volkswagen of america for nsf’s testingwith over 35 years of experience. ... shore mortgage to...

http://www.crainsdetroit.com Vol. 23, No. 35 A U G U S T 2 7 – S E P T E M B E R 2 , 2 0 0 7 $2 a copy; $59 a year

THIS JUST INTHIS JUST INVolkswagen of Americamay take HQ out of state

Volkswagen of America isseriously considering mov-ing both of its brands fromAuburn Hills to a new head-quarters outside Michigan.

VW would move to anarea where its sales arestronger, and would shedsome employees from itsmoney-losing Volkswagenof America unit, accordingto a source in Germany.

The search is “very seri-ous,” and part of the parentcompany’s push to turnaround the U.S. business,the source said. The VWgroup lost $1.1 billion in2005 in North America and$795 million in 2006.

The move would be tied toa restructuring of Volkswa-gen of America by new CEOStefan Jacoby, who assumeshis job Sept. 1. A decision islikely within months, ac-cording to the source.

Volkswagen would moveits Audi and VW brandsfrom Auburn Hills, where itemploys more than 1,500workers. The companyprobably would trim jobs,the source said.

The relocation is being or-chestrated by Germany anda small group Jacoby hassent to the United States toassess and energize restruc-turing efforts.

Volkswagen of America islooking at a number of citieson both coasts. Audi’s salesare bigger on the WestCoast, while the VW brandis split between both. Vir-ginia also has been men-tioned as a possible head-quarters site.

The decision to relocate isnot tied to the building of aU.S. factory.

“There are no concreteplans to mix relocation witha factory. There are misun-derstandings that do notmake sense,” a Volkswagenspokesman in Germany said.

Corporate executiveshave said if the dollar staysweak, VW would have toconsider manufacturing inthe United States. Aspokesman said, “A possiblefactory is far, far away.”

— From Automotive News

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©Entire contents copyright 2007 by Crain Communications Inc. All rights reserved

Leading capital campaigns,4

Two companies takedifferent approach tomaking more pies, Page 3

®

See This Just In, Page 2

CRAIN’S LISTCRAIN’S LIST

China scare a boostfor NSF’s testing

Race restoration

BY CURT CAVINCRAIN NEWS SERVICE

Roger Penske is passionateabout motor sports, business and

his adopted home-town of Detroit, soimagine his enthu-siasm when talkingabout Belle Isle, thepublic park he ishelping to restore.

Penske sat re-cently in front of abroadsheet pam-

phlet that outlines virtually everydetail of the park’s renovation:600,000 square feet of new con-crete, sculpted trees, a refurbishedcasino building, landscaping,

BY CHAD HALCOMCRAIN’S DETROIT BUSINESS

Product safety recalls linked to Chinese suppliercompanies have spurred many Michigan businessesto have their own products tested professionally andto do more of their own internal inventory checks.

That’s good news for NSF International Inc., a non-profit product safety and certification facility in AnnArbor.

Phones are ringing steadily for NSF’s services, saidLori Bestervelt, senior vice president and chief tech-nical officer at the testing lab.

Bestervelt estimates NSF is averaging five contactsper week from companies seeking to become clients— compared with one or two such contacts per weekthree months ago, before the Chinese recalls became

national news. NSF has clients and facilities in nine countries. Its

prices range from as little as $35 for a lead test on asingle-sample product to $20,000 or so for a full auditof a client’s production and supply chain in sectorslike dietary supplement products.

NSF recently completed a $23 million expansion todouble its laboratory space in Ann Arbor, and Bester-velt said the additional capacity is coming in handywith the surge in demand.

Even though NSF also has a facility in Shanghaithat tests products Chinese manufacturers plan to ex-port to the U.S., Bestervelt said it is Ann Arbor that isshouldering most of the new demand.

“The increase in testing requests has been coming

REAL FAST FACTS� The Detroit Belle Isle Grand Prixis two races: The American LeMans Series race on Saturday isthe Detroit Sports Car Challenge;The IndyCar Series race on Sundayis the Detroit Indy Grand Prix.� The race is on the 2.1-mile BelleIsle road course.� The Le Mans race will be on theSpeed Channel at 3:15 p.m.Saturday.� The IndyCar race will be on ABCaffiliate WXYZ-Channel 7 at 3:30p.m. Sunday. Radio coverage is onWRIF 101.1 FM.� Remaining grandstand ticketsare available online atdetroitgp.com or ticketmaster.com,or by calling (866) 464-PRIX orTicketMaster at (248) 645-6666.

See Penske, Page 20

CASINO’SNEW LOOKPhotos ofrestorationwork atlandmark, Page 20.

Penske puts passioninto improvementsat Belle Isle

LAT PHOTOGRAPHIC

Roger Penske’s efforts have resultedin many permanent modifications toBelle Isle.

Fear of recalls increases business locally

See NSF, Page 19

See Ovshinsky, Page 18

Stanford Ovshinsky

InventorOvshinskyworking on‘bigger game’

BY TOM HENDERSONCRAIN’S DETROIT BUSINESS

On Thursday, StanfordOvshinsky announced his re-tirement, effective Aug. 31, aschief scientist from Energy Con-version Devices Inc., the compa-ny he and his wife, Iris, found-ed in Detroit at the corner ofMcNichols and Schaefer onJan. 1, 1960.

Even the company’s originalname, Energy Conversion Labora-tories, must have seemed par-ticularly odd, even indecipher-able, then. What kind of energywould you be converting andinto what?

A photo from that first yearshows Ovshinsky at a black-board, diagramming a processto break a hydrogen moleculeloose from water. Forty-sevenyears later, freeing hydrogenfrom its bonds is at the heart ofthe alternative fuels movement.But ECD didn’t stop there. Itand its subsidiaries havebranched out far and wide.

Rochester Hills-based ECD(Nasdaq: ENER) has licensingagreements with companiesaround the world for a wide ar-ray of technologies; OrionTownship-based Cobasys L.L.C.,a joint venture with ChevronCorp., supplies nickel-metal hy-

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Shore Mortgage to hire 150Shore Mortgage, a Birmingham-

based mortgage lender, plans toadd 150 new jobs at four locationswithin about six months, includ-ing underwriters, account execu-tives and loan officers.

All positions are at the compa-ny’s lending offices in Birming-ham, Roseville, Taylor and Can-ton Township. The companyseeks traditional mortgage pro-fessional experience but is alsofocused on bilingual candidatesand those with an information-technology background.

President Robert Rahal saidShore is expanding largely be-cause of a focus on government-assistance lending like FHAloans, which is proving more sta-ble. Rahal said the company’s“long-term prospect” is to fill allthe new positions by late winteror early spring, though a majori-ty of the hires should take placebefore year’s end.

— Chad Halcom

Zoning board to discuss math,science charter school

A math-and-science chartermiddle school proposed by theThompson Foundation may be

housed in a building adjoiningthe Detroit Science Center.

On Tuesday, the Detroit Board ofZoning Appeals is scheduled toweigh a zoning request thatwould allow construction.

Thompson Foundation, alsothe charter holder for UniversityPreparatory Academy K-12 schoolin Detroit, plans a math-and-sci-ence middle school and a newcharter high school in the city.

The Science Center’s zoning re-quest for land it now uses forparking would permit a 56,700-square-foot addition to its cur-rent building to house the school.

Grand Valley State University hasauthorized a charter for bothThompson schools, but the highschool needs a location.

The foundation hopes to openthe middle school next year andthe high school in 2010.

— Chad Halcom

Huron Capital buys L.A. firmDetroit-based Huron Capital Part-

ners L.L.C. planned to announcetoday its latest in a string of ac-quisitions, Los Angeles-based Zo-latone Automotive.

Zolatone, which makes coat-ings for sale to collision and bodyshops, will be folded into one ofHuron’s portfolio companies,Boston-based Quest SpecialtyChemicals Inc., and will be man-aged by Quest’s automotive after-market unit, Walled Lake-based

Matrix System Automotive Finishes.Huron’s managing director,

Brian Demkowicz, said the pricewas between $10 million and $40million.

He said Zolatone has revenueof less than $25 million and fewerthan 10 employees. Some of thosejobs, yet to be determined, will betransferred to Walled Lake by theend of the year.

— Tom Henderson

Battenberg hearing setThe first substantive hearing

in the civil case against J.T. Bat-tenberg III and other former DelphiCorp. executives is scheduled forOct. 5 in Detroit.

The U.S. Securities and ExchangeCommission has accused Batten-berg and six others of using ac-counting improprieties to artifi-cially boost Delphi’s earningsand cash flow earlier this decade.

The court will hear motions todismiss the charges filed by fivedefendants. Battenberg is notamong those asking for a dis-missal. His attorney, Michael Pat-tillo Jr. of the Washington, D.C.,law firm Baker Botts L.L.P., de-clined to comment.

— Automotive News

C&A deal falls apartCadence Innovation L.L.C.’s deal

has fallen through to buy nineplastics plants from Collins & Aik-

man Corp., a Collins & Aikmanspokesman said Friday.

Only six plants total will re-main open at Collins & Aikmanby the end of August, said DavidYoungman, vice president of com-munications. The company,which is shutting completely un-der Chapter 11 bankruptcy pro-tection, is talking with a numberof undisclosed potential buyersfor the assets, he said.

— David Barkholz

Taylor, St. Regis announce splitOwnership of the newly re-

opened St. Regis Hotel in Detroithas parted ways with restaura-teur Frank Taylor’s Southern Hos-pitality Restaurant Group L.L.C.,both parties confirmed last week.

In the original plan, Taylor’sgroup would have managed the5,000-square-foot restaurant, LaMusique. Fadi Achour, generalmanager of the hotel, said owner-ship decided three months agothat outside management of therestaurant would not be needed.

The restaurant group said it wasa mutual decision.

— Daniel Duggan

Crain’s names new Web editorCrain’s Detroit Business has

named Kevin Hill as Web editor.In this role,

he’ll help theCrain’s Webteam maintainand improvewww.crainsdetroit.comand create newWeb features.

Hill, 23,joins Crain’s

from the Wayne-based JournalNewspapers, where he was a re-porter for The Plymouth Journaland The Canton Eagle and alsodeveloped Journal NewspapersOnline, which serves the group’seight publications.

Hill is a Westland native andDetroit resident. He graduatedfrom Western Michigan University.

THIS JUST INTHIS JUST IN

CORRECTION

� A story on Page 13 of the Aug. 13 issue should have said RTT USA Inc.is the name of the American division of Munich-based Realtime Tech-nology AG. An incorrect name was given.

� The Aug. 20 profile of the accounting firm of Virchow Krause & Co.L.L.P. should have said that the former employer of partner ReginaStaudacher was Axiom Custom Business Solutions L.L.L.P.of Englewood,Colo.

■ From Page 1

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August 27, 2007CRAIN’S DETROIT BUSINESS

Hill


RECIPE FOR SUCCESSAchatz Handmade Pie Co. has seennotable growth in revenue since itbegan in 1993.

1993 $25,000

1994 $100,000

1995 $250,000

1999 $1 million

2006 $3.85 million

Source: Achatz Handmade Pie Co.

BY DANIEL DUGGANCRAIN’S DETROIT BUSINESS

When Achatz Handmade Pie Co.starts baking pies this week inits new Chesterfield Townshipfacility, it opens a new chapterfor the company.

But with the move from a polebarn into a19,000-square-foot bakery,the companyfaces the chal-lenge of howto keep thepersonaltouch that’smade it suc-cessful when

it’s producing 15,000 pies a week.“We’re still going to be a hand-

made pie company, not a ma-chine-made pie company,” co-owner Wendy Achatz said. “Andjust because we’re moving to abigger facility doesn’t mean that

I’m going tostart puttingpotassiumsorbate intothe pies.”

