Smoke and                                                                                                                 ...
2   OCTOBER 15, 2012 • MiBiz                                                                                              ...
Visit www.mibiz.com                                                                                                       ...
4   OCTOBER 15, 2012 • MiBiz                                                                                              ...
Visit www.mibiz.com                                                                                                       ...
6   OCTOBER 15, 2012 • MiBiz                                                                                              ...
Visit www.mibiz.com   MiBiz • OCTOBER 15, 2012   7
8   OCTOBER 15, 2012 • MiBiz                                                                                              ...
Visit www.mibiz.com   MiBiz • OCTOBER 15, 2012   9
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
MiBiz 101512
Upcoming SlideShare
Loading in …5
×

MiBiz 101512

1,093
-1

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,093
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

MiBiz 101512

  1. 1. Smoke and Indie hospitalsmirrors? under pressurePAGE 14 PAGE 22 OCTOBER 15, 2012 • VOL. 25/NO. 1 • $1.50 Serving Western Michigan Business Since 1988 www.mibiz.com SPEED READRack transplantGRAND RAPIDS — A Chicago-basedmanufacturer bought a building andplans to open up shop in Grand Rapidsto be close to its customers. Page 8Stock in the MarketGRAND RAPIDS — Downtown GrandRapids seems to have spilled a fewstreets south, the result of confidenceinspired by the $30 million DowntownMarket. Page 12Broader, younger audienceWEST MICHIGAN — Successfulnonprofits realize they must reachout to younger donors – and on theirterms – if they want to be sustainable.Page 15Accelerated actionGRAND RAPIDS — MichiganAccelerator Fund surpasses its fund-raising goal and prepares for potentialexits. Page 16Pine Rest makes a moveGRAND RAPIDS — Pine Rest plansto consolidate some offices to a newbuilding Dwelling Place has planned atits Herkimer Hotel project. Page 20 JUGGLING ACTNeuro needsGRAND RAPIDS — Spectrum Health’sexpansion of its neurosciences capa-bilities aims to serve a growing numberof patients with neurological disorders.Page 232012: An exceptional vintage?WEST MICHIGAN — Oenophiles that Wolverine World Wide CEO Blake Krueger prepares to integrateimmediately pass on Michigan winesin favor of more complex quaffs may one of the largest ever acquisitions in the footwear industry.want to give the state’s 2012 vintagesanother look. Page 24 SEE PAGE 4 STORY: JOE BOOMGAARD • PHOTO: JEFF HAGEPlan for crisisWEST MICHIGAN — The best way tomanage a crisis is to have a clear andeffective plan in place before one hap-pens, experts say. Page 26 Fifth Third ahead of schedule in Michigan lending programTech firms vie for prize By Mark Sanchez | MiBiz otherwise may not have done, The bank to date has surpassed 80 percent of the $2.5WEST MICHIGAN — Four firms from West msanchez@mibiz.com given the tight federal regu- billion commitment and is well ahead of expectations,Michigan have been selected as finalists lations right now over com- Doyle said. Fifth Third is 30 percent of the way to anotherin the $1 million Accelerate Michigan WEST MICHIGAN — When it came time for a mercial lending and collat- $2.5 billion commitment made in November 2011 forInnovation Competition. Page 32 Standish-based plastic molding company to grow, the eral requirements, said Tim consumer and mortgage lending. company went looking for a loan to finance an expan- Doyle, Fifth Third’s senior Huntington Bank, which committed $2 billion ISSUE INDEX sion. But the firm didn’t qualify for a loan because of vice president and business over four years to small business lending through a lack of adequate collateral, the result of the recession banking manager in West Pure Michigan Business Connect, said in June it hadCompany Index 3Design+Build 20 that pushed down the valuation of many companies. Michigan. originated more than $1.5 billion in loans to moreEconomic Development 12 The solution for Vantage Plastics came via a “They would have been than 2,500 business.Finance 16 Michigan Economic Development Corp. program harder transactions to get Doyle Doyle partly credits Fifth Third’s commercial loanFocus: Logistics 28 that supports the collateral needs for businesses seek- done,” Doyle said. “We’ve volumes through Pure Michigan Business Connect toFood Biz 24 ing credit, which enabled the company to secure a loan been somewhat handcuffed through regulatory the state’s improved economy, especially in the manu-Health Biz 22 from Fifth Third Bank. The transaction is one of many channels.” facturing sector where companies are making capitalManufacturing 8 Fifth Third has conducted as part of Pure Michigan Participation in the MEDC collateral program is purchases, acquisitions and facility expansions. FifthNonprofit Organizations 15 Business Connect, an initiative by Gov. Rick Snyder one aspect of Fifth Third’s broader role and its $2.5 Third’s overall commercial lending in Michigan isPeople & Datebook 33 and the MEDC to get Michigan businesses doing more billion, three-year commercial commitment made running about 30-percent higher in 2012 than in 2011,Pay It Forward 6 business with each other. a year ago to Pure Michigan Business Connect. The he said.Q&A and In the News 34Small Business 26 Fifth Third to date has funded $40 million in amount was about 25 percent higher than what Fifth “It’s very positive,” Doyle said.Talent Development 27 loans for 40 companies alone through the MEDC Third loaned to businesses in Michigan in the priorTechnology 32 collateral support program. They are deals the bank three years, Doyle said at the time. See PURE MI BUSINESS CONNECT | page 2P E R I O D I C A L S Magna plans new sunroof Battling Back facility for MiBiz Supplement: Holland Calhoun County BATTLING PAGE 10 M A D E I N INSIDE THIS ISSUE BACK CER EAL CIT Y REIN VEN TS ITS ELF MICHIGAN Sponsored by Chemical Bank
