crain's cleveland business

By CHUCK [email protected]

When it comes to attracting venture capital, Northeast Ohio’sclean technology companies arecleaning up.

The region’s so-called “clean-tech” startups — companies devel-oping technologies that can rangefrom wind turbines and fuel cells towater purifiers and new types of insulation — are receiving muchbigger pieces of the venture capitalpie as of late, hauling in 20% of allventure investments made in theregion during the past two years.

On a percentage basis, that figureis more than they’re used to receiving,according to figures from the 2009Venture Capital Report, which iscompiled by three local economicdevelopment organizations. Bycomparison, cleantech startups in2005 snared just 3% of all ventureinvestments in Northeast Ohio.

The increase is heartening, according to Becca Braun, president

INSIDE: Clean technology and advanced energy comprise a largerpart of venture capital investment.6

$1.50/MARCH 1 - 7, 2010Vol. 31, No. 9

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609 SPECIAL SECTION

LEGAL AFFAIRSMore local law firms implement sustainable prac-tices with environment, ethics in mind ■■ Page 11PLUS: OFFICE POOLS ■■ LEGISLATION ■■ ADVISER ■■ & MORE

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Small firmsdecry lendingenvironmentBusinesses express anguish to Fed over inability to access credit; banks also in viseBy ARIELLE [email protected]

When she talks about banks andsmall business, Susan Schwartz Salontay doesn’t mince words.

“We’re being killed,” she said.“We are being put out of businessbecause banks are looking to collectwhat they lost.”

Ms. Salontay, president and ownerof Work Best Electric, a 23-year-oldelectrical contracting company inCleveland, said she is “holding on,holding on, holding on,” but that thecompany is “losing our grip here.”

Across the region and the country,small businesses are facing reducedlines of credit, less access to capitaland resistance to restructuring loans.In Ms. Salontay’s words, they’re “so,so screwed.”

According to Ms. Salontay, hereight-employee company hasn’t hada working line of credit since JP Morgan Chase eliminated hers 12months ago. She said there are weekswhen she doesn’t know how she’s going to make payroll. She alreadyhas used insurance money from a lostwedding ring to help pay employees

Clean technology sector findsfavor with local VC investors

INSIDEFirstMerit banks on growth

The Akron-based bank aims to expand its marketshare by bolstering its presence in the Midwest.Last week, FirstMerit added fourbranches in the Chicago area. ReadArielle Kass’ story on Page 3.

See CREDIT Page 17

See TECHNOLOGY Page 16

MIXED MESSAGESAs order levels gyrate, manufacturers must grapple

with changing production logistics to meet customer needs

By DAN [email protected]

The ride out of the recession is turningout to be a bumpy one for manufac-turers as their orders increase not in astraight line, but in a series of fits and

starts that make it harder to navigate the foggyroad ahead.

Most manufacturers made it through thedownturn by becoming experts at austerity,which meant jettisoning employees for whomthey had no work and not maintaining inven-tories for which they had no orders.

Now, though, they must become experts atforecasting and logistics if they are to fill batchesof new orders that are coming in unpredictablewaves, representing revenue they need.

See WHIPS Page 9

KRISTEN WILSON

20100301-NEWS--1-NAT-CCI-CL_-- 2/26/2010 2:12 PM Page 1

OUR LETTERS CARRY THE STRENGTH OF NUMBERS

weatherhead

22 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM MARCH 1-7, 2010

REGULAR FEATURES

Best of the Blogs ..........19Classified .....................18Editorial .........................8Going Places ..................7Letters ...........................8List: Northeast Ohioinvestment banks .......17

Reporters’ Notebook ....19The Week .....................19

COMING NEXT WEEK

Immigrant entrepreneurscomprise an important partof the U.S. economy. We look at some of thechallenges they face aswell as their motivations inour Small Business section.

An American dream

Audit Bureauof Circulation

Subscriptions: In Ohio: 1 year, $59; 2 years, $102.Outside of Ohio: 1 year, $102; 2 years, $180. Singlecopy, $1.50. Allow 4 weeks for change of address.Send all subscription correspondence to Circulation De-partment, Crain’s Cleveland Business, 1155 Gratiot Av-enue, Detroit, Michigan 48207-2912. 1-888-909-9111or FAX (313) 446-6777.Reprints: Call 1-800-290-5460 Ext. 136

Keith E. Crain: ChairmanRance Crain: PresidentMerrilee Crain: SecretaryMary Kay Crain: TreasurerWilliam A. Morrow: Executive vice president/operationsBrian D. Tucker: Vice presidentRobert C. Adams: Group vice president technology, circulation, manufacturingPaul Dalpiaz: Chief Information OfficerDave Kamis: Vice president/production & manufacturingKathy Henry:Corporate circulation/audience development director

G.D. Crain Jr. Founder (1885-1973)Mrs. G.D. Crain Jr. Chairman (1911-1996)

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PUTTING A STOP TO THAT

Year Work stoppages Workers involved2009 5 13,000

2008 15 72,000

They just don’t make big strikes like they used to. There were just five majorwork stoppages — defined as strikes and lockouts involving 1,000 or moreemployees and lasting at least one shift — in 2009 that idled 13,000 workersfor 124,000 lost work days, both record lows. In 2008, for instance, therewere 15 such stoppages idling 72,000 workers for 1.95 million lost work days.In 1947, the first year the Bureau of Labor Statistics tracked such data, therewere 424 stoppages involving more than 1.6 million workers.

Major U.S. work stoppages, 2005-2009 and selected prior years

2007 21 189,000

2006 20 70,000

2005 22 100,000

1990 44 185,000

1970 381 2,468,000

30 YEARS ANDCOUNTING We askwhich institutionshave best representedthe region over thelast 30 years. For thevideo, log on to www.CrainsCleveland.com.


MARCH 1-7, 2010 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

INSIGHTTHE WEEK IN QUOTES

“We learn to manageby understandingcustomers, by lookingat historical data, byunderstanding thevarious industries weserve.”— Jerry Zeitler, president of Die-Matic Corp in Cleveland.Page One

FirstMerit strategy evident in Chicago movesAkron company adds 28 Windy City branches,and more Midwest banks may be there for taking

By ARIELLE [email protected]

The Second City is on the rise forAkron’s FirstMerit Corp., which iscasting a broad eye on expansion inthe Midwest.

FirstMerit last week continued itsexpansion in the Chicago area byadding the four branches of the

failed George Washington SavingsBank in a deal assisted by the Federal Deposit Insurance Corp.The bank also converted the systemsof the 24 Chicago-area branches itpurchased from First Bank of St.Louis in late 2009.

FirstMerit president, chairmanand CEO Paul G. Greig said theChicago moves are just the start of a

wider Midwestern expansion strategy.“We’re looking to grow, we’re

looking at acquisition opportuni-ties,” he said. “Clearly, Chicago provides a great strategic opportunityfor the company. … There are a numberof very attractive cities throughoutthe Midwest.”

Tony Davis, managing director ofinvestment firm Stifel Nicolaus & Co.in Richmond, Va., agreed with Mr.Greig’s assessment of Chicago’s offerings. The population in thatarea is 1.5 times that of FirstMerit’s

FirstMerit Corp.chairman andCEO Paul Greigsaid Chicago “provides agreat strategicopportunity” forthe Akron company.

FILE PHOTO/JANETCENTURY

BioEnterprise,Team NEO tojointly recruitbiomed firmsGroups hope contacts,expertise lead to successBy SHANNON [email protected]

With a decent number of biomed-ical device makers already in North-east Ohio but plenty more to be had,business recruitment organizationsBioEnterprise Corp. and Team NEOhave begun working shoulder toshoulder to recruit those types ofcompanies here.

“When we get involved in theseopportunities — recruiting the com-panies that we find — we actuallyhave a pretty good win rate in convincing companies to move toNortheast Ohio,” said Baiju Shah,president of BioEnterprise. “Weought to take more of a proactive,targeted approach now that weknow the region has strengths.”

Those strengths lie in medicalimaging, orthopedics and biomate-rials, cardiovascular medicine andneurostimulation, which are the fourareas in which BioEnterprise andTeam NEO hope to attract biomed-ical companies, Mr. Shah said. Within these specialties, the regionalready has a sizable community ofbiomedical device makers, a signifi-cant talent pool and a vast amount ofresearch, he said.

BioEnterprise is bringing to thetable its contacts with companiesand venture capital firms across thecountry, heavy hitters in the localmedical industry and its ability totailor a message to a company’sneeds, said Tom Waltermire, CEO ofTeam NEO.

Team NEO will use its expertise inhelping companies find real estateand employees, as well as its abilityto connect firms with governmentsources for support in launchingtheir businesses here, Mr. Walter-mire said.

BioEnterprise and Team NEOhave created www.clevelandplusbiomedical.com to provide informa-tion on the four specialty areas theyare targeting and to explain whyNortheast Ohio is a good location forbiomedical device firms, said CarinRockind, a Team NEO spokeswoman.

Ms. Rockind said the two organi-zations have identified 80 industry

See RECRUIT Page 4

See ASM Page 4

“The next Google, thenext Genentech, is going to come out ofthe cleantech space.”— Mark Heesen, president, National Venture Capital Association. Page One

“This allows firmsand lawyers the opportunity to showthey’re doing some-thing. ... This is some-thing where we needto show some leader-ship.”— Carter Strang, chairman ofthe green initiative committee atthe Cleveland Metropolitan BarAssociation and a partner atTucker Ellis & West. Page 11

“Cities need to updatezoning codes to makethem relevant to today’s 21st-centurybusiness environment.”— Paul Oyaski, Cuyahoga County director of development.Page 14

See STRATEGY Page 18

PHOTO PROVIDED

Russell Township technical trade association ASM International in April will begin a $6 million renovation of itscampus best known for a striking geodesic dome, but that’s not all that’s going on there: It soon will launchthe first of its specialized web sites that house sector-specific information. Customers will purchase licensesto access the information, which ASM spent six years and $11 million compiling.

CONTENT IS KING ...... even in manufacturing, where trade group ASM International aims

to turn its $11 million research database into a profitable web content arm

By DAN [email protected]

Alot of people are tryingto figure out how tomake a living from Internet publishing,

but a bunch of materials scientiststhink they just must be among thefirst to do it.

In Russell Township in GeaugaCounty, ASM International, atechnical trade association focused on materials, has spentsix years and about $11 millionamassing a huge database on materials from steel to ceramicsand preparing to sell the informa-tion via pricey subscriptions to itsown specialized web sites. The

“He who has the best content wins,”says Stanley Theobald, managing director of ASM International, a Geauga County technical trade groupwhose focus is materials. Six yearsand $11 million of work have resultedin a database of sector-specific information available for sale throughsubscriptions to web sites ASM soonwill roll out.■■ ASM on March 15 will unveil The Corrosion Solutions Center, its first site; inApril, a second site, the Energy MaterialsNetwork, will be introduced.■■ Customers then will buy licenses to access the sites’ information — for $4,950.■■ ASM has pre-sold about 500 licenses touniversities and corporations.■■ “The kind of work (ASM does) is essential for innovation, and the waywe maintain our competitive edge inU.S. manufacturing is through innovation.”

— Bill Gaskin, president, Precision Metalforming Association

HOW THE WEB WILL WORK

“Is there really anyone... who wishes wecould return to the‘days of glory’ thatpreceded Gateway?”— From a letter to the editor.Page 8


“We have a better (biomedical) case and more assetshere than the vast majority of communities.” – Tom Waltermire, CEO, Team NEO

conferences where they’ll set upmeetings in advance with attendingcompanies to pitch Northeast Ohio’sbiomedical industry. Companies tobe targeted include startups andsmall to midsize companies thatneed to expand.

