crain's cleveland business

By DAN [email protected]

Mergers and acquisitions are not the hot topic theyonce were, but in Northeast Ohio’s plastics industry,they’re a chief tool for companies to enter new markets,gain customers and expand capacity.

The activity is resulting in stronger players taking outweak ones in an industry realignment that is driven bythe recession, but which someobservers say has been needed.

“It’s a shakeout I think waslong overdue. We’ve had someweak suppliers and too manysuppliers,” said Bill Ridenour,CEO of Polymer Transactions,a mergers and acquisition firmin Newbury that finds bothbuyers and sellers for clients inthe plastics industry.

Mr. Ridenour and others saysome companies are buyingweakened competitors because they want the same customers they’ve been fighting to get for years. In othercases, they are buying into new geographies, such as Europe, or new industries, such as medical device manufacturing or aerospace. Or, they are diluting theirdependence on troubled sectors such as automotive withacquisitions that diversify their customer bases.

“I want to stayin automotive,but I want toreduce my dependencyon it.” – Joseph Gingo,CEO, A. SchulmanInc.

$1.50/MARCH 8 - 14, 2010Vol. 31, No. 3

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Stronger outfits emerge throughacquisitions, while weak lose out

Plasticsfirms playchess inrecession

INSIDEFor-profit colleges get booked up

Institutions such as the University of Phoenix, Stautzen-berger College and DeVry University are bolstering enroll-ment levels because of their flexible methods of delivering instruction. Whilesome nonprofit collegessay they are not worriedabout losing market share, orstudents, to their for-profitcounterparts, their attractionhas prompted nonprofits to be more creative in attractingstudents. Read Shannon Mortland’s story on Page 3.

Region’s angels in favor of pursuing new funds North Coast, Akron groupsseek to capitalize on startups

By CHUCK [email protected]

Northeast Ohio’s only angel fund is aboutto deplete the cash it reserves for new investments, but the region could end upwith two new funds to replace it.

The North Coast Angel Fund plans to finance three more early stage technologycompanies over the next three months,which would leave the group with no moremoney for new deals.

Startups looking for capital shouldn’t fret,though. While the group of angels — a termfor wealthy individual investors — has yet todecide if it will raise a second fund, managingmember Clay Rankin said he would like thegroup to do so. They plan to make the decision over the next three months.

Plus, an informal network of angels inAkron, known as the ArchAngels, aims toraise its own formal fund over the next sixmonths, according to Barry Rosenbaum, asenior fellow with the University of AkronResearch Foundation, which oversees theAkron investors group.

Loose networks such as the ArchAngelsallow individual investors to get togetherregularly to view presentations by star-tups looking for capital and to collaborate

See PLASTICS Page 6

See INVEST Page 18

INDIANS MAKETHEIR PITCH

Ball club’s front office winds up marketing efforts to attract frustrated fans and overcome some bad PR

By JOEL [email protected]

Former Boston Celtics coachRick Pitino famously oncesaid, in discussing the Celtics’struggles, that “(Boston leg-

end) Larry Bird’s not walking throughthat door, fans. Kevin McHale’s notwalking through that door.”

It’s a pantheon-worthy quotation,and one to which the Cleveland Indians definitely can relate.

As the team employs its marketingmuscle ahead of its April 12 homeopener against Texas, it faces the dueling issues of a poor 2009 seasonand little optimism for 2010. Add inlast summer’s trades of marketablefaces Cliff Lee, a Cy Young winner, andVictor Martinez, an All-Star catcher,plus ownership’s reputation amongfans for being thrifty, and there’s ahost of issues with which to deal.

“They’re hurt by the Browns andSee INDIANS Page 7

20100308-NEWS--1-NAT-CCI-CL_-- 3/5/2010 3:22 PM Page 1

22 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM MARCH 8-14, 2010

REGULAR FEATURES

CORRECTION

30 Years and Counting ..9Best of the Blogs .........19Classified ....................18Editorial ........................8Going Places ...............12List: SoftwareDevelopers ................17

Personal View................8

COMING NEXT WEEK

Changes in financing are drying up theability of local builders to build homes onspeculation to enable quick sales to buyers, although national builders still offer them. The shift will change the newhome buying and building process. Weexplore the issues the industry faces inour Real Estate section.

Spec homes scarcer

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CAN’T GET NO ...

Age group % satisfied with jobUnder 25 35.7%

25-34 47.2

35-44 43.4

45-54 46.8

55-64 45.6

65 and older 43.4

Most people aren’t especially happy in their jobs these days, and nowhere is the dissatisfaction more pronouncedthan among younger employees. That’s the result of a Conference Board survey of about 5,000 U.S. households that looked at job satisfaction by age group. In no age group did even half of respondents report they were satisfied withtheir jobs.

SOURCE: THE CONFERENCE BOARD; WWW.CONFERENCE-BOARD.ORG

A Page One, Feb. 22 article onlead times in obtaining steel incorrectlyidentified the city in which Hawk Corp.president Chris DiSantis worked priorto coming to Cleveland. Mr. DiSantisworked at a steel company in Pitts-burgh.


appointed receiver to staveoff a lawsuit from one of itsinvestors.

CSC Group now employsroughly 100 people at itsheadquarters on Foltz Parkway, which is downfrom 108 as of Jan. 1 and125 in June 2009, according to information from Mr. Zimmerman and Crain’s list of the region’s largest software compa-nies, published on page 17 of today’s issue. Cuts have been worseat the company’s Michigan offices;CSC Group has reduced staff at its

Lansing office to 30 fromabout 50 since June 2009,after it already had madecuts at that location andclosed its office in Livonia.

The recession hurt boththe company’s sales andits ability to find many investors willing to buy alarge portion or all of the

company, leaving CSC Group onlywith deals the company consideredunacceptable, Mr. Zimmermansaid. He noted how CSC Group’sdebtors agreed with the company’sdecision to turn down an offer to

sell the company to a group of investors last summer because theprospective buyers seemed unin-terested in rebuilding the company.

“It appeared as though the people … were looking to flip us,”he said.

Mr. Zimmerman, however, saidthat today he feels better about thecompany’s prospects than he did in2009. The company despite its troubles has retained “the over-whelming bulk” of its customers,and the economy’s apparent improvement may help CSC Group

By SHANNON [email protected]

They’re new, striving to be well-known and continuing to gain abigger piece of the student pie.

They are for-profit colleges. TheUniversity of Phoenix, Stautzen-berger College, DeVry Universityand Strayer University are just afew of these schools that havepopped up in Northeast Ohio inrecent years.

Their flexible methods of delivering instruction — and anenormous amount of advertisingspending — are enabling for-profit schools to build their enrollment levels with studentswho otherwise might have chosenthe traditional, nonprofit collegesthat have called Northeast Ohiohome for decades.

“They’re obviously taking a bigchunk of the market away,” said

David A. Armstrong, vice presidentof enrollment and legal counsel atNotre Dame College in South Euclid. “They have made all col-leges look at what they do and seeif what we do, we can do better.”

About 2.6 million students areenrolled in for-profit colleges, andthat number is rising by an averageof 9% annually, according to aFeb. 8 article in the Chronicle ofHigher Education. Overall, about19 million students enroll in degree-granting schools every fall,the article noted.

Such figures have caused NotreDame to take notice. Though enrollment is up in all categoriesat Notre Dame, Mr. Armstrongsaid the college still worries it’slosing market share to the for-profit schools. As a result, NotreDame recently launched the FinnCenter, which will oversee its

MARCH 8-14, 2010 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

INSIGHT

THE WEEK IN QUOTES“It’s a shakeout Ithink was long over-due. We’ve had someweak suppliers andtoo many suppliers.”— Bill Ridenour, CEO of Polymer Transactions, a boutiquemergers and acquisition firm inNewbury. Page One

“Research has shownthat the No. 1 factor onwhether people buy orrenew tickets is hope.It’s been said the RedSox actually winningthe World Series (in2004, after an 86-yeardrought) hurt them alittle.”— Jim Kadlecek, chair of the department of human perfor-mance and sport business,Mount Union College. Page One

“We got (market) penetration that might have taken yearsto acquire — with thestroke of a pen.”— Eric Winbigler, president, Advance Paint Technology Ltd.Page 13

“This is the countrythat will allow you todo whatever youwant.”— Stella Moga-Kennedy,founder, Le Chaperon Rougechild care centers. Page 13

Layoffs latest trouble at software firm CSCReceivership, bankruptcy and recent cutbacks illustrate woes, though boss now more confident


One of Northeast Ohio’s biggestsoftware companies has been gettingsmaller as a result of financial prob-lems that drove the Strongsville firmto file for Chapter 11 bankruptcyprotection in November.

Computer Systems Co., whichdoes business as CSC Group, two

weeks ago laid off an undisclosednumber of employees in an effort tohold down costs while the companycontinues searching for capital topay off several million dollars indebt, said CEO Bill Zimmerman.

The provider of document man-agement software and services hasmade several staff cuts since April2008, when it voluntarily put itselfunder the protection of a court-

Zimmerman

See CSC Page 6

See BOOK Page 10

See CORSA Page 9

The book is out on for-profitcolleges: They’re gaining steamAscension forces traditional schools to take stock

“(Corsa is) definitely an up-and-comer. ... Now they’re branching out.” – Brian Prior, merchandiser, Summit Racing Equipment

JASON MILLER

Corsa Performance Exhaust’s new exhaust system for Ford’s Taurus SHO adds 14 horsepower (to a 365-horse-power engine) and 12.5 foot-pounds of torque. Craig Kohrs (above), Corsa’s vice president of marketing andsales, hopes car buyers fond of muscle cars will pay for the added performance.

PUTTING ON A SHOWBerea manufacturer aims to reinvent muscle car glory days, seize

Ford’s momentum with souped-up system for automaker’s new Taurus

By DAN SHINGLER [email protected]

Corsa Performance Exhaustin Berea wants to do morethan ride Ford Motor Co.’scoattails to growth. It

wants to get right up under thebumpers of the revved-up automaker’snew Taurus SHO model, whichboasts a Cleveland-made EcoBoostengine that Corsa thinks will be a hit.

“American muscle is really who we are,” said Craig Kohrs, head of marketing and sales for Corsa.

Muscle? Taurus? Really? Thosemight be questions from someonewho hasn’t driven a Ford lately, or atleast hasn’t driven the new Taurus.

Armed with a 3.5-liter, twin-turbocharged EcoBoost, the newTaurus SHO puts out 365 horsepower



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Volume 31, Number 10 Crain’s Cleveland Busi-ness (ISSN 0197-2375) is published weekly, exceptfor combined issues on the fourth week of May andfifth week of May, the fourth week of June and firstweek of July, the third week of December and fourthweek of December at 700 West St. Clair Ave., Suite310, Cleveland, OH 44113-1230. Copyright © 2010by Crain Communications Inc. Periodicals postagepaid at Cleveland, Ohio, and at additional mailing of-fices. Price per copy: $1.50. POSTMASTER: Sendaddress changes to Crain’s Cleveland Business,Circulation Department, 1155 Gratiot Avenue, Detroit,Michigan 48207-2912. (888)909-9111.

REPRINT INFORMATION: 800-290-5460 Ext. 136

Stimulus to fuel Ohio’se-health record pushProviders seek better care by sharing information

helpful in cases where patients endup in hospitals they don’t normallyvisit, said Amy Andres, board chair-man of the Ohio Health InformationPartnership.

“If the person ends up in the ER,the ER would know what medsthey’re on,” Ms. Andres said.

The partnership has yet to decidewhich health organizations will serveas Regional Extension Centers, thoughMs. Andres said she has been in closecontact with Better Health GreaterCleveland, a regional coalition ofhealth care providers.

“The good news is that a collabora-tive already exists, so they don’t haveto try to create one,” Ms. Andres said.

The Ohio Health InformationPartnership by June plans to pick ahandful of electronic medical recordscompanies from which hospitalsand doctors receiving help throughthe partnership can choose. To beon the short list, vendors will need tooffer a “dramatically discounted price”on their services, Ms. Andres said.

From there, the extension centerswill help health care providers pick arecords system and implement it.

The federal government isprompting hospitals and physiciansto have such systems up and run-ning by the end of 2011 by promisinglarger reimbursements from the Centersfor Medicare and Medicaid Services.The bonuses will shrink over timeand in 2015 turn into payment cuts.

