Road, Suite 200, Brecksville 44141
(440) 526-0095/www.progressbook.com
54
53
24
Web-based K-12 student, classroom,
school and district management software
ProgressBook, GradeBook, ParentAccess,
StudentInformation (SIS), SpecialServices,
DataMap
1994
Paul Chaffee
CEO
15
Urbancode Inc.
2044 Euclid Ave., Suite 600, Cleveland 44115
(216) 858-9000/www.urbancode.com
53
29
23
Technology
AnthillPro, uDeploy, uBuild, uRelease
1996
Maciej Zawadzki
CEO
16
TOA Technologies
3333 Richmond Road, Suite 420, Beachwood 44122
(216) 925-5950/www.toatech.com
52
30
0
Field service management software
ETAdirect software suite
2003
Yuval Brisker
president, CEO
17
Easy2 Technologies
1220 Huron Road E., 7th floor, Cleveland 44115
(216) 812-3200/www.easy2.com
44
44
12
Consumer product manufacturers and
retailers
MYO (Make Your Own) Demo
1999
Ethan Cohen
CEO
17
New Innovations Inc.
3743 Boettler Oaks Drive, Uniontown 44685
(330) 899-9954/www.new-innov.com
44
38
15
Medical
Residency Management Suite
1995
Steve Reed
CEO
19
Main Sequence Technology Inc.
4420 Sherwin Road, Hamilton Hall, Willoughby 44094
(440) 946-5214/www.pcrecruiter.com
43
45
9
HR applicant tracking, recruiting CRM,
staffing software
PCRecruiter, PCRecruiter Resume Inhaler,
PCRecruiter Outlook Portal, MacRecruiter
1998
Martin H. Snyder,
president; William F.
Kubicek IV, vice
president, marketing
20
FeneTech Inc.
260 Campus Drive, Aurora 44202
(330) 995-2830/www.fenetech.com
42
35
20
Fenestration ERP, Sales Automation
FeneVision
1997
Ronald W. Crowl
president, CEO
20
ID Networks Inc.
7720 Jefferson Road, Ashtabula 44004
(440) 992-0062/www.idnetworks.com
42
41
15
Software solutions for law enforcement
agencies
Jail Management, Records Management,
ImageNet, FingerRoll Livescans, CAD and
Mobile Systems
1991
Douglas Blenman Sr.
president
22
Data-Basics Inc.
9450 Midwest Ave., Cleveland 44125
(216) 663-5600/www.databasics.com
41
37
21
Service management and accounting
SAM Pro Enterprise, TechAnywhere for
Android
1974
Arthur K. Divell
CEO
23
Tribute Inc.
1696-F Georgetown Road, Hudson 44236
(330) 656-3006/www.tribute.com
40
36
8
Industrial distribution, fluid power, hose,
gaskets, seals, power transmission,
process equipment, automation
Tribute Software, TrulinX Software
1981
Timothy Reynolds
president, CEO
24
Imaging Science and Service Inc.
95 Executive Parkway, Suite 500, Hudson 44236
(330) 342-7760/www.issimage.com
39
37
8
Regulatory document compliance - sales
and use tax exemptions, freight
forwarding, product liability
TEAMS Express, LineLink
1994
Philip C. Hodge
CEO
25
PreEmptive Solutions LLC
767 Beta Drive, Mayfield Village 44143
(440) 443-7200/www.preemptive.com
35
30
13
Software security, application analytics
Dotfuscator, DashO, Runtime Intelligence
1996
Gabriel Torok
CEO
26
ONOSYS, a LivingSocial Company
1220 W. Sixth St., Suite 200, Cleveland 44113
(216) 426-0000/www.onosys.com
30
20
11
E-commerce, SaaS (Software as a Service) ONOSYS Online Ordering
2005
Oleg Fridman
Stan Garber
Alex Yakubovich
co-founders, partners
26
Segmint Inc.
One Cascade Plaza, Suite 1800, Akron 44308
(888) 734-6468/www.segmint.com
30
22
12
Financial services, health care, higher
education, sports and entertainment
SegmintOne
2008
Russel R. Heiser II
president, CEO
28
Pointe Blank Solutions Ltd.
7055 Engle Road, Suite 304, Middleburg Heights 44130
(440) 243-5100/www.pointeblank.net
29
25
NA
Health care, government
CasePointe, PropertyPointe, LivingPointe,
ProjectPointe, DocuPointe
2000
Thomas J. Coury
chairman, chief
software architect
29
Associated Software Consultants Inc.
7251 Engle Road, Suite 400, Middleburg Heights 44130
(440) 826-1010/www.asconline.com
26
24
7
1978
Timothy W. Liston
president
Mortgage, consumer and business lending PowerLender Loan Origination &
software solutions for mortgage banks,
Processing System, PowerSeller
community banks, credit unions
Secondary Marketing System
See LIST Page 21
20130211-NEWS--21-NAT-CCI-CL_--
2/8/2013
11:46 AM
Page 1
FEBRUARY 11 - 17, 2013
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Number of local
full-time employees
Full-time
local
programmers
Industry specialization
1-1-2013 1-1-2012
Name
Address
Rank Phone/Web site
21
Year Top local executive
founded Title
Software products
30
Axentis Inc.