The com-pany got itsstart afterWendy and

Dave Achatz closed Achatz FamilyRestaurant in Arcadia. Threeyears after they sold the restau-rant — and vowed to stay out offood service — they started thepie-making business in their Ar-cadia kitchen.

In its first year, 1993, the com-pany had revenue of $25,000.Revenue for 2006 was $3.85 mil-lion, with the goal of $4 millionthis year.

While pies were sold from atable at flea markets in the be-ginning, they’re now being soldin local Nino Salvaggio and Kroger

Tax breaks help fuel deals

CRAIN’SINDEX

Grassroots effort:Tourism industry seeks$30M in annual funding.Page 7.

Learning: Event will teachsmall firms aboutgovernment contracts.Page 10.

Reviving tiredcampaigns: Nonprofitsuse new techniques tobreathe life into capitalcampaigns. Page 11.

CRAIN’SINDEX

BANKRUPTCIES . . . . . . . . . 6BUSINESS DIARY . . . . . . . 16CALENDAR . . . . . . . . . . . . 17CAPITOL BRIEFINGS . . . . . . 7CLASSIFIED ADS. . . . . . . . 15KEITH CRAIN . . . . . . . . . . . 8LETTERS . . . . . . . . . . . . . . 8OPINION . . . . . . . . . . . . . . 8OTHER VOICES . . . . . . . . . . 9PEOPLE . . . . . . . . . . . . . . 17RUMBLINGS . . . . . . . . . . . 22WEEK IN REVIEW . . . . . . . 22

These organizations appear in thisweek’s Crain’s Detroit Business:

21st Century Jobs Fund . . . . . . . . . . 7Achatz Handmade Pie Co.. . . . . . . . . 3Automation Alley . . . . . . . . . . . . . . 10CB Richard Ellis . . . . . . . . . . . . . . . 17Chimes Inc. . . . . . . . . . . . . . . . . 3, 17Cobasys L.L.C. . . . . . . . . . . . . . . . . . 1Collins & Aikman Corp.. . . . . . . . . . . 3Comerica Inc.. . . . . . . . . . . . . . . . . 11Common Ground Sanctuary. . . . . . . 13Detroit Institute of Arts. . . . . . . . . . 11Downtown Detroit Partnership . . . . 20Dura Automotive Systems Inc.. . . . . . 4EDF Ventures . . . . . . . . . . . . . . . . . 21Energy Conversion Devices . . . . . . . . 1Energy Conversion Laboratories . . . . 1Farbman Group . . . . . . . . . . . . . . . 17Friedman Real Estate Group . . . . . . . 3General Dynamics Land Systems. . . 10Grand Traverse Pie Co. . . . . . . . . . . 21Greektown Casino L.L.C.. . . . . . . . . . 6Grubb & Ellis . . . . . . . . . . . . . . . 3, 17Hollywood Market. . . . . . . . . . . . . . 21Key Management Services . . . . . . . 17Kostal Inc. . . . . . . . . . . . . . . . . . 3, 17Lawrence Technological University . 13Lear Corp. . . . . . . . . . . . . . . . . . . . . 4LMS North America . . . . . . . . . . . . . 3LMS. . . . . . . . . . . . . . . . . . . . . . . . 17Loyola High School . . . . . . . . . . . . 13McCann Erickson . . . . . . . . . . . . . . . 7MEDC. . . . . . . . . . . . . . . . . . . . 10, 17Michigan Department of Agriculture . 7MMBDC. . . . . . . . . . . . . . . . . . . . . 10Michigan VC Association . . . . . . . . 21Mission Capital Partners . . . . . . . . . 3Nino Salvaggio . . . . . . . . . . . . . . . . . 3Noreen Keating . . . . . . . . . . . . . . . 12NSF International Inc. . . . . . . . . . . . 1Ovonyx Inc.. . . . . . . . . . . . . . . . . . . 18Penske Corp. . . . . . . . . . . . . . . . . . 20Penske Racing . . . . . . . . . . . . . . . . 20Plante & Moran P.L.L.C. . . . . . . . . . 13QuatRx Pharmaceuticals Co.. . . . . . . 3Regional General Contracting . . . . . 20Remington Group . . . . . . . . . . . 11, 12Royal Oak Industries . . . . . . . . . . . 11Salvation Army . . . . . . . . . . . . . . . 13St. John Health System. . . . . . . . . . 13St. John Providence Park Hospital . . 11State of Mich. Retirement System. . 21Technology Ventures Inc. . . . . . . . . 10The Colton Group . . . . . . . . . . . . . . 13The Social Ventures Network ofSoutheast Michigan . . . . . . . . . . . . 13United Solar Ovonic L.L.C. . . . . . . . 18University of Michigan . . . . . . . . . . 12Volkswagen of America. . . . . . . . . . . 1Westborn Market . . . . . . . . . . . . . . 21Wilson Technologies Inc. . . . . . . . . 21

August 27, 2007 CRAIN’S DETROIT BUSINESS

Brokers fill former C&A space

QuatRx prepsfor IPO oracquisition

BY TOM HENDERSONCRAIN’S DETROIT BUSINESS

Ann Arbor-based QuatRx PharmaceuticalsCo., which has raised more venture capitalthan any company in Michigan since theNational Venture Capital Association begankeeping records in 1980, says it plans to gopublic or be sold by the end of next year.

President and CEO Robert Zerbe said the$44 million the company raised in May will

fund operations untilthen, but that investorsdo not want to do anoth-er venture capital round,which would dilute theirequity.

The company hasraised $116.6 millionfrom a variety of ven-ture-capital firms sinceit was founded in Decem-ber 2000 to develop drugs

to fight endocrine, metabolic and cardio-vascular diseases. The most recent was thesecond-largest single round of VC moneyever invested in a state company, accord-ing to the NVCA.

On Wednesday, the company announcedit has enrolled the last of the 827 subjectsfor ongoing Phase III FDA clinical trials ofits first drug, Ophena, an estrogen-freetherapy to treat sexual dysfunction andvaginal atrophy in post-menopausalwomen.

The trials, to test safety and efficacy, be-gan a year ago with patients being treatedfor 12 weeks. Trial data is expected to beavailable by the end of the year.

If those results mirror the success ofsmaller Phase II trials, a second round ofPhase III studies will begin next year, withcompany executives hoping to have Foodand Drug Administration approval and be onthe market in 2010.

“I think there will be multiple opportuni-ties for QuatRx after the release of data,”said Peter Heron, managing partner of Fra-zier Healthcare Ventures, which is co-head-

See Achatz, Page 21

A bigger sliceAchatz Handmade Pie Co. aims to grow, retain quality

BY DANIEL DUGGANCRAIN’S DETROIT BUSINESS

In a series of commercial real estatedeals, six brokerages have nearly filledthe 340,000 square feet of Troy office

space left vacant af-ter the bankruptcy ofauto supplier Collins& Aikman Corp.

Brokers say thehigh vacancy rates inTroy made for somegood deals — madesweeter in some cas-es by governmentsubsidies.

“It’s nice to seethat there’s that kind of interest inthose buildings,” said Mitchell Lipton,

executive vice president for brokerageservices with Friedman Real EstateGroup. His brokerage leased 35,000square feet in one building and helpedsell two others.

Collins & Aikman moved to Troy in2000 and expanded to a three-buildingheadquarters in 2002.

The company filed Chapter 11 bank-ruptcy in May 2005 and vacated all itsTroy space in March 2006 for a muchsmaller space in Southfield, said DavidYoungman, vice president of communi-cations for Collins & Aikman.

In the last quarter, the former Collins& Aikman space at 5755 New KingCourt has been mostly leased with anOctober move-in planned.

See Space, Page 17

PHOTOS BY HEATHER ROUSSEAU

Increased demand has prompted Achatz Handmade Pie Co. to move to a larger facility. Krista Shoobridge (from left),Dave Lookoiso, and Jo Ann Austin make cherry pies at the current location.

Wendy Achatz

INSIDEGrand TraversePie Co. triesfranchise strategyto expand.Page 21.

Lipton

DETAILS OF THE DEALSBrokers have found tenants for 319,000 square feet of space over fourbuildings formerly leased by Collins & Aikman Corp.

5755 New King CourtThe deal: LMS North America leased 35,000 square feet it plans tooccupy in September. The building, C&A’s first headquarters, has beenmostly vacant since 2002. Broker is Friedman Real Estate Group.

150, 250, 350 Stephenson HighwayCollins & Aikman left the complex for smaller quarters in Southfield inMay 2006, a year after filing Chapter 11 bankruptcy. The deals:150: Valeo SA leased 103,000 square feet and moves in next month.Brokers are Friedman Real Estate Group, L. Mason Capitani.

250: Troy-based Chimes Inc. bought the 105,000-square-foot buildingand moves in this month. Brokers are Grubb & Ellis, Mission CapitalPartners.

350: Kostal Inc. bought the 76,000-square-foot building and moves innext month. Brokers are Signature Group, Farbman Group.Source: Crain’s research

See QuatRx, Page 21

Zerbe


TAKING STOCK

BY BRENT SNAVELYCRAIN’S DETROIT BUSINESS

Several of Dura Automotive Sys-tems Inc.’s creditors argue the com-pany’s reorganization plan filedlast Wednesday unfairly compen-sates one group of bondholdersover another.

Creditors also argue that Durarushed to offer new stock to a pre-ferred group of bondholders with-out searching for other buyers,and effectively transfers control ofthe company to Santa Barbara-based hedge-fund manager Pacifi-cor L.L.C. for less than what thecompany is worth.

John Ashmead partner withNew York City-based Seward &Kissel L.L.P., who represents U.S.Bank Trust National Association, saidDura’s plan wipes out about $550million in bonds held by mostlysmall, individual investors.

“This plan has issues that we

will be challenging concerning val-ue (of the company) and subordi-nation,” of a group of bondholders,Ashmead said.

U.S. Bank Trust is part of Min-neapolis-based U.S. Bancorp. and is atrustee for a group of bondholders.

Dura officials and Roger Hig-gins, partner with Kirkland & EllisL.L.P. in Chicago and lead attorneyfor Dura, declined to comment.

But during an Aug. 15 hearing inU.S. Bankruptcy Court in Delaware,Higgins said Dura’s planned equi-ty rights offering is supported byDura’s creditors committee, thepreferred group of bondholdersand a committee of lien holders.

“We do not believe that this is adisguised sale,” Higgins said dur-ing the hearing.

Dura (Pink Sheets: DRRAQ) ispublicly traded, but would becomea private company under the pro-posed reorganization plan.

Dura seeks to offer new shares

of stock valued at between $140million and $160 million to onegroup of bondholders in exchangefor 39 percent to 43 percent owner-ship in the company.

Pacificor has agreed to under-write 100 percent of that offering.

Dura also plans to convert debtsowed to some bondholders intonewly issued stock that will repre-sent between 57 percent and 61 per-cent of the reorganized company.

Craig Wolfe, of the New YorkCity offices of Kelley, Drye & WarrenL.L.P., who represents HSBC BankUSA, a trustee for bondholders,told the court he is concernedDura rushed to complete its plan ofreorganization because its bank-ruptcy financing agreement ex-pires in December.

Dura filed for Chapter 11 protec-tion last October and had 2006 totalsales of about $2.1 billion.

Brent Snavely: (313) 446-0405,[email protected]

TAKING STOCKNEWS ABOUT DETROIT AREA PUBLIC COMPANIES

All of the securities having been sold, this announcement appears as a matter of record only.

