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AUTO OUTLOOK: PAGES 4-5 ■ NAIAS OVERVIEW: PAGES 18-20

P E R I O D I C A L S

Auto collapse spurs fi rm’s diversifi cationPAGE 6

Docs have room if Medicaid expandsPAGE 16

Breaking News

FEBRUARY 4, 2013 • VOL. 26/NO. 9 • $1.50 SERVING WESTERN MICHIGAN BUSINESS SINCE 1988 www.mibiz.com

State of West Michigan PhilanthropyPAGE 17

Huntington gets new local leader

Huntington Bank has a new lead executive over its West Michigan market.

A s R e g i o na l P r e s i d e n t J im Dunlap focuses on the Huntington’s statewide oper-ations, veteran banker John Irwin steps into the role as West Michigan market leader. Irwin has been in banking for 32 years, the last 11 years with Huntington. He most recently worked as Huntington’s corporate regional banking manager.

“Huntington’s proven support for business to drive economic per formance, par ticularly in Michigan, makes taking on my new role a welcome challenge,” Irwin said. “It is rewarding to rep-resent a bank that is so intensely dedicated to its customers and communities.”

Irwin reports to Dunlap and will collaborate with his counter-part in eastern Michigan, Steve Fezzey, to build the bank’s state-wide focus.

He takes over operations of one of the leading banks in the region, particularly in the Grand Rapids area, where the Columbus, Ohio-based Huntington ranked fourth out of 29 banks in the 2012 FDIC Summary of Deposits and has 22 offices.

Statewide, Huntington ranks seventh out of 160 banks with $9.09 billion in deposits through 140 offices and a 5.46 percent market share.

“I have every confidence in John’s abilities to continue the work that Huntington is doing in West Michigan, that he has already so signif icantly sup-ported,” Dunlap said. “I am look-ing forward to having even more resources committed to Michigan that will continue to drive con-sistent positive outcomes across the board in the state’s diverse communities.”

— Mark Sanchez, MiBiz

By MARK SANCHEZ | [email protected]

MICHIGAN — Venture capital investing in Michigan had one of its best years ever in 2012, setting the stage for what one venture investor sees as “another very big year” for further growth.

Investors put $232.31 million into 47 deals in Michigan last year, surpassing pre-recession levels and easily exceeding the $84.75 million invested in 36 deals in 2011, according to the quarterly MoneyTree report from the National Venture Capital Association and PricewaterhouseCoopers.

The 2012 activity positions the state well for the future, said Dale Grogan, co-manag-ing director of the $15.1 million Michigan Accelerator Fund I in Grand Rapids.

“There are several funds that have money to invest, which means that capital is avail-able. There is some really great innovation that is coming from all three sectors of pub-lic institutions, existing companies and startup companies. That trend should con-tinue for 2013,” Grogan said.

The 2012 totals represent the third best year for venture investing in Michigan since the quarterly MoneyTree report started in 1995. The year was exceeded only by the $356.44 million put into 55 deals in 2000 and, in terms of just dollar value, the $253.47 million invested in 44 deals in 1999.

More than half of the money invested in Michigan last year went into three com-panies: $72.64 million for Protean Electric

VC on the riseState bucks national trend, sees investments increase

See RISE IN VC on page 2


WYOMING — One local health care system has opted to sell and lease back one of its key facilities rather than continue to maintain the property itself.

American Realty Capital Healthcare Trust Inc., a New York City-based real estate investment trust (REIT), closed on the $6.2 million acquisi-tion last month of the Cancer Center at Metro Health Village as part of a much larger $214 mil-lion deal for 14 medical facilities in nine states.

Metro Health will continue to provide radia-tion therapy through a joint venture with the University of Michigan Health System at the cen-ter following the facility’s sale.

The deal came together when the REIT approached the health system and the co-owners

of the cancer center, Triangle Associates Inc. and a group of physicians, said Mike Faas, CEO of Metro Health.

“They kind of wanted to get out and we were fine with it,” Faas said. “We’re not in the mood particularly to tie up our cash in real estate. Whenever we can do this, we will.”

The deal is structured similarly to the sale years ago of Metro’s 13 outpatient centers in the Grand Rapids area that the health system leases back.

Metro Health and its partners developed the 21,502-square-foot radiation oncology center in 2008 for $7.3 million, a good portion of which

went for medical equipment. A 15-year lease on the facility runs through June 2022 and will ini-tially gener ate $600,000 annually for the REIT, according to a quarterly financial report filed with federal securities regulators.

The acquisition of the facility is the third in Michigan for American Realty Capital, which since forming in 2011 has been buying medical office buildings, outpatient centers and senior housing facilities across the country and leasing them back to care providers. The REIT owns 43 health care properties in 16 states.

In September 2012, the REIT acquired the two-story, 100,321-square-foot, fully leased LakeView Outpatient Center in Paw Paw for $30.4 mil-lion from Bronson Healthcare Group. Bronson acquired the outpatient center in 2007 when it acquired LakeView Community Hospital.

Metro sells cancer center to NYC-based REIT

RELATED STORY: Industrial firms seek sale-leaseback agreements to free up capital. PAGE 11

REV UP!With a pick up in pickups,

growth in the luxury segment,

and the rebirth of an icon,

Detroit is ready to

Dunlap Irwin

Read our comprehensive reports from the 2013 North American International Auto Show and the Society of Automotive

Analysts annual outlook conference.

PHOTO: JOE BOOMGAARD

MADE IN MICHIGAN

Sponsored by:

CHEMICAL BANK

GVSU expects longer payback on future green projectsPAGE 15

2 FEBRUARY 4, 2013 / MiBiz Visit www.mibiz.com

in Auburn Hills that’s developing drive sys-tems for electric and hybrid vehicles; $32.5 million to EcoMotors Inc. in Allen Park; and $16.44 million to medical device company CertoPherx Inc. in Ann Arbor.

West Michigan-based companies that received venture funding in the fourth quar-ter were:

• Tolera Therapeutics, a Kalamazoo drug development company that received $5.41 million from Hopen Life Science Ventures in Grand Rapids, the Kalamazoo-based Southwest Michigan Life Science Venture Fund, and Cincinnati, Ohio-based Triathlon Medical Ventures.

• Intervention Insights Inc., a Grand Rapids company that provides genetic tests that are designed to match cancer patients with drugs that will best treat their tumor. The company, spun out of the Van Andel Institute, received $1.6 million from undisclosed inves-tors, according to the MoneyTree report.

In reviewing the 2012 MoneyTree data, Sam Hogg, a partner at Open Prairie Ventures that manages the Southwest Michigan Life Science Venture Fund, noted a “very noticeable uptick in the number and quality of investments in

RISE IN VCContinued from page 1

the $10 million range, basically B or C rounds of funding.”

Hogg attributes that to “an increasingly vibrant technology and talent landscape in Michigan that can be linked back to the state really investing in technology businesses five, 10 years ago via the 21st Century Jobs Fund.”

“Every state wants a technology indus-try but few are willing to invest and wait the length of time it takes for it to take shape. I think we are seeing just that here in Michigan, so kudos to the folks that fought hard for those programs then,” Hogg said.

Eight of the 47 deals in Michigan were for $9 million or more, including the $9.2 mil-lion that five investors put into Kalamazoo-based Vestaron Corp., which has developed an insecticide using spider venom.

Despite the gains over the years, VC investing in Michigan remains in what Grogan calls a “nascent” stage compared to other states, especially on the coasts, because “we simply don’t have as much money to put to work.”

Still, Grogan said, there is more venture funding available in Michigan than ever before. Investors have increased con-fidence in Michigan’s eco-nomic resilience, and “there is an awaking of entrepreneurs and outside investors alike that

now is a good time to nurture Michigan invest-ments,” he said.

Grogan noted the growing number of ven-ture funds from outside of Michigan, Open Prairie included, that now have offices in the state.

“They are here for a simple reason: There are opportunities in Michigan that are attrac-tive,” Grogan said.

As of a year ago, Michigan was home to 20 venture capital firms, up from 15 just three years earlier, according to the Michigan

Venture Capital Association’s 2011 annual report. Another seven firms based elsewhere have an office in Michigan.

In the life sciences sector alone, VC invest-ments in Michigan totaled $107.1 million through 16 deals last year, which compares to $30.8 million in 16 deals in 2011, accord-ing to Cleveland-based BioEnterprise, a bio-medical accelerator that tracks biotech and health care venture investing in the Midwest. In terms of dollar value, the amount was the best year for VC investing in life sciences in Michigan since before the recession.

Most Midwest markets saw increases in VC investing in life sciences during the year, a contrast to the sector nationally.

“As with the rest of the country, Midwest health care investing fell dramatically in 2009 after strong years in 2007 and 2008, but it appears investors are again optimistic about Midwest deals. 2013 should be an inter-esting year to watch,” BioEnterprise interim President Aram Nerpouni said.

Nationally, VC investing in life sciences declined to 466 deals for $4.1 billion, a 15-per-cent decline in dollar value and flat deal vol-ume. Much of the decline occurred in first-time financings for young companies, an area that saw the lowest activity since 1995, according to the MoneyTree report.

Tracy Lefteroff, global managing part-ner of the venture capital practice at PricewaterhouseCoopers, attributes the decline to regulatory uncertainty, plus the heavy amount of capital and the decade or more it takes to move a life science innovation from concept to the marketplace.

“All of these factors have been taking their toll on investing in this space, even though everybody acknowledges there’s still tremen-dous opportunity,” Lefterhoff said.

Investing in the medical device industry alone declined 13 percent nationwide to $2.4 billion through 313 deals, which was down 15 percent from 2011.

In Michigan, the increased investment

activity came as the venture capital industry overall declined nationally.

Across the U.S., venture capitalists invested $26.5 billion in 3,698 deals, a 10-per-cent decline in dollar value and a 6-percent decline in deals from 2011, according to the MoneyTree report.

Venture investing nationally in the fourth quarter alone declined 3 percent to 968 com-panies, although the dollar value increased 5 percent to $6.4 billion.

“General economic uncertainty continues to hinder capital investments, and venture capi-talists are no different,” Lefteroff said.

Michigan venture capital Here’s a look at venture capital activity in Michigan going back to 1995

YEAR DEALS DOLLAR VALUE

2012 47 $232.31 million

2011 36 $84.75 million

2010 31 $151.66 million

2009 36 $178.45 million

2008 44 $204.03 million

2007 23 $109.70 million

2006 24 $131.25 million

2005 21 $93.32 million

2004 17 $134.25 million

2003 18 $95.17 million

2002 27 $109.42 million

2001 22 $154.92 million

2000 55 $356.44 million

1999 44 $253.47 million

1998 30 $122.64 million

1997 28 $106.22 million

1996 21 $79.39 million

1995 12 $65.70 million

SOURCE: MONEYTREE REPORT

“Every state wants a technology industry but few are willing to invest and wait the length of time it takes for it to take shape. I think we are seeing just that here in Michigan, so kudos to the folks that fought hard for those programs then.”