1660 W. Second St., Suite 250, Cleveland 44113
(216) 896-8300/www.axentis.com
25
22
NA
Governance, risk and compliance
management
Axentis Enterprise
1999
NA
30
Dakota Software
23240 Chagrin Blvd., Suite 620, Cleveland 44122
(216) 765-7100/www.dakotasoft.com
25
22
12
Environment, health and safety
ProActivity Suite, Dakota Profiler, Dakota
Auditor, Dakota Tracer, Dakota Scout,
Dakota Metrics
1989
Reg Shiverick
president
30
VeDiscovery LLC
1382 W. Ninth St., Suite 400, Cleveland 44113
(216) 241-3443/www.vediscovery.com
25
17
NA
Electronic data discovery for legal,
medical, regulatory and knowledge
management
VeHOLD (includes VeAGENT),
VeANALYTICS, VeREVIEW, VePROCESS
2012
Ronald K. Copfer
founder, CEO
33
Datacore Consulting LLC
5755 Granger Road, Suite 777, Independence 44131
(800) 244-4241/www.datacoreonline.com
20
18
6
Backup and disaster recovery
BDR
1998
Jim Conley
CEO
34
Specialized Business Software
6325 Cochran Road, Unit 1, Solon 44139
(440) 542-9145/www.specializedbusinesssoftware.com
16
23
NA
Financial services, government, technology Docunym Document Imaging and Workflow
1999
Steve Wiser
president
34
Tharo Systems Inc.
2866 Nationwide Parkway, Brunswick 44212
(330) 273-4408/www.tharo.com
16
15
NA
All industries
EASYLABEL 5 Silver, EASYLABEL 5 Gold,
EASYLABEL 5 Platinum, EASYLABEL 5
Print Only, EASYLABEL 5 Multi-User
1982
Randy Thatcher
president
36
Monarch Teaching Technology Inc.
20600 Chagrin Blvd., Suite 703, Shaker Heights 44118
(800) 593-1934/www.monarchtt.com
15
12
4
Education
VizZle
2005
Terry Murphy
CEO
36
Workflow.com
875 Westpoint Pkwy, Suite 510, Westlake 44145
(440) 827-2000/www.workflow.com
15
13
5
Medical records software
Workflow EHR, Workflow PM
2004
Packy Hyland
CEO
38
Apteryx Inc.
313 S. High St., Suite 200, Akron 44308
(330) 376-0889/www.apteryx.com
13
13
4
Custom applications for medical, dental
and synthetic imaging, image processing,
data security
Apteryx Imaging (dental imaging software),
DICOM Capture View (DCV), DataGrabber,
Continuum
1995
Kevin Crucs
president
39
IQS Inc.
25000 Country Club Blvd., Suite 400, North Olmsted 44070
(440) 333-1344/www.iqs.com
12
12
NA
Discrete and process manufacturing,
automotive, aerospace and defense,
medical device manufacturing
IQS Quality and Compliance Software
1988
Michael Rapaport
president, CEO
40
Bearware Inc.
7160 Chagrin Road, Suite 210, Chagrin Falls 44023
(440) 893-2327/www.bearwareinc.com
11
11
1
Logistics and supply chain
Retail Distribution System, webTMS, Retail
Payment System, Claims Management
System
1987
Robert J. Brooks III
president, COO
40
Henning Industrial Software Inc.
102 First St., Suite 211, Hudson 44236
(330) 650-4212/www.henningsoftware.com
11
11
4
ERP and accounting software
Visual EstiTrack ERP, Visual Books
Accounting, Visual WebTrack, iVET Mobile
1990
Richard G. Henning
president
42
Factivity Inc.
23400 Mercantile Road, Suite 1A, Beachwood 44122
(216) 514-5141/www.factivity.com
10
10
NA
Manufacturing
Factivity, Planet Together
1984
John Leibert
president
42
Incom Integrated Computer Systems Inc.
7353 Austin Powder Drive, Glenwillow 44139
(440) 439-7000/www.netincom.com
10
10
4
Lawfirms, membership organizations;
unions, political organizations, gyms,
neighborhood associations
Membership Tracking Program, Benefits
Tracking Program, LPA Tracker
1988
Jon P. Lorenzo
president, CEO
44
Linestream Technologies
1468 W. Ninth St., Suite 100, Cleveland 44113
(216) 862-7874 /www.linestream.com
9
5
3
Software
SpinTAC
2008
David Neundorfer
president, CEO
44
Point2 Property Manager
6001 E. Royalton Road, Suite 150, Broadview Heights 44147
(866) 602-9007/www.point2propertymanager.com
9
9
4
Property management
Point2 Property Manager
2007
Don Katt
director of development
46
Curtis Research Inc.
