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SMALL BUSINESSArea’s high-profile chefs go beyond the glam tothe grit in sharing journeys to success ■■ Page 15PLUS: EXACTCARE TAKES GUESSING OUT OF MEDICINE ■■ & MORE

Creative outreachThe Cleveland Museum of Art is

ramping up its efforts to becomemore entrenched in the corporatecommunity. The museum nextmonth plans tolaunch a member-ship cam-paign withincentivesintendedto enhance the relation-ship.

PAGE 4

INSIDE

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VOL. 33, NO. 39

University research budgets hang in the balance

Insurance ratesclimb to buoyprofit margins Lower investment returns, property lossescaused by storms contributing to increases

Expected government spending cuts likely to crimp projects in some way said Robert Miller, vice president forresearch at Case Western ReserveUniversity.

There’s only one clear way for thefederal government to avoid the auto-matic cuts, which would amount tomore than $1 trillion over 10 years,starting in January. The cuts won’tgo into effect if Congress and Presi-dent Barack Obama pass a bill thatreduces the deficit by the sameamount.

That means big spending cuts

See RESEARCH Page 20

See THEATERS Page 22

By CHUCK [email protected]

There’s a good chance that re-search budgets at Northeast Ohio’suniversities are going to shrink.

It’s just a matter of when, howand by how much.

Those research budgets will needto absorb big cuts fast if the federalgovernment fails to come up with abudget deal before the end of the

year. That failure automaticallywould trigger massive spendingcuts across most federal programsin a process known as sequestra-tion.

Those cuts would do seriousharm to university research depart-ments, which typically fund most oftheir projects with federal dollars.They’d be forced to cut salaries, layoff graduate students and postdoc-toral researchers, and perhaps even

shut down entire research projects,according to four officials whooversee research functions at localuniversities.

Many more projects wouldn’teven get off the ground, they said.

“I can guarantee that it will impair our ability to do research,”

By MICHELLE [email protected]

Commercial property and casualtyinsurance rates have been on the risefor about a year and are expected tokeep climbing as insurance carrierstry to counteract blows to their profitsdealt by Mother Nature and low interest rates.

Insurers make money in two ways— through underwriting and by investing the cash they amass. Whenboth those sources of revenue getpinched, one by property lossescaused by storms and the other byinterest rates, rate increases are to beexpected, industry insiders say.

“If I can’t make money on invest-ments, I have no choice but to makemore money on insurance,” saidRichard W. Dorman, who consultswith insurance companies on productmanagement and pricing throughhis Beachwood firm, Richard Dor-man Insurance Consultants.

“The only way to make moremoney on the insurance side is toraise your rates,” Mr. Dorman said.

Commercial insurance prices intotal rose by 6% during the secondquarter of 2012 compared to the

year-ago period — the sixth consec-utive quarter that aggregate pricesrose for all commercial lines, accordingto the Commercial Lines InsurancePricing Survey by Towers Watson released last month. The aggregateprice increase was the largest ineight years, the survey found.

“Nobody likes increases,” said Jeremy Bryant, a senior vice presi-dent with Britton Gallagher, a Cleve-land insurance brokerage. “In somecases, (a rate hike) could mean a six-figure increase if you have enoughpayroll or high enough property insured value.”

Commercial property rates are upbecause of “a real frequency of severe losses” inflicted by tornados,hurricanes and the like in 2010 and2011, said David C. Jacobs, presidentand chief operating officer of Oswald

JANET CENTURY

Chris Baxter, director of operations at the Atlas Cinemas at Eastgate 10 in Mayfield Heights

INSIDE: Manufacturers brace for animpact to business, say cuts could hinder industry momentum.

THEATERSEYE THE BIG PICTURE Cinemas convert from film to digitalmovie projectors, but costly upgrades challenge some operations

By MICHELLE [email protected]

Upstairs, out of sight of the movie-goingaudiences that came to see a matineelast Wednesday afternoon, a transfor-mation was taking place.

And, as a result, between two rows of digitalmovie projectors playing titles such as“Frankenweenie” and “Looper,” sit a few 35 mmfilm projectors — dark, quiet, unplugged.

Euclid-based Atlas Cinemas last week com-pleted the installation of digital projectors at theEastgate 10 theater in Mayfield Heights. Now,only one of its five Northeast Ohio theaters usesfilm projectors.

Local theater operators are spending tens ofthousands of dollars to outfit their theaters withdigital projectors as speculation grows that the

See RATES Page 20

20121008-NEWS--1-NAT-CCI-CL_-- 10/5/2012 4:31 PM Page 1

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22 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM OCTOBER 8 - 14, 2012

“Behind the News” podcast■ Crain’s reporters dig deeper into each week’s trends on our podcast, which you can find at www.CrainsCleveland.com/section/audio.

Best of our Blogs■ Our roster includes Editor’s Choice, SportsBiz, Small Business,Staffing/HR, Energy and many guest entries, and is located atwww.CrainsCleveland.com/section/blogs.

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THE WRONG DIRECTIONCall it the low-wage recovery. Two years after the recession officially ended,the majority of new jobs being added to the economy pay just $13.83 per houror less, a new report from the National Employment Law Project shows. Whilethe job losses during the recession were concentrated in midwage occupa-tions, the subsequent employment gains continue to come heavily in low-payingjobs. Employment in lower-wage occupations grew 2.7 times faster than in mid-wage and higher-wage occupations. Here’s how the data break down:

Hourly Share of losses Share of gainswages during recession post-recession

SOURCE: NATIONAL EMPLOYMENT LAW PROJECT; WWW.NELP.ORG

Honoring the region’s top CFOsWe profile some of the area’s top financial professionals with our annual CFO of the Yearawards.


valves. “You sort of feel like you’reon a train, and you’re just along forthe ride.”

In anticipation of potential bud-get cuts of $1.2 trillion over the next10 years as part of the so-called sequestration process, manufacturersare holding off on hiring and onbuying new equipment, and insteadare waiting to see how the budgetsaga unfolds.

For companies such as theBethesda, Md.-based defense con-tractor Lockheed Martin, which operates a plant in Akron, the situa-tion also likely means layoffs.

Lockheed Martin in July said it could need to send out layoff notices starting this month to all itsemployees in order to remain incompliance with the federal Worker

OCTOBER 8 - 14, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

THE WEEK IN QUOTES

“If I can’t makemoney on invest-ments, I have ... tomake more moneyon insurance. Theonly way to makemore ... is to raiseyour rates.”— Richard W. Dorman of RichardDorman Insurance Consultants.Page One

“You have to bewilling to lose it allto gain everything.”— Matt Fish, Melt Bar & Grilledowner. Page 15

“(ExactPacks) aremuch more reliablethan taking pills ...because they canopen one packageand dump every-thing down thehatch in one gulp.”— Dr. William Mills, medical director for Western Reserve Senior Care. Page 15

“It’s very importantfor an art museumto think aboutwhat it can learnand gain from the corporate community.”— David Franklin, director,Cleveland Museum of Art. Page 4

Health care spinoutsmultiply amid need for technology products Efforts to develop, sell IT innovations surge

See HOOPS Page 11

JANET CENTURY

Shane Kline-Ruminski (left) and Mike Heines (center) started The National Basketball Academy, based in Woodmere, in2002. It’s grown to a 10-city domestic operation — with more to come — and it also has established itself in Greece. TomHeines (right) has taken on a larger role in the company’s business operations.

ON THE COURT, A SHOTAT MORE GROWTH

Youth camp operator connects with pro teams, expands here and overseas

By JOEL [email protected]

Mike Heines says his com-pany, The National Bas-ketball Academy in Wood-mere, was successful long

before joining forces with the Cleve-land Cavaliers in 2005 and nine otherNational Basketball Association teamsthereafter.

And in its latest growth plan, theacademy — which administers youthbasketball camps and clinics andtrains young players in Ohio, acrossthe United States and overseas — islooking to return to those roots.

Over the final three months of 2012and into next year, the company willestablish operations in Louisville, Ky.;Portland, Ore.; and Dallas, and sup-plement its office in Oklahoma City. Italso is looking to expand its overseasoperations. The academy currentlyoperates in Greece and is finalizinganother in Indonesia. Mr. Heines hasspoken with officials in Spain, Turkeyand China, among other potentialmarkets.

That group of cities and countriespresents a bigger challenge than theNBA markets in which the academy

has paired with pro teams. In thoseinstances, the academy runs teams’youth programs; in exchange, it buysevery child who attends a camp orclinic or plays on one of its teams or inits leagues a ticket to one of their localpro team’s games.

The academy gets to use the well-established pro team’s brand in pitchingits various camps and training. In non-NBA markets, that marketing becomesmore difficult without the support ofa recognized name — but that isn’t

THE FOUNDING PARTNERSMIKE HEINESHometown: ChesterlandRésumé: Founder, Aurora Products,sold in 2000; Beachwood-based Crescent Digital

SHANE KLINE-RUMINSKIHometown: ChesterlandRésumé: Second-team all-state at West Geauga High School■ MAC freshman of the year, first-teamAll-MAC at Bowling Green; led nation infield goal percentage as a senior■ Played professionally in France, Portugal, Israel, Turkey and Belgium


If the health information tech-nology sector was hot two yearsago, now it’s boiling.

Local companies and institu-tions are clamoring to meet aburning need for IT products thatcan help health care providers cutcosts and improve care.

No. 1 among them is the Cleve-land Clinic. The institution is spin-ning out so many informationtechnology companies that itmight need a whole building forthem.

That discussion is still prelimi-nary. Nothing has been decided,not even whether the best coursewould be to use an existing buildingor build something new, saidHeather Phillips, director of cor-

porate communications for theClinic.

However, the Clinic already iscreating lots of companies thatcould help fill that space.

In March 2011, Chris Coburn —executive director of ClevelandClinic Innovations, the hospitalsystem’s business developmentarm — told Crain’s that the Clinichad launched five health IT com-panies during the previous twoyears.

Since then the Clinic haslaunched a few others, and at leastfive more are in the works, he saidlast week.

“Without question (health IT) is

INSIGHT

See CUTS Page 19

Manufacturers brace for jolt to businessCompanies refrain from hiring and spending, anticipating budget cutsBy GINGER [email protected]

Dramatic federal spending cutsset to take effect at the start of nextyear likely would take the air out ofthe balloon of U.S. manufacturing’sresurgence, industry representa-

tives say. If Congress before the endof 2012 fails to reach a compromiseto cut the federal budget, the nationwill fall off what’s been referred toas the fiscal cliff. That means $109billion in automatic cuts will go into effect in January, involving anacross-the-board $54.5 billion

reduction of Pentagon spending in2013.

“Whatever happens in Washing-ton is something we can’t affectother than react to it,” said GarySwanson, president and CEO ofThermotion LLC, a Mentor-basedmanufacturer of heater control

INSIDE: Cleveland Clinic softwarespinout Explorys relocating to new,larger digs. Page 22

See HEALTH Page 22



Volume 33, Number 39 Crain’s Cleveland Busi-ness (ISSN 0197-2375) is published weekly, exceptfor combined issues on the third week of May andfourth 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 © 2012by Crain Communications Inc. Periodicals postagepaid at Cleveland, Ohio, and at additional mailing of-fices. Price per copy: $2.00. POSTMASTER: Sendaddress changes to Crain’s Cleveland Business,Circulation Department, 1155 Gratiot Avenue, Detroit,Michigan 48207-2912. 1-877-824-9373.

REPRINT INFORMATION: 800-290-5460 Ext. 136

Museum of Art carves out moretangible ties with businesses

By TIMOTHY [email protected]

Upon being named director of theCleveland Museum of Art in August2010, David Franklin was takenaback by the museum’s less-than-robust ties with Northeast Ohio’sbusiness community.

Two years later, and riding on themomentum of a $350 million reno-

large and small — to sign up for cor-porate memberships. Such mem-berships, which could be structuredseveral ways, would allow businesses,for one, to use the museum’s facilitiesto entertain employees or clients.

“That’s really unusual for muse-ums,” Mr. Franklin said. “In the past,you wanted the corporation to justwrite a check for a sponsorship andget their name in our catalog.”

At present, the museum has about30 corporate members, according to August Napoli, the museum’sdeputy director and chief advance-ment officer. Being associated withan internationally recognized institu-tion such as the Cleveland Museum ofArt would benefit any business, he said.

“The takeaway for the businesscommunity is that the museum is anasset that is a great value to every citizen but also to their bottom linesand worth the investment,” said Mr.Napoli, who joined the museum inDecember 2010 from the SummaFoundation, the fundraising arm ofAkron-based Summa Health System.

Still, the museum hasn’t shiedaway from hitting up the businesscommunity for donations or spon-sorships. The museum has about$100 million left in its fundraising effort to support the renovation project, which will add more than55,000 square feet to the museumonce completed and bring its foot-print to about 592,500 square feet.

Also, Mr. Napoli said the museumis plotting “a much more robust” exhibition and events schedule onceconstruction is completed and as themuseum nears its centennial cele-bration in 2016, which will offer sev-eral sponsorship opportunities.

The museum recruited a handfulof well-known business leaders tohelp make the pitch.

David Selman, president and CEOof Selman & Co., a marketer and administrator of life and health insurance in Cleveland, and ScottMueller, CEO of Dealer Tire, are co-chairing the museum’s corporateleadership steering committee thatwas organized to lead the effort. ■

PHOTO PROVIDED

The Cleveland Museum of Art’s atriumopened in late August.

vation and expansion project slatedfor completion next year, the muse-um is prepping a re-energized pitchto region’s business leaders — some-thing officials hope could bring morepeople and ultimately more moneyinto the museum.

“It’s very important for an art museum to think about what it canlearn and gain from the corporatecommunity,” Mr. Franklin said. “Weneed to be part of that community ina very instinctive sense.”

Next month, the art museumplans to launch a campaign to lureas many as 100 businesses — both

Institution launchingmembership campaign



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WHO TO WATCH: LAWCrain’s seeking up-and-coming law professionals

We’re looking to profile some ofthe region’s legal up-and-comers in“Who to Watch: Law,” a special sec-tion slated for publication Nov. 26.

If you think you know who will beamong those leading the Northeast

Ohio legal sector of the future, drop an email to Amy Ann Stoessel,[email protected], or call 216-771-5155.

Please send in your suggestionsby Oct. 22.

Brownfield grants will become more selectiveOlder cities such asCleveland could beat a disadvantageBy JAY [email protected]

The Kasich administration is nar-rowing the scope of projects that willbe eligible for state money to cleanup environmentally contaminatedproperties as it tries to continue aprogram caught in a financial bind.

The Clean Ohio Council on Sept.14 released draft guidelines for a $15 million round of brownfieldcleanup grants and loans. It said regional offices of nonprofit eco-nomic development group JobsOhiowould begin accepting financing requests on Oct. 1 in anticipation ofthe approval of grant and loan criteria.The council is an ad hoc group thathas oversight of the Clean Ohio pro-gram, which uses proceeds of statepublic works bonds to help citiesclean up abandoned, environmen-tally contaminated properties toready them for redevelopment.

The draft guidelines reduce theamount available for a single project

Gov. Kasich planned to redirectmoney for brownfield cleanup toJobsOhio, which he created after hetook office in 2011, after one lastround of Clean Ohio awards in Janu-ary 2012. Communities rushed toapply, fearing the program would beradically changed or could die.