Among the federal requirementsis that hospitals share records, whichso far has been an elusive goal formany regions in the country, includingNortheast Ohio.

OneCommunity, a Cleveland-based group that provides ultra high-speed Internet access to governmentagencies and nonprofits, built supportfor a Northeast Ohio information exchange in 2007. However, the groupcouldn’t round up financing from itspartners, which included most of theregion’s biggest hospital systems,said Mark Ansboury, OneCommunitychief technology officer.

The idea, which was projected tocost about $15 million over the firstfive years, was “ahead of its time,” Mr.Ansboury said. Though federal moneyshould help the new effort get going,he cautioned that the $14.8 millionset aside for the statewide informa-tion exchange won’t last long.

The effort could get help from BetterHealth Greater Cleveland, which isapplying for a federal grant thatwould provide about $20 million instimulus money for a NortheastOhio information exchange.

Any local exchange would be coordinated with the statewide effort,which in turn would be designed toeventually connect to exchanges inother states.

Dr. Randall Cebul, director of Better Health Greater Cleveland,said securing the additional moneywould be a “long shot” because 200groups are applying for 15 grants.The overall effort, however, is impor-tant because broad, quick access topatient records could help providersimprove quality and cut costs, bothfor individuals and for the businesscommunity. ■


First, hospitals and doctors mustadopt electronic medical records.Then, they have to share them.

The $43 million in federal stimulusmoney that the Ohio Health Infor-mation Partnership was awardedlast month should help the statestart down the path to achievingthose two goals, which the federalgovernment set in 2004 in an effort toimprove medical care and lower costs.

Two-thirds of the money — partof the $775 million in stimulusfunds that the U.S. Department ofHealth and Human Services awardedto organizations nationwide on Feb.12 — will go toward the creation ofRegional Extension Centers that willhelp hospitals and doctors chooseand install electronic records systems.The rest will help fund the creationof a Health Information Exchangethat will allow health care providersstatewide to share those recordsdigitally, which would be particularly


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“I continue to try to reduce mydependency on automotive,” saidJoseph Gingo, CEO of Akron-basedA. Schulman Inc., a supplier of plasticresins that has announced two acquisitions in the last four months.

“Let me be clear: I want to stay inautomotive, but I want to reduce mydependency on it,” Mr. Gingo said,noting how acquisitions will help himdo just that.

A lack of investment by private equity firms and other so-called “financial buyers,” who in bettertimes relied on easy credit to makeacquisitions, means a friendlier market for traditional strategic buyers.And distressed companies continueto be put on the market, creating further opportunities for buyers.

In 2009, there were 315 significantacquisitions made in the plastics industry worldwide, according toP&M Corporate Finance LLC, aMichigan M&A firm that works in thesector. More than 15% of those deals,49 in total, involved distressed com-panies. By comparison, only 17 deals,or 5.6% of the 301 transactions in2008, involved distressed companies.

New day for Michael DayThat trend can be seen in North-

east Ohio. For instance, Mr. Ridenourrecently found a buyer for MichaelDay Enterprises in Medina, a nylonproducer with revenues of $45 million in 2009. The company declared Chapter 11 bankruptcy lastNovember with the intention of selling itself after seeing its sales fallfrom about $60 million in 2008. Thecredit crunch and a drop in U.S. automotive production were too

much for it, Mr. Ridenour said.“It’s a sign of the times that this

company finds itself in this situa-tion,” he said. “It was a growing company until it ran into this auto-motive buzzsaw at the end of 2008.”

The buyer was an Italian company,Radici Plastics USA, part of the giantRadici Group of plastics companieswith revenue of nearly $2 billion in2009. Radici paid $5.7 million to buyMichael Day and also signed a five-year lease valued at $3.1 million withKeyBank, the lender that ended upowning the company’s plant andproperty. Radici had little presence inthe U.S. auto market, but wanted one.

“It was a smart move for them, because Michael Day was probablythe largest compounder of nylon forthe automotive market in the U.S.,”Mr. Ridenour said. Of course, headded: “You have to have some faithin the automotive market to makethis kind of deal.”

Other companies are enteringmarkets such as specialty health care.That was the stated objective of PolyOne Corp. in Avon Lake, which atthe end of 2009 announced it waspaying $12 million for Connecticut-based New England Urethane Inc.

New England Urethane makes engineered materials used by plasticmolders to manufacture specializedhealth care products. PolyOne chieffinancial officer Robert Patterson saidthe deal represented an opportunityto expand in a target industry at an attractive price.

In Akron, A. Schulman also has been on the acquisition trail, an-nouncing a deal in December andanother on March 1 — each done for wholly separate reasons, Mr.

Gingo said.In December, A. Schulman agreed

to pay $191 million to acquire ICO Inc., a Houston-based maker of“masterbatch” plastics that producesplastic resins used by molders aroundthe country. The company had 2009revenues of about $300 million.

“There was very little overlappingcapacity” between the two compa-nies, Mr. Gingo said.

A. Schulman’s $10 million purchase last week of McCann Color,a maker of color concentrates inNorth Canton, was driven by its desire to replace an existing plant in nearby Sharon Center with McCann’s 12-year-old facility.

The move also allows A. Schulmanto reduce its dependency on the U.S.auto market, Mr. Gingo said. Where-as A. Schulman’s Sharon Center plantrelied on automotive for about one-third of its business, McCann did al-most no automotive business, hesaid.

Good times for the savvyMr. Gingo said he’s still looking for

other deals to fill specific niches, suchas the Latin America market or theengineered plastics market in theUnited States. He’ll likely find them,said Mr. Ridenour, who also doeswork for A. Schulman.

With the economy still tough formany plastics companies, he expectsmore will come on the market.

Mr. Ridenour suggests firms mar-ket themselves while they are stillhealthy if they know they are going tosell.“Buyers would prefer to buy acompany that hasn’t deteriorated somuch that it’s in bankruptcy,” hesaid. ■


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CSC: Firm opts for Chap. 11 over receiver’s changes

find the right investors, he said. Thecompany, he added, is engaged in“detailed conversations” with severalprospective buyers.

“We feel much more confident,”he said.

Choosing Chapter 11The company would not have

filed for Chapter 11 bankruptcy inNovember had its original court-appointed receiver, Robert Ranallo,not resigned last fall, Mr. Zimmermansaid. The receiver appointed to takehis place, Robert Angart, planned to make several changes to thecompany, so to avoid them CSCGroup filed for Bankruptcy Courtprotection, Mr. Zimmerman said.No receiver currently is in posses-sion of the company.

“Basically we said, ‘If that is goingto happen, we might as well be incharge instead of the receiver beingin charge,’” he said.

Neither Mr. Zimmerman nor Mr. Angart, a company turnaround

specialist with Hillyer Group LLC ofCleveland, would say whether Mr.Ranallo resigned by his choice.

Mr. Ranallo, who is a partner ataccounting firm Skoda Minotti anda founder of Ranallo & Aveni LLC,both in Mayfield Village, did not return phone messages left at hisoffice last Thursday, March 4, andFriday, March 5. Mr. Angart said hewas chosen by Huntington NationalBank, CSC Group’s biggest creditor.

The bankruptcy filing, made inU.S. Bankruptcy Court in Cleveland,said CSC Group has between $10 mil-lion and $50 million in debts, and itlisted the value of its assets in thesame range. The company owesmoney on $13 million in senior debtfrom Huntington, according to theoriginal receivership filing, thoughMr. Zimmerman said CSC Group haspaid off “a good portion” of that debt.

The company also owes moneyon both $2 million in subordinatedebt it received from DCC GrowthFund of Washington, D.C., and $3million in subordinate debt from

Smith Whiley & Co., the Hartford,Conn.-based institutional investmentadvisory firm that originally threat-ened to sue CSC Group in 2008.

In addition, the company owesnearly $1.1 million to its 20 largestunsecured creditors. Included in thatamount is $282,000 in taxes owed tothe state of Ohio and $17,400 in taxes owed to Cuyahoga County.

The committee representing unsecured creditors has been generally happy with the way thebankruptcy has proceeded so farand supports CSC Group’s efforts tofind outside capital, said Ron Gold,the committee’s attorney.

“We’ve had a good level of coop-eration from the debtor and thecounsel and their principals,” saidMr. Gold, an attorney with FrostBrown Todd LLC of Cincinnati.

A lawyer representing DCCGrowth Fund and Smith Whiley didnot return phone messages left lastWednesday, March 3, and Friday,March 5, or an e-mail sent Wednes-day, March 3. ■

continued from PAGE 3


Plastics: Market favors strategic buyers


Cavs owners spending whatever theyhave to,” said Paul Roetzer, presidentof Cleveland-based PR 20/20, “and by fans proving they’ll support a winning baseball team in the ’90s.Until they spend, I don’t know thatany amount of marketing will getmore than 20,000 fans in the seats.”

But the Indians do have hope, andthey’re using it. There’s the TampaBay Rays and Colorado Rockies, twoteams that recently have advanced to the World Series despite smallerpayrolls and being given little chanceto do so. And there’s the hiring ofmanager Manny Acta, who hasproven he realizes the importance ofconnecting with fans through townhall meetings and media appear-ances. The engaging Acta replacedthe often-stoic Eric Wedge.

“Research has shown that the No. 1factor on whether people buy or renewtickets is hope,” said Jim Kadlecek,the chair of the department of human performance and sport busi-ness at Mount Union College. “It’sbeen said the Red Sox actually win-ning the World Series (in 2004, afteran 86-year drought) hurt them a little.Part of being a Cubs fan is the misery(they haven’t won a World Seriessince 1908) of being a Cubs fan.”

The Indians continue to pushunique pricing and promotions: Forthe second straight season, the Indiansare employing value-based pricing,which assigns different prices togames at different points in the season. In addition, the team hasadded to its litany of discounts and

promotions, including a two-for-Tuesday offer, where fans get twobleacher seats and $20 in foodvouchers for $32; and a Sunday pack-age in which fans can purchase a package for as low as $52 that includes four game tickets and $40 infood or merchandise.

Jim Kahler can relate to the strug-gles.

Mr. Kahler, former vice presidentof sales and marketing for the Cleve-land Cavaliers and now executive director of the center for sports administration at Ohio University,said hope is crucial to marketers. Hecited the 1997 NBA Draft, when theCavs selected Derek Anderson fromKentucky and Brevin Knight fromStanford, two names familiar to fansfrom the recent NCAA men’s basket-ball tournament. The year prior, theCavs took a Ukrainian named VitalyPotapenko and a Lithuanian namedZydrunas Ilgauskas.

“We had a lot of buzz from Ander-son and Knight,” Mr. Kahler said.“But with Potapenko and ‘Z,’ I thought,‘I have to get the sales staff going outthere, and I don’t even know how tosay their names?’ Every team in everysport has to build on hope.”

The Grady’s still hereIn the absence of Messrs. Lee,

Martinez and the old Travis Hafner,All-Star center fielder Grady Size-more helps that hope. Mr. Sizemoremissed 56 games and hit .248 in 2009,but by all accounts is fully healthyand still the face of the franchise.That’s the case despite an embar-

rassing November incident in whichnear-nude photos went viral on theInternet. Mr. Sizemore said he tookthe photos for his girlfriend, and theywere stolen from her e-mail account.

Mr. Sizemore adorned the frontpage of a four-page Indians ad section in the Feb. 28 Plain Dealerthat pitched “Family-Friendly Enter-tainment at Family-Friendly Prices.”

“Grady — one of the elite players inbaseball — will continue to play amajor role in how we market Cleve-land Indians Baseball,” Indians vicepresident of public relations BobDiBiasio said in an e-mail.

Without other stars, Mr. Sizemorelikely would have been the point manon Tribe advertising this year no matter what, barring an offseason cat-astrophe. And while Mr. Sizemore’sjudgment lapse created a buzz on theInternet, it’s a mistake from which he— and the Indians — can recover,public relations professionals say.

“I don’t know if I would havepaired that headline with his pictureright away,” Mr. Roetzer said. “Butbecause of his stature and what he’saccomplished, he has to be theirmain image.”