520 S. Main St., Suite 2442, Akron 44311
(330) 376-7665/www.curtissoft.com
8
8
NA
Health care
Proclaim ZAP
1985
David Kosakowski
vice president, sales
46
LogicJunction Inc.
23950 Commerce Park Road, Beachwood 44122
(216) 292-5760/www.logicjunction.com
8
8
2
Hospital wayfinding, software development
and 3D animations; custom solutions for
LogicalEngine, Remote Agents
medical, retail, government
2000
Mark Jowell
CEO
46
Spede Technologies
24864 Detroit Road, Cleveland 44145
(440) 808-8888/www.spede.com
8
9
3
Real-time inventory control systems for
warehouses and manufacturing, PLCcontrolled labeling
1980
Bob Bunsey
president
SPEDE Material Control System, SPEDE
Line-side Labeling System
Source: 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. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Formerly SageQuest.
RESEARCHED BY Deborah W. Hillyer
REAL ESTATE CLASSIFIED
Phone: (216) 522-1383 Fax: (216) 694-4264
Contact: Denise Donaldson
E-mail: [email protected]
AUCTION
Another Bambeck Auctioneers Inc.
Real Estate Auction
March 21 • 11:00 AM On-Site
List your Industrial,
commercial or
Retail Space Here!
Crain’s Cleveland Business’ classifieds will
help you fill that space..
Former 50 Bed Long-Term Care Facility
Contact Denise Donaldson at
216.522-1383
Ashtabula OH
[email protected]
Redevelopment Opportunity
See Web Site For Terms of Sale:
Bambeck Auctioneers Inc.
www.bambeck.com
For daily on-line
updates, sign up @
CrainsCleveland.com/Daily
REALTORS:
Now is a great time to promote your
Luxury Properties to high-end prospects.
Call 216.522.1383 for more details.
Copy Deadline: Wednesdays @ 2:00 p.m.
All Ads Pre-Paid: Check or Credit Card
BUSINESSES FOR SALE
FOR SALE
Business for Sale
Dining room set and
breakfront for sale
Well established Ohio retailer, with 2 prime locations within
Cleveland metro, specializing in army-navy surplus, workwear,
and outdoor products. Company has clean financials and strong
growth potential. Price: $575K Terms: Cash. May consider partial
owner finance over two years. Seller will stay on as consultant for
3 months. Only pre-qualified buyers will be considered.
Email: [email protected] or call 800-880-2485
LOOKING TO SLOW
DOWN and SELL
YOUR BUSINESS?
Motivated Entrepreneur
Seeking An Owner Who Will
TRAIN and Eventually
SELL Business.
Contact Me Confidentially at
216-952-0428 or
[email protected].
BUSINESS
SERVICE
OWNERS!
From Stafford Company.
Mahogany; table, 68” length, 45”
width. Six chairs, three 18” leaves,
½” leather pad for entire table.
Excellent condition. Purchased at
Sedlak’s for $13,000; sale price,
$6,000. Moving -- must sell.
Rocky River. Free delivery.
440-596-0230
BUSINESS
SERVICES
Submit your business card to
promote your service.
Want to Buy or Sell
a Business?
To find out more, contact
Denise Doanldson at
216.522.1383
440-461-2202
Free Seller Market Analysis
See our listings at
www.empirebusinesses.com
20130211-NEWS--22-NAT-CCI-CL_--
2/8/2013
11:47 AM
Page 1
LEGAL NOTICE
LEGAL NOTICE
LEGAL NOTICE
To merchants who have accepted Visa and
MasterCard at any time since January 1, 2004:
Notice of a 6+ billion dollar class action settlement.
Si desea leer este aviso en español, llámenos o visite nuestro sitio web.
Notice of a class action settlement authorized by the U.S.
District Court, Eastern District of New York.
This notice is authorized by the Court to inform you about
an agreement to settle a class action lawsuit that may affect
you. The lawsuit claims that Visa and MasterCard, separately,
and together with banks, violated antitrust laws and caused
merchants to pay excessive fees for accepting Visa and
MasterCard credit and debit cards, including by:
™ Agreeing to set, apply, and enforce rules about merchant
fees (called default interchange fees);
™ Limiting what merchants could do to encourage their
customers to use other forms of payment through, for
example, charging customers an extra fee or offering
discounts; and
™ Continuing that conduct after Visa and MasterCard
changed their corporate structures.
The defendants say they have done nothing wrong. They
say that their business practices are legal and the result of
competition, and have benefitted merchants and consumers.
The Court has not decided who is right because the parties
agreed to a settlement. On November 27, 2012, the Court
gave preliminary approval to this settlement.