Clamor for the program, however,pushed Gov. Kasich to include the$15 million in his mid-term budgetlast summer. The Clean Ohio Councilwill approve final guidelines after theend of a public comment period Oct.17.

Concern over changeIn the future, JobsOhio and brown-

field cleanup programs would be financed by shifting profits from thestate’s liquor operation to JobsOhio.But a lawsuit filed by Democraticlawmakers and Columbus-basedProgressOhio, a progressive advocacygroup, that maintains using publicmoney for a private enterprise is unconstitutional has held the liquorprofits hostage for more than a year,frustrating the governor’s plan.

Since its inception under formerGov. Bob Taft in 2001, the CleanOhio program has financed $393.8million of environmental cleanupwork. The program provided grants

to local governments to assess the environmental problems on aproperty or to fund a cleanup, depending on the nature of the pro-ject.

In a telephone interview, FrantzWard’s Mr. Koncelik, a former director of the Ohio EnvironmentalProtection Agency under Gov. Taft,said he was most concerned aboutthe process proposed for selectingClean Ohio winners and the reduc-tion in the maximum amount offered for loans and grants.

“The problem is that some of thebest Clean Ohio projects in the history of the program were projects that involved significantcontamination” requiring millions ofdollars to clean up, he said. “Goodexamples are the Flats East Bankproject and the Miceli Dairy projecthere in Cleveland.”

Mr. Koncelik, who served as anadviser to Miceli Dairy Products Inc.,added, “It’s questionable if either ofthose projects would have movedforward if there wasn’t $3 millionavailable.”

He also questioned the newprocess for evaluating which projectswin cleanup money and which don’t.

“Clean Ohio had a robust scoringprocess and the cream of the croprose to the top,” Mr. Koncelik said.“The (new guidelines) say, generally,that they are going to look at the jobsa project creates and its return on in-vestment, but (the guidelines) don’tsay, ‘How many jobs?’ and ‘What is areasonable return on investment?’”

Speculation about specIn the past, projects competed

twice a year for funds. Projects ineach biannual round were awardedpoints based upon the nature of the

Cuyahoga Capital Partners acquired by Virginia firm

Private Advisors LLC of Rich-mond, Va., said it has acquiredCuyahoga Capital Partners, a Cleve-land-based private equity secon-daries and fund-of-funds managerwith $817 million in assets undermanagement.

Terms were not disclosed. Cuya-hoga Capital’s investment profes-sionals will join Private Advisors’private equity unit “and will be fo-cused upon the deployment of theirlatest secondaries fund, which re-cently held its final close above its$125 million target.”

In a news release, Private Advi-sors said Cuyahoga Capital focuseson value-oriented, secondary pri-vate equity investing. Of the $817million it manages, about $203 mil-lion is in four secondary private eq-uity funds, $65 million is in a pri-mary private equity fund of funds,and $549 million is in advisory re-lationships.

Private Advisors will take over asgeneral partner for Cuyahoga Cap-ital’s limited partnerships and willassume management of its advisoryrelationships.

The two founders and principalsof Cuyahoga Capital, Bart Shirleyand Chris Hanrahan, are joiningPrivate Advisors. They formerlymanaged the fund of funds unit ofKey Capital Corp., a subsidiary ofKeyCorp, for eight years until spin-ning out in 2011 as Cuyahoga Capital.

Mr. Hanrahan said, “We have in-vested alongside each other as lim-ited partners in several lower mid-dle market funds in the past andshare a similar investment philoso-phy. We just wrapped up fundrais-ing for our fourth secondaries-fo-cused private equity fund, whichwill allow us time to invest capitaland integrate into Private Advisors’business before raising our nextfund a few years from now.” ■

to $1 million from $3 million andgives higher priority to projects thathave an end-user in place. The latterguideline could hinder older citiessuch as Cleveland that have used the Clean Ohio money to clean upotherwise attractive industrial sitesknown to have chemical or asbestoscontamination so that the propertieswould be available for immediate use.

In his Ohio Environmental LawBlog, Joseph P. Koncelik, an environ-mental attorney with Frantz WardLLP of Cleveland, called the changes“a seismic shift in how funding deci-sions will be made.”

With only $15 million budgetedfor fiscal 2013, which ends next June30, economic development consul-tant Mark Barbash is concerned thatolder cities will lose opportunities toattract new or expanding businesses.Mr. Barbash, a development officialunder former Gov. Ted Strickland,noted that the state spent $37 mil-lion on 48 brownfield projects in fis-cal 2012. Those grants and loansspurred $168 million in develop-ment, creating 1,522 jobs, accordingto state development records.

“The thing that concerns me iswhat the plan is going forward,” Mr.Barbash said. “Ohio has gotten usedto a state-of-the-art program.”

proposed development, the amountof clean up occurring and the impor-tance of the applicant’s project tothe local community. The top scor-ers won grants or loans.

Because the JobsOhio money isn’t in place, the new guidelinesleave the decision on awardingfunds to the discretion of the stateDevelopment Services Agency, thesuccessor to the former Ohio Department of Development.

The agency will make awards on arolling basis, accepting or rejectingapplications as they come in, whichgives Mr. Koncelik pause for con-cern.

“If you’re out there as a developer,or someone who works on these pro-jects like myself, you often get intoconversation about ‘Do we have achance to compete for this money?’It’s very difficult to answer thosequestions if you don’t know howprojects are going to be evaluated.”

Cleveland economic developmentdirector Tracey Nichols in the pasthas expressed concern that moneyfor speculative cleanups would beeliminated from the Clean Ohio pro-gram. Last week, she declined tocomment because she hadn’t yetseen the new guidelines.

Lavea Brackman, a member of theClean Ohio Council and executivedirector of the Greater Ohio PolicyCouncil, said she, too, questions theaward criteria. But she believes therestill will be room for speculative pro-jects.

“This has been a tremendous pro-gram for helping to remove blight inurban neighborhoods in particularand I think there are projects thatcan be more speculative and stillreap great return on investments,”Ms. Brackman said. She said shewants to see what comments thepublic makes and what changesmight be made before the council’snext meeting on Oct. 26. ■



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Issue date: November 12

Power cord supplier movesMiss. manufacturing to CLEBy GINGER [email protected]

A Cleveland-based power cordsupplier is using consolidation toenergize its growth.

After pulling the plug on its manufacturing plant in Mississippi,Cleveland-based Electric Cord Setshas moved all its production opera-tions to Northeast Ohio.

Electric Cord, which was foundedin 1947 in Bay Village, in April com-pleted its transition to a 40,000-square-foot building on Manufac-turing Avenue in Cleveland. The sitenow houses Electric Cord’s offices,which previously were in NorthOlmsted, and its manufacturing operations.

The company opted to move allits operations under one roof to become more efficient and to returnto its Ohio roots, said Mike Smalley,vice president of Electric Cord. JonJericho, a third-generation owner,led the move after taking the reinsof the company in 2009.

The consolidated operations willallow Electric Cord to cut costs andfocus on growing its business innew markets — marine and recre-ational vehicle power cords.

The time was right for the movewith attractive real estate rates anda number of manufacturing facili-ties on the market, Mr. Smalley said.Electric Cord paid $715,000 for its Cleveland building, which is 18% less than its appraised value,according to Cuyahoga County auditor’s records.

The company now is trying to sellits former manufacturing plant inMississippi.

Since moving in, Electric Cord already has invested $250,000 inrenovating the building, which hadbeen unoccupied for two years, and$100,000 in new wire-cutting equip-ment.

It also has hired 19 productionand warehouse workers and threeoffice workers to supplement its existing eight-person office staff. Itplans to hire another six to 10 pro-duction employees as sales pick up.

Electric Cord entered the marineand RV markets in 2011, a move thathelped buoy its sales. Electric Cord’sprimary sources of business — sup-plying power cords to sump pumpand cooking appliance manufacturers— have not yet fully recovered fromthe recession.

“People are repairing things, notbuying new,” Mr. Smalley said.

The marine and RV industries, onthe other hand, each have seen aresurgence.

U.S. retail sales of recreationalboats, accessories and marine ser-vices in 2011 rose for the first timein five years, increasing 6% from2010 to $32.3 billion, according to a2011 Statistical Abstract publishedby the National Marine Manufac-turers Association, a recreationalboating industry association.

Likewise, shipments of RVs, salesof which started rebounding in late2009, were 4.1% higher in 2011 thanthe previous year, according to theRecreation Vehicle Industry Associ-ation, a trade association for RVmanufacturers and their componentparts suppliers.

“We knew that was business wewere leaving on the table,” Mr.Smalley said.

While Electric Cord only distrib-utes aftermarket power cords forthose industries at present, it isworking to establish relationshipswith marine and RV manufacturers toget into the business on the front end.

Electric Cord posted $30,000 inmarine and RV power cord sales in2011 and already this year hasboosted that figure to more than$100,000. The company has annualrevenue of $8 million.

The company also hopes to boostits sales by moving more manufac-turing in house. Electric Cord cur-rently contracts with two compa-nies in China for 70% of itsmanufacturing. However, increasingcosts in China make it more afford-able to move production back to theUnited States, Mr. Smalley said. Thecompany plans to move another10% of its manufacturing business toOhio within the next year, he said. ■

Capital, acquisitions help Meritec better connect to market Painesville outfit employs 320, looks to grow still work,” Mr. Weinfurtner said.

Meritec, however, traditionallyhasn’t put much focus on sales andmarketing, which represents an opportunity for growth, he said.There also are big untapped oppor-tunities in the military and medicalmarkets, which need high-perfor-mance computer equipment, he said.

Meritec is “just scratching the sur-face” of those markets today, Mr.Weinfurtner said. They already ac-count for about half the company’ssales, which in past years have beenin the range of $50 million to $100million, he said, declining to be morespecific. The other half comes fromcompanies that make data andtelecommunications products, andequipment used to perform tests onelectronic products.

Whiz kidMr. Weinfurtner has been familiar

with Meritec for years; he foundedGateway Megatech Corp., an inter-connect distributor in HighlandHeights that he sold in 1998 toHeilind Electronics Inc., a larger dis-tributor.

After a few years helping leadcompanies in other sectors, Mr. Wein-furtner and a few other NortheastOhio business executives formed


Like the high-tech plugs it makesin Painesville, Meritec is just waiting tobe attached to an ultrafast computer.

Working with a fresh infusion ofcapital, Meritec’s new leaders aim tohelp the quiet, 45-year-old companygrab a bigger piece of the market for high-performance interconnects,which move data from computersinto cords.

Meritec made its first growthmove in August, when it acquiredtwo other Painesville companies inthe interconnect business. The twocompanies, Connectors UnlimitedInc. and Xponet/Mold-Tech, employa total of 140 people. They bothhave roots that go back to Meritec.

Meritec now employs 320 peopleand is looking for more businessesto buy with the help of a multimil-

lion-dollar investment from com-pany founder Jack Venaleck andCEO Ed Weinfurtner, who joined thecompany in February. Meritec alsois creating a more aggressive mar-keting strategy, according to Mr.Weinfurtner and president MichaelCole, who was hired in August.

Messrs. Weinfurtner and Colejoined the company to help it expand. They both said the businesshas a strong foundation of technicaltalent and products.

During an interview with Crain’s,Mr. Weinfurtner described how thecompany’s Hercules-brand inter-connect reliably can gulp downmassive amounts of data. For instance, the thick plug could beused with military computers thatrecord high-definition video in alldirections at the same time, all whilerolling down a rocky dirt road.

“A tank could run over it. It would

private equity firm Blue Olive Part-ners LLC. He contacted Meritecwhile looking for investment oppor-tunities for Blue Olive.

Mr. Weinfurtner decided to joinMeritec and invest his own money init when he realized how much thecompany could grow with the rightleadership. “The technology is great,but it’s not as well known as it couldand should be,” he said.

Mr. Cole saw the same opportunityafter he and Mr. Weinfurtner recon-nected on the social media siteLinkedIn. Mr. Cole, who years agohad sold interconnects throughGateway Megatech, most recentlywas head of the data communica-tions business at TE Connectivity, aSwiss company that Mr. Weinfurtnerdescribed as the world’s biggestmaker of interconnects.

Mr. Cole said he also was lookingfor investments when he decided to

Weinfurtner Cole

join the company. “Meritec’s some-what of a gem in the market that needsmore visibility,” he said.

As for Mr. Venaleck, his expertise isin developing new products, which iswhy the 75-year-old founder —whose nickname is “The Whiz” — isthe company’s chief technology offi-cer. He remains majority owner.

Down the roadThe two recent acquisitions will

allow Meritec to expand its talentbase, acquire customers and buildrelationships in the medical market,Mr. Weinfurtner said.

Connects Unlimited, which designs and makes interconnects,was founded by Marty Ignasiak, whoyears ago worked at Meritec.Xponet/Mold-Tech, which focuseson connecting cables to the plugs,began as a company that Meritec soldto 3M’s electronic products divisionin 1986. 3M later spun off the com-pany, which is led by Don Barber.

Both Messrs. Ignasiak and Barberhave stayed with the company tolead the new subsidiaries. This fall,all the employees of those compa-nies are scheduled to move toMeritec’s campus on West JacksonStreet, which is about a mile fromthe two acquired companies. ■


Arecent experience with an oldfriend reinforced one of mylongest-held opinions, namelythat Clevelanders remain their

own worst enemy.A small group of us had gathered in a

University Circle restaurant to catch upwith one of our little band who hadmoved away. When the visitorasked how things are going inCleveland, a group member, whoI’ll call “Al,” jumped in to saythat no young people his son’sage ever go downtown becauseit’s not safe.

“And nobody I know goesdowntown,” Al said.

Our host and I were dumb-founded and caught for a lack of words — something nearlyunimaginable from the two of us. Sowhat did I do? Launch into a recitation ofall that is promising for Cleveland and itsenvirons.

First, I recommended that as Al droveback after dinner to his West Side suburbanhome that he look at the stunning newbuilding about to open for the Museum

of Contemporary Art. I reminded him ofthe nearby half-billion-dollar plus reno-vation and rebuild of the Cleveland Museum of Art that has created the region’smost stunning new indoor space in agrand atrium.

The next day, I sent Al a YouTubevideo of the latest construction update

for the new downtown conven-tion center and medical mart.“Less than a block away, a Miami-based developer is doing a multi-million-dollar redo of theold Sheraton Hotel, and I thinkit’s just a matter of time beforesomebody buys the grandschool administration buildingand turns it into a boutique,luxury hotel,” I wrote to Al.

The new casino is outpacingprojections and bringing newcomersdowntown. The HealthLine rapid-stylebus line has prompted a dramatic redoof Euclid Avenue from downtown toUniversity Circle and beyond. A biomed-ical development is spreading west fromthe Cleveland Clinic and University Hos-pitals; a new building is nearly full and

more plans are under way there.A New York financial firm is bringing

more than 1,000 new employees to theold McDonald Investment Center buildingat East Ninth and Superior. Across thestreet, efforts are under way to convertthe old East Ohio Gas headquarters intoapartments. And speaking of apartments,we can’t build them fast enough down-town to satisfy demand.