May 17, 2007

US$ 121,000,000

TriMas Corporation

11,000,000 Shares

Primary Offering

Joint Bookrunners

Co-Arrangers

Creditors criticize Dura plan

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STREET TALKTHIS WEEK’S STOCK TOTALS: 41 GAINERS, 31 LOSERS, 6 UNCHANGED

Asset Acceptance Capital Corp. $10.89 $9.53 14.27Somanetics Corp. 19.01 16.72 13.70Michigan Heritage Bancorp Inc. 9.00 8.00 12.50Perceptron Inc. 10.19 9.29 9.69BorgWarner Inc. 82.84 77.50 6.89Borders Group Inc. 15.80 14.79 6.83Semco Energy Inc. 7.51 7.13 5.33Champion Enterprises Inc. 11.24 10.70 5.05Ramco-Gershenson Properties. 31.97 30.57 4.58FNBH Bancorp Inc. 20.00 19.25 3.90

Visteon Corp. $5.50 $6.41 -14.20North Pointe Holdings Corp. 9.65 11.00 -12.27Community Central Bank Corp. 7.88 8.86 -11.06Universal Truckload Services Inc. 19.42 21.11 -8.01Amerigon Inc. 17.20 18.67 -7.87Clarkston Financial Corp. 11.50 12.25 -6.12Saga Communications Inc. 7.83 8.15 -3.93Flagstar Bancorp Inc. 12.18 12.62 -3.49Valassis Communications Inc. 9.75 10.08 -3.27Credit Acceptance Corp. 25.48 26.31 -3.16

Source: Bloomberg News. From a list of publicly owned companies with headquartersin Wayne, Oakland, Macomb, Washtenaw or Livingston counties. Note: Stocks tradingat less than $5 are not included.

CDB’S TOP PERFORMERS

CDB’S LOW PERFORMERS

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8/24 8/17 PERCENTCLOSE CLOSE CHANGE

1.2.3.4.5.6.7.8.9.

10.

1.2.3.4.5.6.7.8.9.

10.


Lear stock slides in wake of failed buyoutBY BRENT SNAVELY

CRAIN’S DETROIT BUSINESS

Lear Corp.’s (NYSE: LEA) stockopened at $36.80 on July 16, the daythe company announced that aproposed $2.9 billion buyout offerfrom Carl Icahn was defeated byshareholders. Since then, the stockhas fallen more than $7 a share to$29.19.

So does Pzena Investment Manage-ment L.L.C., the investment firmthat led the fight to defeat Icahn’sbid, regret its efforts?

“If you looked at (the stockprice) day to day, you would driveyourself insane,” said Bill Lipsey,managing principal for Pzena.“And the fact that the market istaking it down only makes it moreattractive.”

Icahn offered to purchase South-field-based Lear for $37.25 a share,but Pzena argued that the seat andelectronics supplier could beworth as much as $60 a share.

And Pzena’s argument clearlycarried the day. On Aug. 8, Lear dis-closed Aug. 8 that holders of 55 per-cent of its shares voted against theoffer while 31 percent voted for it.

Lipsey also says Lear beat WallStreet’s expectations when it re-ported net income of $173.5 mil-lion, or $2.22 a share.

“The price they agreed to sell toIchan was unreasonably low,”Lipsey said.

But Lipsey stopped short of say-ing whether or not Pzena is buyingmore shares of Lear at its new,lower price and also declined tocomment on the recent sudden de-parture of President and COO Dou-glas DelGrosso.

DelGrosso had been in line to be-come CEO following Icahn’s acqui-sition of Lear.

But on Aug. 14, Lear announcedthat DelGrosso, long viewed as theheir apparent at Lear, was leavingand said Chairman and CEO Bob

Rossiter wouldassume Del-Grosso’s duties.

Lear was ac-quired in 1988 byRossiter, KenWay and JamesVandenberghe,vice chairmanand CFO. Wayretired a fewyears ago, but

Rossiter wants to remain and takemore direct control of the company.

“Bob has indicated he plans tostay three more years or as long asnecessary to ensure Lear is on sol-id ground,” Vandenberghe said in

a statement e-mailed to Crain’s.“While it is premature to projectpotential successors several yearsout, we expect to consider all po-tential candidates when Bob de-cides to retire.”

He also said the stock drop isn’ta result of just the failed buyout.

“While it is impossible to pre-dict with any degree of certaintywhy a stock goes up or down in agiven period, recent declines arenot isolated to Lear; market condi-tions have adversely impactedshares of most automotive compa-nies,” Vandenberghe said.

Brent Snavely: (313) 446-0405,[email protected]

DelGrosso


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BANKRUPTCIESBANKRUPTCIESThe following businesses filed

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— Compiled by Aaron Harris

Granholm, Patterson support slot machines at racetracksBY AMY LANE

CAPITOL CORRESPONDENT

LANSING — A proposal to allowslot machines at Michigan race-tracks has the interest of Gov. Jen-nifer Granholm and the support ofOakland County Executive L.Brooks Patterson, as Michiganlooks at new revenue sources tohelp solve its budget problems.

“We’d have to see the specificproposal, but the governor hassupported racinos in the past,”said Liz Boyd, Granholm’s presssecretary. She said the governor“has said all along that we need ad-

ditional revenue for state govern-ment.”

Patterson said Friday that raci-nos “would mean jobs” to the com-munities with racetracks and“would mean revenue to a cash-strapped state.”

He said he doesn’t have a role inmoving the proposal forward butis “a vocal supporter.”

A state House committee airedthe issue last week, but no legisla-tion has yet been introduced norhas a formal proposal publiclyemerged. Still, the idea generated abuzz as lawmakers face the Oct. 1start of the new fiscal year and the

need to cement a fiscal 2008 bud-get.

Michigan racetracks are propos-ing a measure that would allowthem to have slot machines. In tan-dem, others in Lansing are sug-gesting it be tied to a reduction inMichigan’s income tax or a small-er income-tax increase than law-makers might otherwise enact as abudget solution.

If approved by the Legislature,the racino measure would go onthe ballot for voter approval. In ad-dition, each community where thegambling would take place wouldneed to vote its approval.

Joe Garcia, general counsel ofthe Michigan Racing Association,said the idea is “put on the table asa potential source of new revenues… that could help resolve the im-passe” over the impending 2008state budget and what new rev-enue and cuts are needed to craft abalanced spending plan.

“No one wants to vote for a taxincrease, no one wants to vote forcuts, so then the question be-comes, how do you fund what isnecessary?” he said.

Garcia said New York, Florida,Pennsylvania and Indiana haveauthorized slots at their race-

tracks in the past year. “It’s notlike we’re breaking new ground,”he said.

No details were available on thenumber of slots being proposed orthe specific amount of potentialrevenue the state might receive.

Two-thirds of the House andSenate would need to approve sucha legislative measure to put it onthe ballot.

Roger Martin, spokesman forGreektown Casino L.L.C., said theproposal “amounts to a hollowpromise that no one can keep.”

He said neither the Legislaturenor the ballot proposal’s statewidepassage would guarantee local ap-proval, and “this isn’t a guaranteeof any tax rollback,” either.

Under Proposal 1 of 2004, anystate actions to expand gamblingopportunities require a statewidevote as well as voter approval inany municipality in which the ex-pansion would take place.

That 2004 ballot initiative pittedhorse racing, educational andbusiness interests against otherbusinesses, Detroit casino andAmerican Indian casino backers.

Matt Marsden, press secretaryfor Senate Majority Leader MikeBishop, R-Rochester, said Bishophas been “briefed on the racino is-sue, but currently there’s no for-mal plan in place to pursue racinosas the option for fixing Michigan’sproblems.

“As he’s said consistently, alloptions are on the table as wemove forward, and we’re currentlyspending our time focused on cutsin the 2008 budgets to find thegreatest level of savings we can be-fore any discussions of revenuemove forward,” Marsden said.

He said Bishop “is certainlyopen to anything that’s going tohelp avoid having to increase peo-ple’s taxes.” But there’s still “a lotto be looked at” in the racino issue,not the least of which is how muchrevenue racinos could produce.

Greg Bird, press secretary forHouse Speaker Andy Dillon, D-Redford Township, said Dillon is“looking at a number of options tohelp balance the budget.” But raci-nos were not included in a propos-al that Dillon sent Bishop, Birdsaid.

He declined to say what was inthe proposal, or comment onwhether Dillon would be open toracinos.

Amy Lane: (517) 371-5355,[email protected]


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August 27, 2007 CRAIN’S DETROIT BUSINESS

Tourism industry seeks $30M in annual funding

LANSING — Bill inhand, Michigan’s tourismbusinesses are rampingup a grassroots effort toconvince lawmakers toprovide annual promo-tional funding.

Last week’s introduc-tion of a bill that wouldearmark $30 million an-nually in state sales taxesto fund tourism market-ing will be followed by e-mails, phone calls, lettersand other legislative contacts topass a measure backers say willkeep Michigan’s tourism promo-tion competitive with other states.

Senate Bill690, sponsoredby Jason Allen,R-Traverse City,is supported bya coalition ofMichigantourism busi-ness intereststhat seek toboost TravelMichigan adver-tising spending from the $5.7 mil-lion in general-fund money that’sbeen spent in past years.

Last year and this year, Michigantourism promotion has benefitedfrom an influx of money from thestate’s 21st Century Jobs Fund. The al-location gave tourism an additional$15 million over the two years, ontop of the general-fund money.

But with the one-time boost end-ing, the Tourism Improving Michi-gan’s Economy coalition is pushingto sustain and increase the budgetfor tourism advertising. And back-ers hail not just from traditionalnorthern tourism climes but fromaround the state, underscoring theissue’s importance to urban aswell as rural areas.

Joining Allen in co-sponsoringthe bill are Sens. Buzz Thomas, D-Detroit; Hansen Clarke, D-Detroit;and Jim Barcia, D-Bay City.

“It’s not a partisan issue. There’stourism dollars being spentthroughout the state,” said NormSaari, Allen’s chief of staff. “Our fo-cus is really to look at tourism as aneconomic engine in the state, andtourism ranges from the KeweenawPeninsula all the way down to Mon-roe, and places in between.”

Roger Martin, spokesman for theTIME coalition, said those who willbe seeking legislators’ attention in-clude the coalition co-chairs LarryAlexander, president of DetroitMetro Convention & Visitors Bureau;R.D. “Dan” Musser III, president ofthe Grand Hotel; and StephenKircher, president of eastern opera-tions for Boyne USA Resorts.

Whether Allen’s bill is the ulti-mate vehicle for increased fundingremains to be seen.

Greg Bird, spokesman for HouseSpeaker Andy Dillon, D-RedfordTownship, said Dillon’s office willgive “serious consideration” toAllen’s bill, but there are “a numberof things” under review in the fiscal2008 budget process. Dillon is “verysupportive” of additional tourismpromotion funding, Bird said.

“We do recognize that tourism

and promotion of the stateis very critical to our econ-omy,” he said. Bird said thespeaker’s office plans tolook at “a number of op-tions” on the funding issue.

House AppropriationsChairman George Cushing-berry, D-Detroit, has float-ed ideas that include arental-car tax to generatemore promotional funding.

The sales-tax proposalcomes at a time when state

sales-tax revenue has been strug-gling. The Senate Fiscal Agency’slatest monthly revenue reportshows sales-tax collections in fis-cal 2007 trailing last year’s level by1.6 percent. July sales-tax revenueposted an increase over last July,but it was only the third time inthe last nine months that sales-taxcollections did so, according to thereport.

The coalition says every $1spent on tourism promotion gener-ates $2 to $3 in new sales-tax rev-enue. And it points to the state’scurrent Pure Michigan campaignas indication of what adequatepromotional spending can mean.

State officials announced lastweek that the campaign has beennamed the top state tourism adcampaign in the country by theTravel Industry Association of America.The campaign also took top honorsfrom the association for the beststate tourism TV commercial.

The Birmingham office of McCann Erickson developed thePure Michigan campaign, whichshowcases the state’s golf courses,beaches, natural beauty and otherattributes.

The state has said that the cam-paign has driven substantial in-creases in volume at its tourismWeb site, which also has the mosttraffic to any state tourism Website in the country, according totracking company Hitwise.

