crain's cleveland business

By STAN [email protected]

With construction workers laboringagain on the 18-story Ernst & YoungOffice Tower at the Flats East BankNeighborhood project in downtownCleveland, steps are afoot that further may change the riverfrontdistrict’s skyline.

The Wolstein Group of Beach-wood and Fairmount Properties ofCleveland are looking at how to revive the “neighborhood” part ofwhat started out as a $500 millionproject before tough economic timesforced developers to split the FlatsEast Bank into phases.

Adam Fishman, a FairmountProperties principal, said last weekduring an interview that efforts areunder way to rekindle plans for the-project’s residential component,perhaps exclusively as apartmentsrather than the mix of for-sale con-dominiums and rental units origi-nally envisioned.

The idea is so attractive that devel-oper K&D Group has discussed cre-ating the apartments with WolsteinGroup and Fairmount, according toits CEO, Doug Price. K&D Groupbuilt Stonebridge Apartments andCondominiums in the Flats and theResidences at Six Six Eight at that ad-dress on Euclid Avenue downtown.

“We’ll see where it goes,” Mr. Pricesaid of the talks. “It can’t be condos.

By CHUCK [email protected]

So far, fiscal 2011 is not turningout like Ramon Lugo III had hoped.

NASA Glenn Research Center thisyear had been expecting to get moremoney and a leadership role in anew NASA program aimed at devel-oping new technologies for deepspace exploration. But those thingsmight not happen because of uncer-tainty at the federal level, said Mr.Lugo, the center’s director.

Congress hasn’t approved the federal budget for fiscal 2011, whichbegan Oct. 1, 2010. That delay hasput new programs at NASA and otheragencies on hold.

Plus, a strengthened push to cutfederal spending could hurt NASA’sbudget, which likely would hurtNASA Glenn, Mr. Lugo said. Any cutsalso might hurt NASA Glenn’schances of keeping its leadershiprole in the new Exploration TechnologyDevelopment and Demonstrationprogram, he said.

No decisions about NASA’s budgethave been made yet. House Repub-licans have said they aim to cutspending within many federal agenciesto 2008 levels or lower, though theylikely would face opposition in the

There’s no condo market in Cleve-land now.”

He should know. Mr. Price saidK&D sold just six condos last year atStonebridge Plaza on the west bankof the Flats. However, the company

$1.50/FEBRUARY 7 - 13, 2011

Entire contents © 2011 by Crain Communications Inc.

Vol. 32, No. 6

07148601032

606 SPECIAL SECTION

HEALTH CARENortheast Ohio a mecca for patients seekingquality health care ■■ 3PLUS: HEART HEALTH ■■ TEAMING UP ■■ & MORE

NEW

SPAP

ER

Manufacturers adjust as raw materials prices riseRelationships guidepurchasing decisions By DAN [email protected]

For area manufacturers, the recoveryis beginning the same way the reces-

sion did — with rising prices forsteel, plastic resins and other criticalraw materials.

“The last time we saw prices riselike this was back in 2008,” said Terry Brown, purchasing managerfor Astro Manufacturing and Design in Willoughby, a custommachine shop and specialty manu-facturer. Mr. Brown mostly buys

steels and special alloys that aremachined into precise parts forproducts including medical devicesand military components.

Companies such as Astro, as wellas countless other machine shops,stamping plants and metal fabrica-tors across Northeast Ohio, haveseen the price of just about every-thing they can cut, bend, shape and

weld go up in recent months.For instance, the price of copper,

which is used in cables, has risen41% in the last five months, said Astro vice president Rich Peterson.And since July, the worldwide aver-age price for carbon steel has gonefrom about $732 a metric ton tomore than $800 today.

See STEEL Page 17

See EAST BANK Page 4

See NASA Page 6

INSIDEBanking on the future

Many Northeast Ohio banks in2010 reported less delinquent debtand set aside less to cover future loan losses. After negotiatingthe highest levels of debt they’veseen in decades, institutions hereand nationwide say they believe theworst is over. Read MichellePark’s story on Page 3.

Apartmentsmay rise atFlats East Bank

COULD THIS SPACE ...

... HOUSE APARTMENTS?

FILE PHOTOS/MARC GOLUB

Development of the Flats East Bank project is under way. The plan originally calledfor a mix of condos and rental units, but developers, such as Doug Price of K&DGroup — whose Stonebridge residential complex is shown directly above — saidapartments may be a more lucrative and attractive option for the project.

As project’s construction proceeds, developersmull reviving dormant residential component

The green space immediately west ofthe planned hotel in the above render-ing may house apartments rather thanfor-sale condominiums.

NASA Glennperplexedamid budgetquandaryFederal spending cutscould affect programs

INSIDE: Other stakeholders seek representation as development proceeds. Page 4

20110207-NEWS--1-NAT-CCI-CL_-- 2/4/2011 3:50 PM Page 1

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22 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM FEBRUARY 7 - 13, 2011

REGULAR FEATURES

Big Issue......................11Classified .....................18Editorial .......................10Going Places................12

Letters .........................10List: Largest hotels ......16Tax Liens .......................9Reporters’ Notebook ....19

CRAIN’S FAMILY BUSINESS SECTION

Audit Bureauof Circulation

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HEALTHY MARGINSAbout 1.3 million Ohioans do not have medical insurance — and Ohio is betteroff, relatively speaking, than the rest of the country, according to a new reportby The Center for Community Solutions and the Mental Health Advocacy Coalition. Ohio’s percentage of uninsured is four percentage points below thenational average, and its share of people with private insurance is five percentage points above the United States as a whole. Here’s how Ohio residents’ health insurance status compares with people nationwide:

Health insurance status Ohio United States

Private 59% 54%

Medicare 14 12

Medicaid 13 16

Uninsured 13 17

Other public 1 1

SOURCE: “BY THE NUMBERS: “DEVELOPING A COMMON UNDERSTANDING FOR THE FUTURE OFBEHAVIORAL CARE,” BY THE CENTER FOR COMMUNITY SOLUTIONS AND THE MENTAL HEALTH ADVOCACYCOALITION

Crain’s Cleveland Business for thesecond year will recognize some ofthe region’s best-run, financially stablefamily businesses.

On April 4, we’ll profile three compa-nies each in three categories: second-,third- and fourth-generation or greaterbusinesses. We’re looking for compa-nies regarded as good employers andthat have earned the respect of theirpeers. Factors such as growth and acompany’s involvement in its community

also will be considered.The deadline is Feb. 21. You may

nominate family businesses by sendingan e-mail nomination to editor Mark Dodosh that should include the com-pany’s name, how many generations ithas been in business and an explana-tion of no more than a single page asto why it should be recognized.

E-mails to [email protected] say “Family Business” in thesubject line.

20110207-NEWS--2-NAT-CCI-CL_-- 2/4/2011 11:18 AM Page 1

By DAN [email protected]

The holiday season was a goodone for Cleveland-area suppliers tothe wind energy industry, as thesector got an important one-yearextension of a federal tax credit thatwind backers say is crucial to creatingsustained growth.

The new year would be even better, they note, if the wind industrycould receive some incentives ormandates that are long term in nature, and therefore better able toinduce billion-dollar investments inprojects that take years to pay off.Nonetheless, industry leaders are

happy Congress acted on at leastone helpful action before 2010 ended.

“It’s a great thing,” said JohnGrabner, president of forged boltmaker Cardinal Fastener in BedfordHeights, of the December passage ofa one-year extension of renewableenergy tax credits.

“I met with (U.S. Treasury Secre-tary Timothy) Geithner and (Depart-ment of Energy Secretary Stephen)Chu when this first came out in2010, and we listened to guys whosaid they pulled all their projectsout of South America and movedthem to the U.S. because of the taxcredit,” Mr. Grabner said.

FEBRUARY 7 - 13, 2011 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

INSIGHT

THE WEEK IN QUOTES“We’ll see where itgoes. It can’t be condos. There’s nocondo market inCleveland now.”— Doug Price, CEO, K&D Group.Page One

“Prices are moving, italmost seems weeklyright now. It looks likea good sign for theeconomy, becausematerial is movingfast and furious.”— Matt Hlavin, president, ThogusProducts. Page One

“These patients findtheir way to Cleve-land. … Our processhas focused on theunique physician and their area of expertise.”— Dr. Michael Nochomovitz,president, University HospitalsPhysician Services. Page 13

“We actually are looking to improvequality of care acrossthe country. … Eventhough we’re com-petitors, we’re all kind of in this together.”— Dr. Joseph Cacchione, director of clinical integration,Cleveland Clinic’s Heart and Vascular Institute. Page 15

Cleveland railroad quietly, quickly moves on expansion projectsCompany saw its chancewhen bigger operators left behind short lines

From left, Douglas Fink,Michael Koleand WilliamBrown have doubled Cleve-land Commer-cial Railroad’soperating revenue overthe past fiveyears.RUGGERO FATICA

By JAY [email protected]

What do railroad buffs nearing retirement age do for a second act? Ifthey are William Brown, DouglasFink and Michael Kole, they start arailroad.

The three men own — and some-times work as locomotive engineersfor — Cleveland Commercial Rail-road Co., a young and growing short-

line railroad serving customersalong its track, which starts inCleveland and runs southeastthrough several suburbs.

In just the last month, the 7-year-old railroad took steps forward ontwo expansions.

First, it won approval Wednes-day, Jan. 19, of a contract with theCleveland-Cuyahoga County PortAuthority. The railroad will run a pilotprogram beginning this spring tooperate a locomotive on the docksthat will move loaded rail cars to thetracks of long-distance, or Class I,freight rail haulers.

The Port Authority is buildingnew track on the docks to make it

more attractive for shippers tomove water-borne cargo onto a railline through the Port of Cleveland.

In addition, the 10-employeecompany on Thursday, Jan. 20, wonapproval from the Ohio Rail Devel-opment Commission for a $170,000loan and grant package to improveone of its lines in the eastern suburbs.It plans to extend rail 2,300 feet to aloading facility it will build thatwould serve four steel processors inBedford Heights.

The company’s proposal to therail development commission saysthe steel processors can save $3 to $5a ton if they can ship to a customer

See RAILROAD Page 7

See CREDIT Page 7

Wind tax creditextension cheersarea suppliersBut, they say, long-term assistance also is vital

PERFORMANCE ART

Bank Total assets % of nonperforming loans % of nonperforming assetsPNC Financial Services $264.3B 3.6% 2.5%

Fifth Third Bank $111.0 4.9 3.9

KeyCorp $91.8 2.3 1.5

Huntington Bancshares $53.8 3.4 2.9

FirstMerit Corp. $14.1 1.9 1.5

Median, top 50 banks $22.0 3.4 2.4

A look at area banks’ nonperforming loans and nonperforming assets as of Dec. 31, 2010:

SOURCE: PARAGON CAPITAL GROUP LLC, MAYFIELD HEIGHTS; DATA: SNL FINANCIAL

BANKS DITCHBAD DEBT

By MICHELLE [email protected]

Banks have faced in recent times the highest levels of delinquent debt they’veseen in decades, but it appears the worstis over, which positions institutions to

focus less on shoring up credit and more on extending it.

During 2010, many banks in Northeast Ohioand nationwide reported less delinquent debtand set aside less per quarter to cover future

Restoring credit quality allowsthem to extend more loans See DEBT Page 8


got a full house when it opened the232 rental units at its Residences atSix Six Eight last year. He said occu-pancy at K&D’s downtown rentalshas rebounded to 95% as the reces-sion has eased.

Last year, the residential portions


Thank you

With deepest gratitude we thank the following corporations and corporate foundations who supported Y.O.U.’s mission with financial contributions of $2,500 or more in 2010.

Aleris International, Inc. ArcelorMittal Benesch Friedlander Coplan & Aronoff LLP Booz & Company Calfee, Halter & Griswold, LLP Cleveland Clinic Deloitte LLP Dominion East Ohio Eaton Corporation Findley Davies, Inc. FirstMerit Bank, NA Forest City Enterprises, Inc. GrafTech International LTD Huntington National Bank

Jones Day JPMorgan Chase Foundation Kaiser Permanente KeyBank Lincoln Electric Foundation Matco Tools Medical Mutual of Ohio PNC Quicken Loans RPM, Inc. Swagelok Company Thompson Hine The TJX Foundation Inc. Turner Construction Company Zashin & Rich Co., LPA

Youth Opportunities Unlimited, a non-profit youth workforce development organization founded in 1982, empowers youth to succeed in school, in the workplace, and in life by graduating high school and preparing for a career.

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Volume 32, Number 3 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for com-bined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July,the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland,OH 44113-1230. Copyright © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio,and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’sCleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373.

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continued from PAGE 1

East Bank: Housing market may alter plansof Flats East Bank were relegated topark-like green space status for anindeterminate future as a secondphase of the project.

That decision left the developersplus state and local officials free tofocus on the office, hotel and retailportions of the project. In so doing,they broke a development logjamcreated by the financial crisis andensuing recession.

With a $270 million financingpackage that closed late last year andincluded money from a staggering30 sources, construction work hasbegun on the office building, hoteland parking garages.

Let’s rollThe project’s restart also has set

the table for planning how to rede-velop the rest of the property nearthe mouth of the Cuyahoga River.

“Our charge from (Mr. Wolstein) isto start working on phase two imme-diately” Mr. Fishman said, referringto Scott Wolstein, executive chair-man of publicly traded DevelopersDiversified Realty Corp. and a prin-cipal of privately held WolsteinGroup, the project’s co-developer.Mr. Wolstein is pursuing the projectwith his mother, Iris Wolstein, inmemory of the late Bertram “Bart”Wolstein, their father and husband,respectively.

Phase two of the project originallywas the key feature of Flats EastBank; it was envisioned as multipleresidential buildings between the office tower and riverfront.