Cleveland State University has trans-formed its campus from urban brutal tomodern and inviting with all its new projects, not the least of which are the newtownhouse-style apartment buildings. Inthe Flats, workers are erecting an office building tower and hotel.

The Warehouse District remains a hotdining and nighttime spot, and EastFourth Street is the envy of urban plan-ners across the country. Two tech-relatedfirms have settled in downtown, withsomething close to 700 professionals.

That’s just a starting point for a discus-sion of what’s going right in Cleveland. Ifyou live in our region, that should makeyou want to shout about it, to anyonewho’ll listen. Even my friend, Al. ■


Yes on 108B

usiness and labor don’t agree politically onmuch these days. However, they are unitedin their support of Issue 108, a levy increasethat would allow the Cleveland-Cuyahoga

County Port Authority to make needed investmentsin Cleveland’s ship channel and waterfront.

The Greater Cleveland Partnership, which is thecity’s chamber of commerce group, as well as theNorthshore Federation of Labor AFL-CIO areamong the organizations that are endorsing thelevy. Their support for the port underscores the economic benefits the added dollars could produceas they’re used to keep the city’s shipping channelnavigable and to set the stage for new waterfrontdevelopment.

Passage of the levy would allow the Port Authorityto address what its CEO, William Friedman, recentlydescribed as “a long period of under-investment in the shipping channel” by various government entities and by private property owners along theCuyahoga River. He was kind in that assessment.

The river has been everybody’s problem, and nobody’s problem. The city of Cleveland hasn’thad the money to stabilize key parts of the shore-line. Property owners have let bulkheads fall intodisrepair.

In other cities around the world, port authoritiesare responsible for handling those types of invest-ments. The Cleveland-Cuyahoga County Port Authority wants to take on that role in Clevelandwith the blessing of its mayor, Frank Jackson, but itneeds money to do the job.

The increase in the levy would provide the PortAuthority with $90 million over five years. Nearlyhalf that money — $43 million — would go towardship channel restoration and slope stabilization.Another $12.5 million would let the port set up aneco-friendly system for dredging and disposing ofriver sediment, which if allowed to build up wouldmake the river unnavigable by larger ships such asthose that make their way to and from the Arcelor-Mittal steel mill in the Flats.

However, the investment wouldn’t stop there.About $25 million of the new money would be usedto create a long-sought pedestrian bridge thatwould link Mall C and Cleveland’s new conventioncenter with North Coast Harbor and an area nearBurke Lakefront Airport that Mayor Jackson sees asripe for commercial and residential development.

It can be hard to generate voter enthusiasm for alevy issue of any kind. It can be harder still whenanyone who reads the ballot language can see thatthe port is asking voters in Cuyahoga County toraise its levy to .67 mills from .13 mills — an increaseof more than 400%.

In dollar terms, though, the increase equates toanother $3 a month for the owner of a $200,000home. That’s not pocket change, but it also isn’t aton of money when compared to the economic catalyst those few dollars could be when pooled together.

We urge county voters to join business and laborin their support of the port by voting “yes” on Issue108.

FROM THE PUBLISHER

BRIANTUCKER

On list of our detractors, we’re No. 1

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

EDITOR:Mark Dodosh ([email protected])

MANAGING EDITOR:Scott Suttell ([email protected])

OPINION

PERSONAL VIEW

Here’s betting on learned entrepreneurshipBy DEBORAH D. HOOVER

It’s a decades-old debate insideacademia and within the world ofbusiness: Can entrepreneurship betaught?

We at The Burton D. Morgan Foun-dation have been actively engaged inthat dialogue for years, with thoughtleaders in both sectors and beyond.Having listened to the lively, well-con-sidered debate, we respectfully submitthat perhaps it would be more produc-tive to re-frame the question itself andpose it this way instead: Can entrepre-neurship be learned?

Our foundation is betting that entre-preneurship can be learned — or, atleast, practiced — by providing collegestudents with risk-free opportunities to

learn about entrepreneurship by doing,guided and encouraged by experiencedentrepreneurs. The emphasis here is onexperiential learning.

That’s why we have invested substan-tially in an innovative program, Black-stone LaunchPad, which provides men-toring, advice and other resources andsupport to students with ideas. The pro-gram was started by the University ofMiami in Florida and enjoys significantsupport from The Blackstone CharitableFoundation.

This fall and winter, BlackstoneLaunchPad operations will begin onfour Northeast Ohio campuses — Bald-win Wallace University, Case Western

Reserve University, Kent State Universityand Lorain County Community College.

Our foundation’s belief in the efficacyof entrepreneurial learning is encour-aged, in part, by our collaboration duringthe past decade with the KaufmannFoundation on the Northeast Ohio Collegiate Entrepreneurship Program,or NEOCEP. This innovative approachwas designed to embed entrepreneur-ship across the campuses at institutionsin this region.

While we’re still analyzing the lessonsfrom that program, two conclusionshave emerged as abundantly clear: Theprogram ultimately changed the lives ofmany students, and it transformed howentire campuses think about the educa-tional process.

Ms. Hoover is president and CEO of TheBurton D. Morgan Foundation.

See VIEW Page 11


■ Regarding your Sept. 17 editorialin opposition to state Issue 2: I’mdisappointed to see that Crain’sadmirable 2009 support for good-government remedies to politicallycorrupt practices and institutions(resulting in our promising newCuyahoga County government) stopsat the door when those abuses arecommitted, this time around, byyour co-religionists. Loved the car-toon, though — Issue 2 is a Davidvs. Goliath struggle, that’s for sure.

Here are some flaws in your argu-ment:

The reputation for judicial fair-ness you mention is the very reasonthat appellate judges are the idealinitial screeners of commission applicants. If they can’t maintainjudicial impartiality and fend off political meddlers, then whoeverpossibly could? Somehow, this short-lived obligation at 10-year intervalsdoesn’t sound like an overwhelmingtask.

Your confidence that partisan

elected officials and legislators willfix gerrymandering abuse next year,if only we defeat Issue 2 this year,reminds me of faithful Browns andTribe fans at the end of every losingseason. And our current front officeswill surely bring us a winner nextyear, if we just wait and trust them.

Finally, a minor but cleverly prejudicial error: Labor unionsjoined the Voters First coalition after the amendment was alreadyresearched and drafted by patient,persistent advocates at the OhioLeague of Women Voters, CommonCause, Ohio Citizen Action and sev-eral constitutional law experts. Thelist of supporting attorneys andnonpartisan nonprofits is long andimpressive.

Apparently, Crain’s editorialboard was swayed by those smoke-screens, but it may not be too latefor Crain’s readers. Read it — see


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LETTER

Issue 2 would fix redistricting gameshow the amendment devises an air-tight barrier against partisan redis-tricting abuse which results in polarized,uncontested fall elections and riggedone-party legislative monopolies.

A citizen initiative fixed countygovernment. Now it’s time to fix another. Vote “yes” on Issue 2.

Lynda MayerShaker Heights

GEORGE HOOVERWestlakeI don’t think President Obama really knows asmuch as a lot of peoplethink he does. I also foundthat Mitt Romney has aplan that he articulatesvery well. It came acrossas a student-and-teachertype of environment.

➤➤➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.

THE BIG ISSUEWhat did you learn from last week’s presidential debate?

BRIAN KURZAvon LakeIt did seem like Romneyhad the upper hand. I usually vote Republican,but I was kind of waffling.Now I’m convinced I’m going to vote for Romney.

MEGAN CRAVENMiddleburg HeightsNothing I didn’t know beforehand. … It was annoying that the generaldebate protocols were notbeing followed.

SHANNON SCHLARBHudsonRomney came off strong,but he kind of seemed arrogant and untrustworthy.But that’s politicians. …Obama did seem a littletired, a little irritated, perhaps.

View: Experimentationcan help learning process

With Blackstone LaunchPad, weare building on the lessons learnedfrom NEOCEP and amplifying theimportance of experiencing entre-preneurship through the successesand failures that are necessary stepsto viable ventures.

A key ingredient for aspiring entrepreneurs is a strong relationshipwith an engaged mentor who askschallenging questions that guide,but do not direct, the startup process.Through this experimentation ateach stage with the student entre-

preneur evaluating the advice andcalling the shots, he or she internal-izes the process and begins to learnhow to create a successful venture.

Which brings us back to our orig-inal point — we think entrepreneur-ship can be taught, but with a finedistinction.

By that conclusion, we mean self-taught and learned by doing entre-preneurship, complete with all thetriumphs, blind alleys, sweatypalms, slammed doors, good daysand bad days that characterize atrue startup experience. ■

continued from PAGE 8

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

Study: Even fewer firmsuse defined benefit plansBy JERRY GEISELBusiness Insurance

The percentage of the largest U.S. employers that offer a defined benefit pension plan to new salariedemployees continues to fall, accordingto new research.

As of June 30, 30% of Fortune 100companies offered a defined bene-fit plan to new salaried employees,according to New York-based TowersWatson & Co. That’s down from33% at the end of 2011, 37% in 2010and 43% in 2009.

As recently as 1998, defined benefit plans were the norm amongthe nation’s largest employers, when90% of Fortune 100 companies offeredthe plans to new salaried employees.

Since then, large employers havemoved away from the plans.

“Large employers have been reassessing their retirement offeringsfor some time,” Towers Watson saidin an article posted last week in “TheInsider,” a company publication.“The shift is motivated by severalfactors, including employers’ desireto reduce overall retirement costs —perhaps due to higher compensa-tion and benefit costs elsewhere, especially health care — perceptionsthat workers prefer more portableplans, market trends, and the beliefthat such a shift reduces financialrisk.”

In addition, as more companieshave moved away from definedbenefit plans, the competitive pres-sure on employers to continue tooffer the plans has declined, saidAlan Glickstein, a Towers Watsonsenior retirement consultant in Dallas.

Traditional plans hit hardest

The move away from definedbenefit plans has been especiallypronounced for traditional plans, inwhich the benefit is typically basedon employees’ years of service andemployees’ salary during their lastyears of employment.

Just 11 Fortune 100 companiesoffered a traditional defined benefitplan to new salaried employees asof June 30, down from 14 in 2011, 17in 2010 and 19 in 2009.

By contrast, during the 1980s, defined benefit plans were the normamong Fortune 100 companies. In1985, for example, nearly 90% ofFortune 100 companies offered atraditional defined benefit plan tonew employees.

The prevalence of hybrid plans,typically cash balance plans, alsohas sharply declined. As of June 30,19 Fortune 100 companies offeredhybrid plans to new salaried employees. That’s unchanged from2011, but almost 50% less comparedwith 2004, when 35 Fortune 100companies offered the plans. Whilehybrid plans have defined benefitand defined contribution plan elements, legally they are definedbenefit plans.

While a handful of big employers,including Dow Chemical Co. andThe Coca-Cola Co., have set up newcash balance plans in recent years,new formations have been morethan offset by other Fortune 100companies, including Bank ofAmerica Corp., SunTrust Banks Inc.and Wells Fargo & Co., which beganto phase out their cash balanceplans. ■


The Internal Revenue Service filed taxliens against the following businessesin the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federalgovernment. The lien is a public no-tice to creditors that the governmenthas a claim against a company’sproperty. Liens reported here are$5,000 and higher. Dates listed arethe dates the documents were filed inthe Recorder’s Office.

LIENS FILEDJag Healthcare2226 Wooster Road, Rocky RiverID: 27-2795645Date filed: Aug. 22, 2012Type: Employer’s withholdingAmount: $547,971

Academy Answering Service Inc.1446 SOM Center Road, Mayfield HeightsID: 34-0893191Date filed: Aug. 24, 2012Type: Employer’s withholdingAmount: $231,423

Vivo Cleveland LLC347 Euclid Ave., Suite 162, ClevelandID: 81-0554703Date filed: Aug. 1, 2012Type: Employer’s withholding, unemploymentAmount: $207,757

Wireless Evolution Inc.10139 Royalton Road, Suite A, North RoyaltonID: 27-0189899Date filed: Aug. 1, 2012Type: Employer’s withholdingAmount: $124,022

Quality Data Management Inc.4015 E. Royalton Road, Broadview HeightsID: 34-1839449Date filed: Aug. 1, 2012Type: Employer’s withholdingAmount: $94,445

Start to Finish Inc.1537 Chardon Road, Unit B, EuclidID: 34-1937604Date filed: Aug. 8, 2012Type: Employer’s withholdingAmount: $56,921

Records Central Inc.4700 Lakeside Ave., ClevelandID: 34-1035430Date filed: Aug. 24, 2012Type: Employer’s withholding, unemploymentAmount: $51,285

Agape Home Health Care540 E. 105th St., Suite 3058, ClevelandID: 06-1725145Date filed: Aug. 24, 2012Type: Employer’s withholding, failureto file complete return, return of

FelicianoKennedySmith

GrealyJohnsonBenson


GOING PLACESJOB CHANGES

FINANCEFEDERAL RESERVE BANKS’ FINANCIAL SERVICES POLICYCOMMITTEE SUPPORT OFFICE:Terrence Roth to senior vice president.LORAIN NATIONAL BANK: SteveDennis to vice president, mortgagelending.

FINANCIAL SERVICEGRANT THORNTON LLP: SteveCarter and Mindy Malbasa to managing directors; Jaime Onk to director, audit services; Jon Dittrichand Rae Foisel to managers; LeslieBenner, Jennifer Daley, Chris Garman, Katie Gallets, Jeff Koons,Katie Mamrack, Chris Mellish,Bela Nahori, Matt Porter, Constan-tine Tsatiris and Andrea Velotta tosenior associates.RETIREMENT SOLUTIONS: RobertBojanowski to associate financialconsultant. SKODA MINOTTI: Tim Stiller to senior staff accountant. WELLS FARGO ADVISORS: JasonOrsky and Daniel Carter to financialadvisers.

LEGALROBERT J. FEDOR ESQ. LLC: Benjamin C. Heidinger to associate.VORYS, SATER, SEYMOUR ANDPEASE: Amanda McMurray Roe toassociate.

MANUFACTURINGCLIFFS NATURAL RESOURCES INC.:Laurie Brlas to executive vice presi-dent and president, global operations;P. Kelly Tompkins to executive vicepresident, legal, government affairsand sustainability, chief legal officerand president, Cliffs China; TerranceParadie to senior vice president,CFO; Steven Raguz to senior vicepresident, corporate strategy andcommunications and chief strategy officer; James Michaud to seniorvice president, human resources andchief human resource officer;Matthew Bittner to vice president,treasurer.

NONPROFITCUYAHOGA HEALTH ACCESSPARTNERSHIP: Mary Gladys tomember and provider services manager; Stephanie Hicks to externalaffairs manager. GREATER CLEVELAND VOLUN-TEERS: Dianna M. Kall to com-munications and special events coordinator.

RETAILSLATE ROCK SAFETY LLC: AlishaHay-Rohrer to business unit manager,FRSafety.com.

SERVICETENABLE PROTECTIVE SERVICES:Scott Fry to general manager; KelliLoudin to administrative manager.

TECHNOLOGYEMERGE INC.: Greg Holcomb toproject leader.HILEMAN ENTERPRISES: BobRawlins to senior vice president,sales and marketing. MCPC INC.: Matt Peterson to creditmanager; Ernest Benson and JohnJohnson to voice engineers. PARTSSOURCE INC.: ChristopherFuss to chief technology officer.