THE SETTLEMENT
Under the settlement, Visa, MasterCard, and the bank
defendants have agreed to make payments to two settlement
funds:
™ I]Z Äghi ^h V ¹8Vh] ;jcYº · V +#%* W^aa^dc [jcY i]Vi
will pay valid claims of merchants that accepted Visa
or MasterCard credit or debit cards at any time between
January 1, 2004 and November 28, 2012.
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Veegdm^bViZan&#'W^aa^dc·i]Vil^aaWZWVhZYdcVedgi^dc
of the interchange fees attributable to certain merchants
that accept Visa or MasterCard credit cards for an
Z^\]i"bdci]¹>ciZgX]Vc\ZEZg^dY#º
Additionally, the settlement changes some of the Visa and
MasterCard rules applicable to merchants who accept their
cards.
This settlement creates two classes:
™ A Cash Settlement Class (Rule 23(b)(3) Settlement Class),
which includes all persons, businesses, and other entities
that accepted any Visa or MasterCard cards in the U.S. at
any time from January 1, 2004 to November 28, 2012, and
™ A Rule Changes Settlement Class (Rule 23(b)(2) Settlement
Class), which includes all persons, businesses, and entities
that as of November 28, 2012 or in the future accept any
Visa or MasterCard cards in the U.S.
WHAT MERCHANTS WILL GET
FROM THE SETTLEMENT
Every merchant in the Cash Settlement Class that files a valid
XaV^bl^aa\ZibdcZn[gdbi]Z+#%*W^aa^dc8Vh];jcY!hjW_ZXi
idVYZYjXi^dccdiidZmXZZY'*d[i]Z[jcYidVXXdjci[dg
merchants who exclude themselves from the Cash Settlement
Class. The value of each claim, where possible, will be based
on the actual or estimated interchange fees attributable to the
merchant’s MasterCard and Visa payment card transactions
[gdb?VcjVgn&!'%%)idCdkZbWZg'-!'%&'#EVnbZcihid
merchants who file valid claims for a portion of the Cash
;jcYl^aaWZWVhZYdc/
™ The money available to pay all claims,
™ The total dollar value of all valid claims filed,
™ I]Z YZYjXi^dc YZhXg^WZY VWdkZ cdi id ZmXZZY '* d[ i]Z
8Vh]HZiiaZbZci;jcY!VcY
™ The cost of settlement administration and notice, money
awarded to the class representatives, and attorneys’ fees and
expenses all as approved by the Court.
>c VYY^i^dc! bZgX]Vcih ^c i]Z 8Vh] HZiiaZbZci 8aVhh
that accept Visa and MasterCard during the eight-month
>ciZgX]Vc\ZEZg^dYVcYÄaZVkVa^YXaV^bl^aa\ZibdcZn[gdb
i]ZhZeVgViZ>ciZgX]Vc\Z;jcY!Zhi^bViZYidWZVeegdm^bViZan
&#'W^aa^dc#I]ZkVajZd[ZVX]XaV^b!l]ZgZedhh^WaZ!l^aaWZ
WVhZY dc Vc Zhi^bViZ d[ dcZ"iZci] d[ & d[ i]Z bZgX]Vci¼h
Visa and MasterCard credit card dollar sales volume during
i]VieZg^dY#EVnbZcihidbZgX]Vcihl]dÄaZkVa^YXaV^bh[dg
Vedgi^dcd[i]Z>ciZgX]Vc\Z;jcYl^aaWZWVhZYdc/
™ The money available to pay all claims,
™ The total dollar value of all valid claims filed, and
™ The cost of settlement administration and notice, and any
attorneys’ fees and expenses that may be approved by the
Court.
Attorneys’ fees and expenses and money awarded to the class
representatives/;dgldg`YdcZi]gdj\]ÄcVaVeegdkVad[i]Z
settlement by the district court, Class Counsel will ask the
Court for attorneys’ fees in an amount that is a reasonable
egdedgi^dcd[i]Z8Vh]HZiiaZbZci;jcY!cdiidZmXZZY&&#*
d[i]Z8Vh]HZiiaZbZci;jcYd[+#%*W^aa^dcVcY&&#*d[i]Z
>ciZgX]Vc\Z;jcYZhi^bViZYidWZ&#'W^aa^dcidXdbeZchViZ
all of the lawyers and their law firms that have worked on the
XaVhhXVhZ#;dgVYY^i^dcValdg`idVYb^c^hiZgi]ZhZiiaZbZci!
distribute both funds, and through any appeals, Class Counsel
may seek reimbursement at their normal hourly rates, not
id ZmXZZY Vc VYY^i^dcVa & d[ i]Z 8Vh] HZiiaZbZci ;jcY
d[ +#%* W^aa^dc VcY Vc VYY^i^dcVa & d[ i]Z >ciZgX]Vc\Z
;jcYZhi^bViZYidWZ&#'W^aa^dc# 8aVhh8djchZal^aaVahd
request reimbursement of their expenses (not including the
administrative costs of settlement or notice), not to exceed
)%b^aa^dcVcYjeid'%%!%%%eZg8aVhhEaV^ci^[[^chZgk^XZ
awards for their efforts on behalf of the classes.
