Crain's Cleveland Business

By JAY [email protected]

While the cuts in state income taxrates that Gov. John Kasich pro-posed last week as part of his 2014-2015 budget have met with strongsupport in the business communi-ty, the other part of his tax reformplan — to extend the sales tax to al-most all business and professionalservices — is drawing considerable

skepticism.It’s too early for lobbyists to

descend on the Statehouse, becausefew groups have had a chance to di-gest the entire tax package, unveiledlast Monday, Feb. 4. But some busi-ness executives are voicing concernabout the plan, while several of thestate’s key business associationshave issued “wait-and-see” state-ments, signaling they need time toevaluate the net impact of the taxactions on their members.

It is likely that state legislators willface some of the most intense lob-bying they have ever seen — afterall, one of the new business servicesthat will be taxed is lobbying.

By TIMOTHY [email protected]

Republican Gov. John Kasich’sdecision to back the controversialexpansion of Medicaid under Pres-ident Barack Obama’s health careoverhaul could prove beneficial tosome employers, though the entire-ty of the health care reform law stillmight be a tough swallow for manyin the business community.

Gov. Kasich last week urged statelawmakers to move forward with an

expansion of the government-runhealth care program, which wouldextend coverage to 366,000 unin-sured Ohioans.

By KATHY AMES [email protected]

Matt Cole sees the glasses half-empty as a positive. It meanscustomers are sating their thirstwith one of his artisan beers.

Not that Mr. Cole hasn’t faced a chal-lenge or two meeting consumer demandsince his Fat Head’s Brewery & Saloonopened in North Olmsted in 2009.

The business has undergone four expan-sions, including the addition last April of a$2 million, 22,000-square-foot productionoperation in Middleburg Heights. Mr. Coleis working with the building’s landlord tokeep vacant an adjoining 22,000 squarefeet, which he expects to use in the nexttwo to three years.

“It’s insane, actually,” Mr. Cole said ofthe company’s growth.

Mr. Cole’s situation is a refrain echoedby craft brewers throughout NortheastOhio, who have been experiencing double-digit and even triple-digit percentage

increases in craft beer output over the lastcouple years.The momentum aligns withnational trends, which reflect craft brew-ers’ market share gains as more consumerseschew the predictable Millers and Bud-weisers for more complex, flavorful beer.

“I don’t see the growth of craft beerslowing down anytime soon,” Mr. Colesaid. “People are trading up because craftbeer is an affordable luxury.”

$2.00/FEBRUARY 11 - 17, 2013

Entire contents © 2013by Crain Communications Inc.

Vol. 34, No. 6

07447083781

706 SPECIAL SECTION

SMALL BUSINESSMany companies are hiring etiquette pros to helptheir employees mind their manners ■■ Pages 13-17PLUS: THE RISE OF ARBORWEAR ■■ TAX TIPS ■■ ADVISER ■■ & MORE

NEW

SPAP

ER

Utica is where it’s atCompanies

such as Momentum,led by presi-dent and CEOFrank Tsuru,right, are focusing theirshale drillingefforts on eastern Ohio, where theprofits tend to be much higher.Plus, a recap of the sold-out ShaleSummit. PAGES 3, 18

INSIDE

MARC GOLUB PHOTOS

Matt Cole’s Fat Head’s Brewery & Saloon has expanded four times since opening in North Olmsted in 2009.

THEY’RE BREWINGSOMETHING SPECIAL

Craft beer is a rapidly growing market; Ohio couldbe home to 100 specialty pubs by the end of 2013

See MEDICAID Page 8

See BREWING 9 See REFORM Page 6

The brewing area at Fat Head’s Brewery &Saloon in Middleburg Heights.

THE STATE BUDGET: HEALTH CARE ANALYSIS

Expansion ofMedicaid couldhelp employersBusinesses mightnot have to pickup tab for workerswith low incomes

Negatives could arisefrom wider tax baseProviders of serviceswary of dampeningeffects on business

THE STATE BUDGET: SALES TAX ANALYSIS

20130211-NEWS--1-NAT-CCI-CL_-- 2/8/2013 4:22 PM Page 1

22 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM FEBRUARY 11 - 17, 2013

REGULAR FEATURES

Big Issue .....................11Bright Spots ..................9Classified ....................22Editorial ......................10

Going Places ...............12Personal View..............10Reporters’ Notebook....23What’s New..................23

COMING NEXT WEEK

Next week’s special sectionwill look at the future of retail,including a look at the region’smalls and the push to buylocal. We’ll also feature tech-nology trends in retail, bargainhunting and more.

Go shopping with us

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ON THE ROAD

Clevelanders, on average, spend 31 hours a year stuck in traffic, which isthe lowest figure among Ohio’s three largest cities, according to data publishedby the Texas A&M Transportation Institute. The institute measured traffic congestion data for 101 metro areas, producing metrics that tally the cost ofour time on the road. Washington, D.C., was the most-congested city. Here’s asmall slice of the data for Ohio metro areas (the stats are per auto commuter,and the rankings are nationally):

Columbus 40 hours 25 $847 29

Cincinnati 37 hours 37 $814 33

Cleveland 31 hours 50 $642 57

Toledo 26 hours 71 $555 73

Dayton 24 hours 80 $507 81

Akron 23 hours 83 $483 85

SOURCE: 2012 ANNUAL URBAN MOBILITY REPORT; MOBILITY.TAMU.EDU/UMS

City Yearly delay Rank Congestion cost Rank


By MICHELLE [email protected]

Facing what it calls “dire” finan-cial impact if it cannot fulfill ordersin a timely manner, a Lakewood

manufacturer has sued some of itsemployees and their union overclaims the employees are refusingto work overtime because they op-pose a relocation.

According to the lawsuit filed in

U.S. District Court last Tuesday,Feb. 5, Ferry Cap & Set Screw Co. isseeking an injunction against “anillegal strike being waged” by em-ployees in violation of a collectivebargaining agreement that con-

tains a no-strike clause and pro-vides for arbitration of grievances.