UTILITYFIRSTENERGY: Anne Grealy to executive director, State GovernmentAffairs.

BOARDSCLEVELAND INTERNATIONAL FILMFESTIVAL: Mark Smith (CobaltGroup) to president; Chris S.W.Blake, Kevin Poor and William E.Koeth to vice presidents; Kate O’Neilto secretary. CM LAW ALUMNI ASSOCIATION:Ian N. Friedman (Friedman & FreyLLC) to president; Gregory S. Scottto president-elect; James P. Sammonto vice president; Kevin M. Butler tosecretary; Gregory F. Clifford totreasurer; Jill S. Patterson to imme-diate past president. GREAT LAKES SCIENCE CENTER:Paul Dolan (Cleveland Indians) tochair.LEUKEMIA & LYMPHOMA SOCIETY,NORTHERN OHIO CHAPTER:Richard Radke (Northern Trust) topresident; Mike Burke to president-elect; Kevin Goodman to vice presi-dent; Michele Dorow to treasurer;Ted Evans to secretary.

AWARDSAMERICAN CHEMICAL SOCIETY:Joseph Kennedy (University ofAkron) to fellow.INTERNATIONAL ENTREPRENEUR:Jose Feliciano (Baker Hostetler) received the Community Catalyst Award. MEDICAL MUTUAL OF OHIO: Harryand Ann Farmer, volunteers at AkronGeneral Hospice of Visiting Nurse Ser-vice, received the Ohio OutstandingSenior Volunteer Award.NATIONAL ASSOCIATION OF PEDI-ATRIC NURSE PRACTITIONERS,OHIO CHAPTER: Tracey Herstichand Julie Tsirambidis (Akron Children’sHospital) received the 2012 PediatricNurse Practitioners of the Year Award.

RETIREMENTCLIFFS NATIONAL RESOURCES INC.:Duncan P. Price, effective Oct. 1.FEDERAL RESERVE BANKS’ FINANCIAL SERVICES POLICYCOMMITTEE SUPPORT OFFICE:Robert Price after 38 years of service.

Send information for Going Places [email protected].

PetersonRoeDennis

TAX LIENS organization exempt from income taxAmount: $45,472

First Step Child Enrichment Center Inc.5550 Northfield Road, Maple HeightsID: 34-1957536Date filed: Aug. 10, 2012Type: Employer’s withholdingAmount: $44,840

Feingold Enterprises Inc.1844 Camberly Drive, LyndhurstID: 75-3075679Date filed: Aug. 8, 2012Type: Employer’s withholding, unemployment, failure to file completereturnAmount: $43,742

Blasted Glass Inc.15151 York Road, North RoyaltonID: 34-1502031Date filed: Aug. 1, 2012Type: Employer’s withholdingAmount: $41,915

Eighty-One Holdings LLC24481 Detroit Road, WestlakeID: 45-3012486Date filed: Aug. 1, 2012Type: Employer’s withholdingAmount: $40,815

Anthony Musca & Associates Inc.440 Hawthorne Farms, Gates MillsID: 01-0697862Date filed: Aug. 24, 2012Type: Employer’s withholdingAmount: $37,386


deterring Mr. Heines.“If I have an opportunity to work

with an NBA team in their market,I’m going to do it,” said Mr. Heines,who employs 30 full-time workersbut contracts with hundreds more inthe company’s various markets toconduct camps and clinics. “But whileit might take another year to get thebusiness to where it’s fruitful for us (in a non-NBA market), there is a finite list of those teams and markets.I don’t like a finite business.”

A quick start Mr. Heines ran information tech-

nology services provider AuroraProducts before selling it in 2000. In2002, he met former West Geauga HighSchool, Bowling Green State Univer-sity and overseas standout playerShane Kline-Ruminski. Mr. Heineswas assisting West Geauga’s boysbasketball teams, and Mr. Kline-Ruminski had helped with youthcamps there. Over breakfast, Mr.Heines pitched the academy’s busi-ness plan, which had included somenumber crunching and revenue andexpense assumptions.

Mr. Kline-Ruminski, who had fin-ished a playing career overseas thattook him to Belgium, Turkey, Israel,Portugal and France, was workingwith a barter exchange group — ajob he wasn’t enjoying. So he signedon, as did his wife, Heather.

“They say if your wife isn’t happy,you’re not happy; it was the oppo-site,” Mr. Kline-Ruminski said. “Iwas miserable, and it made her mis-erable. She said, ‘At least try it.’”

Mr. Heines financed the startupcosts — about $60,000, he says —and they were off. Two years later,the duo was introduced to Chad Estis,who at the time was the Cavaliers’chief marketing officer and hadplayed against Mr. Kline-Ruminskiwhen the former was at fellow Mid-American Conference school OhioUniversity.

Messrs. Heines and Kline-Ruminskipitched the model to Cavs presidentLen Komoroski, among others. Thesides signed a five-year agreement,and another when that one expired.

For the Cavaliers, the partnershipallows the organization to reach itsyoungest fans, and those with themost experience run their youth pro-gram. The Cavs set up a mobile teamshop at some camps, and they seeother family members buy ticketswhen redeeming their child’s freeticket voucher.

“Shane’s a pro’s pro when itcomes to running and orchestratingthese camps,” said Scott MacDonald,the Cavs’ group sales manager. “Wedo a survey of the families that attendafter the camps, and 95% of them ...had a positive experience.”

But there’s moreAt that pitch meeting with the

Cavaliers was Murray Cohn, whoworked with the NBA at that pointbut later with the Orlando Magic.Mr. Heines later ran into Mr. Cohnwhile on vacation in Florida, andmonths later the academy was onboard with the Magic as well. TheLos Angeles Clippers, MinnesotaTimberwolves, New Orleans Hornets,Houston Rockets, Charlotte Bobcats,Memphis Grizzlies, Indiana Pacersand Denver Nuggets followed.

In each city, Mr. Heines installs afull-time director to run the academy.In Cleveland and Orlando, the com-pany employs a larger staff, whichincludes trainers such as Steve Vega


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Hoops: Company offers team benefitslocally. Mr. Vega, a former Avonstandout and small-college player,trained Zydrunas Ilgauskas after “Z”was traded to Washington duringthe 2010 season and later returnedto Cleveland for the playoffs.

“I always just thought it’d be meand Mike,” Mr. Kline-Ruminski said.“I remember Steve and I were lickingenvelopes one day ahead of a camp,and we said, ‘Maybe one day wewon’t have to be doing this and canjust concentrate on basketball.’ ButI never would have envisioned this.”

The company also has a nonprofitarm, Basketball Assist, which raisesfunds for kids who don’t have the financial means to attend the acad-emy’s camps. The nonprofit includesEveryone Wins, which Mr. Heines’

son, Tom, has spearheaded andprovides opportunities for specialneeds children to participate.

Meanwhile, in non-NBA cities,such as Louisville, Mr. Heines saidplayer programs are next on theagenda and a key way to get the wordout. For instance, Boston Celtics starpoint guard Rajon Rondo returns toLouisville every summer, as doesveteran NBA center Nazr Mohammed.A meeting with Mr. Rondo’s repre-sentation is on Mr. Heines’ sched-ule later this month.

“Kids really attach to players; thoseare the most popular programs ofall,” Mr. Heines said of camps andclinics that locally have featuredCavaliers players Daniel Gibson,Alonzo Gee and Omri Casspi. ■


Alliance Solutions Group LLC

Working Capital and Term Loan FinancingJanuary 2012

Lafayette Park Investments LLC / Millennia Housing Development, Ltd.

Multi-Family Acquisition FinancingJanuary 2012

Advance Gas & Welding Solutions LLCWorking Capital and Term Loan Financing

January 2012

Cleveland-Cuyahoga County Port Authority

Letter of CreditMarch 2012

McCarthy, Lebit, Crystal & Liffman Co., LPA

Line of Credit FinancingMarch 2012

Western Reserve Interiors, Inc.

Working Capital FinancingMarch 2012

Novagard Solutions, Inc.

Working Capital and CAPEX FinancingApril 2012

Telefast Industries, Inc.Working Capital and Equipment Financing

April 2012

Westlake Office Associates / Zaremba Management Co.

Working Capital and Real Estate FinancingMay 2012

Middlefield Original Cheese CooperativeWorking Capital and Real Estate Financing

May 2012

Infitech Industries, Inc.Working Capital Financing

May 2012

Greater Cleveland XC LLC / Second Sole Mentor

SBA Term Loan and Working Capital FinancingJune 2012

Treeborn-Cleveland LLC

Multi-Family FinancingJuly 2012

Shiv & Shivani, Inc.

Commercial Real Estate FinancingJuly 2012

Josuda Corporation dba Shade Tree Powersports

Working Capital and Real Estate FinancingAugust 2012

We make it our business

1621 Euclid LLC / Ostendorf-Morris Company

Real Estate FinancingJune 2012

Cleveland Housing Network, Inc. / Emerald Development & Economic Network, Inc.

Construction Loan FinancingJune 2012

U.S. Refractory Products LLC

Working Capital and Term Loan FinancingMarch 2012

That’s why these local compan


Cleveland Medical Devices, Inc.Working Capital Financing

January 2012

J & J Real Estate Group LLC

Commercial Real Estate FinancingJanuary 2012

629 Euclid Ltd. / MRN Limited Partnership

Construction Perm FinancingMarch 2012

Radiance Laser & Aesthetics Spa, Inc.

Construction FinancingMarch 2012

George Schild, Inc. / Schild’s IGA

Working Capital and Real Estate FinancingMarch 2012

Clark-Reliance Corporation / Figgie Equipment LLC

Equipment FinancingMay 2012

Deegan Management, Inc.Multi-Family Acquisition Financing

May 2012

Stow-Kent Associates LLC

Real Estate FinancingMay 2012

Euclid Glass & Steel Door, Inc.Working Capital, Term Loan and Real Estate Financing

May 2012

Kamms Plaza Shopping Center LLC

Commercial Real Estate FinancingJune 2012

Steven Douglas Corp.Working Capital and Term Loan Financing

June 2012

Performance Superabrasives LLC / Coastal DiamondAcquisition Financing

June 2012

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St. Joe Steel Co., Inc.Working Capital Financing

January 2012

Norton Brothers Holding Co. / Anna Maria of Aurora, Inc.

Term Loan, Working Capital and Construction/Perm Financing

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Westlake Tool & Die Manufacturing Co.Working Capital and Real Estate Financing

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Consultant expressesdoubts on 3-D printing

Penton marketing brandsbought by Access IntelligenceBy BtoB

Access Intelligence said it has acquired several media brands cov-ering the marketing industry fromPenton Media, which has opera-tions in Cleveland.

Financial terms of the deal, whichincludes the Chief Marketer, Direct,Multichannel Merchant and PRO-MO brands, were not disclosed.

The acquired properties will joinAccess Intelligence’s Marketing andMedia Group, which includes Best

Events, CableFAX, Cynopsis, DMConfidential, Event Design, EventMarketer, EXPO, Folio:, LeadsCon,min and PR News.

“We’re excited to be rounding outour leadership position in advancedmarketing with these top-drawerbrands and joining their talentedteam with ours to supercharge ourofferings,” said Access Intelligencepresident and CEO Don Pazour.

Group publisher Leslie Baconand her staff of 15 employees willjoin Access Intelligence. ■

By JAMES SNODGRASSEuropean Plastics News

The future for three-dimensionalprinting — which has grown in popularity in Northeast Ohio ascosts have dropped — is “not sorosy,” according to a printing con-sultant’s remarks last week at a con-ference in the United Kingdom.

Todd Grimm, president of T.A.Grimm and Associates, said he hasdoubts about the future of 3-Dprinting, also known as additivemanufacturing, based upon the gulfbetween what is practical today andwhat is promised in the future.

Three-dimensional printing in-volves depositing thin layers of material, often plastic, one on top ofthe other to create what sometimescan be extremely complex parts.

It’s become a growing field inNortheast Ohio, as the YoungstownBusiness Incubator is serving as the central hub for the National Additive Manufacturing Innovation Institute. Federal agencies awarded$30 million to an alliance betweentechnology-focused organizationsin the Cleveland, Youngstown and

Pittsburgh areas to create the insti-tute. Closer to Cleveland, 3-year-oldMakerGear, based in Shaker Heights,has seen growth in demand for its 3-D printers.

Citing Gartner Research’s 2012Hype Cycle for Emerging Technolo-gies special report — which indi-cates that 3-D printing is reachingthe “peak of inflated expectations”— Mr. Grimm blames media hypefor distorting what can be done to-day and what reasonably can be ex-pected in the short-term future.

Examples of media hype thatGrimm identified included Airbus’announcement that it was going to3-D-print aircraft.

“What the media failed to tell youis that Airbus’ statement said ‘by theyear 2050’ … not a single componenton an Airbus aircraft flying today ismade with additive manufacturing,”Mr. Grimm said.

He also cited the stop-motion animated film “ParaNorman,” whichused 3-D-printed facial expressions.

“What they failed to tell you isthat the producers did not save asingle dollar or a single second,” Mr.Grimm said. ■

BRIGHT SPOTSBright Spots is a periodic feature in

Crain’s highlighting some positive business news that has flown under theradar. To submit information, emailmanaging editor Scott Suttell at [email protected].

■ Don Stallard, founderand CEO of The ReservesNetwork in Fairview Park,was named to StaffingIndustry Review’s 2012Staffing 100 list.

The Staffing 100 appearsin the magazine’s Octo-ber 2012 issue.

It’s an annual listing thatpays tribute to the most prominentpeople in the staffing industry. Indi-viduals are not ranked, but rathershowcased “for the contributionsthey have made, and continue tomake, in the staffing community,”according to The Reserves Network.

Mr. Stallard was recognized for hismore than 40 years of work in humanresources and staffing. He foundedThe Reserves Network in 1984. Thecompany provides staffing servicesfor the office, industrial, professionaland technical markets. It has morethan 35 office locations in nine states.

■ Goodman Real Estate ServicesGroup LLC of Cleveland said it com-pleted a deal to bring Dipped and

Dazzled Bakery to Stow WorkmanPlaza in Stow.

Dipped and Dazzled Bakery wasestablished by friends Heather Riceand Tara Colopy. The pair “hadknown each other for years and

decided to open a unique, local,and ‘sparkly’ bakery — décor

is a vintage elegant look,with a pink, black, andsliver theme with crystalchandeliers,” accordingto Goodman.

The menu’s treats in-clude traditional cupcakes,

cake pops, cookies, gourmetbrownies, wedding cakes, and

gluten-free and vegan pastries.Jim Becker, senior associate with

Goodman, is the exclusive leasingagent for Stow Workman Plaza,which is at the southwest corner ofDarrow and Graham road.

■ IRock of Valley View, a manu-facturer of crushing and screeningequipment, said it has acquired IndyEquipment in Independence.

The move “marks a significantstep in furthering IRock’s long-termbusiness strategy of investing ingrowth, technology and quality assurance to better meet the needsof its expanding customer base in theaggregates and recycling industries,”the company said in a news release.

Terms of the deal were not dis-closed. The acquisition was effectiveSept. 14 and included Indy Equipment’sfabrication and manufacturing divi-sion.