  2. 2. 2 OCTOBER 15, 2012 • MiBiz Visit www.mibiz.comAmway wants to exit wireless charging business By Joe Boomgaard | MiBiz Now, the company said the technology is rap- chips or phones,” Weaver said. “Now seems like jboomgaard@mibiz.com idly evolving to the point where it would better a good time to (sell the IP). The market seems to to hand off the technology to a new suitor who be right.” ADA — Amway parent company Alticor Inc. could expand its adoption and scope. If the sale happens, it would be the first time looks to cut the cord on the intellectual property “It’s a good time to sell the IP and exit the in the company’s more than five decades in behind eCoupled, the wireless charging technol- business, really to give the business the opportu- operation that it sold IP it developed, Weaver ogy it developed and nurtured over a decade, by nity to expand with an owner in the business of said. That’s because it is mainly focused on its finding a buyer to take it to the next level. consumer electronics or computer manufactur- core business and never has had “as big of a pat- Alticor took the unusual step earlier this ing,” said Jim Weaver, vice president at Alticor. ent estate in a big, emerging market” as it does month of announcing in a press release that it “They could bring the technology to life through with the eCoupled technology, he said. planned to sell the wireless charging IP devel- their product lines.” But rather than find an investment banker oped by its subsidiary, Fulton Innovation, an While Fulton Innovations developed more to quietly identify a buyer, make the transaction internal skunk works division that works on than 240 worldwide patents and has another and then make the announcement, Amway is product innovation. 480 patents pending behind the technology, the changing up that order. It led with the announce- The company initially created the technology business of wireless charging was too far away ment that it wants to sell the technology, is in the to power its eSpring line of UV water filters, but from Amway’s focus on health, wellness, beauty process of wrapping up a contract with an invest- handed it over to Fulton Innovation to see where and direct selling, he said. To really advance the ment banker, and then plans to shop around theAlticor plans to sell off the IP behind its eCoupled else the technology could be applied. That put the technology, the company felt it was time to find technology to suitors.wireless charging technology, which it originally company into unfamiliar territory, consumer an outside buyer and exit the business. Sources in the investment banking indus-developed for its eSpring UV water filter and later electronics, which could be fitted with adaptive “While licensing is something we under- try that spoke with MiBiz said the move seemedexplored as a solution for consumer electronics. devices that allowed for wireless charging. stand, we don’t have the ability to make power to indicate the company didn’t ascribe muchCOURTESY PHOTO value to the technology and wanted to walk away from it. Weaver insists that is not the case. He said the company chose to go about the process in the order it did out of fairness and transparency to the employees that worked on the technology and to the company’s licensing partners, some of which could be interested in buying the IP. “If we didn’t think it had any value, we would have quietly exited the business,” Weaver said. “We think differently. … This is valuable IP to sell. “We are not in any hurry to sell this. We want to do it the right way. And I’ve been candidly sur- prised how many people have expressed an inter- est. We’ve got a good business now, but we think it will be a great business in the right hands, and we want to help it along the way.” While Amway does want to get out of the wireless charging business, it sees the eCoupled IS THIS HOW YOUR technology as a “big success for the Amway busi- ness.” The company plans to continue licensing BANK SEES YOU? the technology to use in its water filters and other products. “We’re proud,” Weaver said. “There’s no We don’t. doubt that wireless power is in our future. To be a pioneer in creating that market space is a suc- We see you as an individual. cess, not a failure.” With the guts to run a business. Which makes us curious how you do it. And how we, as your bank, can help PURE MI BUSINESS CONNECT Continued from page 1 you do it better. What makes your business special? What is its true potential? The partnership with the state has exceeded How do you actually get paid? It’s how expectations for the Cincinnati-based Fifth we can generate ideas that work for you. Third, which is working to expand the model to Like integrated payables and receivables other states such as Ohio, Illinois and Florida. “The momentum we’ve made in Michigan solutions that may help you improve cash — others states are seeking to leverage that,” flow. Or, perhaps, financing options you Doyle said. “We’re taking this model on the never knew existed. We don’t think a road.” bank can do that without being curious. Key to the model is the MEDC’s referral of companies seeking assistance for an expansion Learn more at 53.com/BusinessIdeas or securing the capital or credit they need to grow. We’re Fifth Third Bank. Doyle recently detailed the program at a U.S. Department of Treasury conference in Chicago on sharing best practices to improve access to credit for businesses across the nation. His primary message in his presenta- The curious bank. tion was for both the public and private sectors was to “put down silos” and to look at how they can work together. Banks need to get more innovative as well in how they approach the market, Doyle said. Given the depth of Michigan’s economic troubles, the Pure Michigan Business Connect program and partnership with the state was an opportunity that Fifth Third welcomed. Deposit and credit products provided through Fifth Third Bank. Member FDIC. Equal Housing Lender. Lending is subject to credit review and approval. “This is the best situation for Michigan, if © Fifth Third Bank 2012. we’re working together,” Doyle said. “Banks have to change. What we realized in the last four years is we have to be more innovative because the cus- tomers’ needs are changing as well.”