HOW
TO
ASK
FOR
PAYMENT
To receive payment, merchants must fill out a claim form.
>[i]Z8djgiÄcVaanVeegdkZhi]ZhZiiaZbZci!VcYndjYdcdi
exclude yourself from the Cash Settlement Class, you will
receive a claim form in the mail or by email. Or you may
Vh` [dg dcZ Vi/ lll#EVnbZci8VgYHZiiaZbZci#Xdb! dg XVaa/
&"-%%"+'*"+))%#
OTHER BENEFITS
FOR
MERCHANTS
Merchants will benefit from changes to certain MasterCard
and Visa rules, which will allow merchants to, among other
things:
™ Charge customers an extra fee if they pay with Visa or
MasterCard credit cards,
™ Offer discounts to customers who do not pay with Visa or
MasterCard credit or debit cards, and
™ ;dgbWjn^c\\gdjehi]VibZZiXZgiV^cXg^iZg^VidcZ\di^ViZ
with Visa and MasterCard.
Merchants that operate multiple businesses under different
trade names or banners will also be able to accept Visa or
MasterCard at fewer than all of the merchant’s trade names
and banners.
LEGAL RIGHTS
AND
OPTIONS
Merchants who are included in this lawsuit have the legal
rights and options explained below. You may:
š <_b[ W YbW_c je Wia \eh fWoc[dj$ You will receive
a claim form in the mail or email or file online at:
lll#EVnbZci8VgYHZiiaZbZci#Xdb#
š ;nYbkZ[ oekhi[b\ from the Cash Settlement Class (Rule
'(W( HZiiaZbZci 8aVhh# >[ ndj ZmXajYZ ndjghZa[! ndj
can sue the Defendants for damages based on alleged
conduct occurring on or before November 27, 2012 on
ndjg dlc Vi ndjg dlc ZmeZchZ! ^[ ndj lVci id# >[ ndj
exclude yourself, you will not get any money from this
hZiiaZbZci# >[ ndj VgZ V bZgX]Vci VcY l^h] id ZmXajYZ
yourself, you must make a written request, place it in an
envelope, and mail it with postage prepaid and postmarked
no later than CWo (." (&') to Class Administrator,
EVnbZci8VgY>ciZgX]Vc\Z;ZZHZiiaZbZci!E#D#7dm'*(%!
EdgiaVcY! DG .,'%-"'*(%# I]Z lg^iiZc gZfjZhi bjhi WZ
signed by a person authorized to do so and provide all of
i]Z [daadl^c\ ^c[dgbVi^dc/ & i]Z ldgYh ¹>c gZ EVnbZci
8VgY >ciZgX]Vc\Z ;ZZ VcY BZgX]Vci 9^hXdjci 6ci^igjhi
A^i^\Vi^dc!º'ndjg[jaacVbZ!VYYgZhh!iZaZe]dcZcjbWZg!
and taxpayer identification number, (3) the merchant that
wishes to be excluded from the Cash Settlement Class
(Rule 23(b)(3) Settlement Class), and what position or
authority you have to exclude the merchant, and (4) the
business names, brand names, and addresses of any stores
or sales locations whose sales the merchant desires to be
excluded. Note: OekYWddejX[[nYbkZ[Z\hecj^[Hkb[9^Wd][i
I[jjb[c[dj9bWii (Rule 23(b)(2) Settlement Class).
š EX`[Yj je j^[ i[jjb[c[dj# I]Z YZVYa^cZ id dW_ZXi
is: CWo (." (&')# Id aZVgc ]dl id dW_ZXi! hZZ/
lll#EVnbZci8VgYHZiiaZbZci#XdbdgXVaa&"-%%"+'*"+))%#
CdiZ/ >[ ndj ZmXajYZ ndjghZa[ [gdb i]Z 8Vh] HZiiaZbZci
8aVhhndjXVccdidW_ZXiidi]ZiZgbhd[i]Viedgi^dcd[i]Z
settlement.
;dg bdgZ ^c[dgbVi^dc VWdji i]ZhZ g^\]ih VcY dei^dch! k^h^i/
lll#EVnbZci8VgYHZiiaZbZci#Xdb#
IF
COURT APPROVES
FINAL SETTLEMENT
THE
THE
Members of the Rule Changes Settlement Class are bound
by the terms of this settlement. Members of the Cash
Settlement Class, who do not exclude themselves by the
deadline, are bound by the terms of this settlement whether
or not they file a claim for payment. Members of both
classes release all claims against all released parties listed in
the Settlement Agreement. The settlement will resolve and
release any claims by merchants against Visa, MasterCard
or other defendants that were or could have been alleged
in the lawsuit, including any claims based on interchange
or other fees, no-surcharge rules, no-discounting rules,
honor-all-cards rules and other rules. The settlement will also
resolve any merchant claims based upon the future effect of
any Visa or MasterCard rules, as of November 27, 2012 and
not to be modified pursuant to the settlement, the modified
rules provided for in the settlement, or any other rules
substantially similar to any such rules. The releases will not
bar claims involving certain specified standard commercial
disputes arising in the ordinary course of business.