—SAM HOGG Partner at Open Prairie Ventures

Visit www.mibiz.com MiBiz / FEBRUARY 4, 2013 3

Published since 1988

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Editor & Publisher

Brian Edwards / [email protected]

Managing Editor

Joe Boomgaard (auto, manufacturing)[email protected]

Senior Writers

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Elijah Brumback (real estate, energy)[email protected]

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Lindsay Patton-Carson, Nick Manes

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WHAT’S INSIDE February 4, 2013

15

MANUFACTURING 4 Stability returns to auto outlook

6 Auto collapse gives Alliance CNC a reason to branch out

8 Communication critical to global auto industry

REAL ESTATE &DEVELOPMENT

11 Industrial firms seek sale-leaseback agreements to free up capital

12 LEED v4: New LEED revision slated as industry remains open to alternative ratings

ECONOMIC DEVELOPMENT

14 Discussion in Lansing shifts to infrastructure

14 Business Leaders for Michigan pushes for education funding

ENERGY 15 GVSU stretches the energy

efficiency dollar

HEALTH BIZ 16 Report: Michigan docs able to

take on patients if Medicaid expands

NONPROFIT ORGANIZATIONS

17 Q&A: Dr. James Edwards

FOCUS: 2013 AUTO SHOW RECAP

18 Good for Gearheads (And the planet, too)

20 Consumers increasingly focus on vehicle infotainment

NOTABLE 25 People & Datebook

26 Q&A: Walter Monroe

26 In the News

17

AIA Grand Rapids ...................................... 12Alliance Cutter Grinding Service Inc. ..... 6Associated Rack Corp. ............................... 4BCBS of Michigan ......................................22Blackford Capital ........................................22Breath Arrest LLC ......................................22Bronson Healthcare Group ....................... 1Business Leaders For Michigan ............ 14Cancer Center at Metro Health Village . 1Citi Research .................................................. 5Cohen Financial .......................................... 11Colliers International ................................. 11Consumers Energy..................................... 15

Center for Healthcare Research ............ 16Denso Manufacturing Michigan Inc. ...22Dykema ..........................................................22Fair Oaks Farms Brands Inc. ...................22Fox Motors ............................................. 18,22Friedman Real Estate Solution Inc. .......22Gartner Group .............................................20Globe of Michigan Inc. ................................ 4Grand Rapids Chamber ............................ 14Grand Valley Metro Council .................... 14GVSU ......................................................... 11,17Honigman LLP .............................................22Hope Network .............................................22Hopen Life Science Ventures ................... 2Huntington Bank........................................... 1

IHS Automotive ...................................... 4, 20Intervention Insights Inc............................. 2Leitz Tooling Systems ................................22LMC Automotive .......................................... 4Lott3Metz Architecture ........................... 12Mecosta County Medical Center ..........22Metro Health .............................................1,22Michigan Accelerator Fund I .................... 1Michigan Health Connect ........................22Michigan Venture Capital Association. . 2Neogen Corp. ..............................................22North American Int’l Auto Show ........... 18North Ottawa Comm. Health System ..22Open Prairie Ventures ................................. 2Owen-Ames-Kimball Co. ......................... 12

People’s Health Center .............................22Perrigo Co. ....................................................22Priority Health ..............................................22Progressive AE ............................................ 12Quantum Sail Design Group ...................22Saint Mary’s Health Care .........................22SW Mich. Life Science Venture Fund .... 2Spartan Stores Inc. ....................................22Three Oaks Group LLC .............................22Tolera Therapeutics ..................................... 2Triangle Associates ...................................... 1U of M Health System ...............................22Van Andel Institute....................................... 2Vestaron Corp ............................................... 2Warner Norcross & Judd LLP ................22

COMPANY INDEX


By JOE BOOMGAARD | [email protected]

After a half-decade on the roller coaster, U.S. automakers are pre-paring for a slow, steady ride that could yield strong profits for carmakers and their suppliers

throughout the rest of the decade. The automotive industry could be settling

into a sustainable period for the foreseeable future, a period perhaps defined by its stabil-ity rather than any dramatic peaks and valleys.

Auto sales beat most analysts’ expectations last year by about 1 million units. U.S. light vehicle sales rose 13.4 percent in 2012 to nearly 14.5 million units, compared to about 12.8 mil-lion units in the prior year. The Detroit Three automakers, the main customers for many auto suppliers in West Michigan, had a market share of 44.8 percent last year, an erosion of 2.3 per-cent from the prior year.

Although analysts expect light vehicle sales to grow this year, they say that growth will be much more contained. That’s good news for a supply chain that’s been struggling to keep up with double-digit growth in the last couple of years.

But the forecast for slow, steady growth fails to tell the whole story, analysts said.

While automakers have focused on the growth of smaller, more fuel-efficient cars dur-ing the past few years, most analysts agree the automotive market will soon see resurgence in a somewhat unlikely segment: full-size pickup trucks, which are being bolstered by an improv-ing housing market. These high-volume, highly profitable models, coupled with growth in the premium vehicle segment, should help buoy automakers’ balance sheets even consider-ing that overall sales are expected to flatten through 2019.

“I think 2013 could be characterized as the year of pickup trucks and the rebounding pre-mium market, and I don’t think many of us would have thought that just a couple short years ago,” said Jeff Schuster, senior vice pres-ident of forecasting at LMC Automotive, in a speech at the Society of Automotive Analysts annual outlook conference in Detroit on Jan. 13.

What’s more, the local automotive supply chain has another potential source of opti-mism: Automakers are continuing to increase production in North America, which is lead-ing to more import substitution as models that had been imported to North America get pro-duced here. Analysts say every gain for North America opens up new sourcing opportunities, which translates into more potential business and jobs in the supply chain.

CONTROLLED GROWTHSpeakers at the SAA conference, held on the eve of the North American International Auto Show in Detroit, generally expected 2013 U.S. light vehicle sales to reach about 15 million units, with a range of 14.9 million to 15.3 mil-lion units.

That slow growth of about 4 percent comes after a string of years that saw the industry grow at a break-neck pace since 2008 and the depths of the recession.

“It’s a great [respite] after three years of double-digit sales growth,” said Ellen Hughes Cromwick, chief economist at Ford Motor Co., who presented at the SAA conference.

Meanwhile, global vehicle sales should tick up a “very modest” 3 percent this year and

top out at around 83 million units, said LMC Automotive’s Schuster.

“I would dare use the word stable,” Schuster said of the global automotive forecast.

In North America, where both sales and pro-duction have been climbing since 2009, IHS Automotive has already revised its production forecast for the year to 15.9 million units, up about 440,000 units from its previous forecast at the end of last year.

“What’s baked into that is a rosier sales out-look,” Mike Wall, automotive analyst at IHS Automotive based in Grand Rapids, told MiBiz. “We’ve been plodding along in this slow-but-steady recovery, but we’re starting to see us finally make that pivot.”

“Leasing has come back. We’ve seen the fleet

and rental buyers come back. All this starts to build a healthier outlook,” Wall said.

LMC Automotive’s Schuster said improve-ments in the general economy should continue to drive growth this year, as should the avail-ability of credit for vehicle buyers.

Schuster said the long-term trends are look-ing favorable for the U.S. market.

LMC projects U.S. light vehicle sales to sta-bilize and reach about 17 million units by 2018, although Schuster notes there is “more upside potential than there is downside risk.”

Another positive factor: Myriad new prod-ucts will bring more people into the show-rooms. While 40 new or redesigned vehicles hit the market in 2012, that number is expected to jump to 61 in 2013, Schuster said.

“That’s a pretty pronounced increase in model activity,” he said.

While North America and Asia remain the bright spots for the global automotive indus-try, Europe is projected to continue to be a drag, with sales expected to fall 2 percent next year. Sales in Japan are also expected to drop 11 per-cent, according to LMC.

The European crisis has the potential to affect West Michigan suppliers, sources said. Many suppliers have plants or joint ventures in Europe to service the European market, or ship product from the U.S. to be installed at European facilities.

For example, Zeeland-based Gentex Corp. said in its earnings report on Jan. 29 that it

SOCIETY OF AUTOMOTIVE ANALYSTS 2013 OUTLOOK, AT A GLANCE■ Industry growth will be more manage-

able through the end of the decade.

■ Any housing rebound should jumpstart the lucrative pickup truck market.

■ North America has become a preferred place to manufacture vehicles, includ-ing for export.

Stability returns to auto outlook

MANUFACTURING

IN BRIEF

Associated Rack continues GR expansion

GRAND RAPIDS — Although Associated Rack just moved to Grand Rapids in October, the company has already expanded locally with a strate-gic acquisition.

The Chicago-based Associ-ated Rack Corp. , a man-ufacturer primarily of racks and equipment for the materi-als coating industry, acquired Globe of Michigan Inc., a Grand Rapids-based metal fabricator and manufacturer of materials handling equipment.

A report in MiBiz about the expansion actually served as a catalyst behind this new-est acquis i t ion , said Don Bauer, engineering manager at Associated Rack. After reading about Associated Rack’s expan-sion into West Michigan, Globe of Michigan President Dennis Velie reached out to the manu-facturer to discuss a potential partnership.

“Dennis saw the article in MiBiz and was looking to align with another company to improve his product line,” Bauer said.

Associated Rack and Globe of Michigan finalized the deal over the holidays.

Oper a t i ons fo r G lobe o f Michigan were moved from its facility at 1731 Michigan Street to Associated Rack’s newly acquired plant at 4910 Kraft Avenue SE, near the Gerald Ford International Airport.

While the idea of getting into materials handling equipment was not foreign to Associated Rack, Bauer said the company never had enough experience in the field to effectively expand into that industry.

“We kind of dabbled in mate-rials handling equipment, but we wanted to par tner with someone with experience,” Bauer said. “Our goal is to expand our base and get more involved in the materials han-dling and transport aspect of our business.”

All Globe of Michigan employ-ees will retain their positions with Associated Rack. Velie will also stay on with the company, Bauer said.

— Carl Dunker, MiBiz

Analysts believe the U.S. full-size pickup truck market is poised for a resurgence over the next three to five years. That should translate into good news for many West Michigan automotive suppliers, which have long had strong concentrations in the full-size pickup segment, including on the Ram 1500. The Ram was selected by automotive journalists as the North American Truck/Utility of the Year before the 2013 North American International Auto Show in Detroit.

PHOTO: JOE BOOMGAARD


expects sales to decline between 5 and 10 per-cent in its first quarter of 2013. That’s because “unstable macroeconomic factors continue to be a concern, especially the sovereign debt crisis in Europe, as it is the company’s largest shipping destination,” Gentex reported.

Schuster said the recovery in Western Europe could take longer than a decade, which compares to the five-year recovery from the recession that occurred there in the early 1990s. By 2020, LMC expects European sales to cross the 14-million-unit mark — “still 500,000 units below the level it was at in 2007,” Schuster said. He expects production in Europe to have declined about 6 percent in 2012 and to continue to dip another 4.2 per-cent for 2013.

Estimated production levels for Europe are about 18.5 million units for 2013, which com-pares to 22 million in 2007.

RETURN OF PICKUPSAmong the new vehicles set to launch this year are the 2014 Chevrolet Silverado and GMC Sierra full-size pickup trucks. And, according to Itay Michaeli, vice president at Citi Investment Research and Analysis, they couldn’t be hitting the market at a better time.

Michaeli, speaking at the SAA conference, said he believes the U.S. market is “on the cusp of a major unlocking of pent-up demand” for full-size pickup trucks over the next three to five years.

“What’s astonishing is that every pent-up demand indicator we look at — and I mean every one — screens much more positively for pickup trucks than it does for cars,” Michaeli said. “I think it’s analytically almost impos-sible to be very optimistic or bullish on auto sales, but to be pessimistic or not equally as bullish — if not more — on the pickup truck segment.”

The root of that optimism starts with hous-ing. The U.S. Census Bureau reported that about 1 million new households were formed last year, and analysts reported the housing inventory stands at about 4.7 months, which is insufficient to meet increased demand.

“We’re starting to see a little more nor-mal re-synching up of housing and autos, in particular, pickups, which are so impor-tant to the housing recovery,” said Ford’s Hughes-Cromwick.

Other contributing factors, according to Citi’s Michaeli: The average age of U.S. pickup trucks is about 13 years old, fewer trucks are getting scrapped, used trucks have held their values, and full-size trucks are just at the start of the new product cycle.

IHS forecasts sales this year of 2.2 million full-size pickups, not including some of the SUVs that share platforms with those vehicles. That compares to 2009, when pickup truck sales hit just 1.3 million units, Wall said.

“I think we could get even a little bit higher than (our forecast),” Wall said. “I think we have the capacity, and as housing starts to come back, I think we could see that pick up a bit further. But more importantly, I think we could see some sustainability in the 2.1 (mil-lion) to 2.2 (million) threshold for a while.”

Wall said growth in the pickup truck seg-ment coupled with recent (Dodge) or very near-term (GM and Ford) truck redesigns

could have “huge implications” for the supply chain in West Michigan.

“For a lot of suppliers on this side of the state, a healthy chunk of their business is com-prised of that full-size truck and SUV lineup,” he said. “The beauty of all this is that the hous-ing market is starting to turn. There is a very solid correlation between housing starts and pickup truck sales.”

IMPORT SUBSTITUTIONThe same improved economy that’s buoying pickup truck sales should also translate into better sales in the premium vehicle and lux-ury segment, the analysts said.

Improved higher-end sales also bode well for the North American supply chain since these days, those brands — especially BMW, Audi and Mercedes-Benz — are building more products in North America instead of import-ing them, what the analysts term import sub-stitution. And the luxury segment isn’t alone, as Honda, Toyota, and Hyundai-Kia all shift production to North America from Asia.

“We’re entering into a period that we have not seen in several decades where production volume outpaces demand in the U.S.,” said LMC’s Schuster.

That’s because of two different kinds of investment, Schuster said.

One, automakers have already expanded capacity by about 600,000 units in the U.S. on top of new capacity of about 1.9 mil-lion units in Mexico. Through the end of the

decade, Schuster expects to see an increase of around 4 million units in production capac-ity in North America, resulting in a 76 per-cent rise in North American production across non-domestic automakers including Daimler, Honda, Hyundai, Nissan, Toyota and Volkswagen.

Secondly, North America is increas-ingly becoming an export hub. Some of the European automakers are looking to source

vehicles for the global market from just one plant. BMW sees its North American plants as its one global source for crossovers, for example, while Honda plans to “grow exports significantly” by sourcing several Honda and Acura vehicles exclusively from North America.

“This is using a lot of that capacity that’s come in,” Schuster said.