Comings & goings� Elizabeth Gleicher of Pleasant

Ridge was named to the 2nd Districtof the Michigan Court of Appeals,which includes Genesee, Macomb,Oakland and Shiawassee counties,for a term expiring Jan. 1, 2009.Most recently, she has been a solopractitioner after four years asowner and partner of Royal Oak-based Gleicher & Patek P.C. She re-places Judge Jessica Cooper, who re-signed.

� Shalina Kumar, of Southfield-based Weiner & Cox plc, was nameda judge of the Oakland County CircuitCourt replacing Gene Schnelz, whohas retired. Kumar who lives inBirmingham, previously was withSouthfield-based Sommers,Schwartz, Silver & Schwartz P.C. Herterm also expires Jan. 1, 2009.

� Donald Koivisto, a former statesenator and Democrat fromEllsworth, on Aug. 13 was appoint-ed to be director of the Michigan De-partment of Agriculture. He replacesMitch Irwin, who retired.

� Cindy Schnetzler, former direc-tor of GCSI Association Services, asubsidiary of Lansing lobbying

firm Governmental Consultant Ser-vices Inc., has been named execu-tive director of the Michigan Opto-metric Association. She fills a rolepreviously held by association ex-ecutive vice president Bill Dansby,who retired.

� George Stojic, former directorof the Michigan Public Service Com-mission’s operations and wholesalemarkets division, has become di-rector of planning and strategic de-velopment at the Lansing Board ofWater & Light. Susan Devon, formerdirector of the PSC’s regulated en-ergy division, has become theBoard of Water & Light’s CFO. Atthe Lansing utility, both join for-mer PSC Chairman Peter Lark, nowthe BWL’s general manager.

Amy Lane: (517) 371-5355,[email protected]

CAPITOL BRIEFINGSAmy Lane

Allen


Editor:In the Aug. 6 issue, Keith Crain

had an excellent column question-ing the inability of the MichiganLegislature to cut costs whileMichigan’s businesses and fami-lies are forced by the state’s trou-bled economy to cut costs at everyturn (“Politicians can learn muchfrom the people”).

Interestingly, Crain’s columnwas followed by a column by MaryKramer that appeared to give herimprimatur to a 9 cents-per-gallonstate gasoline tax increase to payfor infrastructure improvements— a tax increase of $450 millionper year (“A gas tax can help main-tain state bridges”).

Another tax increase of anykind for any purpose will not serveMichigan. Despite Gov. JenniferGranholm’s protestations to thecontrary, Michigan’s governmentis so bloated with bureaucraticoverspending it almost defies com-prehension. Consider just the fol-lowing:

� The cost to run the state hasgone from $18.3 billion in the 1990fiscal year to $45.1 billion in the2006 fiscal year — an increase of146.4 percent for an average annu-al increase of 5.8 percent. At thesame time, the local ConsumerPrice Index (for Midwest urbanconsumers) has increased by 49.7percent for an average annual in-crease of 2.6 percent. Had ourstate’s overseers increased costs atthe rate of inflation, Michigan’sbudget would be $27.6 billion and

the state would be boasting a $15.7billion surplus instead of a $1.8 bil-lion deficit. As it is, each year thestate lays claim to an ever largerpercentage of its taxpayers’ in-come.

� This outrageous increase instate spending does not include themany billions of unfunded liabili-ties (for the pensions and retiree-medical benefits for public em-ployees) currently on the books($23 billion just for the MichiganPublic School Employees Retire-ment System) that must be paid byfuture generations of Michigantaxpayers.

� Michigan has 83 counties, 533cities or incorporated villages, and1,242 townships. It also has 57 in-termediate school districts and 553K-12 school districts that average amere 3,200 students per district(versus, for example, Maryland’s35,100 students per K-12 district).Where are the state programs toencourage consolidations among

KEITH CRAIN:

OPINION

Raise spending for‘Pure Michigan’ ads

tate Sen. Jason Allen has a great idea.The Traverse City Republican is proposing that

lawmakers set aside $30 million from state income-taxcollections to pay for expanding the state’s “Pure Michigan”advertising campaign. (See Capitol Briefings, Page 7.) Thatwould be a significant increase from the current $5.7 million,which Allen says is low — 42nd among the 50 states. (Gov. Jen-nifer Granholm’s boost to $15 million in spending for twoyears expires this year.)

Tourism officials boast that for every $1 invested in promo-tion, the state gets $2 to $3 in new sales-tax revenue withinmonths. So Allen’s S.B. 690 will more than pay for itself.

The “Pure Michigan” campaign was named best statetourism campaign in the U.S. by the Travel Industry Associa-tion of America. And as Amy Lane reports on Page 7, Web sitetraffic on Michigan’s site is setting records, which officials at-tribute to the Pure Michigan campaign.

This is not the time to cut back on the campaign or the mo-mentum it is building.

Lawmakers might be persuaded this is the right tactic ifsupporters define specific ways to track whether the invest-ment is paying off, perhaps by charting year-to-year tax collec-tion from a sample of tourism-related businesses.

Regardless, this is a no-brainer. The Legislature and gover-nor should embrace this investment strategy.

NSF helped by China scareSuddenly, “Made in America” is sounding pretty good.The recent spate of much-publicized safety concerns with

food products and toys made in China has made Americanconsumers more conscious of fine-print product labels.

It’s a huge opportunity for Detroit area companies to pro-mote the origins and safety standards of their products.

But even companies that use “Made in America” as a sell-ing point sometimes outsource components from China.

So companies in the U.S. and China are clamoring for theseal-of-approval from nonprofit product safety and testingcompany NSF International Inc. in Ann Arbor.

As Chad Halcom reports on Page 1, the phones at NSF areringing because of the China scares. Chinese companies alreadyhave tapped NSF services through its facility in Shanghai.

Given the Chinese penchant for continuous improvement,their desire to avoid a trade war and their hopes for making agood showing as host to the summer Olympic games in Beijingnext year, the government will attack this problem fiercely.Chinese remedies may make American executives and regula-tors shudder: One Chinese regulator was executed in the wakeof a scandal involving taking bribes while licensing drugs.

KEITH CRAIN:

State tax increase harmfulLETTERS

OPINION

LETTERS

Everyone realizes that our gov-ernor seems to have certain con-stituencies to whom she is behold-en. It appears she doesn’t think it’sprudent to disturb the relationshipthese constituencies have with thegovernor’s office.

Whether anyone wants to admitit, our state has two things goingagainst it: We are as close to beingin a depression as we can be, butwe’ll call it a recession; we are in acrisis of state government, but noone in Lansing cares to admit theseriousness of our predicament.

The shortfall between revenue

and expenses is enor-mous. Somehow, every-one seems to think thatthe magic bullet is tofind some new tax or tax-es that will allow ourstate government to con-tinue to live in a style towhich it is accustomed.

It’s going to be toughto cut a program or spe-cific budget without of-fending some special in-terest. Heck, everybodyhas a special interest or two. In thiscrisis, if Lansing offends just about

everybody, they’ll be do-ing their job.

But now it has gottento the point of beingridiculous. The gover-nor and Legislature aretrying to raise moneywith all sorts of sordidschemes. We’ll raise thetax on cigarettes andcigars, put a couple ofextra bucks against al-cohol, raise our salestax, and try and find

any potential revenue stream tomaintain government programs.

But through it all, one revenuestream seems immune. God forbidwe raise the tax on beer.

I have to admit right up front thatI am not much of a beer drinker, soany tax large or small wouldn’t im-pact me. But I am amazed at this les-son in civics in our state.

Our governor and Legislatureare willing to trade income tax in-creases for slot machines at racetracks. But no one is even suggest-ing that a tax increase on beermight be worth discussing.

I am told Lansing is afraid of thepublic uproar over a higher tax on

beer. Does that mean that they areafraid that a united and vocalgroup of voters might actually havesome impact on their decision?

Then I suggest that we rally the“beer vote” to march on Lansing.Are they willing to lobby on behalfof other tax increases?

It raises some interesting possi-bilities. If the government is afraidof the beer drinker, we should tryto discover other groups that putsuch fear into the hearts of legisla-tors.

Democracy in action. Isn’t itwonderful?


Crain’s Detroit Businesswelcomes letters to the editor.All letters will be considered forpublication, provided they aresigned and do not defameindividuals or organizations.Letters may be edited for lengthand clarity.Write: Editor, Crain’s DetroitBusiness, 1155 Gratiot Ave.,Detroit, MI 48207-2997.E-mail: [email protected]

Now we have become the ‘beer’ state

See Letters, Page 9

S


August 27, 2007 CRAIN’S DETROIT BUSINESS Page 17

BIOTECHNOLOGYGeorge Dunbar, president, CEO and adirector of Aastrom Biosciences, AnnArbor; and Daniel Calvo, presidentand CEO of Assay Designs Inc., AnnArbor; to the board of directors of Ac-curi Cytometers, Ann Arbor.

CONSTRUCTIONHarris Katzman to senior project su-perintendent, Oliver/Hatcher Con-struction, Novi, from project superin-tendent, Butcher & BaeckerConstruction, Rochester Hills.Nicole DeSalvio to director of market-ing, DeSalvio Group Inc., ClintonTownship, from administrative assis-tant.

CONSULTINGMichael Albritton to director, AlixPart-ners, Southfield, from principal,PRTM Management Consultants,Waltham, Mass.James Gouin to senior managing di-rector, corporate finance segment, FTIConsulting Inc., Detroit, from vicepresident, CFO, strategy & businessdevelopment, international opera-tions, Ford Motor Co., Dearborn.Laurie Harbour-Felax to managing di-rector, operational strategy & perfor-mance improvement group, Stout Ri-sius Ross, Farmington Hills, frompresident and founder, Harbour-FelaxGroup, Troy.

EDUCATIONHenry Tanaka to dean of academic andstudent services, Auburn Hills cam-pus, Oakland Community College,Bloomfield Hills, from interim dean.

ENVIRONMENTALSean Paulsen to associate, Golder As-sociates Inc., Wixom, remaining asgeosciences group leader and seniorproject geologist.

FINANCEDoug Swiatkowski to director of edu-cation, training and development,Burns & Wilcox, Farmington Hills,from training and development man-ager, Raytheon Professional Services,Troy.

HEALTH CARERichard Smith toservice chief, ob-stetrics and gyne-cology, HenryFord Hospital, De-troit, remainingas obstetricianand gynecologist,Henry Ford Med-ical Group.Edwin Tuller to di-rector of healthperformance mea-

surements, Health Alliance Plan, De-troit, from director of quality develop-ment, Care Choices, FarmingtonHills. Also, Vince Ferri to vice presi-dent of business affiliations and sup-port, from director of application de-velopment, business configurationteam and medical and business infor-matics; Toni Frawley to director of cor-porate product development, frommarket research manager; and AnitaLandino to director of advertising andcommunications, from interim lead.

HOSPITALITYScott Stinebaugh to director of salesand marketing, Westin Book CadillacHotel, Detroit, from director of sales

and marketing,Westin DetroitMetropolitan Air-port hotel, Romu-lus. Also, DeniseBednarczyk to di-rector of sales andmarketing, West-in Detroit Metro-politan Airport,from director ofgroup sales, West-in Detroit Metro-politan Airport.

INFO/TECHNOLOGYAnne KohnkeMeda to vice pres-ident of informa-tion technology,Divdat Inc., Fern-dale, from direc-tor of informationtechnology andoperations, ParkWest Gallery,Southfield.Jeremy Wilkinsonto managing con-

sultant, UltraLevel Inc., Detroit, fromsenior technical consultant, MTMTechnologies, Troy. Also, RonaldFromme to senior project manager,from senior network architect/pro-ject manager, Inacomp Technical Ser-vices Inc., Eastpointe.