While the circumstances sur-rounding the Internet photos werenot ideal, Mr. Sizemore may have unintentionally created a buzzaround the team, said Dominic Litten,social media and interactive PR manager at Cleveland marketing andadvertising company Point to Point.

“He may have gotten more peopletalking about the team,” Mr. Littensaid. “That’s never a bad thing.” ■


Indians: Sizemore still key marketing toolcontinued from PAGE 1


By THOMAS V. CHEMA

It is not exactly news that our legisla-tive bodies, whether we are talkingabout the General Assembly inColumbus or the Congress in Wash-

ington, D.C., are not performing at theoptimum.

There are many reasons for this partisan gridlock, but as citizens, we allneed to find solutions and find themquickly. I would like to suggest that onereason for our current mess is that wehave increasingly “professionalized” theholding of public office.

Since the early 1970s, changes to elec-tion laws, including campaign financereforms and other efforts to instill ethicsinto our public officials, have had a series of unintended consequences.

Today, it is less and less likely that regularcitizens will take time from their busi-nesses, professions or the academy toserve in office. We have made it muchtoo complicated, expensive and unat-tractive to be a true citizen legislator.

Instead, in our attempts to rectify various abuses, particularly aroundfunding, we have unintentionally createdprofessional politicians who make holdingoffice a 30-year career — culminating ina very generous payout from the OhioPublic Employees Retirement System orsimilar pension.

Although our country was foundedon the premise that ordinary citizensbecome involved in government, it issafe to wonder today who is serving

whom. In fact, today there are basicallytwo paths to hold public office: One,you are rich to start with and thereforecan afford to spend your own moneyseeking a position; or two, you start out inan elected office (usually at the local level)and move from one office to another.

This has, in fact, stopped the revolvingdoor, but it hardly has been beneficial.Moreover, after eight or 10 years in thesystem, there is an enormous incentive tokeep running for office. That incentive isthe public pension system, which is veryhard to resist with its defined benefits andhealth care opportunities.

To overcome this professionalizationof public office, two decades ago weturned to another reform called “termlimits.” This effort to regulate the length

Maybe it was the sunshine thatmade the day so pleasant; after all, we just had one ofthe most miserable Februarys

I can remember. But last week it lookedand felt, finally, like spring might comebefore June this year.

It was Frank Jackson’s State of the Cityspeech, and he was upbeat despite the daunting problemsthat he and every other big-citymayor face these days.

To his credit, the mayor continued an open spirit and attitude about collaborativeproblem solving among govern-ments. He knows that radicaltransformation is about to happenin his county government and itappears he wants to be a partner.After all, the next census is likely to showanother steep drop in his population, income tax receipts are in the toilet with this horrendous economy and he’spressed to do more with less at every turn.

“If we are going to have educational excellence, and become globally competi-tive, then making systemic changes in

education has to happen at the county level,” the mayor said to resounding ap-plause from the 700-plus in the audience.

This mayor gets it, and he’s the rightperson in that job at this point in Cleve-land’s history. A not-too-distant predeces-sor would not have been able to set asideego and work in concert with other mayors

or this new county council andexecutive.

He’s right in calling for a coun-tywide authority that could examine innovative ways to fundpublic education collaboratively,buy goods and services togetherand perhaps even consider jointhealth care packages that couldleverage the large numbers ofpublic employees.

The mayor said we need tothink about countywide magnet schoolson the model of those that are doing sowell in his city. He’d like to see a mecha-nism created to help public, private andparochial schools share scarce resources.He also is excited — and he ought to be —about his partnership with Cleveland StateUniversity to develop a K-12 school to

serve downtown residents and others.Mayor Jackson knows that schools chief

Eugene Sanders’ plan to transform publiceducation is critical to Cleveland’s future.He said, in his ever-so-forthright manner,that he knows young couples will abandonhis city if we don’t get the schools fixed.And he said he doesn’t blame them.

That’s what you get from this mayor.Straight from the heart, a man with candid and passionate hopes and aspi-rations for the city that is his home.

I hope he succeeds in forging partner-ships with our area colleges and univer-sities to create stronger bonds betweenthem and Cuyahoga County’s schools.We all are wedded to this place; we allhave great stakes in its future.

The political and education leaders whomanage to solve this problem — or evenimprove it significantly — will earn a loftyplace in history. I hope they find a way tosucceed.

Perhaps then, historians will look backone day and say that it was this time, notthe public-financed building boom of thelate 1900s, when the real renaissance ofCleveland and Cuyahoga County began. ■


Ring it upL

eave it to Ohio to continue to apply 20th-century regulations to an industry that hasmoved well beyond the last century. Members of the Ohio House should recognize

that the rules that governed traditional telephonecompanies when they held a stranglehold on themarket are no longer valid and should move forward with updated regulations that would be inline with the competitive and changed nature of thetelecommunications industry.

The state Senate already has approved a piece oflegislation, Senate Bill 162, that would modernizeOhio’s outdated telecom rules. However, the Househas been dragging its feet on a parallel bill, HouseBill 276, and is causing proposed reforms to languish unnecessarily.

It’s hard to justify the hang-up. It isn’t as thoughtraditional landline phone companies enjoy a monopoly over phone service any longer, at least inmost parts of the state.

Just look around. Cable companies aggressivelyhave been pushing phone service and many peoplehave opted for no home phone at all because of theircell phones. As a result, the number of landlinesserved by incumbent phone companies has plungedby nearly half over the last decade, to 4 million in2008 from 7 million in 2001.

Most of the Ohio regulations with which traditionalphone companies must comply don’t apply to theircable and wireless rivals. So, why saddle a group ofcompanies that is losing market share by the basketfulwith rules that don’t vex their competitors?

It’s not that any one rule is particularly onerous.However, the regulations in total are a lot like theold union work rules that used to bedevil steelmakersat their mills. The hoops a company must jumpthrough to avoid violating them can create an unwelcoming atmosphere for doing business —and Ohio surely doesn’t need to discourage telecomcompanies from investing in the state.

After all, a company such as AT&T, which oper-ates traditional phone companies in 22 states, canpick and choose where it makes its investments. Itplans to spend at least $18 billion on hard wire andwireless capital investments this year. Passage ofmodern telecom regulations wouldn’t hurt Ohio’schances for snagging its fair share of that moneyand more investment down the road, says Tom Pelto, president of AT&T Ohio.

We might be skeptical of this legislation if therewas strong opposition to it from either labor orbusiness interests. However, the CommunicationsWorkers of America and the Ohio Chamber of Com-merce both have voiced support for passage of thetelecom bill. Indeed, the chamber’s vice presidentof government affairs, Lisa Woggon, wrote to HouseSpeaker Armond Budish that the legislation “is soimportant to our state that the Ohio Chamber hasdesignated the floor vote on the bills as a key votethat will be reflected in our legislative votingrecord.”

Ms. Woggon’s letter was written in late January. It’snow March. The House needs to answer the call andto get the reform measure going so that Ohio telecomrules no longer are a throwback to a bygone era.

FROM THE PUBLISHER

PERSONAL VIEW

BRIANTUCKER

Jackson rises to the occasion again

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

EDITOR:Mark Dodosh ([email protected])

MANAGING EDITOR:Scott Suttell ([email protected])

OPINION

Mr. Chema is president of Hiram College.

See VIEW Page 9

Public officials’ perks corrupt the system


and generates 350 foot-pounds oftorque — enough to embarrass manyfamous American muscle cars fromthe 1960s and ’70s. For instance, a1971 Z-28 Camaro with a vaunted 350-cubic-inch engine generated onlyabout 330 horsepower and was heav-ier than the modern Taurus.

Many of those old Camaros, Fire-birds, Corvettes, Chargers and Chal-lengers ultimately produced morehorsepower than their factories everintended, because their ownersbeefed up their manifolds, carbure-tors, exhausts and other systems tomake them more muscular.

And that’s exactly what Mr. Kohrsand Corsa are counting on some Taurus SHO owners to do as well. Thenew exhaust system Corsa began offering for the Taurus in Februaryadds 14 horsepower and 12.5 foot-pounds of torque to the car’s factoryperformance specs — and adds a soundthat no factory car ever had, he said.

That extra punch and panache willcost Taurus owners about $1,700 forthe new Corsa exhaust system. That’sno small amount, even for a $38,000automobile, but many car buffs arewilling to pay such a price for perfor-mance, said Brian Prior, a merchan-diser at Summit Racing Equipment in Tallmadge. Mr. Prior said Corsa’s exhausts are in the mid to high rangein terms of aftermarket performance

of time a citizen can serve in anelected office has undermined insti-tutional memory and seeded enor-mous power to unelected staff andlobbyists. Term limits just have notworked in Ohio. In fact, the unin-tended consequence of this reform isthat our state government is evenless effective — a huge problem inthese difficult economic times.

How to deal with this issue? I suggest a three-tiered approach thatgets back to our founders’ view ofcitizen legislators, who took timeaway from their careers to engage inpublic service, rather than makinglegislative service a career.

First, abandon term limits, at least for legislators. Second, prohibitelected public officials from partici-


AND COUNTING ...

Congratulatio

ns!

To the newly elected 2010 Officers and Board Members Mechanical Contractors' Association of Cleveland:

President: Stephen Comunale S.A. Comunale Co., Inc. Vice President: Geoff Engel The Brewer-Garrett Co. Treasurer: Michael Brandt Smith and Oby Co. Past President & David Williams Chairman of the Board: The Soehnlen Piping Co., Inc.

CLEVELAND

The Mechanical Contractors' Association of Cleveland represents Union affiliated mechanical contractors who install and maintain heating, cooling, refrigeration, fire protection, and process piping systems in all types of buildings in northeast Ohio. The Association offers educational, labor relations, government affairs, safety, informational and promotional services to its members. MCA of Cleveland is affiliated with the Mechanical Contractors' of America (MCAA) in Rockville, Maryland, and works closely with its partners at Pipe Fitters Local 120.

Board Members: Richard Bukovec, Diversified Piping & Mechanical, Inc.; Charles Caye, Smith and Oby Co.; Michael J Gallagher, The John F. Gallagher Co.; David Katz, E.B. Katz Inc.; Richard Mohar, E.B. Katz Inc.; James Primozic, Northeastern Refrigeration; Thomas Wanner, Executive Director.

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Moderated byCONNIE DIEKEN

Thursday, March 18, 2010 11:30 am Registration • 12 Noon Lunch & Program

Crain’s Cleveland Businessis celebrating its 30th year asNortheast Ohio’s premier sourcefor business news with a special double issue, which willfeature profiles of 30 of themost influential Clevelanders.

As part of the celebration,we also are reflecting on themost memorable events of thepast three decades with week-ly polls — some of which canbe found in this space — triviaquestions, online content andvideo interviews.

You can get in on the fun byvisiting CrainsCleveland.com/30thanniversary.

Who is your favorite local TV or radio personality of the last 30 years?

MICHAEL HOWARDClevelandMy favorite is Tim White,even though he’s nolonger there (at WKYC).He was an open-mindedguy.

JENNIFER WILLIAMSONParma HeightsI really like Trapper Jack.He’s pleasant.

BETH LAWSONMiddleburg HeightsAustin Carr on (FOX)Sports Ohio. He’s friendlyand nice.

View: Rework officials’ benefitscontinued from PAGE 8 pating in the public pension

systems. Third — and this will not be popular — pay elected public officials more reasonable salaries.

These steps will not solve all the par-tisan bickering and liberal/conserva-tive inability to compromise, but theywill stop the constant moving from office to office and will discouragepeople from holding on to elective office because of their personal eco-nomic stake. And maybe it will encour-age elected officials to truly representall of the public, rather than the sub-groups that help them get re-elected.

In politics, as in all other humanendeavors, the ends do not justifythe means. Getting elected should be a means to serving the public interest, not the end — personal economic benefit. ■


Corsa: Diversification boosts companyexhausts, of which Summit carries several brands, including Corsa.

“They’re definitely an up-and-comer,” Mr. Prior said. “Their coreniche started in the Corvette and marine industries and they built quitea reputation out of that … but nowthey’re branching out.”

Corsa, with about 60 employees,has been around since 1988, when itmade only exhausts for boats. It beganmaking Corvette exhausts in 1998 andlast year was bought by the MifsudGroup in Wadsworth. Its new owner,for which Mr. Kohrs worked before theCorsa purchase, wants the companyto offer more products for more modelsof cars, he said. The private companydoes not disclose its revenues.