Named as defendants are theunion, International Association ofMachinists and Aerospace Work-ers, AFL-CIO, District Lodge 54;

union district representative Jack K.Baker; and 12 men who are em-ployed by Ferry Cap as operators ofits heading equipment, which isused to form the heads of fastenerssuch as screws.

Those men, Ferry Cap alleges inits complaint, “have been engaged

FEBRUARY 11 - 17, 2013 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

INSIGHT

THE WEEK IN QUOTES“I don’t see thegrowth of craftbeer slowing downanytime soon.People are tradingup because craftbeer is an affordable luxury.”— Matt Cole, owner, FatHead’s Brewery & Saloon inNorth Olmsted. Page One

“We would haverather found outthat there was acharacter issuethen, than threeor five monthsinto that person’stenure.”— Ronald Fountain, chairman of the board oftrustees, The MetroHealthSystem. Page 4

“If you’re constantly fixing your clothes,you’re not paying attention; you’re morelikely to get into anunsafe situation —that doesn’t happenwith the (Arborwear)clothes.”— Jim Skiera, executive directorof the International Society of Arboriculture. Page 13

“The overall message isthat when you are eatinga meal, they really do lookat how you eat. I’m notsure people realize thatyou are judged on yourmanners and your handshake.”— Laura C. Cessna, assistant director,student development and leadership,Office of Student Affairs, NortheastOhio Medical University. Page 14

HAL STATA PRODUCTIONS

Frank Tsuru, president and CEO of M3 Midstream, known as Momentum, speaks at the Shale Summit on Feb. 5.

Ferry Cap puts legal screws to union

MOMENTUMIS BUILDING

Lawsuit alleges some employees have refused overtime in protest of relocation

M3 Midstream believes Utica regionis nation’s best investment in shale

By DAN [email protected]

Houston-based M3 Midstream is in the midst ofspending $1 billion across eastern Ohio in a rush tobring pipelines and equipment online to processnatural gas from the Utica shale region, which the

company known as Momentum expects to be the star of thenation’s shale gas and oil industry.

Drillers pursue the most profitable endeavors they can find,and that means coming to the Utica shale, said Momentumpresident and CEO Frank Tsuru, who spoke last Tuesday, Feb.5, to nearly 600 attendees of Shale Summit 2013, an event or-ganized by Crain’s Cleveland Business and public broadcast-ing organization ideastream.

See MOMENTUM Page 18

See ACCURATE Page 8

See FERRY CAP Page 7

Originalgoal wasslightlyoff markPrevious owners ofAccurate Group hadlofty hopes, whichhave been exceededBy CHUCK [email protected]

Four years ago, the previous own-ers of Accurate Group gave Paul Doman what might have seemedlike a lofty goal: Grow the company’ssales to $50 million from $6 million,and increase profits to $5 million by2014.

Maybe they should have set thebar higher. The provider of real estate transaction services hit bothtargets last year.

Accurate Group’s rapid growthhas led to the creation of 61 jobs atits headquarters in Independencesince Evolution Capital Partnersbought a majority stake in the com-pany in February 2009. It also gener-ated a lot of cash for the Beachwood-based private equity firm: Aninvestment group led by ABS CapitalPartners paid $55 million to acquirea majority stake in Accurate Grouplast December.

In the process, Evolution Capitalsold all its shares in Accurate Group,and an undisclosed amount of mon-ey was added to Accurate Group’sbalance sheet. The company alsotook on an undisclosed amount ofdebt, said Mr. Doman, AccurateGroup’s CEO.

The influx of money, along withadvice from Baltimore-based ABSCapital, should help Accurate Groupkeep growing, Mr. Doman said. Thecompany aims to increase sales to$75 million this year from $55 mil-lion last year.

“We’re expecting more growththis year and next year, frankly,” hesaid.

The company plans to hire moremanagers, sales people, software de-velopers and people to manage thecompany’s information technologyinfrastructure, Mr. Doman said. Ac-curate Group employs a total of 180people nationwide, up from about80 when Evolution Capital bought itsstake in the company.



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Volume 34, Number 6 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of December and fifthweek of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2013 by Crain Communications Inc. Periodicals postage paid atCleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Depart-ment, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

MetroHealth is lining upinterviewees for CEO postBy TIMOTHY [email protected]

The MetroHealth System plans tobring in a slate of candidates “as soonas possible” to interview for its CEOpost, and it hopes to have its nextleader in place by mid-year, accord-ing to Ronald Fountain, chairman ofthe health system’s board of trustees.

After a nearly year-long search,MetroHealth lost its top choice lastNovember when Dr. John Brennan,CEO of Newark Beth Israel MedicalCenter in New Jersey, suddenly re-neged on his commitment to takeover the health system subsidizedby Cuyahoga County.

Dr. Fountain said the search forMark Moran’s replacement is on a“pretty good path,” and the commit-tee is lining up schedules to bring inthe candidates. Late last month, theboard installed Dr. Edward Hills, thehealth system’s chief operating offi-cer, as interim CEO after Mr. Morannotified the board in December hewouldn’t stick around until his per-manent successor was named.

Dr. Fountain said the searchcommittee plans to bring in fewerthan 10 prospects — perhaps five toseven, though he couldn’t provide

an exact number — to interview forthe post. He wouldn’t disclose theidentity of the candidates, but not-ed the search committee wouldn’tturn away anyone who was quali-fied “whether they’re local or fromoutside of the city.”

Dr. Fountain said MetroHealth issticking with its search firm, WittKiefer, which brought Dr. Brennanto MetroHealth’s attention. He not-ed there was nothing MetroHealthor the search firm could have doneto predict Dr. Brennan’s decision toback out of the job.

“We would have rather found outthat there was a character issuethen, than three or five months intothat person’s tenure,” he said.