LAWDavid Kurlandsky to senior attorney,intellectual property practice group,Butzel Long, Ann Arbor, from seniorcorporate counsel, Pfizer Inc., AnnArbor. Alicia Skillman to director of the fairhousing unit of the civil law group, Le-gal Aid and Defender Association Inc.,Detroit, from staff attorney, civil lawgroup.Daniel Henry to member, intellectualproperty practice group, HonigmanMiller Schwartz and Cohn L.L.P.,Bloomfield Hills, from associate, intel-lectual property law practice, Rader,Fishman & Grauer, Bloomfield Hills.Andrew Goldberg to shareholder,Kemp Klein Law Firm, Troy, from part-ner, Lipson, Neilson, Cole, Seltzer &Garin, P.C., Bloomfield Hills.

MANUFACTURINGDavid Jaffe to gen-eral counsel andsecretary,Guardian Indus-tries Corp.,Auburn Hills,from associategeneral counsel.Charles Pryde tonational accountsmanager, TheHome Depot,BrassCraft, Novi,

from channel manager.Jai Shah to vice president-strategicplanning/group vice president, win-dow operating divisions, Masco Corp.,Taylor, from vice president for strate-gic planning.

MARKETINGShelly (Havard) Otenbaker to seniorvice president, Eisbrenner Public Re-lations, Troy, from vice president.

Also, Steve Blow to vice president,from account supervisor.Jay Kargula to CEO, Smith-WinchesterInc., Southfield, from executive vicepresident, creative services. Also,Frank Morisette to COO, from presi-dent, operations; and Michael Ladd topresident, from executive vice presi-dent, client services.Kristin Goza to senior art director,Curve Detroit, Pontiac, from art direc-tor.Kelly Scattergood to director of salesstrategies, The Kirkwood Group, AnnArbor, from executive vice presidentof sales and marketing, HomeBuilders Advantage, Livonia.

NONPROFITSGary Guetschow toCFO, The Guid-ance Center,Southgate, fromaccounting offi-cer.

RETAILJamie Chapmanto associate exec-utive director,American Cancer

Society, Southfield, from Relay forLife specialist.

Bob Meaux tosales manager,Mercedes-Benz ofSt. Clair Shores,St. Clair Shores,from used carmanager, Shu-man Chrysler-Jeep, WalledLake.Mary Vandewieleto affiliate pro-gram director

and minority owner, Better HealthStores, Novi, from director of market-ing, Meer Dental, Canton Township.

SERVICESDarron Markwood to marketing coor-dinator, Huffmaster Crisis Manage-ment, Troy, from marketing manager,Lease Corp., Troy.Erna Laza to administrator, The Vil-lage of Westland Senior Living Com-munity, Westland, from adult fostercare facility administrator, O&D In-vestments L.L.C., Sterling Heights.

SUPPLIERSLarry Beard to vice president, merg-ers, acquisitions and business devel-opment, Cooper- Standard AutomotiveInc., Novi, from president, global fluidsystems division. Also, Michael Ver-wilst to president, global fluid systemsdivision, from vice president, strategyand business development.

TELECOMMUNICATIONSPatrick Paterno to regional director ofcommunications, Michigan Region,Comcast, Southfield, from manager ofmedia relations, Leader Dogs for theBlind, Rochester.

PEOPLEPEOPLECOMING EVENTS

Detroit Economic Club. Noon Sept. 6.Ron Gettelfinger, president, Interna-tional Union, United Auto Workers.Masonic Temple, Detroit. $40 members,$50 guests of members, $65 others. Con-tact: (313) 963-8547.

Detroit Economic Club. Noon Sept. 12.Harnessing Global Intellectual Capitalto Create Corporate Value. With Ra-man Roy, chairman and CEO, QuatrroBPO Solutions (pty) Ltd. Townsend Ho-tel, Birmingham. $40 members, $50guests of members, $75 others. Contact:(313) 963-8547.

Ideas Before Dawn. 7:30 a.m. Sept. 12.Downtown Detroit Partnership, Check-er Sedan, LaSalle Bank, ComericaBank, Michigan Association of Certi-fied Public Accountants and Crain’s De-troit Business. Retail Opportunities forDetroit. With Stanley Eichelbaum, pres-ident of Planning Developments Inc.and Marketing Developments Inc. De-troit Athletic Club. $30. Contact: (313)566-8250.

Regional Development Breakfast. 7:30-9a.m. Sept. 25. The Engineering Society

of Detroit Regional Development Com-mittee. Detroit City Council PresidentKenneth Cockrel Jr. $35 members, $50others. Detroit Golf Club. Contact:Leslie Smith, (248) 353-0735, ext. 4152.

Lifeline Awards. 5:30-9 p.m. Sept. 26.Wayne State University College ofNursing. Nancy Schlichting, presidentand CEO of Henry Ford Health Sys-tem, and the late Rachel Boone Keith,physician, philanthropist and commu-nity leader, will be commemorated.Detroit Yacht Club. $125. Contact:Mary Hollens, (313) 577-6967.

Jeffrey Gitomer’sLittle Black Bookof Connections:How to get From“Who You Know”to “Who KnowsYou.” 7-11 a.m.Oct. 12. MichiganRetailers Associa-tion and Crain’sDetroit Business.Jeffrey Gitomer,author andcrainsdetroit.com

weekly sales columnist. The Ritz-Carl-ton, Dearborn. $99. $89 each for groupsof 10 or more. Contact: www.gitomer.com/dearborn.

CALENDARCALENDAR

PEOPLE GUIDELINESAnnouncements are limited tomanagement positions. Nonprofitand industry group boardappointments can be found atwww.crainsdetroit.com. Sendsubmissions for People to JoanneScharich, Crain’s Detroit Business,1155 Gratiot Ave., Detroit, MI48207-2997, or send e-mail [email protected]. Releasesmust contain the person’s name,new title, company, city in whichthe person will work, former title,former company (if not promotedfrom within) and former city inwhich the person worked. Photosare welcome, but we cannotguarantee they will be used.

Gitomer

Bednarczyk

Guetschow

Jaffe

MeauxMeda

Smith

IN THE SPOTLIGHTEPrize L.L.C. wants to build a better

mousetrap, soit appointedJeffrey Ershlerto make surethat happens. Ershler, 37,has beennamed vicepresident,mousetrap, atthe PleasantRidge-basedinteractive-

promotions company. He and histeam are responsible for finding abetter way for everything thecompany does, includingincreasing efficiency and revenue,and measuring operationalperformance.Before joining ePrize, Ershler wasplanning and asset manager atHoneywell International inClearwater, Fla.Ershler earned a bachelor’s degreein history from Columbia Universityin New York, and an MBA from theUniversity of Michigan.

Ershler

Space: Troy spots filled■ From Page 3

Two buildings in the three-building complex on StephensonHighway at 14 Mile Road havebeen sold to tenants and one hasbeen fully leased.

Absorption of such large blocksof space has been rare in Troy,with conditions landlords andleasing representatives describeas “brutal.” Troy office space is 25percent vacant, according to sec-ond-quarter figures by CB RichardEllis.

But brokers say it’s that compe-tition that drove owners to makecompetitive deals.

The 105,000-square-foot buildingat 250 Stephenson Highway, for ex-ample, was once appraised at $14million and sold for roughly $6million to Troy-based Chimes Inc., asource close to the deal said.

The 76,000-square-foot buildingat 350 Stephenson Highway wassold to Germany-based Kostal forroughly $7 million, well below thecost to develop a similar building,a source said.

“Those buildings are good deals,but not for an investor who wantsto buy them and hold them,” saidRandall Book, a senior vice presi-dent with the Southfield office ofGrubb & Ellis, which representedthe buyer for 250 Stephenson High-way. “It’s a good deal for a user.”

Government incentives alsohelped get the deals done.

Kostal will get a $5 million statetax credit over 10 years from theMichigan Economic DevelopmentCorp., the MEDC announced inMarch.

In addition, the city of Troy willcontribute a tax abatement of$105,000 over 12 years, said BrianMurphy, Troy’s assistant citymanager and director of economicdevelopment.

The MEDC also is giving a taxcredit of $686,000 over seven yearsto the new North American officeof Belgium-based LMS. That com-pany is leasing 35,000 square feet

at 5755 New King Court. Troy willalso give LMS a tax abatement of$30,500 over 10 years.

The LMS deal is the most recentleasing transaction.

Collins & Aikman grew out ofthe building on New King Court in2002 when it moved to the three-building complex at 150, 250 and350 Stephenson Highway, saidYoungman.

Since that move, the 60,000-square-foot building has had atmost 10,000 square feet occupied,Lipton said.

“It’s great that you have a com-pany expanding in this market,where there’s been so much attri-tion,” Lipton said.

Finding the space ended asearch that spanned Troy, AuburnHills and Rochester Hills said RickComiskey, a consultant with KeyManagement Services who handlesthe facility management for LMSand worked with Friedman on thelease.

The building is in a good loca-tion, he said, and with a 35,000-square-foot lease LMS will get itsname on the building.

“And it was very competitive interms of leasing,” he said.

The bad news is LMS is movingfrom its smaller office at 1050Wilshire Drive, leaving spacethere vacant.

Other space soon to be left va-cant is Kostal’s current space inNovi.

“This shows that there is depthto the market and there are credittenants doing business in thearea,” said Andy Farbman, co-president and CEO of the FarbmanGroup, which represented ownersat 350 Stephenson Highway. “Butthe bad news is, you have a compa-ny leaving the west side.”

Daniel Duggan: (313) 446-0414,[email protected]


August 27, 2007CRAIN’S DETROIT BUSINESSPage 18

dride batteries for General Motors’hybrid cars. Subsidiary United So-lar Ovonic L.L.C., Auburn Hills, isbuilding a plant in Greenville tomake flexible solar panels forhousing and commercial construc-tion; and Rochester Hills-basedOvonyx Inc., a joint venture with In-tel Corp., is developing nonsilicon-based computer memory that EdDoller, chief technology officer ofIntel’s flash memory group, de-scribed to a trade journal in March“as pretty close to Nirvana.”

Iris died at 79 last August, hav-ing lived long enough to see herand Stan’s vision achieve criticalmass. In an interview Friday fromhis Bloomfield Hills office, Ovshin-sky, 84, who stepped down as ECDpresident in March, made it clearthat while he might be retiringfrom his company, he wasn’t retir-ing from the world of science.

The company and its sub-sidiaries, he said, need to focusmore than ever on near-termprocesses to improve profits andcomplete what has been a longslow transition from research tocommercial success. He needs, hesaid, to focus on big-picture, long-term projects that will continue tochange the world.

Why did you decide to retire? Theannouncement said you would contin-ue to consult for ECD and adviseOvonyx on its computer-memory tech-nology. Why not just stay on as chiefscientist?

The things I want to do now arenot something a growing companycan do. It needs to meet the prof-itability standards Wall Streetputs out there. I built a culturethere I’d like to protect, and I be-lieve sincerely the company is go-ing to do a great job. I hope so. Istill own a lot of stock.

But now I want to really go aftermy passion. I don’t want to be com-petitive with them. I don’t want tobe a distraction. I want to work onstuff they won’t be working on. I’mgoing to be after bigger game.

I’m an industry builder. Now’sthe time to build new industriesfor the future. The battle has beenwon (at ECD). I want to do the or-der-of-magnitude things I’ve donemy whole life, and then turn theminto products for the real world.

How do you physically go aboutthat? Will you have access to a lab?Will you do physical research?

I will certainly want access tolaboratories, not a lab. I’ll certain-ly do R&D, not on the next genera-tion of things, but on generationsdownstream for the building ofnew industries. If we don’t buildnew industries based on scienceand technology, what’s going tohappen? Look at Detroit. It’s atragedy. I want to help build indus-tries that are going to hire people.