The companies have a history together. IRock was established in1992 with Indy Equipment as astrategic partner providing expertisein equipment design, engineeringand manufacturing. The originalpartnership “strengthened IRock’smanufacturing process by ensuringhigh quality, purpose built equipmentfor its dealers and end-user cus-tomers, reflecting Independence Recycling Inc.’s (Indy Equipment’ssister company) firsthand knowledgeand experience in the crushing and

screening industry,” according to thenews release.

The acquisition “now brings theentire manufacturing process ... underone umbrella for a more streamlinedprocess, superior products and better customer service,” IRock said.

■ The Burton D. Morgan Founda-tion announced grants totaling nearly$443,000 in September to supportprograms for youth, college studentsand adults to develop skills and gainexperience in starting business ven-tures.

The foundation said about$172,000 of the money was awardedto four Junior Achievement affiliatesthat provide entrepreneurship andfinancial literacy programs reachingmore than 80,000 students in K-12public, private and parochial schoolclassrooms across Northeast Ohio.

In announcing the grants, founda-tion president Deborah D. Hooversaid, “The foundation continues tobelieve in the power of ... NortheastOhio entrepreneurship. With eachpassing year, we see that ecosystembecome more expansive and robust.This round of grants reflects the fullspectrum of our support as we fosterthe region’s ... entrepreneurial spirit.”

In addition to the grants to the Junior Achievement organizations,some of the most prominent awardswere as follows:

■ Invent Now: $75,680 for CampInvention sites in summer 2013 —two in Akron public schools and onein Wooster City Schools;

■ Foundation for Teaching Eco-nomics: $44,000 for the Economicsfor Leaders high school program insummer 2013 on a Northeast Ohiocollege campus;

■ John Carroll University: $42,350to develop and embed academicunits on entrepreneurship and cre-ativity within 10 existing courses inthe College of Arts and Sciences;

■ NorTech: $50,000 toward devel-opment of the FlexMatters prototypingnetwork; and

■ ideastream: $40,000 for “CEOGlobal Foresight” and “NightlyBusiness Report” broadcasts onWVIZ-TV in 2012-13.

Register for free e-mail alerts andreceive:

■ The Morning Roundup: Theday’s business news from Ohio’sdaily papers

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SMALL BUSINESSI N S I D E

OCTOBER 8 - 14, 2012 CRAIN’S CLEVELAND BUSINESS 15

16 GET DETAILSON SOME OF THEAREA’S NEWESTBUSINESSES.

Closed-door pharmacy provides patients with worry-free processExactCare’s packaging system addresses medication management issues

By EILEEN [email protected]

Having hung outin pharmaciesduring most ofhis teen years,

Dale Wollschleger knewhe was going to be a phar-macist.

When he graduated with a pharmacy degree from OhioNorthern University in 2000 andbecame a registered pharmacist,he knew that, like his father, he’d

own his own business.In 2004, he bought his

first pharmacy, and in2009, he started his ownclosed-door specialtypharmacy. Closed-doorpharmacies are niche operations that are notopen to the public. Mostprovide services to cus-

tomers with special needs or ingroup homes or long-term care facilities and they deliver.

He called the new pharmacy ExactCare because his business

plan doesn’t just focus on providingexcellent product — “That’s avail-able at any pharmacy,” said Mr.Wollschleger — it also focuses onproviding wrap-around customerservice that aims to ensure med-ications are taken safely, easilyand on time.

Providing that kind of customerservice doesn’t just mean workingwith the person taking the medica-tions; it means working with thedoctor prescribing them and theinsurance provider paying for them— and perhaps the customer’s

nurse case manager or socialworker. The goal is to make surethat not only are the right medica-tions being delivered by mail butalso that there is no break in their delivery.

Breaks can cause serious prob-lems — for instance, a psychoticepisode can lead to a hospital admission — for customers andthose who are caring for them.

“When medications are deliv-ered right to a person’s doorstep iteliminates a major reason — theyare out — that people aren’t takingtheir medications,” explained BertRahl, director of mental health ser-vices at Benjamin Rose Institute on

Aging.A large percentage of Exact-

Care’s customers are dealing withmultiple chronic conditions, suchas congestive heart disease and severe depression or diabetes anddementia, that make their caremedically complex and requiresthem to take many different med-ications.

Good things in small packagesThat kind of polypharmacy,

explained Mr. Wollschleger, meansmedications must not only be provided in the proper dose, theymust be timed and taken so that

See PHARMACY

Wollschleger

PHOTO PROVIDED

Dante Bocuzzi, who owns Dante and Ginko among other Cleveland-area restaurants, is one of many well-known localchefs who have tried to keep a proper work-life balance in a competitive field.

SO, YOUWANT TO BE ASTAR CHEF ... Some of area’s best-known restaurateurs are here to tell you that it isn’t always easy

By KATHY AMES [email protected]

Eric Williams jokes he’d own 10 restaurants if he were notmarried. The founder of Momocho and Happy Dog said

he had plans a couple years ago to openanother eatery, but once the deal on theOhio City space closed, he wonderedwhether he should take on anotherobligation.

He thought of family, his uncompro-mising work ethic and the effort it tooksix years earlier to open Momocho.There also was the handshake withpartner Nolan Konkoski not to get sickor hurt and subsequent triple-digithours each week.

“I thought it over, then called Nolan.He wanted his own restaurant, so hetook over the space and last yearopened SoHo,” Mr. Williams said.

Mr. Williams since has expanded hisbrand through pop-up restaurants inother cities, which allows him to managemore carefully Momocho’s year-over-year surge in business while trying tomaintain a work-life balance.

“There’s the adrenaline of opening

See CHEF Page 16



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SMALL BUSINESS

Chef: Competition requires commitmenta restaurant, but I get to go home,”Mr. Williams said. “I’m in a verygood position.”

Cleveland has a healthy share ofaccomplished chef-driven eateries,but the journey toward a restaurant’srevered status often is overlookedor unrealized by consumers and evenother aspiring culinary artisans.

The corresponding long hours,drain on well-being, financial riskand other personal sacrifice taketheir toll despite what can becomea fulfilling reality of robust business,happy customers, accolades andnational media praise.

Melt Bar & Grilled owner MattFish puts it simply: “You have to bewilling to lose it all to gain every-thing.”

All-or-nothing mentalitiesIndeed, Mr. Fish took a gamble

when he opened the doors to hisLakewood grilled cheese conceptwith no money and hoped cus-tomers would show up so he couldmake payroll.

Six years and four establishmentslater, the sandwich destinationemploys about 250 and generates$10 million, although it was justthis year Mr. Fish backed off his100-plus-hour work weeks andhired a senior management teamto assume some of the workload.

“I hit the burned-out wall thisyear,” he said. “I was going sohard, so fast for so many years. Ifelt it was necessary to work sevendays a week, 18 hours a day.

“I’ve been divorced, and latermy girlfriend and I broke up,” hesaid. “A lot of personal relation-ships suffered because of it.”

The chef said there’s no recipefor the kind of attention a conceptlike Melt produces, although an aspiring toque needs to think ofhimself or herself as the dishwasher,janitor, bartender, accountant, linecook and chef.

“Chef-driven concepts tend tosurvive because the chefs whohave been in the trenches under-stand — you are the person thatwill keep the restaurant afloat for avery long time,” Mr. Fish said.

The intensity nearly set Jeff

Jarrett on a new career path abouttwo years ago, while he was working as executive chef at NorthEnd in Hudson.

“I thought about getting out, butI realized this is a part of who I am.Chef Jeff is my identity,” said theAMP 150 executive chef, whosebackground involves some of theregion’s best restaurants.

The death of his mother in Junecaused restaurateur Zack Bruell torethink his rigorous schedule.

“It took the wind out of mysails,” he said. “Up until that point,I felt like a freight train was behindme and I was just running ahead ofit. I was bowled over emotionally.

“I’d like to start working on mygolf game,” Mr. Bruell said.

The 38-year restaurant veteranis known for his pursuit of culinaryperfection in each of the businessesat which he’s been affiliated, in-cluding his own L’Albatros, Chinato,Parallax, Table 45 and Cowell &Hubbard.

Mr. Bruell said he’s not fixated onreinventing the wheel like he oncewas, but rather is focused on ensur-ing each restaurant’s excellence andgrowing his business, likely with newconcepts in other markets.

“I’ve realized it’s not about me.It’s about you,” he said.

Lessons in moderationChris Hodgson acquired a

similar management philosophythis year when he opened Hodge’s,only two years after introducingCleveland to the food truck phe-nomenon with his mobile bistro,Dim and Den Sum.

The operation’s momentum was unrelenting and carried largelyby Mr. Hodgson, who quickly pro-pelled the food truck business intothe national spotlight. As the driver,chef, purchaser, bookkeeper andaggressive social media marketer,Mr. Hodgson was in fifth gearmore than 100 hours each week.


“Being such a young person,launched into the spotlight, it hasbeen difficult to slow down, but I’mdoing my best now for others andnot just myself,” he said. “I surroundmyself with people better than me.”

The chef said he’s been more

careful about managing his timebetween overseeing two foodtrucks, a catering business and therestaurant (including fewer nightsout after work).

“I’m always at the restaurant, soyou know where to find me. I stillhave to filet fish,” he said.

Dante Boccuzzi’s quartet ofeateries is not just a result of hispedigreed background and culinarytalent. He also has developed akeen sense of knowing how to delegate responsibility and managepersonal time.

The father of four children saidhe physically works 12 hours a day,six days per week, not taking intoaccount time away from the officespent fielding calls and checkingemails or texts.

“Last night I lay awake until 2a.m. thinking about what specialsto run (at Dante) in Tremont,” hesaid one day in August.

But because all his restaurantsare closed Sundays, the chef isguaranteed at least one full day tospend with family. “I’ve realizedwhat my limits are, and I’m prettygood at letting go of work on myday off,” he said.

Sweet dreamsOther small outfits and sole

proprietors appreciate the exertionthat comes with creating a recog-nizable business in the crowded,competitive restaurant industry.

For Britt-Marie Culey, owner ofCleveland Heights home-based Coquette Patisserie, “it’s the greatestthing ever” that area foodies indulgedher business when she relocated in2008 from Connecticut.

“There wasn’t a lot of time for social media, so it was all aboutputting the product in people’smouths,” said Ms. Culey, who willbe featured Nov. 3 at the West SideMarket’s centennial gala along with13 other local and national culinaryall-stars.

“I’ve stayed true to my style andcraft, and it was so well-received andwelcomed into the community,” shesaid. “I live on what I love to do.” ■

GRANDOPENINGSNANO BREW CLEVELAND

1859 West 25th St.Cleveland 44113http://nanobrewcleveland.com/Nano Brew Cleveland — a partnershipbetween Market Garden Brewery’sSam McNulty and brewmaster AndyTveekrem — is a neighborhood brewpub with 24 beers on draft, both atthe inside bar and at the outdoorBeer Garden Bar. Its hours are 4:30p.m. to 2:30 a.m. weekdays, andnoon to 2:30 a.m. Saturdays andSundays. Featured beers includethose from its one-barrel brew houseand those from local craft breweries.Nano Brew also features a bike tune-up station and a simple food menuthat features items sourced fromlocal farmers and butchers. [email protected]

ASSURED MEDICAL ALLIANCE LLC

19495 Bagley RoadMiddleburg Heights 44130www.assuredmedicalalliance.comAssured Medical Alliance, under thedirection of CEO Michael A. Pistillo,provides business and technologyservices to the home health care, assisted living and wellness industry.The firm offers an electronic medicalrecord software package that specifi-cally was designed for home careagencies. Also available are medica-tion reminder systems, medical alertdevices and vital sign monitors thatare used to record an individual’sweight, blood pressure, pulse, glucoseand oxygen levels. The informationthen can be transmitted to a secureserver for historical trending or

spotting a negative trend early in order to prevent a trip to the emer-gency room or a lengthy hospitalstay.216-539-9571; 855-AMA-4433(toll free)[email protected]

FIORI DELLA VITA 19041 Old Detroit Road Rocky River 44116Owned by Catherine Jones, formerlyof the Beachcliff Market Squareflower shop, Fiori della Vita (Flowersof Life) is a fresh flower market. Thestore specializes in many flower varieties similar to the open flowermarkets in France, England and Holland. Fiori della Vita offers freshflowers and plants. In addition, thereare gift items and embroidered items.440-333-5155

To submit information about anew business, opened within thepast six months, send the followinginformation for publication to AmyAnn Stoessel, sections editor, [email protected]: businessname; address; city and ZIP; website address; brief description of thebusiness; business phone number;business fax number; and businesse-mail.

PHOTO PROVIDED

Eric Williams, the founder of Clevelandrestaurant Momocho, said he consid-ered the side effects when entertain-ing a potential new project.

“It has been difficult to slow down, but I’m doing my best.” – Chris Hodgson

founder, Hodge’s, Dim and Den Sum


they don’t interfere with each other, don’t cause side effects ordon’t land the customer in the ER— or worse.

That’s why, Mr. Wollschleger said,“I always think of (ExactCare) asbeing an important part of the cus-tomer’s clinical team.”

While Mr. Wollschleger wouldnot provide growth or sales figures,he said ExactCare has seen “signif-icant growth every year” since theValley View-based company started,and that the company currentlyemploys more than 30 pharmacistsand pharmacy technicians, one ofwhom also is a nurse practitioner.

A large percentage of ExactCare’sgrowth has been driven by the introduction and growing use bycustomers of the company’s trade-marked ExactPack.

“Most of our customers havefound out about (ExactPacks)through word of mouth, so, in gen-eral, we haven’t done much mar-keting,” Mr. Wollschleger said.

ExactPacks initially were devel-oped as integrated packaging systems to help individuals withmental health problems and AIDSmanage their medications on adaily basis.

Increasingly, they are being usedby seniors, especially those withimpaired dexterity (due to arthritis)or those dealing with mild cogni-tive decline.

“(ExactPacks) are much more reliable than taking pills from bottlesbecause they can open one packageand dump everything down the

hatch in one gulp,” said Dr.William Mills, the medical directorfor Western Reserve Senior Care, aCleveland-based in-home care firm.

Over time, the ExactPack hasevolved into an even easier-to-usestrip packaging system for dispens-ing medications at home, in grouphomes, in assisted living facilities, atdialysis centers or at school.

“The goal has always been tomake it easy for them to (take theirmedications) so they can have asnormal a life as possible,” Mr.Wollschleger said.

While average ExactPacks con-tain only prescription drugs, theycan be further customized withover-the-counter medications, vitamins and herbals, too, he said.

Help all aroundIt’s not just the customers or

caregivers who get ExactPacks —and can “tear off a day’s worth or aweek’s worth of medications andtake them anywhere with them,”said Mr. Wollschleger — who likethe home-delivered product.

Ambulance drivers and EMS andER professionals like them, too.“When they are handed the box theyknow all the medications the per-son is on,” Mr. Wollschleger said.

While ExactCare can ship phar-maceuticals and its trademarkedExactPacks anywhere in Ohio —but only in Ohio due to interstateregulatory issues — the company’smain market is Northeast Ohio.

But, he added, “We are definitelythinking about expanding, both in-state and out-of-state.” ■


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SMALL BUSINESS

Absent a sale, ways to use low tax rates

As we head to the presiden-tial election, one of the keypolitical and economic issues continues to be taxes.

