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  • 1. Docs haveroom if State of WestMedicaid Michiganexpands PhilanthropyPAGE 16 PAGE 17 FEBRUARY 4, 2013 • VOL. 26/NO. 9 • $1.50 SERVING WESTERN MICHIGAN BUSINESS SINCE 1988 Breaking VC on the rise News State bucks national trend, sees investments increase By MARK SANCHEZ | MiBiz MICHIGAN — Venture capital investing in Michigan had one of its best years ever in Dunlap Irwin 2012, setting the stage for what one venture investor sees as “another very big year” for Huntington gets further growth. new local leader Investors put $232.31 million into 47 deals in Michigan last year, surpassing Huntington Bank has a new pre-recession levels and easily exceeding lead executive over its West the $84.75 million invested in 36 deals in Michigan market. 2011, according to the quarterly MoneyTree As Regional President report from the National Venture Capital Jim Dunlap focuse s on t he Association and PricewaterhouseCoopers. Huntington’s statewide oper- The 2012 activity positions the state well ations, veteran banker John PHOTO: JOE BOOMGAARD for the future, said Dale Grogan, co-manag- Irwin steps into the role as West Michigan market leader. Irwin ing director of the $15.1 million Michigan has been in banking for 32 years, Accelerator Fund I in Grand Rapids. the last 11 years with Huntington. “There are several funds that have money REV UP! He most recently worked as With a pick up in pickups, to invest, which means that capital is avail- Huntington’s corporate regional able. There is some really great innovation banking manager. growth in the luxury segment, that is coming from all three sectors of pub- “Huntington’s proven support lic institutions, existing companies and for business to drive economic and the rebirth of an icon, startup companies. That trend should con- per formance, par ticularly in Michigan, makes taking on my Detroit is ready to tinue for 2013,” Grogan said. The 2012 totals represent the third best new role a welcome challenge,” Irwin said. “It is rewarding to rep- year for venture investing in Michigan since the quarterly MoneyTree report resent a bank that is so intensely dedicated to its customers and Read our comprehensive reports from the 2013 North American started in 1995. The year was exceeded only communities.” Irwin reports to Dunlap and International Auto Show and the Society of Automotive by the $356.44 million put into 55 deals in 2000 and, in terms of just dollar value, the will collaborate with his counter- Analysts annual outlook conference. $253.47 million invested in 44 deals in 1999. part in eastern Michigan, Steve More than half of the money invested Fezzey, to build the bank’s state- in Michigan last year went into three com- wide focus. He takes over operations of AUTO OUTLOOK: PAGES 4-5 ■ NAIAS OVERVIEW: PAGES 18-20 panies: $72.64 million for Protean Electric one of the leading banks in the See RISE IN VC on page 2 region, particularly in the Grand Rapids area, where the Columbus, Ohio-based Huntington ranked fourth out of 29 banks in the 2012 FDIC Summary of Deposits and has 22 offices. Metro sells cancer center to NYC-based REIT Statewide, Huntington ranks By MARK SANCHEZ | MiBiz of the cancer center, Triangle Associates Inc. and went for medical equipment. A 15-year lease on seventh out of 160 banks with a group of physicians, said Mike Faas, CEO of the facility runs through June 2022 and will ini- $9.09 billion in deposits through Metro Health. tially generate $600,000 annually for the REIT, 140 offices and a 5.46 percent market share. WYOMING — One local health care system has “They kind of wanted to get out and we were according to a quarterly financial report filed “I have every confidence in opted to sell and lease back one of its key facilities fine with it,” Faas said. “We’re not in the mood with federal securities regulators. John’s abilities to continue the rather than continue to maintain the property itself. particularly to tie up our cash in real estate. The acquisition of the facility is the third in work that Huntington is doing American Realty Capital Healthcare Trust Whenever we can do this, we will.” Michigan for American Realty Capital, which in West Michigan, that he has Inc., a New York City-based real estate investment The deal is structured similarly to the sale since forming in 2011 has been buying medical already so significantly sup- trust (REIT), closed on the $6.2 million acquisi- years ago of Metro’s 13 outpatient centers in the office buildings, outpatient centers and senior ported,” Dunlap said. “I am look- tion last month of the Cancer Center at Metro Grand Rapids area that the health system leases housing facilities across the country and leasing ing forward to having even more Health Village as part of a much larger $214 mil- back. them back to care providers. The REIT owns 43 resources committed to Michigan lion deal for 14 medical facilities in nine states. Metro Health and its partners developed the health care properties in 16 states. that will continue to drive con- sistent positive outcomes across Metro Health will continue to provide radia- 21,502-square-foot radiation oncology center in In September 2012, the REIT acquired the two- the board in the state’s diverse tion therapy through a joint venture with the 2008 for $7.3 million, a good portion of which story, 100,321-square-foot, fully leased LakeView communities.” University of Michigan Health System at the cen- Outpatient Center in Paw Paw for $30.4 mil- — Mark Sanchez, MiBiz ter following the facility’s sale. RELATED STORY: Industrial firms seek sale- lion from Bronson Healthcare Group. Bronson The deal came together when the REIT leaseback agreements to free up capital. PAGE 11 acquired the outpatient center in 2007 when it approached the health system and the co-owners acquired LakeView Community Hospital.P E R I O D I C A L S Auto collapse spurs firm’s diversification GVSU expects PAGE 6 longer payback MADE IN on future green MICHIGAN projects Sponsored by: CHEMICAL BANK PAGE 15
  • 2. RISE IN VC the $10 million range, basically B or C rounds Venture Capital Association’s 2011 annualContinued from page 1 of funding.” report. Another seven firms based elsewhere Hogg attributes that to “an increasingly have an office in Michigan. Michigan venture capital in Auburn Hills that’s developing drive sys- vibrant technology and talent landscape in In the life sciences sector alone, VC invest- Here’s a look at venture capital activity in tems for electric and hybrid vehicles; $32.5 Michigan that can be linked back to the state ments in Michigan totaled $107.1 million Michigan going back to 1995 million to EcoMotors Inc. in Allen Park; and really investing in technology businesses five, through 16 deals last year, which compares $16.44 million to medical device company 10 years ago via the 21st Century Jobs Fund.” to $30.8 million in 16 deals in 2011, accord- YEAR DEALS DOLLAR VALUE CertoPherx Inc. in Ann Arbor. “Every state wants a technology indus- ing to Cleveland-based BioEnterprise, a bio- 2012 47 $232.31 million West Michigan-based companies that try but few are willing to invest and wait the medical accelerator that tracks biotech and received venture funding in the fourth quar- length of time it takes for it to take shape. I health care venture investing in the Midwest. 2011 36 $84.75 million ter were: think we are seeing just that here in Michigan, In terms of dollar value, the amount was the 2010 31 $151.66 million • Tolera Therapeutics, a Kalamazoo drug so kudos to the folks that fought hard for those best year for VC investing in life sciences in 2009 36 $178.45 million development company that received $5.41 programs then,” Hogg said. Michigan since before the recession. 2008 44 $204.03 million million from Hopen Life Science Ventures Eight of the 47 deals in Michigan were for Most Midwest markets saw increases in in Grand Rapids, the Kalamazoo-based $9 million or more, including the $9.2 mil- VC investing in life sciences during the year, 2007 23 $109.70 million Southwest Michigan Life Science Venture lion that five investors put into Kalamazoo- a contrast to the sector nationally. 2006 24 $131.25 million Fund, and Cincinnati, Ohio-based Triathlon based Vestaron Corp., which has developed “As with the rest of the country, Midwest 2005 21 $93.32 million Medical Ventures. an insecticide using spider venom. health care investing fell dramatically in 2004 17 $134.25 million Despite the gains over the 2009 after strong years in 2007 and 2008, but 2003 18 $95.17 million years, VC investing in Michigan it appears investors are again optimistic remains in what Grogan calls about Midwest deals. 2013 should be an inter- 2002 27 $109.42 million“Every state wants a technology industry a “nascent” stage compared esting year to watch,” BioEnterprise interim 2001 22 $154.92 million but few are willing to invest and wait the to other states, especially on President Aram Nerpouni said. 2000 55 $356.44 million length of time it takes for it to take shape. the coasts, because “we simply Nationally, VC investing in life sciences 1999 44 $253.47 million don’t have as much money to declined to 466 deals for $4.1 billion, a 15-per- I think we are seeing just that here in put to work.” cent decline in dollar value and flat deal vol- 1998 30 $122.64 million Michigan, so kudos to the folks that Still, Grogan said, there is ume. Much of the decline occurred in first- 1997 28 $106.22 million more venture funding available time financings for young companies, an 1996 21 $79.39 million fought hard for those programs then.” in Michigan than ever before. area that saw the lowest activity since 1995, 1995 12 $65.70 million —SAM HOGG Investors have increased con- according to the MoneyTree report. Partner at Open Prairie Ventures SOURCE: MONEYTREE REPORT fidence in Michigan’s eco- Tracy Lefteroff, global managing part- nomic resilience, and “there is ner of the venture capital practice at an awaking of entrepreneurs PricewaterhouseCoopers, attributes the activity came as the venture capital industry and outside investors alike that decline to regulatory uncertainty, plus the overall declined nationally. • Intervention Insights Inc., a Grand now is a good time to nurture Michigan invest- heavy amount of capital and the decade or Across the U.S., venture capitalists Rapids company that provides genetic tests ments,” he said. more it takes to move a life science innovation invested $26.5 billion in 3,698 deals, a 10-per- that are designed to match cancer patients Grogan noted the growing number of ven- from concept to the marketplace. cent decline in dollar value and a 6-percent with drugs that will best treat their tumor. The ture funds from outside of Michigan, Open “All of these factors have been taking their decline in deals from 2011, according to the company, spun out of the Van Andel Institute, Prairie included, that now have offices in the toll on investing in this space, even though MoneyTree report. received $1.6 million from undisclosed inves- state. everybody acknowledges there’s still tremen- Venture investing nationally in the fourth tors, according to the MoneyTree report. “They are here for a simple reason: There dous opportunity,” Lefterhoff said. quarter alone declined 3 percent to 968 com- In reviewing the 2012 MoneyTree data, Sam are opportunities in Michigan that are attrac- Investing in the medical device industry panies, although the dollar value increased 5 Hogg, a partner at Open Prairie Ventures that tive,” Grogan said. alone declined 13 percent nationwide to $2.4 percent to $6.4 billion. manages the Southwest Michigan Life Science As of a year ago, Michigan was home to 20 billion through 313 deals, which was down 15 “General economic uncertainty continues to Venture Fund, noted a “very noticeable uptick venture capital firms, up from 15 just three percent from 2011. hinder capital investments, and venture capi- in the number and quality of investments in years earlier, according to the Michigan In Michigan, the increased investment talists are no different,” Lefteroff said.2 FEBRUARY 4, 2013 / MiBiz Visit
  • 3. WHAT’S INSIDE Published since 1988 MiBiz® is a registered trademark of REVUE Holding Co., Inc. February 4, 2013 Editor & Publisher Brian Edwards / Managing Editor Joe Boomgaard (auto, manufacturing) 15 17 Senior Writers Mark Sanchez (finance, health care) Mike Brennan (technology) Staff Writer Elijah Brumback (real estate, energy) Contributing Reporters Lindsay Patton-Carson, Nick Manes Minion Stephanie Allen Columnists Melissa Anderson, Karl Dehn, Ron Kitchens, Birgit Klohs, Randy Thelen Vice President of Sales Denise Schott / Senior Advertising Consultant Shelly Keel / Creative Director Kim Kibby / MANUFACTURING ECONOMIC NONPROFIT Design Director Kristi Kortman / 4 Stability returns to auto outlook DEVELOPMENT ORGANIZATIONS Ad Designer & Traffic Coordinator 6 Auto collapse gives Alliance CNC 14 Discussion in Lansing shifts to 17 Q&A: Dr. James Edwards Kellie Zaplitny / a reason to branch out infrastructure Web Editor Jayson Bussa / 8 Communication critical to global 14 Business Leaders for Michigan FOCUS: 2013 AUTO pushes for education funding Circulation auto industry SHOW RECAP For address corrections or subscriptions, please visit 18 Good for Gearheads (And the REAL ESTATE & ENERGY planet, too) MiBiz DEVELOPMENT 15 GVSU stretches the energy 20 Consumers increasingly focus on ISSN 1085-4916 • USPS 017-099 Formerly MiBizWest • Established 1988 11 Industrial firms seek sale- efficiency dollar vehicle infotainment MiBiz is published every other week by REVUE Holding Co., Inc., 4927 Stariha Dr., leaseback agreements to free up Suite B, Muskegon, MI 49441. Telephone capital HEALTH BIZ (231) 798-4669. FAX (231) 798-8335. E- NOTABLE mail: Subscription changes: 12 LEED v4: New LEED revision 16 Report: Michigan docs able to Periodicals Postage is paid at slated as industry remains open 25 People & Datebook Muskegon, MI and additional mailing office. take on patients if Medicaid POSTMASTER: Send address changes to to alternative ratings expands 26 Q&A: Walter Monroe MiBiz, 4927 Stariha Dr., Suite B, Muskegon, MI 49441. Subscriptions are available without 26 In the News cost to qualified readers. Paid subscriptions are available to those not meeting qualified cir- culation requirements. Paid subscriptions are $46/year, $68/two years and $84/three years. Single copy and back issues (when available) are $1.50 each, plus first class postage. GRAND RAPIDS 65 Monroe Center, Suite 5 Grand Rapids, MI 49503 COMPANY INDEX Center for Healthcare Research ............ 16 IHS Automotive ...................................... 4, 20 People’s Health Center ............................. 22 616.726.6909 phone • 231.798.8335 fax Denso Manufacturing Michigan Inc. ... 22 Intervention Insights Inc............................. 2 Perrigo Co. .................................................... 22 LAKESHORE 4927 Stariha Drive, Suite BAIA Grand Rapids ...................................... 12 Dykema.......................................................... 22 Leitz Tooling Systems................................ 22 Priority Health .............................................. 22 Muskegon, MI 49441Alliance Cutter Grinding Service Inc...... 6 Fair Oaks Farms Brands Inc. ................... 22 LMC Automotive .......................................... 4 Progressive AE ............................................ 12 231.798.4669 phone • 231.798.8335 faxAssociated Rack Corp. ............................... 4 Fox Motors ............................................. 18,22 Lott3Metz Architecture ........................... 12 Quantum Sail Design Group ................... 22 COPYRIGHT ©2013. All Rights Reserved.BCBS of Michigan ...................................... 22 Friedman Real Estate Solution Inc. ....... 22 Mecosta County Medical Center .......... 22 Saint Mary’s Health Care ......................... 22 Reproduction or use of any portion withoutBlackford Capital ........................................ 22 Gartner Group ............................................. 20 Metro Health.............................................1,22 SW Mich. Life Science Venture Fund .... 2 permission of the publisher is prohibited.Breath Arrest LLC ...................................... 22 Globe of Michigan Inc................................. 4 Michigan Accelerator Fund I .................... 1 Spartan Stores Inc. .................................... 22Bronson Healthcare Group ....................... 1 Grand Rapids Chamber ............................ 14 Michigan Health Connect........................ 22 Three Oaks Group LLC............................. 22Business Leaders For Michigan ............ 14 Grand Valley Metro Council .................... 14 Michigan Venture Capital Association. . 2 Tolera Therapeutics ..................................... 2Cancer Center at Metro Health Village . 1 GVSU ......................................................... 11,17 Neogen Corp. .............................................. 22 Triangle Associates ...................................... 1Citi Research.................................................. 5 Honigman LLP ............................................. 22 North American Int’l Auto Show ........... 18 U of M Health System ............................... 22Cohen Financial .......................................... 11 Hope Network ............................................. 22 North Ottawa Comm. Health System .. 22 Van Andel Institute....................................... 2Colliers International ................................. 11 Hopen Life Science Ventures ................... 2 Open Prairie Ventures ................................. 2 Vestaron Corp ............................................... 2Consumers Energy..................................... 15 Huntington Bank........................................... 1 Owen-Ames-Kimball Co. ......................... 12 Warner Norcross & Judd LLP ................ 22Visit MiBiz / FEBRUARY 4, 2013 3