That increase in North American produc-tion volume from non-domestic companies that used to import vehicles or that are start-ing up new products also creates an opportu-nity for suppliers, he said. In addition to the volume increases, many of the non-domestic automakers that build cars in North America have less than 50 percent of the content on those vehicles sourced from suppliers in North America.

Last year, the North American market imported about 3.9 million units, while auto-makers exported about 1.3 million units that were produced in North America, according to IHS Automotive data.

Wall from IHS Automotive said import substitution should really become noticeable in 2014 and 2015 as automakers bring online new facilities in Mexico.

“Import substitution is huge and … it’s going to heat up even further,” Wall said. “As that heats up, all they do there is basically build vehicles here that they formerly had imported. In many cases, it’s just moving that production here. And I think there’s more to come, too.”

Where is pent-up demand more apparent?

■ Average age: less than 11 years

■ Population down since 2007

■ Scrap rate higher than trend

■ Solid used vehicle values

■ Product cycles mostly complete

■ Varied segment loyalty

■ Prone to declining density

■ Average age: less than 13 years

■ Population up since 2007

■ Scrap rate less than trend (light trucks)

■ Solid/better used vehicle values

■ GM has 41% of full-size pickups on road

■ Highest segment loyalty

■ Geographically advantaged

SOURCE: CITI RESEARCH

sheet metal & fabricatingBAUER

E S T . 1 9 3 2

68 years of

sheet metal

and steel

fabrication

expertise

www.bauersheetmetal.com

9.2

6.0

NORTH AMERICAN PRODUCTION AND CAPACITY

15.7 15.2 15.012.6

8.511.8 13.1

5.3 4.32.2 1.8 1.5

1.4 1.6 1.5 1.4 1.4

0

5M

15M

20M

25M

10M

0%

20%

60%

80%

100%

40%

2005

2018

2019

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

NA Production Underutilized Capacity Utilization

15.415.4 15.9 16.6 17.4 17.9 18.3 18.4 18.4

3.6 3.8 3.7

SOURCE: LMC AUTOMOTIVE


By CARL DUNKER | [email protected]

While it took a big hit from the economic downturn and near-collapse of the American auto industry, Alliance CNC bounced back through equal doses of reinvention and diversification.

Alliance Cutter Grinding Service Inc., commonly known as Alliance CNC, started life primarily as a supplier to the automotive industry. But when a key customer moved operations south and the auto industry collapsed, the small manufacturing company was forced to look to other industry segments for survival.

Dick Czarniecki, Alliance CNC’s president, said that while the company came from humble roots, it hit its stride when it began doing business with Diesel Tech, an auto supplier that was formerly owned by Penske Corp. However, when Diesel Tech was sold and “90 percent of their operations” moved south, Alliance lost a significant amount of business and needed to make some deep cuts.

“We lost about half of our business,” Czarniecki said. The company took a second big hit when the domestic auto

industry nosedived. Two of Alliance’s biggest customers, General Motors and Chrysler, went from being among the largest manu-facturers of automobiles in the world to getting bailed out by the U.S. taxpayers in 2009.

The GM and Chrysler bankruptcy and the coinciding loss in sales came at an inopportune time for Alliance CNC: The company had just purchased $1.5 million in new equipment to help improve operations at its Grand Rapids plant.

This lost business caused Czarniecki to think creatively about where Alliance CNC needed to go next.

“That gave us the reason to diversify and move out into other industries,” Czarniecki said. “We worked with the machines and technology to develop a greater variety of product offerings.”

Alliance is a manufacturer of custom cutting tools primar-ily for the auto industry, although its product line also includes tools for the medical device and steel markets. Founded in 1995, the Grand Rapids-based company grew from a one-man shop and now employs 20 workers in its 10,000-square-foot facility just south of 44th Street.

The company branched out into serving other industries including other second-tier automotive suppliers, medi-cal device companies and steel manufacturers. For exam-ple, it picked up work with Kentwood-based Autocam Corp., Czarniecki said.

This diversification allowed Alliance CNC to survive as the economy plodded along and helped it bounce back as the econ-omy rebounded, he said.

Currently, Czarniecki said he is running two, 50-hour shifts at the 20-person operation. Sales grew by 20 percent in both 2011 and 2012 to reach $4 million, up almost $3 million from the depth of the recession, Czarniecki told MiBiz.

Industry-wide, sales for many of Alliance CNC’s peers stayed flat in 2012 despite starting the year strong, according to the Precision Machined Products Association 2012 busi-ness trends report released in January. Sales were negatively affected by the “brinksmanship leading up to the election,” Miles Free, director of industry research and technology at PMPA, stated in the report.

Free’s outlook for 2013 was “gently optimistic” based on the strength of the auto industry, a resurgence in housing, increased aerospace sales, and strong performance in the medical device industry.

“We are guardedly optimistic about our indus-try sales for 2013 if Washington can stop para-

lyzing the markets we serve,” Free stated in the report. “Our data suggest that the precision machining industry is well positioned to take advantage of growth in demand that can be reasonably foreseen in automotive, housing, aerospace and medical devices, if — and this is a strong if — the pols in D.C. can get the heck out of the way and let our small business job-creator entrepreneurs — and our customers — have confidence in the year ahead. If not, the opportunity for growth that is 2013 will go to waste just like it did in 2012.”

At Alliance CNC, Czarniecki said the company continues to develop its manufacturing process over years of working with clients to identify the specific needs and how best to serve them.

“We work with the customer to develop the tools and develop the process we use to manufacture those tools,” Czarniecki said.

Alliance CNC works in small batches to better serve its cus-tomers by reducing lead times. Working in small production batches also allows for a greater variety of product offerings and customization including special coatings and laser etch-ing as well as multiple options for edge preparation.

Additionally, Czarniecki told MiBiz that the company’s designers use their combined 75 years of experience to develop the tools best suited to clients’ needs. Quality is assured throughout the manufacturing process though a quality con-trol department that maintains its objectivity by being inde-pendent of the manufacturing department.

As with many West Michigan manufacturers, one of the greatest obstacles to growth for Alliance CNC is the lack of

skilled labor to fill open positions. “I guess our biggest challenge is getting the talent, getting

those jobs that aren’t necessarily college jobs,” Czarniecki said.The challenge with the candidates Alliance CNC does find

is that they are often inexperienced and lack the self-motiva-tion and initiative to be effective workers. Czarniecki hopes to remedy the problem by working with local colleges to develop the kinds of employees manufacturers need today.

“Nobody’s going to be babysitting you. Nobody’s going to be handholding. So we need self-motivated, hard-working people who can show up every day and produce,” Czarniecki said.

MADE IN MICHIGAN

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MANUFACTURING

Auto collapse gives Alliance CNC a reason to branch out

MADE IN MICHIGAN

Alliance Cutter Grinding Service Inc, known as Alliance CNC, is a Grand Rapids-based manufacturer of custom

cutting tools for the automotive, medical device and steel industries. What began as a one-man shop in 1995 grew over the past 18 years into a company that did $4 million in sales last year and employed 20 in its 10,000-square-foot facility. The small batches that Alliance CNC works with allow the company to reduce lead time and allow for customizations such as the addition of coatings or laser etching and a variety of other edge preparation options.

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MANUFACTURING

The automotive industry has increas-ingly become an environment that requires a great deal of interaction

between native English-speaking and inter-national personnel.

Within our client base, for example, there is a foreign-owned supplier with U.S. opera-tions that regularly moves people back and forth between the U.S. and Japan to transfer knowledge and information, develop manag-ers, and fulfill the responsibilities of corporate management.

We also know many companies that hire foreign nationals to be based here or overseas

Communication critical to global auto industryas they “follow the work” when design centers are located in other regions (e.g. Ford Cologne for new small car programs, Fiat in Italy for Chrysler’s small engines), or penetrate and grow business with new customers, e.g. Hyundai in Korea. Many supplier personnel regularly inter-face with counterparts of a different nationality in the daily course of business.

In all of these situations, good communi-cation is critical to being able to fully realize the benefits of the interaction and smoothly accomplish goals, yet we find that the impor-tance of high quality communication is not always recognized or understood.

In our regular strategy sessions with the Japanese client, the constraints presented by varying degrees of English fluency are cer-tainly obvious to us, but we have to question what can be done about it.

There is a resource in West Michigan to help address these challenges. Alan Headbloom of Headbloom Cross-Cultural Communication combines a background in linguistics (the technical study of language), teaching English as a second language, and extensive experi-ence living and traveling abroad to help for-eign-born professionals communicate with more comfort and accuracy.

When asked why skilled professionals coming from countries with compulsory English language study have this problem, Headbloom explains, “There is a huge dif-ference between studying a foreign language and speaking a foreign language. Ask any American if he or she could go to work every day and produce the same results using their high school Spanish or French. This is espe-cially noticeable in Japan, which has a culture of face-saving and not standing out.

“In language learning, in fact, you mustlook foolish—putting strange sounds in your mouth, taking risks of being wrong, expos-ing your knowledge and performance gaps in front of classmates. This is compounded because Japanese teachers of English often have poor speaking skills in English and may focus on grammar and writing, instead of speaking and listening—a mainstay of inter-actions in the business world.”

It is a practical problem for a company, but it is also an issue for the career development of the individual employee. We all make judg-ments about someone based on their speech, their fluency and their vocabulary. That might not be fair, according to Headbloom.

“If a foreign engineer gives really short explanations to the problem the team is work-ing on, the Americans may think s/he’s not very knowledgeable,” Headbloom said. “In fact, it may be that s/he is working hard at not making a mistake (a preoccupation of many language learners) and so is only putting out short, confidently correct utterances. It may be s/he has only one way to describe the issue, where a native might judge his/her team is not following and then look to paraphrase or give a different example.”

One of the services Alan Headbloom pro-vides is language coaching. This can continue even after an expatriate becomes reason-ably fluent. For example, a Brazilian engi-neer writes him weekly with short questions about slang used in co-worker or subordinate e-mails.

In a case of needing to suspend an employee, he checked with Headbloom to see if his tone was appropriate before sending an e-mail. There are cultural and professional nuances that go far beyond grammar and spelling. Similarly, there are soft benefits that relate to job satisfaction.

“The more colloquial my clients are, the more comfortable they can be at work,” he said. “They understand what their co-work-ers are talking (or joking) about and they can enter the repartee with real-life, appropriate expressions.”

As we have said in other columns, opera-tional excellence is essential to success in the highly competitive global auto industry. Seemingly small things can make a big dif-ference. Understanding how your colleagues think and gaining the maximum benefit of their input is worth some investment. The essence is to equip people to fit in. They need to be girded with the right language tools and the cultural understanding (and “rules”) to be full-fledged participants in their new world.

It does not happen quickly — or automati-cally — but the results are worth their weight in gold.

Melissa Anderson joined the staff of IRN in 1986. Her primary role in the organiza-tion is as the architect of custom research projects that help clients assess the market potential for new products, prioritize cus-tomer targets, understand industry trends, and other facets of strategic marketing.

■ O P I N I O N / A N A L Y S I SAuto FocusBy Melissa AndersonVice President, IRN [email protected]


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See SALE-LEASEBACK on page 13

By ELIJAH BRUMBACK | [email protected]

Commercial real estate brokers say industrial companies look-ing to free up some capital need only to look as far as their own property for one potential source.

That’s because through sale-leaseback agreements with local or out-of-state investor groups, companies can put their real estate to work for them at a time when banks and other institutional lenders are slow to release financing for expan-sions or other needs.

The resurgence of this strategy is spurred primarily by recovering market conditions and by better investor mar-gins in so-called secondary markets like Grand Rapids.

Prior to 2008 and 2009, sale-leaseback agreements were fairly commonplace, but almost vanished from the marketplace when the recession hit, according to indus-try sources. When the bottom fell out of the economy, many companies’ weak balance sheets couldn’t support such a transaction and what cash flow was in place didn’t give buyers much confidence to invest, sources said.

“It used to be a regular component of the market-place,” said Colin Kraay, a commercial broker and invest-ment group leader for Colliers International in Grand Rapids. “Now that the market has bounced back a bit and is more stable, we’re seeing a lot more interest in (sale-leasebacks) because there is so much less risk in these types of deals.”

Investors are looking for safe and stable investments, and West Michigan manufacturers and other businesses have proven to be a good bet for investors with cash on hand, Kraay said.

While an early January report from Brian Long, Grand Valley State University’s director supply chain management research, had the West Michigan industrial economy trending f lat, a preliminarily purchas-ing managers index (PMI) released on Jan. 24 by research outlet Markit put U.S. manufacturing at a 22-month high. The report showed PMI at 56.1, up from 54.0 in December. This is the strongest rate of growth since March 2011, according to the firm.

In the West Michigan industrial market, which is responsible for a large portion of the recent momentum in commercial real estate sales and leas-ing, the remaining inventory of quality space is running thin. This is driv-

ing up prices for space, resulting in companies having a difficult time finding space if they’re looking to relocate or expand.