Dr. Fountain said the search haspiqued the interest of candidateswho weren’t necessarily interested inthe post during the first go-around;he noted that “the fact that some-body with Brennan’s profile wascommitted to do the job and was in-terested in it, I think that helps.”

Dr. Brennan was poised to earnan annual salary of $685,000 —$135,000 more than his would-bepredecessor, Mr. Moran. The valueof Dr. Brennan’s total compensa-tion package would have been be-

tween $750,000 and $1.1 million.Dr. Fountain’s term on Metro-

Health’s board will expire in March,but he said he would continue toassist with the pursuit for the healthsystem’s next leader should thesearch committee need his help.

Books look betterMeanwhile, the health system’s fi-

nances, which have been dinged inrecent years due to the risingamount of uncompensated care itprovides to the county’s indigent,are on the upswing, according to Dr.Fountain. Once the health system’s2012 books are audited, he expectsMetroHealth to have met its goal ofposting a $10 million surplus.

In addition, MetroHealth’s booksfor 2013 are expected to be buoyedby an infusion of new dollars thanksto federal regulators signing off re-cently on a complex legal maneuverthat could extend Medicaid cover-age to as many as 30,000 people inCuyahoga County. The move will letthe health system receive somecompensation for care for which ithadn’t been paid in the past.

Last year, the health system pro-vided $130 million in uncompen-sated care. ■

By STAN [email protected]

At a time when apartments arethe favored property type of in-vestors and lenders as occupanciesswell and rents rise after the collapseof the housing market, three localapartment owners are finding placesto grow — outside Northeast Ohio.

Summit Multicapital LLC inAkron announced Jan. 16 it has ac-quired the 169-unit Mosteller Man-sion Estates in Hickory, N.C., for $18million. Meantime, an affiliate ofApollo Management in Pepper Pikehas bought the 327-unit George-town Apartments in Kettering, Ohio,for $12.7 million from ConnorGroup of Centerville, Ohio, accord-ing to the Dayton Business Journal.

Burton Carol Management LLCin Warrensville Heights also addedto its portfolio of properties, whichare in Northeast Ohio, Michiganand Florida, with the acquisition ofBeachwalk Apartments in Novi,Mich., according to Joy Anzalone,chief operating officer.

The 240-unit complex in subur-ban Detroit was purchased in a dis-tressed sale from Huntington Na-tional Bank, Ms. Anzalone said.

The apartment owners are follow-ing the tried-and-true investmentstrategy of tapping different geogra-phies to diversify their holdings.

In Summit Multicapital’s case, itis pursuing a plan to acquire prop-erties in areas with population andrent growth, according to EdwardNewman, Summit CEO.

“We’re buying in areas that are

growing because people are attract-ed by the lifestyle, areas where peo-ple want to live, and in secondarymarkets,” Mr. Newman said.

The Hickory, N.C., property is inthe popular Lake Norman area out-side of Charlotte, but it’s removedfrom the Charlotte market itselfwhere Summit would need to com-pete with large, publicly traded realestate investment trusts, Mr. New-man said.

Summit has been buying proper-ties in North Carolina for the last sixyears, and the Hickory property isnear a 312-unit property that itowns in Mooresville, N.C., Mr.Newman said. Summit also ownsabout 800 units in the suburbs ofDenver, and this latest acquisitionmeans about half of its 3,250-suiteportfolio is in the Akron area andthe rest outside the region.

In Burton Carol’s case, it knowsthe Detroit area from other proper-ties it has owned there in priorfirms that it sold. It is a larger met-ropolitan area than Cleveland, butwithin a two-hour drive or flightthat Burton Carol uses to define itstarget markets, Ms. Anzalone said.

Although Beachwalk Apartmentswas bank-owned, Ms. Anzalone de-scribed it as a gem because it is lo-cated on Walled Lake, an inlandlake near Detroit. Burton Carol hadto compete with 19 other offers forthe property.

“There is exuberance in the mar-ket, but you need to be methodi-cal,” Ms. Anzalone said. “We had noproblem rising to the price. But youwant to buy at a price that will allow

you to own a property for years.” Burton Carol is continuing to

look for other opportunities outsidethe region, she said, but is shyingfrom one of its favorite markets,Florida, because of the rise in sell-ing prices there.

Apollo did not return two calls byCrain’s deadline last Friday, Feb. 8,on the Dayton acquisition.

Buying outside the region is aperfect balance to Northeast Ohio’sapartment market, which lackspopulation growth and has rentslower than in larger cities.

That’s the view of Michael Bar-ron, a vice president for invest-ments at the Marcus & Millichapreal estate brokerage, which has anIndependence office.

“In Northeast Ohio you get sta-bility and cash flow,” Mr. Barronsaid, because units are less costlythan in other areas, but the region’sslow-grow apartment market freesit from overbuilding typical in areaswith population growth.

“In other areas, you get price appreciation for the units and rentgrowth,” Mr. Barron said.

Ralph McGreevy, executive vicepresident of the Northeast OhioApartment Association trade group,said owners of larger apartmentportfolios can compete effectivelyfor properties outside the regionbecause of the market’s currentstrength. He considers the drive tobuy outside Northeast Ohio a roadwell-traveled by property owners inthe past. It’s now being trod by an-other group of growing apartmentowners, Mr. McGreevy said. ■

Apartments owners are diversifyinginvestments with out-of-region buys


Some of the closest scrutiny willcome from providers of business-to-business services, such as accountants and attorneys. But theexpansion would hit most servicebusinesses.

“That would really stink,” saidJackie Koral, vice president ofCleveland Cinemas, which operateseight theaters in Ohio, many ofwhich already pay a city admissionstax. “If they were to get rid of thecity tax and go to a state tax, thatwouldn’t be so bad. But to tack onanother tax, that would be horriblebecause, of course, that gets passedon to the consumer.”

Attorney Philip Eichorn, vicechairman of the Ohio Chapter ofthe American Immigration LawyersAssociation, said his organization istaking a stand against expansion ofthe sales tax.