  • 4. MANUFACTURING IN BRIEF Stability returns to auto outlook By JOE BOOMGAARD | MiBiz Associated Rack continues GR A fter a half-decade on the roller expansion coaster, U.S. automakers are pre- paring for a slow, steady ride GRAND RAPIDS — Although that could yield strong profits for Associated Rack just moved carmakers and their suppliers to Grand Rapids in October, throughout the rest of the decade. t he c o mp any ha s alr e ad y The automotive industry could be settling expanded locally with a strate- into a sustainable period for the foreseeable gic acquisition. future, a period perhaps defined by its stabil- ity rather than any dramatic peaks and valleys. The Chicago-based Associ- Auto sales beat most analysts’ expectations ated Rack Corp., a man- last year by about 1 million units. U.S. light ufacturer primarily of racks vehicle sales rose 13.4 percent in 2012 to nearly and equipment for the materi- 14.5 million units, compared to about 12.8 mil- als coating industry, acquired lion units in the prior year. The Detroit Three Globe of Michigan Inc., a automakers, the main customers for many auto Grand Rapids-based metal suppliers in West Michigan, had a market share fabricator and manufacturer of of 44.8 percent last year, an erosion of 2.3 per- materials handling equipment. cent from the prior year. Although analysts expect light vehicle sales A report in MiBiz about the to grow this year, they say that growth will be expansion actually served as much more contained. That’s good news for a a catalyst behind this new- supply chain that’s been struggling to keep up e s t a c q ui s i t i o n , s ai d D o n with double-digit growth in the last couple of Bauer, engineering manager at years. Associated Rack. After reading But the forecast for slow, steady growth fails about Associated Rack’s expan- to tell the whole story, analysts said. sion into West Michigan, Globe While automakers have focused on the of Michigan President Dennis growth of smaller, more fuel-efficient cars dur- Velie reached out to the manu- ing the past few years, most analysts agree the facturer to discuss a potential automotive market will soon see resurgence in partnership. a somewhat unlikely segment: full-size pickup trucks, which are being bolstered by an improv- “Dennis saw the article in MiBiz ing housing market. These high-volume, highly and was looking to align with profitable models, coupled with growth in the another company to improve his premium vehicle segment, should help buoy product line,” Bauer said. automakers’ balance sheets even consider- Analysts believe the U.S. full-size pickup truck market is poised for a resurgence over the next Associated Rack and Globe of ing that overall sales are expected to flatten three to five years. That should translate into good news for many West Michigan automotive Michigan finalized the deal over through 2019. suppliers, which have long had strong concentrations in the full-size pickup segment, including the holidays. “I think 2013 could be characterized as the on the Ram 1500. The Ram was selected by automotive journalists as the North American Truck/ year of pickup trucks and the rebounding pre- Utility of the Year before the 2013 North American International Auto Show in Detroit. Operations for Globe of mium market, and I don’t think many of us PHOTO: JOE BOOMGAARD Michigan were moved from its would have thought that just a couple short facility at 1731 Michigan Street years ago,” said Jeff Schuster, senior vice pres- and rental buyers come back. All this starts to to Associated Rack’s newly ident of forecasting at LMC Automotive, in a build a healthier outlook,” Wall said. acquired plant at 4910 Kraft speech at the Society of Automotive Analysts SOCIETY OF AUTOMOTIVE LMC Automotive’s Schuster said improve- Avenue SE, near the Gerald Ford annual outlook conference in Detroit on Jan. 13. ANALYSTS 2013 OUTLOOK, ments in the general economy should continue What’s more, the local automotive supply to drive growth this year, as should the avail- International Airport. chain has another potential source of opti- AT A GLANCE ability of credit for vehicle buyers. While the idea of getting into mism: Automakers are continuing to increase ■ Industry growth will be more manage- Schuster said the long-term trends are look- materials handling equipment production in North America, which is lead- able through the end of the decade. ing favorable for the U.S. market. was not foreign to Associated ing to more import substitution as models that LMC projects U.S. light vehicle sales to sta- Rack, Bauer said the company ■ Any housing rebound should jumpstart had been imported to North America get pro- bilize and reach about 17 million units by 2018, never had enough experience the lucrative pickup truck market. duced here. Analysts say every gain for North although Schuster notes there is “more upside in the field to effectively expand America opens up new sourcing opportunities, ■ North America has become a preferred potential than there is downside risk.” into that industry. which translates into more potential business place to manufacture vehicles, includ- Another positive factor: Myriad new prod- and jobs in the supply chain. ing for export. ucts will bring more people into the show- “We kind of dabbled in mate- rooms. While 40 new or redesigned vehicles hit rials handling equipment, but the market in 2012, that number is expected to we wanted to par tner with CONTROLLED GROWTH top out at around 83 million units, said LMC jump to 61 in 2013, Schuster said. someone with experience,” Speakers at the SAA conference, held on the Automotive’s Schuster. “That’s a pretty pronounced increase in Bauer said. “Our goal is to eve of the North American International Auto “I would dare use the word stable,” Schuster model activity,” he said. expand our base and get more Show in Detroit, generally expected 2013 U.S. said of the global automotive forecast. While North America and Asia remain the involved in the materials han- light vehicle sales to reach about 15 million In North America, where both sales and pro- bright spots for the global automotive indus- dling and transport aspect of units, with a range of 14.9 million to 15.3 mil- duction have been climbing since 2009, IHS try, Europe is projected to continue to be a drag, our business.” lion units. Automotive has already revised its production with sales expected to fall 2 percent next year. All Globe of Michigan employ- That slow growth of about 4 percent comes forecast for the year to 15.9 million units, up Sales in Japan are also expected to drop 11 per- ees will retain their positions after a string of years that saw the industry grow about 440,000 units from its previous forecast cent, according to LMC. with Associated Rack. Velie will at a break-neck pace since 2008 and the depths at the end of last year. The European crisis has the potential to also stay on with the company, of the recession. “What’s baked into that is a rosier sales out- affect West Michigan suppliers, sources said. “It’s a great [respite] after three years of look,” Mike Wall, automotive analyst at IHS Many suppliers have plants or joint ventures Bauer said. double-digit sales growth,” said Ellen Hughes Automotive based in Grand Rapids, told MiBiz. in Europe to service the European market, or — Carl Dunker, MiBiz Cromwick, chief economist at Ford Motor Co., “We’ve been plodding along in this slow-but- ship product from the U.S. to be installed at who presented at the SAA conference. steady recovery, but we’re starting to see us European facilities. Meanwhile, global vehicle sales should tick finally make that pivot.” For example, Zeeland-based Gentex Corp. up a “very modest” 3 percent this year and “Leasing has come back. We’ve seen the fleet said in its earnings report on Jan. 29 that it4 FEBRUARY 4, 2013 / MiBiz Visit
  • 5. NORTH AMERICAN PRODUCTION AND CAPACITY NA Production Underutilized Capacity Utilization 25M 100% 20M 80% 1.6 1.5 1.4 1.4 BAUER 1.4 3.6 3.8 3.7 1.5 2.2 1.8 6.0 15M 5.3 4.3 60% 10M 9.2 40% sheet metal & fabricating 17.4 17.9 18.3 18.4 18.4 15.7 15.2 15.9 16.6 15.0 15.4 12.6 11.8 13.1 5M 20% EST. 1932 8.5 0 0% 5 6 07 8 9 10 11 12 13 14 15 16 17 18 19 0 0 0 0 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 SOURCE: LMC AUTOMOTIVEexpects sales to decline between 5 and 10 per- “I think we could get even a little bit higher decade, Schuster expects to see an increase ofcent in its first quarter of 2013. That’s because than (our forecast),” Wall said. “I think we around 4 million units in production capac-“unstable macroeconomic factors continue have the capacity, and as housing starts to ity in North America, resulting in a 76 per-to be a concern, especially the sovereign debt come back, I think we could see that pick up a cent rise in North American productioncrisis in Europe, as it is the company’s largest bit further. But more importantly, I think we across non-domestic automakers includingshipping destination,” Gentex reported. could see some sustainability in the 2.1 (mil- Daimler, Honda, Hyundai, Nissan, Toyota and Schuster said the recovery in Western lion) to 2.2 (million) threshold for a while.” Volkswagen.Europe could take longer than a decade, Wall said growth in the pickup truck seg- Secondly, North America is increas-which compares to the five-year recovery ment coupled with recent (Dodge) or very ingly becoming an export hub. Some of thefrom the recession that occurred there in the near-term (GM and Ford) truck redesigns European automakers are looking to sourceearly 1990s. By 2020, LMC expects Europeansales to cross the 14-million-unit mark —“still 500,000 units below the level it was at in2007,” Schuster said. He expects production Where is pent-up demand more apparent?in Europe to have declined about 6 percent in2012 and to continue to dip another 4.2 per-cent for 2013. Estimated production levels for Europe areabout 18.5 million units for 2013, which com- ■ Average age: less than 11 years ■ Average age: less than 13 yearspares to 22 million in 2007. ■ Population down since 2007 ■ Population up since 2007 ■ Scrap rate higher than trend ■ Scrap rate less than trend (light trucks)RETURN OF PICKUPS ■ Solid used vehicle values ■ Solid/better used vehicle valuesAmong the new vehicles set to launch this ■ Product cycles mostly complete ■ GM has 41% of full-size pickups on roadyear are the 2014 Chevrolet Silverado and ■ Varied segment loyalty ■ Highest segment loyaltyGMC Sierra full-size pickup trucks. And,according to Itay Michaeli, vice president at ■ Prone to declining density ■ Geographically advantagedCiti Investment Research and Analysis, they SOURCE: CITI RESEARCHcouldn’t be hitting the market at a better time. Michaeli, speaking at the SAA conference,said he believes the U.S. market is “on the cuspof a major unlocking of pent-up demand” forfull-size pickup trucks over the next three to could have “huge implications” for the supply chain in West Michigan. “For a lot of suppliers on this side of the vehicles for the global market from just one plant. BMW sees its North American plants as its one global source for crossovers, for 68 years offive years. state, a healthy chunk of their business is com- example, while Honda plans to “grow exports “What’s astonishing is that every pent-updemand indicator we look at — and I meanevery one — screens much more positively for prised of that full-size truck and SUV lineup,” he said. “The beauty of all this is that the hous- ing market is starting to turn. There is a very significantly” by sourcing several Honda and Acura vehicles exclusively from North America. sheet metalpickup trucks than it does for cars,” Michaeli solid correlation between housing starts and “This is using a lot of that capacity that’ssaid. “I think it’s analytically almost impos-sible to be very optimistic or bullish on autosales, but to be pessimistic or not equally as pickup truck sales.” come in,” Schuster said. That increase in North American produc- tion volume from non-domestic companies and steelbullish — if not more — on the pickup truck IMPORT SUBSTITUTION that used to import vehicles or that are start-segment.” The same improved economy that’s buoying ing up new products also creates an opportu- The root of that optimism starts with hous-ing. The U.S. Census Bureau reported that pickup truck sales should also translate into better sales in the premium vehicle and lux- nity for suppliers, he said. In addition to the volume increases, many of the non-domestic fabricationabout 1 million new households were formed ury segment, the analysts said. automakers that build cars in North Americalast year, and analysts reported the housing Improved higher-end sales also bode well have less than 50 percent of the content oninventory stands at about 4.7 months, which isinsufficient to meet increased demand. for the North American supply chain since these days, those brands — especially BMW, those vehicles sourced from suppliers in North America. expertise “We’re starting to see a little more nor- Audi and Mercedes-Benz — are building more Last year, the North American marketmal re-synching up of housing and autos, products in North America instead of import- imported about 3.9 million units, while auto-in particular, pickups, which are so impor- ing them, what the analysts term import sub- makers exported about 1.3 million units thattant to the housing recovery,” said Ford’s stitution. And the luxury segment isn’t alone, were produced in North America, accordingHughes-Cromwick. as Honda, Toyota, and Hyundai-Kia all shift to IHS Automotive data. Other contributing factors, according to production to North America from Asia. Wall from IHS Automotive said import www.bauersheetmetal.comCiti’s Michaeli: The average age of U.S. pickup “We’re entering into a period that we have substitution should really become noticeabletrucks is about 13 years old, fewer trucks are not seen in several decades where production in 2014 and 2015 as automakers bring onlinegetting scrapped, used trucks have held their volume outpaces demand in the U.S.,” said new facilities in Mexico.values, and full-size trucks are just at the start LMC’s Schuster. “Import substitution is huge and … it’sof the new product cycle. That’s because of two different kinds of going to heat up even further,” Wall said. “As IHS forecasts sales this year of 2.2 million investment, Schuster said. that heats up, all they do there is basicallyfull-size pickups, not including some of the One, automakers have already expanded build vehicles here that they formerly hadSUVs that share platforms with those vehicles. capacity by about 600,000 units in the U.S. imported. In many cases, it’s just moving thatThat compares to 2009, when pickup truck on top of new capacity of about 1.9 mil- production here. And I think there’s more tosales hit just 1.3 million units, Wall said. lion units in Mexico. Through the end of the come, too.”Visit MiBiz / FEBRUARY 4, 2013 5