“The greater perspective is that we have a glut of manufacturing buildings and no demand, but that’s exactly the opposite of what we have. We are out of property,” said Duke Suwyn, president and CEO of West Michigan brokerage for Colliers.

This past year, rates for some indus-trial spaces rose from about $20 per square foot for a typical, run-of-the-mill, 20,000-square-foot industrial build-ing to $40 per square-foot and beyond. Some buildings even garnered more than $60 per square foot, Suwyn said.

“When we get to that, we’re starting to approach new construction,” he said. “Quarter by quarter, rates contin-ued to jump.”

That’s where sale-leaseback agreements started to come back into play, Kraay said. Some strong companies

REAL ESTATE & DEVELOPMENT

reporter’sNOTEBOOK

Elijah Brumback writes about real estate and development, design/build and energy.

616-608-6170 | [email protected]

I t’s time to lock in long-term financing and get debt deals done now.

That ’s the word from ana-lysts and brokers at Colliers International’s annual forecast held Jan. 25 in Grand Rapids.

While interest rates are at historic lows now, Colliers’ Economist K.C. Conway said economic headwinds in the coming years could close the window on cheap debt. Issues with the country’s fiscal health are spurring investment fears nationally, locking up roughly more than $2 trillion of private capital.

“If you’re planning to do a debt deal, get it done this year,” Conway said. “The Fed has sewn just incredible seeds of inflation. Their balance sheet is now 20 percent of our annual GDP in our $15 trillion dollar economy. There is a day of reck-oning for that.”

Conway expects any resolution to happen quickly and abruptly and within the next two to three years, setting up concern for 2014.

Coupled with uncertainties in health care reform and other regulations, Conway said he believes national GDP growth could be constrained by as much as 50 percent.

Regionally, an additional $200 billion to $250 billion a year for the last three years was absent from the West Michigan economy due to these fiscal unknowns, said Paul Isley, chair of economics at Grand Valley State University.

For the meantime, a perfect storm for financing real estate remains as the region is seeing its supply of high-end office and industrial properties diminish.

With the “aggressive” local banks, the national insurance lenders and commercial mort-gage backed securities, it’s not a matter of what’s available, but what options a borrower wants.

“There are so many options that it’s a borrower’s market right now,” said Cathy Brokema, partner and VP of the Cohen Financial office in Grand Rapids. “We are at historically low rates, so really, now is the time to get that capital.”

BUILD-SELL-LEASEIndustrial fi rms seek sale-leaseback agreements to free up capital

“The greater perspective is that we have a glut of manufacturing buildings and no demand, but that’s exactly the opposite of what we have. We are out of property.”

—DUKE SUWYN President and CEO of Colliers International-West Michigan

Suwyn



As the U.S. Green Building Council readies the fourth iteration of its Leadership in Energy and Environmental Design (LEED) rating system and a host of updates to the program, some insiders say the market for green building certifications is primed for new competition.

While the USGBC hopes to address increased technologi-cal processes and new market sectors as well as streamline its

services, industry profes-sionals believe LEED could see some push back from a grassroots level.

“I think 2013 could be the year we see whether or not the USGBC will continue its dominance or we’ll start to see people’s eyes glazing over,” said David Bell, sus-tainability coordinator and senior mechanical engineer

at Progressive AE in Grand Rapids. “I don’t know if it’s a good or bad thing, but there is certainly room in the marketplace for other flavors. Really, it’s all about what is important to build-ing owners.”

While Bell does recognize the marketable value of hav-ing a third-party certification evaluate a building’s sustain-ability and efficiency measures, it’s the design and engineer-ing companies that have to step up and help coach clients in a more tailored way about the benefits of the program.

A comprehensive approach means that clients must go beyond picking out the most efficient light fixtures or installing low-flow toilets — in essence, the low-hanging fruit, Bell said.

“Certainly, there are some base fun-damentals that are all pretty attainable,” Bell said. “However, it’s important to look at what makes the most sense from a life cycle perspective, and that changes depending on the functions of each dif-ferent business.”

On the national level, movements like the Living Buildings Challenge and NetZero are two examples of really aggressive practices being pushed in some regions. Both are expected to challenge the ubiquity of LEED or even Energy Star certifications, as well as call out their strategy and marketplace advantage, sources said.

With the conversation about green building practices get-ting ever more complex, Kris Ford, project manager for Owen-Ames-Kimball Co. and chair of the West Michigan Chapter of the USGBC, maintains LEED still sets the bar for companies’ initial forays into sustainable building design and practices.

With the “Version Four” LEED rating system slated for beta testing through November 2013, Ford said reducing the amount of paperwork and simplifying the reporting process are just small steps in an overall effort to improve the standards, which were last updated in 2009.

“Version four is going to be more robust,” Ford said. “Between June and November, there will be a number of edu-cational programs to introduce people to the changes.”

In collaboration with the USGBC’s Detroit chapter, the West Michigan branch is also hosting a second Green Schools Conference in Lansing in June. The conference is meant to explore how future schools will operate and how sustainable design is implemented within them.

The West Michigan area is a leader in sustainable building at the educational and institutional level, Ford said. Getting more of the commercial sector to follow is a continued chal-lenge, he added.

One expected change under the next LEED iteration is accommodating more information sharing on buildings’ energy usage and the development of better cloud-based data management systems for building metrics, according to some industry watchers. Some experts also forecast the increased usage of solar power systems.

“Energy costs — rising or falling — always affect project design decisions,” said Brian Swem, architect at Lott3Metz

Architecture and president of the American Institute of Architects Grand Rapids. “As costs do rise, we’re looking to incorporate more passive house and zero energy building concepts into our standard design practice. Regardless, the holy grail of the ‘off the grid’ build-ing remains out of reach for the general marketplace.”

With a lot of uncertainty and volatil-ity surrounding electricity prices, Bell said the use of solar power is factoring into the long-term cost equations for some of Progressive AE’s customers.

“We’re seeing great pricing for solar, and with electric rates rising, some peo-ple are saying we’re already at grid par-ity,” he said. “Depending on how you do the math, it’s either here now or it’s coming soon.”

The USGBC has set the groundwork for sustainable building practices, but there are more aggressive voices saying that LEED is just the tip of the iceberg in green design, Bell said.

Swem agreed. “LEED has changed how we’re building buildings in a posi-

tive way and it remains a great place to start, but many real world building applications don’t fit well in the LEED program and ultimately don’t serve the needs of our clients,” Swem said. “LEED will be with us for many years. It is a measuring system that is accepted by both the public and private sectors. It may be used less over the years but it’s going to around for a long time.”

In the development of new buildings, developers used to concern themselves with only the up-front costs of the projects, Bell said. However, as more studies start to show that sustain-able buildings sell and lease for higher dollar amounts, savvy developers are looking at the costs of sustainable buildings from a much more long term perspective, he said.

“LEED helped established this language that wasn’t there before,” Bell said. “LEED is great, but the blinders are off now for people.”

REAL ESTATE & DEVELOPMENT

DESIGN+BUILD

Coverage sponsored by:

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New LEED revision slated as industry remains open to alternative ratingsLEED v4:

“2013 could be the year we see whether or not the USGBC will continue its dominance or we’ll start to see people’s eyes glazing over. I don’t know if it’s a good or bad thing, but there is certainly room in the marketplace for other fl avors. Really, it’s all about what is important to building owners.”

—DAVID BELL Sustainability coordinator and senior

mechanical engineer at Progressive AE

The Lacks Cancer Center at Saint Mary’s Mary’s Health Care is one of the region’s early adopters of LEED standards. However, health care systems today are one of the most progressive industry sectors for LEED construction and retrofitting. COURTESY PHOTO


realized that they could cash in their space and free up some capital, while at the same time lock into a long-term fixed-rate lease and reduce their tax liability, he said. Those benefits have been enough to convince a growing number of companies that owning their own facilities is not the only solution, he said.

While the practice hasn’t become wide-spread just yet, Kraay said some strategic companies see sale-leaseback agreements as just one more option in the cor-porate strategy playbook.

“Historically, if you’re a man-ufacturer you own your own building. That’s just been the kind of West Michigan conserva-tive mentality of long-term own-ership,” Kraay said. “The reality is, is when a lot of these compa-nies see growth opportunities, they can’t quite come up with enough capital to make that next jump. One of ways they can open up their business to grow is to sell the real estate and take what equity they get out of it to do an expansion, modernize facilities or hire people — whatever you need to do.”

On the buyer’s side, Grand Rapids hasn’t necessarily been on radar to the types of investors who are interested in lean, advanced manufacturing facilities, Kraay said. However, as West Michigan’s recovery continues to garner attention outside the region, many investors have started to give the area a second look as they search for emerging growth opportunities.

Another factor contributing to a return to sale-leaseback agreements: an aging

population of business owners looking for exit strategies and estate planning, Kraay said.

So far, Kraay and others in the Colliers office have worked with buyers from Boston, Chicago, California, Tennessee and Ohio. In the fourth quarter of 2012, the Grand Rapids office closed on more than $30 million in investment real estate, which includes retail, office and industrial. For the first quarter of 2013, Kraay said the firm has

roughly more than $35 million in investment real estate sales pending.

“That’s almost a return to where we were at the peak of the marketplace,” he said. “As far deal velocity and momen-tum, it’s pretty good. Those are pretty big numbers for West Michigan.”

For greater Grand Rapids as a whole, Kraay said the area could probably expect to see about $100 million in investment deals for the last two quarters.

Looking ahead for what’s to come in the market this year, Suwyn sees developers and companies looking at new industrial construction. While the gap between the cost of new construction and current inven-tory isn’t at parity, Suwyn predicts there will be a tipping point this year.

“Conversation is starting to occur on what do we build, when do we build it and where do we build it,” he said. “Has anybody really pulled the trigger yet? No. Do I expect someone to pull the trigger this year? Yes. There is no question we’ll see it.”

SALE-LEASEBACKContinued from page 11

RELATED STORY: Metro sells cancer center to NYC-based REIT. PAGE 1


ECONOMIC DEVELOPMENT


MICHIGAN — If nothing else, Gov. Rick Snyder’s focus on improving funding for Michigan’s aging roads and bridges positions the issue toward the top of the agenda in Lansing.

While various ideas circulate on how to gen-erate the $1.2 billion annually the governor says is needed to improve the state’s deteriorating roads, parties with a stake in the issue say they welcome the attention that it’s finally getting.

“We need a good, serious discussion on it because too much of our economy and qual-ity of life is dependent on the quality of trans-portation,” said John Weiss, executive director of the Grand Valley Metro Council in Grand Rapids that consists of municipalities in Kent and Ottawa counties.

Gov. Snyder made road funding a top prior-ity in his recent State of the State address. The issue has also received increased focus from business advocates across the state.

Business Leaders for Michigan, a coalition of top CEOs and university presidents, views improved roads funding as a top priority.

“There are two things that you can invest in as a government that will have the best impact

on growth, and that’s people and infrastruc-ture. With infrastructure, you need to kind of keep yourself connected in the whole economy. That’s why we’re fully supportive of the gover-nor’s call for transportation funding,” Business Leaders for Michigan CEO Doug Rothwell told MiBiz. “We are agnostic in terms of what that funding system or structure looks like. As long as it solves the problem for a number of years and we’re not back here in three or four years having the same conversation, we’d probably be supportive of almost any reasonable plan that the legislature may come up with.”

Sixty-five percent of Michigan’s roads and bridges are now in “good” or “fair” condition, according to the Michigan Department of Transportation. Under the present funding level, that will fall to 35 percent by the end of the decade and cost the state millions more to address in the years ahead.

“That is not going to be contributing to a positive business environment,” said Andy Johnston, vice president of government affairs at the Grand Rapids Area Chamber of Commerce.

A good road system is particularly impor-tant to economic development and the state’s $17 billion tourism industry, Johnston said.

By MIKE BRENNAN | [email protected]

GRAND RAPIDS — Michigan needs to spend another $1 billion on higher education to produce graduates with the advanced skills needed for the 21st century economy, contends Business Leaders for Michigan.

But the state also needs to spend more money on early childhood education and on the state’s crum-bling infrastructure.

According to statistics provided by the business group, state spending in 2001 accounted for around 50 per-cent of Michigan university revenues. In the current fiscal year, it accounts for less than 25 percent. At the same time, tuition and fees went from about 45 percent to more than 70 per-cent of revenue to universities. State

spending per college student fell by 35 percent over the past decade, said Doug Rothwell, president and CEO of Business Leaders for Michigan.

In an editorial board meeting with MiBiz, Rothwell said increased state funding would help ease tuition increases at the state’s 15 public four-year universities and take the financial pressure off par-ents now forced to cover the state’s funding shortfalls.

“We’ve shifted the burden to par-ents from government,” he said. “We need more kids in the state to get a higher education.”