“When you are a sole practition-er or small business entity, most ofyour clientele is individuals,” Mr.Eichorn said. “What (Gov. Kasich) isdoing is not just forcing a lawyer tocollect the sales tax, but increasingthe cost of legal services.”

Ed Sitter, a real estate broker inToledo and chairman of the legisla-tive and government affairs com-mittee of the Toledo Board of Real-tors, also opposes the new tax onhis services. He worries that whilethe increase in sales tax is accom-panied, for now, by a drop in the in-come tax, that offset won’t last. Mr.Sitter fears the income tax eventu-ally will increase — but the sales taxwill remain.

He also questions how it wouldwork in practice.

“In the real estate industry, we’rejust starting to bounce back fromthe housing debacle, and this will

add more cost to closing a house,something we can’t necessarily af-ford to do right now because mar-gins are so thin,” Mr. Sitter said.“We … in the short run may have toabsorb those costs and not passthem along to consumers.”

Details, detailsAlthough he is not yet taking a

position on the governor’s propos-al, attorney Larry Oscar, CEO ofHahn Loeser & Parks LLP, said hewas concerned that the complexitycreated by the broadening of thesales tax would damage the gover-nor’s campaign to brand Ohio as amore business-friendly state due towhat Mr. Oscar called “unintendedconsequences.”

Mr. Oscar wondered, for in-stance, how attractive it would befor a multistate law firm to basebusiness in Ohio, where the salestax would apply, rather than initiat-ing legal actions from other stateswithout a tax on legal services.

Big trade associations such as theOhio Society of Certified Public Accountants and Ohio State Bar Association so far are reacting in ameasured way to the governor’sproposal, even though they longhave opposed expansion of thesales tax.

“This is a pretty comprehensivetax reform package that we want tocarefully consider,” said BarbaraBenton, vice president for govern-ment affairs for the accounting so-ciety. “We want our members tohave a chance to evaluate it.”

The bar association is similarlycautious.

“While historically the Ohio StateBar Association has opposed thisexpansion of the sales tax as an un-due burden on the consumers of le-gal services, we will examine thesenew proposals before making anydecisions about them,” it said in aprepared statement on its website.“The devil may very well be in thedetails, which is why understandingthe details is so important.”

Tradeoffs aboundAt present in Ohio, only specific

services incur a sales tax, includingcell phone service, carpet cleaningand laundry services, and printingand photocopying services.

Under Gov. Kasich’s plan, all ser-vices would be taxed, except for afew that specifically would be ex-empt. Exemptions would be fo-cused mostly on services consid-ered necessities of life, such asmedical and health care services, aswell as carpentry, plumbing andother construction services, thoughthe exemptions would extend, lessobviously, to dance, tennis and oth-er personal instruction services.

Businesses and consumerswould pay a sales tax on most otherbusiness and professional services,ranging from legal and accountingservices to debt collection and ad-vertising agency services. The taxalso would apply to theater admis-sions, credit bureaus services and

bank service charges.At the same time, the state sales

tax rate would drop to 5% from5.5%. Locally imposed sales taxrates also would be cut through aformula designed to adjust most ofthe gains that counties and transitsystems would see because of theexpansion of the tax base. The for-mula would give local agencies anestimated 10% increase in tax col-lections.Gov. Kasich has said ex-panding the sales tax to services is arecognition that the economy —and the things people buy — haveshifted dramatically from goods toservices. Nationwide, some tax ex-perts have argued that only by tax-ing services can the sales tax remaina meaning source of revenue forstates, because the purchase ofgoods has declined as a percentageof household income, while thepurchase of services has grown.

Mark Engel, partner in charge ofthe Cincinnati/Dayton office ofColumbus-based Bricker & EcklerLLP, sees a big debate ahead.

Mr. Engel said because the salestax is a flat percentage tax on goods,lower-income people tend to spenda greater share of their income onpurchases and end up paying agreater share of their income onsales tax. He also sees argumentsthat might be used to oppose thesales tax expansion on business-to-business, or b-to-b, transactions.

“The situation on b-to-b is an in-teresting issue because there is atrain of thought out there that thesales tax should only be on finalconsumption,” he said.

“There is one train of thoughtthat any business-to-businesstransaction is not final consump-tion and therefore any businesstransaction ought not to be subjectto (sales) tax,” Mr. Engel said. “For-tunately or unfortunately, depend-ing on your perspective, (there isthe idea that) business has to pay itsfair share of taxes.”

End to the goofiness?Expanding the sales tax base to

lower income taxes has motivatedseveral states led by Republicangovernors to take a look at broaden-ing their sales taxes; notable amongthem are Louisiana, North Carolinaand Virginia. They have embracedthe idea advanced by conservativeeconomist Arthur Laffer that cut-ting income taxes and raising con-sumption taxes such as the sales taxwill boost a state’s economy.

“We strongly disagree with thatpresumption,” said Michael Maze-rov, a senior fellow specializing instate fiscal policy at the Center forBudget and Policy Priorities, a pro-gressive think tank in Washington,D.C. “There are good reasons tothink it will be damaging to stateeconomies.”

The center argues that a sales taxdisproportionally can hurt lower-income people more than an in-come tax.

One group that may welcome thenew tax for uniformity sake,though, is landscapers. Right now,said Matt Ellis, president of theOhio Lawn Care Association, somelandscaping services are taxed andothers are not.

“If we do a major landscaping,we would (apply the sales) tax toplant materials but not on thepavers,” he said.

Similarly, a landscaper would ap-ply the tax to putting in a trellis butnot a fence.

“It’s really goofy,” he said. ■


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continued from PAGE 1 “That would really stink.If they were to get rid ofthe city tax and go to astate tax, that wouldn’tbe so bad. But to tack onanother tax, that wouldbe horrible.” – Jackie Koral, vice president,Cleveland Cinemas


in a concerted refusal to work over-time to protest the company’s deci-sion to transfer its heading equip-ment to a different facility.”