“Small companies are very mobilebecause there’s not much there yet,”Mr. Shah said. “With medium tolarge companies, their decision (ofwhere to locate) centers aroundwhere they would like to establish aproduction facility or a sales and service facility for customers.”

When companies outside the stateacquire a Northeast Ohio company,BioEnterprise and Team NEO have achance to convince them to main-tain operations here or move jobs toNortheast Ohio, which is a sort of“super victory,” Mr. Shah said

Making inroadsBioEnterprise and Team NEO are

no strangers to recruitment. Since2007, 14 biomedical device compa-


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Volume 31, Number 9 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for com-bined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July,the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland,OH 44113-1230. Copyright © 2010 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio,and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’sCleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. (888)909-9111.

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first such site, The Corrosion Solu-tions Center, will launch March 15. Asecond site, The Energy MaterialsNetwork, will go up at the end ofApril.

“Content is king, and he who hasthe best content wins,” said ASMmanaging director Stanley Theobaldin explaining the organization’sstrategy.

That’s why so much time, moneyand research has been spent on

continued from PAGE 3


ASM: Cost pales compared to mistakesresearching and preparing for thenew sites, Mr. Theobald said.

Site users will be able to drilldown through categorized informa-tion to find specific data that isneeded by engineers, architects, designers and others. For example,if someone wants to know the cor-rosion properties of a certain steelalloy, they not only can find it on thesite but can access test data showingexactly how that metal performed,and for how long, in various corro-sive environments.

All told, there are more than13,000 records in the corrosion website alone, according to ASM.

Accessing all that informationwon’t come cheap, as a license to asingle web site will cost $4,950. Butthe cost is far less than using thewrong material just once in the design of a machine, vehicle, buildingor just about anything else, Mr.Theobald said.

“The cost of corrosion in the U.S.alone is about $400 billion a year,”he said.

Others apparently agree, as Mr.Theobald said ASM has pre-soldabout 500 licenses to universitiesand corporations that want to usethe first two sites.

While the delivery model mightbe new, making a living off the saleof technical data is old hat to ASM.The organization historically hasderived the bulk of its revenuesfrom the sale of books and technicalpublications, and it already offers17,000 titles on its web site, asminternational.org. Topics range fromnanomaterials to heat treating andmany are standard industrial texts.

Publishing and selling such textshas been a good business for ASM,but looking forward, Mr. Theobaldsaid, a new model will be required.

“That stuff isn’t going to stop

going down” in sales, he said of ASM’sprint products, “and these (Internetofferings) are more profitable.”

Changing with the timesThe 97-year-old nonprofit that

began life as the Steel Treaters Clubin Detroit has successfully evolvedbefore.

During World War I, when metal-working advanced to become a science, the organization becamethe Steel Treating Research Society.When aluminum and other metalsbecame more important in the1930s, it became the American Society for Metals. And when com-posites, ceramics and other materialscame to the forefront, it becamesimply ASM International in 1986.

Along the way, ASM has lost noneof its relevance and may have become even important as materialshave become more diverse andcomplex, said Bill Gaskin, presidentof the Precision Metalforming Asso-ciation in Independence.

“They’re the material scientists.These are the folks who understandthe technology, the research andthe chemistry behind materials,”Mr. Gaskin said. “They’re really important.”

And ASM isn’t going anywheresoon. In April, it will begin a $6 million renovation of its historicsite, which sits on 200 acres and includes a 10-story-tall geodesic domedesigned by Buckminster Fuller.

It might be too soon to say howsmoothly ASM will transition into aweb-based provider of materialsdata, but Mr. Gaskin said he hopesthey succeed.

“The kind of work they do is essential for innovation, and theway we maintain our competitiveedge in U.S. manufacturing isthrough innovation,” he said. ■

Recruit: Groups have track record

nies have been lured to NortheastOhio, including Israeli biomedicaldevice maker Ni Medical Ltd. of Israel, which last month announcedit would open an office in Akron.

Likewise, pharmaceutical and dietary supplement company AIM Pharmakon Inc. of New York announced in December it wouldbuild a research, development andmanufacturing site in Cleveland.The research lab initially will employ 40 people at an averagesalary of $55,000 each.

Ms. Rockind said thousands ofbiomedical companies and suppliersexist in the region, and BioEnter-prise and Team NEO can provide aspecialized list of existing NortheastOhio companies that can help anew company meet its needs.

Though Northeast Ohio has agood story to tell, it faces a lot of

competition from various regionsacross the country, Mr. Waltermiresaid.

“Every community in the U.S. has its future in the biomedicalarea,” he said. “We have a bettercase and more assets here than thevast majority of communities, butother locations have more than wedo.”

Northeast Ohio, in some respects,is arriving late to the biotech ball,Mr. Shah noted. For example, NorthCarolina has been recruiting bio-medical companies to its ResearchTriangle Park region for 20 years.

Mr. Waltermire, however, saidthe growing biomedical industry willnot be concentrated in one place, sothere is room for competition.

“This is a matter of getting a higher-than-average share of that business,”he said. “Not dominating it.” ■


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NIH stimulus boon for economyInstitutions use grantmoney to bolster staff,expand capabilities

By SHANNON [email protected]

The $10.4 billion stimulus windfallto the National Institutes of Healthlast year has translated into a pot of gold for Northeast Ohio researchinstitutions.

In the year since the NIH stimuluspackage was announced, local researchers have received 159 grantstotaling nearly $42 million — andmore is likely to follow. NIH has distributed only about 56% of thestimulus money it received and itmust award the remaining $4 billionby Sept. 30, said Michael Edwards,associate vice president for researchat Case Western Reserve University.

“We’re very early into the expen-diture portion,” Mr. Edwards said. “Isuspect the week of Sept. 30 will be avery exciting week.”

Not surprisingly, CWRU, theCleveland Clinic and University Hospitals have been the big winnersof NIH stimulus grants in NortheastOhio. Combined, they have received136 grants totaling nearly $39 million, according to the NIH. Theremaining grants were awarded toinstitutions such as Cleveland andKent state universities and theNortheastern Ohio Universities Colleges of Medicine and Pharmacy.

The cash influx has enabled insti-tutions to recruit researchers, add

jobs and become bigger competitorswith other parts of the country in therace to secure further NIH researchmoney. The added dollars also havehelped some young researcherslaunch their research careers earlier.

UH has used the $13.5 million itreceived for cancer research to recruit three new faculty membersfrom out of state who, in turn, hiredpeople to staff their labs, said Dr.Stanton Gerson, director of the UHIreland Cancer Center and the CaseComprehensive Cancer Center.

“They came in here and got a research package to start, buy equip-ment and hire graduate students,”he said. “The dollars are staying inthe economy.”

CWRU and UH together have created 189 jobs with the expendi-ture of $4.3 million of the grant moneyreceived so far, Mr. Edwards said.

NEOUCOM, which received $1.5million from five NIH stimulusgrants, created 11 jobs, said WalterHorton, vice president for researchat NEOUCOM.

Though the stimulus package hasbeen criticized for being a short-term boost to the economy, Dr. Horton said it has long-term benefitsas well. For example, the NIH stimulusgrants permitted research institu-tions to buy state-of-the-art equip-ment, which puts them in a betterposition to recruit researchers andconduct more robust research projects in the future.

Dollar chase continuesThe NIH money has assisted local

cancer investigators in gaining astronger foothold in research areas

such as brain tumors, stem cells andmelanoma, which eventually tricklesdown to better treatment and diag-noses, Dr. Gerson said.

Landing future NIH researchfunds after the stimulus money runsout will be needed to help continueto support those people hired withstimulus money, Dr. Gerson said.The competition will be steep, butresearchers are used to it, he said.

The current NIH budget stands at $30.5 billion. In his Feb. 1 budgetproposal, President Barack Obamarecommended a $32 billion NIHbudget for the coming fiscal year,which would be a 4.9% increase.NEOUCOM’s Dr. Horton said the research field expects the NIH ultimately to receive a 3% budget increase.

In the meantime, local researchinstitutions are waiting to hearwhether current NIH stimulus grantproposals will be funded and theycontinue to submit new proposals.

CWRU and UH have submitted212 NIH stimulus grant requests so far this year, including three large grant proposals from the Case Comprehensive Cancer Center,which is a collaboration amongCWRU, the Clinic and UH, Mr. Edwards said. NEOUCOM has about$14 million in grant requests stilloutstanding, Dr. Horton said.

Though the bulk of the money hasbeen appropriated, the competitionhas not slowed down for the remaininggrants, Mr. Edwards said.

“Case and its affiliates have beenworking on this very diligently,” hesaid. “We’re continuing to submit recovery act proposals.” ■

Leader Building owner getsreprieve from foreclosureBy STAN [email protected]

In a new and rare public develop-ment during the real estate creditcrunch, the lender that recently instituted a foreclosure actionagainst the owner of the LeaderBuilding in downtown Clevelanddropped the case in CuyahogaCounty Court of Common Pleas.

Abdi Mahamedi, president of Carlyle Development Co. of NewYork, said in an interview that itslender, Grand Pacific Finance Corp.,had extended the $4.2 million mort-gage on the 15-story Leader Buildingfor two years.

“We made the same offer we didbefore the filing with a little betterguarantee,” Mr. Mahamedi said. Hesaid his company pledged additionalmoney, but would not disclose howmuch, to make improvements to the property and to pay brokeragecommissions to woo tenants.

Grand Pacific, a Los Angeles-based lender that made the loanthrough its Flushing, N.Y., office, didnot return three calls last week.Court records show Grand Pacificfiled a terse notice of voluntary dismissal Feb. 16.

Alec Pacella, a vice president atreal estate broker NAI Daus inBeachwood, said the agreement reflects the “extend and pretend”scenario that real estate experts sayis occurring behind closed doorswhen property owners are behind

on their mortgage payments or loans mature. Rather than forecloseor get the owner to turn over controlof a property, the lender extends the loan to deal with the propertylater, hopefully in a better business climate.

David Browning, managing directorof the Cleveland office of CB RichardEllis, said the resolution holds nogeneral lesson for the real estatemarket because each lender appearsto be following a different agendawith respect to maturing or distressedloans. Some are extending loans,some are selling distressed loans,and some are pressing foreclosure toget control of the property, Mr.Browning said. ■

VA hospital nabsfunds to expand

A deal has been reachedto finance the expansion of Cleveland’s Veterans

Affairs hospital.The Louis Stokes Veterans

Affairs Medical Center has hadtrouble securing financing in thedifficult credit cycle. Fifth ThirdSecurities Inc. said last Thurs-day, Feb. 25, it had served as the financial adviser andstructuring agent for a $115 million bond deal to help reno-vate and expand the hospital.

The Cleveland-Cuyahoga County Port Authority financedthe development through the issuance of taxable, lease rev-enue bonds. A special tax incre-ment financing district also waspart of the deal, which Fifth Thirdsaid was two years in the making.

“The goal of this project is toimprove access, improve qualityof care and reduce costs,” saidSean Nelson, chief of external affairs at the medical center.

The financing will go towardconsolidating the hospital’sBrecksville campus into the WadePark campus, then renovatingand expanding that campus. Newconstruction will include a 2,000-car parking garage, administra-tion building and residential services for homeless veterans.— Arielle Kass

ON THE WEB Story from www.CrainsCleveland.com.

STAN BULLARD



GOING PLACESJOB CHANGES

EDUCATIONCASE WESTERN RESERVE UNIVERSITY, SCHOOL OF ENGINEERING: Daniel Ducoff to associate dean for external affairs anddevelopment; Sylvia Aarons to seniormajor gifts officer. NORTHEASTERN OHIO UNIVERSITIESCOLLEGES OF MEDICINE ANDPHARMACY: Jay Alan Gershen,D.D.S., to president.NOTRE DAME COLLEGE: AlDiFranco to director of donor relations.