The residential units were seenmainly as for-sale condos to ride thehousing boom of the mid-2000s.

However, Mr. Fishman said he andothers are studying the feasibility ofconstructing apartments becausethey are desirable investments andeasier to finance.

Cleveland City Councilman JoeCimperman, whose Ward 13 includesmost of the Flats, said city-approvedplans speak to residential develop-ment in general, not the type of residences, and he supports eitherapartments or condos.

“The key for me is having peopledown there,” Mr. Cimperman said inan interview last Thursday, Feb. 3.

A market tightens upReviving the residential compo-

nent of Flats East Bank as rentalsmakes sense. Apartments regainedluster as lagging home sales and epi-demic foreclosures reduced homeownership rates.

A report issued last week by theMarcus & Millichap real estate bro-kerage on the apartment market in keycities nationwide projects the Cleve-land apartment market will tightenas apartment vacancies will fall to 5.6%in 2011 from 6% at the end of 2010.

However, Marcus & Millichap actually dropped Cleveland’s rankingas a desirable place for new apart-ments to 40th out of the 44 markets itfollows from 32nd last year. One reason:Affordable home prices are providingstrong competition for apartments.

The brokerage forecasts 80 newunits will be added to the Clevelandmarket this year compared with 290in 2010. The expected decline inapartment construction reflects difficulty some developers face inobtaining attractive financing. ■

Flats interests jockey for inclusionBy STAN [email protected]

Renewed interest in real estatedevelopment in Cleveland’s Flats isoccurring as a push is under way toinsert another local developmentcorporation into the role of the FlatsOxbow Association, a stakeholdergroup that has represented interestsof Flats businesses since 1976.

“There is $2 billion of investmentset for the Flats. I’ll be damned if I’llmiss the chance to get this right,”said Cleveland City Councilman JoeCimperman, referring to developmentthat includes the Flats East BankNeighborhood, an aquarium at Nau-tica and the planned Caesar’s Horse-shoe Casino at Tower City Center.

“In 13 years as a councilman, onething that has frustrated me is the‘Us vs. Them’ philosophy in the Flats.The ‘Us’ is always different but the‘Them’ is constant,” Mr. Cimpermansaid, referring to Flats Oxbow.

“We need an organization,” Mr.Cimperman said, “that speaks withone voice for the Flats.”

Over the years, Flats Oxbow hasfollowed a free-wheeling, libertariancourse for the Flats, favoring existinginterests and counting on big devel-opment projects for success ratherthan the incremental, service-focused

approaches of most neighborhoodorganizations.

For example, Mr. Cimpermansaid, five pieces of legislation wentthrough Cleveland City Council onone day last summer that dealt withitems from the Flats East Bankmixed-use project to a loan for thenew home of the Cleveland RowingFoundation.

“No one from Flats Oxbow wasthere,” Mr. Cimperman said. “Whenother (community developmentcorporations) have funds for astorefront renovation project beforecouncil, they get three people toCity Hall.”

Efforts to reorganize representa-tion in the Flats surfaced with ameeting last Monday evening, Jan. 31,in the first-floor conference room ofka architecture in the Western Reserve Building, 1468 W. Ninth St.

Albert Ratner, co-chairman ofreal estate giant Forest City Enter-prises Inc., talked that evening to aroom of people who included DougPrice, CEO of apartment developerK&D Group; Adam Fishman, a co-developer of the Flats East Bankproject; and David Grunenwald ofJacobs Entertainment, which ownsthe Nautica complex.

The session, coordinated by thenonprofit Downtown Cleveland

Alliance, was designed to get “every-one in the room to talk” about thefuture of the Flats, Mr. Cimpermansaid. He said others in the room included two Flats Oxbow boardmembers.

The session was to stress the valueof one voice, Mr. Cimperman said. Hesaid “the whole world” will be invitedto a Feb. 22 planning session at Nau-tica for ideas for improving the Flats.

Longtime Flats business and prop-erty owner Mike Samsel attended theJan. 31 session after he called for aninvitation.

“I was suspicious,” Mr. Samsel saidof the session. “After listening to (Mr.Cimperman) and the others, I decidedif they want to get the Flats going inone direction, that’s OK by me.”

Less accommodating is Kyle Fries,Flats Oxbow chairman, who said Mr.Cimperman has been looking forways not to fund the organization.

“Other organizations have staffs.We have two people,” Mr. Fries said.“We want to do as much as we canwith as little as we can.”

Asked if Flats Oxbow is a target asdevelopment interest in the Flats ris-es, its executive director, Tom New-man, said, “When the Flats was notsexy, no one paid attention to us.”

Counters Mr. Cimperman: “I knowdysfunctional when I see it.” ■


Positively Cleveland andthe Greater ClevelandSports Commission will

be moving to the southwest corner of Euclid Avenue andEast Fourth Street.

David Gilbert, who runs bothorganizations, said the nonprofittourism organizations will takeover the space that was usedtemporarily for “Bodies … TheExhibition,” the gallery that displayed plasticized and dismembered human bodies.

Positively Cleveland, the region’s convention and visitors’bureau, must move from the Higbee Building to make way forthe temporary Horseshoe CasinoCleveland that will occupy fourfloors in the former departmentstore. It is leaving space at thecorner of Ontario Street andPublic Square.

The sports commission’slease in the Terminal Tower expired at the end of 2010.

The two organizations’ 50 employees will occupy 17,000square feet in the Windsor Building, an apartment block.


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Parts shortage slows EcoBoostUnion boss says outsourcing ‘is killing Ford’By DAN [email protected]

Ford’s Brook Park-made EcoBoostengine might be going a little too fast— it’s outpacing the ability of partssuppliers to keep the automaker’sproduction lines running.

Both Ford and its major union atthe engine plant, United Auto WorkersLocal 1250, confirmed that the planthas experienced slowdowns, includingat least two instances when the entire EcoBoost engine line was shutdown and its workers were senthome.

“Even this week it’s causing aproblem,” said Local 1250 presidentMike Gammella, speaking to Crain’slast Friday, Feb. 4. “The whole line’sbeen shut down a couple of times.”

Ford spokeswoman Megan What-man said the plant did “have an engine parts shortage that temporarilyreduced some EcoBoost productionin January,” but that it continued tomake other products during the affected periods.

Mr. Gammella declined to say exactly how long the lines were down,but noted that all of the EcoBoostline’s 155 workers were sent homeon at least two occasions.

Workers still receive nearly alltheir pay in such a situation, thoughwork stoppages brought on by partsshortages have had ramifications forFord that extend beyond Brook Park.Ms. Whatman confirmed a partsshortage also resulted in the shut-down of Ford’s truck plant in Dear-born, Mich., after reports came outof Detroit that 3,000 workers hadbeen sent home in that shutdown onJan. 25.

There are various reasons for theproblems, including a tight supply

chain and poor weather that hamperedsome deliveries, Mr. Gammella said.

Mr. Gammella said he hopes Fordwill address the problem not only byworking more closely with suppliers,like it’s doing now, but also by bringing some parts production in-house. Over the past two decades,Ford and other U.S. automakershave outsourced more of their partsproduction. Mr. Gammella said thatcost-cutting strategy now is ham-pering its production — especially inan era when Ford and its workers are focused on the quality of both finished vehicles and the parts thatgo into them.

“This outside machining is killingFord. They can’t get cams, they can’tget rods — we need to bring this stuffback in-house,” Mr. Gammella said.

Ford so far has announced nosuch plans, but Mr. Gammella saidhe hopes it’s something that will bediscussed when his union’s contract isrenegotiated in September.

On the bright side, Mr. Gammellasaid the shutdowns are a sign of the popularity of the engine made atthe plant — a V-6 turbocharged engine,which Ford boasts can achieve V-6mileage while delivering power sim-ilar to a V-8. The company has beenincreasing the number of vehicles inwhich the engine is available, andadded it as an option for its popularF-150 pickup trucks in 2010. ■

United AutoWorkers Local1250 presidentMike GammellaFILE PHOTO/MARC GOLUB

Higbee Buildingmainstays willmove to E. 4th

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Democrat-controlled Senate. NASA’sfiscal 2010 budget was $18.7 billion,up $1.4 billion from $17.3 billion in 2008. And it was projected to increase in future years.

If NASA’s budget is cut, there’sno telling which of the agency’s 10centers would absorb the hit, butMr. Lugo said it is unlikely any particular center would be spared.Should that happen, NASA Glennfirst would cut discretionary spendingand defer some purchases, but itmight need to cut staff, he said.

It’s a disappointing situation, Mr.Lugo said. “It looked like 2011 wasgoing to be our year,” he said.

No frettingLast October, President Barack

Obama signed the NASA Authoriza-tion Act of 2010, a bill that scrappedthe agency’s Constellation program,which aimed to build two new rockets in an effort to send astro-nauts to the moon by 2020 and thento Mars. The bill instead providedmoney to pay private companies todevelop rockets for low-Earth orbit,while NASA would develop a heavy-lift rocket and generally focus moreon developing technology for deepspace exploration. The bill also included plans to send astronautsto an asteroid by 2025 and to Marsby the mid-2030s.

The bill was opposed by severalmembers of Ohio’s congressionaldelegation, who said it provided toomuch money to private companiesand not enough for research con-ducted by NASA. However, Mr. Lugosaid the new plan’s focus on researchand technology development shouldbe good for NASA Glenn, playing

into the center’s strengths.The bill also allotted $250 million

of NASA’s budget to the new Explo-ration Technology Developmentand Demonstration program. NASAGlenn had been assigned to leadthe program. The role would involvedoling out much of the money toother centers, but it would create ahandful of administrative jobs atNASA Glenn, and NASA might allowNASA Glenn to set aside a relativelysmall amount of the money for in-house research, Mr. Lugo said.

Though the bill passed, the federalgovernment still hasn’t passed abudget for fiscal 2011. Since then,the entire government has been operating under a continuing reso-lution, which funds federal pro-grams at the previous year’s levelsuntil an official budget it passed.

So, the Exploration TechnologyDevelopment and Demonstrationprogram has yet to begin. If NASA’sbudget is cut, Mr. Lugo said NASAheadquarters might take over theprogram to keep costs down. Headded, though, that he expects NASAGlenn would win its share of assign-ments from that program even if theresearch center doesn’t manage it.

“We can fret over what we don’thave, or we can take advantage ofwhat we do have,” he said.

Holding patternThe bill passed in October

prevents NASA from laying off anygovernment employees for threeyears, but the agency is allowed tocut private contractors, who makeup roughly half of NASA Glenn’swork force of about 3,500.

Two private contractors who declined to be identified said they

understood that cuts could hurtNASA Glenn contractors, thoughneither expected their own compa-nies to be hurt much. One notedthat the continuing resolution waspreventing his company from win-ning some new work for which ithad been preparing.

An official from the union repre-senting NASA Glenn scientists andengineers who left a phone mes-sage last Thursday, Feb. 3, did notreturn a follow-up phone message oran e-mail.

Because of the continuing reso-lution, NASA Glenn is preventedfrom working on other projects related to the new space explo-ration plan. In an effort to followthe law without wasting time andmoney, Mr. Lugo said the centerhas tried to work on projects thatcould be used in whatever rocketNASA ends up developing.

“It’s going to have a power sys-tem, it’s going to have a propulsionsystem, it’s going to have a commu-nications structure,” Mr. Lugo said.

Some members of Ohio’s con-gressional delegation have told Mr.Lugo they don’t expect Congress toreach an agreement on the fiscal2011 budget before the continuingresolution expires on March 4.

That situation leads Mr. Lugo tothink Congress might keep NASA at2010 budget levels until fiscal 2012begins in October, depriving theagency of a slight budget increase itwas supposed to receive this year.

He said Ohio’s delegation haspushed to make sure NASA Glenn is-n’t forgotten at the federal level.

“They are making sure that NASAGlenn’s capabilities are going to beused,” Mr. Lugo said. ■

NASA: Contractors could suffer from cutscontinued from PAGE 1

E!CLEVELANDEvery Thursday, Crain’s sends

to more than 20,000 readers anarts and leisure e-mail callede!Cleveland.

The e-mail highlights at least 10events, and often more, that mightbe worth your time outside work.

To sign up for this and all our e-mails, visit www.CrainsCleveland.com and click the “Register forCrain’s alerts” icon at the top leftof the home page.

Here’s a taste of what makes itinto the e-mail:

Beyond the sea

Event: “TheLittle Mermaid”

Venue: Studio One Theatre,Cleveland Play House

When: Now through Feb. 19Why you might be interested: If

you haven’t seen enough puppet-based entertainment lately. ThePlay House’s excellent Theatre for Children revisits the art of pup-peteering with an imaginativeretelling of the Hans Christian An-dersen story in which a young girllearns the beauty and power of herown voice. Put the fine Disneymovie out of your mind and takethe kids (it’s designed for grades K-5) to this one-woman show starringNina Domingue. Tickets start at $10.

On the web: www.ClevelandPlayHouse.com

Close to their heartsEvent: “Cleveland Collects: An

Exhibition of Members’ FavoriteRegional Artwork”

Venue: Beck Center for the Arts,Lakewood

When: Now through March 12Why you might be interested:If

you’re a believer in NortheastOhio’s arts scene. The ClevelandArtists Foundation, which preserves,researches, collects, exhibits, doc-uments and promotes significantvisual art from this region, is stagingits biennial celebration that cele-brates the patronage of localartists. For this exhibition, mem-

bers of the ClevelandArtists Foundation haveselected their favoriteNortheast Ohio worksfrom their own collec-tions. They also share a

few words about what the artmeans to them in comments thatare posted on the gallery walls.There are no limitations on timeperiod, subject matter or medium,so visitors will see a hugely diverse— and hugely impressive — collection.