The world’s at a crucial pointit’s never been at before, and wehave to answer the big questions.They are answerable, and I intendto answer them. I want to do bigthings in energy and information.

I will do R&D, and I will do li-censing as it’s required. I’ll be con-sulting all over the world. I’m leav-ing next week to give a talk inSwitzerland, then I’m off to Italy,then back home, then I’m going toTaiwan and Japan, then maybeMexico.

You’ve certainly had an interestinglife. You didn’t go to college but havewritten hundreds of articles that havebeen published in scholarly journals.The PBS program “Nova” profiled youin 1987. Time named you “A Hero forthe Planet” in 1999. Last year, TheEconomist called you “the Edison ofour age.” Will you be working on anautobiography?

I don’t believe in that. A womannamed Lillian Hoddeson, a prize-winning historian and a physicistat the University of Illinois, is writingthe scientific history of my life.And Helmut Fritzsche, the formerhead of the physics department atthe University of Chicago, is compil-ing my scientific papers from theearly 1990s on. That’s my thirdcompilation. It’s supposed to beout by my 85th birthday on Nov.24, but I doubt if they’ll have itdone in time.

When you founded the company,you and Iris said you wanted tochange the world. You seem to have fi-nally reached some critical mass. Didyou think it would take nearly 50years?

I told Iris before she died, “We’regoing to change the world,” andshe said: “No, Stan, we havechanged the world.” All over theworld, people are using our stuff.

The critics have pretty vocal overthe years. They said ECD might havedone great research but it wasn’tmuch of a public company. It lost mon-ey every year. Any thoughts?

The things I fought against thecritics for are what’s making mon-ey, now. If I’d have listened tothem, these things wouldn’t haveseen the light of day. You don’t runa company for 48 years and not bea realist. You listen to informedopinion, not uninformed criticism.I’ve done everything I said I wasgoing to do. I turned out to be apretty good businessman.

You were married to Iris for morethan 50 years and her business part-ner for more than 40. How have youcoped since her death?

It’s been the toughest. It’s beyonddescription. I failed at trying to han-dle it. It’s going to be with me all mylife. I failed at living alone. I could-n’t eat. I couldn’t sleep. I could workand that was about it. I was as in-tensely in love with her from thefirst moment I saw her until theminute she died. This is a way tokeep going. If it was just a matter ofbeing active, I’d retire.

She died very suddenly. What hap-pened, if you don’t mind my asking?

I had a bacteria that had at-tacked my heart. I went in for a hipoperation and got an infection thatthreatened my life. Iris wanted meto start building up my strength.We were swimming in our littlelake. She was in the shallow endand I was out in the middle and shesaid to Lillian (Hoddeson), “I’mworried about Stan out there,” andthat was the last thing she said.

The next thing we saw, she wasfloating. We think it was a heart at-tack, but I didn’t have them do anautopsy. There was no point. I’mtrying now to build somethingover that chasm of unhappinessthat gives me some satisfaction.

Tom Henderson: (313) 446-0337,[email protected]

Ovshinsky: Rebuilding■ From Page 1



NSF: China scare provides a boost for nonprofit’s testing business■ From Page 1

in from U.S. companies, and the re-quest is largely for tests to be donehere in the U.S.,” she said. “We’refinding the clients feel more com-fortable with results of a U.S. teston overseas (made) products.”

Bestervelt said demand is up fortests for toxins at the Ann Arbor

facility, whichcan handlepharmacologi-cal products,food and waterproducts, andmanufacturedgoods.

NSF’s jointventure inShanghai, she

said, is mostly handling tests of petfood products for melamine, a tox-in that was found in limited dosesin U.S. store inventories, as well asdiethyl glycol, a toxin that hasturned up in some toothpastes andoral-hygiene products.

“I couldn’t exactly look at re-sults for every single productwe’ve tested, (but) more seem to becoming up safe than not,” she said.“There haven’t been recalls (basedon) our tests. Usually our clientscan end up dealing with it inter-nally because we’re generallylooking at inventory that hasn’treached retailers yet.”

NSF not only tests finished prod-ucts but conducts audits of compo-nents and raw materials along thesupply chain. Test and audit re-sults can take days or weeks tocomplete.

Testing isn’t cheap but is an ef-fective way to safeguard againsteven more expensive recalls or le-gal exposure, said Hal Stratton, an

attorney at theWashington of-fice of Detroit-based DykemaGossett P.L.L.C.and chairman ofthe U.S. Con-sumer ProductSafety Commis-sion from 2002 to2006.

“Any busi-ness involved in some way withunsafe products — the retailer, themanufacturer, the distributor, thesupplier, the importer — they aretreated as equally responsible un-der the law,” he said.

But, in cases of offshoring or im-ported products, American compa-nies often end up shouldering agreater share of the total liabilitybecause their overseas partnersare beyond the reach of U.S. agen-cies and courts.

In 2004, under Stratton’s tenureat the safety commission, four im-porter companies had to recall 150million toy jewelry products madein India and sold in vending ma-chines. No retailers or local manu-facturers could be tied to that case,Stratton said.

“This doesn’t mean there’sgreater risk in offshoring. Whenyou get into offshoring you’re notjust sending your production outinto some black hole,” he said.“These companies usually knowwell who they’re doing businesswith, and can make sure they dothe proper testing.”

Since late May, 13 companies

have recalled more than 3.25 mil-lion toys and other products forchildren on their own or in cooper-ation with the U.S. Consumer Prod-ucts Safety Commission, all due toexcessive levels of lead in paint orin components manufactured inChina.

Hardest hit have been RC2 Corp.in Illinois and California-basedMattel Inc. with over 1 millionunits apiece.

Other product recalls tied toChina have included tires, tooth-paste and oral-hygiene products,and pet food.

In Chesterfield Township, LionelTrains has been conducting localtests of its warehoused inventory,even though the company has hadno product complaints, LionelCEO Jerry Calabrese said. Thenew tests have not found cause forconcern.

Lionel has outsourced most pro-duction to Asia since 2001, but Cal-abrese said many large retailchains that carry Lionel productsalready test the safety of toy prod-ucts before they go on display.

“We still did our own testing,just to be sure,” he said. “But wetrust our manufacturers in Asia.

This (testing) was just an addedprecaution.”

Pet food retailers were also grap-pling with a smaller scare lastweek after it was revealed Wal-MartStores Inc. pulled two brands of dogtreats in July for testing after cus-tomer concerns that the Chineseproducts may have sickened theirpets.

Harvey Solway, president andCEO of Farmington Hills-based PetSupplies Plus Inc., said his companygathered statements from manu-facturers and suppliers that its in-ventory meets U.S. safety stan-

dards.Wal-Mart was reviewing its sup-

ply of Chicken Jerky Strips fromImport-Pingyang Pet Product Co. andChicken Jerky from Shanghai Be-stro Trading, but Solway said PetSupplies Plus doesn’t stock the af-fected brands.

“This doesn’t appear to be any-thing like the melamine-related re-call in March, which was muchmore widespread,” he said. “Thisappears to be more localized, andwe’re confident (Pet Supplies Plus)isn’t affected.”

Chad Halcom: (313) 446-6796,[email protected]

Stratton

Bestervelt



Penske: Passion for city■ From Page 1

brick facades on the new concretewalls, a new children’s play-ground. And those are just the per-manent modifications that will bein place when the IndyCar Seriesand the American Le Mans Serieshit town on Labor Day weekend.

There will be corporate chalets,some of the classiest advertisingdisplays seen in the sport and thesame Penske class that benefitedthe 2006 Super Bowl at nearbyFord Field.

“I’m giving everything I can tohelp the city,” he said.

It bears noting that Penske did-n’t make that last statement to pada reporter’s notebook. Rather, hesaid it to IndyCar drivers DarioFranchitti, the Indianapolis 500winner, and Danica Patrick whenhe asked them to attend fundrais-ers for the Belle Isle project, whichhas a “multiyear” deal with theALMS and a five-year contractwith the Indy Racing League with anoption for a four-year extension.

It didn’t take much convincingfor Franchitti, Patrick and othersto jump onboard. They took onelook at Penske’s eyes and plansduring an informal presentationand knew that his effort and moti-vation are genuine.

“That’s great,” Franchitti saidat least four times to no one in par-ticular as Penske spoke.

Turning to a reporter inPenske’s motor home, Franchittisaid, “It’s pretty awesome, isn’t it?It was a pretty good place to racebefore, but it’s going to be reallygood now.”

Franchitti raced on the track fivetimes in CART, winning in 1999. Heremembers how tight the back-stretch was and how blind some ofthe corners were. They aren’t now.

Penske, a former racer of consider-able skill, believes he has openedthose up, too, particularly the first,third and seventh turns, and evenmade adjustments after Penske Rac-ing driver Helio Castroneves testedthere July 25. Castroneves won thefinal two CART races on the 2.346-mile (now 2.125) temporary circuitin 2000 and 2001.

The new concrete will cover spec-tator and sponsor areas that used tobecome mud bogs at the first sign ofmoisture. Franchitti remembersseeing people covered in filth andknows it wasn’t always the bestplace for corporate hospitality.

Of course, Penske wrote the bookon entertaining clients, and he hasmade sure spiffy areas are foundeasily. Tents and chalets will be col-or-coded and lined with white pick-et fences. Seventy shuttle buses willprovide transportation.

Plus, 250 dead trees have beenremoved, and Penske’s group willraise tree foliage to 14 feet off theground to give people clear viewsof the Detroit River on either side.

And as for the racing, Castro-neves said it should be an improve-ment over years past.

“The course is similar to what Iremember, but there’s a new sur-face, new concrete, and the cornersare wider, which should make formore exciting racing,” he said.

Penske predicts the ALMS race— with different car classes featur-ing racers running at larger speeddifferentials than the Indy cars —will benefit from the course adjust-ments, too. The wider backstretchfigures to allow for some on-trackfighting.

“This should really be terrific,”he said. “I can’t wait.”

From AutoWeek

Penske selective about his event choices Projects seen as onesthat will better Detroit

BY BILL SHEACRAIN’S DETROIT BUSINESS

Automotive entrepreneur Roger Penske has been hailedfor his chairmanship of Super Bowl XL at Ford Field and forreviving the Detroit Belle Isle Grand Prix, but has no plans tomake such efforts a regular part of his corporate universe.

Penske is chairman of Bloomfield Hills-based PenskeCorp., a $16.6 billion company whose holdings include trans-portation, auto sales, truck leasing and motor sports ele-ments. Last year, it was announced he was leading the effortto bring back the Grand Prix, idle since 2001, over this LaborDay weekend as part of a five-year deal.

“We have no plans for an event management organiza-tion,” said Bud Denker, a Penske senior vice president whois chairman of the Grand Prix.

Penske, who couldn’t be reached for comment, shouldn’tbe viewed as someone readily available to manage or revi-talize moribund events, Denker said. Instead, he’ll take onprojects that are of interest to him and will better Detroit.

“Who knows what else is in Roger’s mind for what hewants to do in the future?” Denker asked, adding that hedoesn’t know whether Penske has been approached aboutany future projects.

In the meantime, Penske has been willing to leverage hiscompany’s assets to make sure the Grand Prix comes off aswell as the Super Bowl. About a dozen Penske staffers were

loaned for the Super Bowl and roughly a half-dozen are as-signed for the Grand Prix.

“Despite being lean, with the right people, we have a cou-ple meetings and we move forward,” Denker said. “We don’thave committees. No pre-meetings. We don’t have time forthose things. We make it happen.”

Denker himself is such an example: “Itmay mean working several hours into theevening to make sure it happens,” he saidof ensuring his Penske and his race rolesboth are handled.

Last Sunday, for instance, he said hespent seven hours walking the 2.1-mileBelle Island race course with Penske at hisside. Penske is known for being involvedwith the smallest details or projects, andwas making improvement suggestions dur-ing their walk.