;dg bdgZ ^c[dgbVi^dc dc i]Z gZaZVhZ! hZZ i]Z hZiiaZbZci
V\gZZbZciVi/lll#EVnbZci8VgYHZiiaZbZci#Xdb#
THE COURT HEARING ABOUT
THIS SETTLEMENT
On September 12, 2013, there will be a Court hearing to
decide whether to approve the proposed settlement, class
counsels’ requests for attorneys’ fees and expenses, and
awards for the class representatives. The hearing will take
place at:
United States District Court for the
Eastern District of New York
''*8VYbVcEaVoV
7gdd`anc!CN&&'%&
You do not have to go to the court hearing or hire an attorney.
7jindjXVc^[ndjlVciid!VindjgdlcXdhi#I]Z8djgi]Vh
appointed the law firms of Robins, Kaplan, Miller & Ciresi
AAE!7Zg\ZgBdciV\jZ!E8!VcYGdWW^ch<ZaaZgGjYbVc
9dlYAAEidgZegZhZcii]Z8aVhh¹8aVhh8djchZaº#
QUESTIONS?
;dg bdgZ ^c[dgbVi^dc VWdji i]^h XVhZ In re Payment Card
Interchange Fee and Merchant Discount Antitrust Litigation,
MDL 1720), you may:
8Vaaidaa"[gZZ/&"-%%"+'*"+))%
K^h^i/lll#EVnbZci8VgYHZiiaZbZci#Xdb
Write to the Class Administrator:
EVnbZci8VgY>ciZgX]Vc\Z;ZZHZiiaZbZci
E#D#7dm'*(%
EdgiaVcY!DG.,'%-"'*(%
:bV^a/^c[d5EVnbZci8VgYHZiiaZbZci#Xdb
EaZVhZX]ZX`lll#EVnbZci8VgYHZiiaZbZci#Xdb[dgVcnjeYViZh
relating to the settlement or the settlement approval process.
w w w. P a y m e n t C a r d S e t t l e m e n t . c o m
sINFO 0AYMENT#ARD3ETTLEMENTCOM
LEGAL NOTICE
LEGAL NOTICE
LEGAL NOTICE
20130211-NEWS--23-NAT-CCI-CL_--
2/8/2013
2:06 PM
Page 1
FEBRUARY 11 - 17, 2013
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
23
THEINSIDER
THEWEEK
FEBRUARY 4 - 10
The big story: It was no surprise that the twoyear state budget Gov. John Kasich unveiled last
week would reduce personal income taxes. Unforeseen, though, was a call for a reduction in the
state sales tax to 5% from 5.5%, and another tax
cut that would provide a significant reduction to
small businesses. See analysis, Page One
Bridgework: The Ohio Department of Transportation announced the final three teams that will
vie for an estimated $330 million contract to design, construct and finance the second Inner Belt
bridge in Cleveland and demolish the existing, aging span. They are: Kokosing Construction Co.
with Michael Baker Jr. Inc.; Trumbull Corp., Great
Lakes Construction Co. and Ruhlin Co. with URS
Corp.; and Walsh Construction with HDR Engineering Inc. The finalists will submit detailed financial and technical proposals that ODOT will
score on seven elements, including design, construction scheduling and green building initiatives.
Goodbye, Cleveland: Eaton Corp. plans to finish moving into its new Beachwood building by
Feb. 18. It began vacating its longtime downtown
Cleveland home Feb. 2. Eaton said it will refer to
the Beachwood
building
as
“Eaton Center.”
The company’s
headquarters
now
is
in
Dublin, Ireland,
following its acquisition
of
Cooper Industries of Ireland
PROVIDED BY EATON CORP.
last year. The The new Eaton Center
diversified
manufacturer said it will house about 700 employees at the new Beachwood building in the
Chagrin Highlands corporate office park.
REPORTERS’ NOTEBOOK
BEHIND THE NEWS WITH CRAIN’S WRITERS
Akron Law to cut
startups a break
■ Beginning this Thursday, Feb. 14, the University of Akron School of Law will offer at its
Lakewood campus, 14725 Detroit Ave., free
and discounted legal advice to small startup
businesses.
The school’s new Small Entrepreneur and
Economic Development, or SEED, Legal
Clinic is booked with appointments for its
first office hours, according to Gary Spring,
clinic director.
And he expects it to keep busy.
“Everywhere we go, there’s demand from
people looking for help with their business,”
Mr. Spring said.
Mr. Spring and another attorney are leading a team of six law school students who
will advise businesses on a variety of legal
needs, such as contracts and commercial
leases. The clinic is scheduled to offer office
hours every other week, but could ramp up
if the demand is there, Mr. Spring said.