  3. 3. Visit www.mibiz.com MiBiz • OCTOBER 15, 2012 3WHAT’S INSIDE October 15, 2012 Published since 1988 MiBiz® is a registered trademark of REVUE Holding Co., Inc. Editor & Publisher Brian Edwards bedwards@mibiz.com Managing Editor Joe Boomgaard jboomgaard@mibiz.com Senior Writers Mark Sanchez (finance, health care) msanchez@mibiz.com Mike Brennan (technology) mbrennan@mibiz.com Staff Writer Elijah Brumback (design-build, real estate) ebrumback@mibiz.com 12 24 Contributing Reporters Carl Dunker, Kelly Hill, Lindsay Patton- Carson, Ruth Terry Minion Stephanie AllenMANUFACTURING FOOD BIZ Contributing Photographer 7 Out-of-state rack maker plans new Grand Rapids plant 24 West Michigan wineries excited for 2012 vintage Jeff Hage10 Magna International to expand in Holland Columnists11 MCC launches hybrid CAD/CNC program SMALL BUSINESS Melissa Anderson, Karl Dehn, Ron Kitchens, Birgit Klohs, Randy Thelen11 Event to highlight center’s training capabilities 26 Planning, communication key to crisis management Vice President of Sales Denise SchottECONOMIC DEVELOPMENT TALENT DEVELOPMENT dschott@mibiz.com 12 Downtown GR project gives developers confidence to invest 27 Summit shares best practices in employee retention Senior Advertising Consultant 14 Smoking gun? Study shows little impact from smoking ban Shelly Keel FOCUS: LOGISTICS skeel@mibiz.comNONPROFIT ORGANIZATIONS 28 State looks to bolster logistics capabilities Creative Services Director 15 Nonprofits broaden reach to younger donors 30-31 Statistics Kristi Kortman kkortman@mibiz.com 15 Q+A: Cecilia Cunningham, Major Gifts Director, Aquinas College 31 Governor, biz leaders near unanimous in bridge support Ad Designer & Traffic Coordinator Kellie ZaplitnyFINANCE TECHNOLOGY kzaplitny@mibiz.com 16 Accelerated Action: VC fund beats fundraising goal 32 Four West Mich. firms vie for Accelerate Michigan prize Web Editor 16 PNC survey shows small business owners planned for sluggish year Jayson Bussa NOTABLE jbussa@mibiz.comDESIGN+BUILD 6 Pay It Forward: Pete Brand Circulation 20 Pine Rest to anchor Herkimer project addition 33 People For address corrections or subscriptions, please visit www.mibiz.com 21 Industry slow to adopt new construction modeling software 33 Datebook 34 Q&A: Brian RyksHEALTH BIZ 34 In the News MiBiz 22 Indie hospitals feel increasing pressure to align, merge ISSN 1085-4916 • USPS 017-099 Formerly MiBizWest • Established 1988 23 Spectrum broadens neuroscience specialties MiBiz is published every other week by REVUE Holding Co., Inc., 4927 Stariha Dr., Suite B, Muskegon, MI 49441. Telephone (231) 798-4669. FAX (231) 798-8335. E-mail: info@ mibiz.com. Subscription changes: www.COMPANY INDEX Global Forex Trading ...............................16 Mich. Licensed Beverage Association ....14 Spectrum Health Innovations LLC..........32 mibiz.com. Periodicals Postage is paid atAccelerate Mich. ....................................32 Grand Action...........................................12 Michigan Accelerator Fund I...................16 Star Truck Rentals Inc. ...........................34 Muskegon, MI and additional mailing office. Grand Rapids Comm. Foundation ..........15 MEDC ................................................ 26,32 Stryker Corp. ..........................................34 POSTMASTER: Send address changes toAlcoa Howmet ........................................11 MiBiz, 4927 Stariha Dr., Suite B, Muskegon,Alticor Inc. ................................................2 Grand Valley State University ........... 15,16 Michigan Fleet Services .........................34 Van Andel Institute .................................16 MI 49441. Subscriptions are available withoutAnderson Global .....................................11 Great Lakes Entrepreneurship Quest ........6 Mich. Grape and Wine Industry Council .24 Varnum LLP ................................. 22,26,32 cost to qualified readers. Paid subscriptions Guardian Finance & Advocacy Services .34 Mich. Manufacturing Technology Center11 Warner Norcross & Judd LLP .................34 are available to those not meeting qualifiedAssociated Rack Corp. .............................8 circulation requirements. Paid subscrip-Axios Inc. ................................................34 Heart of West Michigan United Way .......27 Michigan Works! .....................................27 WMSTI ....................................................16 tions are $46/year, $68/two years and $84/ Heeren Bros. Inc. ....................................34 Midlink Business Park ............................34 Zeeland Community Hospital .................22 three years. Single copy and back issuesBarFly Venture LLC .................................14 (when available) are $1.50 each, plus firstBattle Creek Health System....................22 Hi-Tech Plastics .....................................34 Mindscape at Hannon McKendry .............6 class postage.Benton Harbor Pharmacy LLC ................34 Huntington Bank .....................................2 Muskegon Community College ..............11 IHS Automotive ......................................10 Neogen Corp. ..........................................34 SPECIAL SECTION: GRAND RAPIDSBronson Healthcare ................................22 65 Monroe Center, Suite 5Brookstone Capital LLC ..........................12 Inner City Christian Federation ......... 