Though Dodge muscle cars and,more recently, trucks have representedsuccessful new markets for Corsa, Mr.Kohrs said this latest exhaust mighthave extra potential because of Ford’srecent success as a brand and becauseof the popularity of the EcoBoost engine.

“We’re committed to increasingour depth of Ford products,” Mr.Kohrs said. “Right now, from whatwe see, Ford is doing a better jobthan anyone else at delivering whatthe consumer wants.”

The EcoBoost seems like a wisechoice in terms of new engines to target. Ford spokeswoman MeganMacRae Whatman said in an e-mail

that the company already has sold6,000 vehicles with the new EcoBoost,which will be put in more Ford vehi-cles in the next few years.

And there was another reason fordesigning an exhaust for the TaurusSHO — Mr. Kohrs hoped the EcoBoostengine also would be available inFord’s new Mustang, which he expectsto appeal more to the muscle-carcrowd than the Taurus SHO.

So far Ford has not linked the two,and Ms. Whatman said the 2011 Mustang will not be available with theEcoBoost. However, Ms. Whatmanalso said that by 2013, 90% of Ford’svehicles will be available with the turbocharged powerplant. ■



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Under the Finn Center, NotreDame will increase assistance itprovides to adult students in areassuch as recruitment, financial aidand retention, Mr. Armstrong said.The adult programs also will be revamped to offer more conve-nience, partly by offering more online classes and majors, he said.Classes will be offered in persondays, evenings and weekends.

“Adults, when they’re learning,have different needs than traditionalstudents,” Mr. Armstrong said.“When adults go to school, it’s allabout convenience and cost.”

No naggingIn the 2007-2008 school year, the

cost to attend a private, nonprofit,four-year college averaged $33,935,according to “For-Profit Higher Education by the Numbers,” a studyreleased in January by the NationalConsumer Law Center, a nonprofitgroup in Boston. By contrast, theaverage cost to attend a for-profitschool was $22,950, and the cost toattend a public, four-year college was$17,497, according to the report.

Though it’s cheaper to attend a

public, nonprofit college, for-profitschools still are attracting students,especially those unconcerned with acampus setting.

Alecia Jones is one of the Univer-sity of Phoenix’s 7,000 NortheastOhio students. Though she receivedher undergraduate degree at KentState University in 1997, she saidthe University of Phoenix was theright place to earn her MBA with aconcentration in marketing.

“I was really able to get the direc-tion and guidance I needed and thatrelationship continued throughoutmy experience as a student,” she said.

The flexibility of taking classesonline and in person at three localcampuses has worked well for Ms.Jones, 35, who will graduate in Augustand plans to open her own businessdevelopment firm to provide fund-raising services to nonprofits.

Stautzenberger has operated inNortheast Ohio since 2005 and has410 students enrolled at its Brecksvillecampus, said Donna Palmer, vicepresident and director of that campus. Only a handful of its classesare offered online, she said.

About two-thirds of Stautzen-berger’s students have transferredfrom other colleges in NortheastOhio, mainly Cleveland State Uni-

versity, Kent State University, theUniversity of Akron, and Cuyahogaand Lorain County community colleges, Ms. Palmer said. Transferstudents have told her they prefersmaller class sizes and individualtreatment.

“They get academic advising onso many fronts, they probably thinkwe’re beginning to be a nag,” Ms.Palmer said.

Sticking with traditionThough students are flocking to

for-profit institutions in risingnumbers, some nonprofit collegesin Northeast Ohio say they’re notworried about the competition. Theysay they pull students from differentpopulations, largely those who wanta traditional or residential college experience.

Rob Spademan, associate vicepresident of marketing and under-graduate admissions at ClevelandState, said for-profits tend to targetpeople who already have earnedsome college credits, while Cleve-land State recruits students comingout of high school and working adultslooking to earn a master’s degree.

“I wouldn’t say we react to (thefor-profit schools) at all,” Mr.Spademan said. “This is our home

market. We know where our kids are.”Traditional, nonprofit colleges

also have had years to refine theirmissions and how they deliver programs, said Scott Evans, vicepresident of institutional advance-ment at Lake Erie College.

“There may be some efficiencies(at for-profit schools), but it will takesome time for for-profits to catch upto the delivery systems and method-ologies that nonprofits have been of-fering for decades,” he said.

Partnership possibilitiesBut don’t discount for-profit

schools altogether, said Peter Ross,vice president of enrollment man-agement at Tri-C. The communitycollege often works with for-profitschools such as the University ofPhoenix to help students transfer thecredits they earned at Tri-C to puttoward a bachelor’s degree, he said.

Most Tri-C students who want topursue a bachelor’s degree initiallyconsider attending local nonprofitschools such as Cleveland State,Kent State, Akron and Baldwin-Wallace, but they also look at for-profitschools once they know more aboutthem, Mr. Ross said. The flexibility incurriculum delivery that for-profitsoffer appeals to many adult studentswho work or have families, he said.

For-profit schools also tend to offer programs that have a lot of jobpossibilities, which are often thesame programs that nonprofits useto help support liberal arts programsthat aren’t linked to specific careers,said Kevin Kinser, associate professorin the Department of Education Administration and Policy Studies atthe University at Albany, State Uni-versity of New York. He has studiedthe dynamics of for-profit colleges.

For example, Stautzenberger entered the Northeast Ohio marketwith a veterinary technician majorthat also was offered at Tri-C, whichhad a three-year waiting list to get in,Ms. Palmer said.

“We pretty much depleted theirwaiting list by at least a year,” she said.

At the very least, for-profit collegesare forcing nonprofits to think outside the box to attract students,Tri-C’s Mr. Ross said.

“In some sense, (for-profit schools)push us to be creative. They make uslook at our curriculum and how it’soffered,” he said. ■


Book: Students like flexibility offered by for-profits Staffing firmswith differentclient bases combine forcesAlliance, eSearch sayjoint venture bolsters jobplacement capabilities

By ARIELLE [email protected]

Two staffing firms are teaming up to create a more comprehensivesource for job placement assistance.

Alliance Staffing Solutions, a specialized staffing service withstrengths in health care, manufac-turing, clerical, information technologyand engineering employment, ispartnering with eSearch Inc., a company that specializes in financialservices jobs.

Randy Samsel, president of eSearch,said while the company does a good jobof finding bookkeepers or accountingclerks, it lacked the expertise to fillother jobs — and so either did itpoorly for clients or told them theywere on their own to find hiring help.

While the 35-person Alliance and11-person eSearch will remain separate companies, they will referclients from one to the other and areconnecting their phone lines so callscan be easily transferred betweenboth companies.

“What we initially agreed to is a lot of sharing of information,” Mr. Samsel said. “We want to grow thebusinesses together.”

Because 85% of Alliance’s work isfor temporary jobs and a similar percentage of eSearch’s clients arelooking for permanent employees,the companies said they thought thejoint venture would be complemen-tary to their clients. Windward Partners, a retained search groupthat does talent consulting for C-suiteexecutives and is a part of eSearch,also is part of the agreement.

Alliance also has a joint venturewith background check companyCrimcheck of Cleveland. Alliancepresident Aaron Grossman said hewants to continue searching forCleveland-based partners. ■


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Plan to change law hiring rebuffedCritics say proposallimited well-run firmsBy ARIELLE [email protected]

Jones Day’s hiring partner, in lateJanuary, penned an eight-page missive aimed at undercutting a National Association for Law Place-ment recommendation that law student recruiting be significantly altered in the coming years.

It worked.On Feb. 26, the association’s board

voted to reject its original proposal,which called for law firms to movetheir offer dates from the summeruntil January and proposed a two-week offer window for students todecide what jobs they were going totake. Instead, the legal career plan-ning and recruiting organizationvoted to shrink an existing 45-day offer window to 28 days and took noaction on the offer date proposal.

“During a public comment periodour members participated in a spir-ited and thoughtful dialogue aboutthe proposed recommendations,”the organization said in a statement.“After reviewing member feedback it became clear that there was no consensus among the membershipabout the nature and scale of changethat might be appropriate.

“As a result, the Commission didnot submit its original proposal as afinal recommendation,” the organi-zation said. It was referring in thestatement to the Commission on Recruiting in the Legal Profession, asub-group that made the recom-mendation. James Leipold, the associ-ation’s executive director, said the offerdate proposal — the part that rankledmost law firms — is “off the table.”

“I think it’s certainly done fornow,” he said. “There was no con-sensus on the offer date.”

Mr. Leipold said the associationreceived more than 800 commentsabout the proposal, but that the JonesDay letter, which ignited discussionin legal circles, played a part in thedecision not to move forward withthe proposal.

“That was certainly part of it,” he said.“We really weighed all the feedback.”

Greg Shumaker, the firmwide hiring partner in Washington, D.C.who wrote the Jones Day letter, saidhe thought the decision to reject theproposal was “the right thing to do.”

“We thought it was a thoughtfulresponse to the concerns raised by anumber of law firms, includingours,” he said.

Mr. Shumaker said at no point hadhe been contacted by the associationabout the letter, which questionedthe necessity and legality of the proposal and was posted on JonesDay’s web site and sent to the deansof several law schools.

In the letter, Mr. Shumaker saidthe proposal did not serve the interestsof well-managed law firms and putfirms that had not been responsiblymanaged on the same footing as those,such as Jones Day, that had been.

“I strongly feel we should not behandcuffed by this,” he said before thedecision was made. “It takes a fairlyshort-term view of hiring. … I don’tthink it’s in the student’s best interest.”

Barbara Weinzierl, director of career planning at the University ofAkron School of Law, said before the vote that she was not sure theproposal would have accomplishedwhat it intended to do. Ms. Weinzierl

noted that law students would haveadded pressure on them if they hadto wait through the fall semester oftheir second year to learn wherethey would be able to work as asummer associate, after interviewingin August.

Still, she said the school wouldcontinue to work within whateverguidelines were established.

“Our main goal is to see studentssucceed,” she said. “We’ll do what-ever we have to do to make sure thathappens.”

Jennifer Blaga, director of careerplanning at Cleveland-MarshallCollege of Law at Cleveland StateUniversity, said any changes don’taffect her students greatly becausethey are accustomed to looking for

jobs outside of the typical period.Case Western Reserve University,which the other schools agreedwould be most affected by anychanges, would not comment onany potential changes.

Ron Stepanovic, hiring partner atBaker Hostetler, said — as did others— that he saw no need to changethe process, calling the association’sproposal a “bit of an overreaction”to the ills law firms suffered in therecession. “I don’t think the systemis all that broken,” he said.

However, Ryan Burns, director oflegal recruiting and professional development for Benesch, Friedlander,Coplan & Aronoff, said he thoughtthe process has needed “a goodoverhaul” for quite some time. ■



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GOING PLACESJOB CHANGESARCHITECTUREADA ARCHITECTS INC.: Jay E. Jesensky to business developmentmanager. MIDDOUGH INC.: Richard J. Raganto senior vice president and generalmanager.

EDUCATIONUNIVERSITY SCHOOL: KimberlyPleasant to director of marketing and

brand management.

FINANCIAL SERVICEANCORA ADVISORS LLC: DanaLusardo to compliance associate.BOBER MARKEY FEDOROVICH:Karen J. Costantini to senior manager,taxation services. DELOITTE: Craig Giffi to leader,U.S. automotive practice. GREAT LAKES RETIREMENTGROUP: Jarrett Lang to associateadviser.

SCHLABIG & ASSOCIATES LTD.:Kelly Nizzer Bates to director of administration. ZINNER & CO. LLP: Tina Myers totax manager.

HEALTH CARESTRATFORD COMMONS: DanaWilliams to director of human resources.

HOSPITALITYGREAT WOLF RESORTS INC.:Chris Ballou to general manager,Great Wolf Lodge.

INSURANCEALPHA PROPERTY & CASUALTY:Mark DeBlauw to divisional leader,automotive accounts.

LEGALBUCKINGHAM, DOOLITTLE & BURROUGHS LLP: Jon R. StefanikII to associate.

SCHNEIDER, SMELTZ, RANNEY &LAFOND PLL: Thomas I. Hausmanto of counsel.

THOMPSON HINE: Robyn MinterSmyers to chair, diversity committee.