ENGINEERINGTECHNICAL ASSURANCE: JeffSmallidge to senior associate.

FINANCEFIRSTMERIT CORP.: Richard H.Buffett to vice president, business development officer.

FINANCIAL SERVICEANCORA ADVISORS LLC: JackBurke to senior vice president. DELOITTE: Fiona Chambers to managing partner, Cleveland tax practice. SKODA MINOTTI: Jonathan Stocker to senior staff accountant;Diane Thompson, Michael Gross,Kyle McClear and John DiGeronimoto staff accountants.

HEALTH CARECLEVELAND CLINIC: Holly L. Reillyto system executive director, nursingoperations and integration, The Stanley Shalom Zielony Institute forNursing Excellence. CROSSROADS HOSPICE: MichelleElwood to clinical director; TereReyes-Decrane and Edward Nugent to assistant clinical directors. QUEST DIAGNOSTICS: CharlesRippin to director of hospital sales,Cleveland, Pittsburgh and Buffalo. SUMMA WESTERN RESERVE HOSPITAL: Nealie Houk to administrative director, graduate medical education, and institutional educational officer, medical educationdepartment. VILLAGE AT MARYMOUNT: PatSasso to director of nursing.

INSURANCEMEDICAL MUTUAL OF OHIO: RayMueller to vice president, finance andcorporate controller.

RIDGWAY & ASSOCIATES: SusanWoodmansee to partner, vice president, administration; Kevin J.Waldron to partner, vice president,marketing and sales.

LEGALMEYERS, ROMAN, FRIEDBERG &LEWIS: Robert A. Fuerst to partner.

OGLETREE, DEAKINS, NASH,SMOAK & STEWART P.C.: MichelleArendt to shareholder.

VORYS, SATER, SEYMOUR ANDPEASE LLP: M. Patricia Oliver to

partner.

MANUFACTURINGAPPLIED VISION CORP.: JerryShaffer to vice president, customerservice; Brian Baird to director ofproduct marketing; Paul Stephan todirector of software engineering. THE FEDERAL METAL CO.: PeterNagusky to president.

NONPROFITTHE NORTH AMERICANMENOPAUSE SOCIETY: ElizabethA. Georges to director of strategicinitiatives. PARALYZED VETERANS OF AMERICA,BUCKEYE CHAPTER: SharonMoster to executive director. PATHWAYS INC.: Jacqueline A. Justus to finance and human resources director.

REAL ESTATECB RICHARD ELLIS: Lisa Anne Cotten to senior commercial real estate appraiser.

SERVICETHE RESERVES NETWORK:Nicholas Stallard to chief financialofficer.

TECHNOLOGYCARDINALCOMMERCE CORP.:Sara Koch to marketing communica-tions manager. XEROX CORP.: Brian Walsh to region vice president, Northern Ohio.

UTILITYFIRSTENERGY CORP.: James G.Garanich to vice president, tax.

BOARDSMAXIMUM ACCESSIBLE HOUSINGOF OHIO: Thomas Meyer (GreaterCleveland Habitat for Humanity) topresident; Michael V. Palcisco tovice president; Scott G. Strawn totreasurer; Jan Hollinger Jones tosecretary; Ann G. Russell to past-president.OHIO OPHTHALMOLOGICAL SOCIETY: Dr. Bernard D. Perla(Ophthalmology Consultants Inc.) topresident. SWEDISH-AMERICAN CHAMBEROF COMMERCE: Matias Bonnier tochairman; Bo Carlsson to vice chair-man; Lars Eriksson to president;Lars Traner to secretary; KennethPalmman to treasurer.

Send information for Going Places [email protected].

SmallidgeDiFrancoGershen

MuellerSassoReilly

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20100301-NEWS--7-NAT-CCI-CL_-- 3/1/2010 9:18 AM Page 1

After a decades-long decline thatbegan with the demise of thelarge-scale steel industry,Youngstown and its environs

are finally seeing real light at the end of the tunnel, or more appropriately perhaps, tube.

A big European steel company says itwill invest $650 million to expandits existing Youngstown plantand hire another 350 workers.Paris-based Vallourec SA plansthis mammoth expansion in order to produce steel tubesneeded to extract natural gasfrom shale deposits.

The company already employs500 at its existing Youngstownplant. This latest deal neededsome cooperation from the mayor of the adjoining municipality, sincethe expansion crossed a border. It tooksome wrangling, but it happened.

Then this week, a top General Motorsofficial drove to Lordstown to help announce plans to add a third shift inadvance of the rollout of GM’s new Honda Civic-Toyota Corolla fighter, the

Cruze. That move will mean another1,200 employees at the massive facilityoutside Warren.

In large part, the decision by GM tobuild the Cruze there is an outgrowth ofthe enormous strides made by manage-ment and labor leaders to make the facilitya model for both efficiency and quality.

That is a far cry from the dayswhen Lordstown was a model oflabor unrest.

And Youngstown’s businessincubator has helped create oneof our region’s hottest softwarecompanies, Turning Technolo-gies, which employs hundreds atits downtown headquarters.

How can anyone be anythingbut happy for the folks of the Mahoning Valley, who have

known little than the constant drumbeat ofbad economic news since the shutdown ofthe steel mills and the loss of thousandsupon thousands of jobs?

* * * * AND SPEAKING OF differences, how

about the shift in attitude at Kent State Uni-versity (my alma mater) in the decades

since the tragic National Guard shootingsof students there 40 years ago this May 4?

The university and that historic datewere in the news again last week whenthe area of the student protests and theshooting that ensued was added to theNational Register of Historic Places. Itmeans the university has embraced itsunique place in American history.

There was a time — decades ago —when university and community leaderstried to make those memories go away,and even took the word “State” out ofmuch of its branding efforts. Then, gradu-ally, other opinions prevailed, and the university instead began using the anniversary to focus attention on the right-ful place of peaceful protest in our form ofgovernment.

The university — in its centennial year— is hoping to attract donors interested inthe installation of a proper visitors’ centernear the site, and is planning an appropri-ate schedule of events for this year’s May 4commemoration. Kudos to the four KSUprofessors (Laura Davis, Jerry Lewis, MarkSeeman and Carole Barbato) who led thecharge on this National Register effort. ■


Now or never

During a recent meeting between Crain’sand officials from the Cleveland Founda-tion, the subject of the foundation’s role in promoting education reform came up.

Foundation CEO Ronn Richard was asked his opinion of the dramatic transformation plan for theCleveland Metropolitan School District that hasbeen put forth by district CEO Eugene Sanders.

“This is our last chance to resuscitate the district,”Mr. Richard said succinctly.

The no-nonsense Mr. Richard isn’t the kind of guyto make statements loosely. So it wasn’t a surprisewhen he followed that comment by saying, “Thisschool transformation is our No. 1 priority.”

It should be the business community’s No. 1 priority as well.

It’s not that the business community hasn’t beensupportive in the past. But enthusiasm for rushingto the district’s aid has waned over time as past reform efforts that companies have supported withmoney and personnel have failed to reverse the decline of Cleveland’s schools.

No one can guarantee that Dr. Sanders’ transfor-mation plan will play out differently. However, weshare Mr. Richard’s belief that if the Clevelandschools are to be pulled out of their agonizing tailspin, a plan very close to the dramatic makeoverDr. Sanders is advocating must be enacted ASAP.

It’s great that a handful of innovative schools aremeeting with success, among them the ClevelandSchool of the Arts and John Hay High School, withits School of Science and Medicine and School ofArchitecture and Design. But students and familieslack the luxury of time to wait for what amounts toincremental improvement to make its way throughthe Cleveland schools. As Mr. Richard correctly stated during our meeting, “It’s not enough to save1,000 kids in the district.”

Joel Klein, chancellor of the New York publicschools, likes to say the way to improve urban education isn’t to create a great school system, but asystem of great schools. That’s where Dr. Sanders isgoing with his plan to close habitually underper-forming schools and to focus the district’s preciousresources on those schools that are successful orstand a fighting chance to make the grade.

And for as much as it may pain the ClevelandTeachers Union, it’s important that charter schools in the city with a track record of success beincorporated in any initiative for transforming thedistrict. We especially like the idea of co-locatingcity and charter schools in buildings that otherwisemight be underused, with no strings attached towhom the charter schools can hire for teaching positions. This nontraditional approach already issucceeding in New York with charter schools thatare under the Uncommon Schools banner.

The cost of this transformation won’t be cheap,which is why Mr. Richard says the business commu-nity “must come up with the dollars and providemoral support” to make it happen. Businesses haverisen up en masse before in support of the cityschools. We hope they marshal their forces onemore time.

FROM THE PUBLISHER

BRIANTUCKER

Youngstown economy begins revival

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

EDITOR:Mark Dodosh ([email protected])

MANAGING EDITOR:Scott Suttell ([email protected])

OPINION

LETTERS

Mental illness is a fact of employees’ lives■ As an organization dedicated tobreaking the stigma of mental illness,we have nothing but praise for the finejob Crain’s did in its Feb. 22 section featuring stories on mental health.

We are all called to get the facts outthere — removing the Boogie Man frommental illness by open and honest discus-sion. Mental illness is a simple fact of life.Treatment works. People recover.

Marilyn Mongeon QuillPresident and CEOPassion for ChangeWestlake

Gateway opened doors■ Brian Tucker’s Feb. 15 commentaryregarding the naysayers complaining

about the Gateway sports complex andits unfulfilled promises squarely hit thenail on the head.

Is there really anyone in NortheastOhio who wishes we could return to the“days of glory” that preceded Gateway?Before Gateway, we could only boast of thedowntown Central Market, a refrigeratedfood warehouse and associated bars.

Now, because of Gateway, we have astate-of-the-art, 43,500-seat ballpark, a20,500-seat sports arena, two parkinggarages, the Hilton Garden Inn and numerous restaurants in the Prospect Avenue/East Fourth Street area. These attractions have opened up the Ware-house District and the restaurants in theWest Sixth and West Ninth street area aswell. Soon, a casino and medical mart willbe added.

Cities are great if they have people living downtown or if they attract people to the downtown area. We canhave some of both.

Each new feature we add brings uscloser to the goal. The old food terminaland other buildings never could haveaccomplished what Gateway has donefor our center city and our suburbs.

Thank you, Gateway.

James M. BiggarChairman and CEOGlencairn Corp.

30-somethings, eat this■ This is more of a rant to the editorrather than a letter. I got a kick out of

See LETTERS Page 9



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LETTERSyour recent video segment whereyou asked people their favorite local restaurant of the last 30 years.

I am no expert on age — at myage (48) everyone looks young.However, my estimated calculationof the average age of the folks inter-viewed was 34.375 years old.Therefore, on average, they were 4years old when the period started,and five of eight of them could nothave been born 30 years ago. I didnot consider them experts on thesubject.

A more appropriate question forthis group would have been whatwas your favorite kids’ meal for thelast 30 years — McDonald’s cheese-burger, Burger King chicken orChuck E. Cheese Pizza. The mostpopular answer was Melt, of allplaces, and although they make a

nice grilled cheese sandwich, Idon’t know anyone with an Ameri-can Express Card who would say itis the best restaurant in Clevelandover the of the last 30 years. People— it’s a grilled cheese sandwich!

I have lived in Cleveland for 48out of 48 years and went to schoolor worked downtown since 1979 for22 of the last 31. Therefore, I knowa little more about it than your interviewees and have about averageknowledge of people with my yearsand background.

My personal favorites over thelast 30 years were Alvie’s for break-fast, Theatrical for Lunch, Swingo’sfor dinner, and Mowry’s for cock-tails. Difficult to argue with thislineup.