Higher emphasis should be placed on producing the so-called STEM degrees — science, technology, engi-neering and mathematics — as well as providing well-rounded educa-tions to produce workers with criti-cal thinking skills. But the state also

needs to dedicate at least 1 percent of the K-12 budget on early childhood education, Rothwell said, to better prepare children for grade school.

In the Michigan Turnaround Plan developed by the group in 2009, Michigan has made great progress on the first three pillars, said Business Leaders For Michigan board mem-ber and former Perrigo Chairman Michael Jandernoa. Those pil-lars include “responsibly manage finances,” “effectively and efficiently provide public services,” and “create a competitive business climate.” On the fourth pillar, “strategically invest for future growth,” much work needs to be done, Jandernoa said.

“We’ve got Michigan back in the game,” he said. “Step four is invest in people and infrastructure.”

By 2020, Michigan will need 900,000 workers with more than a

high school degree, Rothwell said. While the state has thousands of open, unfilled positions, at least 80 percent of them require a minimum of an associate degree. Those jobs include registered nurses, accoun-tants and auditors, industrial engi-neers, computer systems analysts, management analysts and more.

Ideally, Rothwell said, the state would add $100 million a year for the next 10 years to higher education funding. Getting this money could come from improving state rev-enues and reducing expenditures, particularly in the Department of Corrections. Currently the state spends 10 times more to house pris-oners each year, $46,000, than it does to help students get a college education, $4,600.

While the current state budget adds $36 million in one-time money

to the universities if they show cer-tain results, the money does not provide universities with the abil-ity to plan or restrain tuition costs, Rothwell said. He said Michigan universities are very efficient in comparison to peer institutions, but they have not been able to make up for the massive state cuts.

Another way to add more money to university budgets would be to attract more out-of-state students, Rothwell said. If Michigan universi-ties attracted the same percentage of non-resident students as other states, it would mean an additional $200 million to the universities and statewide as much as another $1 bil-lion in overall spending.

Mike Brennan is Senior Technology Writer at MiBiz. His day job is editor and publisher of MITechNews.com.

Discussion in Lansing shifts to infrastructure Snyder proposes increased fees to fi x state’s aging roads In the 2013 Grand Rapids Area Chamber

of Commerce government affairs survey, the condition of the state’s roads and bridges ranked eighth among the issues that respond-ing members viewed as important to their business. Among transportation and infra-structure issues alone, adequate funding that keeps infrastructure in “good” or “fair” condi-tion rated at the top.

While business groups like the Grand Rapids Chamber typically loathe any tax increases, Johnston takes the view of Gov. Snyder: The roads need attention and the cost is only going to increase if left unaddressed.

“It absolutely is an instance to save money over the long term,” Johnston said.

While there’s plenty of consensus that Michigan needs to fix its road system, there’s not nearly as much agreement over how to do it. There’s also an anti-tax sentiment within his own party that the Republican governor will have to overcome. Then there are the Democrats, who are not in any mood to assist Gov. Snyder, especially after the passage of right-to-work leg-islation just prior to the end of 2012.

In his State of the State address last month, Gov. Snyder proposed generating $12 bil-lion over 10 years by shifting the gas tax from the retail to the wholesale level, increasing the vehicle registration fee for cars and light trucks by an average of about $120 per vehicle,

and allowing an optional local or regional reg-istration fee.

Prior to the governor’s State of the State address, the Michigan office of the National Federation of Independent Businesses touted results of a 2012 survey that indicate its mem-bers largely oppose increased taxes to pay for road improvements.

Sixty-eight percent of respondents to the NFIB survey said they would not support a higher gas tax at the retail level, 60 percent would not back transitioning the tax to the wholesale level, and 75 percent would not support increasing driver’s license and vehi-cle registration fees.

Forty-nine percent indicated support for allowing local governments to raise money for roads through a public vote and 44 percent oppose it. Half of respondents opposed elimi-nating the gas tax and raising the state sales tax by a cent, while 35 percent supported the mea-sure, according to results of the NFIB survey.

“While we recognize the need for good roads and adequate funding, this is a difficult time for tax and fee increases on Michigan small business job providers. NFIB small busi-ness owners have made it clear that they are not supportive of a motor fuels tax increase or a hike in vehicle registration fees,” states the NFIB’s recently released 2013 le gislative agenda.

Business Leaders for Michigan pushes for education funding


ENERGY


ALLENDALE — As Grand Valley State University continues push-ing the sustainability envelope, facilities engineers at the univer-sity expect to see larger upfront costs and longer payback periods for future energy efficiency projects.

In November last year, the university received an $116,280 rebate incentive check from Consumers Energy after installing two new high-efficiency cooling systems at its Central Utilities Building. The incentives are offered under the Clean, Renewable, and Efficient Energy Act of 2008.

With a total investment cost of around $1.5 million, the improve-ments are expected to save Grand Valley 451,400 kilowatt-hours of electricity annually.

But the university fully expects the up-front costs will get more expensive as it picks off some of the simpler projects, such as replacing dated lighting fixtures with more efficient LED products.

“We’ve been very aggressive in trying to find energy-saving proj-ects,” said Terry Tahl, a facilities engineer for GVSU. “It’s getting harder and harder to find projects because we’ve picked all the low-hanging fruit.”

The current annual electricity bill for the university is around $77,000, Tahl said. While the university has recouped roughly $312,000 over the last four years, it took the first two years to break even on its investments.

Since 2009, the university either completed or has underway 33 projects with the potential to save Grand Valley more than 2.6 million kilowatt-hours of electricity annually.

Many of the projects early on had around a four-year payback period, but Tahl said the outlook for further improvements isn’t as lucrative, as he is expecting about an 8-percent increase in meter fees next year.

Since the Consumers programs are funded through meter fees and a program surcharge participants pay, Tahl sees more research and engineering work that will need to take place on the front end of any future projects.

“In talking with some other facilities managers at (Michigan State University) and (the University of Michigan), we’re looking at more eight- to 10-year paybacks when it comes to efficiency projects,” he said.

In the short term, GVSU is targeting a number of lighting proj-ects as well as installing variable frequency drives that control motor speeds for water pumps and similar mechanisms. Projects related to heat recovery could also be in the offing.

“We’ve probably dug a little deeper than most to recoup our mon-ies,” Tahl said. “We’re ahead of the game this year, but we’ll be digging and scratching to find projects and available funds.”

Consumers Energy’s programs are set to run through 2014, but a

representative from the utility said they would have to wait and assess whether or not it will continue to offer the rebates after that.

The utility has more than 150 energy efficiency incentive and rebate programs. In the third quarter of 2012, Consumers divvied out nearly $3.7 million in incentives to commercial and industrial cus-tomers. The total number of projects is just shy of 1,000.

With 959 program participants, Consumers estimates that the amount of energy saved could serve more than 5,000 residential elec-tric customers and nearly 800 residential natural gas customers for a year.

“The cheapest kilowatt is the one that is not produced,” said Roger Morgenstren, senior public information director for Consumers Energy. “Efficiency is where we are putting a lot of our focus right now.”

By offering incentives for efficiency, Consumers Energy can to some extent defer larger capital investments. The steps give the utility more wiggle room in planning for future generation needs, Morgenstern said.

“It’s important to recognize the impact of energy efficiency,” Consumers Energy CEO John Russell told MiBiz in December. “Due to the effectiveness of our energy efficiency programs, we’ve seen elec-tric sales growth reduced by 40 percent over the past two years. We hope all our customers take advantage of energy efficiency offerings and savings in 2013.”

Right now, the energy provider is in the process of assembling land and securing permitting for its Cross Winds Energy Park, a $250 mil-lion, 150-megawatt wind farm planned for Tuscola County. The proj-ect is expected to reach commercial operation by the end 2015.

Stretching the energy effi ciency dollarGrand Valley looking at longer investment payback periods

Expected to open in the fall of 2013, GVSU’s new $65 million Mary Idema Pew library is shooting for LEED Platinum certification - a first for the Allendale campus. The 150,000-square-foot facility designed by Texas-based SHW Group LLP focuses on user-guided design principles and emphasizes sustainable building concepts, including a green roof and natural lighting. COURTESY PHOTO

Downtown, GVSU’s new $40 million Seidman College of Business is another sustainability focused project pursuing LEED Silver certification. COURTESY PHOTO


HEALTH BIZ


MICHIGAN — A new report suggests that some of the fears about expanding Medicaid in Michigan seem to be misguided.

Survey results from an Ann Arbor health care research group dispel the notion that if Michigan expands Medicaid, then the tens of thousands of people receiving coverage would have trouble getting in to see a doctor because of the influx of patients.

How that may play into any decision on the expansion question is unknown as Gov. Rick Snyder prepares to offer a recommendation to legislators this week when he presents his budget proposal for the state’s 2013-14 fiscal year.

“At this point, the governor and his team are closely analyzing the impacts and ramifications

Report: Michigan docs able to take on patients if Medicaid expandsof any decision. They are working hard to study and evaluate the options that will help determine the best course of action that provides protection and security for Michiganders,” Kurt Weiss, a spokesperson for the governor, stated in an email to MiBiz. “It’s not a decision the governor feels can be made immediately or lightly.”

Weiss declined to comment specifically on the survey data from the Center for Healthcare Research & Transformation “because there are many studies and many sources of data the gov-ernor is looking at.” Capacity is just one of many criteria Gov. Snyder is weighing in his decision, Weiss said.

“He won’t be basing his decision on findings from one group or study. The governor wants to be sure that if we do a Medicaid expansion, that sufficient capacity exists in the physician and insurance market to support the large influx of

individuals. He wants this to result in individu-als getting a primary care physician who is the primary point person for care, which helps with preventive care and a healthier population with better health outcomes,” Weiss stated. “In short, the governor wants to make sure we’re actually improving health outcomes and not just paying for more emergency room visits.”

The Center for Healthcare Research & Transformation survey results indicate that most doctors in Michigan have the ability to take more patients into their practices and that they would accept new Medicaid patients. The data counters a key question about expanding Medicaid: whether a physician shortage leaves the system unable to handle the thousands of people in Michigan who would gain coverage and have a better financial ability to access care.

“Our data is telling us that we will indeed have

enough physicians to take care of patients if we do expand Medicaid,” said Marianne Udow-Phillips, director of the Center for Healthcare Research & Transformation.

The same goes for people who would get bet-ter access coverage from private health plans when provisions of the federal Affordable Care Act kick in Jan. 1 of next year.

The results challenge not only a wide-held notion about Medicaid expansion but also the center’s own assumption as well.

“All of this surprised us,” Udow-Phillips said. “We did not expect that we would see such a high

rate of physicians saying that they were really able to expand their practices, and particularly that they were ready to take more Medicaid patients. This part of the survey was quite sur-prising, I have to say.

“It definitely was not what we expected. We expected much lower numbers.”

In the random survey late last year of 1,500 physicians, conducted with the Child Health Evaluation and Research Unit at the University of Michigan, 81 percent of primary-care doc-tors said they expect to expand their practice to accept newly insured patients in 2014. Ninety percent of those doctors also indicated they would accept new Medicaid patients, according to survey results.

Even among doctors who currently do not accept new Medicaid patients, nearly nine of 10 said they would accept those patients if the state expands the program.

In West Michigan, a lower percentage of phy-sicians — 71 percent in Kalamazoo County, 61 percent in Ottawa County and 56 percent in Kent County — said they expect to have capacity for new Medicaid patients.

The survey results can help to settle doubts about whether the health care system can han-dle the influx of patients expected under the Affordable Care Act, Udow-Phillips said.

“We hope it answers the fundamental ques-tion,” she said.

An earlier paper issued in October by the Center for Healthcare Research & Transformation concluded that expanding Medicaid under the Affordable Care Act makes economic sense for the state. It would save an estimated $840 million to $1.4 billion over a decade as more than 600,000 people gain access to health coverage by 2020.

Under the health reform law, the federal gov-ernment would cover 100 percent of the expan-sion cost for the first three years and 90 percent beginning in 2017.

When the Affordable Care Act initially passed, it required states to expand Medicaid eligibil-ity. The decision last June by the U.S. Supreme Court upheld the federal health care law but struck down provisions that would penalize states if they fail to expand eligibility. That left states the option of expanding Medicaid, a pros-pect that has strong political opposition among Republicans who oppose the Affordable Care Act as a whole.

While the non-partisan Center for Healthcare Research & Transformation does not advocate or lobby for policy positions, Udow-Phillips believes the October study and the new survey data combined “does sort of lead to a conclusion that’s hard to avoid.”

“With those two pieces of data, we think poli-cymakers — if they are making decisions based on data — ought to be saying, ‘We should expand Medicaid in Michigan,’” she said. “The data should speak for itself.”

Enabling physicians to absorb the new patient volume is a decline in business resulting from the economic downturn. That combines with increased efficiency through changes in practices that allow for higher patient caseloads, including the adoption of the patient-centered medical home model, deployment of electronic health records and the greater use of physician assistants and nurse practitioners.