On the web: www.ClevelandArtists.org

A meaningful journeyEvent: “The Trip to Bountiful”Venue: The Cleveland Play HouseWhen: Through Sunday, Feb. 27Why you might be interested: If

you’re looking for a fresh take on amodern classic. This marks thefirst time the Play House has pro-duced a show by Academy Awardand Pulitzer Prize-winning play-wright Horton Foote, and it’s theworld premiere of “The Trip toBountiful” featuring an African-

American cast. Hallie Foote, theTony-nominated actress anddaughter of the late playwright,has authorized the production,which is directed by Timothy Douglas and is a co-productionwith the Round House Theatrenear Washington, D.C. Veteran actress Lizan Mitchell leads thecast as widow Carrie Watts, whoyearns to visit her childhood homeone last time but has to break freefrom an ineffectual son and anoverbearing daughter-in-law.

On the web: www.ClevelandPlayHouse.com

Life in the fast laneEvent: “Becky’s New Car”Venue: Greystone Hall in Akron,

across the street from the John S.Knight Center

When: Thursday, Feb. 10,through Sunday, Feb. 27

Why you might be interested: Ifyou’d like your life to shift into anew gear. In this Actor’s Summitplay written by Steven Dietz, thelead character, Becky, is in a rut.She has a dull job, a boring marriage and a 26-year-old sonwho still lives at home. But thingsliven up when a widower million-aire mistakenly assumes thatBecky is single and falls for her atfirst sight. Becky fails to correct themistake, and she finds herselfleading a double life. As in anyfarce, Actor’s Summit says, “hertwo lives collide and accelerate outof control.”

On the web: www.ActorsSum-mit.org


through the new spur rather thanputting the steel on a truck at theirplants. The railroad’s proposal esti-mates the processors will generate29 rail cars a month of traffic for therailroad.

The railroad has its admirers.“You talk about a bootstrap oper-

ation, but they’ve done very well,”said Stuart Nicholson, spokesmanfor the Ohio Rail DevelopmentCommission. “They’ve really revivedwhat was a moribund set of tracks.”

Cleveland Commercial Railroadleases track owned by Wheeling &Lake Erie Railway and NorfolkSouthern Corp. One line runs fromSolon, the other from nearby Glen-willow; they together account for 33miles of track. The two lines join ina former Erie Lackawanna Railroadyard owned by Norfolk Southernnear downtown Cleveland.

Mr. Brown said the railroad hasgrown from one locomotive movingabout 1,500 rail cars a year in itsearly years to four locomotivesmoving about 5,400 cars in 2010.According to an annual report thecompany filed with the Public Utilities Commission of Ohio, itsoperating revenue more than doubledto $1.01 million in 2009 from

$473,841 in 2004.

On the right trackShort-line railroads are taking

advantage of the freight rail renais-sance of the last decade. Before therecession, railroads were settingcargo-hauling records. In 2007, theindustry matched the record it setin 2006 for the number of ton-milesof freight it carried — 1.8 trillionton-miles.

A ton-mile is the movement ofone ton of freight one mile. The industry also was increasing itsshare of the freight traffic comparedwith trucking and other modes oftransportation.

Mr. Brown and his partners believe as the economy shakes offits gloom, the business will continueto grow.

Freight that moves by rail spendsmost of its time on larger, or Class I,freight railroads such as NorfolkSouthern and CSX Corp. Those industry giants prefer to concen-trate on their efficient mainlinesthat move rail cars long distances tolarge intermodal centers, wherecargo, usually containers, is movedfrom rail cars to trucks.

Mr. Nicholson said as the Class Irailroads grew — in particular after

the absorption of what had beenthe lines of federally owned Conrailby Norfolk Southern and CSX in1999 — the major railroads chose todispose of their least profitabletrack. So, they divested or abandonedshort stretches of rail that servedcustomers moving coils of steel,scrap metal or bulk commodities.

That change opened up oppor-tunities for short lines such as Cleveland Commercial Railroad.Indeed, Ohio has 36 short-line railcompanies, according to Mr.Nicholson.

Mr. Brown said it is “more cost-efficient for (the major railroads) touse a short line” than tie up theirown capital and highly paid labordelivering directly to customers,Mr. Brown said.

“The labor-intensive part of railroading is the first mile and thelast mile,” he said. “We save theClass Ones insurance, fuel, crew;we lease the locomotives.”

Cleveland Commercial Railroad’scustomers include scrap metaldealers, a lubricant maker and theNestle USA plant in Solon thatmakes Stouffer’s and Lean Cuisinefrozen meals.

“We take (Nestlé) tomato pasteand semolina (flour),” he said. ■


Credit: Standard wouldlead to more U.S. turbines

The credit, which functions as agrant from the U.S. government,has been extended to include all windand other renewable energy projectsbegun before the end of 2011. Itprovides developers a grant equal toup to 30% of their project costs andallows for the accelerated depreciationof new equipment for tax purposes.

The day after the credit cleared itsfinal hurdle in the House of Repre-sentatives on Dec. 16, Denise Bode,CEO of the American Wind EnergyAssociation, called it “a great holidaypresent for the 85,000 Americanworkers in the wind energy industry.”She added, “Orders will be on the risefor new wind power, and investorswill put more capital into the U.S.economy.”

People such as Mr. Grabner saywhile the extension is great, the indus-try also needs long-term sustenance.

His view is important, becausenot only does Mr. Grabner head oneof Ohio’s most prominent smallmanufacturers related to the windbusiness, he’s a board member of theAmerican Wind Energy Association,the nation’s largest wind trade orga-nization and lobbying group. (In caseyou were wondering why a smallmanufacturer in Bedford Heightshas the ears of policymakers such asMessrs. Geithner and Chu.)

Others agree, and Ms. Bode blamedthe industry’s weak performance in2010 — when U.S. wind energy installations dropped by about half, to about 5,100 megawatts of new capacity — on the inability of investors to count on short-term oron-again/off-again tax incentives.

“Our industry continues to endure a boom-bust cycle becauseof the lack of long-term, predictablefederal policies,” Ms. Bode said inannouncing the tally for last year’sU.S. wind installations.

‘It’s got legs’What Ms. Bode, Mr. Grabner and

others in the industry want is some-thing called a Renewable EnergyStandard (RES) — a piece of federallegislation that would mandate thatthe United States get a certain,probably increasing percentage ofits energy from wind and otherforms of renewable power.

President Barack Obama in 2009proposed a federal RES of 25% by 2025,but the measure never took hold, tothe chagrin of wind energy developers.

“They were banking on an RES,and when it did not make it, theypulled back,” Mr. Grabner said.

He and other manufacturers willtry again this year to push for such astandard, beginning with an intensivelobbying effort in Washington, D.C.,at a Feb. 15 industry conference.

“It’s got legs,” Mr. Grabner said of the effort. “Polls show that 87% of this country wants renewable electricity, even if it’s at a greater expense. … But it’s not going tocome without some effort.”

An RES would result in the installation of more wind turbinesin the United States, said Ed Weston,president of the Great Lakes WindNetwork, a Cleveland-based groupformed by manufacturing advocacygroup Wire-Net that has grown toinclude more than 1,200 membersnationwide. Mr. Weston said a stan-dard also would yield more revenuefor suppliers like Cardinal.

“It would make the pie bigger, no

doubt,” Mr. Weston said.But an RES would not solve

another problem, one that in theeyes of Mr. Weston is more impor-tant for the long-term success ofU.S. wind industry suppliers. A stan-dard by itself would not increase thedomestic content of wind turbines;at present, about half the typicalwind turbine installed in the UnitedStates is made overseas, accordingto Mr. Weston.

Playing catch-up with ChinaThe problem isn’t just that Asia

and other developing markets havecheaper labor— that’s only part ofthe reason that they can producewind turbine parts for less thansome domestic manufacturers, Mr.Weston said. It’s also that they oftenhave better, more modern factories,especially in the wind industry.

While U.S. manufacturers areworking with plants and machinerythat sometimes are decades old,their Chinese competitors are workingwith brand-new equipment — andusing not only cheaper labor, butless of it. China’s industrial base isalmost all new growth, while muchof the industrial base of the UnitedStates is aging.

“There aren’t as many peopleworking in a Chinese wind turbinefactory as there are in the typical U.S.factory,” Mr. Weston said, recallinghis tour of Chinese factories in 2010.

Overcoming that will be tough.“No one I talk to in the wind

industry wants protectionism, butthere’s a growing sentiment that theU.S. needs to develop a nationalmanufacturing strategy that willsupport domestic competitive-ness,” Mr. Weston said.

Even what has been passed so farin the way of legislative aid for windindustry development has been atough sell, said U.S. Sen. SherrodBrown, a Democrat from Avon.

“We had trouble getting (the 30%tax credits) even for one more year,”Sen. Brown said in a recent interview.

Everyone wants to be ‘clean’President Obama, arguably renew-

able energy’s most powerful sup-porter to date, appears to be backingoff on his exclusive support for a Renewable Energy Standard.

In his Jan. 25 State of the Unionspeech, Mr. Obama proposed a national Clean Energy Standard,rather than the Renewable EnergyStandard he supported in the past.The difference is huge to many inthe wind industry, because nuclear,natural gas and even some coal-fired generation projects could arguefor support as “clean energy” projects.

There may be some hope for additional help this year. Sen.Brown hopes to secure $5 billion innew federal tax credits for renew-able energy by getting Congress torenew the 48C tax credit program.

Part of the American Recoveryand Reinvestment Act of 2009, the48C program provides tax creditsfor manufacturers that provide thewind and other renewable energysectors with parts and supplies. Thatprogram was allotted $2.3 billionwhen it was put in place at the end of2009, but quickly used up its funds.

Sen. Brown said he hopes Con-gress will renew it, in an even largerform, this year.

“I think I can get that as part of abigger tax bill this year,” he said. ■


Railroad: Number of cars moved risescontinued from PAGE 3


“Unless you missed something, you shouldn’t be seeinga lot of new (problem loans) all the time.” – Jay Gould, investor relations director, Huntington Bancshares

loan losses — a sign they believethey’ve turned the corner.

Fourth-quarter reports in Januarydelivered word of more progress.

Two examples: KeyCorp andHuntington Bancshares Inc. nowhave reported five consecutivequarters of declining nonperformingassets, which include delinquent,nonaccruing loans and repossessedproperty. Both banks also reducedtheir loan loss allowances everyquarter in 2010.

Improving credit quality drivesup earnings for banks, many ofwhich have reported fourth-quarterprofits compared to year-earlierlosses. And as credit quality improves,

the flow of credit should, too.“That’s the key to banks being

willing to make more loans,” saidFred Cummings, president of Eliza-beth Park Capital Management inBeachwood. “To the extent thatthey feel good about their currentportfolio, that’ll give them confi-dence to make more loans.”

Plus, Mr. Cummings noted,banks likely will be more willing toconsider acquisitions as they spendless on credit problems.

The patients stabilize Most of the nation’s top 50 banks

have shown a decent progression incredit quality improvement, saidCharlie Crowley, managing director

of Paragon Capital Group LLC, an investment banking firm inMayfield Heights.

Cleveland-based KeyCorp, which reported a fourth-quarter profit of$279 million compared to a loss of$265 million in the year-ago period,noted that its nonperforming assetsstood at $1.3 billion as of Dec. 31 —the lowest they’d been since thirdquarter 2008.

Key’s net loan charge-offs, or loanlosses, also dropped every quarterlast year.

Asked to identify the main driverof improvement, spokesman BillMurschel said Key was among the first to sell a large portfolio of problem real estate loans and


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Debt: Local banks follow long road to upgrading qualitycontinued from PAGE 3

repossessed properties. That action,combined with a modestly improvingeconomy, resulted in lower nonper-forming loans and net charge-offs.

FirstMerit Corp. in Akron reporteda fourth-quarter profit of $27 million, nearly double its profit inthe year-ago quarter. However, itsnonperforming assets and loanlosses rose for the second straightquarter. The bank’s nonperformingassets and loan losses, though, remain some of the lowest amongits Midwestern peers, said Paul G.Greig, chairman, president andCEO.

“Some of those who’ve reporteddeclines are coming from astro-nomical levels,” said Mr. Greig, whoblamed the ongoing difficult econ-omy for the increases to FirstMerit’sproblem assets and losses.

One bank that fits Mr. Greig’s description is Columbus-basedHuntington, which said its nonper-forming assets posted a “huge decline,” dropping nearly 60% to$844.8 million on Dec. 31, 2010,from an unprecedented $2 billionon Dec. 31, 2009.

“You stop finding (problem loans)eventually,” explained Jay Gould,Huntington’s investor relations director. “You’ve got your borrowersstabilized. The ones that have had themost problems, you’ve addressed.Unless you missed something, youshouldn’t be seeing a lot of newstuff all the time.”

Upbeat about asset qualityHuntington has seen increasing

upgrades of loans that previouslywere nonperforming, Mr. Gouldnoted. Such upgrades are outpacingdowngrades, added Daniel P. WalshJr., president of the bank’s GreaterCleveland region.

“The most important takeaway is… macroeconomic conditions areimproving for our clients,” Mr.Walsh said. “As that list (of problems)shrinks, it frees up a lot of parts of the bank to turn its attention on new opportunities,” such as increasing lending, he said.

Mr. Murschel agreed that lowercredit costs combined with strongercapital, liquidity and reserves putKeyBank in a position to lend to itsclients, though he noted the bank’slending activity ultimately will depend on economic improvementand loan demand.

Banks’ expectations for assetquality were “significantly more upbeat than in past years,” accordingto the Federal Reserve Board’s January 2011 Senior Loan OfficerOpinion Survey. The poll also revealed that banks expect improve-ments in delinquency and charge-off rates in every major loan categorythis year.