Let’s also not forget about someof the other downtown favoritessuch as Sammy’s, Jim’s Steakhouse,

Clevelander, New York SpaghettiHouse, Rusty Scupper, Boxwood,Leather Bottle, Otto Moser’s, andoutliers such as Spanish Tavern,Guarino’s, The Oaks, Don’s, CarrieCerino’s and Giovanni’s. (Melt is better than Giovanni’s? C’mon.)Not to mention, if you are going to focus on newer restaurantswhich opened, say, in the last 10years, wouldn’t Lola have to be onthe list?

If Melt is considered by Cleve-landers as the best restaurant overthe last 30 years, we must be in theGreater Depression. Two slices ofbread, cheese and a long line. Ithink I remember seeing pictureswith this theme from the 1930s.

Thomas J. WrabelDirectorBarnes Wendling CPAs Inc.


Whips: Organization is essentialIt’s a matter of figuring and refig-

uring when to order inventory, whatand when to buy, how many peopleto have available to work and whichmachines have extra capacity, localmanufacturers said. Many can’t seemore than a few weeks, if not days,into the future in terms of order volumes. And too often, they say,neither can their customers.

“We put together forecasts and weget forecasts from our customers,but by definition they are alwayswrong. It’s like a broken clock — it’sright twice a day,” said Hawk Corp.president Chris DiSantis, whosecompany makes friction materialsfor brakes, clutches and transmis-sions used in automobiles, heavyequipment and motorsports.

Customers frequently tell their supplier to expect a certain sized order, then downsize the order beforeit’s produced, often at the last minute.

They’re motivated to over-orderbecause they know if they run out ofinventory it will take time to replaceit, but once they see that their ownorder flow is less than expected, theyare just as motivated to cancel existingorders so they can avoid having cashtied up in extra inventory. Unfortu-nately, the most optimistic businessoften is left holding the inventorybag — and that breeds caution.

“What we’re seeing now is just ageneral cautiousness in the market,”Mr. DiSantis said. “In 2008, whenbusiness was still booming, it wasthe opposite problem — customerswould say they needed 20% moreand then they needed 30%.”

A touch of grayMeanwhile, those in charge of

purchasing and production are constantly scrambling to prioritizecustomer orders and inventory, oftenguessing what to buy in anticipation ofwhat their customers might need next.

“A lot of times, I feel like I’m working in Las Vegas — the way youhave to guess with a crystal ball as towhere things are going,” said DaveMorgan, purchasing manager forMaster Products Co. in Cleveland.

On the factory floor of MasterProducts, which produces special-ized washers and other stampedmetal products, production managerMike Zupka is dealing with his ownset of variables and predictions.

“I didn’t have gray hair five yearsago,” quipped Mr. Zupka, who saidin 40 years at the company he has

continued from PAGE 1 WHEELS ARE TURNINGManufacturers face a variety

of challenges as customers’ order levels vary drasticallyamid economic uncertainty.

■ Shops have to figure out howmuch inventory to buy and when toplace those orders. These days, it’stough to anticipate future order volumes.

■ Employees in charge of production and purchasing arescrambling to prioritize orders andinventory.

■ Lead times are increasing.

never seen an environment as chal-lenging as today’s in terms of theplanning and work required to makesure production runs are completedand goods are shipped on time.

Mr. Zupka said he’s spendingmore time than ever talking with customers, suppliers and hiscompany’s sales force to get the information he needs to make constant revisions and refinementsto production schedules.

“I live in an area of the computercalled the scheduling white board,”Mr. Zupka said. He said productionschedules that formerly were reviewed or changed once a weeknow often are revised daily.

All the revisions don’t mean Master Products is disorganized. Farfrom it. If anything, the company ismore organized, with more internalcommunications, than ever before,Messrs. Morgan and Zupka said.

But some things are beyond acompany’s control, such as whetherits own suppliers can provide theraw materials, parts or finishedgoods expected of them. And that’scausing many manufacturers tospend more time talking with or visiting suppliers to make sure theycan secure what they need to keeptheir workplaces humming.

For companies such as Hawk Corp.,it’s a matter of whether basic materialssuch as steel are available, Mr. DiSantissaid. Sometimes they’re not, whichmeans production must wait untilthey arrive on the plant floor.

Longing for predictabilityIn an ironic twist, just when mate-

rials are needed more quickly, leadtimes are increasing.

“Lead times are getting long — 14weeks or longer is not unusual,” said

Charlie Kerr, owner of Kerr Lakeside,a Cleveland manufacturer of high-quality socket screws.

And that’s where the train wreckcan happen — when customers demanding that last-minute ordersbe filled quickly smash into inventorylead times that just won’t budge.

Avoiding the carnage is every company’s goal, as is maintaininggood working relationships with bothcustomers and suppliers. For manymanufacturers, trying to achieve bothis a combination of art and science.

“We learn to manage by under-standing customers, by looking athistorical data, by understanding thevarious industries we serve,” saidJerry Zeitler, president of Die-MaticCorp, a precision metal stamper inCleveland.

It’s a pressurized process in a still-recovering economy.

“All customers want parts when itbest fits their schedule and needs anddon’t want to hold inventory at theirplants,” Mr. Zeitler said. “They wantthe best of both worlds. They alsoclaim they worry about their suppliersand want healthy suppliers, but theyhave done little to help the situation.”

That’s because no one wants to be the company that takes on therisk of optimism, said Mike Noretto,a partner with the accounting andconsulting firm Rea & Associates inMentor and a consultant to areamanufacturers.

“They’re selling what they canproduce, but they’re afraid to go tothat next level of production becausethey don’t want to get stuck with it,”Mr. Noretto said.

So, manufacturers must wait itout. They long for the day when order rates again will become predictable or, better yet, when theycan toil away at standing backlogs asthey did in better days.

Those days might be coming, butthey’ll arrive at different times fordifferent companies and industries,predicts Ned Hill, an economist anddean of the Maxine Goodman LevinCollege of Urban Affairs at ClevelandState University.

“The good news is going to start outdistancing the bad news, but it’s goingto be a mix,” Dr. Hill said. “The onlypredictability that matters to a busi-ness is on the order books, and that’sgoing to vary industry by industry. Ifyou are in commercial construction,you’ve probably got awhile yet. Ifyou’re in auto, hopefully it will be later this year.” ■


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LEGAL AFFAIRSI N S I D E

MARCH 1-7, 2010 CRAIN’S CLEVELAND BUSINESS 11

13 ADVISER: BEMINDFUL OFFEDERAL BRIBERYGUIDELINES.

Summons

Crain’s Cleveland Business District Court

Summons in a civil action

Case no. 0301072010

Northeast Ohio law firms

wasteful business practices

v.

Author: Arielle Kass, Crain’s legal affairs [email protected]

You are hereby summoned to read the following story detailing howNortheast Ohio law firms are doing their part to minimize their impacton the environment. What are they doing?

■ Reducing paper consumption is No. 1 on most firms’ lists, as the legalindustry consumes more paper than any other except publishing;

■ Making light fixtures energy-efficient;

■ Replacing in-office paper products with glass; and

■ At Thompson Hine, implementing a “freecycle board,” where employees give items to their co-workers instead of throwing themaway.

Consistent treatment easiest way to avoid pitfalls involved with office poolsBy JOEL [email protected]

When it comes to MarchMadness, it’s all aboutconsistency.

Sure, that goes forthe 65 entrants in the NCAA’smen’s college basketball tourna-ment, which kicks off March 18.

But that also goes for employersattempting to find middle groundwith the inevitable office poolsthat are contested in officesaround the region and country:Regulate them? Ignore them? Or,in order to gain control, sponsorthem?

“Clients ask me about this, andthose are the three options,” saidEric Johnson, a partner at Walterand Haverfield and the head of thefirm’s labor and employment lawsection. “Prohibiting these thingscan lead to other negative effects,especially these days. Employeeswill ask, ‘We can’t even have an office pool?’

“Many find the best way to handle it is to sponsor contests, sothey get a handle on it and alsoaren’t killing camaraderie.”

The key, said Mr. Johnson andSeth Briskin, the chair of the laborand employment group at Cleve-land law firm Meyers, Roman,

Friedberg & Lewis, is consistency.No matter the intentions, companiesstill run the risk of inconsistentlyenforcing company rules involvingusage of property and inefficientuse of company time. When later itcomes time to fire someone forsomething similar, that employeecan point to a company permittingoffice pools on company time asan inconsistency.

“This is a human resources issue: Having good policies andconsistently applying those poli-cies is the safest bet to avoid litiga-tion,” Mr. Briskin said.

Mr. Briskin, though, downplayed

Here’s a goodbet: When KentState advancedto the Elite Eightin 2002, manyoffice poolbrackets werebusted.PHOTO COURTESYKENT STATEUNIVERSITY ATHLETICS

See POOLS Page 12

See GREEN Page 12

EASY BEINGGREEN

Region’s law firms enhance efforts to reduce impact on environment

Some people do it for altruisticreasons. Others for economicones. Still more because doing something for the

environment looks good to clients.Irrespective of the rationale,

though, attorneys say the result oflaw firms increasing their sustain-ability efforts is the same. And it’s allgood.

“Regardless of the motivation, theefforts have a beneficial impact,”said Doug McWilliams, a partner inthe environmental, health and safetysection at Squire, Sanders &Dempsey. “It’s easier to gain a consensus on a path forward ifyou’re not concerned about what themotivations are.”

Mr. McWilliams said at his firm, reducing the amount of paper usedor becoming more energy efficient isimportant to different people for different reasons. But the result atSquire Sanders and elsewhere is similar in that it means more firmsand clients are paying attention tothe environmental impact of thework they do and how they can reduce that impact.


The Cleveland Metropolitan BarAssociation started a program lastyear to certify firms that have takensteps to go green, and since then, ithas had more than 40 law firmsand law departments qualify forthe process. While the CMBA doesnot double-check efforts, it doesask firms to state they are meetingcertain criteria, including a commit-ment to reduce total office energyby 10% in the coming year.

Carter Strang, the chair of thegreen initiative committee at theCMBA and a partner in the energyand environmental law practice atTucker Ellis & West, said he sawthe need to push a green initiativeat his firm and more broadly afternoticing a large disparity in whatpeople were doing.

“I began to check around towhat firms had in place already,”he said. “Some were on the ball,but others were doing nothing.”

Walk the walkMr. Strang said he used Tucker

Ellis to test ideas for the largerCMBA program, which he hopeswill continue to evolve and improve over the years. He wantedto avoid setting the bar too high atthe start, he said, to ensure therewould be significant buy-in.

“This allows firms and lawyersthe opportunity to show they’redoing something,” Mr. Strang said.“Lawyers make good leaders. Thisis something where we need toshow some leadership.”

Already, he said, Tucker Ellis attorneys are using 15% less paperper person. He said there are nofigures on savings across theCMBA.

Dave Nash, a partner at McMahonDeGulis LLP, said the environmentallaw firm was one of the first 10firms in the country to pilot anAmerican Bar Association sustain-ability program and it has been

certified by the CMBA. Recyclingwaste paper by printing on twosides saves more than $4,000 ayear alone, Mr. Nash said.

He said that when a firm makesthe decision to be more sustainable,it’s about more than going green— it’s about doing the right thing.Especially at an environmental firm.

“We’ve got to walk the walk, too,we can’t just talk the talk,” he said.“We have a responsibility to be responsible.”

Mr. Nash emphasized, too, thatthe expectations on lawyers to gogreen shouldn’t differ at all fromother white-collar workers, sayingattorneys should not face either ahigher or lower standard. He suggested that the high ethicalstandard a lawyer is expected tolive up to should also extend tosustainability.