“In any business we have, he’s got hisfingerprints on it and he wants to knowwhat’s going on. He wants to add value,”Denker said. “He’s meticulous in the wayhe wants things to look. He wants things clean. This is ahuge undertaking for us.”

Thus far, it appears the public is interested in the under-taking. Denker said more than 44,000 tickets had been soldas of Friday, leaving about 4,000 remaining, and he expectedthose to be gone by the time of the races.

The Grand Prix, which includes both American Le Mansand IndyCar cars, is being organized and promoted by theDowntown Detroit Partnership, of which Penske is chairman,but many key personnel are from Penske. The partnership

is a public-private venture that plans and coordinates pro-jects aimed at the betterment of the city. It set up Detroit BelleIsle Grand Prix L.L.C. to manage the races.

About $8 million is being spent on upgrades to the race-course and the 982-acre island for the Grand Prix, whichmoved from downtown to the island in 1992. About $6 mil-

lion is coming from sponsorship moneyand the rest through a loan and line of cred-it, Denker said. Sponsors include major au-tomotive names like Corvette, Firestone andBosch, and others such as Comerica Bank,MotorCity Casino and Compuware.

The race has guaranteed $100,000 in cashthis year for the improvement and preser-vation of the island, and all net proceedsfrom the race will go to the same fund.

The race had just six months from gettingits city approvals to the starting flag to raisesponsorship money. Ann Lang, who workswith Penske as president and CEO of thedowntown partnership, isn’t surprised thefund-raising goal was reached so quickly.

“I’d almost call it the Penske respect. He’s so highly re-garded, people will do things for him that they might not dofor anyone else,” she said. “His motives are beyond re-proach. He only wants the best for the city.”

Planning for next year will begin shortly after this year’sraces, said Merrill Cain, public and community relations di-rector for the Grand Prix.

“We’ve kinda thought ahead about what additions wewant to do,” he said, but declined to go into detail.

Bill Shea: (313) 446-1626, [email protected]

We don’t havecommittees. No pre-meetings. We don’thave time for thosethings. We make it

happen.Bud Denker, Penske Corp.

”

“

POLISHING A LANDMARKPart of the $8 million in capital investments on BelleIsle by the organizers of the Detroit Belle Isle Grand Prixhas been spent polishing the island’s nearly century-oldcasino.The Albert Kahn-designed casino, which opened in1908 but is now used for events and meetings, got a$110,000 cleanup that included painting, replacementfixtures, flooring and general upkeep. Regional GeneralContracting in Plymouth oversaw the work.The two-story casino is near the island’s entrance, eastof the Scott Fountain. It replaced a casino built in 1887.More photos of the casino can be viewed atwww.crainsdetroit.com.

— Bill Shea

Improvements to the Belle Isle Casino are visible in the main lobby (upper right) and exterior column and facade(lower right and left). The view from the casino (above) reveals the landscape.

PHOTOS BY HEATHER ROUSSEAU



www.crainsdetroit.com

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QuatRx: Company preps for IPO or acquisition■ From Page 3

Achatz: Bigger slice■ From Page 3

quartered in Palo Alto, Calif., and Seattle. Fra-zier and TL Ventures of Wayne, Pa., each invest-ed $1.5 million to launch QuatRx in 2000. Bothhave been part of each round of fundraisingsince then.

Peter Reikes is managing director in chargeof health care investments for the New YorkCity-based investment banking firm of Cowen &Co. L.L.C., which was going to be one of the un-derwriters of an IPO last year. QuatRx filedwith the U.S. Securities and Exchange Commissionin February, then withdrew the filing in Julyafter the market for biotech IPOs cooled off.

“They are starting to attract a lot of attentionbecause of the results of their clinical trials. Itis a company that we were quite enthusiasticabout last year, and they’ve made substantialprogress since then, so it’s hard to imagine notbeing more excited today. Their story isstronger today than it was,” Reikes said.

Reikes said his company currently has no in-volvement with QuatRx but would like to be in-volved with an IPO or in helping find a buyer.“That would be up to them, but we certainlywould be very interested in continuing our re-lationship with them. They’re working in areasthat clearly have very large unmet needs.”

Zerbe said the company is working to be pre-pared for either a sale or initial public offering.

“We are working with banks to position our-selves for when the market is right, but wehave no specific timeline,” he said. And, “BigPharma is always interested in companies withgood compounds. There’s nothing imminent,but we’ve had discussions.”

QuatRx is in Phase II studies of fispemifene,a drug for men that stimulates production oftestosterone, and is in Phase I studies of a com-pound known for now as QRX-431, which low-ers low-density lipoprotein, or LDL, the so-called bad cholesterol, and treats obesity.

A fourth compound, Asord, a treatment forpsoriasis, was recently licensed to Pennsylvania-based CollaGenex Pharmaceuticals Inc. (Nasdaq:CGPI) for development and commercialization.

QuatRx is in pre-clinical development of twocompounds to treat endocrine disorders inwomen.

The company has 53 employees, including 30at a research facility in Turku, Finland, ac-quired when QuatRx bought Hormos MedicalCorp. in 2005.

The founding QuatRx team are former execu-tives at Parke-Davis and Co. in Ann Arbor wholeft the company after it was sold to Pfizer Inc. in2000. They include Zerbe, who previously hadbeen managing director of Eli Lilly’s researchcenter in England and a senior vice president atParke-Davis; COO Christopher Nicholas, whowas vice president of global marketing atParke-Davis; and chief science officer StuartDombey, a vice president of research.

Last year’s aborted IPO led to May’s $44 mil-lion round of venture capital. It was led by Ven-rock, co-located in New York City and MenloPark., Calif., a first-time investor, and included14 VC firms. Another new investor was CatellaHealthcare, a VC firm in Sweden.

The State of Michigan Retirement System in-vested for the third time, through its positionas the primary limited partner in Chicago-based Stockwell Capital L.L.C. Its Stockwell CapitalFund I has invested $486 million in 39 companiesand a total of $2.3 million in QuatRx.

“For a company of this size, their roster ofventure capital investors is a Who’s Who,” saidTom Hufnagel, a principal in Stockwell.

Other prominent investors in the last roundincluded Baltimore-based T. Rowe Price, MenloPark, Calif.-based InterWest Partners and SanFrancisco-based Thomas Weisel Healthcare Ven-ture Partners L.P.

The money, said Zerbe, will finish Phase IIIstudies of Ophena, finish Phase II studies andbegin Phase III studies of fispemifene and fin-ish Phase I studies of QRX-431.

None of QuatRx’s investors are Michigan-based VC firms.

Mary Campbell, president of the Michigan Ven-ture Capital Association and co-founder and gener-al partner of Ann Arbor-based EDF Ventures, thestate’s oldest VC firm, blamed bad timing for thelack of an investment by her firm.

“We met with them in the very early going, butwe were just raising our thirdfund and we didn’t have anymoney to invest. Afterwards,they needed more money thanwe could afford,” said Camp-bell.

“I follow them from afar,and I’ve heard only positivethings about them and theirstrategy. They’re very highlyregarded,” said Campbell. “Iwas excited for them when

they brought in Venrock, which is one of theoldest institutional investors on the planet.Venrock has just raised a new fund and theyhave a lot of dry powder left, and if they likeMichigan, that might be good for others of us.

“Quite frankly, it’s easier to get an investorinterested in Ann Arbor if they’re already com-ing here, anyway. I can’t tell you how impor-tant QuatRx is as a lightning rod.”

Venrock was founded by Laurance Rocke-feller, the fourth of the six children of John D.Rockefeller, in 1969. It has invested $1.9 billion in400 companies that have resulted in 122 IPOs and111 mergers or acquisitions. Companies it helpedlaunch include Apple Computer Inc. and Intel Corp.

Tom Henderson: (313) 446-0337, [email protected]

stores in addition to Whole Foodsstores in Michigan, Ohio and Illi-nois. The company also has retailstores in Armada, Troy, Oxford,Shelby Township and SterlingHeights.

“Those first few years, we weremore than doubling in size everyyear,” she said. “Over the lastfive years, growth has slowed todouble-digits.”

Achatz credits success to careshe’s put into the pies. The crustsare crimped by hand, rather thanby a machine. Fruit and buttercome from local producers.

She refuses to change thosestandards.

“I go to the grocery stores andread the ingredients of pies,” shesaid. “You read that list and it’sgross. Chemicals like that don’tbelong in the food chain.”

Yet, moving to the new facilitymeans broadening every aspectof the business. Weekly pie pro-duction will go from an averageof 5,000 to 15,000, with the abilityto crank it up to 25,000 during theholidays.

The next question for theAchatz family is what to do withall the pies being produced.

They can freeze pies and sendthem to grocery stores to becooked and sold. National inter-est is growing, Achatz said, withoffers from Kroger to distribute to2,400 stores around the country,as well as from the Florida chainof Publix grocery stores.

However, the company’s retail

stores have also done well,Achatz said.

“Should we open 50 more littlestores and franchise them, orcrack into the frozen-pie marketwith 2,400 Kroger stores acrossthe nation?” she said. “We stillhaven’t decided.”

The growth of Achatz bringschallenges many mom-and-popbusinesses face when they ex-pand: maintaining quality andconsistency of product, said Dar-ren Tristano, executive vice pres-ident with Technomic, a food in-dustry consulting firm based inChicago.

“The biggest pitfall is that theygrow so fast, they’re unable tomaintain the level of quality,” hesaid. “As you add people, it’shard to train them to put in thecare that an owner would.”

Examples of companies thatslipped, he said, are Subway orBurger King, which lost quality asthey expanded.

“A good example of keepingthat quality level up is Cheese-cake Factory,” he said. “Theyhave facilities on the East Coastand the West Coast; they’re massproducing but have that quality.”

A positive for Achatz, Tristanosaid, is being organic.

“Natural and organic is ontrend right now,” he said. “Peoplehear about problems with foodcoming from China, and they likefood that’s grown locally.”

Daniel Duggan: (313) 446-0414,[email protected]

Bakery chain tries franchisestrategy to expand

BY CHAD HALCOMCRAIN’S DETROIT BUSINESS

Grand Traverse Pie Co. hopes to dowith pie what Panera Bread Co.does with bread: make it the signa-ture food for a chain of bakerycafés nationwide.

That concept was a fast sell toJohn Parent, owner of a new fran-chise café opening in Troy.

“My wife and I had a meal at thelocation in Petoskey, and we hadn’theard of (the stores) before,” Parentsaid. “The owner there came outand talked with us, asking how themeal was; we got to talking aboutthe place and by the time I was leav-ing, I was on the phone finding outmore about franchises.”

A Traverse City-based pie mak-er and bakery chain, Grand Tra-verse Pie will have its third De-troit area franchise when theParent café opens in October. Bak-eries in Sterling Heights and AnnArbor opened within the past year,and a fourth site in Plymouth iscoming next spring.

The site is part of an agreementfor five franchise locations in Oak-land County over five years. Par-ent also owns Clawson-based secu-rity software company WilsonTechnologies Inc.

Grand Traverse Pie PresidentMichael Busley figures the Detroitmarket is solid enough for at least10 stores, while other cities such as

Chicago and Indianapolis couldeach support more.

The Parents are also consider-ing locations in Farmington Hillsand West Bloomfield Township.

Parent said the store will havecapacity to produce 700 to 1,800pies a day and will take over pro-duction of the pies Grand TraversePie sells at nearby grocers.

After their start in 1996, Busleyand his wife, Denise, for years op-erated the Traverse City store anddeveloped wholesale connectionsto grocers such as Troy-based Holly-wood Market or Westborn Market inDearborn. Around 2003, Busleysaid, the company shifted to thecafé franchise strategy.

The company will have ninefranchises and three corporatestores in Michigan, plus a fran-chise that opened this month inTerre Haute, Ind. The Detroit sub-urbs mark the company’s first for-ay into a major population center.