Ohio’s banks likely are reboundingmore quickly than markets such asCalifornia, Florida, Michigan andNevada that were harder hit by therecession and the housing bust, Mr.Crowley said.

“In general, banks in this regionhave been doing just what theyneeded to do,” he said, citing theirtightened underwriting and effortsto recoup delinquent debts. “It justtakes time. It’s a long process.”

The worst is overProgress at community banks has

been more uneven, Mr. Crowley said.Smaller banks do not have the

same access to capital markets aslarger banks and thus don’t havethe ability to raise large amounts ofcapital the way Huntington andFifth Third Bank of Cincinnati didrecently, Mr. Crowley explained. Asa result, smaller banks may be lesslikely to sell assets and swallow lossesto get nonperforming assets off thebooks, particularly if they anticipatethe economy and real estate marketsare improving.

PVF Capital Corp., parent of ParkView Federal Savings Bank in Solon,announced a $3.7 million loss in itsfiscal second quarter that endedDec. 31, but said its nonperformingassets had decreased $11 million, or 14%, to $67 million during the quarter. That’s the single biggestquarterly decline in problem assetsin five quarters, president and CEOBob King said.

He credited most of the improve-ment to the sale of residential andcommercial real estate collateral inNortheast Ohio.

“There are actually buyers outthere,” Mr. King said.

“Obviously, improved credit qualitygets us one step closer to resolvingour regulatory issues,” Mr. Kingadded, referring to a cease-and-desist order the institution receivedin October 2009 from the Office ofThrift Supervision. “I do believe thatthe very worst is behind us. By nomeans is it great, but it’s better thanit was.”

LNB Bancorp Inc., parent of Lorain National Bank, reported itsnonperforming assets rose as ofDec. 31, 2010, to $44.9 million, or3.9% of total assets, compared to$40.1 million, or 3.49% of total assets, a year ago. However, it didsee improvement year-over-year inits levels of past-due loans that arenot yet 90 days past due.

While Middlefield Banc Corp.,parent of The Middlefield BankingCo., reported that its asset qualityissues have stabilized, it noted ithad increased its provision for loanlosses by 39% over 2009 levels to address potential credit quality issues.

Time for disciplineNo one source is to blame exclu-

sively for the credit quality issues thathave plagued banks, Mr. Crowleysaid. Some banks weren’t carefulenough in lending. Some con-sumers bit off more than they couldchew. Legislators wanted to seehome ownership increased and encouraged Freddie Mac and FannieMae to help make it happen, butsome of those new homeownerscouldn’t withstand a severe reces-sion, Mr. Crowley said.

So who’s to be credited for theturnaround?

Bank management teams, Mr.Crowley noted, have been prudentin their lending standards, and regulators — though “sometimesthey shoot too far” — are injectingan appropriate amount of disci-pline. In some cases, too, people arecatching up on their payments.

“I think a lot of it is the normalfunctioning of the business cycle,”Mr. Crowley said. “It doesn’t neces-sarily feel like an economic recovery,but things are getting better.” ■



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bnymellonwealthmanagement.com

BNY Mellon Wealth Management congratulates:

Ronald Ambrogio on his recent appointment to Regional President — Ohio

and welcomes:

Ron Ulle Team Leader and Senior Director — Portfolio Management

30195 Chagrin Boulevard Suite 350 West

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216-464-4244

©2011 The Bank of New York Mellon Corporation.

TAX LIENSThe Internal Revenue Service filed taxliens against the following businessesin the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federalgovernment. The lien is a public noticeto creditors that the government has aclaim against a company’s property.Liens reported here are $5,000 andhigher. Dates listed are the dates thedocuments were filed in theRecorder’s Office.

LIENS FILEDBaker Motors Towing Inc.12214 Detroit Ave., LakewoodID: 20-5027878Date filed: Jan. 19, 2011Type: Employer’s withholding, unemploymentAmount: $254,448

K Klass Masonry Inc.15293 Sandalhaven Drive, Middleburg HeightsID: 34-0874223Date filed: Jan. 28, 2011Type: Employer’s withholdingAmount: $135,870

Central Ohio Group Homes Inc.2500 Country Club Blvd., Suite 255,North OlmstedID: 20-0030020Date filed: Jan. 11, 2011Type: UnemploymentAmount: $63,650

Simpsons EZ Enterprise Inc.14218 Euclid Ave., East ClevelandID: 34-1963963Date filed: Jan. 11, 2011Type: Corporate incomeAmount: $56,265

Full Circle Check LLC6887 Ridge Road, ParmaID: 26-2787010Date filed: Jan. 3, 2011Type: Employer’s withholdingAmount: $27,825

Euclid Foreign Motors Inc.20020 Saint Clair Ave., ClevelandID: 34-1087596Date filed: Jan. 13, 2011Type: Employer’s withholdingAmount: $26,338

Roth Sign Studios Inc.26241 Cannon Road, Bedford HeightsID: 34-1378126Date filed: Jan. 11, 2011Type: Employer’s withholdingAmount: $20,940

Lobecks Hot Rod Parts Inc.560 Golden Oak Parkway, ClevelandID: 34-1454604Date filed: Jan. 28, 2011Type: Employer’s withholding, unemploymentAmount: $19,976

Alpha Tool & Mold Inc.83 Alpha Park, Highland HeightsID: 34-1258012Date filed: Jan. 7, 2011Type: Employer’s withholdingAmount: $19,604

Ohio Natural Stone LLC760 W. Bagley Road, BereaID: 30-0260193Date filed: Jan. 3, 2011Type: Employer’s withholdingAmount: $18,785

Rockport Medical Center Inc.3665 W. 117th St., ClevelandID: 34-1206629Date filed: Jan. 19, 2011Type: Employer’s withholdingAmount: $14,994

Haylo Manufacturing Co.5100 Richmond Road, Bedford HeightsID: 34-0905327

Date filed: Jan. 7, 2011Type: Employer’s withholdingAmount: $14,696

Elegant Interiors & Design37177 Lake Shore Blvd., EastlakeID: 34-1912978Date filed: Jan. 3, 2011Type: Failure to file complete return,unemploymentAmount: $13,840

Clarkes Family Trucking Inc.5669 Columbiana Drive, BedfordID: 20-2603805Date filed: Jan. 11, 2011Type: Employer’s withholding, heavyhighway vehicle use taxAmount: $12,007

Trifecta Cleveland III Inc. T/A Cowboys

P.O. Box 14100, ClevelandID: 20-5546327Date filed: Jan. 11, 2011Type: Employer’s withholding, unemploymentAmount: $9,321

Pioneer Environmental Systems Inc.20536 Krick Road, Walton HillsID: 06-1682390Date filed: Jan. 3, 2011Type: Employer’s withholdingAmount: $8,827

Innovare Solutions LLC20820 Chagrin Blvd., Shaker HeightsID: 16-1633182Date filed: Jan. 11, 2011Type: Employer’s withholdingAmount: $7,790

Thomas A. Rak Landscaping Inc.1773 Rauland Drive, Walton Hills

ID: 34-1142864Date filed: Jan. 11, 2011Type: Employer’s withholdingAmount: $7,500

Caito Brothers Co.4000 Orange Ave., ClevelandID: 34-1151301Date filed: Jan. 19, 2011 Type: Employer’s withholdingAmount: $7,261

Victoria Health Care Inc.2560 Buckhurst Drive, BeachwoodID: 31-1702565Date filed: Jan. 4, 2011Type: UnemploymentAmount: $7,220

Glass Block Headquarters Inc.673 Dover Center Road, WestlakeID: 03-0531238Date filed: Jan. 4, 2011Type: Employer’s withholdingAmount: $7,133

Alsoussou & Sons Inc.1240 E. 55th St., ClevelandID: 34-1901453Date filed: Jan. 4, 2011Type: Employer’s withholding, corporate incomeAmount: $6,585

Harold Pollock LPA590 Harper Road, Suite 107ID: 34-1530164Date filed: Jan. 11, 2011Type: Employer’s withholdingAmount: $6,132

Abel Counseling & Associates Inc.14100 Cedar Road, Suite 300, University HeightsID: 34-1805036Date filed: Jan. 11, 2011Type: Employer’s withholding, unemploymentAmount: $5,581


The departure of former Cleve-land public schools CEO EugeneSanders gets increasingly both-ersome as we get further from his

abrupt retirement.I don’t meet many people who knew

Dr. Sanders — even a little — who didn’trespect and like him. He seemed engaged and involved, especiallyin the six months or so since theballyhooed announcement ofhis radical “transformation plan”for the school system.

In the middle of last year, Dr.Sanders asked the school boardand Mayor Frank Jackson (theirboss under state law) for athree-year extension of his contract (at $263,000 per yearplus generous benefits). Themayor and board agreed, only to haveDr. Sanders jolt the community six monthslater with news of his retirement.

“Mystifying” is a common word I’veheard from folks in business and civicleadership roles. A few probably usedless flattering terms, given the news thatsurfaced just days after his retirement

announcement that he is among 25 beingconsidered for the presidency of BowlingGreen State University, his alma mater.

In his press conference, and duringsome interviews since, Dr. Sandersspoke of his desire to relax and ponderthe next stage of his life. He joked aboutbeing able to wear blue jeans for a while.

Then why ask for a contract extension just a few monthsearlier?

So in came Peter Raskind,former National City Bank CEOwho helped guide the Cleve-land-Cuyahoga County PortAuthority in the turbulent periodafter the top exec there wasfired. Again, Mr. Raskind willwork for the princely sum of $1,while a search committee

begins its work for the school system.Then, as all this news is breaking

around the schools comes a story lastweek in The Plain Dealer that Dr.Sanders also will receive $110,000 for his accrued, unused vacation days. And because of the way public contracts aredone and pensions are calculated, he

qualified for a monthly pension paymentof $15,000. That’s $180,000 a year at age 54.

Tell me that makes sense. I don’t carehow many years he spent in education,retiring at 54 with a pension that largeand then starting a second career, perhapsas a highly paid college president, doesn’tseem right.

Examples like his — and there arethousands upon thousands of “doubledippers” like him (assuming he worksagain) — show just how messed up thepublic pension systems are, and howmuch they need to be changed, at everygovernment level.

We know that pension liabilities are amassive problem for all governmentsright now, and there will be increasingpressure for radical change. Perhaps GeneSanders saw that coming and really diddecide to retire now. He will be amongall the other publicly paid employeeswho do so, under the rationale that they’resimply “doing what they’ve earned under the contracts as they’re written.”

Tell that to the parents of the Cleve-land students who fear that theirs will bethe next school to close. ■


Jump aboardN

ortheast Ohio? A cradle of entrepreneurialthought? Yes, and a program to which theregion gave birth seven years ago to spurthe development of new businesses now

is serving as a model for other cities to follow.We’re speaking of JumpStart Inc., which civic

organizations that included the Cleveland Founda-tion, the George W. Codrington Foundation andCleveland Tomorrow (now the Greater ClevelandPartnership) helped get off the ground. Its missionwas to assist early-stage businesses with advice andmodest monetary investments in order to helpbuild those ventures into job-creating machines.

Its CEO from the beginning, Ray Leach,has gained a nationalreputation for himselfand his organization because of the roleJumpStart has played inencouraging angel investors and venturecapital firms to invest incompanies in NortheastOhio. How? By puttingJumpStart’s moneywhere its mouth is andinvesting in the compa-

nies it talks up. Now, Mr. Leach is about to take on an even bigger

assignment while remaining in his position here.As announced last week, the Obama administra-

tion has selected JumpStart to create a nonprofit,called JumpStart America, that aims to raise $2 billion to fund programs that promote entrepre-neurship and innovation in other parts of the country. Mr. Leach will be CEO of both JumpStarts.

As JumpStart Inc. chief marketing officer CathyBelk told Crain’s technology reporter Chuck Soder,it’s unclear exactly how JumpStart America willwork. However, Ms. Belk said it likely will draw inspiration from JumpStart Inc.’s “community advisors” division, which already is working with sixother cities — Akron, Detroit, Fort Wayne and Minneapolis-St. Paul, among them — to figure outhow to spur entrepreneurship in their regions.

Officials of JumpStart Inc. believe the new, national nonprofit will help increase NortheastOhio’s visibility among national foundations andpolicy makers. We suspect they’re correct, whichwould be a big plus for a region that itself still is undergoing a transformation in how it thinks aboutitself and how it approaches economic develop-ment.

Northeast Ohio has yet to embrace the swash-buckling, risk-taking mentality of California’s Silicon Valley. Nonetheless, thanks to JumpStartand other people and organizations that have encouraged and invested in early-stage companiesin our market, a greater entrepreneurial spirit existshere today than it did a decade ago.

We may have a long way to go, but we’ve alreadycome a long way, baby — and the recognition received by a group such as JumpStart affirms thatwe’re on the right track.

FROM THE PUBLISHER

BRIANTUCKER

System serves departing Sanders well

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

EDITOR:Mark Dodosh ([email protected])

MANAGING EDITOR:Scott Suttell ([email protected])

OPINION

Leach

LETTERS

Governmental organization behind times■ Our traditional way of organizing government service delivery on national,state and local levels is out of touch withhow commerce, communications andcommunity have evolved.

In fact, the new model of service delivery should reorganize along neigh-borhood, regional and global levels;that’s how business, the Internet and human beings interact in the 21st century.Why shouldn’t the way government servespeople begin shifting toward this newmodel, too?

Imagine how our community mapswould look if we revised our 200-year-old government service lines to reflectthe way we really live. The new mapswould show clusters of neighborhooddistricts and innovation zones where education, technology and social amenities

converge in regional marketplaces.That’s the actual metropolitan dynamic

most of us live in today. Now imagine ifgeopolitical boundaries were reorga-nized along government service lines thatseamlessly crossed district boundarieswith efficiency and economy of scale.That would be reorganizing for our future success.