Initial consultation and services are free,
but those businesses that seek continuing
services will be charged a $300 fee, which is
“still a bargain,” Mr. Spring said. Such legal
services can cost tens of thousands of dollars, he said.
The aim of the clinic is to give practical
experience to the law students while meeting the needs of businesses. The intent is not
to compete with the Cleveland Metropolitan
Bar Association and its members, Mr. Spring
said.
To be eligible for clinic participation, a
business must have operated for fewer than
WHAT’S NEW
Time to think about it: Pepper Pike financier
A. Eddy Zai was sentenced to more than seven
years in prison and ordered to forfeit more than
$23 million for his participation in a fraud against
the now-defunct St. Paul Croatian Federal Credit Union in Eastlake. Last November, Zai pleaded
guilty to nine federal counts in the fraud scheme.
After getting pasted …: Ferro Corp. sold its
solar pastes business, which has been a millstone
around the company’s neck the last couple years
because of a decline in production of solar cells,
where the pastes are used. Ferro said the buyer is
Heraeus, a privately owned precious metals and
technology company based in Hanau, Germany.
Terms of the transaction were not disclosed.
This and that: Data analysis software developer Segmint Inc. of Akron raised about $3.3
million from a group of 50 investors, according
to a filing with the Securities and Exchange
Commission. The money will be used to cover
general expenses. … The Cleveland Clinic added
another partner to its growing Innovation
Alliance — a collaborative effort designed to lead
to the commercialization of medical technologies. Its newest partner, the Innovation Institute,
is a newly launched for-profit company based in
Orange County, Calif., owned by a group of nonprofit health systems.
All the way
with A.J.?
■ A.J. Hyland for president?
Don’t
hold
your
breath. But don’t be surprised if at some point
you see his name on a Hyland
ballot.
The former CEO of Westlake’s Hyland
Software Inc. said he is thinking about getting into politics at some point.
It may never happen, and even if it does,
Mr. Hyland said he isn’t sure what office he
would seek. But he could start a third political party “that actually tries to make the
country better instead of bowing to special
interests,” he said via email, noting that he’s
registered as an independent.
If he did run for an office, he probably
could make a large donation to his own campaign: Hyland Software, which makes content management software, has done particularly well since Mr. Hyland took over as CEO
for his older brother Packy 12 years ago. It
employed 1,168 people in Northeast Ohio as
of Jan. 1, up from 134 at the start of 2001.
The younger Mr. Hyland stepped down as
CEO last month, saying he wanted to focus
more on his family and philanthropic causes. He was replaced by chief operating officer Bill Priemer. — Chuck Soder
In Ohio, things are cooking
COMPANY: National Safety Apparel,
Cleveland
PRODUCT: WorkWear line in UltraSoft AC fabric
The company describes the UltraSoft AC
fabric as its “most comfortable flame-resistant material yet.”
National Safety Apparel, which makes protective apparel for industrial safety workers,
says its flame-resistant work garments have
been revamped “to be more comfortable,
modern, and customizable,” and the UltraSoft AC fabric is the latest variety to be
added. Work shirts and coveralls are available in either 7-ounce medium blue or khaki,
while coveralls and work pants are made with
9-ounce navy fabric.
Each garment is offered with optional features to best fit the needs of the job. For instance, work shirts are available with multiple pockets, pocket flaps, and short sleeves.
Work pants offer cargo pockets, flame-resistant hook-and-loop adjusters and additional
knee reinforcement patches.
The “enhanced softness” of the material
comes from its 88% Pima cotton and 12%
high-tenacity nylon blend, resulting in “an inherently flame-resistant finished product,” National Safety Apparel says.
For information, visit www.nsamfg.com.
Send information about new products to
managing editor Scott Suttell at
[email protected].
Advertising ROI,
and then some
■ Local nonprofits looking to make a splash
over the airwaves, in print, on billboards or
other media could do so at a significantly
discounted rate with the help of the Cleveland chapter of the American Advertising
Federation.
The group is looking for local nonprofits
that want to maximize their media budgets,
and AAF-Cleveland guarantees a three-toone return on the investment. For instance,
if a group has an advertising budget of
$10,000, AAF-Cleveland guarantees $30,000
in market value for the investment.
“It is a deeply discounted amount,” said
Jim Gagen, president at SynerG Marketing &
Media in Lakewood and the chairman of the
AAF-CLE project. “They see value in it.”
This is the second year AAF-CLE has offered the service, which is made possible
through donated air time and other media.
Last year’s participants included Big Brothers/Big Sisters of Greater Cleveland, the
Beck Center for the Arts in Lakewood and
Guidestone, an agency that offers social services ranging from assistance with finding
work to counseling for troubled youth.
All the revenue generated from the program supports the AAF-Cleveland’s scholarship program, which assists Northeast Ohio
college students pursuing careers in communication. Interested groups should visit
www.aafcleveland.com/aafcle-non-profitprogram for information.