TUCKER ELLIS & WEST LLP: Jaclyn A. Bryk to associate. WELTMAN, WEINBERG & REIS CO.LPA: Tom McGuinness to director oftitle services.

MANUFACTURINGPSC METALS INC.: David Spectorto president, Northern region.

MARKETINGLINEAR CREATIVE LLC: SherryThaler to diversity coordinator;Randy Jasinski to account executive,new business development; HannahLevy to graphic designer.

NONPROFITSUMMER ON THE CUYAHOGA:Bernadette M. Gosky to executivedirector.

REAL ESTATEKELLER WILLIAMS GREATERCLEVELAND WEST: Brian Salem,Matt Chase, Dave Sanson andLindsay White to sales associates. RESOURCE TITLE: Andrew Rennellto chief operating officer.

SERVICEBRIGHTWOOD ANIMAL HOSPITAL:Kasie M. Podojil to associate veteri-narian. FLEET RESPONSE: Allison Lanzilottato vice president, business development.

TECHNOLOGYPARAGRID: Bob Bray to help deskengineer; Jerry Gobeille to deliveryengineer; Stacy Devore to operationsmanager.

TELECOMMUNICATIONSTIME WARNER CABLE: Patrick Joyto vice president, finance and businessoperations.

TRANSPORTATIONINTERNATIONAL TRANSPORT SER-VICES: Jim Leopold to vice president,sales; Val Janicek to sales manager.

UTILITYFIRSTENERGY CORP.: Michael J.Dowling to vice president, external affairs; Gretchan E. Sekulich to director, communications.

AWARDSBALDWIN-WALLACE COLLEGE:Jan Murphy (Fairview Hospital, Lake-wood Hospital) received the Dr. EdwinRiemenschneider Award for Excel-lence in Health Care Leadership fromthe Health Care MBA Class of 2009.KIDNEY FOUNDATION OF OHIO:Rick A. Chiricosta (Medical Mutual ofOhio) received the 2010 Person of theYear Award.

Send information for Going Places to [email protected].

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20100308-NEWS--12-NAT-CCI-CL_-- 3/4/2010 9:42 AM Page 1

Veronica Dahlberg said immigration reform is oneof the top priorities for immigrant business owners

in Lake and Ashtabula counties.Ms. Dahlberg is executive director

of HOLA, or Hispanas Organizadasde Lake y Ashtabula, which serves asthe umbrella organization for theLatino Business Association ofNortheast Ohio. The group hopes tosend several busloads of people toWashington, D.C., to participate inthe March 21 national mobilizationfor immigration reform.

“It’s been horrible, and it hasn’tchanged with this new administra-tion,” said Ms. Dahlberg, who notedthat the immigrant population provides both a consumer and laborbase for foreign-born business owners. “Unfortunately, we’re seeing no action on this.”

In practice for more than 30 years,Margaret Wong, an immigrant herself and the founder of MargaretW. Wong & Associates Co., helpsthose from other countries stay inthe United States. At the age of 19,Ms. Wong and her sister left HongKong and came to the United Statesto study on scholarships.

Ms. Wong describes practicing immigration as a “different world,”one that is peppered by the personalstories of her clients amid the com-plicated framework of immigrationlaw and policy.

“On a personal level, we all feelvery sorry, but as a nation we don’tknow what we want,” she said.

— Amy Ann Stoessel

SMALL BUSINESSI N S I D E

MARCH 8-14, 2010 CRAIN’S CLEVELAND BUSINESS 13

14 IRS EYESS CORPS’ WAGEREPORTING

TACTICS.

In recession, some companies may buy their way out of growth rut

LIVING OUT THE

AMERICAN DREAM

By DAN [email protected]

Small businesses have struggled through the longeconomic downturn alongwith big banks, big automakers

and other large corporations — butsome have found ways to not onlysurvive the crisis, but to growthrough acquisitions.

It can be a great strategy for essentially buying much-neededcustomers when few new ones areto be found, but it must be done

Acquisitions can provide customers when finding them proves difficultwith discipline and focus. Just askEric Winbigler, president of Advance Paint Technology Ltd. inCleveland. He’s done it — both theright way and the wrong way — including a deal he pulled off in2008 in the teeth of the recession.

“We got (market) penetrationthat might have taken years to acquire — with the stroke of apen,” Mr. Winbigler said.

Mr. Winbigler runs a 16,000-

square-foot shop in Cleveland,where a dozen workers spend 90%of their time painting and coatingparts that go into medical devices,aerospace components and othermanufacturers’ products. Whatevertime is left often is spent doingcustom automotive work or otherprojects for individuals.

He’s purchased two companiessince buying Advance Paint in2004: a metal-sawing company

where six employees cut largepieces of steel into manageableportions for manufacturers andsteel service centers; and a three-man paint shop in Canton that offered many of the same servicesas Advance Paint, plus a few more.

For companies in a position tobuy, there’s less competition in themarket than there was a couple ofyears ago, when financing wasplentiful, said Bill Ridenour, CEO

of Polymer Transactions in New-bury.

Mr. Ridenour specializes in helping plastics companies to buyother companies or to sell them-selves. He said there are two kindsof companies buyers are likely tofind in today’s market — those thathave to sell because their banker orfinancial situation demands it, andthose that will sell if they find theprice they want.

For the latter, Mr. Ridenour saidbuyers probably should expect to

See BUYING Page 15

Immigration issuescan be complicated,frustrating for many

Some foreign-born entrepreneurs say being in U.S. helps open door to possibilities

By AMY ANN [email protected]

Stella Moga-Kennedy had tobeg for a dime at the airportin 1979 when she landed inthe United States from

Romania with two suitcases and nomoney. Today, the founder of Northeast Ohio’s Le ChaperonRouge child care centers is worthnearly $30 million.

It’s the American dream: Workhard, prosper and be happy, and it’sa story that seems to ring especiallytrue for those who come to the UnitedStates from other countries and starttheir own businesses.

“I wake up every morning thankingGod I’m in America,” said Mrs. Moga-Kennedy, who taught herself Englishby reading children’s books. “If you

See IMMIGRANTS Page 16

Veronica Dahlberg said immigration reform is oneof the top priorities for immigrant business owners

in Lake and Ashtabula counties.Ms. Dahlberg is executive director

of HOLA, or Hispanas Organizadasde Lake y Ashtabula, which serves asthe umbrella organization for theLatino Business Association ofNortheast Ohio. The group hopes tosend several busloads of people toWashington, D.C., to participate inthe March 21 national mobilizationfor immigration reform.

“It’s been horrible, and it hasn’tchanged with this new administra-tion,” said Ms. Dahlberg, who notedthat the immigrant population provides both a consumer and laborbase for foreign-born business owners. “Unfortunately, we’re seeing no action on this.”

In practice for more than 30 years,Margaret Wong, an immigrant herself and the founder of MargaretW. Wong & Associates Co., helpsthose from other countries stay inthe United States. At the age of 19,Ms. Wong and her sister left HongKong and came to the United Statesto study on scholarships.

Ms. Wong describes practicing immigration as a “different world,”one that is peppered by the personalstories of her clients amid the com-plicated framework of immigrationlaw and policy.

“On a personal level, we all feelvery sorry, but as a nation we don’tknow what we want,” she said.

— Amy Ann Stoessel



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SMALL BUSINESS

IRS may watch moreclosely S corporations’wage reporting tactics

Business owners operatingunder the S corporationstructure should be awarethat their tax returns and

rulebooks have become fertileground for authorities looking fornew ideas on where to shore upcompliance and raise new sourcesof revenue.

The U.S. Government Account-ability Office recently completed astudy on how well S corps generallyare complying with tax rules. Thefindings suggest S corps are under-reporting income and maybe enjoying some tax advantagesthat Congress should reconsider.

The S corp structure is a common choice of legal entity forowners of small businesses in largepart because of the way it is taxed.The income of an S corp is nottaxed at the corporate level, but ispassed through to the tax returns ofits individual shareholders.

That means any earnings, lossesand credits are reported by individual shareholders rather thanthe corporate structure, resulting inonly a single level of taxation, at theindividual level, rather than twolevels of tax at both the corporateand individual level.

It also means that whateveramount S corp owners are not paying themselves in salary is retained by the corporation asundistributed earnings, whichmeans those earnings are not subject to payroll, Social Security orMedicare tax. This is a distinct difference for S corps compared toC corps or other types of partnership or sole-proprietorstructures.

The IRS has long held that S corpowners are expected to pay them-selves reasonable salaries so thattheir income is fairly taxed, but ithasn’t been a point of rigorous enforcement by the IRS. There’splenty of room for shareholders,their tax preparers and the IRS to

PETERDEMARCO

TAX TIPS

judge what might constitute a reasonable salary.

The GAO report said some Scorps in 2003 and 2004 failed to payadequate wages to shareholders fortheir service to the corporation, andit estimated the underpayment at$23.6 billion. That raises seriousquestions about whether employmenttaxes have been underpaid as a result, and whether perhaps the IRSmight consider some new focus onthis issue in its examinations andaudits going forward.

Other tax studies also haveshown that inadequate shareholdercompensation is a significant issue.The IRS has provided limited guid-ance on what often proves to be ahighly subjective issue, promptingthe GAO to suggest the IRS considerproviding some new guidance tohelp improve compliance.

The GAO also reported thatabout 68% of S corporation returnsfiled for the 2003 and 2004 tax yearscontained at least one misreporteditem, and 80% of those errors favored the taxpayer. The most frequent errors involved deductingexpenses for which there was no legitimate eligibility.

Also disturbing, the report says71% of noncompliant tax returnswere prepared by professional taxpreparers. The GAO said preparermistakes may result from a lack ofstandards for preparers to follow aswell as a general misunderstandingof the tax rules, both of which couldreasonably become the subject offuture rulemaking or enforcementaction to improve compliance.

As economic circumstancesprompt Congress to seek out newforms of revenue, none of this isgood news for business owners operating under the S corp structure. The study’s discoveriescombined with documented earlierconcerns and the general economicand political climate may wellcause the IRS and Congress to con-sider whether changes are in order.

There are a number of movingparts to the debate in Washingtonover how Congress and various regulators should respond to current conditions with new taxrates, new rules and new reportingrequirements. Owners in S corpsshould plan to stay tuned for whatare certain to be some meaningfulchanges that may affect how theystructure and operate their busi-nesses going forward. ■

Mr. DeMarco is vice president anddirector of tax services for the regional accounting and businessconsulting firm of Meaden & Moore,headquartered in Cleveland.

GRANDOPENINGSB. LUX BOUTIQUE

First and Main shopping center46 Park LaneHudson 44236www.bluxboutique.comB. Lux is a boutique that specializes in apparel, accessories and shoes.Each piece is handpicked by ownersMichelle Bryce and Lia Kalin, who areboth natives of the Cleveland area. B.Lux carries brands such as Kensie,Glam, Miss Me and Hazel, with an emphasis on the romantic, yet freshand chic.Phone 330-342-0033Fax [email protected] [email protected]

WOMFIRE4401 Rockside Road, Suite 214Independence 44131www.womfire.comWOMfire, a new social media marketingcompany that helps brands and products capitalize on the millions ofconversations already taking place online, has opened its main headquar-

ters in Independence. Offices alsohave been opened in Detroit, Atlantaand Tampa. [email protected]/womfire_hz

CASLL LLC 4498 Great Smokey CircleMedina 44256www.casll.comFounded by Scott A. Sarles, CASLL(Cleveland-Akron Senior Living Link) isa free elder care service available toseniors and their families coveringeight counties throughout NortheastOhio. CASLL was started out of thegrowing need for families to save timeand energy while minimizing the stressof sorting through the several hundredoptions available for senior care andhousing. CASLL matches the seniorand his or her family with the ideal fitbased on geographical and financialdesires as well as clinical needs.CASLL provides person-centered guidance with Alzheimer’s and dementia care, assisted living, inde-pendent living and nursing homes.CASLL also will connect seniors withelder law attorneys, home health careand rehab services, hospice care, senior real estate professionals andhome care companion services.CASLL’s services are free due to reimbursements through contractswith local senior service agencies andhousing communities.