  • 6. MANUFACTURINGBOUNCE BACKAuto collapse gives Alliance CNCa reason to branch outBy CARL DUNKER | MiBizcdunker@mibiz.comW hile it took a big hit from the economic downturn and near-collapse of the American auto industry, Alliance CNC bounced back through equal doses of reinvention and diversification. Alliance Cutter Grinding Service Inc., commonlyknown as Alliance CNC, started life primarily as a supplier to theautomotive industry. But when a key customer moved operationssouth and the auto industry collapsed, the small manufacturingcompany was forced to look to other industry segments for survival. Dick Czarniecki, Alliance CNC’s president, said that while COURTESY PHOTOSthe company came from humble roots, it hit its stride when itbegan doing business with Diesel Tech, an auto supplier that Industry-wide, sales for many of Alliance CNC’s peerswas formerly owned by Penske Corp. However, when Diesel stayed flat in 2012 despite starting the year strong, accordingTech was sold and “90 percent of their operations” moved to the Precision Machined Products Association 2012 busi-south, Alliance lost a significant amount of business and ness trends report released in January. Sales were negativelyneeded to make some deep cuts. affected by the “brinksmanship leading up to the election,” “We lost about half of our business,” Czarniecki said. Miles Free, director of industry research and technology at The company took a second big hit when the domestic auto PMPA, stated in the report.industry nosedived. Two of Alliance’s biggest customers, General Free’s outlook for 2013 was “gently optimistic” based onMotors and Chrysler, went from being among the largest manu- the strength of the auto industry, a resurgence in housing,facturers of automobiles in the world to getting bailed out by the increased aerospace sales, and strong performance in theU.S. taxpayers in 2009. medical device industry. The GM and Chrysler bankruptcy and the “We are guardedly optimistic about our indus-coinciding loss in sales came at an inopportune try sales for 2013 if Washington can stop para-time for Alliance CNC: The company had just lyzing the markets we serve,” Free stated in thepurchased $1.5 million in new equipment to report. “Our data suggest that the precisionhelp improve operations at its Grand Rapids machining industry is well positioned to takeplant. advantage of growth in demand that can be This lost business caused Czarniecki to reasonably foreseen in automotive, housing, MADE IN MICHIGANthink creatively about where Alliance CNC MADE IN aerospace and medical devices, if — and thisneeded to go next. “That gave us the reason to diversify and MICHIGAN is a strong if — the pols in D.C. can get the heck out of the way and let our small business job- A lliance Cutter Grinding Service Inc, known as Alliance CNC, is a Grand Rapids-based manufacturer of custom cutting tools for the automotive, medical device and steelmove out into other industries,” Czarniecki Sponsored by: creator entrepreneurs — and our customers — industries. What began as a one-man shop in 1995 grew oversaid. “We worked with the machines and CHEMICAL BANK have confidence in the year ahead. If not, the the past 18 years into a company that did $4 million in salestechnology to develop a greater variety of opportunity for growth that is 2013 will go to last year and employed 20 in its 10,000-square-foot facility.product offerings.” waste just like it did in 2012.” The small batches that Alliance CNC works with allow the Alliance is a manufacturer of custom cutting tools primar- At Alliance CNC, Czarniecki said the company continues to company to reduce lead time and allow for customizationsily for the auto industry, although its product line also includes develop its manufacturing process over years of working with such as the addition of coatings or laser etching and a varietytools for the medical device and steel markets. Founded in clients to identify the specific needs and how best to serve them. of other edge preparation options.1995, the Grand Rapids-based company grew from a one-man “We work with the customer to develop the tools and developshop and now employs 20 workers in its 10,000-square-foot the process we use to manufacture those tools,” Czarniecki said.facility just south of 44th Street. Alliance CNC works in small batches to better serve its cus- The company branched out into serving other industries tomers by reducing lead times. Working in small production skilled labor to fill open positions.including other second-tier automotive suppliers, medi- batches also allows for a greater variety of product offerings “I guess our biggest challenge is getting the talent, gettingcal device companies and steel manufacturers. For exam- and customization including special coatings and laser etch- those jobs that aren’t necessarily college jobs,” Czarniecki said.ple, it picked up work with Kentwood-based Autocam Corp., ing as well as multiple options for edge preparation. The challenge with the candidates Alliance CNC does findCzarniecki said. Additionally, Czarniecki told MiBiz that the company’s is that they are often inexperienced and lack the self-motiva- This diversification allowed Alliance CNC to survive as the designers use their combined 75 years of experience to develop tion and initiative to be effective workers. Czarniecki hopes toeconomy plodded along and helped it bounce back as the econ- the tools best suited to clients’ needs. Quality is assured remedy the problem by working with local colleges to developomy rebounded, he said. throughout the manufacturing process though a quality con- the kinds of employees manufacturers need today. Currently, Czarniecki said he is running two, 50-hour shifts trol department that maintains its objectivity by being inde- “Nobody’s going to be babysitting you. Nobody’s going toat the 20-person operation. Sales grew by 20 percent in both pendent of the manufacturing department. be handholding. So we need self-motivated, hard-working2011 and 2012 to reach $4 million, up almost $3 million from As with many West Michigan manufacturers, one of the people who can show up every day and produce,” Czarnieckithe depth of the recession, Czarniecki told MiBiz. greatest obstacles to growth for Alliance CNC is the lack of said.6 FEBRUARY 4, 2013 / MiBiz Visit
  • 7. Monday, March 11, 2013 Radisson Hotel, Lansing 8:00 am - 1:00 pmVisit MiBiz / FEBRUARY 4, 2013 7
  • 8. MANUFACTURING Auto Focus■ O P I N I O N / A N A LY S I S By Melissa Anderson Vice President, IRN Inc. melissaa@think-irn.comCommunication critical to global auto industryT he automotive industry has increas- as they “follow the work” when design centers In our regular strategy sessions with the When asked why skilled professionals ingly become an environment that are located in other regions (e.g. Ford Cologne Japanese client, the constraints presented by coming from countries with compulsory requires a great deal of interaction for new small car programs, Fiat in Italy for varying degrees of English fluency are cer- English language study have this problem,between native English-speaking and inter- Chrysler’s small engines), or penetrate and grow tainly obvious to us, but we have to question Headbloom explains, “There is a huge dif-national personnel. business with new customers, e.g. Hyundai in what can be done about it. ference between studying a foreign language Within our client base, for example, there Korea. Many supplier personnel regularly inter- There is a resource in West Michigan to help and speaking a foreign language. Ask anyis a foreign-owned supplier with U.S. opera- face with counterparts of a different nationality address these challenges. Alan Headbloom of American if he or she could go to work everytions that regularly moves people back and in the daily course of business. Headbloom Cross-Cultural Communication day and produce the same results using theirforth between the U.S. and Japan to transfer In all of these situations, good communi- combines a background in linguistics (the high school Spanish or French. This is espe-knowledge and information, develop manag- cation is critical to being able to fully realize technical study of language), teaching English cially noticeable in Japan, which has a cultureers, and fulfill the responsibilities of corporate the benefits of the interaction and smoothly as a second language, and extensive experi- of face-saving and not standing accomplish goals, yet we find that the impor- ence living and traveling abroad to help for- “In language learning, in fact, you must We also know many companies that hire tance of high quality communication is not eign-born professionals communicate with look foolish—putting strange sounds in yourforeign nationals to be based here or overseas always recognized or understood. more comfort and accuracy. mouth, taking risks of being wrong, expos- ing your knowledge and performance gaps in front of classmates. This is compounded because Japanese teachers of English often have poor speaking skills in English and may focus on grammar and writing, instead of speaking and listening—a mainstay of inter- actions in the business world.” It is a practical problem for a company, but it is also an issue for the career development of the individual employee. We all make judg- ments about someone based on their speech, their fluency and their vocabulary. That might not be fair, according to Headbloom. “If a foreign engineer gives really short explanations to the problem the team is work- ing on, the Americans may think s/he’s not very knowledgeable,” Headbloom said. “In fact, it may be that s/he is working hard at not making a mistake (a preoccupation of many language learners) and so is only putting out short, confidently correct utterances. It may be s/he has only one way to describe the issue, where a native might judge his/her team is not following and then look to paraphrase or give a different example.” One of the services Alan Headbloom pro- vides is language coaching. This can continue even after an expatriate becomes reason- ably fluent. For example, a Brazilian engi- neer writes him weekly with short questions about slang used in co-worker or subordinate e-mails. In a case of needing to suspend an employee, he checked with Headbloom to see if his tone was appropriate before sending an e-mail. There are cultural and professional nuances that go far beyond grammar and spelling. Similarly, there are soft benefits that relate to job satisfaction. “The more colloquial my clients are, the more comfortable they can be at work,” he said. “They understand what their co-work- ers are talking (or joking) about and they can enter the repartee with real-life, appropriate expressions.” As we have said in other columns, opera- tional excellence is essential to success in the highly competitive global auto industry. Seemingly small things can make a big dif- ference. Understanding how your colleagues think and gaining the maximum benefit of their input is worth some investment. The essence is to equip people to fit in. They need to be girded with the right language tools and the cultural understanding (and “rules”) to be full-fledged participants in their new world. It does not happen quickly — or automati- cally — but the results are worth their weight in gold. Melissa Anderson joined the staff of IRN in 1986. Her primary role in the organiza- tion is as the architect of custom research projects that help clients assess the market potential for new products, prioritize cus- tomer targets, understand industry trends, and other facets of strategic marketing.8 FEBRUARY 4, 2013 / MiBiz Visit
  • 9. Have a specific need? Our candidates have specific training. Health Engineering/ Education & Business Computers Technology Human Services When you have a position to fill, you want someone who’s qualified and ready to hit the ground running. Baker College’s HireQualified® can help. Our candidates are highly trained in very specific areas by instructors who are working professionals. They know what’s needed in their industries and teach practical experience over theory. The service is free—the result is just the person you are looking for. To learn more about how we can help you find the best candidate for your needs, or to schedule a meeting at your place of business, visit Free recruiting services from America’s leading career college. X6405HQ KALAMAZOO SPACE CERTIFIED SHEET METAL Warehouse - Office - Manufacturing A Division of East Muskegon Roofing and Sheet Metal • Food Processing • Educational • Commercial • Institutional • Hospitals • Government I need space!!! • Industrial • Mining • Mechanical Contractors • Drug and Pharmaceutical • Those requiring USDA and FDA standards 269.345.4546 616.791.6900 • Goodwill=Green Free Computer and TV Recycling DONATE: Protect the environment + provide job training | 231-722-7871Visit MiBiz / FEBRUARY 4, 2013 9