Ferry Cap makes critical strengthfasteners used primarily in theheavy equipment and automotiveindustries and employs an estimat-ed 56 hourly production and main-tenance employees at its Lakewoodoperations, according to the law-suit.

The company’s website says Fer-ry Cap was founded in 1906 and isa supplier for companies such asCaterpillar, Mack Trucks and JohnDeere.

Ferry Cap’s lawsuit states thatthe header operators’ refusal towork overtime “jeopardizes thecompany’s ability to fulfill cus-tomer orders in a timely manner.”It adds that an inability to fulfill or-ders in a timely manner “will resultin Ferry Cap incurring significantfinancial penalties under supplycontracts with customers, the lossof goodwill and the loss of cus-tomers.”

“The potential overall financialimpact of the work stoppage on thecompany is dire and could affectthe company’s ability to continuebusiness operations altogether,”the lawsuit maintains.

An attorney for Ferry Cap declined comment for this story,and two phone messages left forthe company’s director of opera-tions were not returned by Crain’sdeadline last Friday, Feb. 8.

Root of the disputeAbout a year ago, on Feb. 16,

2012, Ferry Cap announced to theunion its intention to move itsheading equipment to the NelsonStud Welding plant in Elyria, whichis owned by Doncasters, the sameparent company of Ferry Cap.

Shortly thereafter, on March 9,2012, two union members wrote aletter to the parent companyprotesting the move of that equip-ment, Ferry Cap’s lawsuit says.

A copy of that letter reveals theauthors of the letter worried thatmoving the header group wouldnot achieve cost savings for the par-ent company, but instead wouldcost Doncasters profits. They also

wrote that if any of the experiencedworkers who set up and run headermachines were to decline to relo-cate to Nelson Stud, “we have morethan 50% chance of losing our maincustomer base … due to latenessfrom lack of experienced people.”

“We as a whole just hope thatthis is not being done to enhanceanother companies [sic] bottomline that does not perform as wellas Ferry Cap,” the letter read.“Something just doesn’t smell rightto us.”

In August 2012, the union filed agrievance protesting the an-nounced transfer of the headingequipment.

Ferry Cap, the company says inits lawsuit, has been and is nowready and willing to process thedisagreement between the partiesthrough the grievance procedure.Indeed, its lawyers wrote, the griev-ance is scheduled for arbitrationthis March.

In support of the union’s griev-ance, Ferry Cap alleges, the headeroperators “began to refuse to workany overtime … to pressure thecompany outside the scope of thegrievance/arbitration procedure.”

Ferry Cap responded on Jan. 18by sending a letter to Mr. Baker, theunion representative, protestingwhat it calls a “work stoppage.” Italso asked the union to inform theheader operators that the uniondoes not condone or support theiractivity and that their “strike” vio-lated the collective bargainingagreement, the lawsuit says.

“The union should instruct theheader operators to resume theirnormal work habits and acceptovertime in accordance with theirusual practice,” Ferry Cap’s letter toMr. Baker read.

Despite the letter, “the union hasrefused to take any action to stopthe concerted refusal of the headeroperators to work overtime, there-by condoning this work stoppage,”the company’s lawsuit alleges.

Ferry Cap warned the union thatit could face liability — and mone-tary damages — for a breach of thecollective bargaining agreement.

According to the lawsuit, the col-lective bargaining agreement pro-vides that there shall be no strikes,stoppages or slowdowns of work by

the union so long as the agreementis in effect. The agreement is effec-tive through Feb. 21, 2016.

The lawsuit also notes: “No pro-vision of the agreement limits thecompany’s ability to require em-ployees to work overtime.”

Legal experts weigh inOne local labor and employment

attorney thinks Ferry Cap has astrong case, provided that the factsin the company’s complaint aretrue.

“The employer seems to have alltheir ducks in a row,” said VincentT. Norwillo, a partner in the Cleve-land office of Gonzalez Saggio &Harlan LLP out of Milwaukee.“They would seem to have a legiti-mate shot at convincing the courtto issue at least a temporary re-straining order.”

To obtain what Mr. Norwillo saidis “very rare relief” from the court,Ferry Cap must show — and seemsto have shown — that a no-strikeclause exists, that its contract pro-vides for the mandatory arbitrationof contract disputes and that employees’ refusal to work over-time is damaging or will damagethe company irreparably.

“This doesn’t happen every day,”

Mr. Norwillo said. “The right tostrike is the single most powerfuleconomic bargaining tool availableto a labor organization, and courtshave been loath to restrict the rightof unions. But since Boys Markets(a 1970 lawsuit), they’ve recognizedthis rare exception.”

Another local labor and employ-ment attorney, David A. Campbell,said he’s surprised Ferry Cap tookto suing the employees rather thandisciplining — and even firing —them. He also said he was surprisedthe collective bargaining agree-ment may not require mandatoryovertime because most union con-tracts do.

“I would simply handle it at theplant and discharge for subordina-tion,” said Mr. Campbell, a partnerin the Cleveland office of Colum-bus-based Vorys, Sater, Seymourand Pease LLP. “Either this compa-ny doesn’t have the appropriatecontract … or they’re just simply

not responding the way a typicalemployer would.”

In the company’s letter to unionrep Mr. Baker, Ferry Cap’s directorof operations wrote that the com-pany is considering discipline ofthe header operators up to and in-cluding termination.

One possible reason for FerryCap’s decision to sue, rather thanterminate: Header operator jobsare skilled jobs, and the manufac-turing work force is not exactly ro-bust right now.

“Companies like this — screwcompanies — typically have rathersophisticated machinery that re-quires some complex skill sets,things like setting up the machine,reading blueprints,” said JudithCrocker, director of work force andtalent development for MAGNET,the Manufacturing Advocacy andGrowth Network of Cleveland.