Little things, big differenceAt Hahn Loeser & Parks, Alan

Kopit, partner in charge of theCleveland office, said that firm’sgreen efforts really began in June2008, when the firm moved its offices. Then, they replaced paperproducts with glass, used primarilyrecycled paper and made light fixtures energy sensitive.

While Mr. Kopit said the firmlikely would have done such thingseventually, the move to a newspace was a good opportunity tokick off a new program.

And Mr. Kopit said the changeshave made for a more pleasantcorporate environment. “It justseems more civilized to drink acup of coffee out of a glass mug instead of Styrofoam,” he said.

And while Mr. Kopit said lawfirms don’t have the same environ-mental impact that a manufacturermight, they still do things that impact the environment.

Alvidas Jasin, director of businessdevelopment and chair of theThink Green Initiative at Thompson

any extensive damage such a suitwould cause, especially in at-willstates — such as Ohio — where employers can terminate employeesfor any legal reason they see fit. Hecited outrage over a December casewhere a Fidelity Investments officein Westlake, Texas, another at-willstate, fired four employees over using company time to play fantasyfootball.

“Comments online in that casesaid the company doesn’t have anyright to terminate employees whenmanagers were involved too,which is a dreamland,” Mr. Briskinsaid. “Companies in at-will statescan terminate employees for anyreason under the sun as long as itisn’t illegal.

“Those employees can sue, butthey probably would win more inthe office pool.”

All about moraleFifty-seven percent of companies

responding to a February surveyby Alexandria, Va.-based Society ofHuman Resource Managementsaid they organize a form of a college basketball tournamentgambling pool, and 55% saidmorale was affected positively.Three Northeast Ohio companiescited morale as reason enough toorganize some form of contest, orallow related activities, in conjunc-tion with the popular men’s tour-nament or fantasy sports.

■ Cleveland architectural firmka last year had its 64 employeeseach draw a name out of a hat, andwhatever team came out, that employee had to amp up his or herspirit for that school. The mostspirited got a “tiny bit of money,”said human resource and officemanager Audrey Kekst.

Employees took to e-mails totalk friendly trash about “Bruin”(UCLA) some coffee, to say some-thing was “Very Courteous of U”

(Virginia Commonwealth) or simplyto pass along team fight songs.

Ms. Kekst said ka would dosomething similar this year, thoughplans have not been finalized.

“(Last year) we had a littledownsizing, and had people sittingacross from others they didn’tknow that well,” she said. “Wethought, ‘Let’s do something fun.’The spontaneity really took off andwe had fun with it.”

■ Nick DeTomaso, the directorof operations at Jakprints, aCleveland printing shop, said the company does not condone fantasyor pool meetings, fantasy transac-tions or other gambling-related activity in the workplace, citing thetechnical illegality. Gambling onorganized athletics is illegal, savefor Atlantic City and Las Vegas.

The firm does allow one employ-ee telling another how badly, in ahypothetical situation, Jim’s Slimsare going to beat the SpringfieldIsotopes in this weekend’s fantasybaseball championship.

“The competitive nature tendsto be a great team-building exercise and is great for employeemorale,” Mr. DeTomaso said.

■ Willoughby-based tda archi-tecture runs a free NCAA pool inwhich all employees may participate,and the winner receives a $25 gascard; additionally, the companythis year will hold a chili cookoff onMarch 18 to kick off the festivities.

“It’s just a way for the staff toconnect and participate in some-thing fun,” partner Chris Smithsaid. “By doing it like this, it’s engaging for everyone.”

However, Walter & Haverfield’sMr. Johnson did offer this advice:

“The last thing you want to do isbe a company managing a thingwhere money isn’t there, or there’smajor money involved,” he said.“Fifty dollars is a lot different than$5, and that’s where trouble comesin.” ■


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continued from PAGE 11 continued from PAGE 11

Pools: Activity can connect staff Green: Clients interested in sustainability

LEGAL AFFAIRS

The Crain’s Cleveland Busi-ness Emerald Awards recog-nize Northeast Ohio companiesthat have implemented sustain-able strategic priorities that

significantly trimcosts or increasecash flow with innovations and products that reduce its environmentalfootprint.

Nominations for the 2010program open May 3, with honorees recognized in a special section Sept. 6 and anevent in mid-September.

For coverage of the 2009awards, go to www.CrainsCleveland.com/marketing/emeraldawards.html.

Crain’s to takenominations forEmerald Awards

Hine, said the legal industry is thelargest consumer of paper outsideof publishing.

Mr. Jasin said one of the keychanges his firm made was to reducethe amount of paper used, andreuse paper whenever possible. Thefirm also has a “freecycle” boardwhere employees can give items totheir co-workers instead of throwingthem away, it encourages ride sharingand shares best practices across thecountry as other law departmentsseek ways to become greener.

Selling pointThompson Hine founded a

climate change and sustainablebusiness solutions practice groupabout two years ago, co-chair Andrew Kolesar said. Mr. Kolesar,who is also the leader of the firm’senvironmental practice group, saidmore clients are starting to pay attention to sustainability.

While clients ultimately maketheir decisions based on thelawyers that would represent themin a matter, he said there are clientswho care about what firms are doing internally and they appreciateexpertise in a particular area.

While Mr. Kolesar said he expectsmore companies to begin focusingon sustainability, it has not yettranslated into a question whencompanies request proposals fromlaw firms about possible work. Mr.Jasin, though, said he has begun tosee the question about a firm’s sustainable practice “more often.”

“We know it’s top of mind with alot of clients and we want to makesure we’re addressing that,” he said.

Mr. McWilliams, at SquireSanders, said European clients aremore interested in knowing the lawfirm’s carbon footprint — and thatof the work done for them — thanAmerican or other clients are. Hesaid that question has led SquireSanders to calculate that footprintthen, naturally, to work to reduce it.

“It’s important to different people for different reasons,” hesaid. “Some of us advocate for thison the basis of our responsibility aspeople and as stewards to reduceour impact. … It also reduces cost,so it’s an easy sell.” ■



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LEGAL AFFAIRS

In business overseas? Comply with federal bribery law

Apparently not everythingthat happens in Vegas staysin Vegas.

While in Las Vegas for the 2010 Shooting, Hunting andOutdoor Trade Show in January, 21people were nabbed in a sting thatthe FBI set to catch violators of theForeign Corrupt Practices Act, orFCPA.

The FCPA is a federal law thatprohibits bribery of foreign offi-cials. All 21 people are alleged tohave offered bribes to an FBI officerwho posed as an official of anAfrican country.

The arrests sent shockwavesthrough the trade show’s attendeesand are an indication that the federal government is increasing itsenforcement of the FCPA. Currently,the Department of Justice has admitted to having 140 open FCPAinvestigations. Every business thatsells overseas needs to make surethat they are not violating theFCPA.

The FCPA has been around since1974, and while it was an issue onmany people’s checklists, most people were not very concernedabout it.

All that has been changing lately,as the FCPA now is one of the threeareas in which the Department ofJustice is focusing enforcement.

They have recruited a new special team of prosecutors to handle FCPA cases, and the numberof investigations they have con-ducted steadily has been increasing.These investigators have the resources of the federal govern-ment behind them.

What’s more, attorneys at theDepartment of Justice can makenames for themselves by handlinghigh-profile cases, and the FCPAcertainly gives them the opportunityto do that.

In many countries, payment to agovernment official to keep or retainbusiness not only is common, it isexpected.

However, the FCPA prohibits aU.S. business from giving anythingof value to a foreign government orpolitical official to gain an “improperadvantage.”

This puts U.S. businesses at a distinct disadvantage. This dilemmais magnified by the seriousness ofthe penalty for violating the FCPA.Violations of the act result in finesand even jail time: $100,000 to $5million and up to five years for eachviolation.

In 2009, the engineering and construction company KelloggBrown & Root paid to the Depart-ment of Justice a $402 million fineto settle a case, disgorged to the Securities and Exchange Commis-sion $177 million, and individualsnow are facing criminal charges.Fines are not deductible, and individuals cannot be compensatedto pay the fines.

Not only is it illegal under theFCPA to make bribes, it also is illegalto attempt to do so. In addition, ifyou do not have adequate internalcontrols to prevent or detect viola-tions, you already are violating theact. Also, you are responsible forforeign subsidiaries and agents who violate the act, so you cannotoutsource bribes.

Finally, if a company violates theFCPA, criminal culpability may go

FREDLEFFLER

ADVISER

all the way to the board of directorsif proper steps have not been takento ensure that the company compliedwith the FCPA. Directors and officers cannot plead ignorance,but must instead deal with the issuehead-on. Most directors’ and offi-cers’ insurance policies do not provide coverage for FCPA matters.

The best defense to a violation ofthe FCPA is an effective corporatecompliance program. Among otherthings, it must be tailored to theparticular risks in your business,have strong support from the boardof directors and be properly imple-

mented.When a problem arises — such as

a violation or the company is inves-tigated — your employees must be

trained to contact senior manage-ment and the company’s attorneysimmediately. Reporting and responses must be handled verycarefully to minimize any damage.

It is hard enough for businessesto make international sales, butthe increased enforcement of theFCPA is going to make it evenmore difficult.

There are not many waysaround it, except for an effectivecompliance program. As such,companies selling overseas need toconsider what they are doing tocomply with the FCPA. Otherwise,

they could be painfully surprised— much like those people whodidn’t make it home from Vegaslast month. ■

Mr. Leffler, an Akron-based partnerwith Roetzel & Andress, focuses hispractice on corporate and interna-tional transactions. He representsclients in structuring, negotiatingand documenting strategic alliances, acquisitions and disposi-tions of businesses. In addition, headdresses matters necessary for theongoing internal and external opera-tions of business ventures.



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LEGAL AFFAIRS

Communities adopt morebusiness-friendly rules By KATHY AMES [email protected]

Businesses and communitiesoften end up square dancingover the elements of a community’s tax structure

or zoning code. But rather thancontinuing that do-si-do, manyNortheast Ohio municipalities areinstead leading companies into amore business-friendly environmentby adjusting legislation to advanceeconomic development.

“Cities need to update zoningcodes to make them relevant to today’s 21st-century business envi-ronment,” said Paul Oyaski, Cuya-hoga County director of develop-ment.

Lakewood, for example, passedlegislation last April that awarded a$200,000 renovation loan to theowner of the 70,000-square-footBailey Building at Warren and Detroit roads as an incentive tolure new tenants.

“We created an asset and usedlegislation to attract economic development,” said Nathan Kelly,director of planning and develop-ment for Lakewood. “We took anugly, empty building and made itbetter looking. We have very high-profile tenants interested in the site.”

The city also passed last May asidewalk dining ordinance to allowrestaurants to use city-owned side-walks for restaurant seating. Sincethen, a half-dozen restaurants haveopened, and one establishment reported a 15% increase in business.

“The response has been reallypositive,” Mayor Ed FitzGerald said.“We used to have a lot of bureau-cratic laws about restaurants.”

Kevin E. O’Brien, director of thecenter for public management forthe Maxine Goodman Levin College of Urban Affairs at Cleve-land State, said he expects to seemore municipalities explore or implement legislative changes toimprove their business environment,but also said he predicts moremovement on a broader scale.

“The lack of economic growthhas created an opportunity forstates to award grants that stimulateeconomic development, so we maysee more local jurisdictions collab-orate” to receive these funds andattract new business, he said.

The good and the badIn Wickliffe, the city council

unanimously passed late last yearan ordinance that establishes theWickliffe Incentive Grant Program,which offers tax credits based onthe size of the investment made bya company and whether it retainsor adds jobs, the now former MayorThomas Ruffner said at the timethe incentive package was passed.

The city already has incentivesfor new businesses, but it did nothave anything for businesses lookingto expand and add more jobs.

By doing so, Wickliffe emulated theincentives offered by nearby East-lake and Mentor. “We wanted toremain competitive,” Mr. Ruffner said.