“Those changes are enabling them to take more patients,” Udow-Phillips said.


What is the overall state of philanthropy in West Michigan? What is the role played by the Johnson Center as well as other organizations or individuals?

I think the state is very good. We are consis-tently one of the most generous communities in terms of our time and talent. We recently did a West Michigan Charitable Giving report that kind of verified that. That’s something we’re planning to do on an annual basis. I know some others nationally are looking at those reports, and West Michigan does really well, overall. So that’s the good news.

And the bad news?

The challenge is that we get a lot of budget con-straints. Nonprofits are really struggling for a couple of reasons. One is because they’re being asked to do more. They’re being asked to serve more people. They’re being asked to serve more efficiently. They’re being asked to use more data. And at the same, you have leadership suc-cession happening. There are a lot of challenges for the sector, but there’s a lot of really nice and innovative things happening in the sector as well.

What do you see as some of those innovations?

There’s a lot of energy around Collective Impact Initiatives, place-based strategies where com-munities are coming together and looking at where the most need is and kind of wrapping a whole community of resources around those areas. Larger collective impact initiatives are also exciting. Kent County is engaging right now in that process. Another trend right now is impact investing. We are still learning more about that and what that looks like from the perspective of a foundation, and also what that looks like from the perspective of a social enterprise.

Can you explain the concept of impact investing?

There’s a lot of different versions but basically from the side of a foundation, it’s using funds in a way that can give them a better return on their investments, but also do good. So you invest in a portfolio that is going to be mixed. Some are going to be for-profits, some are nonprofits. The idea is that you’re using your capital to help this entity grow because you believe in their mis-sion. It’s also called mission-driven investing. The expectation is that you’re getting a return. Now that return doesn’t have to be 8 percent or 10 percent. It could 1 percent. But you’re expect-ing that you will have some return on this from your portfolio.

How do you define philanthropy?

The big definition of philanthropy that we use is “private action for public good.” So by definition, it is going to be uneven because it

is private action, and people will act in accor-dance to their means and capabilities, so it doesn’t always appear uniform and it can be transparent.

Where do you see philanthropy at work in the community at the present?

If you look around West Michigan, you see a $40 million business school [GVSU’s Seidman School of Business] that is driven by philan-thropy. You see initiatives to reopen the rapids [in the Grand River]. That is spurred by philan-thropy and government together. There are a lot of things that we don’t label as philanthropy. So the first part is understanding what is philan-thropy and how it is impacting our community.

How does the Johnson Center play a role in that community?

For organizations like us, what we try and do is improve the sector. That’s really our goal. By improving the sector, we improve communi-ties. We try to bring in the latest trainings, the latest knowledge. We try to work with people side by side to improve their work. We try to have honest dialogue with people whose work may not be up to par. We try to work with foun-dations on their strategies.

One thing I talked about in the blog is repu-tation and to try and always be above the fray and giving out good grants. And sometimes making bad grants is a good thing. You learn a lot. So making grants that aren’t successful and then telling people about it so that everyone else can learn from those lessons is an impor-tant part of it, too.

In that same blog post one of your resolutions is that philanthropy needs to be better at “not pretending that we always know what we’re doing.” Can you explain that?

We have theories of change and philanthropy is really good at seeking out scholars and experts in the field and getting experts’ opinions. We are good at pulling up research. But a lot of that is tied to place, tied to people. So when you adopt those philosophies for your foundation, there is some experimentation going on. We don’t know that it’s going to work 100 percent. So it’s important to be open to that.

Nothing is ever certain, right?

We have a theory of change, we think this will work, it’s worked in other places, we have evi-dence that this will work, but we are not 100 percent. We think it’s a reasonable idea and we should try it here. I think that’s the approach we should take as opposed to saying, ‘This is absolute and this is 100 percent’ because as wonderful as our philanthropy community is in this area, we still have a lot of disproportion-ate data, a lot of disproportionate indicators to show that poverty is increasing, that people are

struggling even more. Now, it’s not philanthro-py’s fault. Philanthropy is one piece of it. But it does mean that we need to be open to look at what we are doing.

In this community, obviously we have a lot of big name philanthropic donors. Some have said that makes this area unique in terms of its philanthropy. How do you view this region? How is Grand Rapids compared to the east side of the state, or even on a national level?

We are a concentrated area of wealth, which makes us unique, (although) there are other places that have a similar look. I think the com-mitment to the community that our large foun-dations and donors have had is a unique piece. That commitment is what has made this area what it is. … Overall, we’ve been able to move things through, where I know on the east side of the state there has been troubles and it’s nice to see it coming together now.

How does that translate into future stability within the sector?

Going forward, I do think that is going to be a challenge. Our Frey Chair for Family Philanthropy, Dr. Michael Moody, is going to release a report on next-generation donors. In that report, there will be some highlights about things we should be paying attention to as sec-ond- and third-generation family members begin to take control of foundations and the giving. It’s not necessarily a bad thing, but the next generation does have a different perspec-tive of philanthropy.

Some might contend that philanthropy is just wealthy people wanting to put their names on buildings. How do you respond to that contention?

We don’t always recognize and label philan-thropy. We do see the buildings, and it’s easy to call attention to the names on the buildings or the plaques that are there, but we don’t see the person that is volunteering every day at the Senior Citizen’s Club or at a Boy’s and Girl’s Club or the volunteers that are calling United Way. That’s all philanthropy as well, and those things are integral to our community. Those things are really the foundation of the commu-nity. It’s the individual giving their $5, their $10. Most philanthropy is individual giving. Those are the pieces I would focus on. The names on the building are nice. It’s wonderful that peo-ple have the ability to do that, we should cel-ebrate it. But we should also celebrate all of philanthropy.

Interview conducted and condensed by Nick Manes.

Photo by Elijah Brumback.

Dr. James EdwardsGVSU Dorothy Johnson Center for Philanthropy

Q&A

It is certainly fair to say that West Michigan has had its share of generous philanthropists.

Names like DeVos, Van Andel, Meijer and Cook adorn buildings all over the region, as well as the donor lists of many local cultural organizations.

But those recognizable names make up just a small portion of what is considered philanthropy, said Dr. James Edwards, executive director of the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University.

In a January blog post entitled “Philanthropy 2013: Hopes for the Sector,” Edwards laid out his resolutions for the year. He sat down with MiBiz to give an overall pulse check on philanthropy in West Michigan.

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Foundation continue to make a difference.


By JOE BOOMGAARD | [email protected]

It turns out that fun-to-drive cars, 500-horsepower engines and respectable fuel economy don’t have to be mutually exclusive.

Over the past few years, the automotive industry seemed to be telling a feel-good product story as the auto-makers eschewed their once proud labels as “car compa-

nies” and instead anointed themselves as purveyors of sus-tainable mobility. Green was king, even if the hardcore electric vehicles and expensive hybrid technology appealed only to a small niche of customers.

But in a marked pivot at this year’s North American International Auto Show (NAIAS), the automakers seemed to talk less about hybrids, electrics and their ilk. No, they’re not regressing on the issue of more efficient transportation. Rather, they’re showing that they are paying more attention to the cars, trucks and SUVs that the general public wants to buy — as well as the vehicles aimed squarely at the hearts of enthusiasts. In short, they’re using the best technology avail-able to make the cars people buy simultaneously fun, efficient and smart forms of transportation.

“In the past years, you’ve seen a flurry of electric vehicles and hybrids, and there was a little bit of that, but nowhere near the preponderance as we’ve seen in the past. There was more of the focus on the vehicles themselves and not the propul-

sion system,” said Mike Wall, a Grand Rapids-based automo-tive analyst at IHS Automotive. “It doesn’t mean that (EVs and hybrids are) going away or that they’re not important. They’re critically important, especially in the longer run, but I think we may have overshot a bit or got over-enthused. This maybe was a realignment across the board.”

The shift was also noticed by Marc Noordeloos, manag-ing director of Grand Rapids-based Fox Motorsports and a freelance automotive journal-ist. A self-professed enthusiast and “car guy” with an interest in performance cars and mid-range to high-end vehicles, Noordeloos said the prevalence

of cars with more than 500 horsepower — some with available all-wheel drive — and a full warranty “blew my mind.”

He cited examples including the Audi RS7, BMW M6 Gran Coupe and Mercedes-Benz E63 AMG, which all debuted in Detroit.

“When I was a kid, I couldn’t imagine having a car with 500 horsepower and luxury and fuel economy to boot,” he said. “What I like is that they’re building those cars and they do get better fuel economy than the models they’re replacing. It’s not just marketing. I think we’re seeing known technology — rather than groundbreaking technology — being developed to improve fuel economy to a good level. We need to do all that we can with the technology we have now.”

(AND THE PLANET, TOO)

FOCUS

2013 NORTH AMERICANINTERNATIONAL AUTO SHOW RECAP

GOOD FOR GEARHEADS

Noordeloos’ point: The vehicles that automakers brought to the Detroit auto show focused more on advanced iterations of existing and familiar technology — more usage of direct injec-tion, automatic transmissions with up to 9-speed gearboxes, the use of lightweight materials — to reduce fuel usage, versus completely new and untested automotive systems.

“These are more practical vehicles,” IHS analyst Wall said of this year’s show.

The analyst said he saw three main themes for this year’s NAIAS: “a redesigned icon with the Corvette, the rise of the pickup truck and the healthy dose of luxury unveilings.”

AMERICANA REBORN

As one of the all-American automotive icons, the new Corvette was met with an infectious anticipation in the days and months leading up to its Detroit unveiling. (The fever continued even after the debut, as some attendees of the world premier were selling their free Corvette press materials online for a going rate of $400 to nearly $700.)

Except to the cadre of unyielding Corvette enthusiasts who are loath to accept even the smallest of changes — square tail lamps, for example — the overwhelming consensus was that GM’s design team struck a good balance of appeasing the Corvette fan base while also evolving the sports car into a more globally competitive package.

The new Corvette Stingray features a revised V8 powertrain with direct injection and cylinder deactivation, an available 7-speed manual gearbox, and lightweight materials through-out, including an all-aluminum frame and carbon fiber body panels even on the base models.

The more angular design and much-improved interior was a step along a path to position the Corvette and the Chevrolet brand on a global scale, Wall said.

“That does not mean they’re going to sell a lot of these Corvettes globally — not by any stretch — but what it does is it starts to change that Chevy image a bit,” he said. “It even starts to change it a little bit here in the States. When you see that vehicle, there’s that certain core buyer you may think of with a Corvette of yore. It’s going to tend to skew a little bit older, folks that are tending to respond to the heritage side of the Corvette. This attempts to start to bring that average age down and bring more youthful buyers into the dealerships.”

Noordeloos agreed. “I think they struck a good balance between not pushing

away present Corvette buyers but attracting younger people that might like a Nissan GT-R,” he said. “I like the direction it’s going.”

Now the challenge for Chevrolet and GM comes down to whether or not the company can strengthen the rest of its vehi-cle lineup to take advantage of the attention the new Corvette will attract, Wall said.

“This will be a halo car that will bring people in all day long, but you want them to (at least) leave with a different car,” he said.

TOW WITH LUXURY

The 2013 NAIAS was destined to be the “Corvette Auto Show” right up to the point when Ford took the wraps off its Atlas concept pickup truck, which offers a preview for the direction Ford plans to take the next generation of its best-selling F-150 pickup.

As Road & Track described it, the surprise unveiling of the Ford Atlas caused “the new GM pickups (to) become a footnote at their hometown coming-out party.”

Compared to GM’s design evolution with its 2014 Chevrolet Silverado/GMC Sierra pickups, Ford’s Atlas concept — with its active aerodynamic elements and integrated roof cargo hold — was more of a leap forward in terms of styling and technology.

While Noordeloos praised Ford’s Atlas concept, he said GM’s 2014 redesign of the Chevrolet Silverado and GMC Sierra was much more “understated” and aimed at “the mainstream truck buyer, while Ford and Dodge look at the advanced truck buyer.”

All three Detroit pickup platforms are backed with more fuel-efficient powertrains and clearly the trend is toward more plush, car-like interiors. Pickups are, in essence, becoming luxury cars that tow, Noordeloos said.

Wall from IHS said automakers have to constantly refresh their interiors and add technology to all their vehicles, includ-ing trucks, to keep them competitive. After all, that’s where owners spend most of their time: on the inside.

General Motors brought back the historic Stingray name for the 2014 Corvette. The all-new American sports car features an all-aluminum frame structure, several lightweight carbon fiber body panels and roof, a revised and more efficient V8 powertrain with an available 7-speed manual transmission, and a fully upgraded interior. PHOTO: JOE BOOMGAARD

The Ford Atlas concept likely hints at the styling and direction of the next-generation Ford F-150. The truck, which came as a surprise to many at the 2013 NAIAS, uses many active aerodynamic features and an updated range of engines to achieve better fuel economy. PHOTO: JOE BOOMGAARD

2013 NAIAS AT A GLANCE■ All-new Corvette

‘halo car’ could provide GM an overall bump in interest.