Phone 440-623-5223Fax [email protected]

To submit a new business, send thefollowing information by e-mail toAmy Ann Stoessel at [email protected]: business name; address;city and ZIP; web site; brief descrip-tion of business; business phonenumber; business fax number; busi-ness e-mail address; and date thatbusiness opened. Call 216-771-5155with questions.

A resource for productive business

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Located on Euclid Avenue, acrossthe street from the House of Blues,the new e4b (Environments 4Business) Cleveland ResourceCenter specializes in work spaces,from complete interior constructionto specific renovations or projects.Established in 2008, e4b creates environments for business that maximize productivity with interchangeable furnishings, style,color and texture that reflect imageand culture and suit specializedneeds. The company employs eightand also has a location in Akron.

■ TECHNICALLY SPEAKING:The Reserves Network haslaunched a new division, TRN Technical, that focuses on high-end consulting, contract andtemporary assignments for technical, professional and managerial positions. “Contractstaffing is becoming a popularstaffing alternative for many businesses,” said Don Stallard,founder and CEO of The ReservesNetwork. The Reserves Network isa regional staffing service for theoffice, industrial, professional andtechnical markets; TRN Technical is based out of company’s headquarters in Fairview Park.

IN BRIEF


pay roughly the same prices theypaid in 2006 or 2007, even thoughthe company’s revenues might beless than they were then. But, hesaid, there are many potentialbuyers whose own facilities arenot running at full capacity — andby buying and consolidating aweaker competitor, they can morefully use the capacity and be moreprofitable.

“Most of what we’re seeing areconsolidating acquisitions to elim-inate capacity,” Mr. Ridenour said.“They’re trying to buy customers,and if they have an existing facility,it’s probably underperforming because of the recession.”

Often, the customers of two underperforming companies areenough to make one companyhealthy and profitable, he said.

Hindsight is 20/20For Mr. Winbigler’s part, aside

from retaining six good employeesfrom the metal-sawing company,he wishes now that he’d skippedthat deal.

However, he’d love to find another painting and coatingcompany like PowerMax, the shophe bought in Canton. AdvancePaint and PowerMax formerly werecompetitors and knew each otherwell, Mr. Winbigler said, so whenbusiness fell off and PowerMaxwanted to sell, it approached Advance Paint, knowing its customers would be valuable tothe Cleveland company.

That deal worked, Mr. Winbiglersaid, because it dovetailed so wellwith his existing business. Power-Max offered some specializedcoatings that Advance Paint did

not work with and it had customersin Northeast Ohio that were notpreviously doing business with Mr.Winbigler’s company.

“We added half a dozen new accounts,” he said. “Any one ofthem by themselves wasn’t any-thing huge, but together they werea nice piece of business.”

It also worked, he said, becauseit was small. Advance Paint paid asix-figure price for PowerMax —an amount Mr. Winbigler was ableto come up with from his ownfunds and by borrowing from afew family members.

Had it been a multimillion-dollar deal, he said, neither banksnor his relatives could have orwould have funded it. But every-one’s been paid back already fromthe small transaction that tookplace, because it quickly paid foritself, he said.

The metal-sawing company wasa different experience altogether.

Mr. Winbigler bought that com-pany thinking he would diversifyinto another business. But he soonfound out that the steel servicecenters that were using the company to handle their overflowwork were quick to abandon itonce their volumes declined andcould be handled internally.

“We had a 90% drop in busi-ness,” Mr. Winbigler said. “Weclosed the doors on that in 2008.”

The taste of successOthers who have done deals

during the recession say they’vefollowed a similar recipe. AtNet-Plus, a Stow information technologycompany with 21 employees, is one.

Co-founder Jay Mellon said hiscompany bought Akron-based

VirtuMark, another IT company,in October 2009 because it fit wellwith his existing business, wouldbring aboard talented employeesthat AtNetPlus needed and it alsocame with new customers.

“We’d done this before andthought it was a very good way toadd a group of customers to ourportfolio,” Mr. Mellon said. “Mostof the time when you hire an employee, they don’t come withcustomers.”

Both companies offered net-working and Internet services, Mr.Mellon said, but only AtNetPlusmaintained its own servers to hostclient web sites, and it put them towork for VirtuMark’s existing customers. That meant not onlymore revenue, but customers nowhad a local person they could call,physically located with the server,when technical issues needed tobe addressed.

Now, Mr. Mellon said he’s alsoscouting for other similar acquisi-tions that can add customers andin-house capabilities.

The same can be said for Advance Paint’s Mr. Winbigler, forwhom the sweet taste of successhas proven stronger than the bittertaste of a mistake.

Mr. Winbigler said he’s hungryto do another deal and is actuallyworking on one. But his futuredeals will be inline with his company’s existing core businesses,which he knows well, and will havesynergies with his existing operations.Besides, he said, he likes buyingcompanies in deals that work.

“It’s been the most stressful,fun, joyous, wild ride I’ve been onin my 40 some years of living,” hesaid of his acquisitions. ■


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SMALL BUSINESS

Trusted insurance agent amust in starting company

FRANKKUSHLER

ADVISER

Cleveland, and all of Ohio forthat matter, is beginning toemerge from one of themost challenging economic

downturns in recent history.The job losses, particularly in the

automotive and manufacturing industries, have been felt across thestate for years, and many Cleve-landers remain unemployed despitetheir best efforts to find work.

However, there has been somepositive to come out of these layoffs— namely, a number of Main Streetbusinesses have been started in andaround Cleveland.

Many of the men and womenwho lost jobs are chasing their passions or finding an unmet needin the area and are taking the opportunity to start their own busi-nesses. These new entrepreneursare forming the foundation of anew economy in the Midwest.

Starting a new business is nevereasy, and statistics show that success often is hard to achieve.While this may be intimidating,there is one simple step that newand established business ownersshould take to help promote successand mitigate some of businessownership’s most expensive risks.

When starting a new business,entrepreneurs often assemble ateam of experts to help secure thevitality of the business. This groupmay include an accountant orbookkeeper, an attorney, a financialadviser, a banker and an insuranceagent.

While most small business ownersgenerally will maintain an ongoingrelationship with their accountantor banker, few maintain an ongoingdialogue with their insuranceagent. This is a common mistakeamong new entrepreneurs andmore seasoned business ownersalike.

Overlooking relationship mainte-nance is one of the biggest mistakesbusiness owners make. As economic,environmental and social conditionschange and as businesses grow, thevalue of the relationship betweenbusiness owners and their insurancerepresentative becomes clear.

As new businesses get off theground, owners will work with aninsurance agent to purchase a Business Owners Policy, or BOP.

While BOPs vary slightly fromone insurance carrier to the next, ingeneral they provide property andcasualty insurance, crime insurance,liability insurance and vehicle coverage for rented or borrowed vehicles. A distinguishing feature ofmost BOPs is that they automaticallyinclude business income coverage,providing money to offset lost profits or to pay continuing expenseswhen a business is forced to shutdown for a period of time.

While establishing a BOP seemslike a fairly obvious step in the

process of starting up a new venture,owners all too often sign theiragreements and forget about themuntil the renewal process at the endof the year. This misstep can bedetrimental to the business.

Many Cleveland-based entrepre-neurs are currently finding the opportunities available and are driving their nascent businessesforward by making smart investments.As ventures expand, it is criticalthat these business owners keeptheir insurance agents apprised ofthe evolving state of the company.

For example, investments inequipment, technology, people, office space and vehicles all shouldbe recorded in a BOP in real time,rather than added at the end of abusiness year. By updating theirpolicy regularly, business ownersminimize the risk of being underin-sured in the event of a major loss.

The same can be said about business owners who have not yetexperienced a jumpstart in theirbusinesses. Fewer employees or adownsized office should be notedon a policy as well, saving the owner a few extra dollars a month.

While no business owners wantto think it will happen to them, disasters such as winter storms,downed trees and fires, as well asincidents such as vandalism andtheft occur regularly and signifi-cantly impact businesses in Clevelandand throughout the country. Incidents such as these can shutdown a business for an extendedperiod of time and produce majorlosses.

If business owners neglect to takeproactive measures to update theirBOP prior to such a disaster or incident, they may be without thenecessary coverage to protectthemselves from serious losses. Fornew entrepreneurs and other newbusiness owners, these losses canbe life-threatening to the business— sometimes to the point that theyare forced to shut their doors forgood.

Growth and expansion are goalsof just about every small businessowner. Strategic, forward-thinkingsmall business owners take the timeto make their insurance agents a regular part of their growth story. ■

Mr. Kushler is regional vice presi-dent of the Great Lakes region forTravelers Insurance.

Buying: Complementary services can lead to successcontinued from PAGE 13


really want to do something, youcan do it.”

While it’s not a new discussion,the issue of immigration is bubbling to the surface with the recession, globalization and debates over legislative reformserving as backdrops.

Some are even pointing to immi-grant entrepreneurs as the key tothe country’s economic survival.Still others argue that those who areforeign-born are no more importantthan those who have been here allof their lives.

Sens. John Kerry, D-Mass., andRichard Lugar, R-Ind., chairman ofthe Senate Foreign Relations Committee, late last month even introduced legislation that they claimwill drive job creation and increaseAmerica’s global competitivenessby helping immigrant entrepre-neurs who have secured significantU.S. investments get visas.

Big-picture arguments aside, foreign-born entrepreneurs livingin Northeast Ohio say the UnitedStates can be a place that opens upboth doors and possibilities for theindividual.

“You see opportunities that don’texist in another place,” said RadhikaReddy, who emigrated from Indiaafter studying at Case Western Reserve University and in 2001founded Cleveland-based ArielVentures LLC, a business advisoryfirm. “In this country, there is still alot of opportunity if you workhard.”

Land of opportunityLe Chaperon Rouge’s Mrs. Moga-

Kennedy, for one, considers herself


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Immigrants: U.S. offers level playing field

SMALL BUSINESS

to be the American dream: “This isthe country that will allow you to dowhatever you want.”

After a bad experience with herson’s child care, Mrs. Moga-Kennedysaved her money and opened herfirst day care in a church basementwith $1,800 and toys she had collected from garage sales.

Communism in Romania came“overnight like a tsunami,” she said.So when it became possible tocome to the United States, Mrs. Moga-Kennedy was among those who applied for a passport — although itwas another five years before shecould leave her possessions behindand come to the United States withher husband and 9-year-old daughter.

Today, there are eight Le ChaperonRouge locations with another set toopen in May in Solon. She recentlypublished a book, “Stella’s Way,”and she was among those named in2009 as winners of the Ernst &Young Entrepreneur of The Yearaward in Northeast Ohio.

“America allowed me to be a driven person,” she said.

Alper Behar, who in May 2004moved with his wife to Clevelandfrom Istanbul in search of a higherstandard of living, said in an e-mailthe United States offers an evenplaying field for new businesses.Mr. Behar owns the Mentor andRichmond Heights locations of AnyLab Test Now, a walk-in laboratory.

“One does not need to know important people to start a businessand be successful,” wrote Mr. Behar, who owned a manufacturers representative sales and service organization in his native Turkey.

However, Ariel Venture’s Ms.Reddy said there can be challenges— whether it’s due to cultural

IN BRIEFA new way of thinking

Video production company to try its hand at marketing

“America allowed me to be a driven person.” – Stella Moga-Kennedy (below)

Romanian immigrant and founder, Le Chaperon Rouge child care

differences or other factors.“For some, there is a bias against

immigrants,” she said. “Some of thesentiment is that they are comingand taking away our jobs.”

Immigration economicsRichard T. Herman, principal of

Cleveland-based Richard T. Herman & Associates LLC, an immigration law firm, agrees thereis a sentiment of “scarcity economics… if we bring outsiders in there’sgoing to be competition for scarceresources.”

Mr. Herman is the co-author withjournalist Robert L. Smith of the recently published book “Immi-grant Inc.: Why Immigrant Entre-preneurs are Driving the New Economy (and how they will savethe American worker).”

“The new economy requires certain skill sets,” Mr. Herman said,including high-tech and advanceddegrees, new capital and globalization.

“We’ve got tremendous pockets of immigrant talent,” he said.

Mr. Herman said he is encouragedby activity taking place in NortheastOhio, including the launch of TiEOhio, an organization that helpsconnect immigrant entrepreneursand work being done by the JewishCommunity Federation of Clevelandand Cleveland State University topursue an international welcomecenter.