13,20 NCEDO ....................................................11 CALHOUN COUNTY Grand Rapids, MI 49503Business Leaders for Michigan ..............28 InnoValuation LLC ..................................16 NextGen United Way...............................15 Battle Creek Area Math & Science Center 3 616.726.6909 phone • 231.798.8335 fax Inspire Community Development FCU ...34 Perrigo Co. ..............................................34 LAKESHORECallander Commercial ..............................8 Battle Creek Chamber of Commerce ......10 4927 Stariha Drive, Suite BCharter Group, The .................................16 Kenco Logistics ......................................29 Pine Rest ................................................20 Battle Creek Downtown Partnership.........3 Muskegon, MI 49441Cheboygan Memorial Hospital ...............22 Kent Co. Essential Needs Task Force .....27 Pioneer Construction..............................21 Battle Creek Unlimited...........................3,8 231.798.4669 phone • 231.798.8335 faxCommunity Promise FCU .......................34 Lacks Enterprises Inc. ..............................8 Plante Moran PLLC .................................34 Benhke Trucking and Warehousing Inc. ...8 MiBiz is printed on 35# alternative offsetDavenport University ..............................16 Lakeland HealthCare ..............................22 PNC Bank ...............................................16 Brembo North America Inc. ......................4 newsprint, 80 bright. The manufacturer Lakeshore Advantage .............................10 Priority Health ........................................34 (Abitibi Consolidated) states that thereDixon Architecture ..................................34 Bronson Healthcare Group .......................9 is up to 40 percent recycled paperDowntown Market ..................................12 Lambert, Edwards & Associates.............26 RC Productions Inc. ................................34 Denso Michigan Manufacturing ...............4 incorporated into this paper grade. TheDTS-Winkleman .....................................20 Lean Logistics ........................................28 Rapid, The ..............................................27 Employment Group ...................................4 printer (Newsweb, Greenville, MI) uses Lee Shore Enterprises Ltd. .....................28 Right Place Inc., The ..............................28 soy-based inks and recycles all of itsDwelling Place ........................................12 Hi-Lex .......................................................8 production scrap.ENRG Power Systems.............................32 M&K Quality Truck Sales Inc. .................34 Rockford Construction ...........................20 Janesville Acoustics..............................4,8Fenn Valley Vineyards Inc.......................24 Magna International Inc. ........................10 Royal Technologies Corp. .......................34 Mary Free Bed Rehab Hospital .................9 COPYRIGHT©2012. All Rights Reserved. Marquette General Hospital....................22 Saint Mary’s Health Care ........................23 Reproduction or use of any portion withoutFirst Companies .....................................34 Michigan Economic Development Corp. ..4 permission of the publisher is prohibited.Gerald R. Ford Int’; Airport ......................34 McLaren Health System .........................22 Sigma Machine Inc. ................................34 Michigan Works! .......................................4Gerber Memorial Hospital ......................22 Memorial Medical Center of West Mich..22 Source One Digital ..................................34 RSB Transmissions North America Inc. ...4Gerber Products Co. ...............................11 Mercy Health Partners ............................22 SOURCE, The ..........................................27 Southwest Regional Rehab. Center ..........9Global Food Protection Institute ..............6 Meritage Hospitality Group Inc...............34 Southwest Michigan First.......................29 The Hinman Company ..............................8 Mich. Health & Hospital Assoc. ..............22 Spectrum Health .............................. 22,23 Waterland Properties LLC .........................8
  4. 4. 4 OCTOBER 15, 2012 • MiBiz Visit www.mibiz.com JUGGLING ACT Wolverine World Wide CEO Blake Krueger prepares to integrate one of the largest ever acquisitions in the footwear industry.By Joe Boomgaard | MiBizjboomgaard@mibiz.comROCKFORD — Two decades of merger experi-ence have prepared Wolverine World Wide Inc.for the biggest acquisition in the company’s his-tory and one of the largest and most complexdeals ever in the footwear industry. The Rockford, Mich.