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  • 11. REAL ESTATE & DEVELOPMENT reporter’s NOTEBOOK Elijah Brumback writes about real estate and development, design/ build and energy. 616-608-6170 | I t’s time to lock in long- term financing and get debt deals done now. That’s the word from ana- lysts and brokers at Colliers International’s annual forecast held Jan. 25 in Grand Rapids. While interest rates are at historic lows now, Colliers’ Economist K.C. Conway said economic headwinds in the coming years could close the window on cheap debt. Issues with the country’s fiscal health are spurring investment fears nationally, locking up roughly more than $2 trillion of private capital. “If you’re planning to do a debt deal, get it done this year,” Conway said. “The Fed has sewn just incredible seeds of inflation. Their balance sheet is now 20 percent of our annual GDP in our $15 trillion dollar economy. There is a day of reck- oning for that.” Conway expects any resolution to happen quickly and abruptly and within the next two to BUILD-SELL-LEASE three years, setting up concern for 2014. Coupled with uncertainties in health care reform and other regulations, Conway said he believes national GDP growth Industrial firms seek sale-leaseback agreements to free up capital could be constrained by as much as 50 percent. Regionally, an additional $200By ELIJAH BRUMBACK | MiBiz While an early January report from Brian Long, Grand Valley State billion to $250 billion a University’s director supply chain management research, had the West for the last three years was Michigan industrial economy trending f lat, a preliminarily purchas- absent from the West MichiganC ommercial real estate brokers say industrial companies look- ing managers index (PMI) released on Jan. 24 by research outlet Markit economy due to these fiscal ing to free up some capital need only to look as far as their own put U.S. manufacturing at a 22-month high. The report showed PMI at unknowns, said Paul Isley, chair property for one potential source. 56.1, up from 54.0 in December. This is the strongest rate of growth since of economics at Grand Valley That’s because through sale-leaseback agreements with March 2011, according to the firm. State University. local or out-of-state investor groups, companies can put their In the West Michigan industrial market, which is responsible for a large For the meantime, a perfect real estate to work for them at a time when banks and other portion of the recent momentum in commercial real estate sales and leas- storm for financing real estate institutional lenders are slow to release financing for expan- ing, the remaining inventory of quality space is running thin. This is driv- remains as the region is seeing sions or other needs. ing up prices for space, resulting in companies having a its supply of high-end office and The resurgence of this strategy is spurred primarily by difficult time finding space if they’re looking to relocate industrial properties diminish.recovering market conditions and by better investor mar- or expand.gins in so-called secondary markets like Grand Rapids. “The greater “The greater perspective is that we have a glut of With the “aggressive” local Prior to 2008 and 2009, sale-leaseback agreements perspective is that manufacturing buildings and no demand, but that’s banks, the national insurance lenders and commercial mort-were fairly commonplace, but almost vanished from themarketplace when the recession hit, according to indus- we have a glut of exactly the opposite of what we have. We are out of property,” said Duke gage backed securities, it’s nottry sources. When the bottom fell out of the economy, manufacturing Suw yn, president and CEO of West a matter of what’s available, but what options a borrower wants.many companies’ weak balance sheets couldn’t support buildings and Michigan brokerage for Colliers.such a transaction and what cash flow was in place didn’t This past year, rates for some indus- “There are so many optionsgive buyers much confidence to invest, sources said. no demand, but trial spaces rose from about $20 per that it’s a borrower’s market “It used to be a regular component of the market- that’s exactly the square foot for a typical, run-of-the-mill, right now,” said Cathy Brokema,place,” said Colin Kraay, a commercial broker and invest- 20,000-square-foot industrial build- partner and VP of the Cohenment group leader for Colliers International in Grand opposite of what ing to $40 per square-foot and beyond. Financial office in Grand Rapids.Rapids. “Now that the market has bounced back a bit and we have. We are Some buildings even garnered more Suwyn “We are at historically low rates,is more stable, we’re seeing a lot more interest in (sale-leasebacks) because there is so much less risk in these out of property.” than $60 per square foot, Suwyn said. “When we get to that, we’re starting to approach new so really, now is the time to get that capital.”types of deals.” —DUKE SUWYN construction,” he said. “Quarter by quarter, rates contin- Investors are looking for safe and stable investments, President and CEO of Colliers ued to jump.”and West Michigan manufacturers and other businesses International-West Michigan That’s where sale-leaseback agreements started tohave proven to be a good bet for investors with cash on come back into play, Kraay said. Some strong companieshand, Kraay said. See SALE-LEASEBACK on page 13Visit MiBiz / FEBRUARY 4, 2013 11
  • 12. REAL ESTATE & DEVELOPMENTLEED v4:By ELIJAH BRUMBACK | MiBiz New LEED revision slated as industry remains open to alternative ratings With the conversation about green building practices ting ever more complex, Kris Ford, project manager for Owen- Ames-Kimball Co. and chair of the West Michigan Chapter ofA s the U.S. Green Building Council readies the the USGBC, maintains LEED still sets the bar for companies’ fourth iteration of its Leadership in Energy and initial forays into sustainable building design and practices. Environmental Design (LEED) rating system and With the “Version Four” LEED rating system slated for beta a host of updates to the program, some insiders testing through November 2013, Ford said reducing the amount say the market for green building certifications is of paperwork and simplifying the reporting process are just primed for new competition. small steps in an overall effort to improve the standards, which While the USGBC hopes to address increased technologi- were last updated in processes and new market sectors as well as streamline its “Version four is going to be more robust,” Ford said. services, industry profes- “Between June and November, there will be a number of edu- sionals believe LEED could cational programs to introduce people to the changes.” see some push back from a In collaboration with the USGBC’s Detroit chapter, the DESIGN grassroots level. West Michigan branch is also hosting a second Green Schools + BUILD “I think 2013 could be the year we see whether or not Conference in Lansing in June. The conference is meant to explore how future schools will operate and how sustainable the USGBC will continue design is implemented within them. Coverage sponsored by: its dominance or we’ll start The West Michigan area is a leader in sustainable building ROCKFORD to see people’s eyes glazing at the educational and institutional level, Ford said. Getting CONSTRUCTION over,” said David Bell, sus- more of the commercial sector to follow is a continued chal- tainability coordinator and lenge, he added. senior mechanical engineer One expected change under the next LEED iteration isat Progressive AE in Grand Rapids. “I don’t know if it’s a good accommodating more information sharing on buildings’or bad thing, but there is certainly room in the marketplace for energy usage and the development of better cloud-based dataother flavors. Really, it’s all about what is important to build- management systems for building metrics, according to someing owners.” industry watchers. Some experts also forecast the increased While Bell does recognize the marketable value of hav- usage of solar power a third-party certification evaluate a building’s sustain- “Energy costs — rising or falling — always affect projectability and efficiency measures, it’s the design and engineer- design decisions,” said Brian Swem, architect at Lott3Metzing companies that have to step up and Architecture and president of the The Lacks Cancer Center at Saint Mary’s Mary’s Healthhelp coach clients in a more tailored way American Institute of Architects Grand Care is one of the region’s early adopters of LEED standards.about the benefits of the program. Rapids. “As costs do rise, we’re looking However, health care systems today are one of the most A comprehensive approach means “2013 could be the year to incorporate more passive house and progressive industry sectors for LEED construction andthat clients must go beyond picking we see whether or not zero energy building concepts into our retrofitting. COURTESY PHOTOout the most efficient light fixtures orinstalling low-flow toilets — in essence, the USGBC will continue standardgrail of the ‘off the Regardless, the holy design practice. grid’ build-the low-hanging fruit, Bell said. its dominance or we’ll ing remains out of reach for the general Swem agreed. “Certainly, there are some base fun- start to see people’s marketplace.” “LEED has changed how we’re building buildings in a posi-damentals that are all pretty attainable,” With a lot of uncertainty and volatil- tive way and it remains a great place to start, but many realBell said. “However, it’s important to eyes glazing over. I don’t ity surrounding electricity prices, Bell world building applications don’t fit well in the LEED programlook at what makes the most sense from know if it’s a good or said the use of solar power is factoring and ultimately don’t serve the needs of our clients,” Swem said.a life cycle perspective, and that changes bad thing, but there is into the long-term cost equations for “LEED will be with us for many years. It is a measuring systemdepending on the functions of each dif- some of Progressive AE’s customers. that is accepted by both the public and private sectors. It mayferent business.” certainly room in the “We’re seeing great pricing for solar, be used less over the years but it’s going to around for a long On the national level, movements marketplace for other and with electric rates rising, some peo- time.”like the Living Buildings Challenge flavors. Really, it’s all ple are saying we’re already at grid par- In the development of new buildings, developers used toand NetZero are two examples of really ity,” he said. “Depending on how you concern themselves with only the up-front costs of the projects,aggressive practices being pushed in about what is important do the math, it’s either here now or it’s Bell said. However, as more studies start to show that sustain-some regions. Both are expected to to building owners.” coming soon.” able buildings sell and lease for higher dollar amounts, savvychallenge the ubiquity of LEED or even The USGBC has set the groundwork developers are looking at the costs of sustainable buildingsEnergy Star certifications, as well as —DAVID BELL for sustainable building practices, but from a much more long term perspective, he out their strategy and marketplace Sustainability coordinator and senior there are more aggressive voices saying “LEED helped established this language that wasn’t there mechanical engineer at Progressive AEadvantage, sources said. that LEED is just the tip of the iceberg in before,” Bell said. “LEED is great, but the blinders are off now green design, Bell said. for people.”12 FEBRUARY 4, 2013 / MiBiz Visit
  • 13. SALE-LEASEBACKContinued from page 11realized that they could cash in their space population of business owners looking forand free up some capital, while at the same exit strategies and estate planning, Kraaytime lock into a long-term fixed-rate lease said.and reduce their tax liability, he said. Those So far, Kraay and others in the Colliersbenefits have been enough to convince a office have worked with buyers fromgrowing number of companies that owning Boston, Chicago, California, Tennesseetheir own facilities is not the only solution, and Ohio. In the fourth quarter of 2012, thehe said. Grand Rapids office closed on more than While the practice hasn’t become wide- $30 million in investment real estate, whichspread just yet, Kraay said some strategic includes retail, office and industrial. For thecompanies see sale-leaseback agreements as first quarter of 2013, Kraay said the firm hasjust one more option in the cor- roughly more than $35 millionporate strategy playbook. in investment real estate sales “Historically, if you’re a man- pending.ufacturer you own your own RELATED “That’s almost a return tobuilding. That’s just been the STORY: where we were at the peak ofkind of West Michigan conserva- Metro sells cancer the marketplace,” he said. “Astive mentality of long-term own- center to NYC- far deal velocity and momen-ership,” Kraay said. “The reality based REIT. PAGE 1 tum, it’s pretty good. Those areis, is when a lot of these compa- pretty big numbers for Westnies see growth opportunities, Michigan.”they can’t quite come up with enough capital For greater Grand Rapids as a whole,to make that next jump. One of ways they can Kraay said the area could probably expect toopen up their business to grow is to sell the see about $100 million in investment dealsreal estate and take what equity they get out for the last two quarters.of it to do an expansion, modernize facilities Looking ahead for what’s to come in theor hire people — whatever you need to do.” market this year, Suwyn sees developers On the buyer’s side, Grand Rapids hasn’t and companies looking at new industrialnecessarily been on radar to the types construction. While the gap between theof investors who are interested in lean, cost of new construction and current inven-advanced manufacturing facilities, Kraay tory isn’t at parity, Suwyn predicts there willsaid. However, as West Michigan’s recovery be a tipping point this year.continues to garner attention outside the “Conversation is starting to occur onregion, many investors have started to give what do we build, when do we build it andthe area a second look as they search for where do we build it,” he said. “Has anybodyemerging growth opportunities. really pulled the trigger yet? No. Do I expect Another factor contributing to a return someone to pull the trigger this year? sale-leaseback agreements: an aging There is no question we’ll see it.”Visit MiBiz / FEBRUARY 4, 2013 13
  • 14. ECONOMIC DEVELOPMENTDiscussion in Lansing shifts to infrastructure In the 2013 Grand Rapids Area Chamber and allowing an optional local or regional reg-Snyder proposes increased fees to fix state’s aging roads of Commerce government affairs survey, the istration fee. condition of the state’s roads and bridges Prior to the governor’s State of the StateBy MARK SANCHEZ | MiBiz on growth, and that’s people and infrastruc- ranked eighth among the issues that respond- address, the Michigan office of the ture. With infrastructure, you need to kind of ing members viewed as important to their Federation of Independent Businesses touted keep yourself connected in the whole economy. business. Among transportation and infra- results of a 2012 survey that indicate its mem-MICHIGAN — If nothing else, Gov. Rick Snyder’s That’s why we’re fully supportive of the gover- structure issues alone, adequate funding that bers largely oppose increased taxes to pay forfocus on improving funding for Michigan’s nor’s call for transportation funding,” Business keeps infrastructure in “good” or “fair” condi- road improvements.aging roads and bridges positions the issue Leaders for Michigan CEO Doug Rothwell told tion rated at the top. Sixty-eight percent of respondents to thetoward the top of the agenda in Lansing. MiBiz. “We are agnostic in terms of what that While business groups like the Grand NFIB survey said they would not support a While various ideas circulate on how to gen- funding system or structure looks like. As long Rapids Chamber typically loathe any tax higher gas tax at the retail level, 60 percenterate the $1.2 billion annually the governor says as it solves the problem for a number of years increases, Johnston takes the view of Gov. would not back transitioning the tax to theis needed to improve the state’s deteriorating and we’re not back here in three or four years Snyder: The roads need attention and the cost wholesale level, and 75 percent would notroads, parties with a stake in the issue say they having the same conversation, we’d probably is only going to increase if left unaddressed. support increasing driver’s license and vehi-welcome the attention that it’s finally getting. be supportive of almost any reasonable plan “It absolutely is an instance to save money cle registration fees. “We need a good, serious discussion on it that the legislature may come up with.” over the long term,” Johnston