“Those people are not out there,and the ones who are, are peoplewho used to work for less sophisti-cated companies (and) need train-ing,” Ms. Crocker. “If they had va-cancies to fill and they were on atight deadline, they would have achallenging time finding qualifiedworkers to come in and immediate-ly be able to do the job.” ■


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continued from PAGE 3

Ferry Cap: Two union members wrote letter opposing move in 2012“The employer seems tohave all their ducks in arow.” – Vincent T. Norwillo, partner,Cleveland office of Gonzalez Saggio & Harlan LLP


Peter Brown, vice president andpublisher of Automotive News, a sis-ter publication of Crain’s ClevelandBusiness and the leading publica-tion covering the auto industry, hasannounced his retirement effectiveApril 30.

Mr. Brown, 64, joined AutomotiveNews as editor in 1989 after serving4½ years as the founding editor of itssister publication, Crain’s DetroitBusiness. He joined Crain Commu-nications from the Detroit Free Press.

Jason Stein, associate publisherand editor of Automotive News, be-comes publisher and editor. In thisrole, Mr. Stein, 41, will oversee morethan 50 automotive reporters andeditors around the world and leadthe publication’s sales, marketing,event and circulation departments.

During his tenure, Mr. Brown hasled Automotive News to dramaticgrowth and global prominence witha suite of print and online productsthat cover the automotive industry.He became publisher of AutomotiveNews in January 2010 after servingas associate publisher and editorialdirector since 1992.

Crain Communications vicepresident KC Crain has been namedgroup publisher of the AutomotiveGroup, which includes AutomotiveNews, Automotive News Europe, Au-tomobilwoche and Autoweek. Mr.Crain, 33, will continue as publish-er of Autoweek and group publisherof Plastics News, European PlasticsNews, Rubber & Plastics News, Euro-pean Rubber Journal, Plastics andRubber Weekly, Tire Business, Waste& Recycling News, and UrethanesTechnology International.

— Automotive News

Plus, Accurate Group plans to startlooking for other businesses to buy,Mr. Doman said. Though that processhasn’t yet begun, he said he knows ofa few companies that Accurate Groupwould consider purchasing.

Accurate Group “has just explod-ed” since Evolution Capital boughta majority stake in the business in2009, said Brendan Anderson, co-founder and managing partnerof the private equity firm.

At the time, half of AccurateGroup was owned by First Ameri-can Title Insurance Co., whichworked with Accurate Group tomanage various transactions need-ed to close on a home purchase.Back then, the company was focused mainly on serving cus-tomers in North Carolina, where itwas founded in 2003 as a home appraisal company, and elsewherein the southeastern United States.

The investment by Evolution Cap-ital was intended to help the compa-ny expand nationwide, with the helpan upgraded software system.

“That’s happened, and it’s beenwonderful,” Mr. Anderson said.

Change creates opportunityAs part of the 2009 deal, Mr.

Doman and Accurate Group chiefinformation officer Michael Cullenleft the Cleveland office of FirstAmerican, which provides title in-surance and other services related toreal estate transactions, to lead Accurate Group and establish itsnew headquarters in Independence.

That year the company upgradedits Magellan software so that a widervariety of lenders could use the sys-tem, which allows them to sendwork orders quickly to AccurateGroup and complete other tasksneeded to close a transaction. The

company integrated the softwarewith some of the systems used by itslarger clients, and it created a webinterface that has helped other cus-tomers access the software.

“We knew we could take the plat-form and scale it across the coun-try,” Mr. Doman said.

Using Magellan, Accurate Grouphelps clients manage property appraisers, title agents and notaries;conduct title searches; buy title insurance; and estimate homeprices, among other functions relat-ed to home sales.

Mr. Doman said he knew it wasrisky to join a real estate servicescompany so soon after the housingmarket crash. However, he notedthat the recession drove a lot of com-petitors out of the business. Plus,new regulations have helped in-crease demand for Accurate Group’sservices, and low interest rates haveboosted both home purchases andrefinancing transactions, he said.

“There was a lot of opportunitycreated by all the change in themarketplace,” Mr. Doman said.

More expansion opportunitiesremain, said Phil Clough, managingpartner of ABS Capital.

Messrs. Doman and Cullen arewell-equipped to keep growing thebusiness, Mr. Clough said. For one,they have “a ton of experience” in thereal estate services business, he said.Plus, as former executives at FirstAmerican, they have the perspectiveneeded to manage the company as itgets bigger, which Mr. Clough described as one of the biggest chal-lenges facing the business.

“Paul’s got a vision to make thecompany much bigger, and we’reinvesting in that vision,” he said.

How much bigger? The companynow has a new goal: Grow to $200million in sales by 2017. ■


In his announcement, the conservative governor cautioned hestill was “not a supporter of Oba-macare,” but stressed the role of theexpansion in propping up the finances of hospitals that care forthe uninsured as well as the impor-tance of $1.4 billion in federal fundsthat would flow into the state aspart of the deal.

Those broad strokes led theGreater Cleveland Partnership, theregion’s chamber of commerce, tothrow its support behind the expansion just a few days before thegovernor’s announcement.

Business groups long have ar-gued that the cost of caring for theuninsured already has been shiftedto those with private insurance in a“hidden tax” through premiumhikes. Without the expansion ofMedicaid, they’ve said, those in-creases could be even more severe.

“Who ends up paying for it? Thebusiness community,” Joe Roman,Greater Cleveland Partnership’spresident and CEO, said last week.“All legs of the stool would haveseen undue harm as a result. Therewas no ability to just stand back.”

More pointedly, however, if law-makers approve the expansion, local businesses employing a slewof low-wage workers could steertheir employees toward Medicaidrather than pick up the tab for theirhealth care, according to severalhealth care attorneys and benefitsexperts that spoke with Crain’s.

“The more people Medicaidscarfs up at the lower end, the lesspeople employers are going to haveto worry about,” said John Mc-Gowan, employee benefits attorneywith Cleveland law firm Baker-Hostetler.