“Of course we have to build upwithin, but part of building upwithin is attracting outsidesources,” he said.

Scott Shane, the A. Malachi MixonIII Professor of EntrepreneurialStudies at Case Western ReserveUniversity’s Weatherhead School ofManagement, has a different takeon whether immigrant entrepre-neurs are in themselves a drivingeconomic force.

Dr. Shane said there is not a consistent statistical pattern thatshows immigrants are more likelyto be entrepreneurs.

“There are plenty of people whoimmigrate to the United States andbecome entrepreneurs, but thereare plenty of people who are bornhere who become entrepreneurs,”Dr. Shane said.

Ultimately, Dr. Shane said it is important to consider the opportuni-ty cost when applying resources.

But, he said, “If someone is goingto start a good company … it woulddo us a lot of good if they started ithere.” ■

Cleveland-based Think Media Studios, a video and event production company, has formed amarketing and communications firm,The Think Agency.

“Our video clients were asking foragency recommendations to assistwith their marketing plans. We wereable to help some, but it was clearthat the type of creative, fast turn-around support did not exist in the

market and we should expand our offerings,” said Brian Glazen, founderof Think Media Studios. “This voidwas a unique opportunity to combineforces and offer video productionwith marketing to create an onlinevideo strategy.”

Mr. Glazen said so far three additional employees have beenhired on top of the current 12 employees.



LOCAL SOFTWARE DEVELOPERSRANKED BY FULL-TIME EMPLOYEES

Number of full-timeemployees

Rank

NameAddressPhone/Web site 1-1-2010 1-1-2009

Full-timeprogrammers Industry specialization Software products

Yearfounded

Top local executiveTitle

1Hyland Software Inc.28500 Clemens Road, Westlake 44145(440) 788-5000/www.hyland.com

765 742 117Health care, higher education,government, financial services,insurance, manufacturing

OnBase, enterprise contentmanagement software suite 1991 A.J. Hyland

president, CEO

2Snap-on Business Solutions Inc.4025 Kinross Lakes Parkway, Richfield 44286(330) 659-1600/www.sbs.snapon.com

277 NA 75 Global electronic parts catalogs Global EPC 1920 Tim Chamberspresident

3Micros-Retail30500 Bruce Industrial Pkwy., Cleveland 44139(440) 498-4414/www.micros-retail.com

265 267 NA Retail, including stores and directcommerce

Xstore Java POS, Store21 SpecialtyRetail POS, Tradewind Retail POS 1978

Jeremy Grunzweigvice president operations,Store Systems Group

4MRI Software LLC(1)20800 Harvard Road, Cleveland 44122(800) 321-8770/www.mrisoftware.com

191 230 24 Business solutions for propertymanagement and corporate real estate

MRI Commercial, CRE Manager, MRIResidential, IMPACT, Access 24/7 1971 David M. Post

president, CEO

5TMW Systems Inc.21111 Chagrin Blvd., Beachwood 44122(216) 831-6606/www.tmwsystems.com

184 186 68 Trucking and logisticsTMWSuite, TL2000, TruckMate,Innovative, IDSC Netwise, IDSCExpertFuel, TMT Fleet Maintenance

1983 David W. Wanglerpresident, CEO

6OEConnection4205 Highlander Parkway, Richfield 44286(330) 523-1800/www.oeconnection.com

147 167 27Online parts and service exchange in theautomotive original equipment partsbusiness

D2DLink, D2D Plus, D2D Express,CollisionLink, LinkIQ,ServiceAdvantage, RepairLink

2000 Charles Rotunopresident, CEO

7BrandMuscle Inc.3750 Park East Drive, Beachwood 44122(216) 464-4342/www.brandmuscle.com

121 91 15 Marketing solutionsBrandBuilder, BrandPlanner,BrandWorkshop, BrandLibrary, DigitalAsset Manager

2000 Philip AlexanderCEO

8The CSC Group17999 Foltz Parkway, Strongsville 44149(440) 546-4272/www.thecscgroup.com

108 130 17Business health care, clinical healthcare, manufacturing, finance, insurance,government

PAPERS, nPower, R4 Acert, Phoenix 1964William F. Zimmermanchairman, CEO,interim CFO

9SageQuest31500 Bainbridge Road, Suite 1, Solon 44139(888) 837-7243/www.sage-quest.com

99 99 NA Provider of GPS fleet managementsolutions Mobile Control 2003 Dennis Abrahams

president, CEO

10Virtual Hold Technology LLC137 Heritage Woods Drive, Akron 44321(800) 854-1815/www.virtualhold.com

80 80 20 Technology, software, telephony, virtualqueuing

Virtual Hold Concierge, Rendezvous,WebConnect, Encore, Rapport,MobileConnect

1995 Kevin SjodinCEO

11Fit Technologies1375 Euclid Ave., Suite 500, Cleveland 44115(216) 583-0733/www.fittechnologies.com

70 125 10Education (K-12 and higher education),nonprofits, health care, law firms,accounting firms

Student Information System (SIS) 1999Micki Tubbs, CEO, co-founder; Michelle Tomallo,executive vice president, co-founder

12Foundation Software150 Pearl Road, Brunswick 44212(330) 220-8383/www.foundationsoft.com

69 66 12 Accounting software for construction Foundation for Windows 1985 Fred Odechairman, CEO

13Knotice526 S. Main St., Suite 705, Akron 44311(800) 801-4194/www.knotice.com

44 35 12 Direct digital marketing Concentri 2003 Brian DeaganCEO

14Main Sequence Technologies Inc.4420 Sherwin Road, Hamilton Hall, Willoughby 44094(440) 946-5214/www.pcrecruiter.com

42 42 NA HR applicant tracking, recruiting, humancapital management

PCRecruiter, PCRecruiter ResumeInhaler, PCRecruiter Interim,PCRecruiter Outlook Portal

1998Martin H. Snyder, presidentWilliam F. Kubicek IVvp marketing

15Tribute Inc.1696-F Georgetown Road, Hudson 44236(330) 656-3006/www.tribute.com

38 38 7Industrial distribution, fluid power, hose,seals, power transmission, automation,industrial controls

Tribute Software, TrulinX Software 1981 Timothy Reynoldspresident

16Merge Healthcare571 Boston Mills Road, Suite 500, Hudson 44236(330) 655-3300/www.merge.com

37 30 18 Health care imaging and informationtechnologies

Fusion RIS/PACS MX, Fusion RIS,Fusion PACS MX, Merge Mammo,Merge PET/CT, Fusion Billing

1987 Timothy Kulbagogeneral manager

17Imaging Science and Service Inc.95 Executive Parkway, Suite 500, Hudson 44236(330) 342-7760/www.issimage.com

35 35 5Regulatory document complianceincluding sales and use tax exemptions,freight forwarding

TEAMS Express, LineLink 1994 Philip C. HodgeCEO

18Data-Basics Inc.9450 Midwest Ave., Cleveland 44125(216) 663-5600/www.databasics.com

33 32 18 Service management and accounting SAM Pro Enterprise, TechAnywhere3.0, Escalation Manager 1974 Arthur K. Divell

CEO

19Noteworthy Medical Systems Inc.6005D Landerhaven Drive, Mayfield Heights 44124(440) 864-6800/www.noteworthymedical.com

30 60 NA Health care technologyNetPracticePM, NetPracticeEHRweb,NetPracticeERX,NetPracticeMedicalHub

1996 Susan E. HagertyCEO

19PreEmptive Solutions LLC767 Beta Drive, Suite A, Mayfield Village 44143(440) 443-7200/www.preemptive.com

30 28 10 Software security, application analytics Dotfuscator, DashO, RuntimeIntelligence 1996 Gabriel Torok

president

21Associated Software Consultants Inc.7251 Engle Road, Suite 400, Middleburg Heights 44130(440) 826-1010/www.asconline.com

26 32 5Mortgage lending software solutions forthe primary and secondary mortgagemarkets

PowerLender Loan Origination &Processing System, PowerSellerSecondary Marketing System

1978 Timothy W. Listonpresident

22Pointe Blank Solutions Ltd.7055 Engle Road, Suite 304, Middleburg Heights 44130(440) 243-5100/www.pointeblank.net

23 23 NA Health care, governmentCasePointe, PropertyPointe,LivingPointe, ProjectPointe,DocuPointe

2000Thomas J. Courychairman,chief software architect

23Specialized Business Software6325 Cochran Road, Unit 1, Solon 44139(440) 542-9145/www.specializedbusinesssoftware.com

22 22 16 Financial services, government,technology

Docunym Document Imaging andWorkflow 1999 Steve Wiser

president

23Urbancode Inc.2044 Euclid Ave., Suite 600, Cleveland 44115(216) 858-9000/www.urbancode.com

22 16 11 Technology AnthillPro ALA 1996 Maciej ZawadzkiCEO

25ControlSoft Inc.5387 Avion Park Drive, Highland Heights 44143(440) 443-3900/www.controlsoftinc.com

21 21 NA Process control INTUNE, MANTRA 1985 Tien-Li Chiapresident

25Workflow.com20006 Detroit Road, Suite 300, Rocky River 44116(440) 827-2000/www.workflow.com

21 38 11 Medical records software Workflow EHR, Workflow PM 2002 Packy HylandCEO

27Bearware Inc.7160 Chagrin Road, Suite 210, Chagrin Falls 44023(440) 893-2327/www.bearwareinc.com

20 20 10 LogisticsRetail Distribution System, webTMS,Retail Payment System, ClaimsManagement System

1987 Jeffrey Berichonpresident, founder

27Metasystems Inc.13700 State Road, Suite 1, North Royalton 44133(440) 526-1454/www.metasystems.com

20 20 15 Software provider to discretemanufacturers ICIM ERP 1975 Joseph R. Berish

president

29Datacore Consulting LLC5755 Granger Road, Suite 777, Independence 44131(800) 244-4241/www.datacoreonline.com

18 16 4 Distribution and manufacturing CANDIS, CIS, CIS HelpDesk,AlertSystem, DCCRM 1998 Jim Conley

senior partner

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) Formerly Intuit Real Estate Solutions.

RESEARCHED BY Deborah W. Hillyer


on investment opportunities. How-ever, the region definitely benefits bya formal group such as North CoastAngel Fund, Mr. Rosenbaum said.

Not only do formal funds by defin-ition serve as a source of money for promising companies, but their tendency to do their own researchencourages other investors to opentheir wallets.

“The rigor of the processes thatflow from having the fund, the for-mality and the due diligence — it’svery helpful,” Mr. Rosenbaum said.

Planting seedsThe North Coast Angel Fund

certainly has been opening its walletof late. The group has invested innine companies in nine months andwill be 12-for-12 if it makes its nextthree on schedule.

The fund itself typically invests$200,000 in each company. Membersthen chip in a few hundred thousanddollars of their own cash.

For instance, late last month thegroup led a $2.5 million investmentABSMaterials Inc., a company inWooster that makes a glass-like material meant to pull oil and otherpollutants from air, water and soil. Inaddition to the fund’s $200,000,members and other individuals connected to the fund plopped downanother $570,000, a record add-oninvestment for the group.

Three other investors — local startupdevelopment group JumpStart Inc.,strategic partner Fontz Drilling Inc. of Wooster and New York venturecapital firm Harris & Harris Inc. —threw in $250,000 each, and the restof the $2.5 million came from individ-uals not affiliated with the fund.

ABSMaterials is using the moneyto expand research and develop-ment, production, marketing andsales. On March 1 it opened a two-person Houston sales office to targetthe oil and gas industry, and soon itplans to lease another 11,000 squarefeet of lab space at Wooster’s Ohio

Agricultural Research and Develop-ment Center, said CEO StephenSpoonamore. The company’s Ohiooffice employs 14 in research, devel-opment and production, and thatnumber only will grow, Mr. Spoon-amore said. “We intend to stay inNortheast Ohio,” he said.

ABSMaterials represents the kindof company the region needs and in-vestors want to fund, said Todd Fed-erman, executive director of NorthCoast Angel Fund. The company’sOsorb technology serves a need, andit appears to do so better than otherproducts on the market, he said.

“It really was a revolutionary concept. It wasn’t a moderate improvement,” he said.