Brian Tucker’s Jan. 24 commentary,“Eighty-eight counties just won’t cut it,”was on the money in highlighting theproblem of an anachronistic Ohio countysystem, originally organized to accom-modate people’s day trips by horse andbuggy from their homes to the countyseat.

Aligning governments to those ancientmaps leaves Ohioans with predictablyancient service models. Redundant

governments and inefficient services entangle us like a giant cobweb in Ohio.Because we haven’t changed, Ohio is agovernment of 3,000 independent andcompeting counties, cities, townships,villages, and school districts. Yet 70% ofour people and their patents, and 80% ofour State GDP and knowledge jobs, arelocated in our seven largest metropolitan regions of Ohio.

It’s time to stop tinkering with tepid,incremental approaches to regionalism.It’s time we start designing a new modelthat competitively positions Ohio’s met-ropolitan regions in the global economy.The clarion call comes from our popula-tion problem.

Cleveland’s metro region is the 26th

most populous in the nation, but it’s alsoSee LETTERS Page 11


one of only three in the top 30 U.S.metro areas losing population. Andwhile Ohio is the nation’s seventh-largest state, it ranks 47th in expectedpopulation growth. It’s clear thatour old and inefficient way of delivering government resources is a major contributor to our lack ofcompetitiveness.

Winning precedents for reorgani-zation exist in places like Oregon,where 40 years ago the state’s Repub-lican governor teamed with Port-land’s Democratic mayor to developa metropolitan strategy for growth,forming a Metro Council of govern-ment to guarantee it. The resultsspeak volumes. In four decadesPortland has achieved 48% growth, andOregon’s population has explodedby 83% in its regional centers wheredevelopment has been targeted.

Ohio’s seven major urban centersmake it a perfect place to start incor-porating a new way of governingthat embraces a neighborhood, regional, and global approach —targeting investment in neighbor-

hood districts, delivering servicesacross metropolitan regions, andcompeting in the global marketplace.

There is a better way, and it’s themetro way.

Chris RonaynePresidentUniversity Circle Inc.

Contract story on target■ Congratulations on a lucid andaccurate article in publishing “Kasichpush for contract rule changes facespitfalls” on Page 3 of your Jan. 30 issue.

I’ve been reading labor relationsnewspaper articles for decades. Thisis the very first one I’ve read thatdidn’t confuse arbitrators with mediators, binding arbitration withadvisory arbitration, and/or media-tion with meditation! Kudos.

Susan Grody RubenLabor and employment arbitra-

tor/mediatorCleveland


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LETTERS

ROBERT STAIBCleveland Yes, I think someone canbe successful in that position. It’ll take someonewho can really confront allthe vested interests. Thevendors and the unions.

➤➤➤➤ Watch more of these responses by visiting the Multimedia section at www.CrainsCleveland.com.

THE BIG ISSUEThe Cleveland Metropolitan School District is searching for a new CEO. Can anyone be successful inthat job or are the district’s problems too daunting?

KERMIT LINDCleveland Heights It (the solution) will comefrom some group that includes the superintendent.Just the superintendentalone is not going to be ananswer.

GILBERT BLOMGRENCleveland I don’t think they’re too bigto be solved. They’ve gotto find the right person.

BECKY GRIMMStrongsville I would say in any situation,if you have somebodynew, it can make a difference.


Public pensions tout recent improvementsConcerns mount over potential regulations the fact sheet.

Keith Brainard, the Georgetown,Texas-based research director forNASRA, said the decision to issue thefact sheet was prompted by the increased attention paid to publicpension plans and by proposals atthe federal level to “require certainreporting among state and localpension plans.”

“We’re concerned about a one-size-fits-all approach to regulate,monitor or measure state and localpension plans,” he said. “Every oneof these plans is unique.” ■

Investors watch Egypt’simpact on Middle EastOil prices could rise if unreast spreads

By TIMOTHY INKLEBARGERPensions & Investments

A group of organizations repre-senting state and local governmentsand public pension plans released afact sheet that it says aims to set therecord straight on the operationsand funding of public employeepensions.

Released Feb. 1, the fact sheet notesthat state and local governmentshave funded the majority of theirpension costs and collectively hold$2.7 trillion for current and futureretirees.

The fact sheet — issued by 10 organizations, including the NationalAssociation of State Retirement Administrators (NASRA), National

Council on Teacher Retirement andNational Conference of State Legis-latures — also notes that publicpension investment returns haveexceeded their assumptions over a25-year period — at 9.25% vs. theassumed 8%. It says state and localgovernments also have changedbenefit levels, contribution ratesand made other adjustments tohelp rebound from losses incurredfrom the world financial crisis.

“The great strides made in theability of state and local govern-ment retirement systems to ensurethat more than 20 million workingand retired public employees havefinancial security in retirement havebeen achieved without federal intervention,” the group states in

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

By JEFF BENJAMINInvestment News

From a fixed-income perspective,the ongoing unrest in Egypt shouldnot rattle investors, according toSara Zervos, head of the global debtteam at OppenheimerFunds.

Ms. Zervos, who manages morethan $13 billion in global fixed-income assets, said her investmentstrategy has not materially changedsince the political unrest began inEgypt more than a week ago.

She did note, however, that shewill be paying close attention to theway the Egyptian army handles theprotestors.

“The only way this can be a real(investment) issue is if it spreadsthroughout the entire Middle Eastand causes oil prices to spike,” shesaid.

Crude oil prices hovered around$92 a barrel last week as Egypt’s 30-year president Hosni Mubarakannounced that he would not seekre-election in September.

“Oil is everyone’s favorite indicatorof Middle East risk,” Ms. Zervossaid.

Even though Egypt controls theSuez Canal, which is responsible for8% of global sea trade, the country’soil production is not the issue, Ms.Zervos said.

“Egypt is not a significant tradingpartner of any major emerging or developed country,” she said.“The potential impact of what’s happening in Egypt is that it couldlead to contagion in places like

Saudi Arabia.” Ultimately, Ms. Zervos believes

the risks of such a contagion areminimal, which is why she has notadjusted her benchmark weightingsin Egypt.

Indeed, she has begun increasingher weighting in dollar-denominatedEgyptian bonds.

In a research report issued lastweek, Ms. Zervos wrote that she expects there will be “noise sur-rounding Egypt and the Middle Eastfor days, if not weeks, and our basecase is there will likely be somepressure on the exchange rate of theEgyptian pound, while sovereignyields on local debt are likely to befairly steady.”

Meanwhile, the local equity markets have been volatile.

The Egyptian equity markets,measured by the MSCI Egypt Index,fell by more than 21% between Jan.14 and Jan. 28.

The S&P 500 fell by 1.3% over thesame period.

But the fact that the S&P ralliedby more than 2% since Jan. 20, asthe protestors in Egypt startedclashing with the police, is evidencethat the global financial markets aremanaging to keep the political unrest in context, according to Ms.Zervos.

In an attempt to “view Egyptthrough the lens of the global landscape,” she pointed out that thecountry of 83 million, which gener-ates $200 billion in gross domesticproduct, represents 0.3% of globalGDP. ■



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FINANCECHASE: John Batcho to middlemarket division manager, Akron, Canton, Youngstown.

FEDERAL RESERVE BANK OFCLEVELAND: Office of Minority andWomen Inclusion, Peggy Velimesisto director and Diana Starks to assistant vice president, diversity officer. WESTFIELD BANK: Timothy E.Phillips to president; Kevin P. Vonderau to chief lending officer.

FINANCIAL SERVICEAPPLE GROWTH PARTNERS:Michael Markowski to principal,health care services; Brett Mangonto senior tax manager; LindsayCooper to tax associate; WillMichael to senior tax associate; Rebecca Miller to marketing coordi-nator; Brigitta Gut to bookkeeper.BEST TAX + ACCOUNTING: John

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KPMG: Brian G. Greenberg to director, advisory services.

RETIREMENT SOLUTIONS: KristineCharkosky to internship coordinator.

HEALTH CARECASE WESTERN RESERVE UNIVERSITY SCHOOL OF MEDICINEAND UNIVERSITY HOSPITALSCASE MEDICAL CENTER: Dr. Clifford V. Harding to chair, Department of Pathology.

INSURANCEMEDICAL MUTUAL OF OHIO:Kevin Lauterjung to executive vicepresident, managed care; Irene Koler to director of commercialsales, northeast region.

LEGALFAUVER, KEYSE-WALKER &DONOVAN: Kristina M. King toshareholder. THOMPSON HINE LLP: Erin C. Hewitt to associate.

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ULMER & BERNE LLP: Andrew G.Fiorella to associate.

MANUFACTURINGA. SCHULMAN INC.: Sanja Valenticto manager of corporate marketingand business development.

NONPROFITBIG BROTHERS BIG SISTERS: LoisPozega to Northeast Ohio regionalmanager, Amachi Ohio program. HOSPICE OF THE WESTERN RESERVE: William E. Finn to CEO;David Simpson to CEO emeritus.JD BREAST CANCER FOUNDATION:JT Aguila to executive director.

SERVICEFINDLEY DAVIES: Caroline Smithto associate attorney; Jill Leitner andTara Morey to senior consultants.FLEET RESPONSE: Mike Bonaccito midwest regional sales manager. NEWRY CORP.: Ted Evans Jr. tosenior consultant.

TECHNOLOGYOECONNECTION: Alice Lewis tomanager, quality.

UTILITYFIRSTENERGY CORP.: Dennis M.Chack to president, Ohio operations.

BOARDSFIRST TEE OF CLEVELAND: MikedeWindt Jr. (Gates Group CapitalPartners) to chairman; Craig Donnanto chair-elect; Suzanne Day to secretary; Larry Cruise to treasurer. JD BREAST CANCER FOUNDATION:Karen Lippmann (Cuyahoga CountyJuvenile Court) to president; ErinAdams Armstrong to vice president;Hayley Williams to second vice president; Anne Curry-Smith to secretary; Mark Royle to treasurer.SHOES AND CLOTHES FOR KIDS:Terence J. Uhl (Landau Public Relations) to chair; Scott Simon tochair-elect; Allan C. Krulak to chairemeritus; vic gelb and Rockette L.Richardson to life directors; WilliamR. Joseph to vice chair; StephanieMcHenry to secretary; A. LamontMackley to treasurer.

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HEALTH CAREI N S I D E

FEBRUARY 7 - 13, 2011 CRAIN’S CLEVELAND BUSINESS 13

15 HOSPITALSYSTEMS TEAMTO BOOSTPATIENT CARE.

Nelson Bobb (left) isn’t a fan of Cleve-land snow, but that hasn’t deterred himfrom traveling from his home in Greens-boro, N.C., to seek treatment forhis diaphragm, which hadstopped functioning properly,and a collapsed lung.

Under the care of Dr. Ray-mond Onders of UniversityHospitals Case Medical Center,Mr. Bobb recently underwentminimally invasive surgery toimplant the same type of diaphragm pacing device, pictured at right, used on thelate Christopher Reeve.

“This process has made atremendous difference in myeveryday life,” said Mr. Bobb of the devicethat now delivers electrical stimulation 14times a minute to his diaphragm, ultimatelyaimed at improving his breathing.

Mr. Bobb — a Kent State University

graduate who for 26 years was the athleticdirector at the University of North Carolinaat Greensboro — came to Cleveland for a

second opinion at the sugges-tion of his sister, who lives inthe area with her husband. Mr.Bobb’s sister has a nursingbackground, and she has afriend who works at UH.

“The way that I’ve been handled, the whole professionalapproach to my needs is phenomenal,” he said.

Today, Mr. Bobb isn’t only aproponent of the health care hehas received; the city itself hasgained a fan.

“Take away the winter …Cleveland is a nice city to visit,” said Mr.Bobb, noting that he’s had a chance to takein some of the local flavor with his brother-in-law, specifically sampling some of theregion’s eateries. — Amy Ann Stoessel

A MEDICAL MECCA

Area institutions benefit as reputation for quality caredraws patients from beyond region’s borders

By AMY ANN [email protected]

It’s been just about a year sinceMooresville, N.C.-based homeimprovement giant Lowe’s entered into a partnership with

the Cleveland Clinic allowing employees and dependents enrolledin the company’s self-insuredmedical insurance plan to seekcardiac care in Northeast Ohio.

The voluntary program coversall medical deductibles and co-insurance amounts as well as travel

and lodging expenses for the patient and a companion.

“If we had 10 people use the Clinicin the first year, that would be awin-win,” said Lowe’s spokeswomanKaren Cobb of the company’s initialexpectations.

Chalk one up in the win category.Since the Cleveland Clinic

benefit became available lastMarch 1, 29 Lowe’s employees and dependents from across thecountry have had procedures performed in Northeast Ohio, Ms.

MARC GOLUB PHOTOS

Nelson Bobb, of Greensboro, N.C., visited University Hospitals last week for a post-surgery checkup. Mr.Bobb underwent surgery in December for an implantable diaphragm pacing device, which provides elec-trical stimulation to his diaphragm.

Providers aren’t missing a beat in building up cardiac carePrivate physicians join ranks of larger hospitals amid industry changesaiming to stay there, and othersare trying to keep pace?

MetroHealth Medical Centerand Akron General Medical Centereach recently hired six cardiolo-gists, Metro from a variety of hospitals and medical schools andAkron General from the NorthOhio Heart Center, a private cardi-ology practice with seven locationsin Northeast Ohio.