-based footwear com-pany’s role in the $2.0 billion acquisition ofCollective Brands Inc. should yield consider-able growth for the company that makes HushPuppies and Merrell shoes. Company executivesproudly claim the transaction, which was final-ized last Tuesday, makes Wolverine the third-largest footwear company in the world, trailingonly Nike Inc. and Adidas AG. The acquisitionis expected to add $1 billion in annual sales toWolverine’s top line in 2013, pushing its totalrevenues to more than $2.5 billion. But some on Wall Street and in the footwearindustry are wondering if Wolverine will be ableto pull off an acquisition this large. The deal willcreate a new level of complexity as Wolverineworks to simultaneously integrate the acquiredoperations of Collective Brand’s Performance+ Lifestyle Group (PLG) and its four brands:Sperry Top-Sider, Saucony, Stride Rite and Keds.And for the first time in memory, Wolverine willfind itself heavily leveraged with the mountainof debt required to pull off the “transforma-tional” transaction that will vault it to the upperechelon of global shoe companies. Wolverine World Wide CEO Blake Krueger and the company’s management team are focused on integrating the company’s largest ever acquisition and one of the “We’re a pretty conservative Midwest com- largest deals in the history of the footwear industry. “The dovetail strategic fit for us is almost perfect,” Krueger said of the deal that adds four brands to Wolverine’spany,” Wolverine CEO Blake Krueger told MiBiz. portfolio and more than $1 billion in annual sales. The acquisition positions Wolverine — with projected 2013 total revenues of more than $2.5 billion — as the third-“For years, we’ve operated with basically no debt largest global footwear company behind only Nike and Adidas. PHOTO: JEFF HAGEand a pretty large cash surplus, but this was obvi-ously such a strategic opportunity for us. So wemade the decision to make a break from our past “The fact that Collective Brands went for so distribution and entry into new market seg- come from markets outside the United States.mode of operating.” much money — and that Wolverine had to take ments such as kid’s and athletic footwear. The The Sperry brand, for example, is one of the That break has given pause to some on Wall on debt to complete the deal — shook up the PLG brands, which are sold primarily in the most popular casual shoe brands domesticallyStreet. industry,” she said. United States, should see tremendous benefit with an estimated $330 million in annual rev- “Without a doubt you have integrated smaller from Wolverine’s international sourcing and enues, but only 4 percent of its sales come frombrands successfully in your portfolio,” said ana- distribution networks, as well as its disciplined outside of North America.lyst Diana Katz from Lazard Capital Markets FILLING WHITE SPACE approach to financial management. By comparison, Wolverine marketed nearlyon a conference call with the company, but she While there are questions, few argue with the “The dovetail strategic fit for us is almost two-thirds of its units in international marketsand others asked how Wolverine would be able strategy behind the deal, which saw Wolverine perfect,” Krueger said. “They’re brands we know last year, and international revenues accountedto handle the integration of such a large acqui- partner with two private-equity firms on the intimately, formerly as some direct or indirect for more than 40 percent of total revenue.sition. In fact, many analysts are taking a “wait complex bid. competitors of ours. We know that we can help “Our international scope is still really one ofand see” attitude about this deal, said Michelle From a strategic standpoint, the PLG them accelerate their current growth path.” the envies of the industry,” Krueger said. “AfterTay, business editor of industry trade publica- acquisition gives Wolverine added size and The first acceleration pedal is international. 50 or 60 years, operating with different cul-tion Footwear News. negotiating power, as well as expanded retail Less than 10 percent of PLG’s footwear sales tures, promoting and growing brands on a global basis — it’s kind of in our DNA now. “So we know we can take these (new) brands international and give them some pretty imme- Stiles is taking care of business. diate global mass and global extension.” There’s also tremendous upside for improv- ing PLG’s profit margins, which are about 40 percent lower than what Wolverine earns, Krueger said. “We can win just by improving their profit- ability up to our levels,” Krueger said. “We’re pretty good operators as a company and consis- tently deliver healthy profit margins. We can bring them up to our profitability level over We helped Energetx innovate with breakthrough technology. time.” Energetx Composites has successfully translated its deep manufacturing expertise to capitalize on opportunities in the growing KMT RoboTrim Wolverine should also see benefits. With the wind-energy industry. To procure the specialized equipment needed, they turned to Stiles. Key among the Holland, Michigan- addition of the four PLG brands into its portfo- based company’s acquisitions was a highly advanced, fully automated, KMT root end cut and drill system for processing the lio, the combined company expects to sell 100 150-foot-long, 9-ton blades used by utility-scale wind turbines. The system uses breakthrough drilling technology that’s 25% million pairs of shoes and units of apparel per faster than other systems and offers patent-pending automatic blade-location technology—drastically reducing set-up time and maximizing productivity for this growing enterprise. year around the globe — up from the 52 million units Wolverine sold in 2011. The company’s Find out how Stiles can help you take care of your business. Call Stephan Waltman at 616.698.7500 collective mass will allow it to get better pricing or email swaltman@stilesmachinery.com. stilesmachinery.com from its suppliers, and its increased volume will help spread out logistics costs, Krueger said.