Future prospectsAfter the next three investments,

North Coast Angel Fund will have financed 20 companies in four years.By then, all that will be left of the fund’soriginal $5.6 million stash will be a“modest amount” reserved for fol-


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Invest: Third Frontier bolsters efforts ical, advanced energy and advancedmaterials sectors, given the Akronarea’s strengths in material scienceand the technologies expected tocome out of the newly formed AustenBioInnovation Institute in Akron,which is a research collaborative involving area colleges and hospitals.

Funds are heaven-sentThe existence of formal angel funds

in Northeast Ohio helps high-techcompanies in the short term, but inthe long term it helps wealthy peoplein the region become more comfort-able with angel investing, said ChrisCoburn, executive director of Cleve-land Clinic Innovations, the technologycommercialization arm of the Cleve-land Clinic. And that comfort levelmeans more capital for future star-tups, he said.

“It raises the level of sophistication,”Mr. Coburn said.

There are about 300 angel groups inthe United States, but only 22% haveformal funds, said Marianne Hudson,executive director of the Angel CapitalAssociation in Overland Park, Kan. Mostangel investing is done by investorsnot affiliated with a group, she said. ■

low-up investments in existing portfo-lio companies, Mr. Federman said.

Managing member Mr. Rankin saidthe group could continue meeting regularly to collaborate on individualinvestments and watch presentationsby entrepreneurs. That, however, isthe “fall-back” option. He’d ratherraise more capital, which he said helpsensure high-potential companies stayin Northeast Ohio.

The fund is subsidized partially bythe state: The group has received twogrants totaling $2.8 million from theOhio Third Frontier project, a 10-yeartechnology-based economic develop-ment program.

The fund likely would not haveformed without money from the ThirdFrontier, according to Mr. Rankin,who said the state program will have“a huge potential impact” on Ohio asthe technologies it helped create arecommercialized.

As for the ArchAngels, the groupplans to form its first formal fund without a Third Frontier grant, but itintends to apply for money next year,Mr. Rosenbaum said.

The ArchAngels’ fund likely wouldfocus on investments in the biomed-


A loan programworthy of note■ Starving artists who need cash for a newclarinet, clay or canvases can stop diggingthrough their couch cushions — there’s anew loan source in town.

The NoteWorthy Federal Credit Union inCleveland, which for 50 years has been makingloans to musicians, is introducing a loan designed for creative types in any medium.

The Creative Artist Project loan will beavailable for individual artists who are affiliated with a professional artistic organi-zation, but who needmore money to com-plete a project. In a pilotprogram, credit unionpresident Henry Peyre-brune — who is also abassist in the ClevelandOrchestra — said loanswere made to help aband finish producing aCD, to provide workingcapital for a documen-tary film and to buy an embroidery machinefor a costume designer.

The 400-member credit union has about$1.5 million in assets and is earmarking$400,000 to make the loans, which will be for$50,000 or less each.

Mr. Peyrebrune said the credit union isinterested in expanding its base from musi-cians to other artists and in the future wouldlike to be a resource for small nonprofits andarts businesses.

“In our experience, artists are highly motivated and self-disciplined people, and

they’re a good credit risk,” he said. “Theyneed capital just like any other business tokeep the business going.”

For more information on the loans, seehttp://noteworthyfcu.com. — Arielle Kass

Software guy’s soft sell yields new 20/30 web site■ The Cleveland Professional 20/30 Clubcouldn’t find the software it needed to buildthe perfect web site. So it gathered 60 volun-teers and built it.

From March 5 through March 7, the local young professionalsgroup hosted Advance20/30, an event thatdoubled as a marathonprogramming sessionand a social outing. Attendees included pro-grammers and graphicdesigners as well as volunteers from non-technical professions.

Dan Young, 20/30Club president, denied that he was trying topull a Tom Sawyer-style prank on membersof the club, but from what I can tell it did indeed look like organizers were trying totrick attendees into believing that work canbe fun. The event took place inside the oldHornblowers boat on Lake Erie, which nowis home to software developer LeanDog,and it featured free food, beer and coffees aswell as appearances by a balloon clown anda disc jockey.

If that was Mr. Young’s ploy, it worked:The group got its new web site, though it

won’t launch until finishing touches are completed in May. Not only that, butAdvance 20/30 also helped form morebonds between Cleveland’s community ofsoftware developers, said Mr. Young, whoalso is founder of DXY Solutions LLC, aCleveland company that develops softwarefor mobile phones.

“It was an amazing weekend,” he said. — Chuck Soder

Sounds like a job for Post-It notes■ Nonprofits often have no problem toutinghow they help the public, but making thatstory stick in people’s minds is anotherthing.

The Saint Luke’s Foundation hopes tohelp nonprofits better tell their storiesthrough a new grant program called Make itStick. Nonprofits that focus on health andhealth care, human services or neighbor-hood empowerment can submit proposalsto receive grants for unique approaches tocommunications.

“This is an opportunity to really look at nonprofits and how they can tell their story, build capacity, build programs andgenerate revenue,” said Kimberly St. John-Stevenson, communications officer for thefoundation.

Letters of inquiry must be submitted tothe foundation by April 1. Saint Luke’s willdecide which nonprofits to support and willfund their communications efforts for oneyear starting on July 1. More information isavailable at www.saintlukesfoundation.org.— Shannon Mortland

WHAT’S NEW

COMPANY: ACRT Inc., AkronTHE OCCASION: Its 25th anniversary

It’s a jungle out there, and few companiesknow that better than ACRT.

ACRT is an employee-owned “utility vege-tation management” consulting firm. (Notyour typical description of a consultant, to besure.) The company offers national line clear-ance, tree care and urban forestry training,and its reason for being is to help powercompanies provide safe and reliable electricservice.

The company opened Feb. 11, 1985, withfewer than 50 employees. It now has morethan 400 employees, works in most U.S.states, and has satellite groups in Lodi, Calif.,Nashville, Tenn., Texas and Florida. ACRTalso manages arborist training in six JobCorps centers in Oregon, Illinois, Vermont,Arkansas and Kentucky.

ACRT moved to its current location, 1333Home Ave., in 2004.

For information, visit www.acrtinc.com.

Send information about corporate anniver-saries to managing editor Scott Suttell at [email protected].

REPORTERS’ NOTEBOOKBEHIND THE NEWS WITH CRAIN’S WRITERS

THEINSIDER

THEWEEK MARCH 1 - 7

The big story: Benesch Friedlander Coplan& Aronoff merged with an Indianapolis law firm,and its dealmaking may not end there. The combination with the 43-person Dann PecarNewman & Kleiman took place March 1. Ira Kaplan, Benesch’s managing partner, will remain in that role and the firm’s headquarterswill stay in Cleveland. In Indianapolis, the firmwill be known as Benesch/Dann Pecar for atleast a year. Mr. Kaplan also said Benesch will“be pretty aggressive” when it comes to lookingat other cities it may be able to enter. He mentioned Chicago, Milwaukee, Minneapolisand Philadelphia as possibilities.

Seeing the light: The Public Utilities Com-mission of Ohio voted to require FirstEnergy

Corp. to restore the rate discounts forthe utility’s customers living inall-electric homes. And in an indication of how strongly theFirstEnergy move has both-ered Columbus, State Sens.

Tom Patton, R-Strongsville, andTim Grendell, R-Chesterland,

also introduced Senate Bill 236,legislation that would restore thediscounts. FirstEnergy last year

eliminated special rates that it previ-ously promoted, leading to big increases in electricbills this winter for customers that heat withelectricity.

Heart healthy: Early stage company Cleve-land HeartLab LLC, a specialty clinical laboratorythat is developing proprietary diagnostic testsfor measuring a patient’s risk for heart disease,said it completed a $3 million fundraising roundand has selected its top officers. ClevelandHeartLab said its new shareholders include localbusiness leaders that it did not identify, as wellas private equity firms Glengary LLC, SecondGeneration Ltd. and Zapis Capital Group LLC.The company also announced that its board of di-rectors elected Les Vinney as chairman, JakeOrville as president and CEO, Dr. Marc Penn aschief medical officer and Dr. Stanley Hazen aschief scientific officer. Mr. Vinney is the retiredpresident and CEO of Steris Corp.

Speeding things up: OneCommunityreceived $18.7 million in stimulus money that itplans to use to help poor residents in Ohio and fourother states get high-speed Internet access andlearn to use it. The Cleveland-based nonprofit,which provides fiber-optic Internet service to government agencies and nonprofits in NortheastOhio, will use $11.7 million of that money to increase broadband adoption in Cleveland, Akronand southeastern Ohio. The rest of the money forthe “Connect Your Community” program will goto Detroit; Lexington, Ky.; Bradenton, Fla.; andGulfport and Biloxi, Miss.

The color of money: A. Schulman Inc.announced its second acquisition deal in the lastfour months, a move that will result in the closingof its Polybatch Color Center in Sharon Center.The Akron-based supplier of plastic resins boughtMcCann Color Inc., a producer of specially formu-lated color concentrates in North Canton. A. Schul-man put the purchase price at “less than $10 million in cash.” A. Schulman will consolidate itsproduction at the McCann plant.

This and that: Snack foods maker Shearer’sFoods Inc. in Brewster agreed to buy Snack Alliance Inc., a producer of branded and private-label snack foods that is a supplier to retail giantWalmart. Terms of the transaction were not disclosed. … Hyland Software Inc. of Westlake acquired another document management soft-ware company, the 30-employee eWebHealth ofReading, Mass. Terms were not disclosed.


Excerpts from blog entries on CrainsCleveland.com.

BEST OF THE BLOGS

These killer organismsaren’t from a horror flick■ An infectious disease specialist fromCleveland was quoted in a scary New YorkTimes piece on the rising threat of infec-tions unfazed by antibiotics.

The piece led with the tale of a former base-ball player who died after being infected by anorganism called Acinetobacter baumannii.

“The germ is one of a category ofbacteria that by some estimatesare already killing tens of thou-sands of hospital patients eachyear,” The Times reported. Whilethe organisms do not receive asmuch attention as the one known asMRSA — for methicillin-resistantStaphylococcus aureus — some infectious-disease specialists say theycould emerge as a bigger threat.

“In many respects it’s far worse thanMRSA,” said Dr. Louis B. Rice, an infec-tious disease specialist at the LouisStokes Cleveland V.A. Medical Centerand at Case Western Reserve University.“There are strains out there, and they are becoming more and more common, that areresistant to virtually every antibiotic we have.”

The newspaper said there are severaldrugs that can treat MRSA. But for a combi-nation of business reasons and scientificchallenges, the pharmaceuticals industry“is pursuing very few drugs for Acinetobac-ter and other organisms of its type, knownas Gram-negative bacteria. Meanwhile, thegerms are evolving and becoming evermore immune to existing antibiotics.”

Under water on themortgage? Walk this way■ Worried about the consequences of walking

away from your underwater mortgage? The ramifications might not be as bad asyou think, according to a Wall Street Journalcolumn that quoted Cleveland bankruptcyattorney Richard Nemeth.

In his ROI column on the paper’s web site,Brett Arends wrote that people who aredeeply under water on their mortgage “needto stop living in a dream world and give serious thought to walking away from thedebt. No, you shouldn’t feel bad about it, andyou shouldn’t feel guilty. The lenders woulddo the same to you — in a heartbeat.”

In “non-recourse” states, themortgage lender “may have noright to come after you for anyshortfall. They may have no optionbut to take the home, sell it and

eat the loss,” he wrote. Even in “recourse” states, lenders “may havelimited ability to come after you. Often they’d have to jump a lot of legalhurdles, and it’s just not worth it forthem,” Mr. Arends wrote. “They’reswamped with cases anyway.”

As Mr. Nemeth told Mr. Arends,“In my experience, right now they’re

not really going after anyone. Theyjust don’t have the resources.”

Melt’s a handful, butour money’s on Adam■ This was inevitable.

Melt Bar and Grilled in Lakewood said onits Facebook page that Adam Richman andthe crew of “Man v. Food” visited recentlyto film a segment for a coming show, whichairs on the Travel Channel.

Mr. Richman’s challenge was to eat a“monster grilled cheese” loaded with 14 dif-ferent cheeses and that weighed in at closeto four pounds.

Based on the gigantic food Mr. Richmanhas eaten on this show, we’re sure he canhandle it.


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