The latter group’s joining AkronGeneral represents a growingtrend nationally, according to theAmerican College of Cardiology. In a September survey, the collegefound 48% of cardiologists in pri-vate practices were considering oralready in the process of integratingwith a hospital system. A declinein Medicare reimbursements hasput the squeeze on those private

practitioners; most famously, theArizona Heart Institute, founded40 years ago by globally knowncardiovascular surgeon EdDiethrich, in August went bank-rupt, saddled with millions in liabilities.

“The private practitioner is becoming extinct,” said Daniel Simon, the director of the Harring-ton-McLaughlin Heart & Vascular

BY JOEL [email protected]

Cardiac care is one of a hos-pital’s most lucrative areas.

And Northeast Ohio —with a myriad of care

options, including the No. 1 heartcare center in the nation, and an aging population with a higher rateof heart disease than the rest of thenation — is ripe for the picking.

Is it any wonder, then, that theregion’s top dogs in cardiac care are

Institute at University Hospitals.“Cardiology’s golden age is gonewith declining reimbursement.Doctors are finding it increasinglydifficult to compete.”

Additionally, compliance with thefederal health care reform law thatnewly empowered House Republi-cans want repealed also has played arole, the biggest part being known as“accountable care organizations.”It’s a fancy way of saying hospitals, in order to cut costs for patients,

Out-of-state resident a case in point

See MEDICAL Page 14

See CARE Page 15


Cobb said. Of course, the Cleveland Clinic

is not the only heath care institutionin Northeast Ohio that’s caring forpatients from outside the area.

In fact, more savvy patients, increased access to informationand specialized medicine all areserving as drivers when it comes tohealth care travel — and manyworking in the medical communitysay it’s a trend they expect willcontinue and grow.

Often referred to as “medicaltourism,” the phenomenon of people traveling for health care isnot a new one, but it is one that ap-pears to be gaining some traction,according to some in NortheastOhio.

According to information fromthe Ohio Hospital Association,roughly 3.4% of U.S. patient visits tothe large majority of Ohio hospitalswere by out-of-state residents in2009. This compares to 3.1% in2007 and 2008.

“People tend to want the besthealth care their money can buy,”said Tiffany Himmelreich, the association’s spokeswoman.

Star performersIndeed, Michael McMillan,

Cleveland Clinic executive directorfor market and network services,said the Clinic is in active andbroad-based discussions withabout a dozen Fortune 50 and 100companies for deals similar to thatwith Lowe’s.

Additionally, the arrangementwith Lowe’s may be expanded toinclude other specialties.

“We are building an importantnew marketplace,” Mr. McMillansaid. “People are increasingly comfortable with the idea thatthere are specialized centers of care.”

Both University Hospitals andMetroHealth Medical Center agreethat having a certain reputationand level of expertise can serve toattract patients from outside thearea — whether it’s through physi-cian referral or patient research.

“Over the last few years … wewere fortunate enough to bring toCleveland a number of specializedphysicians,” said Dr. Michael Nochomovitz, president, UniversityHospitals Physician Services.

There are UH doctors known fora wide range of specialties, fromcochlear implants and cancer careto hernia repair, just to name a few,according to Dr. Nochomovitz.

“It’s certainly part of our strategyto promote our physicians nation-ally and internationally,” he said.

Dr. Mauricio Arruda, for one,was featured on “The Today Show”for a novel procedure to treat atrialfibrillation, for which patients havetraveled from Brazil and Canadaand several other states.

“These patients find their way toCleveland,” Dr. Nochomovitz said.“Our process has focused on theunique physician and their area ofexpertise.”

Similarly, MetroHealth MedicalCenter has seen interest from out-of-area patients in part due to itsdesignation by the National Insti-tute on Disability and Rehabilita-tion Research as one of 14 model systems nationally for Spinal CordInjury Rehabilitation, according to


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Medical: Savvy patients find their way to Northeast Ohio

For hoteliers Neville Erasmus andMichael Cooper, “Please comeback again,” is not always an appropriate statement to makewhen guests are checking out.

Mr. Erasmus is executive assis-tant manager at the InterContinentalSuites Hotel while Mr. Cooper is executive assistant manager, Inter-Continental Hotel. Both propertiesare owned by the Cleveland Clinicand on the health care system’smain campus in Cleveland.

“The guests here … their needsare very different,” Mr. Erasmussaid. “You have to be careful sayingto someone, ‘Have a great day.’”

Roughly 70% of the guests stayingat Mr. Erasmus’ property — and50% of those at Mr. Cooper’s prop-erty — are patients of the ClevelandClinic or family members of patients,for whom discounted rates areavailable.

“You feel like you’re doing morethan what a normal hotelier woulddo,” Mr. Cooper said. “You share inthe joy and sadness of life here.”

To that end, Mr. Cooper said it iscritical the right employees are hired— people who can be empatheticand sensitive to a variety of needs,including those that might occur witha patient pre- and post-operation.Blood-borne pathogen education andcultural sensitivity are top of mind.

“A lot of what we focus on is howwe train our team,” said Mr. Cooper.“Our employees are very calm and

professional.”On the facility side, the InterConti-

nental Suites Hotel, opened in1999, is in the midst of a property-wide renovation, all planned for withthe patient and their family in mind,Mr. Erasmus said.

From aromatherapy to color andfood choices to more practicalamenities such as in-room freezers,attention was paid toward promotinga sense of wellness. The hotel evenmakes available specialized technol-ogy aimed at reducing stress.

“We’ve really thought of every detail to really relax the guest andmake them feel comfortable,” Mr.Erasmus said.

Comfort is especially important atboth properties since some guestsare long-term, ranging from two tothree months to longer than a year.That also means going the extramile for family members who mightbe looking for ways occupy them-selves while away from home forsuch an extended period of time.

“We have family members stayinghere … and their whole lives havebeen turned upside down,” Mr.Cooper said.

Mr. Cooper said he only expectsto see health care travel increase asthe economy improves.

“It’s really a new area for the ho-tel industry,” he said. “Medicaltourism is a new part … I think it’sgoing to be very important.”

— Amy Ann Stoessel

Clinic hotels cater to unique needs

Dr. Greg Nemunaitis, the hospital’sdirector of spinal cord injury reha-bilitation and director of the SpinalCord Injury Model System.

“It’s one thing to know you’regood, but to have someone else sayyou’re good is even better,” he said.

Unique commoditiesShawn Lyden, executive vice

president for Akron Children’sHospital, said while it is not neces-sarily part of his institution’sstrategic plan to market its servicesoutside the region, patients oftenare drawn to physicians with highprofiles or unique expertise.

According to patient demo-graphic information provided byAkron Children’s, of 369,673

patient visits in 2010, 3,601 werefrom patients from outside of Ohio.Within the state, 1,751 of 366,072visits were from outside AkronChildren’s 25-county service area.

“The more informed consumersget the more I see them shoppingfor services,” Mr. Lyden said.

Additionally, he said specialists,such as those in cardiac care, orthopedics and neonatal care, often are hard to come by in pedi-atric medicine.

Similarly, Dr. Scott Weiner,chairman of the Department of Orthopaedics for Summa HealthSystem’s St. Thomas and AkronCity Hospital, is one of about six inthe state who practice the specialtyof orthopedic oncology.

On average, Dr. Weiner said 30% ofhis patients are from outside ofNortheast Ohio, and 60% are fromoutside of Summa’s coverage area.

While Dr. Weiner, who has beenin practice for 18 years, said the typesof conditions that would necessi-tate care from an orthopedic oncol-ogist are not all that common, it stilldoes mean that he often is treatingpatients from outside of the area.

“Patients have to travel to get thecare that they need,” he said.

‘An advocate on your side’At the Cleveland Clinic, there is an

entire full-service department dedi-cated to helping out-of-area patients.

Dr. Bill Ruschhaupt, chairman ofthe department known as Global Patient Services, said patients wereseen last year at the Clinic fromevery state and 135 countries (al-though international patients makeup a small percentage of total pa-tient volume).

Domestically, there were 40,000unique Clinic patients from outside Ohio last year, contribut-ing to 25% of hospital discharges.In 2003, 21% of discharges camefrom other states.

The growth in the number of pa-tients traveling to University Hospi-tals for treatment even promptedthe formation of a concierge-typeservice to help coordinate visits.

Patient concerns can range fromlodging and travel issues to makingsure a pet or child is accommodatedfor while in Northeast Ohio.

“It really helps to ease anxiety …to know you have an advocate onyour side,” said Erin Slay, patientrelations officer. ■

MARC GOLUB

Nelson Bobb, of Greensboro, N.C., receives a checkup for a procedure he hadin December at University Hospitals. Mr. Bobb underwent surgery for an im-plantable diaphragm pacing device, which provides electrical stimulation to hisdiaphragm.



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HEALTH CARE

need to ensure every one of a patient’s needs are met under oneroof, and more specialists can helpaccomplish that.

“There’s a financial incentive forproviders to work together or become part of the same organiza-tion,” said Tom Campanella, the director of the health care MBA program at Baldwin-Wallace College.“The theory behind it is that healthcare is fragmented, so they’ve tried toincent everyone to come together.”

Recent movesMetro’s No. 1 priority, according

to Dr. David Rosenbaum, the directorof the hospital’s Heart and VascularResearch Center, is to intervenemuch earlier in the heart care time-line; in other words, to attack diseasebefore it’s too late.

“We want to change the naturalevolution of the disease,” Dr. Rosen-baum said. “The emphasis has beenon applying technologies to the veryend stages of heart disease, but wedon’t do nearly a good enough jobmore upstream in the process, whereit will have more impact.”

Two of the new physicians spe-cialize in electrophysiology, and Dr.Rosenbaum said Metro hopes todevelop a heart failure program towork in tandem with its robustteam of arrhythmia specialists.

Akron General’s move comes asthe hospital’s cardiac center was“losing steam,” said Dr. DennisWright, the executive medical director of the Heart and Vascularservice line for Akron General. Sothe hospital scooped up five physi-cians who previously worked forthe North Ohio Heart Center. Thenew physicians bring expertise inimaging, an area in which Dr. Wrightsaid Akron General previously lagged.

The lucrative nature of heart carealso played a role, and Dr. Wrightsaid the hospital is set up well tomeet accountable care mandates.

“We looked at it as, ‘How do wereinvigorate and reimagine whatour future will be in heart and vas-cular?’” Dr. Wright said. “If we weregoing to continue to make progress,we needed a group of cardiologiststhat were dedicated to our facilities.”

The whysAccording to the Center for

Studying Health System Change’slatest Cleveland Community report,the region’s heart disease rate is5.3%, higher than the 4.1% in othermetro areas with more than 400,000residents. As the area’s populationcontinues to age, the need for qual-ity heart care, and plenty of it, onlywill intensify.

At UH, the heart and vascular de-partment has continued to growsince Dr. Simon came to Clevelandfrom Harvard Medical School in2006, when he found that the cardio-vascular operation at UH was prof-itable, but “not appropriately sized.”

Since then, the division of cardio-vascular medicine has grown from21 to 58 faculty members, and theamount of committed National Institutes of Health research grantshas grown from about $2 million to$18 million, Dr. Simon said.

All the while, the Cleveland Cliniccontinues to be the national leader inheart care, according to U.S. News &World Report, which has named theClinic’s heart program No. 1 in theU.S. for 16 years running.

Dr. Steven Nissen, the chair of thedepartment of cardiovascular medicine at the Clinic, said the de-partment has grown continuously,most recently in imaging and electro-physiology, the latter an area where it

will add three more doctors in July. And keeping up with those two

giants also has played a big role inrecent hiring, B-W’s Mr. Campanellasaid. In addition to the lofty statusesenjoyed by the Clinic and UH,Summa Health System two yearsago scooped up a major Akron-areacardiology practice.

“There are defensive and offen-sive strategies at work,” he said.“Metro is competing against theClinic and UH, and Akron Generaland Summa are competing. (Metroand Akron General) want to protectthe heart surgeries they performand referrals they get, and bring innew referrals.” ■

Care: Providers seek to improve expertisecontinued from PAGE 13

Institutions benefit from collaborationBy TIMOTHY [email protected]

The sheer number of North-east Ohio health careproviders offers a fertileground for spirited compe-

tition, but it also presents an opportunity for strategic collabo-rations aimed at improving care inthe region and beyond.

Examples are strewn throughoutthe area’s medical landscape.Akron Children’s Hospital, for instance, announced in Decemberit would provide pediatric care atthe MetroHealth System startingthis year. Also, the Cleveland Clinic’sHeart and Vascular Institute haspartnered with six hospitals in thecountry — most recently one inKentucky — and more are in thepipeline.

The growing stream of partner-ships and affiliations betweenhealth care groups allowsproviders to capitalize on eachother’s resources and gain accessto new revenue streams. Mean-while, health care observers notethat such collaborations are goingto continue to surface, especiallyas the federal health care reformlaw takes hold.

“From an institution receivingthe service, there’s that ability to

position yourself as being able tocredibly deliver the care,” said BillRyan, president and CEO of theCenter for Health Affairs, an asso-ciation representing local hospitals.“From the perspective of the insti-tution bringing care, it’s about extending market reach, increasedmarket share and long-term referrals.”

Akron Children’s move to offerits services in Cuyahoga County ispart of a strategy of regionalgrowth, according to Dr. NormChristopher, Akron Children’schairman of the department of pediatrics. The strategy, he noted,is driven by health care providerswho want to increase the scope ofservices provided for children andtheir families close to home.

Still, some patients with particu-larly acute needs may need to receive care at the Akron campus,but the idea is to broaden AkronChildren’s Hospital into an accountable care organization — astill-evolving component of thefederal health care reform law thataims to band together medicalproviders and reward them with financial incentives for providingquality care at a controlled cost.

“We want to be situated in a goodway going forward, and we want toimprove health and wellness in the

entire community when that’s possi-ble,” Dr. Christopher said.