Will they migrate?If approved, the Medicaid expan-

sion would provide health care cov-erage to adults living at up to 138%of the federal poverty level, whichequates to about $32,000 a year fora family of four and $15,400 a yearfor an individual. At present, Med-icaid for the most part covers chil-dren and the elderly.

The Affordable Care Act, or Oba-macare, dictates that employerswith 50 or more full-time employ-ees offer health insurance that

meets certain requirements or payto the government a penalty of$2,000 or $3,000 per employee. Em-ployees have the option to selectthe employer plan or, if their income qualifies, Medicaid —something many experts say low-income employees might choosegiven the costs they would need tostomach for signing up for compa-ny-provided plans.

“I think it will definitely happenbecause Medicaid is a no-cost op-tion for these folks” said PaulNachtwey, vice president of ToddAssociates, an insurance brokeragein Beachwood.

Employees also would have theoption of buying their insurance onthe public exchange — an onlineportal where individuals can shopfor their own insurance. Their em-ployers would be subject to the gov-ernment penalty should they buyinsurance through the exchange.However, should qualifying em-ployees sign on with Medicaid, em-ployers could skirt the penalty andforgo the cost of providing healthcare.

“That would have the immediateeffect of reducing costs employerwould have to bear,” Mr. Nachtweysaid.

Gregory Hubbell, senior vicepresident in the Cleveland office ofAon Risk Solutions, a large insur-ance brokerage, said the expansionof Medicaid “certainly providesmore options for all of us as individ-uals, so the tricky part for the em-ployer would be, ‘What does Med-icaid mean to me and my existinggroup health plan?’ Now there arethe public exchanges and Medicaid— those are two wild cards thatpeople might gravitate to.”

Mounting concerns The two pillars of health care

reform driving President Obama’sgoal of universal health care cover-age are the Medicaid expansion

and the individual mandate, whichis the law’s provision that requiresmost Americans to carry health in-surance. To the delight of manyconservatives, the U.S. SupremeCourt last year ruled that individualstates could sidestep the Medicaidexpansion — a decision only ahandful of Republican governorsthus far have bought into.

Gov. Kasich’s decision to go for-ward with the expansion has beenseen by many as a sign the conser-vative movement is weakening inits opposition to the AffordableCare Act in the face of the presi-dent’s re-election. However, othershave suggested it would have beenirresponsible to forgo expandingcoverage in Ohio at no additionalcost to the state.

The federal government haspledged to pick up the full tab forthe first three years of the Medicaidexpansion. Thereafter, the fedswould cover 95%, which declines to90% over time. Gov. Kasich, how-ever, promised to reverse his deci-sion should the feds fail to comethrough with the promised support.

“This is in noway his en-dorsement ofObamacare,”said RobertKlonk, CEO ofOswald Cos., aCleveland-based insurancebrokerage. “Heput politicsaside and did what’s best for the cit-izens of Ohio. This was the onlychoice he really had.”

Many people, however, are con-cerned that putting more low-in-come individuals on government-financed health care programs onlywill push premiums for private pay-ers north, considering Medicaid re-imbursements rarely cover hospi-tals’ costs of providing care.

Despite signaling its support forthe expansion, the Ohio Chamberof Commerce said in a statement itstill had “serious concerns” aboutthe long-term financial stability ofthe program

As Oswald’s Mr. Klonk put it,“This is not going to drive downcosts at all. This is the hand we weredealt, and we have to play it the bestway we can.” ■


Medicaid: Government will pay full tab

Kasich Roman

Klonk


Accurate: Business ‘exploded’

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Wednesday,February 13, 2013Noon to 1:30 p.m. EST - Program

It’s all aboutwater!Water challenges in the oil and gas industry.

Automotive News publisher will retire;a new management team takes shape


■ Cleveland-area entrepreneursare in a pretty good mood, accord-ing to a new survey conducted byThe Entrepreneurs’ Organization.

The survey of 143 local compa-nies with at least $1 million in annu-al revenue found 42% expect to hiremore full-time workers in the nextsix months, and 56% plan to hiremore part-timers in that time frame.

Those surveyed also say they believe the economy is moving in apositive direction, with 56% report-ing positive feelings about startinga new business in the next half yearand 63% believing in a positivechange in net profit.

“The results from the survey underscore that Cleveland busi-nesses are thriving despite the cur-rent economic climate,” said theorganization’s Cleveland chapterpresident, James Benjamin. “Weexpect our businesses to continuegrowing, and we expect the marketto rebound in a positive way.”

The Entrepreneurs’ Organizationis a network of more than 8,000business owners in 40 countries.Membership in one of its 20 chap-ters is by invitation only; the aver-age member is 41 years old with annual revenues of $17.3 million.

■ The accounting firm of Crum,Buchanan & Associates has mergedwith Levin, Swedler & Co. to createLevin Swedler Crum, Certified Pub-lic Accountants, located in Fairlawn.

Company principals Gary Levin,Steven Swedler and Kevin Crumhave more than 100 years of com-bined experience. The new firmserves business, individual and non-profit clientele in Northeast Ohio. Itoffers audit services, tax planning,tax preparation, accounting, estateplanning, and consulting services.

“Combining our expertise, tech-nology, resources and dedicatedteams has allowed us to provide anew level of excellent service to ourclientele,” Mr. Crum said in a state-

ment. “We have a sharedmission, and that is tocontinue to utilize allof our resources mosteffectively for thebenefit of the clientsand community weserve. Merging withLevin, Swedler & Co. has allowed us to take mean-ingful steps to sustain our currentrate of growth as specialized solu-tion providers.”

Mr. Levin founded Levin Swedler& Associates in 1986. CrumBuchanan was founded in 1996 byMr. Crum.

The merged firm plans to em-phasize its expertise and experi-ence in the areas of nonprofit orga-nizations and audits ofprofit-sharing plans. Mr. Crum willmanage the nonprofit practice; theprofit-sharing plan audit practicewill be managed by Todd Kennedy.