Franchise fees to open a GrandTraverse Pie store are $25,000, andthe company advises franchiseesto have total investment capital of$400,000-500,000.

Roughly $1 million in companyrevenue comes from the TraverseCity store; Busley said with fran-chises and wholesale distributionthe company is on pace to make$15 million revenue for 2007.

Chad Halcom: (313) 446-6796,[email protected]

Campbell



WEEK IN REVIEWRUMBLINGS

Fieger, partnerindicted oncampaign-finance charges

eoffrey Fieger and Ver-non Johnson, both at-torneys and officers

of Southfield-based Fieger,Fieger, Kenney & JohnsonP.C., were indicted Tuesdayby a federal grand jury inDetroit on charges they vio-lated campaign laws duringthe 2004 presidential race,conspiring to make morethan $125,000 in illegal cam-paign contributions to the2004 presidential campaignof North Carolina Sen. JohnEdwards.

Fieger, 56, and Johnson,45, are accused of makingfalse statements and ob-struction of justice, a U.S.Department of Justice state-ment said Friday.

Neither Fieger nor John-son was immediately avail-able for comment, butFieger will be representedby high profile criminal de-fense attorney Gerry Spence,of The Spence Law Firm inJackson, Wyoming.

“Mr. Fieger will absolute-ly tell the court that he isnot guilty,” Spence said.

According to his Website, Spence has never lost acriminal case and hasn’tlost a civil case since 1969.

The Justice Departmentstatement says that “unbe-knownst to Senator Ed-wards’ campaign” Fiegerand Johnson had more than60 “straw donors” makecontributions of $2,000 each— then the maximum al-lowable per donor — butthe money was actuallypaid by the law firm ratherthan the named donors.

Other names mentionedas part of a Fieger defenseteam include Harvardcriminal law professor AlanDershowitz and former StateBar of Michigan presidentTom Cranmer of Miller, Can-field, Paddock and Stone plcin Detroit.

Granholm announces jobsfrom European trip

Gov. Jennifer Granholm onMonday announced thatSwedish firm Trelleborg Auto-motive plans to invest $10.2million in a new technicalcenter in Northville Town-ship that will employ 32.

The center will be usedfor advanced engineeringand product development.

Also, Swedish industrialequipment manufacturerAtlas Copco A.B. plans to add30 jobs in engineering, salesand marketing at its opera-tions in Auburn Hills,

Granholm said Tuesday.On Thursday, Granholm

said German engineeringand development companyEDAG Engineering and DesignAG plans to spend $7 millionto expand its operations inAuburn Hills and Troy,adding 140 jobs.

New stores coming toTwelve Oaks Mall

Three retailers plan tomake their Michigan debutat the new, 97,000-square-foot wing of Twelve OaksMall in Novi when it opensSept. 28, according to mallowner Taubman Centers Inc.

They are Metropark, anapparel and accessoriesstore that features live mu-sic, art and fashion perfor-mances; aerie by AmericanEagle, which sells lingerieand sleepwear; and Moon-struck Chocolate Cafe.

A 165,000-square-footNordstrom will anchor thewing.

Gas rate changes OK’d The Michigan Public Ser-

vice Commission on Tuesdayapproved a $49.8 millionnatural gas rate increasefor Consumers Energy Co.,compared with the $88 mil-lion increase originally re-quested.

The initial request includ-ed $9.3 million in proposedspending on an energy effi-ciency program, an aspectthe PSC did not adopt inTuesday’s order and plansto rule on in the future.

In a news release, thecommission said the in-crease reflects rising operat-ing costs and will translateto an approximate $2.36-a-month increase for a typicalresidential customer.

The commission also ap-proved a settlement withMichigan Consolidated GasCo., authorizing MichCon tosell excess natural gas fromone of its storage fields anddeliver other gas to cus-tomers at a discount. As aresult, the utility expects atypical residential cus-tomer to pay $45 less overthe course of the 2007-08heating season, comparedwith the 2006-07 season.

Fairlane: Saks Off 5th toclose, expansion planned

Saks Off 5th, a division ofSaks Fifth Avenue offering dis-count merchandise willclose its store at FairlaneTown Center by year-end, ac-cording to a statementThursday from the mall’sowner, Taubman Centers Inc.

Taubman said the sitewill be demolished to makeroom for a 25,000-square-footdining and entertainmentwing to open by fall 2008.P.F. Chang’s China Bistro hascommitted to a location at

the new wing, and Taubmansaid it expects to sign twoother restaurants.

OTHER NEWS

� The Sault Ste. Marie Tribeof Chippewa Indians reaf-firmed a decision to ousttribal chairman Aaron Pay-ment as chairman of theGreektown Casino Board of Di-rectors by a 7-3 vote on Tues-day, although he retains aseat on the casino board.

� Michigan Bureau of StateLottery official Tom Weberwas named acting lotterycommissioner, filling a postvacated by CommissionerGary Peters on Aug. 10.

Weber has been the lot-tery’s deputy commissionerof marketing since January2001.

� Detroit-based Corner-stone Schools said it hadreached a $1.2 million schol-arship fundraising goalthanks to its “Be a Tiger ForKids” promotion with theDetroit Tigers. Cornerstonesold more than 13,000 ticketsto Tuesday’s game againstthe Cleveland Indians.

� The state’s “PureMichigan” tourism advertis-ing campaign, developed bythe Birmingham office ofMcCann Erickson, has beennamed the top state cam-paign of its type in the coun-try by the Travel Industry Asso-ciation of America and alsotook top honors from the as-sociation for the best statetourism TV commercial.

� The new $5 bill will bedigitally unveiled at 9 a.m.Sept. 20 at www.moneyfactory.gov/newmoney. It’sthe first such digital unveil-ing in U.S. history.

� The SoutheasternMichigan chapter of theAmerican Red Cross hasopened a training center fornursing assistants in De-troit’s Palms office building.

� Oakland County Cir-cuit Judge Denise LangfordMorris dismissed a breach ofcontract lawsuit filed byJulie Roehm against Wal-MartStores Inc. after it fired her assenior vice president in De-cember. Morris ruledRoehm, a former Daimler-Chrysler executive, shouldfile in Arkansas, where Wal-Mart is based and she lives.

� The Mall at PartridgeCreek, a new shopping cen-ter being developed byTaubman Centers Inc., willhold a job fair 9 a.m.-6 p.m.August 28 and 9 a.m.-2 p.m.August 29 at the MacombCultural Center in ClintonTownship in hopes of fill-ing about 1,000 positions.

OBITUARIES

� William Bostick, formeradministrator and secre-tary at the Detroit Instituteof Arts, died of heart failureAug. 14. He was 94.

ow “ultra” is an “ul-tralounge?”

That questioncould be answered for twoarea night spots this fallwhen a federal trademarkinfringement lawsuit pend-ing for almost 16 monthsgoes to a summary judg-ment hearing before U.S.District Judge MarianneBattani in Detroit.

Posh Entertainment Inc.,which operated Posh Night-club & Ultralounge in Fern-dale, sued Eton Street Restau-rant Inc., operating Big RockChop House in Birmingham,with Gotrocks Ultra Lounge onits second floor.

Posh alleged in its May 1,2006, complaint that it wasfirst to bring the “Ultra-lounge” concept to the De-troit area in December 2003and registered it as a ser-vice mark with the state onJune 7, 2004.

They accuse Eton Street’sGotrocks of marketing itselfas an Ultralounge and in-fringing on the Posh regis-tered style under a variety offederal and state laws.

Eton’s lawyers, Troy-based Vandeveer Garzia P.C.,in asking the court to dis-miss the lawsuit, claim that“ultralounge” is a genericterm, not entitled to trade-mark protection.

Try Googling the termand you’ll get about 716,000hits for one of the threeforms of “ultralounge,” ei-ther as one word, two wordsor hyphenated.

There’s even an “ul-tralounge” in Ann Arbor:The Habitat Ultralounge at We-ber’s Restaurant.

Aubrey Tobin, WestBloomfield Township-basedPosh attorney and registered

agent, did not return callsfor comment last week.

Cobo ‘iconic personality’dies at 89

Cobo Center lost an iconicfigure when Leon “Sarge” Lit-tleton, died Aug. 19 at 89.

Littleton was dockmasterat Cobo, ramrodding trucksthat delivered displays tothe manyshows therefor nearly fourdecades.

Even afterlosing a leg tomedical com-plications sev-eral years ago,Littleton con-tinued to di-rect traffic forcomplicatedevents like theNorth AmericanInternationalAuto Show, us-ing a golf cartto get around.

Tom Tuskey, Cobo Centerdirector, called Littleton“an iconic personality atCobo,” and said “there wasno one more dedicated tothe notion that ‘the showmust go on.’

“In Leon’s words, ‘theshow must go in, and it’sgotta be done right, and myway is probably the bestway to do it,’ ” Tuskey said.Littleton had worked atCobo since 1968.

Littleton, of Clawson,was an independent con-tractor who worked forCobo convention contrac-tors. A U.S. Army veteranof both World War II andthe Korean conflict, he hadrun the mail room for the

National Association of Invest-ment Clubs for more than 30years. He died of congestiveheart failure. He wasburied in Great Lakes Na-tional Cemetery, Holly.

Bob Whiting, manager ofsales and convention showservices at Cobo, said Little-ton was “a sergeant untilthe end, as he had been inthe Army. We knew him asornery, but lovable.”

Talking the talk makes big difference

Stuttgart-based PrionGbmH, a German communi-cations and information-technology firm, decided tolocate its North Americanheadquarters office, PrionUSA Inc., in Novi this year inlarge part to the German flu-ency of the Detroit RegionalEconomic Partnership’s Dean

Johnson.Eshan Shariff,

Prion businessdevelopmentmanager in theU.S., said hisboss, managingpartner Christo-pher Frim, com-mented thatwith Johnson’sefforts “it tookonly one weekwhen elsewhereit would haveeasily been twoor threemonths,” to

hire local lawyers and ac-countants, and lease officespace.

When they learned thatJohnson, a senior director ofglobal business developmentat the partnership who wasraised in Germany, could ac-tually “speak their lan-guage,” it cinched the deal,Shariff said.

“Sometimes in financeand accounting, terms aredifficult to translate,” hesaid, “and his ability tospeak German was a bighelp.” Prion, has 100 em-ployees worldwide, in Ger-many, Switzerland, Franceand India, provides consult-ing in the transportationand engine manufacturingindustries.

RUMBLINGS WEEK IN REVIEW

No dancingaround the‘Ultra’ issue

F R O M W W W . C R A I N S D E T R O I T . C O M , W E E K O F A U G . 1 8 - 2 4

HG

Stanford Ovshinsky, for whom theterm “genius” is applied liberally andseriously, retired last week from hischief scientist position and boardmembership at the company hefounded, Rochester Hills-basedEnergy Conversion Devices.The breadth of the 84-year-oldOvshinsky’s work is astonishing.Rechargeable nickel-metal-hydridebatteries. Hydrogen fuel cells.Computer memory. Solar-powerproducts. A search of patents on theU.S. Patent & Trademark Office Website turns up 349 hits(tinyurl.com/ys5389).His later titles include “movie star”; he was

featured in the documentary “WhoKilled the Electric Car?”(tinyurl.com/n94yu) released lastyear.Late last year, the Wall Street Journalprofiled his life and work(tinyurl.com/27nw6g), including hislong personal and professionalpartnership with his wife, biochemistIris Ovshinsky.The important quote? “We wanted tostart new industries and solve serioussocietal problems.” As that vision isbeing borne out today with the push

to create new sources of energy, it’s clear theywere ahead of their time, but that time hasarrived.

WEB WORLDMichael Lee

Ovshinsky ahead of the times

Littleton was considered adedicated worker.


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