Several significant tax increases areon the books and will become effective Jan. 1, and a total reprievefrom these increases seems lesslikely than it did at the end of 2010.

This political and economic climate has caused many businessowners to consider a liquiditytransaction to sell their business, inwhole or in part, to take advantageof the current low tax rates.

However, many business ownersfeel that the time is not right for asale of their business; profits likelyare to be down or flat as comparedwith historical performance.

Lower profits, of course, typicallyresult in lower valuations. Timingalso has now become an issue becausethree months may not be enough timeto adequately market a companyfor sale and complete a transaction.

For business owners who want totake advantage of current tax ratesbut are unable or unwilling to sellthe entire business, there are variousalternatives available.

The most dramatic potential effectof the imminent tax rate increases isa dividend rate that could be as highas 43.4% (39.6% ordinary income rateplus the 3.8% Medicare surcharge),not including state and local taxes, almost triple current rates.

Paying a substantial dividendduring 2012 before tax rates increaseis therefore worth considering.

The IRS is in certain circum-stances able to effectively force acorporation to pay a dividend. Cor-porations are potentially subject toa tax on excess accumulated earnings,

CARLGRASSI

TAX TIPS

which taxes corporations holdingon to their cash that is beyond its“reasonable needs.”

Corporations using a strategy ofpaying out profits as salary to share-holders may face IRS assertions thatsuch payment exceeds the amount ofcompensation that is reasonable.These IRS positions likely are to bemore aggressively asserted in 2013 ifrates do go up.

Another technique to extract value is through a redemption. A redemption should be consideredwhere less than all of the share-holders — for instance, a share-holder nearing retirement age —want to create a liquidity event anddiversify their investments.

One issue with a redemption isthat partial redemptions often aretreated as a dividend for tax purpos-es. Tax rates of dividends and long-term capital gains are the same undercurrent law, so there is currently lessconcern about whether a partial re-demption will qualify as such.

If tax rates increase as scheduled,the tax difference between a re-demption and a dividend again willbecome significant. Completingthis type of transaction in 2012should guarantee that the transac-tion will be taxed at the current low

capital gain or dividend tax rate.If a business does not have suffi-

cient cash to pay the dividend orcomplete a redemption of a signifi-cant shareholder, the corporation ei-ther could borrow the money or issuea note to the shareholders.

If a redemption is financed with apromissory note, locking in the current tax rates would require theshareholder to elect out of the installment method. Under the installment method, the seller paystax only as payments are received,but at the rates that are then in effect, not the rates in effect whenthe transaction is completed.

So, for instance, if capital gainsrates were raised to 23.8% in 2013, ataxpayer selling his stock in 2012would pay the 23.8% rate on anypayments received in 2013 and wouldnot enjoy the 15% rate in effect in2012 when the stock was sold.

A taxpayer can elect out of the installment method by reportingthe entire amount of the gain on hisreturn for the year. For sales occur-ring in 2012, this decision thereforecan essentially be deferred until atleast April 15, 2013.

While it’s unclear what the futureholds, opportunities exist to take ad-vantage of current tax rates. In somecases, a taxpayer may be able to closea transaction now but wait until atleast next April to decide whether toaccelerate gain on the sale.

By that time, we may have a clearerpicture of what is in store. In anycase, given the uncertain future of taxrates, now is the time to act to takeadvantage of the current low rates. ■

Mr. Grassi is president of McDonaldHopkins LLC.


Pharmacy: Companymakes dispensing easier



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SMALL BUSINESS

New retirement fee rules allow better provider comparison

In the movie “The Three Amigos,”Lucky Day (Steve Martin),Dusty Bottoms (Chevy Chase),and Ned Nederlander (Martin

Short) are Hollywood silent filmactors who portray the heroic Amigos on screen.

Believing they are real heroes,Carmen asks them to protect hervillage from El Guapo. The ThreeAmigos honor Carmen’s requestthinking their appearance alonewill be enough to save the day.They soon realize they cannot justgo through the motions to protectthose counting on them.

Just like The Three Amigos, retirement plan sponsors cannotjust go through the motions. ERISA(the Employee Retirement IncomeSecurity Act) requires plan fiduciariesto act prudently and solely in thebest interest of the plan’s partici-pants and beneficiaries when selecting and monitoring serviceproviders and plan investments.

Have you ever stopped to thinkabout what this means?

■■ Act prudently. You shoulddocument that you operate andmake decisions that affect the plan

based on some objective process.Be sure to follow the rules

described in the plan document.You are not expected to be a fortune teller; you are expected tohave some rationale supportingyour decisions. If you are not anexpert on retirement plans and/orinvestment options, you are expected to hire people who are, orobtain the necessary training.

■■ Act solely in the best interestof the plan’s participants and beneficiaries. Remember thiswhen you select service providersand investment options. Don’tmake decisions that impact theplan simply because you or thecompany receive some favorabletreatment (i.e. bank financing).

■■ Did you notice the words “selecting and monitoring?” ERISArequires you to revisit your deci-sions periodically and makechanges when appropriate. Thisevaluation should include a reviewof the investment options and theservice providers (i.e. financial adviser, actuary, third-party admin-istrator, record keeper, auditor).

Don’t retain them simply because

CHRISTINESIVAKCRAIGGABEL

ADVISER

they are your golfing buddy, relativeor manage your personal investments.Make sure your service providers,and the plan’s investment options,continue to do the job you hiredthem to do.

These duties have moved underthe spotlight now that new retire-ment plan fee disclosure rules havegone into effect.

Final regulations issued by theDepartment of Labor required cov-ered service providers to providefiduciaries with information abouttheir compensation, the services theyprovide and their fiduciary status.

Why? Because these covered ser-

vice providers are only permittedto be paid from the plan assets ifboth the contract/arrangementand the compensation for servicesare reasonable.

El Guapo has arrived, plan sponsors, and you can no longergo through the motions. You needto review the services you are re-ceiving and their respective costs.

Your service providers shouldhave given you fee disclosure documents by July 1. Rememberthose thick documents you receivedin the middle of the summer? (Ifyou didn’t receive any, you are re-quired to send a written request.)Once you have them, you cannotjust put them in your drawer.

Now is a good time to do somecomparison shopping. This can bedone by reviewing survey data orby gathering specific proposals foryour plan. You are not required toselect the lowest cost alternative,but should make sure you are getting what you (and your partici-pants) are paying for.

You think you don’t need toworry about this because you hired“Bob” to do this for you?

Small business owners who offerplans to their employees are per-sonally liable if it is determinedthat they failed to satisfy the fidu-ciary obligations of ERISA, even ifthey are not actively involved inthe day-to-day management of theplan. Sit down with “Bob” and makesure the review has been done.

The DOL is encouraging plansponsors to take the necessarycompliance steps and has increasedexamination activity. In FY 2011,the DOL closed 3,472 civil investi-gations, with 2,614 (75.29%) resultingin monetary results for plans orother corrective action.

Recently, in a lawsuit filed by theDOL, a federal judge ordered thepresident of a Columbus companyto personally restore more than$500,000 to the company’s twoemployee retirement plans.

The DOL’s suit alleged insufficientoversight and mishandling of planassets resulting in multiple viola-tions of ERISA. You cannot affordto put off the review of your planadministration, fees and services.

In the beginning, the Three Amigos were playing a role. By theend, they accepted the challengeand began living the part. Will youfulfill your fiduciary duties and liveyour part? ■

Ms. Sivak and Mr. Gabel are partnerswith Cedar Brook Financial Partners.Securities offered through SecuritiesAmerica Inc., member FINRA/SIPC,Ms. Sivak and Mr. Gabel, registeredrepresentatives. Advisory servicesoffered through Securities AmericaAdvisors Inc., an SEC registered investment adviser, Ms. Sivak andMr. Gabel, investment adviser rep-resentatives. Cedar Brook FinancialPartners LLC and the SecuritiesAmerica companies are not affiliated.

IN BRIEF■■ FIFTH OFFICE: Global TechnicalRecruiters has opened an office inMentor, which is the employment firm’sfifth location and the second thisyear. The office is recruiting for man-ufacturing, office and professional po-sitions in Lake and Geauga counties.The new office adds to the firm’s coverage area, which already servedCuyahoga, Lorain, Medina and Summit counties.

■■ SURGIPLEX ADDITION: The OhioClinic for Aesthetic and PlasticSurgery, under the leadership of Dr.

Michael Wojtanowski, has added a surgical facility at its Westlake location. Called the Surgiplex, thenewly built suite is designed for plasticsurgery procedures, and it is staffedwith board-certified anesthesia person-nel, surgical techs, surgical assistantsand registered nurses.

■■ SOUP ANYONE?: Jamie andKathy Buzzanca have opened a fran-chise of Zoup! Fresh Soup Compa-ny in the Points East Shopping Cen-ter in Mentor. The new restaurant willhave 17 full- and part-time employees.


While he doesn’t anticipate anyjob losses, he did say the cuts couldslow Voss’ growth plan.

Roger Sustar, CEO of FredonCorp., a Mentor-based contractspecialty machine shop with 86employees, said with NortheastOhio so strong in defense manufac-turing, sequestration no doubt isgoing to hurt.

Mr. Sustar said a fear of cuts already is halting innovationamong potentially affected manu-facturers.

“We could be so much more pro-ductive,” Mr. Sustar said. “We’rewasting the next four or fivemonths before we decide what’sgoing to happen.”

Long-term impact

Don Styblo, vice president oftechnology for Valtronic USA Inc., amaker of miniature electronic devices in Solon with roughly 100employees, is concerned aboutwhat sequestration could mean forthe future of manufacturing inOhio.

In cutting financial support tonext-generation projects and to research and development, thegovernment could be handicap-

ping the growth of manufacturing,he said.

“They stop the momentum thatwe’ve generated in the past fewyears to bring manufacturing backto the United States and back toOhio,” Mr. Styblo said.

Manufacturing already is facinga challenge in finding skilled workers to replace aging babyboomers and, if across-the-boardcuts are enacted, that pipeline ofnew workers could become evendrier as more students are discour-

aged from pursuing manufacturingjobs.

For example, at Valtronic, it takestwo years for an engineer to becomefully trained, Mr. Styblo said, soadding new workers is part of aconstant evolution.

Any sequestration-induced slow-down also could hurt the state’sstatus internationally as a center ofmanufacturing, according to Mr. Silk.

“Ohio is absolutely one of thosestates that you see around theworld constantly,” said Mr. Silk.“It’s China. It’s Germany. It’s Israel.You name it, we are out there. Ohio,as a large manufacturing state, isone of the most significant playerson the international scene.” ■

“They stop the momentum that we’ve generated in thepast few years to bring manufacturing back to ... Ohio.” – Don Styblo, vice president of technology, Valtronic USA Inc.

Adjustment and Retraining NoticeAct, which requires that employeesreceive at least 60 days’ notice of potential mass layoffs.

While Lockheed Martin thismonth issued a statement saying itwouldn’t issue layoff notices, it citedas the reason the Department of Defense’s guidance that contractchanges wouldn’t be made for a fewmonths into the year, not that layoffswouldn’t be necessary.

In an Oct. 1 memo to employees,Lockheed Martin chairman and CEOBob Stevens wrote: “We remain firmin our conviction that the automaticand across-the-board budget reduc-tions under sequestration are inef-fective and inefficient public policythat will weaken our civil govern-ment operations, damage our national security and adversely impact our industry.”

Major projects such as the F-35fighter jet, which is part of the government’s Joint Strike Fighterprogram, could be at risk, accordingto David Silk, partner at SGI GlobalBusiness Advisors LLC, a Cleveland-based advisory firm that deals withinternational economic develop-ment groups.

The F-35 project, which is headedby Lockheed Martin, touches 2,876direct and indirect jobs in Ohio andhas an economic impact of $353.7million in the state, according toLockheed Martin.

That means the 47 Ohio suppliersto the F-35 project, not to mentionLockheed Martin itself, could see aloss of business. And that’s only oneproject.

Fear of the unknownThe biggest problem with seques-

tration is the uncertainty involved.There are unknowns about the pro-grams that would be cut and whatthose cuts would look like.

“By the time it trickles down to us,all we get are more questions thananswers,” Thermotion’s Mr. Swan-son said.

For that reason, Thermotion is delaying any unnecessary spending,including buying equipment andhiring employees, Mr. Swanson said.

The 15-person company servesthe aerospace and defense sectors,which represent 10% and 30% of itsbusiness, respectively, Mr. Swansonsaid.

Customers aren’t making anylong-term commitments, Mr. Swan-son said. And, without long-termcommitments from customers,companies such as Thermotioncan’t do long-term planning.

“Everything is just stacking up,waiting for someone in Washingtonto make a decision,” Mr. Swansonsaid.

Daniel Sedor Sr., president andCEO of Voss Industries LLC, saidthere will be “significant hardshipout there” for those companiesheavily reliant on military work.

Voss, a metal fabricator in Cleve-land’s Ohio City neighborhood thatmakes clamps, couplings and ductingfor aerospace, defense and industrialclients, hasn’t yet seen an impact inbusiness because the contracts onwhich it’s already working haven’tbeen altered.

Mr. Sedor doesn’t expect Voss,which employs 335 people, to be severely impacted by sequestrationbecause of the company’s diversifi-cation.

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Cuts: Customers’ uneasiness also affecting operations


could be on the way no matterwhat.

Even so, the research departmentat CWRU will be better off if Con-gress can come up with its own wayto reduce the deficit, Dr. Miller said.

“The reductions will be intro-duced in a much more rationalfashion and over a period of time,”he said.

A lot of money is at stake, espe-cially at CWRU. The university’s research department had a budgetof $388 million during the fiscalyear that ended June 30.

About 80% of that money comesfrom federal agencies such as theNational Institutes of Health andthe National Science Foundation.Those programs and others thatfund research will need to reducetheir budgets by 8.2% under the automatic cuts.

‘This is scary’It’s unclear how those agencies

would distribute the cuts, but a fewofficials interviewed for this storysaid they expect new research pro-grams to be hit hardest. Existingprograms that are up for renewalalso could take a hit, but ongoing,multiyear projects probably wouldbe protected to some degree.

Federal research agencies needto protect existing projects becauseit’s hard to ramp them back up ifthey get shut down, Dr. Miller said.However, cutting back too much ongrants for new projects isn’t a greatsolution, either, he said.

“The problem with that is you dryup your pipeline,” he said.

Walter Horton still is trying tobuild that pipeline at Northeast

Ohio Medical University in Root-stown.

The university known asNEOMED is in the process of con-structing a new research building,and it is in the middle of a five-yearplan meant to double the amountof research the school conducts.The school doesn’t calculate an an-nual research budget, but each yeartypically receives about $8 millionfrom external sources that goes toward research and some otherprograms, said Dr. Horton, who isvice president for research and deanof graduate studies at NEOMED.

The automatic cuts would slowdown the effort to increase researchat the university, Dr. Horton said.

“There’s no question that this isscary,” he said.

There’s only so much universitiescan do to prepare for possible cuts.For instance, NEOMED plans toprovide bridge financing to help existing researchers advance theirprojects and stay competitive forgrants.