said. Forty-nine percent indicated support forbecause too much of our economy and qual- Sixty-five percent of Michigan’s roads and While there’s plenty of consensus that allowing local governments to raise moneyity of life is dependent on the quality of trans- bridges are now in “good” or “fair” condition, Michigan needs to fix its road system, there’s for roads through a public vote and 44 percentportation,” said John Weiss, executive director according to the Michigan Department of not nearly as much agreement over how to do oppose it. Half of respondents opposed elimi-of the Grand Valley Metro Council in Grand Transportation. Under the present funding it. There’s also an anti-tax sentiment within his nating the gas tax and raising the state sales taxRapids that consists of municipalities in Kent level, that will fall to 35 percent by the end of own party that the Republican governor will by a cent, while 35 percent supported the mea-and Ottawa counties. the decade and cost the state millions more to have to overcome. Then there are the Democrats, sure, according to results of the NFIB survey. Gov. Snyder made road funding a top prior- address in the years ahead. who are not in any mood to assist Gov. Snyder, “While we recognize the need for goodity in his recent State of the State address. The “That is not going to be contributing to a especially after the passage of right-to-work leg- roads and adequate funding, this is a difficultissue has also received increased focus from positive business environment,” said Andy islation just prior to the end of 2012. time for tax and fee increases on Michiganbusiness advocates across the state. Johnston, vice president of government In his State of the State address last month, small business job providers. NFIB small busi- Business Leaders for Michigan, a coalition affairs at the Grand Rapids Area Chamber of Gov. Snyder proposed generating $12 bil- ness owners have made it clear that they areof top CEOs and university presidents, views Commerce. lion over 10 years by shifting the gas tax from not supportive of a motor fuels tax increaseimproved roads funding as a top priority. A good road system is particularly impor- the retail to the wholesale level, increasing or a hike in vehicle registration fees,” states “There are two things that you can invest in tant to economic development and the state’s the vehicle registration fee for cars and light the NFIB’s recently released 2013 legislativeas a government that will have the best impact $17 billion tourism industry, Johnston said. trucks by an average of about $120 per vehicle, agenda.Business Leaders for Michigan pushes for education funding spending per college student fell by needs to dedicate at least 1 percent of high school degree, Rothwell said. to the universities if they show cer-By MIKE BRENNAN | MiBiz 35 percent over the past decade, said the K-12 budget on early childhood While the state has thousands of tain results, the money does Doug Rothwell, president and CEO of education, Rothwell said, to better open, unfilled positions, at least 80 provide universities with the abil- Business Leaders for Michigan. prepare children for grade school. percent of them require a minimum ity to plan or restrain tuition costs,GRAND RAPIDS — Michigan needs In an editorial board meeting In the Michigan Turnaround of an associate degree. Those jobs Rothwell said. He said Michiganto spend another $1 billion on higher with MiBiz, Rothwell said increased Plan developed by the group in 2009, include registered nurses, accoun- universities are very efficient ineducation to produce graduates state funding would help ease Michigan has made great progress on tants and auditors, industrial engi- comparison to peer institutions, butwith the advanced skills needed for tuition increases at the state’s 15 the first three pillars, said Business neers, computer systems analysts, they have not been able to make upthe 21st century economy, contends public four-year universities and Leaders For Michigan board mem- management analysts and more. for the massive state cuts.Business Leaders for Michigan. take the financial pressure off par- ber and former Perrigo Chairman Ideally, Rothwell said, the state Another way to add more money But the state also needs to spend ents now forced to cover the state’s Michael Jandernoa. Those pil- would add $100 million a year for to university budgets would be tomore money on early childhood funding shortfalls. lars include “responsibly manage the next 10 years to higher education attract more out-of-state students,education and on the state’s crum- “We’ve shifted the burden to par- finances,” “effectively and efficiently funding. Getting this money could Rothwell said. If Michigan universi-bling infrastructure. ents from government,” he said. “We provide public services,” and “create come from improving state rev- ties attracted the same percentage According to statistics provided need more kids in the state to get a a competitive business climate.” On enues and reducing expenditures, of non-resident students as otherby the business group, state spending higher education.” the fourth pillar, “strategically invest particularly in the Department of states, it would mean an additionalin 2001 accounted for around 50 per- Higher emphasis should be placed for future growth,” much work needs Corrections. Currently the state $200 million to the universities andcent of Michigan university revenues. on producing the so-called STEM to be done, Jandernoa said. spends 10 times more to house pris- statewide as much as another $1 bil-In the current fiscal year, it accounts degrees — science, technology, engi- “We’ve got Michigan back in the oners each year, $46,000, than it lion in overall spending.for less than 25 percent. At the same neering and mathematics — as well game,” he said. “Step four is invest does to help students get a collegetime, tuition and fees went from as providing well-rounded educa- in people and infrastructure.” education, $4,600. Mike Brennan is Senior Technologyabout 45 percent to more than 70 per- tions to produce workers with criti- By 2020, Michigan will need While the current state budget Writer at MiBiz. His day job is editorcent of revenue to universities. State cal thinking skills. But the state also 900,000 workers with more than a adds $36 million in one-time money and publisher of FEBRUARY 4, 2013 / MiBiz Visit
  • 15. ENERGY Expected to open in the fall of 2013, GVSU’s new $65 million Mary Idema Pew library is shooting for LEED Platinum certification - a first forthe Allendale campus. The 150,000-square-foot facility designed by Texas-based SHW Group LLP focuses on user-guided design principlesand emphasizes sustainable building concepts, including a green roof and natural lighting. COURTESY PHOTOStretching the energy efficiency dollarGrand Valley looking at longer investment payback periodsBy ELIJAH BRUMBACK | MiBizebrumback@mibiz.comALLENDALE — As Grand Valley State University continues push-ing the sustainability envelope, facilities engineers at the univer-sity expect to see larger upfront costs and longer payback periods forfuture energy efficiency projects. In November last year, the university received an $116,280 rebateincentive check from Consumers Energy after installing two newhigh-efficiency cooling systems at its Central Utilities Building. Theincentives are offered under the Clean, Renewable, and EfficientEnergy Act of 2008. With a total investment cost of around $1.5 million, the improve-ments are expected to save Grand Valley 451,400 kilowatt-hours ofelectricity annually. But the university fully expects the up-front costs will get moreexpensive as it picks off some of the simpler projects, such as replacingdated lighting fixtures with more efficient LED products. “We’ve been very aggressive in trying to find energy-saving proj- Downtown, GVSU’s new $40 million Seidman College of Businessects,” said Terry Tahl, a facilities engineer for GVSU. “It’s getting is another sustainability focused project pursuing LEED Silverharder and harder to find projects because we’ve picked all the low- certification. COURTESY PHOTOhanging fruit.” The current annual electricity bill for the university is around representative from the utility said they would have to wait and assess$77,000, Tahl said. While the university has recouped roughly whether or not it will continue to offer the rebates after that.$312,000 over the last four years, it took the first two years to break The utility has more than 150 energy efficiency incentive andeven on its investments. rebate programs. In the third quarter of 2012, Consumers divvied out Since 2009, the university either completed or has underway 33 nearly $3.7 million in incentives to commercial and industrial cus-projects with the potential to save Grand Valley more than 2.6 million tomers. The total number of projects is just shy of 1,000.kilowatt-hours of electricity annually. With 959 program participants, Consumers estimates that the Many of the projects early on had around a four-year payback amount of energy saved could serve more than 5,000 residential elec-period, but Tahl said the outlook for further improvements isn’t as tric customers and nearly 800 residential natural gas customers forlucrative, as he is expecting about an 8-percent increase in meter fees a year. “The cheapest kilowatt is the one that is not produced,” said Roger Since the Consumers programs are funded through meter fees and Morgenstren, senior public information director for Consumersa program surcharge participants pay, Tahl sees more research and Energy. “Efficiency is where we are putting a lot of our focus right now.”engineering work that will need to take place on the front end of any By offering incentives for efficiency, Consumers Energy canfuture projects. to some extent defer larger capital investments. The steps give the “In talking with some other facilities managers at (Michigan State utility more wiggle room in planning for future generation needs,University) and (the University of Michigan), we’re looking at more Morgenstern said.eight- to 10-year paybacks when it comes to efficiency projects,” he “It’s important to recognize the impact of energy efficiency,”said. Consumers Energy CEO John Russell told MiBiz in December. “Due to In the short term, GVSU is targeting a number of lighting proj- the effectiveness of our energy efficiency programs, we’ve seen elec-ects as well as installing variable frequency drives that control motor tric sales growth reduced by 40 percent over the past two years. Wespeeds for water pumps and similar mechanisms. Projects related to hope all our customers take advantage of energy efficiency offeringsheat recovery could also be in the offing. and savings in 2013.” “We’ve probably dug a little deeper than most to recoup our mon- Right now, the energy provider is in the process of assembling landies,” Tahl said. “We’re ahead of the game this year, but we’ll be digging and securing permitting for its Cross Winds Energy Park, a $250 mil-and scratching to find projects and available funds.” lion, 150-megawatt wind farm planned for Tuscola County. The proj- Consumers Energy’s programs are set to run through 2014, but a ect is expected to reach commercial operation by the end 2015.Visit MiBiz / FEBRUARY 4, 2013 15
  • 16. HEALTH BIZReport: Michigan docs able to take on patients if Medicaid expandsBy MARK SANCHEZ | MiBiz of any decision. They are working hard to study individuals. He wants this to result in individu- enough physicians to take care of patients if and evaluate the options that will help determine als getting a primary care physician who is the do expand Medicaid,” said Marianne Udow- the best course of action that provides protection primary point person for care, which helps with Phillips, director of the Center for HealthcareMICHIGAN — A new report suggests that and security for Michiganders,” Kurt Weiss, a preventive care and a healthier population with Research & Transformation.some of the fears about expanding Medicaid in spokesperson for the governor, stated in an email better health outcomes,” Weiss stated. “In short, The same goes for people who would get bet-Michigan seem to be misguided. to MiBiz. “It’s not a decision the governor feels the governor wants to make sure we’re actually ter access coverage from private health plans Survey results from an Ann Arbor health can be made immediately or lightly.” improving health outcomes and not just paying when provisions of the federal Affordable Carecare research group dispel the notion that if Weiss declined to comment specifically on for more emergency room visits.” Act kick in Jan. 1 of next year.Michigan expands Medicaid, then the tens of the survey data from the Center for Healthcare The Center for Healthcare Research & The results challenge not only a wide-heldthousands of people receiving coverage would Research & Transformation “because there are Transformation survey results indicate that most notion about Medicaid expansion but also thehave trouble getting in to see a doctor because many studies and many sources of data the gov- doctors in Michigan have the ability to take more center’s own assumption as well.of the influx of patients. ernor is looking at.” Capacity is just one of many patients into their practices and that they would “All of this surprised us,” Udow-Phillips said. How that may play into any decision on the criteria Gov. Snyder is weighing in his decision, accept new Medicaid patients. The data counters a “We did not expect that we would see such a highexpansion question is unknown as Gov. Rick Weiss said. key question about expanding Medicaid: whether rate of physicians saying that they were reallySnyder prepares to offer a recommendation to “He won’t be basing his decision on findings a physician shortage leaves the system unable to able to expand their practices, and particularlylegislators this week when he presents his budget from one group or study. The governor wants to handle the thousands of people in Michigan who that they were ready to take more Medicaidproposal for the state’s 2013-14 fiscal year. be sure that if we do a Medicaid expansion, that would gain coverage and have a better financial patients. This part of the survey was quite sur- “At this point, the governor and his team are sufficient capacity exists in the physician and ability to access care. prising, I have to say.closely analyzing the impacts and ramifications insurance market to support the large influx of “Our data is telling us that we will indeed have “It definitely was not what we expected. We expected much lower numbers.” In the random survey late last year of 1,500 physicians, conducted with the Child Health Evaluation and Research Unit at the University of Michigan, 81 percent of primary-care doc- tors said they expect to expand their practice to accept newly insured patients in 2014. Ninety percent of those doctors also indicated they would accept new Medicaid patients, according to survey results. Even among doctors who currently do not accept new Medicaid patients, nearly nine of 10 said they would accept those patients if the state expands the program. In West Michigan, a lower percentage of phy- sicians — 71 percent in Kalamazoo County, 61 percent in Ottawa County and 56 percent in Kent County — said they expect to have capacity for new Medicaid patients. The survey results can help to settle doubts about whether the health care system can han- dle the influx of patients expected under the Affordable Care Act, Udow-Phillips said. “We hope it answers the fundamental ques- tion,” she said. An earlier paper issued in October by the Center for Healthcare Research & Transformation concluded that expanding Medicaid under the Affordable Care Act makes economic sense for the state. It would save an estimated $840 million to $1.4 billion over a decade as more than 600,000 people gain access to health coverage by 2020. Under the health reform law, the federal gov- ernment would cover 100 percent of the expan- sion cost for the first three years and 90 percent beginning in 2017. When the Affordable Care Act initially passed, it required states to expand Medicaid eligibil- ity. The decision last June by the U.S. Supreme Court upheld the federal health care law but struck down provisions that would penalize states if they fail to expand eligibility. That left states the option of expanding Medicaid, a pros- pect that has strong political opposition among Republicans who oppose the Affordable Care Act as a whole. While the non-partisan Center for Healthcare Research & Transformation does not advocate or lobby for policy positions, Udow-Phillips believes the October study and the new survey data combined “does sort of lead to a conclusion that’s hard to avoid.” “With those two pieces of data, we think poli- cymakers — if they are making decisions based on data — ought to be saying, ‘We should expand Medicaid in Michigan,’” she said. “The data should speak for itself.” Enabling physicians to absorb the new patient volume is a decline in business resulting from the economic downturn. That combines with increased efficiency through changes in practices that allow for higher patient caseloads, including the adoption of the patient-centered medical home model, deployment of electronic health records and the greater use of physician assistants and nurse practitioners. “Those changes are enabling them to take more patients,” Udow-Phillips said.16 FEBRUARY 4, 2013 / MiBiz Visit