Similarly, Westlake in 2009 passeda job creation grant ordinance tolure businesses to the area.

Two firms — Lakewood-basedBonne Bell Co. and Westlake’s

Hyland Software — both took advan-tage of the move by expandingwithin the West Side city, said JohnWheeler, director of the city’s lawdepartment.

For all the economic benefitsthat legislation can spark, however,certain laws end up hinderingbusiness activity.

Elyria, for example, is evaluatingthe current structure of its DesignReview Committee, about whichbusinesses and contractors arecomplaining because they say thecommittee’s design and buildingstandards are too stringent.

The city in November placed amoratorium on the design reviewprocess until a more streamlinedsystem can be rolled out, law director Terry Shilling said. Themoratorium was scheduled to belifted Feb. 28.

Not all municipalities, townsand villages have such reviewprocesses in place, and the goal ofthe committee, established in 2000by Mayor Bill Grace, was to ensureuniformity among building con-struction and design.

“One ice cream business com-plained because they wanted toupgrade their building, but had touse red brick, which is more expensive than some alternatives,”Mr. Shilling said.

Think bigOn a more collaborative level,

communities also are joiningforces to generate economic development by establishing jointeconomic development districts.

A joint economic developmentdistrict is created when a city orvillage joins with a township tocreate a development zone. JEDDsgive communities the opportunityto generate more jobs and revenue.

In Medina County, for example,commissioners are scheduled to review a proposed JEDD betweenMedina and Montville Township.

The agreement calls for certainindustrial/commercially zonedproperties of Montville Townshipto be part of the JEDD; Medina andMontville would share in the rev-enue dollars created by the busi-nesses located within the JEDD.

As Northeast Ohio municipalitiestake steps to legislate their own business-friendly climates, regionalcollaboration also must be part ofthe larger agenda to maintain services in a cost-effective way andgrow a property tax base that hasbeen declining for 30 years, Cuya-hoga County’s Mr. Oyaski said.

“They need to find ways to col-laborate and seduce new businessinvestment for revenue,” he said.

Indeed, a more broad-basedproposed attempt at regional col-laboration is under way.

Under the proposed RegionalProsperity Initiative, a 16-county entity would share new growthrevenue from cooperative land useplanning. The idea is to eliminate inefficiencies in government opera-tions that hinder the region’s capaci-ty to attract and retain business.

“We have to do it if the region isgoing to compete in the globalmarketplace,” said Hudson MayorWilliam Currin, who also is the initiative’s co-chairman. ■



A CALFEE ATTORNEYwears many hats. And occasionally, a cape.*

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Brent D. BallardMitchell G. Blair Michael BrittainThomas A. CicarellaCheryl A. D’Amico Virginia A. DavidsonJohn J. Eklund

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LEGAL AFFAIRS

In data breaches, repairing reputation as important as legal obligationResponsibilities to customers, authorities could be minor depending on type of information leakedBy ARIELLE [email protected]

From banks to hospitals to thedepartment stores whereyou did Christmas shopping,your information is out

there.Sometimes it’s a Social Security

number. Other times, your creditcard information. Maybe your driver’s license number.

And sometimes that informationgets lost or stolen. That was thecase at FirstMerit Bank branches inElyria, Westlake and Streetsboro inOctober, when locked trash binsfilled with unshredded documentswere taken. It also happened to patients and donors at Akron Chil-dren’s Hospital in 2006, when theirinformation was viewed during anetwork expansion. Countless otherbreaches have taken place acrossthe nation and state.

So what happens when informa-tion is breached? And what respon-sibility does the business or institu-tion have to affected customers?The answer changes depending onthe state you live in or what infor-mation has been compromised,said Columbus attorney Kevin D.Lyles, a partner at Jones Day wholeads the firm’s privacy and data security practice.

In Ohio, companies are requiredto disclose that information hasbeen breached only if a customer’sfirst and last name or first initialand last name are attached to thecompromised data. So if a SocialSecurity number is leaked, the customer may never know — unless a name is attached to it, too.

Mr. Lyles also said Ohio’s lawsonly refer to data that were com-promised electronically, like the2006 case when hackers broke intothe database of Akron Children’s Hospital and stole donors’ bank account information and the personal and medical histories ofhundreds of thousands of patients.

While Mr. Lyles said he would

encrypting data as it travels, but notwhile it is at rest.

He said while it is hard to saywhether there have been more orfewer instances of data being inap-propriately accessed, it seems thatsuch breaches now are getting moremedia attention.

Mr. Lyles said that may be becauseas more states adopt reporting laws,information is required to be releasedto consumers more frequently.

Matt Davis, a principal at Cleve-land-based SecureState, an infor-mation security management consulting firm, said businesseslikely are paying more attention aslaws like the Health InsurancePortability and Accountability Acthave been altered to have morestringent reporting requirements.

advise clients who lost paper copiesof customer data — as FirstMeritdid earlier this year — to comeclean about the theft, they may beunder no legal obligation to do so.A FirstMerit spokesman said customers were notified and securitywas modified, though the bankwould not discuss how.

“There’s no obligation there tonotify,” Mr. Lyles said of non-elec-tronic thefts. “There’s a criminalmarket to buy that stuff (personaldata in electronic form). Paper, Ican’t imagine anyone’s traffickingin that.”

The electronic information towhich Ohio’s laws apply doesn’t actually have to be stolen to qualifyfor notification under the state’s requirements — it just needs to bebreached.

Once that happens, Ohioansmust be notified within 45 days, regardless of the state in which thebreach occurred, Mr. Lyles said.

‘Preparation is the key’Breck Weigel, a litigation partner

at Baker Hostetler in Cincinnati,said companies that experiencedata breaches may have to worryabout rebuilding consumer good-will, more so than any fines thatcould be imposed by the FederalTrade Commission or, in some cases,an industry watchdog like the Payment Card Industry SecurityStandards Council.

“They may have no legal obligationto provide notice, but so much ofwhat’s at issue here is a company’sgoodwill,” he said. “Preparation isthe key.”

Mr. Weigel said companies thathave access to sensitive informationalready should have a process inplace to respond to breaches beforeone happens and should ensurethat data is properly encrypted.

Kelly Todd, an Omaha, Neb.-basedproject leader for Open SecurityFoundation, an online databasethat tracks data breaches, saidproblems often come from companies

“So much of what’s at issuehere is a company’sgoodwill.”

– Breck Weigellitigation partner, Baker Hostetler’s

Cincinnati office

Since Feb. 17, third parties thathave access to patient informationhave been required to be HIPAAcompliant, which Mr. Davis said“changes the burden” of compli-ance, broadening it.

Aside from HIPAA requirements,Mr. Davis said even if a companyisn’t stuck with a fine for compro-mising customer data, it likelywould be required to pay for replace-ment credit cards for consumers,or the cost of notification to thosewhose information was accessed.

He estimated that it would cost acompany between $200 and $300per record that was breached tomake the proper notifications andreplacements.

“Why wouldn’t you treat a creditcard number as a $100 bill?” Mr.Davis said. “That’s what it’s worthon the black market.”

Staying on guardColleges and universities are

among the most frequent targetsof hackers, Mr. Davis said, becausewhile they have a good deal of information about both students

and employees, “the academic freedom concept, the openness ispervasive.”

Stolen laptops also are a frequent occurrence. BakerHostetler’s Mr. Weigel said that isone of the most difficult cases todeal with because it’s impossible toconduct a forensic exam on thecomputer to learn how it wasbreached, or even if it was at all.

Both he and Mr. Lyles said rulesin the state and nation are gettingtougher every day. Companies areexpected to do more to protectdata, Mr. Lyles said, and class-action or other consumer lawsuitsagainst companies that releaseddata are more likely to succeed ifcustomers can show that they hada “reasonable expectation” theirdata would be stored safely, and itwas not.

He cautioned, though, that the“fear and hassle” of dealing withcompromised information oftenhas not been enough to win law-suits in the past. People need toshow they actually were damagedby the information’s loss. ■

IN BRIEF■■ TAKING THEIR SHOW ON THEROAD: The Ohio Supreme Courtwill convene in official session in

Huron County onApril 21 as partof the court’ssemiannual Off-Site CourtProgram.

The Off-SiteCourt Program,initiated by ChiefJustice Moyerin 1987, has

gained national recognition as a model program for education aboutthe judiciary. The program is intendedto enhance students’ understandingof the legal system by providing anopportunity to attend and observe theproceedings of the Supreme Court inperson and to interact with justices,attorneys and court staff.

Students from the area and theirteachers will receive curriculum material to study before the session,including summaries of the specific

cases to be argued. Attorneys willteam with educators at participatingschools to explain Ohio’s judicial system and review case materials.

The Huron County session will markthe 59th time the Supreme Court hasheard oral arguments outside Columbus during the past 23 years.

■■ NEW KIDS ON THE BLOCK:More than 400 prospective lawyerstook the Ohio Bar Examination lastweek. Results from the exam will beannounced on April 30, and individualswho passed the exam and meet allother requirements for admission willbe sworn in on May 10 during a special session of the Ohio SupremeCourt.

Moyer


of JumpStart Ventures, which is theinvestment arm of venture develop-ment group JumpStart Inc.

For one, Ms. Braun said, it showsprivate investors believe localcleantech companies can competein what experts expect will be anenormous market. She said findingcheaper ways to create clean energywould be “like curing cancer.”

Plus, companies developingclean technologies can capitalize onthe expertise other Northeast Ohiocompanies have in manufacturingand advanced materials, Ms. Braun

said.“It’s exciting because it plays on a

base in Ohio,” she said.The Venture Capital Report —

compiled by JumpStart, technologyadvocacy group NorTech andBioEnterprise Corp., which assistshealth care companies in the region— showed venture investments incleantech companies in the regiontotaled $20 million, or just over 20%of all venture investments, in 2009.The dollar figure is way down from2008, when cleantech investmentstotaled nearly $51 million, but thepercentage in 2009 was slightly


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Technology: International demand expected to burgeonhigher because venture investing as a whole slowed down due to therecession.

Despite the slowdown, the 2009dollar figure for cleantech compa-nies still beat figures from 2005, 2006and 2007.

Single digits no longerNortheast Ohio cleantech compa-

nies in 2005 received less than $8million, or 3% of all the venture investments made that year. They’vegained more attention, however, inensuing years.

Cleantech companies in 2006snagged $19 million, or 12% of allventure investments, and they received more than $18 million —just under 6% of all venture invest-ments — in 2007, a year in whichNortheast Ohio startups raised arecord $318 million in venture capital.

Ms. Braun said more cleantechcompanies have been approachingJumpStart in recent times. She expects the sector’s dollar amount togrow as the region’s effort to increase venture capital investmentsin all industries continues.

Richard Stuebi, who six monthsago joined Early Stage Partners inCleveland as the venture firm’s

cleantech specialist, agrees. Twentypercent of all venture investments is about as much as the region canexpect cleantech firms to pull in because investors will spare much oftheir money for deals in life sciences,advanced materials and manufac-turing — the region’s traditionalstrengths, said Mr. Stuebi, who alsois BP Fellow for Energy and Environ-mental Advancement with theCleveland Foundation.

Still, Mr. Stuebi has been impressedby the quality of cleantech compa-nies he has reviewed since joiningEarly Stage Partners six months ago.He would love to see cleantech investments in the region increase,which likely will happen if venture

investing in Northeast Ohio keepsgrowing.

“I think the size of the pie needs toincrease,” he said.

Anticipating the next GoogleNationwide, venture investing in

cleantech grew to $4.1 billion in2008, up 52% from $2.7 billion in2007, according to figures from theNational Venture Capital Associa-tion of Arlington, Va. Although 2009figures haven’t been released, asso-ciation president Mark Heesen saidcleantech figures fell in proportionto overall venture investing, whichdropped about 38% to about $17 billionin 2009 from $28 billion in 2008.