  5. 5. Visit www.mibiz.com MiBiz • OCTOBER 15, 2012 5 “It immediately makes you important to Opportunity Fund LP and Blum Capital “At 100 million pairs a year,everyone, and by everyone, I mean the factories Partners LP, jointly acquired the remaining por-that make footwear around the world,” he said. tions of Collective Brands, Payless ShoeSource“At 100 million pairs a year, we carry a very large and Collective Licensing International.collective pencil.” The acquisitions also fill “white space” “We were able to end up with the brands we wanted and not touch the Payless business, we carry a very large collective pencil.”in Wolverine’s portfolio, giving it entry into which is an entirely different kind of lower-mar-markets where it lacked a significant presence ket business,” Krueger said.— children’s, athletic and women’s footwear, The transaction required Wolverine to takein particular — and a significantly larger foot- on approximately $1.3 billion in long-term debt,print of company-owned retail stores. Krueger which was raised through a bank syndicate, and BLAKE KREUGER, WOLVERINE WORLD WIDEexpects Wolverine’s existing brands to benefit an offering of corporate notes. The companyby gaining immediate entry into the “better- secured a $1.1 billion credit agreement with agrade” domestic children’s footwear market syndicate of 20 banks, including JP Morganthrough Stride Rite’s 300 retail stores. Chase, Wells Fargo Bank, Fifth Third Bank and That’s a market where Wolverine had “pock- PNC Bank. The company also offered $375 mil- ramped up its pace, licensing Patagonia and from 2005 to 2011. Having Jeppesen on boardets of success” but never really had the infra- lion in senior notes, which will be used to fund acquiring Sebago, Chaco and Cushe. helped in the acquisition because he ran PLG’sstructure to make a significant play, Krueger the purchase and pay off PLG’s debts. Every one of them has been successful, operations and sourcing and was familiar withsaid. The notes offering was oversubscribed, said Krueger claims. its brand leaders. “It’s a different business,” he said. “(The Krueger, attributing the demand to a strong “We tend to be a pretty disciplined team “We’ve been trying to lasso him for years andstores) will also give our existing brands’ chil- national market for corporate debt as well as the when it comes to acquisitions and brands. were fortunate to do that six months or so beforedren’s business access to factories (and) product company’s track record as an operator. When you look at our history with Sebago, with the acquisition was announced,” Krueger said,development expertise that we frankly didn’t “I think the strategic fit, the strategic story, Caterpillar, with Harley-Davidson and with cracking a smile. “He’s made huge contributionshave in sufficient depth before.” our reputation for being pretty consistent and many of our other acquisitions, every one of already to our company.” PLG’s retail stores will effectively double good operators of the business sold very well,” those has been a success story. Frankly, (that) isWolverine’s retail sales as a percentage of rev- Krueger said. “We had a very high confidence unusual to have a period of sustained successesenue from 7 percent to 14 percent from brick and level.” over a period of years.” OFF THE DEAL PATHmortar stores and e-commerce websites, it said The poster child of that successful acquisi- The final driver of the company’s integrationin a filing with regulators. Following the acqui- tion strategy is Merrell. The company acquired strategy is focus. While the company has builtsition, Wolverine will operate about 425 stores, PROVEN TRACK RECORD Merrell from the Outdoor Division of Sports its business through a series of acquisitions andmostly in the United States. Based on Wolverine’s track record of acquiring Holding Corp. for $17 million in cash in 1997. brand licensing agreements, it knows it will “In today’s world, we believe you need to con- and integrating brands and operations over the The prior year, Merrell had sales of approxi- have to step back from the hunt for other dealstrol a certain percentage of your destiny at your past 18 years, the confidence may be well placed. mately $27 million. Today, “Merrell’s well over and pour all its effort into integrating the PLGown retail,” Krueger said. “It brings you closer Founded in 1883, Wolverine operated with just $500 million in sales,” Krueger said. business.to the consumer. It lets you present your brands three main brands — Wolverine, Hush Puppies “When we acquired Merrell, it wasn’t a very Because the companies shared a similarin the best possible way and actually creates a and Bates — for most of its existence. Beginning big brand, and it wasn’t a very good business,” he culture and because the acquisition processhealthier wholesale business.” in the early 1990s, though, Wolverine began to said. “When we were able to plug and play that has gone on for so long, Wolverine’s execu- license and acquire other brands, starting with a into our international distribution network, we tives estimate the PLG business will be fully license with Caterpillar Inc. for CAT Footwear were able to get some fairly accelerated growth.” integrated into Wolverine by the end of theCOMPLEX DEAL, EASY DEBT in 1994 and, later, the acquisition of the Merrell calendar year.Wolverine has already cleared a significant brand in 1997. A year later, Wolverine acquired “There are certainly some projects and somehurdle with the transaction: getting it done. the global license for the Harley-Davidson foot- THE PARTS OF THEIR SUM information services that will roll on into 2013,The company announced the acquisition had wear brand. Beginning in 2003, the company Wolverine’s management plans to use the same but in a lot of areas, the integration will be sub-cleared last week, two months later than origi- playbook for integrating the PLG brands. stantially complete this year,” Krueger said.nally anticipated and more than a year after While the size does far eclipse any other deal With