— Timothy Magaw
BEST OF THE BLOGS
Excerpts from recent blog entries on
CrainsCleveland.com.
Sharing’s a virtue: University Hospitals
Health System is about to start sharing health
records with other hospitals. UH is the first major hospital system in Cleveland that has agreed
to share records through the state of Ohio’s
health information exchange. The agreement is
a big win for the CliniSync exchange, which is
trying to get hospitals all over Ohio to share electronic medical records. Not only will UH’s 10
hospitals and 100 physician practices join the exchange — which now has received commitments from 71 hospitals and hundreds of private
practices — but the agreement also shows CliniSync can win over big hospital systems.
five years, post annualized gross revenues of
less than $100,000 and be otherwise unable
to afford an attorney, Mr. Spring said.
—Michelle Park
■ It feels like Ohio is the center of the
restaurant universe — at least according to
trade publication Nation’s Restaurant News.
The Penton Media property included
Melt Bar & Grilled and
two
Columbus-based
chains —Jeni’s Splendid
Ice Creams and Piada
Italian Street Food — in
its list of 50 breakout
brands for 2013.
Melt was singled out
for “breakout factors”
that include a “distinctive beverage program,” an “innovative approach to
food/operations” and premium products.
The Lakewood chain, started by Matt Fish,
has four restaurants now and plans a
Columbus eatery next year.
Jeni’s has a store in Chagrin Falls and has
made its products widely available in
Northeast Ohio grocery stores. Piada has
restaurants in South Euclid and Canton.
In addition, Cleveland chef Jonathon
Sawyer was named the MenuMasters Innovator for 2013. The awards are produced by
Nation’s Restaurant News and sponsored by
Ventura Foods. They honor outstanding
menu development plus excellence in foodservice research and development.
Publisher Randall Friedman said Mr.
Sawyer “is truly a trailblazer in culinary innovation and never rests on his latest success.”
Cold comfort
■ There was a choice comment from a
Cleveland commodity futures trader in a
Wall Street Journal story about financial
con man Russell Wasendorf Sr., who recently was sentenced to the maximum 50 years
in jail after admitting to orchestrating a
fraud at his futures brokerage and mislead-
ing regulators for almost 20 years.
Wasendorf, 64, pleaded guilty last September to the fraud at Peregrine Financial
Group Inc. that federal prosecutors said
“had cost clients $215.5 million and masked
a business that never was profitable,” according to The Journal. He also was ordered
to pay the full amount of missing funds in
restitution.
But that’s a pipe dream;
Wasendorf’s assets are
being liquidated but they
aren’t expected to come
close to covering the
shortfall.
The
Journal
said
Wasendorf’s
sentence
brought little comfort to
Kevyn Davey, a 45-year-old independent
commodity futures trader in Cleveland. Mr.
Davey told the paper that he lost around
$5,000 when Peregrine filed for bankruptcy.
“To me, the fact that he rots in jail doesn’t matter,” he said. “The money would be
the thing.”
A game of concentration
■ Poverty in the last decade has risen most
rapidly in neighborhoods that already have
a lot of poor people, according to a commentary from three researchers at the Federal Reserve Bank of Cleveland.
The increasing concentration of poverty
was found in 83 of the 100 metro areas studied by researchers Dionissi Aliprantis, Kyle
Fee and Nelson Oliver.
In the Cleveland Fed’s service area of
Ohio and western Pennsylvania, “the concentration of poverty rose markedly in many
major metro areas due to the severity of the
recession in Ohio,” according to the bank.
The researchers found that between 2000
and 2010, the total poverty rate of the United States rose from 11.3% to 15.3%. The government’s official poverty threshold is a
family of four earning just more than
$22,000 a year.
20130211-NEWS--24-NAT-CCI-CL_--
2/8/2013
11:48 AM
Page 1
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BMW Cleveland
6135 Kruse Dr. • Solon • 1-866-210-6710 • www.BMWCleveland.com
* 36 month lease with first payment, $2,950.00 cash or trade in and BMW bank fee due at delivery. License and taxes are extra. 10k miles per year, includes all BMW incentives. Offer expires February 28, 2013
Introducing the all new
2013 Range Rover
2012 Jaguar XJL
$799/mo
SIGN
THEN
DRIVE
NOW TAKING RESERVATIONS
RANGE ROVER
6137 KRUSE DR., SOLON
(440) 542-0601
www.jaguarcleveland.com
LAND ROVER SOLON
CLEVELAND
Due at delivery applicable sales tax. Jaguar Financial Services 42 month lease. with 10,000 miles per year, $.30 per mile thereafter. To very qualified customers
through Jaguar Financial Services. Offer ends 2/28/13. Stock #J01910.
6137 KRUSE DR., SOLON
1-866-210-6707
www.landroversolon.com
6135 Kruse Dr. • Solon • (440) 542-0600 • www.DavisAutomotive.com