Dr. Miller said CWRU is trying tobroaden its sources of financing,but those efforts take time. TheUniversity of Akron is planning to review its federally financed research projects, said GeorgeNewkome, vice president for researchand dean of the graduate school atAkron.

The researchers leading projectsoften would be the ones to decidewhether they pay their assistantsless, let them go or spend less onequipment and supplies.

Dr. Newkome said the university— which received $58 million in research grants last year, about halfof which came from the federal

government — doesn’t have the resources to protect its researchprojects from spending cuts.

“There’s not going to be moneyat the university to cover thosecosts,” he said.

Hope in … Congress?The cuts over time could hamper

the region’s ability to turn universitytechnologies into products andstartup companies, said W. GrantMcGimpsey, vice president of research and sponsored programsat Kent State University.

“Where does that technologycome from? It comes out of research,” Dr. McGimpsey said.

About 75% of Kent State’s $33million research budget comesfrom federal sources, he said. Thatbudget is fairly small comparedwith budgets at schools such asCWRU or Ohio State University, adifference that might put Kent Stateat a disadvantage when applyingfor grants, Dr. McGimpsey said.

“The larger institutions that havea longer history with funding agen-cies are the ones that are going tobe looked to first when funding becomes available,” he said.

Many researchers are “holdingtheir breath,” hoping that the federalgovernment comes up with a better way to cut the deficit, Dr.McGimpsey added.

Dr. Newkome, of the Universityof Akron, said he’s “not overly con-fident” in Congress’ ability to meetthat challenge, but he said he thinksit has a strong incentive to pull it off.

“People still have to be re-electedinto office, and things like that areremembered long and hard by voters,” he said. ■

Cos., a Cleveland insurance broker-age. Even non-coastal Ohio grap-pled with significant hail and windstorm damage, he noted.

Workers’ comp rates have climbedbecause medical costs have risen.

“Rates are going to continue toincrease,” Mr. Jacobs predicted.“Interest rates are virtually nil, so(insurers) are not earning anything(off their reserves). This lack of investment income has causedthem to be much more conserva-tive about how they underwrite risk.”

End of the dealsThe rate increases come after

years of rate suppression caused bycompetition and attractive invest-ment yields.

“Commercial pricing levels through2010 and 2011 were really at roughly2002 and 2003 price levels,” saidDave Peterson, national personallines and small business accountsleader for Westfield Insurance inWestfield Center, which sells morethan 40% of its commercial insur-ance in Ohio and Pennsylvania.

“Commercial lines insurance hasbeen a fantastic deal for quite a period of time,” Mr. Peterson said.

Year to date through August 2012,Westfield’s investment income wasdown 4.3% from the year-ago period,even though invested assets havegrown during that time, a spokes-woman said. That situation meanscarriers cannot rely on investmentreturns to make up for underwritingshortcomings as they might have in

other years, Mr. Peterson said.The rate increases vary from car-

rier to carrier and depend greatly onthe risks inherent in a company’sbusiness and its claims history, industry insiders say.

Westfield’s Mr. Peterson said hehas seen year-over-year increasesof 25% or more. For those Westfieldclients with unchanged risk — forexample, because they didn’t hiremore employees or buy property —premiums are increasing roughly5% on average, Mr. Peterson said.

Likewise, Mr. Jacobs said Oswaldclients with good claims experiencein “fairly benign” industries are seeing increases of 4% to 6%, whileclients with high risk exposure andpoor claims history are seeing “wellinto double-digit increases.”

Mid-course adjustmentsFrom an insurance industry per-

spective, the upward trend in pricingis a positive one, said Steven W. Webersen, managing director withConning, a Hartford, Conn., insur-ance research and consulting firm.

“It’s definitely good for the industryto improve its profitability,” he said.“Rate increases need to continue.”

And most expect they will.“This market is going to continue

until investment income improves,which isn’t likely anytime soon,”Oswald’s Mr. Jacobs said.

Westfield’s Mr. Peterson expectsto continue to increase rates in2013, roughly by percentage rates inthe mid single digits, and expectscompetitors to do the same.

“Prices have been going up nowfor a year,” he said. “That doesn’tinstantly make you whole.”

Britton Gallagher’s Mr. Bryantpredicts increases of 5% to 10% forthe next two to three years.

“Insurance companies are notgoing to price themselves out of busi-ness,” he said. “Instead of hitting theinsurance marketplace with the insurance increases they want,they’ll stagger it over a few years.”

To mitigate the increasing insur-ance rates they face, some compa-nies are considering self-insurance,taking on higher deductibles andbuying excess insurance, said Mr.Jacobs. He said buying excess insur-ance typically is cheaper than buyingcoverage with low deductibles.

“Clients are taking on more riskthemselves to offset the increase inpremium dollars,” he said.

Westfield’s Mr. Peterson said hiscompany has enjoyed pretty stableretention rates, has had clients increase their deductibles and writenew risk control plans.

Companies may mitigate the increases by taking a more active,strategic approach to managingtheir risk and their claims activity,Mr. Jacobs advised. Those steps caninvolve anything from ensuringmachine guards are in place tospreading product between proper-ties so that there’s less value lost if aroof leaks or collapses.

Also, Britton Gallagher’s Mr.Bryant recommends starting insur-ance renewal processes earlier, atleast six months in advance. ■


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Research: Technology advances may stall




Global Business Experts Advise Area Companies

Thank You to our Keynotes

Presented by

World Trade Conference

Crain’s event highlights Northeast Ohio’s global business potential

Supported by

ModeratorS

Pat Perrin, Global Finance Manager, Ohio Department of Development

Ken Marblestone, President, RBS Citizens and Charter One in Ohio

Bob Johnson, Vice President, BioEnterprise

Andrew Smaltz, Director, Corporate Risk Solutions & Events, RBS Citizens

Brian KimForeign Exchange Strategist, RBS Securities

Amy LiuCo-Director and Senior Fellow, Metropolitan Policy Program, Brookings Institution

Luncheon Keynote: Evening Keynote:

Thank You Moderators and Panelists

PanelistsSusan Whitney, Director, Cleveland Office, U.S. Commercial Service

Amy Liu, Co-Director and Senior Fellow, Metropolitan Policy Program, Brookings Institution

Patrick Hayes, Regional Manager, SBA Export Solutions Group, U.S. Export Assistance Center

Mark Klein, Export Finance Manager, The Export-Import Bank of the U.S.

Rose Lee Askin, Senior VP, RBS Citizens

Carl Steidtmann, Chief Economist, Deloitte

Steve Hedlund, VP of Strategy & Business Development, Lincoln Electric

Ray Ursick, President, REU Associates

Will Joliat, Vice President & General Manager, Alltech Medical Systems

Jerry Baty, CFO, Secretary and Treasurer, Axiomed

Michael Corkan, CEO & Co-Founder, ChinaCentric Business Development

Mark Barnes, Partner, High Growth Markets, KPMG

Brett Barragate, Partner & Global Co-Leader of Banking & Finance Practice, Jones Day

Tom Collin, Partner and Group Leader, Antitrust, Competition & Distribution Practice, Thompson Hine LLP

Going global isn’t just a catchphrase. It makes good business

sense.

At least that’s the word from Amy Liu, co-director and senior

fellow of the Metropolitan Policy Program of the Brookings Insti-

tution.

Ms. Liu, appearing last Thursday, Sept. 27, at the NEO World

Trade Conference at Executive Caterers at Landerhaven, said lead-

ers in large U.S. metro areas should encourage local companies to

become participants in the international marketplace if they want to

see sustained growth.

She cited data from the Organisation for Economic Co-oper-

ation and Development, which promotes worldwide economic

growth, that indicated global consumption of goods is expected to

rise from $21 trillion annually to $31 trillion by 2020, largely led

by growth in Asia and Latin America.

“We view these trends less as a threat than as a market oppor-

tunity,” Ms. Liu said. “The winners in the next economy will be

those who strengthen their global assets and tap new sources of

aggregate demand.”

The U.S. recovery has been led by companies that are export-

ing, she said. Exports represented 46% of GDP growth in 2001

from 2010, even though exports account for only 13% of the U.S.

economy. Cleveland, which is the 28th largest metro in the country,

ranks 21st in terms of the share of its GDP represented by exports.

outside the United States,” Ms. Liu said.

Brian Kim, a foreign exchange strategist of research and strategy

for RBS Securities Inc., said the interconnectedness of the world’s

markets is leading to a relative slowdown in China. As European

countries continue to struggle, the effects will be felt by their

global trade partners.

“While growth will come out of Asia, a lot of that will be depen-

dent on the rest of the world,” he said.

Given the struggles in Europe, Mr. Kim said he is more bullish

on the U.S. dollar for the next year. He said he is encouraged to see

trade balance turns more in its favor.

In partnership with


the hottest area in medical innova-tion right now,” Mr. Coburn said.

Demand for health IT productshas been rising for a few years, butlately local efforts to develop andsell those products have becomemuch more pronounced. For one,investors have pumped a lot moremoney into local health IT compa-nies over the past 18 months.

The money starts to flowEnforcer eCoaching Inc. — a

Lyndhurst company developingsoftware that sends personalizedemails to people looking to leadhealthier lives — raised $1.6 millionfrom investors in March, according toa document filed with the U.S. Se-curities and Exchange Commission.

That company this summerraised another $250,000 from Jump-Start Inc., a Cleveland nonprofit thatassists and invests in local startups.So did GenomOncology LLC, aWestlake company developing soft-ware designed to automate theprocess of analyzing genomic data.GenomOncology raised $1.25 mil-lion from other investors earlier in2012.

Explorys Inc., a Clinic spinout thathas developed software that can an-alyze vast amounts of patient data,announced in May 2011 that it hadraised $11.5 million. The 3-year-oldClinic spinout has raised a total of $20million and has 79 employees. It is inthe process of moving into a largerspace in the Clinic-owned buildingthat used to house the Cleveland PlayHouse and the Museum of Contem-porary Art Cleveland. The company

eventually could become the anchortenant in any health IT building theClinic creates. (See adjoining story for details).

Nationally, some investors havecreated funds that invest only inhealth IT companies, Mr. Coburnsaid. So the Clinic expects its spin-outs to be able to raise capital with-out too much trouble.

BioEnterprise Corp. is working tohelp more young health IT compa-nies get off the ground. The Cleve-land nonprofit, which was createdto help boost the region’s healthcare industry, in February of thisyear launched its H.I.T. Acceleratorprogram.

Health IT companies that applyto the quarterly program sendBioEnterprise information abouttheir products. The nonprofit selects the best of the bunch, thenuses an online portal to discussthose products with panels com-prised of people from the program’spartner institutions: the region’s fivelargest hospital systems, Case WesternReserve University and health insurers SummaCare and MedicalMutual of Ohio.

Insurers join the crowdThe goal is to help local health IT

companies find key customerswhile also helping institutions findgood products, said Jim Weisman, avice president at BioEnterprise whofocuses on health IT. Partner insti-tutions asked to follow up with twoof the four companies that partici-pated in the summer session, Mr.Weisman said.

The number of health IT startups

in Northeast Ohio keeps growing,he said, adding that University Hos-pitals has a few spinouts in the works,too. The companies Mr. Weismansees cover all sorts of sectors, he said.

“I’m seeing health and wellness.I’m seeing remote monitors. I’mseeing telemedicine,” he added.

Mr. Weisman said insurers alsoare starting to show more interestin health IT.

Medical Mutual in April hiredRahul Rosh to fill a new position:vice president of IT strategy. TheCleveland insurer since then hasstarted making bets on different ITtechnologies, Mr. Rosh said. In addition to participating in theBioEnterprise program, MedicalMutual has invested in a health IT-focused private equity fund in hopesof getting first dibs on some of thetechnologies in which it invests.

The company also is using anAT&T platform that will allow it todevelop medical software programsthat will work on a broad range ofmobile devices.

Although the company for yearshas used IT to process transactions,now Medical Mutual wants to use itto analyze information, Mr. Roshsaid. For instance, data eventuallycould allow the company to sepa-rate smokers with a real desire toquit from those who probablywon’t, he said.

His position’s existence is a testa-ment to Medical Mutual’s growinginterest in health IT, he said fromhis home in New York City, whilepreparing to move to Cleveland.

“Certainly the emphasis has in-creased,” he said. ■



Health: Insurers energized over industry activity

Theaters: Movie studios subsidize some costsdistribution of 35 mm film willcome to an end next year.

Bottom line: If movie studiosstop delivering first-run movies infilm and theaters don’t have theprojectors to play the digital moviesthey deliver instead, theaters can’tplay the titles.

“There are certain things youhave to do to stay current and rele-vant,” said Chris Baxter, director ofoperations for Atlas. “Digital is oneof those things.”

Atlas installed 10 projectors atthe Eastgate 10 location alone, plus39 at three other locations. Companyleaders are negotiating a deal to con-vert the final location, in Elyria, too.

Likewise, Solon-based ClevelandCinemas has spent more than $1million on its digital projector upgrades, said David Huffman, director of marketing for the chain,which operates eight theaters inNortheast Ohio and one in Pitts-burgh. The company launched theinstallations in the summer of 2009,driven in part by the oncoming pro-liferation of digital 3-D films. Of its76 projectors, 29 are digital.

“No theater is untouched bythis,” Mr. Huffman said.

For some of the very smallesttheaters, though, it’s likely a wrap,insiders predicted. The owner ofParma Theater, for example, citedthe cost of going digital as one ofthe reasons he closed the theater inSeptember.

“There are so many theaters thatare just barely paying the bills

now,” said John Knepp, who ownstwo drive-in theaters in Chardonand Ravenna and buys film for theaters in 12 states as president ofCooperative Theaters Inc. in May-field Heights.

“Those theaters will not be ableto spend the $70,000 to put a digitalprojector in their booth,” he said.“Northeast Ohio will see fewer independent theaters.”

No choice but to payNo movie studios have put a date

to when they will discontinue 35mm distribution, said Mr. Knepp,who works with all of the majornames, including Warner Bros. andUniversal Studios. But change ishere, he noted.

“This coming year, you’re goingto see less and less 35 mm beingmade,” Mr. Knepp said. “The studios cannot wait to get rid offilm. Film is expensive. As more andmore theaters put the digital projectors in, the film costs keepgoing up.”

Consider, he noted, that 35 mmreels come in cans that weighmaybe 50 pounds, making themheavy to ship. And each film printcosts roughly $2,000, comparedwith an estimated $40 for film harddrives.

Atlas Cinemas embarked on its

transition five years ago, back whendigital projectors still ran some$100,000 apiece. Today, each costsroughly $60,000 to $70,000.

The digital projectors cost moreand require service plans that filmprojectors do not, Mr. Baxter said.

Fortunately, movie studios haveagreed to pay theaters so-called“virtual print” fees, or fees paid totheaters for each digital title theyshow. Theaters cannot say howmuch the studios are helping to offset their costs, per nondisclosureagreements.

Still, the price remains cost-pro-hibitive for some. Deb Sherman,owner of Aut-O-Rama Drive-InTheatre in North Ridgeville, expectsit will be the reason that final creditsroll at many drive-in theaters.

“This doesn’t bring any extramoney in,” said Ms. Sherman, whooperates the 47-year-old drive-inwith her five children. “All it’s doingis putting money out. They justcan’t afford this extra expense. (Vir-tual print fees) aren’t going to payfor the whole thing.”