the company taking on significantCollective Brands first put itself up for sale. in Wolverine’s history, the integration process financial burden, Wolverine will be out of the “It was about the longest process I’ve heardof in recorded M&A history,” Krueger said with Brand (new) revenues will be based around the parts rather than their sum. The four individual brands that make up acquisition market for about two or three years as it pays down its debt.a laugh. The four brands acquired by Wolverine the acquisition are of a size that Wolverine is “This acquisition and our existing business Collective Brands first put itself on the mar- World Wide will add more than $1 billion used to digesting, he said. are going to generate a lot of cash. Obviously,ket in August 2011, after shopping itself quietly in revenue to the Rockford-based footwear “Although this is a big business … you have we’re going to first use that cash to invest back infor a few months. Wolverine had reportedly been maker’s results in 2013. In 2011, the four to also remember it’s comprised of four differ- our brands, but then we’re going to take the casheyeing the footwear brands “for a long time,” recently acquired brands topped the billion ent brands. These are all brands of a size we cur- that’s generated and pay down the debt,” Kruegeraccording to an industry source, but was not dollar revenue mark. rently have,” Krueger told analysts in a confer- said. “But we’ll always be out there looking forinterested in the Payless ShoeSource retail busi- ence call. niche brands, maybe a smaller bolt-on acquisi-ness. The company and its advisers recruited The CEO argued that Wolverine does have tion. After a couple of years, we’ll certainly be intwo private equity firms with retail portfolios experience integrating brands the size of the a position to consider a larger acquisition.”to make the deal happen. The group decided to Sperry Top-Sider: $330 million individual PLG brands, which in 2011 ranged in Krueger does admit that there is one thingbid for CBI together and divide the respective revenues from $80 million (Keds) to $335 mil- that keeps him up at night related to the massivebusinesses. While it sounds simple, the three- lion (Stride Rite). He said the company can suc- acquisition.party“club bid” aspect of the transaction added a cessfully integrate the PLG business by using “The thing that really keeps me up is try-layer of complexity, said attorney Tracy Larsen Saucony: $270 million the company’s usual formula: “time, people and ing to prioritize all the opportunities in frontof Barnes & Thornburg LLP, which represented effort.” of the company right now,” he said. “When youWolverine. Negotiating terms among the three “There is always risk,” Krueger told analysts. look across our existing portfolio of 12 brands,parties and Collective Brands, and the subse- “It probably always takes more time and effort the global opportunities for these four (newly Stride Rite: $335 millionquent need to obtain audited financials on the than you think going into it, but we are pretty acquired) brands, the fact that our company haspieces of the Collective Brands business created good at execution.” become a one-stop shop for international dis-the bulk of delays, he said. Wolverine also had an insider’s perspective tributors and retailers, the collective power of In the final transaction structure, Wolverine on the PLG business. About six months before these 16 brands…(is) almost unlimited. Keds: $80 millionacquired the PLG brands and business for the acquisition was announced, Wolverine hired “For me, right now, and the managementabout $1.24 billion, while two San Francisco- SOURCE: WOLVERINE WORLDWIDE ANALYST PRESENTATION Mike Jeppesen, who served as Collective Brands’ team, it’s really a question of prioritizing ourbased investment firms, Golden Gate Capital senior vice president of design and sourcing efforts, time and resources.” H HISTORY OF WOLVERINE WORLD WIDE BRANDS Saucony Sperry Top-Sider Patagonia Stride Rite Hush Puppies HyTest Cat (Canada) Keds Wolverine Hush Puppies Harley- Merrell Track ‘N Trail Wolverine Chaco Colombia JV Bates Cat (U.K.) Merrell Davidson (Europe) Cat (Europe) Sebago (Canada) Cushe India JV 1883 1994 1996 1997 1998 2001 2002 2003 2005 2009 2012
  6. 6. 6 OCTOBER 15, 2012 • MiBiz Visit www.mibiz.com UNDERWRITTEN BY: FORWARD Highlighting local business people giving back to the community. To nominate someone for a Pay It Forward feature, email editor@mibiz.com. PAY IT Pete Brand After completing an assignment in sixth grade that had him rifling through the help wanted ads in hospitality services to families in crisis, the local newspaper to find the job of his dreams, Pete Brand knew he wanted to be an entrepreneur. Brand is committed to empowering people As the co-founder of Mindscape at Hanon McKendry, he is constantly engaging businesspeople so they can get their lives on track. with startup ideas. Using his expertise to help others launch their own businesses, Brand goes one “It’s really easy to watch the guy get out Co-founder, Mindscape step further, putting confidence behind each person he works with in and out of the office. of his BMW wearing a slick suit and think A that’s what success looks like,” he said. at Hanon McKendry fter co-founding Mindscape in 2001, Brand has overseen his With those days in the rear view, Brand is using his experience to help others To Brand that’s not the kind of inspira- tion people need. Instead people need to company’s growth year after year. bounce back. look inward and promote their strengths. But the momentum he is working with “What drives me is helping people real- “If I can help people realize happiness now wasn’t always behind him. Like many ize they are significant,” he said. “Whether and not sell out and spend all of their people, Brand battled his share of personal you’re homeless or a multi-billionaire, time and effort doing something they issues, including the not-so-distant people’s biggest fear is not mattering.” hate just to pay the bills, that’s my goal,” passing of a loved one and the financial Through his work mentoring entrepre- he said. insecurity of being an entrepreneur with neurs or his efforts on the board of Family a dream. Promise, an organization that provides Interview and photo: ELIJAH BRUMBACK