  • 17. NONPROFIT ORGANIZATIONS ALL FOR ONE Q&A AND SOMETHING FOR ALL. Dr. James Edwards GVSU Dorothy Johnson Center for Philanthropy It is certainly fair to say that West Michigan has had its share of generous philanthropists. Names like DeVos, Van Andel, Meijer and Cook adorn buildings all over the region, as well as the donor lists of many local cultural organizations. But those recognizable names make up just a small portion of what is considered philanthropy, said Dr. James Edwards, executive director of the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University. In a January blog post entitled “Philanthropy 2013: Hopes for the Sector,” Edwards laid out his resolutions for the year. He sat down with MiBiz to give an overall pulse check on philanthropy in West Michigan.What is the overall state of philanthropy is private action, and people will act in accor- struggling even more. Now, it’s not philanthro-in West Michigan? What is the role played dance to their means and capabilities, so it py’s fault. Philanthropy is one piece of it. But itby the Johnson Center as well as other doesn’t always appear uniform and it can be does mean that we need to be open to look atorganizations or individuals? transparent. what we are doing.I think the state is very good. We are consis-tently one of the most generous communities Where do you see philanthropy at work in the In this community, obviously we have a lotin terms of our time and talent. We recently did community at the present? of big name philanthropic donors. Somea West Michigan Charitable Giving report that If you look around West Michigan, you see a have said that makes this area unique inkind of verified that. That’s something we’re $40 million business school [GVSU’s Seidman terms of its philanthropy. How do you viewplanning to do on an annual basis. I know some School of Business] that is driven by philan- this region? How is Grand Rapids comparedothers nationally are looking at those reports, thropy. You see initiatives to reopen the rapids to the east side of the state, or even on aand West Michigan does really well, overall. So [in the Grand River]. That is spurred by philan- national level?that’s the good news. thropy and government together. There are a lot We are a concentrated area of wealth, which of things that we don’t label as philanthropy. So makes us unique, (although) there are otherAnd the bad news? the first part is understanding what is philan- places that have a similar look. I think the com-The challenge is that we get a lot of budget con- thropy and how it is impacting our community. mitment to the community that our large foun-straints. Nonprofits are really struggling for a dations and donors have had is a unique piece.couple of reasons. One is because they’re being How does the Johnson Center play a role in That commitment is what has made this areaasked to do more. They’re being asked to serve that community? what it is. … Overall, we’ve been able to movemore people. They’re being asked to serve more For organizations like us, what we try and do things through, where I know on the east sideefficiently. They’re being asked to use more is improve the sector. That’s really our goal. By of the state there has been troubles and it’s nicedata. And at the same, you have leadership suc- improving the sector, we improve communi- to see it coming together now.cession happening. There are a lot of challenges ties. We try to bring in the latest trainings, thefor the sector, but there’s a lot of really nice and latest knowledge. We try to work with people How does that translate into future stabilityinnovative things happening in the sector as side by side to improve their work. We try to within the sector? An education forwell. have honest dialogue with people whose work Going forward, I do think that is going to one person improves the may not be up to par. We try to work with foun- be a challenge. Our Frey Chair for FamilyWhat do you see as some of those innovations? dations on their strategies. Philanthropy, Dr. Michael Moody, is going to community for everyone.There’s a lot of energy around Collective Impact One thing I talked about in the blog is repu- release a report on next-generation donors. In Just imagine what more thanInitiatives, place-based strategies where com- tation and to try and always be above the fray that report, there will be some highlights about 60 scholarships of every shapemunities are coming together and looking at and giving out good grants. And sometimes things we should be paying attention to as sec-where the most need is and kind of wrapping making bad grants is a good thing. You learn a ond- and third-generation family members and size can do! Visita whole community of resources around those lot. So making grants that aren’t successful and begin to take control of foundations and the Larger collective impact initiatives are then telling people about it so that everyone giving. It’s not necessarily a bad thing, but thealso exciting. Kent County is engaging right else can learn from those lessons is an impor- next generation does have a different perspec- to find out what eachnow in that process. Another trend right now tant part of it, too. tive of philanthropy. scholarship is for, who isis impact investing. We are still learning moreabout that and what that looks like from the In that same blog post one of your resolutions Some might contend that philanthropy is just eligible, and how you can help is that philanthropy needs to be better at “not wealthy people wanting to put their namesperspective of a foundation, and also what Grand Rapids Communitythat looks like from the perspective of a social pretending that we always know what we’re on buildings. How do you respond to thatenterprise. doing.” Can you explain that? contention? Foundation continue to We have theories of change and philanthropy is We don’t always recognize and label philan- make a difference.Can you explain the concept of impact really good at seeking out scholars and experts thropy. We do see the buildings, and it’s easyinvesting? in the field and getting experts’ opinions. We to call attention to the names on the buildingsThere’s a lot of different versions but basically are good at pulling up research. But a lot of that or the plaques that are there, but we don’t seefrom the side of a foundation, it’s using funds in is tied to place, tied to people. So when you the person that is volunteering every day at thea way that can give them a better return on their adopt those philosophies for your foundation, Senior Citizen’s Club or at a Boy’s and Girl’sinvestments, but also do good. So you invest in there is some experimentation going on. We Club or the volunteers that are calling Uniteda portfolio that is going to be mixed. Some are don’t know that it’s going to work 100 percent. Way. That’s all philanthropy as well, and thosegoing to be for-profits, some are nonprofits. The So it’s important to be open to that. things are integral to our community. Thoseidea is that you’re using your capital to help this things are really the foundation of the commu-entity grow because you believe in their mis- Nothing is ever certain, right? nity. It’s the individual giving their $5, their $10.sion. It’s also called mission-driven investing. We have a theory of change, we think this will Most philanthropy is individual giving. ThoseThe expectation is that you’re getting a return. work, it’s worked in other places, we have evi- are the pieces I would focus on. The names onNow that return doesn’t have to be 8 percent or dence that this will work, but we are not 100 the building are nice. It’s wonderful that peo-10 percent. It could 1 percent. But you’re expect- percent. We think it’s a reasonable idea and we ple have the ability to do that, we should cel-ing that you will have some return on this from should try it here. I think that’s the approach ebrate it. But we should also celebrate all ofyour portfolio. we should take as opposed to saying, ‘This is philanthropy. absolute and this is 100 percent’ because asHow do you define philanthropy? wonderful as our philanthropy community isThe big definition of philanthropy that we in this area, we still have a lot of disproportion- grfoundation.orguse is “private action for public good.” So by ate data, a lot of disproportionate indicators to Interview conducted and condensed by Nick Manes.definition, it is going to be uneven because it show that poverty is increasing, that people are Photo by Elijah Brumback.Visit MiBiz / FEBRUARY 4, 2013 17
  • 18. FOCUS 2013 NORTH AMERICAN INTERNATIONAL AUTO SHOW RECAP GOOD FOR GEARHEADS (AND THE PLANET, TOO)By JOE BOOMGAARD | MiBiz General Motors brought back the historic Stingray name for the 2014 Corvette. The all-new American sports car features an aluminum frame structure, several lightweight carbon fiber body panels and roof, a revised and more efficient V8 powertrain with an available 7-speed manual transmission, and a fully upgraded interior. PHOTO: JOE BOOMGAARDI t turns out that fun-to-drive cars, 500-horsepower engines and respectable fuel economy don’t have to be mutually exclusive. The new Corvette Stingray features a revised V8 powertrain Over the past few years, the automotive industry with direct injection and cylinder deactivation, an available seemed to be telling a feel-good product story as the auto- 7-speed manual gearbox, and lightweight materials through- makers eschewed their once proud labels as “car compa- out, including an all-aluminum frame and carbon fiber bodynies” and instead anointed themselves as purveyors of sus- panels even on the base models.tainable mobility. Green was king, even if the hardcore electric The more angular design and much-improved interior wasvehicles and expensive hybrid technology appealed only to a a step along a path to position the Corvette and the Chevroletsmall niche of customers. brand on a global scale, Wall said. But in a marked pivot at this year’s North American “That does not mean they’re going to sell a lot of theseInternational Auto Show (NAIAS), the automakers seemed Corvettes globally — not by any stretch — but what it does is itto talk less about hybrids, electrics and their ilk. No, they’re starts to change that Chevy image a bit,” he said. “It even startsnot regressing on the issue of more efficient transportation. to change it a little bit here in the States. When you see thatRather, they’re showing that they are paying more attention vehicle, there’s that certain core buyer you may think of with ato the cars, trucks and SUVs that the general public wants to Corvette of yore. It’s going to tend to skew a little bit older, folksbuy — as well as the vehicles aimed squarely at the hearts of that are tending to respond to the heritage side of the Corvette.enthusiasts. In short, they’re using the best technology avail- This attempts to start to bring that average age down and bringable to make the cars people buy simultaneously fun, efficient more youthful buyers into the dealerships.”and smart forms of transportation. Noordeloos agreed. “In the past years, you’ve seen a flurry of electric vehicles “I think they struck a good balance between not pushingand hybrids, and there was a little bit of that, but nowhere near away present Corvette buyers but attracting younger peoplethe preponderance as we’ve seen in the past. There was more that might like a Nissan GT-R,” he said. “I like the directionof the focus on the vehicles themselves and not the propul- it’s going.” sion system,” said Mike Wall, a Now the challenge for Chevrolet and GM comes down to Grand Rapids-based automo- whether or not the company can strengthen the rest of its vehi- tive analyst at IHS Automotive. The Ford Atlas concept likely hints at the styling and direction cle lineup to take advantage of the attention the new Corvette 2013 NAIAS “It doesn’t mean that (EVs and of the next-generation Ford F-150. The truck, which came will attract, Wall said. AT A GLANCE hybrids are) going away or that as a surprise to many at the 2013 NAIAS, uses many active “This will be a halo car that will bring people in all day long, ■ All-new Corvette they’re not important. They’re aerodynamic features and an updated range of engines to but you want them to (at least) leave with a different car,” he said. ‘halo car’ could critically important, especially achieve better fuel economy. PHOTO: JOE BOOMGAARD in the longer run, but I think provide GM an we may have overshot a bit or TOW WITH LUXURY overall bump in interest. got over-enthused. This maybe Noordeloos’ point: The vehicles that automakers brought to The 2013 NAIAS was destined to be the “Corvette Auto Show” was a realignment across the the Detroit auto show focused more on advanced iterations of right up to the point when Ford took the wraps off its Atlas ■ Ford’s Atlas pickup board.” existing and familiar technology — more usage of direct injec- concept pickup truck, which offers a preview for the direction concept should give The shift was also noticed tion, automatic transmissions with up to 9-speed gearboxes, Ford plans to take the next generation of its best-selling F-150 GM and Chrysler by Marc Noordeloos, manag- the use of lightweight materials — to reduce fuel usage, versus pickup. some heartburn. ing director of Grand Rapids- completely new and untested automotive systems. As Road & Track described it, the surprise unveiling of the ■ An improving based Fox Motorsports and a “These are more practical vehicles,” IHS analyst Wall said Ford Atlas caused “the new GM pickups (to) become a footnote economy puts freelance automotive journal- of this year’s show. at their hometown coming-out party.” premium and luxury ist. A self-professed enthusiast The analyst said he saw three main themes for this year’s Compared to GM’s design evolution with its 2014 Chevrolet cars in the spotlight. and “car guy” with an interest NAIAS: “a redesigned icon with the Corvette, the rise of the Silverado/GMC