■ Ford’s Atlas pickup concept should give GM and Chrysler some heartburn.

■ An improving economy puts premium and luxury cars in the spotlight.


“A typical buyer of a Silverado or Sierra, or of a pickup truck in general, I don’t know that they’re going to be signifi-cantly put off by the evolutionary redesign. The interior is an improvement. It’s a wickedly competitive segment. Each of the Detroit Three has strong offerings,” Wall said. “All three of the Detroit Three had pickups at the forefront. The Ram won (North American) Truck of the Year, you have the new Silverado and Sierra for GM, and Ford wasn’t going to be outdone with their Atlas concept truck.”

Because of their large production runs, pickup trucks are very important, profitable vehicles for the automakers, which explains why the companies continuously refresh their prod-uct offerings, he said. Moreover, with housing starts on the rebound and an aging existing fleet of trucks on the road, truck sales are projected to increase at a higher rate than the rest of the light vehicle market. (See Stability returns to auto outlook, page 4.)

SUVs were also back at this year’s NAIAS. Volkswagen revealed its Cross Blue and Cross Coupe SUVs, while Honda showed its small Urban SUV Concept. Nissan also revealed its mid-size Resonance SUV concept, a nod to what the replace-ment for the aging Murano could look like.

As well, Chrysler showed that it was committed to keep-ing its Jeep offerings up-to-date with a more up-market driven refreshing of its Grand Cherokee, which just launched in 2011. The SUV features an updated exterior and interior, as well as an available new 3.0-liter diesel engine and stan-dard 8-speed automatic transmission with an Eco Mode to improve fuel economy across the range of V6 and V8 powertrains.

Buyers of commercial vehicles should also note that Ford launched its new European-engineered Transit and Transit Connect vans, the company’s first new platform in the van market in decades, which come in varying roof heights and lengths, as well as with a choice of EcoBoost gasoline or diesel powertrains.

DELUXE DELIGHT

Opposite the showroom floor from the utilitarian trucks and vans, automakers also debuted many new models in the pre-mium and luxury segment.

New launches included the Mercedes-Benz E-Class fam-ily, the BMW 4-Series, Lincoln MKC, Infiniti Q50, Acura MDX, Lexus IS and the Cadillac ELR. Even Hyundai dipped its toes further into the luxury segment with its up-market HCD-14 concept.

Those who prefer an Italian flair to their luxury sedan also have a new option: the new Maserati Quattroporte, now with a turbocharged range of engines: the 410-horsepower V6 with available all-wheel drive or a 530-horsepower V8.

“There were just a ton of luxury offerings,” said Wall. Long the domain of the German Three — Audi, BMW and

Mercedes — more companies are turning their attention to the lucrative segment, often by sharing platforms among lower-end and premium vehicles. That way, they can eke even more profitability out of the R&D and engineering that goes into platform development, Noordeloos said.

In Detroit, Noordeloos talked to Rolf Frech, the head of engineering for Bentley, about the British luxury brand’s new SUV, which it previewed last year with the EXP 9F concept. By tapping into Bentley’s corporate parent, Volkswagen Group, the company can start with the bones of the latest platform shared by the Porsche Cayenne, Audi Q7 and Volkswagen Touareg, “throw in some wood and styling, and you’ve got a Bentley,” Noordeloos said.

“That’s how companies can get economies of scale,” he said. “If it’s sophisticated enough and as long as the mainstream journalists don’t make a big stink, I think it will work. ”

REINVENTION AT WHAT COST?

On the other hand, both domestic luxury brand stalwarts, Cadillac and Lincoln, are still trying to find their way for-ward by attracting new buyers while not alienating a clien-tele that still skews mostly to the older end of the spectrum. Some of their customers still appreciate the big beige barges of the 1980s and 1990s, far cries from what younger drivers expect, Noordeloos said. In trying to broaden their reach with European-inspired designs and sporting intentions, they might end up isolating some of their long-time custom-ers, he said.

Cadillac, for example, last year launched both the ATS and the XTS, two very different cars with very different aspira-tions. With the 2013 North American Car of the Year-winning ATS, engineers at Cadillac aimed squarely at the BMW 3-Series crowd with nearly identical dimensions and similar rear-wheel drive architecture. However, the front- or all-wheel drive XTS fills a spot the older generation of Cadillac buyers can easily identify with.

But even if GM was to follow the model of brand reinven-tion it shepherded with Buick, it needs to flesh out the Cadillac portfolio across more segments, Wall said. Wall noted that the new range-extended plug-in hybrid Cadillac ELR, based on the Chevrolet Volt architecture, will “certainly draw higher up than the average income buyer,” but the vehicle “will be low volume.”

“Again, it’s about fleshing out that Cadillac brand. I think to that extent, it goes a long way to showing the design scheme, the design format of the vehicle itself,” he said.

The same is true for Ford with Lincoln, which, by almost all accounts, has been languishing for years in trying to find its way. The newly rebranded Lincoln Motor Company followed up its MKS sedan from last year with the MKC concept SUV based off the Ford Escape platform.

The concept “looked great and is a great step forward” for the brand, Noordeloos said.

“Both Cadillac and Lincoln face the interesting decision of how much do they try to hold on to their old customer that’s aging and how much do they try to be like an American Audi

and BMW and Mercedes,” he said. “I think they’d do better to look to Mercedes.”

But even emulating the Germans is not a sure bet any-more, Noodeloos said. As some of the brands adopt “extro-verted styling” to appeal to the Middle Eastern and Chinese markets, they may wind up putting off American customers, he said.

“I think a lot of the West Michigan clientele likes subtle, classy design,” Noordeloos said. “Some of the way design is going could probably be a little polarizing. A lot of it is overly aggressive, but some people like that.”

THE FUN RETURNS

While it’s typical auto show hyperbole to say the cars were the stars, at this year’s NAIAS, one could make that case. As Wall from IHS Automotive said, the automakers really seemed to focus on showing their cars and not any groundbreaking pro-pulsion systems or technology — aside from Hyundai’s hand gesture-sensing controls, perhaps.

The general sense was that the 2013 NAIAS was a more mature show with the automakers again ready to step back out into the spotlight.

“You’d be hard pressed not walk around with a smile on your face with all these vehicles and these unveilings,” Wall said. “There wasn’t necessarily an arrogance to it all, by any means. But there was at least a little more confidence to it. That was great to see.”

For Noordeloos, this year’s show was a testament to how far the industry has come from the brink of oblivion. It’s back on firmer footing now and ready to compete and inspire buyers to open their wallets, he said.

“I will never forget the 2010 show. When I walked through the GM stand, it was just like a carpeted area with cars,” Noordeloos said. “For me, 2010 was the bottom, and it’s gotten better since then. And now in 2013, the show is back into the groove of auto-makers being more comfortable showing off and being proud of their direction and going forward. They’re bringing back some of the fun of buying cars from years ago.”

As the general economy improves, more buyers are in a position to consider luxury and premium vehicles, such as the Audi RS7. Audi matched the gorgeous four-door coupe aesthetics found on the A7 with a more aggressive and sportier powertrain. The 189-mph, 560-horsepower, all-wheel-drive hatchback that can power from 0-60 mph in about 3.7 seconds is expected to have an MSRP approaching $100,000. PHOTO: JOE BOOMGAARD


[ FOCUS ]

By MIKE BRENNAN | [email protected]

Studies show consumers shop for cars and trucks that match their style, their favorite color, and even the best fuel economy. Increasingly, though, experts say vehicle-buying decisions hinge on how well consumers’ smart-phones connect to a car or trucks’ infotainment system.

“Towing capability is a unique feature for a certain segment. Cargo volume is another,” said Mark Boyadjis, senior analyst and manager of infotainment at IHS Automotive. “But increasingly it doesn’t matter what car, nor the price, as long as the technol-ogy in the car works with the consumers’ mobile technology.”

A couple of years ago, Ford Motor Co., BMW and Mercedes-Benz were ahead of other automakers in offering in-vehicle infotainment systems, he said. But at the North American International Auto Show in January — and a week earlier at the International Consumer Electronics Show in Las Vegas — the rest of the automakers closed the gap and showcased cars and trucks that connected to smartphones through Bluetooth technology.

At CES, both Ford and General Motors took the smartphone experience one step further by opening their latest vehicles to global developers working on apps for Android and iPhone technology.

GM spokesman Scott Fosgard called it GM’s new flexible app framework.

Consumers increasingly focus on vehicle infotainment

COMMAND CENTRAL

“This will do two things: lead to the creation of a new cat-egory of apps that don’t exist yet,” Fosgard said. “Let’s call them car apps, designed uniquely for the car and not a tablet or smart-phone. … Two, this allows you to add the apps you want and add more the longer you own the vehicle. You aren’t stuck with the two to three apps the car company chose for you.”

But analyst Thilo Koslowsky, vice president and automo-tive practice leader for Gartner Group, said he thinks it will be model year 2017 — which is available in three years — before the majority of consumers will make the availability of info-tainment systems a reason to buy competing vehicles.

But for premium brands such as Cadillac, Audi and Mercedes, “we’re there now,” he said.

Koslowsky calls it lifestyle convergence. Cars are becoming the ultimate mobile device. But he won’t declare any automaker the leader. What he does like is the Cadillac Cue Technology, a system designed for autos, not smartphones. It features a dash-board display that allows the driver to press icons to activate audio, navigation, phone, climate control and more. He also likes Audi’s in-vehicle approach that features Google maps.

The key to future success is which automakers take the

ability that consumers now have on smartphones and convert it to the most meaningful in-vehicle experience, he said.

“Now everyone is fishing for the next big thing and trying to cram as many apps as possible into a car,” Koslowsky said.

Certainly, app developers have a much bigger screen on which to build their products in a car, he said. Cars also have multiple screens. They have sensors built-in. He sees a future where the car can sense the driver’s mood and play music to, say, relieve stress.

Before the end of this decade, Koslowsky predicts, there will be self-driving cars on the road, a driverless taxi system of sorts. That, he said, could change the car-buying paradigm dramatically, perhaps more so than the debate over the con-nected car today.

“If a car drives itself, how do automakers differentiate the driving experience, a big factor in buying decisions today?” he said. “If a car picks me up and drops me off, why do I need to even buy a car? Cars just become another public transporta-tion vehicle for getting someone from point A to point B.”

Mike Brennan is senior technology writer at MiBiz. His day job is editor and publisher of MITechNews.com.

CFO

OF THE YEARAWARDS

SPECIAL EVENT ON JUNE 11, 2013

The customers have spoken, and automakers are increasingly paying attention to the integration of infotainment systems in their vehicles of all types, including the Chevrolet MyLink shown in the 2014 Silverado pickup. The system with its 4.2-inch color Driver Information Center can link to up to 10 devices and uses voice recognition to place calls, enter destinations, browse media, play music and control other functions. PHOTO COURTESY GENERAL MOTORS

2013 NORTH AMERICANINTERNATIONAL AUTO SHOW RECAP


Bigford

Hofstra

Leonardos

Risko

Linebaugh

Edsenga

Leyendecker

Bird

Sciba

Email business events to: [email protected]

PHARMACEUTICALS ■ Veteran life sciences exec-utive Tim Derrington was appointed chief operating

officer of Forensic Fluids Laboratories. He previously served as the president and COO at MPI Research.

EDUCATION■ The Ferris Foundation board of directors appointed three members: Michael Bigford, president and CEO of Utility Supply and

Construction Company; Stephanie Leonardos, president and CEO of Amerikam Inc.; and Karl Linebaugh, president of Chemical Bank’s North Region. The school also named Peter Bradley as the director of Ferris State University’s Honors program, who previously served as the acting director of McDaniel College’s honors program.

BANKING■ Founders Bank and Trust hired Seth Leyendecker as an employee benefits relationship manager and Deb Sciba as the marketing coordinator. With more than

nine years of experience, Leyendecker will be responsible for setting up and admin-istrating 401k and retirement plans for customers. Sciba has more than 19 years of marketing experience and will be responsible for all marketing activities. Founders Bank also promoted Brian Hofstra to vice president of commercial lending.

ACCOUNTING■ Nicholas Risko joined Echelbarger, Himebaugh, Tamm & Co. P.C. as a staff accountant. Risko earned his bachelor’s

degree from Grand Valley State University and a J.D. from Boston University School of Law.

PRIVATE EQUITY■ Jeffrey Helminski was appointed to ma nag ing d irector at Black ford Capital LLC and will be responsible for

the firm’s activities in Michigan. Helminski also serves on the board of direc-tors for Custom Profile, one of the firm’s newest acquisitions.