Mr. Heesen said Ohio has reasonto believe it can be competitive incleantech, given the state’s expertisein manufacturing and advanced materials.

“There’s a reason to look at Michigan and Ohio and Indiana,states that have a core competency already,” he said.

Mr. Heesen said international demand for clean technology is going to be massive in the comingyears, especially because of concernover global warming. Venture capi-talists are paying attention: He noted that six of his association’s 26board members paid a visit to theU.S. Department of Energy when theboard gathered for a quarterly meetingin Washington, D.C. That never usedto happen, he said.

“The next Google, the next Genen-tech, is going to come out of the clean-tech space,” Mr. Heesen said. ■

Year Dollars %

2009 $20.08M 20.28%

2008 50.87 19.59

2007 18.30 5.77

2006 18.64 11.76

2005 7.76 3.00

CLEANTECH INVESTMENT Northeast Ohio cleantech startups,which are developing technologies thatrange from wind turbines and fuel cellsto water purifiers and new types of insulation, are receiving a larger percentage of venture capital invest-ments than they were four years ago.

Investments, across 21 counties

SOURCE: JUMPSTART, NORTECH, BIOENTERPRISECORP.


and is contemplating selling herhome to use the equity as workingcapital.

Ms. Salontay is one of the smallbusiness people Sandra Pianalto,president and CEO of the Federal Reserve Bank of Cleveland, is refer-ring to when she says — as she did ina speech in Dayton last Thursday,Feb. 25 — that “the amount of pas-sion each side is bringing to the table(in the lender-borrower relationship)is unprecedented in my experience.”

The Fed has been conducting “anextensive outreach program to hearthe views of small business owners,community bankers” and others, Ms.Pianalto said, according to a tran-script of her speech. Ms. Salontaywas one of the participants in thatprogram, and she attended a Feb. 11meeting in Cleveland with more thana dozen other small business owners.

From the perspective of smallbusinesses owners, Ms. Pianalto said,credit is extremely tight. She saidowners also have complained thatthey’ve had difficulty obtaining ormaintaining credit on acceptableterms.

It’s just businessRandy Markey, chairman of

telecommunications equipmentdeveloper Phylogy in Santa Clara,Calif., and managing partner ofCapital Acceleration Partners inCleveland, said Phylogy had to negotiate with PNC Bank to keep itfrom reducing the company’s lineof credit by one-third.

It was “not a comfortable conver-sation,” Mr. Markey said, but onethat was necessary to have, and farin advance of when the line was set to expire. If the reduction hadhappened, he said, Phylogy wouldnot have been in a position to succeed as a company.

Mr. Markey said, though, that heunderstood throughout the negoti-ations that PNC was not trying tomake the change because of anyanimosity for Phylogy; it was justbusiness.

“If we’re being rational about it,they made sense,” he said of thechanges PNC required before it wouldrenew the line. “It’s not because thebank wants to make your life miser-able. It’s because their world hasbeen turned upside down, too.”

Jim Huntsman, president andCEO of the International Soap BoxDerby Inc. in Akron, said the 76-year-old institution got into troublewith its bank, FirstMerit, when it

was forced into default for beingunable to make more than interestpayments toward the $580,000 itowed on a $700,000 credit line.

Because of the derby’s history inthe community and its impact of $1.5million to $2 million on the localeconomy, the city of Akron guaran-teed the note, but Mr. Huntsmansaid without that help, the derbycould have closed its doors, or beenpoached by another city that couldafford to help keep it going.

Mr. Huntsman said while hewished the derby hadn’t found itselfin the situation it did, he understoodthat the bank was doing its job.

“We didn’t view them as the enemyor the bad guy,” Mr. Huntsman said.“Unfortunately, it’s happening to too many guys, too many different companies right now, and not just inthe community, nationwide. I havefriends going through the same thing.Everybody’s struggling right now.”

He said while the derby was “veryfortunate” to have a happy ending,

other companies are not always asfortunate.

Assets on the lineTony George, chairman of The

George Group — a holding companythat owns the Harry Buffalo restau-rants and Westside Jaguar, LandRover, Volvo and Mazda, among other properties — said he has laidoff 350 employees over the past year,though about 1,000 people continueto work for him.

Mr. George, who also attended theFed’s Feb. 11 session with small busi-ness owners, said he’s able to survivebecause he’s a good business person,despite his company’s holdings inreal estate, restaurants and car deal-erships — “three businesses that arenot really good to be in right now.”But he said as he’s negotiating a newline of credit, he’s found that banksdon’t want to work with him.

As an example, instead of askingbusiness partners as a whole toguarantee 100% of a loan, they’renow requiring that each individualdo so, Mr. George said.

“Now, they want your wife to signpersonal, your kid to sign personal,your dog to sign personal,” he said.“What they’re doing now is breakingthe backs of small businesses. We’re

“Now, they want your wifeto sign personal ... yourdog to sign personal.” – Tony George, chairman, The George Group


NORTHEAST OHIO INVESTMENT BANKSLISTED ALPHABETICALLY

CompanyAddressPhone/Web site

Yearfounded

# of localinvestment

bankers Headquarters Specialties Chief investment banker(s)Top local executiveTitle

Brown Gibbons Lang & Co.1111 Superior Ave., Suite 900, Cleveland 44114(216) 241-2800/www.bglco.com

1989 21 Cleveland Merger advisory services, restructuring, capitalraising

Michael E Gibbonssenior managing director

Michael E. Gibbonssenior managing director

Bruml Capital Corp.1801 E. Ninth St., Suite 1620, Cleveland 44114(216) 771-6660/www.brumlcapital.com

1986 3 ClevelandMerger advisory services, sell-side and buy-sidetransaction advisory services, raising privatecapital, valuation and fairness opinions

Robert W. Brumlpresident

Candlewood Partners LLC10 1/2 E. Washington St., Chagrin Falls 44022(440) 247-2800/www.candlewoodpartners.com

2001 5 Cleveland Restructurings, debt financings, mergers andacquisitions, distressed investments

Glenn C. Pollackmanaging director

Glenn C. Pollackmanaging director

EdgePoint Capital Advisors3700 Park East Drive, Beachwood 44122(216) 831-2430/www.edgepoint.com

2000 8 BeachwoodManufacturing, distribution, technology,chemicals, transportation, metal forming, healthcare

Dan Weinmann, John Herubin,Russ Warren, senior vicepresidents

Thomas Zuckerpresident

Evarts Capital LLC20600 Chagrin Boulevard, Suite 495, Cleveland 44122(216) 991-1201/www.evartscapital.com

1975 4 Shaker HeightsMerger and acquisition advisory services, sell-sideand buy-side transaction advisory services, capitalplacement and financial restructurings

G. William EvartsTodd Petermanaging partners

G. William EvartsTodd Petermanaging partners

Harris Williams & Co.1900 E. Ninth St., 20th floor, Cleveland 44114(216) 689-2400/www.harriswilliams.com

1991 12 Richmond, Va. Sale advisory, M&A advisory, restructuring, capitalraising, fairness opinions

Dave Hegeman, managing dir.;Geoffrey Frankel, managingdir., head of restructuringadvisory services

Dave Hegemanmanaging director

Holmes Hollister & Co.1111 Superior Ave., Suite 1400, Cleveland 44114(216) 937-2320/NA

2000 4 Cleveland General industrial, transportation, specialitymaterials, Internet, for-profit education

John B. Hollister IIIco-managing partner

KeyBanc Capital Markets127 Public Square, Cleveland 44114(216) 689-3000/www.key.com/html/LP-KBCM.html

NA 375 Cleveland Consumer, energy, financial sponsors, industrial,real estate

Christopher M. Gormanpresident,KeyBanc Capital Markets

MelCap Partners LLC5164 Normandy Park Drive, Suite 285, Medina 44256(330) 721-1990/www.melcappartners.com

2000 4 MedinaMiddle market investment banking firm, mergerand acquisition advisory services, privateplacement of debt and equity capital, generaladvisory services

Albert D Melchiorrepresident

Albert D. Melchiorrepresident

Merkel & Associates Inc.29325 Chagrin Blvd., Suite 101, Pepper Pike 44122(216) 831-1440/www.merkelandassociates.com

1986 3 Pepper Pike Manufacturing, distribution, business services Nicholas B. Merkelpresident

ParaCap Group LLC6140 Parkland Blvd., Mayfield Heights 44124(440) 995-5100/www.paracapgroup.com

2006 2 Cleveland Insurance, financial institutions, wastemanagement, industrial

Jeff BoyleWill Areklettmanaging partners

Raintree Capital Partners(1)1350 Euclid Ave., Suite 800, Cleveland 44115(216) 774-1100/www.raintree-capital.com

2004 7 Cleveland M&A advisory services, capital placement andfinancial restructuring, turnaround management

James Lisy, Mikel Harding, BillFrazier, managing directors

Stifel, Nicolaus & Co.30100 Chagrin Blvd., Suite 101, Cleveland 44124(216) 593-7306/www.stifel.com

1890 11 St. Louis Merger advisory services, capital raising, publicfinance, fixed income, retail brokerage services

Charles R. Crowley, managingdirector; Alan G. Baucco, sr. vicepresident

Vetus Partners1300 E. Ninth St., Suite 600, Cleveland 44114(216) 333-1840/www.vetuspartners.com

2006 6 ClevelandDistribution and logistics, engineered products,automation, controls and electrical products,specialty materials, corporate carve-outs anddivestitures

Jay K. Greysonmanaging director, principal

Jay K. Greysonmanaging director, principal

Western Reserve Partners LLC200 Public Square, Suite 3750, Cleveland 44114(216) 589-0900/www.wesrespartners.com

2004 20 ClevelandCorporate merger advisory services, corporatecapital raising, restructuring and bankruptcy, realestate finance

Ralph M. Della Rattamanaging director

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

RESEARCHED BY Deborah W. Hillyer


Credit: Fed solicits views from banks, businesses the boots on the ground.”Indeed, Ms. Pianalto noted in her

speech last week that small busi-nesses make up nearly 99% of allfirms, account for more than half ofall private-sector employees andhave generated 64% of net new jobsover the past 15 years.

“Collectively, these statistics tell usthat small business is in fact big busi-ness, and its impact is even greater because it remains one of the most innovative and flexible parts of theeconomy,” she said in the speech.

Kenneth McElrath, another attendeeat the Fed’s Feb. 11 meeting and pres-ident of telecommunications companyMAC Installation & Consulting LLC inBedford Heights, said business ownerswho realize how integral they are tothe economy are frustrated thatthey’re unable to go to banks to gethelp growing their companies.

Mr. McElrath said he is seekingmore private sector work because itpays faster than public sector workand is pressuring clients to pay himsooner because “going to banks isn’treally the best answer.” Mr. McElrathsaid, too, that the tendency of smallbusinesses to use real estate as collateral often means they’re ineven more trouble with their lendersbecause of the declining value of thereal estate that backs up their loans.

“It’s hard to get an increase in yourline of credit when your assets are going down,” he said. ■


existing Ohio franchise, he said,and there are more than twice as many small and mid-market companies in Chicago that couldprovide lending opportunities forthe bank.

In addition, Chicago’s medianincome of $67,000 is more than$14,000 higher than that of thebank’s Ohio footprint. FirstMeritalso has branches in western Penn-sylvania.

“It’s a much bigger and more affluent market. It’s fractured,” Mr.Davis said of Chicago. “There are alot of opportunities to acquire trou-bled institutions.”

Since January 2009, more than adozen Chicago-area banks havefailed, according to the FDIC. Withmore than 700 banks on the FDIC’stroubled bank list, failures in theMidwest are bound to be plentiful.