Sierra pickups, Ford’s Atlas concept — with in performance cars and mid- pickup truck and the healthy dose of luxury unveilings.” its active aerodynamic elements and integrated roof cargo range to high-end vehicles, hold — was more of a leap forward in terms of styling and Noordeloos said the prevalence technology.of cars with more than 500 horsepower — some with available all- AMERICANA REBORN While Noordeloos praised Ford’s Atlas concept, he saidwheel drive — and a full warranty “blew my mind.” As one of the all-American automotive icons, the new Corvette GM’s 2014 redesign of the Chevrolet Silverado and GMC Sierra He cited examples including the Audi RS7, BMW M6 Gran was met with an infectious anticipation in the days and months was much more “understated” and aimed at “the mainstreamCoupe and Mercedes-Benz E63 AMG, which all debuted in leading up to its Detroit unveiling. (The fever continued even truck buyer, while Ford and Dodge look at the advanced truckDetroit. after the debut, as some attendees of the world premier were buyer.” “When I was a kid, I couldn’t imagine having a car with 500 selling their free Corvette press materials online for a going All three Detroit pickup platforms are backed with morehorsepower and luxury and fuel economy to boot,” he said. rate of $400 to nearly $700.) fuel-efficient powertrains and clearly the trend is toward more“What I like is that they’re building those cars and they do get Except to the cadre of unyielding Corvette enthusiasts who plush, car-like interiors. Pickups are, in essence, becomingbetter fuel economy than the models they’re replacing. It’s are loath to accept even the smallest of changes — square luxury cars that tow, Noordeloos said.not just marketing. I think we’re seeing known technology — tail lamps, for example — the overwhelming consensus was Wall from IHS said automakers have to constantly refreshrather than groundbreaking technology — being developed to that GM’s design team struck a good balance of appeasing the their interiors and add technology to all their vehicles, includ-improve fuel economy to a good level. We need to do all that we Corvette fan base while also evolving the sports car into a more ing trucks, to keep them competitive. After all, that’s wherecan with the technology we have now.” globally competitive package. owners spend most of their time: on the inside.18 FEBRUARY 4, 2013 / MiBiz Visit
  • 19. “A typical buyer of a Silverado or Sierra, or of a pickuptruck in general, I don’t know that they’re going to be signifi-cantly put off by the evolutionary redesign. The interior is animprovement. It’s a wickedly competitive segment. Each ofthe Detroit Three has strong offerings,” Wall said. “All three ofthe Detroit Three had pickups at the forefront. The Ram won(North American) Truck of the Year, you have the new Silveradoand Sierra for GM, and Ford wasn’t going to be outdone withtheir Atlas concept truck.” Because of their large production runs, pickup trucks arevery important, profitable vehicles for the automakers, whichexplains why the companies continuously refresh their prod-uct offerings, he said. Moreover, with housing starts on therebound and an aging existing fleet of trucks on the road, trucksales are projected to increase at a higher rate than the rest ofthe light vehicle market. (See Stability returns to auto outlook,page 4.) SUVs were also back at this year’s NAIAS. Volkswagenrevealed its Cross Blue and Cross Coupe SUVs, while Hondashowed its small Urban SUV Concept. Nissan also revealed itsmid-size Resonance SUV concept, a nod to what the replace-ment for the aging Murano could look like. As well, Chrysler showed that it was committed to keep-ing its Jeep offerings up-to-date with a more up-marketdriven refreshing of its Grand Cherokee, which just launchedin 2011. The SUV features an updated exterior and interior, As the general economy improves, more buyers are in a position to consider luxury and premium vehicles, such as the Audias well as an available new 3.0-liter diesel engine and stan- RS7. Audi matched the gorgeous four-door coupe aesthetics found on the A7 with a more aggressive and sportier powertrain.dard 8-speed automatic transmission with an Eco Mode The 189-mph, 560-horsepower, all-wheel-drive hatchback that can power from 0-60 mph in about 3.7 seconds is expected toto improve fuel economy across the range of V6 and V8 have an MSRP approaching $100,000. PHOTO: JOE BOOMGAARDpowertrains. Buyers of commercial vehicles should also note that Ford and BMW and Mercedes,” he said. “I think they’d do better tolaunched its new European-engineered Transit and Transit REINVENTION AT WHAT COST? look to Mercedes.”Connect vans, the company’s first new platform in the van On the other hand, both domestic luxury brand stalwarts, But even emulating the Germans is not a sure bet any-market in decades, which come in varying roof heights and Cadillac and Lincoln, are still trying to find their way for- more, Noodeloos said. As some of the brands adopt “extro-lengths, as well as with a choice of EcoBoost gasoline or diesel ward by attracting new buyers while not alienating a clien- verted styling” to appeal to the Middle Eastern and Chinesepowertrains. tele that still skews mostly to the older end of the spectrum. markets, they may wind up putting off American customers, Some of their customers still appreciate the big beige barges he said. of the 1980s and 1990s, far cries from what younger drivers “I think a lot of the West Michigan clientele likes subtle,DELUXE DELIGHT expect, Noordeloos said. In trying to broaden their reach classy design,” Noordeloos said. “Some of the way design isOpposite the showroom floor from the utilitarian trucks and with European-inspired designs and sporting intentions, going could probably be a little polarizing. A lot of it is overlyvans, automakers also debuted many new models in the pre- they might end up isolating some of their long-time custom- aggressive, but some people like that.”mium and luxury segment. ers, he said. New launches included the Mercedes-Benz E-Class fam- Cadillac, for example, last year launched both the ATS andily, the BMW 4-Series, Lincoln MKC, Infiniti Q50, Acura MDX, the XTS, two very different cars with very different aspira- THE FUN RETURNSLexus IS and the Cadillac ELR. Even Hyundai dipped its toes tions. With the 2013 North American Car of the Year-winning While it’s typical auto show hyperbole to say the cars were thefurther into the luxury segment with its up-market HCD-14 ATS, engineers at Cadillac aimed squarely at the BMW 3-Series stars, at this year’s NAIAS, one could make that case. As Wallconcept. crowd with nearly identical dimensions and similar rear-wheel from IHS Automotive said, the automakers really seemed to Those who prefer an Italian flair to their luxury sedan also drive architecture. However, the front- or all-wheel drive XTS focus on showing their cars and not any groundbreaking pro-have a new option: the new Maserati Quattroporte, now with fills a spot the older generation of Cadillac buyers can easily pulsion systems or technology — aside from Hyundai’s handa turbocharged range of engines: the 410-horsepower V6 with identify with. gesture-sensing controls, perhaps.available all-wheel drive or a 530-horsepower V8. But even if GM was to follow the model of brand reinven- The general sense was that the 2013 NAIAS was a more “There were just a ton of luxury offerings,” said Wall. tion it shepherded with Buick, it needs to flesh out the Cadillac mature show with the automakers again ready to step back Long the domain of the German Three — Audi, BMW and portfolio across more segments, Wall said. Wall noted that the out into the spotlight.Mercedes — more companies are turning their attention to the new range-extended plug-in hybrid Cadillac ELR, based on the “You’d be hard pressed not walk around with a smile onlucrative segment, often by sharing platforms among lower- Chevrolet Volt architecture, will “certainly draw higher up than your face with all these vehicles and these unveilings,” Wallend and premium vehicles. That way, they can eke even more the average income buyer,” but the vehicle “will be low volume.” said. “There wasn’t necessarily an arrogance to it all, by anyprofitability out of the R&D and engineering that goes into “Again, it’s about fleshing out that Cadillac brand. I think to means. But there was at least a little more confidence to it. Thatplatform development, Noordeloos said. that extent, it goes a long way to showing the design scheme, was great to see.” In Detroit, Noordeloos talked to Rolf Frech, the head of the design format of the vehicle itself,” he said. For Noordeloos, this year’s show was a testament to how farengineering for Bentley, about the British luxury brand’s new The same is true for Ford with Lincoln, which, by almost all the industry has come from the brink of oblivion. It’s back onSUV, which it previewed last year with the EXP 9F concept. By accounts, has been languishing for years in trying to find its firmer footing now and ready to compete and inspire buyerstapping into Bentley’s corporate parent, Volkswagen Group, way. The newly rebranded Lincoln Motor Company followed to open their wallets, he said.the company can start with the bones of the latest platform up its MKS sedan from last year with the MKC concept SUV “I will never forget the 2010 show. When I walked through theshared by the Porsche Cayenne, Audi Q7 and Volkswagen based off the Ford Escape platform. GM stand, it was just like a carpeted area with cars,” NoordeloosTouareg, “throw in some wood and styling, and you’ve got a The concept “looked great and is a great step forward” for said. “For me, 2010 was the bottom, and it’s gotten better sinceBentley,” Noordeloos said. the brand, Noordeloos said. then. And now in 2013, the show is back into the groove of auto- “That’s how companies can get economies of scale,” he said. “Both Cadillac and Lincoln face the interesting decision of makers being more comfortable showing off and being proud of“If it’s sophisticated enough and as long as the mainstream how much do they try to hold on to their old customer that’s their direction and going forward. They’re bringing back somejournalists don’t make a big stink, I think it will work. ” aging and how much do they try to be like an American Audi of the fun of buying cars from years ago.”Visit MiBiz / FEBRUARY 4, 2013 19
  • 20. [ FOCUS ] 2013 NORTH AMERICAN INTERNATIONAL AUTO SHOW RECAPCOMMANDCENTRALConsumers increasinglyfocus on vehicle infotainmentBy MIKE BRENNAN | The customers have spoken, and automakers are increasingly paying attention to the integration of infotainment systems in their vehicles of all types, including the Chevrolet MyLink shown in the 2014 Silverado pickup. The system with its 4.2-inchS tudies show consumers shop for cars and trucks that color Driver Information Center can link to up to 10 devices and uses voice recognition to place calls, enter destinations, browse match their style, their favorite color, and even the best media, play music and control other functions. PHOTO COURTESY GENERAL MOTORS fuel economy. Increasingly, though, experts say vehicle- buying decisions hinge on how well consumers’ smart- “This will do two things: lead to the creation of a new cat- ability that consumers now have on smartphones and convert phones connect to a car or trucks’ infotainment system. egory of apps that don’t exist yet,” Fosgard said. “Let’s call them it to the most meaningful in-vehicle experience, he said. “Towing capability is a unique feature for a certain segment. car apps, designed uniquely for the car and not a tablet or smart- “Now everyone is fishing for the next big thing and tryingCargo volume is another,” said Mark Boyadjis, senior analyst and phone. … Two, this allows you to add the apps you want and add to cram as many apps as possible into a car,” Koslowsky said.manager of infotainment at IHS Automotive. “But increasingly more the longer you own the vehicle. You aren’t stuck with the Certainly, app developers have a much bigger screen on whichit doesn’t matter what car, nor the price, as long as the technol- two to three apps the car company chose for you.” to build their products in a car, he said. Cars also have multipleogy in the car works with the consumers’ mobile technology.” But analyst Thilo Koslowsky, vice president and automo- screens. They have sensors built-in. He sees a future where the car A couple of years ago, Ford Motor Co., BMW and Mercedes- tive practice leader for Gartner Group, said he thinks it will be can sense the driver’s mood and play music to, say, relieve stress.Benz were ahead of other automakers in offering in-vehicle model year 2017 — which is available in three years — before Before the end of this decade, Koslowsky predicts, thereinfotainment systems, he said. But at the North American the majority of consumers will make the availability of info- will be self-driving cars on the road, a driverless taxi systemInternational Auto Show in January — and a week earlier at tainment systems a reason to buy competing vehicles. of sorts. That, he said, could change the car-buying paradigmthe International Consumer Electronics Show in Las Vegas — But for premium brands such as Cadillac, Audi and dramatically, perhaps more so than the debate over the con-the rest of the automakers closed the gap and showcased cars Mercedes, “we’re there now,” he said. nected car today.and trucks that connected to smartphones through Bluetooth Koslowsky calls it lifestyle convergence. Cars are becoming “If a car drives itself, how do automakers differentiate thetechnology. the ultimate mobile device. But he won’t declare any automaker driving experience, a big factor in buying decisions today?” he At CES, both Ford and General Motors took the smartphone the leader. What he does like is the Cadillac Cue Technology, a said. “If a car picks me up and drops me off, why do I need toexperience one step further by opening their latest vehicles to system designed for autos, not smartphones. It features a dash- even buy a car? Cars just become another public transporta-global developers working on apps for Android and iPhone board display that allows the driver to press icons to activate tion vehicle for getting someone from point A to point B.”technology. audio, navigation, phone, climate control and more. He also GM spokesman Scott Fosgard called it GM’s new flexible likes Audi’s in-vehicle approach that features Google maps. Mike Brennan is senior technology writer at MiBiz. His day jobapp framework. The key to future success is which automakers take the is editor and publisher of CFOAWARDS OF THE YEAR SPECIAL EVENT ON JUNE 11, 201320 FEBRUARY 4, 2013 / MiBiz Visit