MANUFACTURING■ The Stow Company Inc. hired Frank Newman as its president and CEO. Newman has more than

25 years of CEO experience working with international domestic marketing and manufacturing companies.

CONSTRUCTION■ Matt McCambridge was promoted from project manager to the presi-dent of Nugent Builders after being

with the company since 1990. He began with Nugent Builders as a carpenter before advancing to jobsite foreman and then project manager.

LEGAL■ Patrick Edsenga joined Miller Johnson’s Grand Rapids office as an associate in the employment and labor group. He earned his bachelor’s degree from Michigan State

University and his J.D. from the University of Michigan.

DESIGN ■ Mark Bird joined Brightly as a senior creative strate-gist. He has 28 years of design experience, including work with companies such as Apple, Canon, Meijer, Haworth

and Steelcase.

INSURANCE■ Michigan Insurance Company promoted three employees: Andrew Holmes to vice presi-dent of the east business unit; Melissa Veenstra

to vice president of the west business; and Ryan U’Ren to commercial under-writing manager. Homes and Veenstra both previously worked as commercial underwriting managers and U’Ren served as a commercial underwriting account executive.

PEOPLE Email people news to: [email protected]

TUESDAY, FEBRUARY 5■ Start Garden: “Introduction to the Lean Canvas and Validation Board” will cover the basics of business model generation, customer development, human-centered design, marketing, communications, finance and law. The program will focus on Lean Startup methods. Presenter: Amanda Chocko. 11:30 a.m. to 1:30 p.m., Start Garden, Grand Rapids. Cost: Free for members, $25 for nonmembers. Contact: [email protected].

WEDNESDAY, FEBRUARY 6■ MI-SBTDC: “Legal Issues When Starting or Running a Small Business” focuses on the legal issues that businesses encounter when they are structuring and starting. Registration required. 6-8 p.m., Michigan Alternative and Renewable Energy Center, Muskegon. Cost: Free. Contact: [email protected].

■ West Michigan Chamber: “SMART Lunch — The Future of Work” will discuss what work will look like between the next five and 15 years and how people can prepare themselves for the complex tasks that lie ahead. Presenter: Dean Whittaker, president, CEO

and founder of Whittaker Associates Inc. in Holland. 11:30 a.m. to 1 p.m., Howard Miller Community Center. Cost: $15 for chamber members, $25 for nonmembers. Contact: [email protected].

TUESDAY, FEBRUARY 12■ ISM-GGR: “Winning the Negotiation Mind Game” will discuss using sales psychology and persuasion to out-negotiate sales professionals. Presenter: Alan Ovson, a communications expert. 8 a.m. to 4:30 p.m., GVSU DeVos Center. Cost: Free for members, $225 for nonmembers. Contact: [email protected].

FRIDAY, FEBRUARY 15■ VAGTC: “Basics of Importing” will provide infor-mation about how customs and border protection operates to oversee imported goods, which can help prevent businesses from incurring fines and penalties. 8:30 a.m. to 3:30 p.m., Grand Valley State University Bicycle Factory, Grand Rapids. Cost: $175 for Van Andel Global Trade Center members, $300 for non-members. Contact: (616) 331-6811.

Newman

MONDAY, FEBRUARY 11Econ Club of Grand Rapids: “125 Years of Making Quality, Affordable Health Care in West Michigan”The program will focus on Perrigo’s history in West Michigan and the company’s place in the health care market place. Presenter: CEO Joseph Papa. Registration required. Noon-1:30 p.m., Ambassador Ballroom, Amway Grand Plaza. Cost: $30 for members and spouses, $37 for nonmembers. Contact: (616) 454-1883.


Walter MonroeCEO, Breath Arrest LLC

In his more than three decades as a CPA, Walter Monroe made a few business contacts.

So when he became involved with a startup company working to bring to market a new product that treats bad breath, or halitosis, he turned to that business network for help. Those contacts enabled the company, Breath Arrest LLC, to find a bottler and sign a distributor, Kent Beverage Co., for the 2-ounce drink that is now sold at about 100 convenience and party stores in West Michigan “and growing.”

“We were actually dead in the water until I started examining my network group and people I’ve known in 34 years as a CPA and came up with a couple of names,” said Monroe, the CEO and a partner in the Kentwood-based company.

Those two acquaintances he contacted, Steve Basinski and Darin Arnett, had once brought a dietary supplement to market and had the connections that got Breath Arrest moving in the right direction, including contracting with a bottler in Tampa, Fla. Both are now partners in Breath Arrest. Arnett serves as chief operating officer.

The company is now talking to potential distributors in southeast Michigan and is “deep in the conversation” with a major food chain in the south to sell the product, which neutralizes the bacteria that can cause bad breath.

Breath Arrest’s goal is to eventually get on the shelves in 10,000 stores, Monroe said.

Monroe, who retired as a CPA six years ago and “re-careered” with Breast Arrest, credits his years in business with giving him the ability to know what he doesn’t know and the willingness to seek help. He spoke with MiBiz about the product and the lessons learned along the pathway to market.

What was the single biggest obstacle to get your product to market?Having never done it, you feel like you’re in a dark cave. You have this product, tested it and tested it, and now you have faith in it. What do you do with it? Where do you go? Without my years as a CPA and the people you meet, I don’t know what we would have done. We probably would still be in the inventor’s kitchen playing with the formula. But within eight months of meeting with Darin and Steve, we had product in stories.

What was the basic lesson learned?It’s just keep climbing over rocks and talking to people that you know within your network and that you trust — and listening. Then one thing leads to another. In talking to Steve and Darin, they were already doing what the inventor and I needed to get done. So we brought them on and their sweat equity and knowhow probably saved us a couple hundred thou-sand dollars that we didn’t have to spend on researching the business.

What kind of compromises did you have to make to get to market?You really have to team with one distributor. They have the territory and you agree to allow them to distribute the product to the retailer. You can’t run around their back and sell the product to stores one on one.

What advice do you have for someone who’s trying to bring a product to market?I would say look around. Who do you know? Who do you trust? Who’s done it already? Do you know anybody? Just start talking to them. You have to put a budget together and have a game plan. … You have to have enough fuel in the ship to get across the ocean, and you have to plan for that, and don’t jump before you look. Step back and look at the situation and say, ‘How do I get from A to B?’

At some point, you realized you couldn’t do this alone.Absolutely. That’s where you have to start brainstorming and making phone calls.

Is it difficult to come to that conclusion, to admit that you don’t have all the answers? No. I’m 64 and the inventor is 62. When you’ve been around the block and been success-ful, intelligent decisions are based on (asking) ‘What do I know? What don’t I know?’ It’s research. When you’re younger, perhaps, you don’t make those decisions as intelligently as an older guy. You just don’t have the experience. You have to look in the mirror and say, ‘You don’t know how to do that.’ I wouldn’t build my own home, either. You hire it done.

Interview conducted and condensed by Mark Sanchez. COURTESY PHOTO

Q&AIN THE NEWSM&A■ Grand Rapids-based Leitz Tooling Systems LP, a subsidiary of Leitz Group of Germany that manufactures precision cutting tools for wood and other materials, acquired the assets of

San Bernardino, Calif.-based Royce//Pacific Precision. In a statement to MiBiz, the company said the acquisition will bring additional volume to its Grand Rapids manufacturing facility while strengthening its Western region capabilities. Warner,

Norcross & Judd LLP advised on the deal. Terms of the agreement were not disclosed. ■ Neogen Corp. (Nasdaq: NEOG) of Lansing acquired the assets of Davis, Calif.-based Scidera Genomics LLC, an animal genomics business, according to a statement. Terms of the acquisition were not disclosed. Neogen plans to continue to operate from Scidera’s California facility. ■ One of Grand Rapids-based Blackford Capital’s holdings, composite components manu-facturer Amtech LLC of Wapato, Wash., acquired Arrowhead Composites and Thermoplastics in Elmore, Ala. Blackford helped facilitate the acquisi-tion. Amtech is seeking other growth opportunities in the Midwest, the company said in a statement. ■ Traverse City-based Quantum Sail Design Group has entered into an agreement with Dimension Polyant to purchase the company’s sailmaking facility located in Sri Lanka, according to a statement. The acquisition helps Quantum strategically expand globally, President Ed Reynolds said in a statement. Quantum also has existing sail-making facilities in Malaysia, South Africa and Traverse City.

EXPANSION ■ As part of a $1 billion North American investment announced at the North American International Auto Show in January, Denso Manufacturing Michigan Inc. will add 266 new positions and invest $105 million in its Battle Creek manufactur-ing plant by 2015. Those new jobs include 220

manufacturing jobs and 46 skilled trade and professional jobs at i t s 1.29 mill ion-

square-foot facility. This investment will add new manufacturing capabilities to the Fort Custer Industrial Park location, including new lines of condenser and radiator products.■ Grand Rapids-based Fox Motors selected a 7.5-acre parcel in Chicago between the Bucktown and Lincoln Park areas as the permanent home for its Ford-Lincoln dealership, according to a report in Crain’s Chicago Business. Fox plans a 64,000-square-foot project at the site, which will include a three-story showroom and a one-story service center, the report stated. The site would have parking for about 1,000 vehicles. In January, Fox leased a vacant former dealership on Michigan Avenue to serve as temporary space while the com-pany shopped around for a permanent site for the dealership, Crain’s reported. That temporary facility is scheduled to open this month. The permanent dealership site should open by 2015.■ Allegan-based pharmaceutical manufacturer Perrigo Co. plans a $42 million expansion of infrastructure and equipment at its Allegan loca-tion, as well as a $200 million investment in a new facility and new equipment in Holland Charter Township, where it also has a presence after the 2008 acquisition of J.B. Laboratories. The move

could create 650 jobs to support growth in Perrigo’s tablet products for its over-the-counter business, according to a statement from Gov. Rick Snyder’s office. ■ The dairy cooperative Fair Oaks Farms Brands Inc. plans to invest $127 million to manu-facture nutritionally enhanced liquid milk products at a newly constructed facility in Coopersville, according to a statement from Gov. Rick Snyder’s office. Fair

Oaks was awarded a $900,000 Michigan Business Development Program performance-based grant. ■ Benton Harbor-based appliance manufacturer Whirlpool Corp. plans to invest $18.9 million to relocate refrigeration research and develop-ment operations from Evansville, Ind., to a former manufacturing facility. The company, which is projected to create 180 jobs, received a $2.4 million Michigan Business Development Program per-formance-based grant, according to a statement.

DISTRIBUTION AGREEMENT■ G r a n d R a p i d s -based Spartan Stores Inc. (Nasdaq: SPTN) inked a distribution agreement to be the

primary wholesale grocery supplier for Chief Super Market Inc., which operates 12 Chief and Rays stores in northwest and west-central Ohio. In March, Spartan Stores will assume distribution for grocery, dairy, frozen, bakery and other products, according to a statement.

BUILDING MANAGEMENT■ The Waters Building, which is in receivership, is now under the management of Farmington Hills, Mich.-based Friedman Real Estate Solution Inc. The historic downtown Grand Rapids building went into foreclosure last September, according to building’s former owner, Bill Godrey, partner at the Ann Arbor-based Three Oaks Group LLC. Three Oaks paid about $27 million for the building in 2006, but it appraised at just $12 million in 2012, Godrey said. A New York-based bond holding company currently owns the mortgage.

HEALTH CARE■ The University of Michigan Health System joined Priority Health provider care network and will accept its HMO, PPO, POS and Medicare health plans. The contract, which goes into effect March 1, adds U of M’s hospitals and more than 1,800 physicians to the Priority Health network. In a statement, Priority CEO Michael Freed said the collaboration enhances and offers more access to the group’s growing health care network. ■ North Ottawa Community Health System in Grand Haven and Mecosta County Medical Center in Big Rapids are the latest hospi-tals to join Michigan Health Connect . The move allows the two organizations to send patients’ health records and reports through a secure electronic network that include 57 other hospitals, 1,551 medical offices and more than 7,000 individual health care providers statewide that are part of the Grand Rapids-based regional health information exchange. ■ Blue Cross Blue Shield of Michigan awarded a $200,000 grant to the People’s Health Center, a not-for-profit collaborative that will provide dental care to primarily to low-income and home-less people. The grant stems from a partnership between Blue Cross Blue and the People’s Health Center to improve access to dental, medical and mental health care. The health center is a collab-orative between Saint Mary’s Health Care, Hope Network and Metro Health.

CORRECTIONIn our Jan. 21 issue, two law firms were inadvertently left off the Top West Michigan Corporate Law Firms list, which ranked firms by the number of attorneys in their West Michigan offices. The Kalamazoo office of Honigman Miller Schwartz and Cohn LLP, which has 21 attorneys specializing in M&A, intellectual property and other legal services, would have ranked 13th on the list. The Grand Rapids office of Dykema, which offers M&A counsel, securities law, public finance law and other legal services, would have ranked 20th on the list. MiBiz regrets the error.


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