Ms. Sherman, however, will seeka loan to replace the two 35 mmprojectors at Aut-O-Rama, with in-stallation projected for April 2013.

“If we don’t switch to digital,we’ll be out of business,” she said.“There’s no two ways about it. The

way you can make money in thetheater business is by showing firstruns. There’s going to be fewer andfewer prints of first-run movies.”

The digital advantageDespite the admission price, the-

ater operators see benefits to theirentry into digital.

For one, digital projectors andfilm are lauded for their brighterpictures and more consistent quality.

“After running digital for the lastfive years, I honestly don’t missfilm,” Mr. Baxter of Atlas said. “Isaw what film was becoming. You(the moviegoer) have grown so ac-customed to it, you don’t even real-ize it’s worsened.”

Film, Mr. Baxter said, has degraded over the years as moviestudios have sought to print it fasterand cheaper. And while film canpick up scratches and other blem-ishes as it’s run through projectors,digital hard drives remain unchangedeven after heavy use.

“A digital print looks as good thefirst time you run it as the thou-sandth time you run it,” ClevelandCinemas’ Mr. Huffman said.

The new projectors also affordtheaters the ability to present liveevents, such as concerts and sportingevents, because content can bestreamed and played through digi-tal projectors. Plus, the projectorsoffer greater ease and less expensein playing movie marathons, suchas the “Twilight” marathon Atlashas scheduled at two of its theaters

in November, because content ismore readily available and shippingall those film reels isn’t necessary,Mr. Baxter said.

Aut-O-Rama’s Ms. Sherman alsosees the potential for her drive-in tohost tailgate parties and show foot-ball games.

Lost ‘soul’Some, though, wax nostalgic for

film.John Ewing, part-time associate

director of film for The ClevelandMuseum of Art and director of theCleveland Cinematheque, whichbills itself as the region’s only all-analog theater, regards film as abeautiful medium, but he concedesthat both institutions for which heworks likely will need to go digitalsometime soon. Even today, Mr. Ew-ing cannot get a lot of the films hewould like to show on film.

“I think it’s important, especiallyfor nonprofit art institutions, toshow work in its original format,” hesaid. “So if a movie was shot on 35mm, that’s the way you want to pro-ject and present it. At galleries,you’re looking at the canvas that thepainter actually put the paint on.You’re not looking at a reproduction.I feel the same way about film.

“Hard-core film people will tellyou that a film image is slightlywarmer than a video image,” headded. “It seems to have a bit ofsoul.”

The vast majority of moviegoers,however, have no idea which they’rewatching, Mr. Huffman said, as evi-denced by people’s recent posts onCleveland Cinemas’ Facebook page,pleading that they not switch oneparticular location — eight monthsafter it already had gone digital. ■


Want hard, physical evidence thatthe health information technologysector is growing in Cleveland?

You’ll find it at the corner of Euclid Avenue and East 86th Street— the domed building that used tohouse the Cleveland Play House andthe Museum of Contemporary ArtCleveland.

That building soon will be the newhome of Explorys Inc., a ClevelandClinic spinout that has developed asystem that allows hospitals andhealth care companies to analyzemassive amounts of patient data.

Three-year-old Explorys plans tomove into 20,000 square feet inthe Clinic-owned building by the end of the month, giving the fast-growing company roughly twice asmuch space as it has today in thenearby Global Cardiovascular Inno-vation Center on Cedar Avenue,CEO Stephen McHale said.

Explorys has an option to take another 20,000 square feet in thebuilding, but even that may only beenough to satiate the company fora few years, given its growth, Mr.McHale said. The Cleveland Clinic istalking about creating a buildingspecifically for health IT companies,and should it do so, Explorys could

become the anchor tenant in thatbuilding, Mr. McHale said, notingthat the company has been involvedin those discussions.

The hospital system is consideringa variety of possible locations, saidHeather Phillips, director of corpo-rate communications for the Clinic.However, the discussions are veryearly and nothing has been final-ized, she said, noting that the Clinicisn’t even sure whether it would usean existing building or build some-thing new.

Explorys has the equivalent of 79full-time employees, up from about25 in May 2011, when it announcedthat it had raised $11.5 million inventure capital. The company plansto keep hiring, Mr. McHale said.

Sales at the company are 30%ahead of expectations for 2012,Mr. McHale said, declining to giverevenue figures. A total of 12 healthsystems that manage 114 hospitalsuse Explorys’ software, which helpsthem study their operations andconduct medical research.

Demand for health IT productsthat help hospitals analyze patientdata is “white hot” right now, whichhas made it a lot easier to get theattention of health care providers,Mr. McHale said.

“There’s more demand than supply,” he said.

Cleveland Clinic software spinoutExplorys readies for relocation

“(Many theaters) will not be able to spend the $70,000to put a digital projector in their booth. Northeast Ohiowill see fewer independent theaters.” – John Knepp, president, Cooperative Theaters Inc.




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And now you know the rest of the story■ Last Christmas, BrandMuscle Inc. came thisclose to being bought by a private equity firmthat was the subject of an HBO movie.

BrandMuscle — whichsells software that helpscompanies localize theiradvertisements — wasbought by The RiversideCo. this past winter.

But the Cleveland pri-vate equity firm wasn’tthe highest bidder, saidBrandMuscle CEO PhilAlexander, who last weekat Ohio City’s Market Avenue Wine Bar described the story behind the Riverside dealto a group of entrepreneurs who belong to anetworking organization called the GorillaGroup.

On the morning of Dec. 23, the plan wasto sell BrandMuscle to the highest bidder,Kohlberg Kravis Roberts & Co. L.P. KKR is abig, well-known private equity firm in NewYork made even more famous by a book andmovie called “Barbarians at the Gate,”which described KKR’s ill-fated leveragedbuyout of RJR Nabisco, which at the timewas the largest LBO deal in Wall Street history.

Then, on the evening of Dec. 23, Riversidecalled Mr. Alexander and told him about aplan to have BrandMuscle work with twoother companies Riverside recently boughtthat together would form one big, localizedmarketing machine.

Riverside was offering “marginally less”

than KKR, he said. But BrandMuscle’s man-agement team figured that, if Riverside didn’tbuy their business, the private equity firmwould buy another similar company. Com-peting with that group didn’t sound like a lotof fun. So, they took the if-you-can’t-beat-’em-join ’em route.

“The competition that comes out of it willbe hard to beat,” Mr. Alexander said. —Chuck Soder

These numbers should shock no one■ In the all-important presidential cam-paign spending race, the Cleveland televi-sion market’s leading role continues un-abated, according to the latest accountingfrom the Wesleyan Media Project.

The Wesleyan University initiative esti-mated that committees supporting the twocandidates spent $5.6 million for 6,583 tele-vision spots on Northeast Ohio televisionstations from Sept. 9 to Sept. 30. That totalput the Cleveland market in third placeamong metro areas in the battlegroundstates. The two candidates spent $9.8 mil-lion in the Washington, D.C., market, whichserves northern Virginia, and $5.81 millionin the Denver market.

The tally includes ads bought by the can-didates’ campaign committees and the un-affiliated committees that support them onbroadcast television only; it does not in-clude cable TV spending.

In addition, spending on the races forOhio’s U.S. Senate seat and for the 16th Ohiocongressional district led the spending lists

for their respective houses of Congress. The spending on the race between Demo-

cratic incumbent Sen. Sherrod Brown andRepublican challenger Josh Mandel for theSeptember time frame totaled just over $6million. Spenders favoring Sen. Brownbought $2.6 million of ad time and those fa-voring Mr. Mandel bought $3.4 million.

In the congressional race between incum-bents Jim Renacci, a Republican, and BettySutton, a Democrat, spending approached$2.2 million. Of that, committees supportingRep. Sutton spent $944,000 and those sup-porting Rep. Renacci spent $1.3 million. —Jay Miller

Will that be a burritoor bowl, please? ■ Euclid Avenue’s food scene is about to getspicier — or less, depending on how youprefer your made-to-order Mexican food.

Chipotle plans to open a downtown Cleve-land outlet early next year between East Second Street and East Fourth. In an email,Mark Heath, Chipotle’s real estate managerfor the central and southeast United States,said the Denver-based company timed its en-try to steer well clear of the redo of Euclid Av-enue for Greater Cleveland Regional TransitAuthority’s bus/rapid transit HealthLine.

Richard Edelman, a principal at Goodman Real Estate Services Group ofLyndhurst, which represented Chipotle,said the brokerage and Chipotle also wanted to ensure the new store would nothurt sales at nearby Steelyard Commons inCleveland. — Stan Bullard

WHAT’S NEW

REPORTERS’ NOTEBOOKBEHIND THE NEWS WITH CRAIN’S WRITERS

THEINSIDER

THEWEEK OCTOBER 1 – 7

The big story: Hyland Software Inc. mayconstruct an office building across the streetfrom its headquarters in Westlake. The contentmanagement software developer — NortheastOhio’s largest software company — has drafteda plan that would involve constructing a three-story, 112,000-square-foot building connected to a 66,000-square-foot building it already owns on the south side of Clemens Road,said Robert Parry, director of economic devel-opment for Westlake. Hyland Software says it isn’t sure it will move ahead with the plan. Thecompany is “evaluating multiple opportunities”to help it house its rapidly growing base of employees, said Rick Kirk, director of operationsat Hyland Software.

He’s looking for work: Mark Kvamme, president and interim chief investment officer ofJobsOhio, is leaving the nonprofit developmentcorporation. JobsOhio board chairman Jim Bolandsaid the organization and Mr. Kvamme “are imple-menting the leadership transition plan developedduring the formation of JobsOhio in 2011.” Mr.Kvamme will resign from his management roleand as a member of the JobsOhio board at theboard’s Nov. 1 meeting. The board has chosenJohn Minor, one of JobsOhio’s managing directors,as its new president and chief investment officer.

In a Jam: Myers Industries Inc. bought JamcoProducts Inc., a maker of heavy-duty industrialsteel carts and safety cabinets. Akron-based Myers did not say what it paid for Jamco, whichhas annual sales in the range of $15 million to$18 million. Myers said Jamco’s product offering,relationships with industrial distributors “andreputation for quality and service complementsMyers Industries’ existing Akro-Mils businessand aligns with the company’s material handlinggrowth strategy.”

Suite deal: Atlanta-based Noble InvestmentGroup acquired the Embassy Suites ClevelandBeachwood and plans to make $8.6 million inimprovements at the hotel. Noble said it boughtthe 216-room hotel because it is near multiplepublic and private corporations in Beachwood.Cuyahoga County land records show a Noble affiliate, NF II Beachwood LLC, paid $8.15 million for the property at 3665 Park East Drive

Bigger in Texas: Lubrizol Corp. of Wickliffewill spend $125 million over three years to build aresin and compounding manufacturing plant inDeer Park, Texas. The additional capacity will serveLubrizol building and construction customersworldwide, the specialty chemicals company said.Lubrizol said it projects “continued strong globalgrowth” in its CPVC business, particularly in developing countries. The plant is expected to beoperational by the fourth quarter of 2014.

A strategy that pays dividends: RPM International Inc. raised its quarterly cash dividend by a penny a share, to a new rate of 22.5cents, in an action that marks the company’s 39th

straight year of increased cash dividends.

This and that: Private equity firm ResilienceCapital Partners in Cleveland agreed to acquire CRBrands Inc., a maker of household cleaning andlaundry products, from Juggernaut Capital Partners of Washington, D.C., for an undisclosedprice. … Beth Mooney, chairman and CEO of Key-Corp, was ranked second on American Banker’s2012 list of the 25 Top Women in Banking.

BEST OF THE BLOGSExcerpts from recent blog entries onCrainsCleveland.com.

Don’t drink the water —it’s too expensive■ You’ve probably noticed it whenyou’re paying bills, but a USA Todayanalysis confirmed that water costsin Cleveland are soaring.

The newspaper produced a series of maps that chart where water prices have increased themost since 2000. Cleveland is one of14 cities in which water costs haveincreased 130% or more.

Cleveland is 14th on that list,which is led by Atlanta, with a 233%increase. San Francisco and Wilming-ton, Del., also saw increases of 200% ormore.

USA Today attributed the increasing pricesto several factors:

■ The cost of paying off the debt on bondsmunicipalities issue to fund expensive repairsor upgrades on aging water systems;

■ Increases in the cost of electricity,chemicals and fuel used to supply and treatwater;

■ Compliance with federal governmentclean-water mandates;

■ Rising pension and health care costsfor water agency workers; and

■ Increased security safeguards for watersystems since the 9/11 terror attacks.

A ranking in the top half isbetter than our sports teams■ Cleveland is the 46th best city in America.

So said Businessweek.com, which ranked100 cities based on leisure attributes (thenumber of restaurants, bars, libraries, mu-seums, professional sports teams, and parkacres by population); educational attributes(public school performance, the number of

colleges, and rate of graduate-degree holders);economic factors (income and unemploy-ment); crime and air quality.

Throwing all that together, Bloomberg —with help from Onboard Informatics andthe nonprofit Trust for Public Land —

ranked Cleveland 46th nationwide, justahead of No. 47 St. Louis, No. 48

Omaha, No. 49 Anchorage andNo. 50 Los Angeles.

Cleveland is third in Ohioby these rankings, behind No.

20 Columbus and No. 21Cincinnati.

Bloomberg ranked San Francis-co as the best city in America, fol-

lowed by Seattle.

For just $5 million,that Monet can be yours■ Some of the biggest sellers in the comingfall auctions in New York are museums, The Wall Street Journalreported, and theCleveland Museumof Art is getting in onthe action.

The paper reportedthat Sotheby’s said itsNov. 5 sale of Im-pressionist and mod-ern art “will include a trioof works by Claude Monet, Pablo Picasso andPierre-Auguste Renoir that all come frommajor art institutions.”

The Cleveland museum “is asking at least$5 million for Monet’s 1881 landscape,‘Cornfield,’ which depicts wildflowers andspindly trees against a wispy, blue sky,” TheJournal noted. The work “was originallybought by an American collector shortly after it was painted, and it was first exhibitedin New York in 1886.”

The Cleveland museum received it as agift in 1947.


COMPANY: Eye Lighting of NorthAmerica Inc., MentorPRODUCT: Super XenonSolar/Weather durability testchamber

Eye Lighting, a provider of lamps, lumi-naires and related lighting products, says itsnew Super Xenon Solar/Weather durabilitytest chamber (XER-W75) is “designed formaximum flexibility to provide a single testsystem that complies with global automotive,textile, plastic, paint and other material teststandards.”

The system “yields results with exceptionalcorrelation to true outdoor exposure condi-tions,” according to Eye Lighting. A high-out-put, proprietary Xenon lamp and filter assem-bly provides spectral compliance with naturalsunlight, and “shower” and “day/night” cy-cles assure natural exposure effects, thecompany says.

The XER-W75 system complies with com-mon global standards for testing paints, plas-tics, and textiles, Eye Lighting says.

Gary Brown, managing director, Eye Light-ing Applied Optics, says the system is basedon designs in solar simulation lighting appli-cations from Iwasaki Electric Co., Eye’s par-ent company.

Alexander


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