  • 21. PEOPLEEmail people news to: ■ Veteran life sciences exec- PHARMACEUTICALS utive Tim Derrington was appointed chief operatingofficer of Forensic Fluids Laboratories. He previously served as the president Bigford Leonardos Linebaugh Leyendecker Scibaand COO at MPI Research. ■ The Ferris Foundation board of directors EDUCATION appointed three members: Michael Bigford, president and CEO of Utilit y Supply andConstruction Company; Stephanie Leonardos, president and CEO of AmerikamInc.; and Karl Linebaugh, president of Chemical Bank’s North Region. Theschool also named Peter Bradley as the director of Ferris State University’sHonors program, who previously served as the acting director of McDanielCollege’s honors program. ■ Founders Bank and Trust hired Seth Leyendecker BANKING as an employee benefits relationship manager and Deb Sciba as the marketing coordinator. With more than Hofstra Risko Newman Edsenga Birdnine years of experience, Leyendecker will be responsible for setting up and admin-istrating 401k and retirement plans for customers. Sciba has more than 19 years ofmarketing experience and will be responsible for all marketing activities. FoundersBank also promoted Brian Hofstra to vice president of commercial lending. DATEBOOK Email business events to: ■ Nicholas Risko joined Echelbarger, ACCOUNTING Himebaugh, Tamm & Co. P.C. as a staff accountant. Risko earned his bachelor’s TUESDAY, FEBRUARY 5 and founder of Whittaker Associates Inc. in Holland. ■ Start Garden: “Introduction to the Lean Canvas 11:30 a.m. to 1 p.m., Howard Miller Community from Grand Valley State University and a J.D. from Boston University and Validation Board” will cover the basics of business Cost: $15 for chamber members, $25 for nonmembers.School of Law. model generation, customer development, human- Contact: centered design, marketing, communications, finance ■ Jeffrey Helminski was appointed to and law. The program will focus on Lean Startup TUESDAY, FEBRUARY 12 PRIVATE EQUITY ma nag i ng d i rec tor at Black ford methods. Presenter: Amanda Chocko. 11:30 a.m. to ■ ISM-GGR: “Winning the Negotiation Mind Game” Capital LLC and will be responsible for 1:30 p.m., Start Garden, Grand Rapids. Cost: Free will discuss using sales psychology and persuasionthe firm’s activities in Michigan. Helminski also serves on the board of direc- for members, $25 for nonmembers. Contact: hello@ to out-negotiate sales professionals. Presenter: Alantors for Custom Profile, one of the firm’s newest acquisitions. Ovson, a communications expert. 8 a.m. to 4:30 p.m., GVSU DeVos Center. Cost: Free for members, $225 for ■ The Stow Company Inc. hired WEDNESDAY, FEBRUARY 6 nonmembers. Contact: MANUFACTURING Frank Newman as its president and CEO. Newman has more than ■ MI-SBTDC: “Legal Issues When Starting or25 years of CEO experience working with international domestic marketing Running a Small Business” focuses on the legal issues FRIDAY, FEBRUARY 15 that businesses encounter when they are structuringand manufacturing companies. ■ VAGTC: “Basics of Importing” will provide infor- and starting. Registration required. 6-8 p.m., Michigan mation about how customs and border protection ■ Matt McCambridge was promoted Alternative and Renewable Energy Center, Muskegon. operates to oversee imported goods, which can help CONSTRUCTION from project manager to the presi- dent of Nugent Builders after being Cost: Free. Contact: prevent businesses from incurring fines and penalties. ■ West Michigan Chamber: “SMART Lunch — The 8:30 a.m. to 3:30 p.m., Grand Valley State Universitywith the company since 1990. He began with Nugent Builders as a carpenter Future of Work” will discuss what work will look like Bicycle Factory, Grand Rapids. Cost: $175 for Vanbefore advancing to jobsite foreman and then project manager. between the next five and 15 years and how people Andel Global Trade Center members, $300 for non- ■ Patrick Edsenga joined Miller Johnson’s Grand Rapids can prepare themselves for the complex tasks that members. Contact: (616) 331-6811. LEGAL office as an associate in the employment and labor group. He earned his bachelor’s degree from Michigan State lie ahead. Presenter: Dean Whittaker, president, CEOUniversity and his J.D. from the University of Michigan. ■ Mark Bird joined Brightly as a senior creative strate- MONDAY, FEBRUARY 11 DESIGN gist. He has 28 years of design experience, including work with companies such as Apple, Canon, Meijer, Haworth Econ Club of Grand Rapids: “125 Years of Making Quality,and Steelcase. Affordable Health Care in West Michigan” ■ Michigan Insurance Company promoted The program will focus on Perrigo’s history in West Michigan and the company’s place INSURANCE three employees: Andrew Holmes to vice presi- dent of the east business unit; Melissa Veenstra in the health care market place. Presenter: CEO Joseph Papa. Registration required. Noon-1:30 p.m., Ambassador Ballroom, Amway Grand Plaza. Cost: $30 for membersto vice president of the west business; and Ryan U’Ren to commercial under- and spouses, $37 for nonmembers. Contact: (616) 454-1883.writing manager. Homes and Veenstra both previously worked as commercialunderwriting managers and U’Ren served as a commercial underwritingaccount executive.Visit MiBiz / FEBRUARY 4, 2013 21
  • 22. Q&A IN THE NEWSWalter M&A Oaks was awarded a $900,000 Michigan BusinessMonroe ■ Grand Rapids-based Leitz Tooling Systems LP, a subsidiary of Leitz Group of Germany that manufactures precision cutting tools for wood Development Program performance-based grant. ■ Benton Harbor-based appliance manufacturer Whirlpool Corp. plans to invest $18.9 millionCEO, Breath Arrest LLC and other materials, acquired the assets of to relocate refrigeration research and develop- San Bernardino, Calif.-based ment operations from Evansville, Ind., to a former Royce//Pacific Precision. In a manufacturing facility. The company, which isIn his more than three decades as statement to MiBiz, the company projected to create 180 jobs, received a $2.4 milliona CPA, Walter Monroe made a few said the acquisition will bring Michigan Business Development Program per-business contacts. additional volume to its Grand formance-based grant, according to a statement. So when he became involved Rapids manufacturing facilitywith a startup company working to while strengthening its Western DISTRIBUTION AGREEMENT region capabilities. Warner, ■ Grand Rapids-bring to market a new product that Norcross & Judd LLP advised on the deal. Terms based Spartan Storestreats bad breath, or halitosis, he of the agreement were not disclosed. Inc. (Nasdaq: SPTN)turned to that business network for ■ Neogen Corp. (Nasdaq: NEOG) of Lansing inked a distributionhelp. Those contacts enabled the acquired the assets of Davis, Calif.-based Scidera agreement to be thecompany, Breath Arrest LLC, to find a bottler and sign a distributor, Kent Genomics LLC, an animal genomics business, primary wholesale grocery supplier for ChiefBeverage Co., for the 2-ounce drink that is now sold at about 100 convenience according to a statement. Terms of the acquisition Super Market Inc., which operates 12 Chief andand party stores in West Michigan “and growing.” were not disclosed. Neogen plans to continue to Rays stores in northwest and west-central Ohio. In operate from Scidera’s California facility. March, Spartan Stores will assume distribution for “We were actually dead in the water until I started examining my network ■ One of Grand Rapids-based Blackford grocery, dairy, frozen, bakery and other products,group and people I’ve known in 34 years as a CPA and came up with a couple of Capital’s holdings, composite components manu- according to a statement.names,” said Monroe, the CEO and a partner in the Kentwood-based company. facturer Amtech LLC of Wapato, Wash., acquired Those two acquaintances he contacted, Steve Basinski and Darin Arnett, Arrowhead Composites and Thermoplastics in BUILDING MANAGEMENThad once brought a dietary supplement to market and had the connections Elmore, Ala. Blackford helped facilitate the acquisi- ■ The Waters Building, which is in receivership,that got Breath Arrest moving in the right direction, including contracting tion. Amtech is seeking other growth opportunities is now under the management of Farmington Hills,with a bottler in Tampa, Fla. Both are now partners in Breath Arrest. Arnett in the Midwest, the company said in a statement. Mich.-based Friedman Real Estate Solution ■ Traverse City-based Quantum Sail Design Inc. The historic downtown Grand Rapids buildingserves as chief operating officer. Group has entered into an agreement with went into foreclosure last September, according to The company is now talking to potential distributors in southeast Michigan Dimension Polyant to purchase the company’s building’s former owner, Bill Godrey, partner at theand is “deep in the conversation” with a major food chain in the south to sell sailmaking facility located in Sri Lanka, according Ann Arbor-based Three Oaks Group LLC. Threethe product, which neutralizes the bacteria that can cause bad breath. to a statement. The acquisition helps Quantum Oaks paid about $27 million for the building in 2006, Breath Arrest’s goal is to eventually get on the shelves in 10,000 stores, strategically expand globally, President Ed but it appraised at just $12 million in 2012, GodreyMonroe said. Reynolds said in a statement. Quantum also has said. A New York-based bond holding company Monroe, who retired as a CPA six years ago and “re-careered” with Breast existing sail-making facilities in Malaysia, South currently owns the mortgage. Africa and Traverse City.Arrest, credits his years in business with giving him the ability to know whathe doesn’t know and the willingness to seek help. He spoke with MiBiz about HEALTH CARE EXPANSION ■ The University of Michigan Health Systemthe product and the lessons learned along the pathway to market. ■ As part of a $1 billion North American investment joined Priority Health provider care network announced at the North American International and will accept its HMO, PPO, POS and Medicare Auto Show in January, Denso Manufacturing health plans. The contract, which goes into effectWhat was the single biggest obstacle to get your product to market? Michigan Inc. will add 266 new positions and March 1, adds U of M’s hospitals and more thanHaving never done it, you feel like you’re in a dark cave. You have this product, tested it and invest $105 million in its Battle Creek manufactur- 1,800 physicians to the Priority Health network. Intested it, and now you have faith in it. What do you do with it? Where do you go? Without ing plant by 2015. Those new jobs include 220 a statement, Priority CEO Michael Freed said themy years as a CPA and the people you meet, I don’t know what we would have done. We manufacturing jobs collaboration enhances and offers more access toprobably would still be in the inventor’s kitchen playing with the formula. But within eight and 46 skilled trade the group’s growing health care network.months of meeting with Darin and Steve, we had product in stories. and professional jobs ■ North Ottawa Community Health System at it s 1. 29 million- in Grand Haven and Mecosta County Medical square-foot facility. This investment will add new Center in Big Rapids are the latest hospi-What was the basic lesson learned? manufacturing capabilities to the Fort Custer tals to join Michigan Health Connect. TheIt’s just keep climbing over rocks and talking to people that you know within your network Industrial Park location, including new lines of move allows the two organizations to sendand that you trust — and listening. Then one thing leads to another. In talking to Steve and condenser and radiator products. patients’ health records and reports through aDarin, they were already doing what the inventor and I needed to get done. So we brought ■ Grand Rapids-based Fox Motors selected a secure electronic network that include 57 otherthem on and their sweat equity and knowhow probably saved us a couple hundred thou- 7.5-acre parcel in Chicago between the Bucktown hospitals, 1,551 medical offices and more thansand dollars that we didn’t have to spend on researching the business. and Lincoln Park areas as the permanent home 7,000 individual health care providers statewide for its Ford-Lincoln dealership, according to a that are part of the Grand Rapids-based regional report in Crain’s Chicago Business. Fox plans a health information exchange.What kind of compromises did you have to make to get to market? 64,000-square-foot project at the site, which will ■ Blue Cross Blue Shield of Michigan awardedYou really have to team with one distributor. They have the territory and you agree to allow include a three-story showroom and a one-story a $200,000 grant to the People’s Health Center,them to distribute the product to the retailer. You can’t run around their back and sell the service center, the report stated. The site would a not-for-profit collaborative that will provideproduct to stores one on one. have parking for about 1,000 vehicles. In January, dental care to primarily to low-income and home- Fox leased a vacant former dealership on Michigan less people. The grant stems from a partnership Avenue to serve as temporary space while the com- between Blue Cross Blue and the People’s HealthWhat advice do you have for someone who’s trying to bring a product to pany shopped around for a permanent site for the Center to improve access to dental, medical andmarket? dealership, Crain’s reported. That temporary facility mental health care. The health center is a collab-I would say look around. Who do you know? Who do you trust? Who’s done it already? Do is scheduled to open this month. The permanent orative between Saint Mary’s Health Care, Hopeyou know anybody? Just start talking to them. You have to put a budget together and have dealership site should open by 2015. Network and Metro Health.a game plan. … You have to have enough fuel in the ship to get across the ocean, and you ■ Allegan-based pharmaceutical manufacturerhave to plan for that, and don’t jump before you look. Step back and look at the situation Perrigo Co. plans a $42 million expansion ofand say, ‘How do I get from A to B?’ infrastructure and equipment at its Allegan loca- tion, as well as a $200 million investment in a new CORRECTION facility and new equipment in Holland Charter In our Jan. 21 issue, two law firms wereAt some point, you realized you couldn’t do this alone. Township, where it also has a presence after the inadvertently left off the Top West MichiganAbsolutely. That’s where you have to start brainstorming and making phone calls. 2008 acquisition of J.B. Laboratories. The move Corporate Law Firms list, which ranked could create 650 jobs to support firms by the number of attorneys in their growth in Perrigo’s tablet products West Michigan offices. The KalamazooIs it difficult to come to that conclusion, to admit that you don’t have all for its over-the-counter business, office of Honigman Miller Schwartzthe answers? according to a statement from Gov. and Cohn LLP, which has 21 attorneysNo. I’m 64 and the inventor is 62. When you’ve been around the block and been success- Rick Snyder’s office. specializing in M&A, intellectual propertyful, intelligent decisions are based on (asking) ‘What do I know? What don’t I know?’ It’s ■ The dair y cooperative Fair and other legal services, would have rankedresearch. When you’re younger, perhaps, you don’t make those decisions as intelligently Oaks Farms Brands Inc. plans 13th on the list. The Grand Rapids officeas an older guy. You just don’t have the experience. You have to look in the mirror and say, to invest $127 million to manu- of Dykema, which offers M&A counsel,‘You don’t know how to do that.’ I wouldn’t build my own home, either. You hire it done. facture nutritionally enhanced securities law, public finance law and other liquid milk products at a newly legal services, would have ranked 20th on constructed facility in Coopersville, the list. MiBiz regrets the error.Interview conducted and condensed by Mark Sanchez. COURTESY PHOTO according to a statement from Gov. Rick Snyder’s office. Fair22 FEBRUARY 4, 2013 / MiBiz Visit
  • 23. AFTER THE STORM, A RAINBOW. We’ll watch your back during the storm. 616.459.1171 | www.lawweathers.comVisit MiBiz / FEBRUARY 4, 2013 23
  • 24. Reliable, modernized grid Energy is essential to the way we live, work and play. ITC operates, builds and maintains the region’s electric transmission infrastructure. We’re a Michigan-based company working hard to improve electric reliability and increase electric transmission capacity throughout the Midwest. We’re ITC – your energy superhighway. www.itctransco.com24 FEBRUARY 4, 2013 / MiBiz Visit