Spreading the specialtiesMeanwhile, Dr. Christopher said

it’s difficult for some hospitals torecruit certain specialists, particu-larly in pediatrics, to create a robustnetwork of providers. Systems suchas MetroHealth are branching outto tap into other health careproviders’ resources to fill that void.

“There is a tremendous shortagein subspecialty service providers,”Dr. Christopher said. “Regionalismis evolving as a strategic response tothose shortages.”

Similarly, University Hospitalsoffers several of its services at com-munity-based hospitals.

The health system recently announced that certified neonatalnurse practitioners from RainbowBabies & Children’s Hospital willcare for newborns with seriousmedical issues at Parma CommunityGeneral’s special care nursery.

UH also has cancer centers locatedat hospitals throughout the state, including Firelands Regional MedicalCenter in Sandusky, TrumbullMemorial Hospital in Warren andSouthwest General Health Center inMiddleburg Heights, which are led byclinical staff from UH’s SeidmanCancer Center.

Medicaid reimbursement climatehave been significant drivers of suchcollaborations and partnerships,said Thomas Strauss, president andCEO of the Summa Health System.

Mr. Strauss noted that it’s become a necessity for health careproviders to come together and findhow best to leverage their resourcesand not duplicate services.

Summa, for instance, tappedAkron Children’s Hospital last fallto maintain its special care nurseryat Summa’s Akron City Hospital.

MetroHealth recently affiliatedwith a large independent physiciancollective — Premier PhysiciansGroup — in Cuyahoga County.

Dr. William Lewis, chairman of themarket development campaign andchief of clinical cardiology, said thearrangement also allows Premier’sphysicians to remain independentwhile allowing them to receive someservices offered to those employeddirectly with MetroHealth, such asthe electronic medical record system.

“I think that those types of rela-tionships will go on as long asthey’re viable,” he said. “We wantto embrace that. That’s what accountable care is all about.” ■

“It’s really shown from a coststandpoint, it’s cheaper to do it thatway than to duplicate services,” according to Richard Hanson, pres-ident of UH community hospitalsand ambulatory networks.

As for the Clinic’s move to alignits heart and vascular institute withother hospitals, the strategy is tospread the Clinic’s expertise and ultimately improve patient out-comes across the country, accordingto Dr. Joseph Cacchione, the director of clinical integration atthe Heart and Vascular Institute.

The Clinic is paid for its services,but the benefit for partnering insti-tutions is the ability to align withthe Clinic’s brand and improve care.

“We actually are looking to improve quality of care across thecountry,” Dr. Cacchione said. “Eventhough we’re competitors, we’re allkind of in this together.”

Pinching the penniesThe stresses of health care reform

and the uncertain Medicare and



LARGEST HOTELSRANKED BY NUMBER OF GUEST ROOMS(1)

RankNameAddress Phone/Web site

Numberof guestrooms

Number ofmeetingrooms

Meeting space(square feet)

Corporateroom rate ($)

Grouproom rate

($)

Full-timeemployees(12-1-2010) Hotel owner General manager

1Kalahari Resort & Convention Center7000 Kalahari Drive, Sandusky 44870(877) 642-6847/www.kalahariresorts.com

884 26 95,000 95-195 94-594 960 Todd Nelson Brian Shanle

2Hotel BreakersOne Cedar Point Drive, Sandusky 44870(419) 627-2106/www.cedarpoint.com

650 3 2,898 NA 97-279 NA Cedar Fair LP Katie Wobser

3Renaissance Cleveland Hotel24 Public Square, Cleveland 44113(216) 696-5600/www.renaissancecleveland.com

491 33 62,000 239 109-299 320 CTF Hotel Holdings Inc. Gary McGauley

4Crowne Plaza Cleveland City Centre Hotel777 St. Clair Ave. N.E., Cleveland 44114(216) 771-7600/www.hotelsdowntowncleveland.com

472 20 28,000 89-109 79-129 NA Driftwood HospitalityManagement LLC Stephen Moran

5Hilton Cleveland East/Beachwood3663 Park East Drive, Beachwood 44122(216) 464-5950/www.hiltonclevelandeastbeachwood.com

404 17 16,000 149-179 115-135 200 Twin Tier Hospitality LLCSatish Duggal Ali Chiani

6Cleveland Marriott Downtown at Key Center127 Public Square, Cleveland 44114(216) 696-9200/www.clevelandmarriottdowntown.com

400 16 17,000 179-269 99-199 NA Wells Real Estate Funds Bob Megazinni

7Doubletree Hotel Cleveland Downtown/Lakeside1111 Lakeside Ave. E., Cleveland 44114(216) 241-5100/www.doubletreecleveland.com

379 10 10,347 119-189 79-179 118 The Hotel Group Leonard Clifton

8Cleveland Airport Marriott4277 W. 150 St., Cleveland 44135(216) 252-5333/www.clevelandairportmarriott.com

372 16 15,500 149+ 109+ NA Thomas Point Ventures Rick Bertram

9Holiday Inn Cleveland South/Independence6001 Rockside Road, Independence 44131(216) 524-8050/www.hiindependence.com

364 18 18,100 130 85-99 NA Janus Hotels & ResortsInc. Tom Moore

10Breakers ExpressOne Cedar Point Drive, Sandusky 44870(419) 627-2106/www.cedarpoint.com

350 0 NA NA 89-199 NA Cedar Fair LP Mike Levy

11Holiday Inn Strongsville15471 Royalton Road, Strongsville 44136(440) 238-8800/www.holidayinn.com/cle-strongsvil

303 10 12,500 139 79-99 125 Hospitality Ventures Joe Isernia

12InterContinental Hotel & Conference Center9801 Carnegie Ave., Cleveland 44106(216) 707-4100/www.intercontinentalcleveland.com

299 13 35,000 NA NA NA Cleveland Clinic Campbell Black

13Marriott Cleveland East26300 Harvard Road, Warrensville Heights 44122(216) 378-9191/www.clevelandmarriotteast.com

295 15 15,000 209 NA 70 Western and SouthernInsurance-Eagle Realty Keith Shopnick

14Hyatt Regency Cleveland at the Arcade420 Superior Ave., Cleveland 44114(216) 575-1234/www.cleveland.hyatt.com

293 9 7,100 239 129-199 100 Cleveland Arcade LLC Robert Kallmeyer

15Akron City Centre Hotel20 W. Mill St., Akron 44308(330) 384-1500/www.akroncitycentrehotel.com

274 20 18,000 129 NA NA David and Ann Brennan Tom Finley

16Embassy Suites Hotel Cleveland Rockside5800 Rockside Woods Blvd., Independence 44131(216) 986-9900/www.embassysuites-rockside.com

271 13 17,500 159-209 129-169 NA AP/Aim IndependenceSuites TRS LLC Kendall Clay

17Holiday Inn Westlake1100 Crocker Road, Westlake 44145(440) 871-6000/http://www.ichotelsgroup.com/h/d/hi/1/en/hotel/clewl

266 11 11,000 89-119 79-119 100 Twin Tier Hospitality Janet Remalius

18Embassy Suites Cleveland Downtown1701 E. 12th St., Cleveland 44114(216) 523-8000/www.clevelanddowntown.embassysuites.com

252 10 10,541 129-229 109-159 NA K & D Group Inc. Kenric Hall

19Sheraton Cleveland Airport Hotel5300 Riverside Drive, Cleveland 44135(216) 267-1500/www.sheraton.com/airportcleveland

242 14 20,000 179 NA 138 Oakbrook Hotels Marc Jacobs

20Hilton Garden Inn Cleveland Downtown1100 Carnegie Ave., Cleveland 44115(216) 658-6400/www.clevelanddowntown.stayhgi.com

240 14 20,000 159 99-149 100 Gateway Hospitality GroupHarvey Schach George M. Iannacone

20Sawmill Creek Resort & Conference Center400 Sawmill Creek Drive, Huron 44839(800) 729-6455/www.sawmillcreek.com

240 25 50,000 85-165 105-195 NA Gregory Hill Gregory Hill

22Crowne Plaza Cleveland Airport7230 Engle Road, Middleburg Heights 44130(440) 243-4040/www.crowneplaza.com/clevelandarpt

238 14 16,000 109-149 79-149 90 Toledo Inns Inc. Kathy Jennings

23Castaway Bay2001 Cleveland Road, Sandusky 44870(419) 627-2106/www.castawaybay.com

237 8 7,691 99-259 99-259 NA Cedar Fair LP Tyler Adams

24Cleveland Clinic Guesthouse9601 Euclid Ave., Cleveland 44106(216) 707-4200/www.hotels.clevelandclinic.com

232 0 0 NA NA NA Cleveland Clinic Campbell Black

25Days Inn & Suites Richfield4742 Brecksville Road, Richfield 44286(330) 659-6151/www.clevelandrichfieldhotels.com

216 6 30,000 79 72 NA Sandip Thakkar Sandip Thakkar

25Embassy Suites Hotel Beachwood3775 Park East Drive, Beachwood 44122(216) 765-8066/www.embassybeachwood.com

216 7 5,878 159-249 99-229 NA IA Urban HotelsBeachwood TRS LLC Mark Herron

27Ramada Plaza Cleveland East28600 Ridgehills Drive, Wickliffe 44092(440) 585-0600/www.ramada.com

213 15 10,000 49-99 59-109 10 Inn at Wickliffe LLC Atul K. Patel

28Sheraton Suites Akron/Cuyahoga Falls1989 Front St., Cuyahoga Falls 44221(330) 929-3000/www.sheratonakron.com

209 14 23,000 189 99-149 NARiverside CommunityUrban RedevelopmentCorp.

Robert Trammell

29Ritz-Carlton, Cleveland1515 W. Third St., Cleveland 44113(216) 623-1300/www.ritzcarlton.com

205 13 24,466 249-299 149-229 NA Forest City Enterprises Inc. Joseph Mattioli

29Wyndham Cleveland at PlayhouseSquare1260 Euclid Ave., Cleveland 44115(216) 615-7500/www.wyndhamcleveland.com

205 9 13,079 119-205 89-169 60 PlayhouseSquare Brian Moloney

Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee theselistings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book ofLists are available to purchase at www.crainscleveland.com. (1) All information as of Dec. 1, 2010.

RESEARCHED BY Deborah W. Hillyer


Economists and those who advisemanufacturers on price trends saysteel and other metals are going toget more expensive still, even asmills and service centers alreadygive their customers notifications ofsurcharges and price hikes.

Several manufacturers sharedwith Crain’s Cleveland Businessrecent correspondences they hadreceived from their steel providersinforming them of price increaseson steel from Timken Co., Nucor,Republic Steel and Severstal —companies that supply much of thestock for area machine shops.

Manufacturers such as Astro saythey stay in close communicationwith their customers, so they’re ableto resolve pricing issues. But rawmaterials also represent a fairlysmall portion of the overall cost oftheir goods — highly engineered, labor-intensive components, oftenstuffed with expensive electronics.

Relationship adviceOthers have a more immediate

problem. For companies that makesimple products, such as bolts,washers or stamped brackets, mostof what they charge customers goesto pay for their raw materials.

At Master Products Co. in Cleve-land, raw materials make up 80% to90% of the total cost of the company’swashers and other stamped prod-ucts, said owner Jeff Walters. On thesupply side, he’s facing ongoingprice increases from steel mills thatwere slow to restart all their plants.On the sell side, he’s facing customers who are themselves con-stantly under price pressure. Buildinggood relationships with the servicecenters that cut and sell him hissteel has allowed the company tocope, Mr. Walters said.

“The price increases (MasterProducts is seeing) are coming fromthe mills, not the processors,” Mr.Walters said. “We are fortunate tohave relationships with processorsthat have helped ease the burden bywarning us of increases before theyhappen and directing our purchasedecisions in light of this informa-tion.”

But Mr. Walters resents that sooften of late he has had to justifyprice increases at the mills with hisown customers. In the end, MasterProducts and other companies saythey must sell themselves over andover again to the same customers— once to get the initial business,and then repeatedly to keep it in theface of price increases that theymust explain.

“It’s like selling for the enemy,”Mr. Walters said.

Economics 101Steel companies cite strong de-

mand for their products as the rea-son for both longer lead times andhigher prices.

But the lead times also are long,manufacturers say, because too fewsteel mills have come back online inthe economic recovery so far. Cleve-land’s ArcelorMittal mill was broughtback up in the fall of 2009, but itlargely supplies flat-rolled steel tolarge stampers that make auto bodyparts and large consumer appli-ances. Too few of the mills that pro-duce the type of steel that machin-ists need have come back, though.

Timken doesn’t comment onspecific pricing issues, but it says it’sworking hard to bring up capacity

and efficiency at its steel works inCanton. It has announced $85 million in new investments at itsCanton works since last August.But, as an indication of how long ittakes to add that capacity, the com-pany has said some of those capitalinvestments won’t be in place andrunning until 2013.

It’s no different for the companiesworking in plastics, where pricesalso are moving up within a systemconstrained by capacity issues.

“Prices are moving, it almostseems weekly right now,” said MattHlavin, president of Thogus Prod-ucts, a plastic molder in Avon Lake.“It looks like a good sign for theeconomy, because material is movingfast and furious.”

Like those who work in metal, Mr.Hlavin said he’s trying to managenot only higher prices, but alsolonger lead times. His customersspecify the material he uses — andtherefore the price they pay for it —but the lead times present a greaterchallenge, he said.

Just as with steel, the plastic industry is affected by too little capac-ity among suppliers of plastic resinto meet surges in demand quickly.

“The producers cut capacity”when the economy went in the tank,Mr. Hlavin said — and so far, they’venot ramped up production suffi-ciently to meet resurgent demand.