  7. 7. Visit www.mibiz.com MiBiz • OCTOBER 15, 2012 7
  8. 8. 8 OCTOBER 15, 2012 • MiBiz Visit www.mibiz.com ManufacturingOut-of-state rack maker plans new Grand Rapids plantBy Carl Dunker | MiBiz million, has around 175 employees nationwide.cdunker@mibiz.com Originally a manufacturer of racks for use in electroplating, the product line at Associated GRAND RAPIDS — A Chicago-based manu- Rack Corp. expanded in recent years to includefacturer plans to open up shop in Grand Rapids fixtures for powder coating as well as protectiveto be close to a key customer, while riding the coatings, material handling products and heat-wave of the automotive recovery and a successful treating units.diversification strategy into growth industries. Currently owned by Bill Faulman, a descen- Associated Rack Corp. just purchased a dent of its founder, the company also diversifiedmore than 10,000-square-foot facility on Kraft its offerings to attract business from burgeon-Avenue in Grand Rapids, where the company ing industries, namely the aerospace sector,plans to open a new plant to make racks, which Bauer said. That’s led to successful bids on con- Associated Rack Corp. just purchased a facility in Grand Rapids to open a new manufacturing operation. Theits customers use in processes ranging from tracts from companies including aerospace $11 million company makes racks used in powder coat paint lines and other manufacturing processes. Thepowder coating to electroplating. giant Boeing, he said. site joins the company’s other facilities in Illinois and Florida, but will service local customers. COURTESY PHOTO The move into West Michigan follows This diversification strategy is partly toan increase in business at many of the firm’s thank for the company’s survival of the reces- trade school, but are developed over time through “Think about an artist or a sculptor, some-local customers, including automotive sup- sion, Bauer said, and helped make possible its on-the-job experience. He said he needs more can- one who can look at a block of marble and seeplier Lacks Enterprises Inc., said Don Bauer, move into Michigan. didates that think like people who grew up around what’s inside of it,” Bauer said. “You have yourAssociated Rack’s engineering manager. “We try to diversify what we can do in order farms and have a natural ability to find solutions prototype guy and you tell him you need certain The company has initial plans to hire up to to provide more services to our customers,” to products and can develop new products and pieces held a certain way, and he has to be able20 people at the site, he said. said Bauer. “Business was really kind of a roller prototypes that make business easier. to see how to make it work, and then form and “Things are much better this year than in the coaster in the past six years, especially in the “It’s a skill level that you can’t just go to shape the metal.”past four,” Bauer said. “We decided six or eight lows. We really were kind of just holding on and a community college and get someone who While Associated Rack also expects itsmonths ago that there was enough business for avoiding layoffs.” has two years of class experience,” said Bauer. employees to have hard skills and advancedus to move into the Grand Rapids area.” As the company enters the West Michigan busi- “Oftentimes, those are skills that you find in training in welding and fabrication, the most The real estate transaction was brokered by ness environment, Bauer sees staffing as the larg- someone like a farmer, because farmers are important quality that the company is lookingPamela Collins, a Grand Rapids-based broker at est obstacle to the expansion plans. He said finding always having to find ways to make things work. for in its people is that ability to see the finishedCallander Commercial. qualified candidates to fill positions is becoming We actually have a few guys who have that back- rack, how it will be used and the steps needed to The new Grand Rapids location will be increasingly difficult, for a variety of factors. ground, who worked on a farm when they were make it, he said.the company’s eighth, and it’s first location “Some of the workforce needs that we have younger.” Bauer knows that takes time, noting thatin Michigan — at least in a handful of years, are for welders, especially experienced ones,” Because the company is often manufacturing the company will work with the right person tosaid Bauer, who noted the company’s founders said Bauer. “I’m not talking about somebody racks that are custom-built to hold a specific part develop those traits.started the company in the state 60 years ago. who can weld a pipe or a seam, I’m talking about and fit into a defined manufacturing process, “We’re looking for people who have the abil-Currently, Associated Rack has locations serv- doing intricate, precision TIG (tungsten inert Associated Rack especially values employees ity to think carefully through a problem anding the southern states and the western U.S., gas) welding.” who can envision the entire manufacturing pro- form and bend metal by hand,” Bauer said. “Youwith two plants each in Florida and Illinois. Bauer said these skills are not the type that cess that goes into a part and then design a rack have to find someone who has the experience andThe company, with annual revenues nearing $11 can be easily picked up at a community college or to fit that whole production cycle, Bauer said. incubate that.” Have a specific need? Our candidates have specific training. Computers Health Engineering/ Education & Business 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 HireQualified.com. HireQualified.com Free recruiting services from America’s leading career college. X6406HQ
  9. 9. Visit www.mibiz.com MiBiz • OCTOBER 15, 2012 9

×