‘It’s only a matter of time’Terry McEvoy, managing director

and bank analyst at investment firmOppenheimer & Co. in Portland, Me.,

said there are several publicly traded banks in the Chicago areathat are trading below $1 a shareand that may be available in thenear future.

“It’s only a matter of time” beforemore banks in Chicago andthroughout the Midwest fail, Mr.McEvoy said. “It’s more than justone.”

Greg Hernandez, a spokesmanfor the FDIC, said there were fourbidders for George WashingtonSavings Bank, and that they made atotal of eight bids. There were 366qualified bidders for the institution.Another Chicago-area bank thatfailed Dec. 4, Benchmark Bank, hadjust two bidders from a similarnumber of qualified bidders, hesaid, while others — like Commu-nity Bank of Lemont, which failedOct. 30 — had 18 bidders making 41bids.

Competition for failed banks willrise, Mr. McEvoy said, as morebanks stabilize and decide to takeadvantage of their relative stabilityfor growth.

Mr. Davis of Stifel Nicolaus saidhe expects FirstMerit to fill outOhio and Illinois in the near term,but he wouldn’t be surprised to seethe bank enter Indiana or a similarmarket. However, he said he doesnot want to see the bank making aseries of “rapid-fire” acquisitions.

“All things in good time,” he said.“We want them to be able to absorbthese things.”

Chew and swallowTom Mitchell, a senior financial

analyst at Miller Tabak & Co. inNew York, also said he’d prefer to see FirstMerit making acquisi-tions that are easy for the bank toswallow.

“They run the risk of having indigestion at some point over thenext two to three years,” he said.“There’s always that risk if theymake several acquisitions or a largeacquisition.”

Mr. Mitchell said he does not expect FirstMerit to run into thatproblem if the bank continues tofocus on markets that it knows and

avoids spreading itself too thin. Mr.McEvoy noted that prior to theChicago additions, it had been 11years since FirstMerit’s last acquisi-tion. “As a basic plan, I would hopethere would be enough opportuni-ties in their own back yards, so tospeak, that they would develop incremental growth through acqui-sitions without having to scatterthemselves through too many areas,” Mr. Mitchell said.

Mr. Greig said FirstMerit continuesto look at organic expansion “opportunistically,” saying it is “farand away” the most accretive wayto provide growth for shareholders.

Mr. Davis said he is looking forFirstMerit to be “in the hunt” inChicago throughout this year andnext; Mr. McEvoy said he expectsthe bank to be smart as it makes itsmoves.

“They can come in and say, ‘Weare a very strong organization, how can we help you today?’” Mr.McEvoy said. “Their banking philosophy would work well in other Midwest markets.” ■


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Strategy: Bank may not be only player in future bids BRIGHT SPOTSBright Spots is a periodic feature

in Crain’s Cleveland Business, highlighting positive business developments from across Northeast Ohio.

To submit information, e-mailmanaging editor Scott Suttell [email protected].

■ The Nord Center in Lorain,which provides behavioral

health care services, hasbeen recognized for its organizational perfor-mance with the 2009 Pioneer Award from

the Ohio Partnershipfor Excellence, or OPE.The OPE is the state of

Ohio’s performance excellenceand quality program. OPE part-ners with organizations using theBaldrige Criteria for PerformanceExcellence to complete a com-prehensive organizational assess-ment that helps organizationsbetter understand and prioritizekey strengths and improvementopportunities.


Young people create game for young people■ A new digital game soon will be availableon iTunes, courtesy of students at CaseWestern Reserve University and the Cleve-land Institute of Art.

Students in a joint digital arts course ofthe two schools created ChromaWaves, agame designed for the Apple iPhone or iPodTouch. It’s expected to debut on iTunes thesecond week of March andwill be downloadable for99 cents, said Casey Burry,a spokeswoman for theCleveland Institute of Art.

In ChromaWaves, playersshoot at enemy balls of color, some of which explode and create inter-esting patterns on thescreen.

The students created the game with guidancefrom Electronic Arts Inc. of Redwood City,Calif., which makes games for systems such asNintendo Wii, Sony PlayStation and Xbox 360.Electronic Arts executives gave high ratings toChromaWaves and even provided the stu-dents with contacts at Apple, Ms. Burry said.

All proceeds from the game will be donatedto Child’s Play, a nonprofit group in Seattlethat provides games and gaming systems tochildren’s hospitals — Shannon Mortland

Nasty weather? Bring it on■ This is the winter version of makinglemonade out of lemons.

Rather than take offense at Forbes.com’s recent designation of Cleveland as the worstwinter weather city in the country, clothingand sporting goods retailer Geiger’s has decided to embrace it by naming itself the“Official Supplier to America’s Worst WinterWeather City.”

“We are proud and thrilled at the designa-tion,” Geiger’s president Chas Geiger writesin a tongue-in-cheek news release. Mr.Geiger says he knows other cities “are clam-

oring for the crown,” espe-cially after big snowstormsthis season in places suchas Baltimore, New Yorkand Washington, D.C.

“But one blizzard, nomatter how big, does not awinter make,” Mr. Geigergoes on. “America’s WorstWinter Weather City is notawarded to a sprinter, but

to those who live winter over the long haul.”And the Geiger family should know some-

thing about the long haul. It has been in busi-ness for nearly 80 years, and besides its land-mark Lakewood store on Detroit Road, ownsGeiger’s Ski & Sport Haus in Chagrin Falls.

Thanks for the chuckle, Chas. — MarkDodosh

Accentuating the positive■ Sparked by angry tweets, e-mails and callsabout Forbes’ recent list dubbing Clevelandthe most miserable city in America, PositivelyCleveland is encouraging people to helpcounteract the label.

Now through March 10, the region’s convention and visitors bureau is running a“Happy in CLE+” contest, in which peoplecan go to www.whattheforbes.com andshare their favorite things about the regionthrough videos, photos or postings. Theyalso can tweet their faves with the hashtag#HappyinCLE+.

Three winners will be chosen at randomon March 11. — Kathy Ames Carr

Case Law struts its stuff■ Students at the Case Western ReserveUniversity School of Law have won the rightto compete in an international mock trialcompetition.

The team of five students won the MidwestSuper Regional Jessup Moot Court Competi-tion in Chicago in February, and will competein the international rounds this month. Theteam beat Michigan State, Valparaiso andMarquette in the preliminary rounds; JohnMarshall College of Law in Chicago in the quar-terfinals; Thomas M. Cooley College of Law inLansing, Mich., in the semifinals; and LoyolaUniversity School of Law in the finals to ad-vance to the competition in Washington, D.C.

In 2008, the school’s mock trial team wonthe Jessup World Championship. This is thethird time in four years it has made it to the international competition.

Michael Scharf, a law professor at theschool and the team’s coach, said the win“brings a real positive image” to CWRU.

“When we walk into that particular compe-tition, we’re seen as the Harvard of law schoolsthat compete,” he said. — Arielle Kass

WHAT’S NEWCOMPANY:Root Candles,MedinaPRODUCT:Legacy byRoot HopeCandle

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THEWEEK FEBRUARY 22 - 28

The big story: The Cleveland Clinic willspend $848 million on renovations and construc-tion across the health system this year and is

looking for ways to continueto expand its footprint locally,nationally and abroad. ClinicCEO Dr. Delos “Toby” Cos-grove announced those plansduring his State of the Clinicaddress. The new constructionprojects come on the heels ofthe $1.2 billion spent in recentyears on various building

projects, such as the Clinic’s $506 million hearthospital, which opened in fall 2008. “By the end ofthe year, all of this campus’ clinical and outpatientfacilities will be renewed,” Dr. Cosgrove said.

Change the tire CEO: Robert J. Keegan, theman who set Goodyear Tire & Rubber Co. on astable track after becoming the company’s CEOseven years ago, will relinquish the chief executiveofficer’s post but will remain the tiremaker’s chairman. Akron-based Goodyear said a Keeganprotégé, chief operating officer Richard J. Kramer,has been elected president and CEO effectiveApril 13. Mr. Kramer, a 1982 graduate of PaduaFranciscan High School in Parma, also waselected a member of the company’s board.

It’s all about jobs: Most Ohio voters aren’tfamiliar with the phrase “Third Frontier.” Andthose campaigning to renew the state’s technology-based economic development program aren’tabout to teach them. The campaign to renew theThird Frontier initiative is leaving the name of theacclaimed program out of much of the material itwill use to convince voters to pass the $700 millionbond issue, which will appear on the May ballot. Instead, the material will refer to the renewal as “Issue 1” and will use the tagline “United for Jobs and Ohio’s Future.” An OhioBusiness Roundtable survey indicated only 16% ofvoters were familiar with the program.

The price is right: AmTrust Financial Corp.sold its property and casualty insurance subsidiaryfor more than originally expected. Novak Insur-ance Agency Inc. in Solon is the new owner ofAmTrust Insurance Agency Inc. Vice presidentRyan Novak said the company will bring on thesubsidiary’s two employees and more than $2.5million in premiums. The winning bid of $625,000was more than Novak’s original $450,000 offer be-cause of a competing bid of more than $500,000.

Fresh starts: Two startup companies eachhave raised about $1 million from investors inTaiwan and soon will be living and working together in Cleveland’s Midtown neighborhood.Business process software company Silico Corp.and electronic device maker Ardent ProductsCorp. plan to move into the former Hill Floral Prod-ucts distribution building at 6401 Midtown Com-merce Park Drive in September. Ardent bought the23,500-square-foot building in December for$665,000 and is in the process of remodeling it.


Excerpts from blog entries on CrainsCleveland.com.

BEST OF THE BLOGS

Sustainable developmentcan follow Cleveland’s lead■ Some national publications look at Cleve-land and see misery. The Nation looks hereand sees an emerging “Cleveland model”for sustainable development.

In a piece on the much-lauded EvergreenCooperatives, the steadfastly liberal maga-zine said the project “has substantial backing,not only from progressives but from a number of important members of the localbusiness community as well.”

Co-ops in general “cut acrossideological lines — especially atthe local level, where practicality,not rhetoric, is what counts in dis-tressed communities,” The Nationsaid. “There is also a great deal ofnational buzz among activists and community-developmentspecialists about ‘the Clevelandmodel.’ Potential applications ofthe model are being considered in Atlanta,Baltimore, Pittsburgh, Detroit and a numberof other cities around Ohio.”

What’s especially promising about theCleveland model, The Nation said, is that “itcould be applied in hard-hit industries andworking-class communities around the nation. The model takes us beyond both traditional capitalism and traditional socialism.The key link is between national sectors of expanding public activity and procurement,on the one hand, and a new local economicentity, on the other, that ‘democratizes’ ownership.”

Beer makes everythingbetter, including travel

■ Atlantic writer James Fallowsoccasionally uses his blog to report on exceptional beers hefinds as he travels. He recentlyfound Burning River Pale Alefrom Great Lakes Brewing Co.

It’s a beer “whose cheeky nameI really admire, not to mention really admiring its hoppy taste,”Mr. Fallows wrote. He added: “Irealize that Kids Today might not

recognize the puckish elegance of calling aCleveland beer ‘Burning River.’ DennisKucinich would be able to explain.”

This is a candle for a cause.Root has introduced a new line of

fragrance candles designed exclusively forthe Susan G. Komen for the Cure breast cancer organization. The candles come inthree scents: Port Cozumel, Golden Chrysan-themum and Fresh Lime Blossom.

Retail price is $30. Root says 10% of thesales will support the Susan G. Komen program, with a minimum guaranteed donationof $25,000. The program runs through Dec. 31.

For information, visit www.RootCandles.com.

Send information about new products to managing editor Scott Suttell [email protected].

Cosgrove


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