“It’s not like flicking a switch tobring it back, so we were out to 16weeks on some lead times” for thesupplies Thogus needs for its ownproduction.

Big guys not exemptEven with their better bargaining

and buying power, public compa-nies also are feeling the effects ofrising raw material prices.

In the most recent round of quar-terly earnings announcements, local manufacturing giants such asInvacare Corp., Lubrizol Corp. andPolyOne Corp. all have noted thatthey’re contending with rising prices.

PolyOne, a polymer producer,announced a 12% rise in fourth-quarter revenues, but said only halfthat increase represented an actualincrease in shipping volumes. Therest was due to price increases forraw materials that ended up also increasing the prices PolyOnecharged for its products.

At Invacare, a maker of wheel-chairs and home health products,the company in announcing year-end results last week said its salesgrowth and interest savings thisyear “will likely be partially offset bythe potential for continued increasesin freight and commodity costs,particularly in aluminum and steel,which are already being incurred in2011.”

The Institute for Supply Manage-ment’s Prices Paid Index for Januarylists 30 major commodities, fromsteel and plastic to corn and nuts,that increased in price over themonth. Not a single item posted aprice decrease. Almost two-thirds of its membership, 64%, reportedrising raw material costs for themonth, while only 1% said they’dseen a price drop.

Bill Stone, chief investmentstrategist of PNC Asset Manage-ment Group, said many factors aredriving up raw material prices, including an increase in the mone-tary supply and the effects of eco-nomic growth on basic supply anddemand. Even investors buying up



Steel: Fewer mills back online

FILE PHOTO/JANINE BENTIVEGNA

Willoughby-based Astro Manufacturing & Design Corp. — where expeditor MarkMcDougle works in this file photo — says it is able to resolve raw material pric-ing issues by communicating regularly with its customers.

commodities as a hedge against inflation can increase the pricesmanufacturers pay, Mr. Stone said.

Working with the customerFor manufacturers, they have

little choice but to pass on the priceincreases to customers — or to swal-low them in part or in full and seetheir profit margins erode.

Thogus has it easier than mostwhen it comes to passing along itscosts. Mr. Hlavin said the price ofraw materials is decided largely byhis customers, who usually are specific about which plastic theywant in their Thogus-made parts.

But Thogus uses another strategyas well, Mr. Hlavin said, by always offering customers an alternativematerial, one that might be cheaperor more quickly available.

Mr. Hlavin said whenever Thogusgets a new contract or customer, oneof the first things it does is assign itsown engineers to the project. Theirjob, he said, is to determine what alternative materials could be usedfor a job in addition to the materialsthe customer specifies. That way, hesaid, both Thogus and its customershave options if the original materialbecomes expensive or difficult to obtain. ■



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Hollywood Movie Being made in ClevelandWriter/Director with “A list” script credits is seeking investors to fund a“G” rated film to be shot in Cleveland this summer.

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MedCity Media trims the management fat■ One of MedCity Media’s co-founders lefther position in December as vice presidentof operations with the Cleveland-basedhealth care news provider to help the com-pany cut costs while it continues to grow.

Mary Vanac said she remains a MedCityMedia investor but now is looking into otherentrepreneurial opportunities beyond themedia world.

“We were growing quickly butwere too executive heavy,” shesaid. “So to save costs and pre-serve investments, my positionwas eliminated, and some of thefunctions, like accounting, wereoutsourced.”

Chris Seper, MedCity Media’spresident and other co-founder,said Ms. Vanac’s departure wasan internal decision.

“We were balancing our budget, looked atour staff of eight full-time people and sawthree managers,” he said, speaking also ofAmanda Todorovich, vice president of busi-ness development and marketing. “It was amutual decision.”

The decision came around the timing ofJumpStart Inc.’s announcement that itwould invest $250,000 in the startup as MedCity Media continues to expand intoother markets, including the Raleigh-Durham area in North Carolina. The com-pany already covers health care news in theCleveland and Minneapolis regions.

The startup to date has received about$500,000 in grants and investments, including

an initial $40,000 private investment in late2008 made by Mr. Seper and Ms. Vanac.They received that money as part of a buyoutpackage from their former employer, ThePlain Dealer.

“We wouldn’t be where we are todaywithout Mary,” Mr. Seper said. “She’s verytalented. Her track record speaks for itself.”

MedCity Media creates content not onlyfor its own web site but also for other publi-cations. The company has more than 30clients who pay for content. — Kathy Ames Carr

Or maybe the GPS went haywire■ The Cleveland Indians take a ton

of abuse, but this one may take thecake.

The Columbus Dispatch on Jan. 31ran a scathing column taking theteam to task for skipping the state

capital on its annual winter caravan.(Read the column at http://tinyurl.com/4n7nso3.)

The Indians hit four cities — Beachwood,North Olmsted, Akron and Strongsville — infour days, with the racing hot dogs, Sliderand selected players and team personalities.But not Columbus, and column author BobHunter was none too happy about it, offeringeight sarcastic bullet points in an attempt toexplain why. They included this never-heard-this-one-before gem:

“The Indians can’t afford the bus trip toColumbus. The way this team has jettisonedveteran players and their salaries, it shouldhave the money to finance the constructionof a bullet train between Cleveland and

Columbus.”It could be that, or that the Indians don’t

value Columbus. Or, it could be that the Indians on March

30 are playing an exhibition game in Columbusagainst the minor league Clippers, two daysbefore the Tribe’s home opener against theWhite Sox. Even better: The Dispatch reportedon the exhibition game in October. The pa-per’s archives search must have been down.

The Indians, of course, value Columbusenough to have agreed in September 2008 toone of the most logical organizational affili-ations in professional sports, after the parent club’s Class AAA affiliate played inBuffalo for 14 seasons. — Joel Hammond

Give Cardinal credit — it’s ready to lend■ Even as some banks finally begin channeling more resources to increase theirloans to business, one local credit unionplans to begin business lending March 1.

Though the new business line has beenplanned since roughly August, the presidentand CEO of Mentor-based Cardinal Com-munity Credit Union noted the 2011 startdate is great timing.

“You don’t want to wait till 2012 becausethe need exists today,” Christine Blake said.

In response to demand from some of its17,000 members, the credit union decidedlast year it would offer lines of credit to busi-nesses and small business and commercialloans, Ms. Blake said. The CEO noted thatthere could be a need to add staff in a yearor two depending on how the business of-ferings grow. — Michelle Park

MILESTONE

COMPANY: McKinney Advertising& Public Relations, ConcordTownshipTHE OCCASION: Its 75th anniversary

McKinney Advertising & Public Relations iskicking off its 75th year with a new name in anew location.

The firm founded in1936 by Harris D. McKin-ney now is known formallyas McKinney-Cerne Inc.,reflecting its long tenureunder the headship ofpresident and CEO JudyCerne. Ms. Cerne joinedMcKinney in 1985 whenthe agency was in theHanna building in down-

town Cleveland. It later moved to the TerminalTower and after 15 years moved to the Penton Media Building. Ms. Cerne and herhusband, agency chairman Roger Cerne,bought the Cleveland operation of McKinneyin 1997, incorporating the business as McKinney-Cerne Inc. However, until now, ithad not changed its identity publicly.

“While we thought about dropping the McKinney from our new agency name, wethought better of it as the name McKinneyand its heritage means a great deal to mepersonally,” Ms. Cerne said.

The firm also has moved out of Clevelandto new offices on Auburn Road in ConcordTownship in Lake County. Ms. Cerne said thelocation provides easy access to Interstate90 and state Route 44.

Send information about significant corporateanniversaries to managing editor Scott Suttellat [email protected].

REPORTERS’ NOTEBOOKBEHIND THE NEWS WITH CRAIN’S WRITERS

THEINSIDER

THEWEEK JANUARY 31 - FEBRUARY 6

The big casino: If all goes as planned, Cleve-land will have the first casino in Ohio in early2012 when the Cleveland Horseshoe Casinoopens its temporary, $350 million first phase inthe Higbee Building at Tower City Center. Thatmoney is in addition to the $600 million invest-

ment planned for thepermanent casino southof Tower City. Cleve-land Cavaliers ownerDan Gilbert and GaryLoveman, presidentand CEO of Caesar’sEntertainment Corp. —the leaders of a jointventure called RockOhio Caesars LLC —unveiled the four-floor,300,000-square-footgambling hall at a news

conference Thursday. “You’re going to see some-thing very spectacular,” Mr. Gilbert said. He saidthe temporary casino will create 2,000 tempo-rary construction jobs and 1,600 full-time jobs.

Downtown shuffle: New office buildingmoves are in the cards for the Council of SmallerEnterprises, the Greater Cleveland Partnershipand Liggett Stashower, with each shuffling theiroffice locations to make way for downtown’splanned casino. GCP and COSE are moving their100 employees from the Higbee Building at Pub-lic Square to the LS Brand Building at 1240Huron Road, which is the home of brandingagency Liggett. The two organizations will occupy50,000 square feet on the first four floors of thebuilding. Liggett, which now occupies the firstthree floors of the LS Brand Building, will moveto a fourth-floor space of 39,000 square feet inthe nearby Hanna Building at month’s end.

Buyer’s market: VWR International LLC, acompany in Radnor, Pa., that provides laboratorysupplies and services, bought Amresco Inc., acompany in Solon that makes and supplies bio-chemicals and reagents for use by customers inmolecular biology, biotechnology and other research specialties. VWR did not disclose a purchase price for Amresco, which was foundedin 1976 and employs 235. Amresco will be a subsidiary of VWR, and CEO David Camienerwill remain in his position.

Time to sell: TransDigm Group Inc. enteredinto a definitive agreement to sell its fastenerbusinesses to Alcoa Inc. for about $240 million.The fastener business was acquired last Decemberas part of TransDigm’s $1.27 billion deal to buyMcKechnie Aerospace. The business is made upof Valley-Todeco Inc., located in Sylmar, Calif.,and Linread Ltd. in the United Kingdom. Thebusiness makes fasteners, fastening systems andbearings for commercial, military and generalaviation aircraft.

End of the line: Premier ManufacturingCorp. of Cleveland, a supplier of fabricated wireproducts for the HVAC industry, plans to shut itsheadquarters and plant at 12117 BenningtonAve., resulting in the loss of 100 jobs. Tony Bur-dock, general manager of the Cleveland plant,wrote in a notice to the state that layoffs will begin March 28 and will be completed within sixto nine months. Eighty-four of the 100 workersare represented by Local 48U of the UnitedSteelworkers Union.

California dreaming: Forest City EnterprisesInc. sold its 50% share of the Met Lofts apart-ment complex in Los Angeles to the CaliforniaPublic Employees Retirement System. Thetransaction valued the 264-unit complex at $74million. Forest City expects to net $13.2 millionfrom the sale. Forest City developed the eight-story loft apartment in 2005.


Excerpts from recent blog entries on CrainsCleveland.com.

BEST OF THE BLOGS

Faith in the Fed as regulator?A ‘quaint’ idea, Rokakis says■ Fortune highlighted a telling Clevelandanecdote from the Financial Crisis InquiryCommission’s 662-page report that under-scores the Federal Reserve’s lax approach toregulation in the past decade.

The report names former Federal Reservechief Alan Greenspan andcurrent Chairman BenBernanke “as two of themain enablers of the creditbubble that led to the 2008collapse,” Fortune said.

Mr. Greenspan, commit-ted to the cause of dereg-ulation, “simply refusedto enforce regulations thatcould have prevented someof the worst subprime lending abuses during the bubble, the panel said,” accordingto Fortune.

The magazine cited as typical the experienceof former Cuyahoga County treasurer JimRokakis, who warned a Fed governor in2001 about the wave of easy money-fueledhouse-flipping that was endangering the area.

“I naively believed they’d go back and tellMr. Greenspan and presto, we’d have somenew rules,” Mr. Rokakis told the commis-sion. “I thought it would result in action being taken. It was kind of quaint.”

The ‘Man vs. Food’ guyshould make a trip to Akron■ We should expect no less from a vegetar-ian web site, but ThisDishIsVegetarian.comis pretty disgusted by the menu at AkronAeros games.

“Apparently the Double-A affiliate of the Cleveland Indians is in cahoots with

Nutrisystem — or a local heart surgeon —because the club’s newest food additionsare ridiculously unhealthy,” according to apost on the site.

The Aeros already offer the “3 Dog Night,”a 3,300-calorie treat featuring a “hot dogstuffed inside a bratwurst, stuffed inside akielbasa, topped with sauerkraut and mustard, and served on a hoagie.” The teamis about to add the “Nice 2 Meat You” burger,which consists of a 1¼-pound hamburger,stuffed with a ½-pound hot dog and ¼

pound of bacon, cheeseand onions.

“If the team continuesto offer fare this filled withcalories, fat and sodium(let’s add cruelty), the en-trances to the friendlyconfines of Canal Parkmay need to be widened,”the web site noted.“Somewhere the Ameri-

can Heart Association frowns in disbeliefand disappointment while a factory farmergrins ear to ear.”

MOCA Cleveland building has a cool (and Koolhaas) look■ The Wall Street Journal’s Ideas Marketblog mentioned the Museum of Contempo-rary Art Cleveland in a post on the wide-ranging influence of architect Rem Koolhaas.

The blog picked up on a story in Metropolismagazine that said Mr. Koolhaas and his Office for Metropolitan Architecture (OMA)are the forces behind some of the moststriking structures built in recent years.

MOCA Cleveland, for instance, “is movingahead with construction of a striking newbuilding, which features triangular facadesthat, from certain angles, allow luminescentpeeks at the museum’s interior,” the Journal blog noted. It’s the handiwork ofForeign Office Architects, an OMA offshoot.

AKRON AEROS

The Nice 2 Meat You burger. Yum!Cerne


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