■ Business-to-business marketingfirm Clayman Advertising Inc. haschanged its name to Clayman Mar-keting Communications Inc. andmoved into new offices at 1245 S.Cleveland-Massillon Road in Akron.

“The name change is somethingwe have thought about for sometime,” said Margie Clayman, thefirm’s vice president of client ser-vices, in a statement. “Even thoughwe are still a full-service ad agency,our services are now so much broad-er than just advertising that we feltthe new name was much more indicative of what we do today.”

This is the fourth move in thefirm’s 59-year history. It was found-ed in 1954 by Henry J. Clayman andnow is headed by Larry Clayman. Itserves clients throughout NortheastOhio as well as in Illinois, Kansas,Michigan, Tennessee, and Oregon.

■ Proforma Promotional Solu-tions of Cleveland has opened itsfirst European office, in London.

The company said David Gar-nelas joined Proforma to increaseits international presence and toexpand the Proforma brand intonew markets worldwide.

Mr. Garnelas comes to Proforma

with an extensive backgroundin sales and marketing.He served as the sales

director at Event Mer-chandizing, managingthat firm’s work for

events such as the LiveEarth environmental ini-

tiative and the 2012 LondonOlympics. He was responsible

for providing all promotional mer-chandise and revenue-generatingideas as well as giveaways and advertising campaigns.

In the London office, Mr. Gar-nelas will offer brand and graphiccommunications services throughpromotional products, commercialprinting, and business documents.

■ Akron personal injury law firmKisling, Nestico and Redick LLCsaid it has hired five attorneys andopened a Columbus office.

The expansion brings the firm toa total of 22 attorneys and 40 sup-port staff.

Attorneys Antonio Magnone andBrian Zaber joined Kisling Nesti-co’s pre-litigation team, whileChristopher Corrigan, MichaelMaillis and Walter Messengerjoined the litigation group.

Messrs. Corrigan and Zaber workin the main office in Akron. Messrs.Magnone and Messenger joined

attorney Paul Steele in the newColumbus location. Mr. Maillis rep-resents the firm in Youngstown.

■ Digital forensics company Dig-its LLC of Buffalo, N.Y., said it is ex-panding with the opening of officesin Cleveland and Rochester, N.Y.

The Cleveland office at present isa virtual operation that is seekingpermanent physical space for up tothree employees, a companyspokesman told Crain’s ClevelandBusiness in an email.

“Our new offices in Rochesterand Cleveland will help … bettermeet the needs of our clients andhelp them respond to corporatecompliance challenges, litigation,and stay more secure from theever-changing cyber threats corpo-rate America faces every day,” saidMichael McCartney, president andCEO of Digits, in a statement.

“We feel that our presence inthese cities will help to bring addi-tional awareness of the significantcorporate risks effecting businessowners,” he said.

The company, founded in 2006,specializes in digital forensics, datarecovery, corporate computer investigations, network security advisory services and litigationsupport services.

■ Visual Evidence Corp., a trialpresentation and courtroom evi-dence firm that has done businessin Northeast Ohio for more than 27years, said it has moved its officesto Valley View from downtownCleveland.

The move to 4,200 square feet at8555 Sweet Valley Drive, Suite A, inValley View means Visual Evidencewill be able to “offer clients a new,state-of-the-art videoconferencingroom that can accommodate 20 attendees, as well as free parking,”said Manfred Troibner, principaland co-founder of the firm. In addi-tion, he said, “our new location offers easy access to clientsthroughout Northeast Ohio as weserve pre-eminent law firms inAkron, Canton and Youngstown, aswell as in Cleveland.”

Company principal Daniel D.Copfer Sr. added, “Our staff ofnine, as well as our trial evidenceproduction studios, has moved tofacilitate the continued expansionof services we offer our litigationclients. We outgrew the space wewere sharing, and will now be ableto deliver more services to legalteams preparing for trial.”

A sister company, VeDiscoveryLLC, is remaining downtown at itscurrent West Ninth Street location.


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Flow Polymers to expandBy FRANK ESPOSITOPlastics News

Strong sales growth in plastic ad-ditives will lead Flow Polymers LLCof Cleveland to install a new pro-duction line by the end of the year.

Sales of SureFlo-brand additivesmade by Flow Polymers grew 40% in2012, president and CEO Mike Ivanysaid in an interview last Tuesday,Feb. 5. The company had planned toadd the new production line during2012, but Mr. Ivany said Flow Poly-mers personnel were able to getmore production out of the existingline, which started up in 2009.

SureFlo’s growth has come fromseveral areas, but Mr. Ivany said thematerial recently has provided thebiggest benefit in blow-moldedparts used in landscaping and trashremoval. SureFlo is a proprietarymix of hydrocarbon resins that canincrease flow and line speed, andcan allow different resins to be reprocessed together.

During 2012, Flow Polymers alsomoved part of its rubber-based busi-ness to an 83,000-square-foot plantabout four miles from its existing

plant on Cleveland’s East Side. Theadditional space was needed afterFlow Polymers closed a smaller plantin Connecticut in late 2011 becauseof environmental issues from a pre-vious business at that site.

Adding the second site and over-all sales growth allowed Flow Poly-mers to add 25 jobs during 2012,Mr. Ivany said. More jobs mightneed to be added in 2014 after thesecond SureFlo production linecomes on later this year.

Flow Polymers’ main businesshas been rubber additives and dis-persions since it was founded in1984 by Cleveland entrepreneurDan T. Moore. In late 2010, Mr.Moore’s Dan T. Moore Co. sold astake of about 75% in Flow Poly-mers to Chicago private equity firmGeneva Glen Capital LLC.

The existing SureFlo productionline is in a 100,000-square-foot build-ing that was used to manufacture tor-pedoes during World War II. ■

Frank Esposito is senior staff reporter with Plastics News, a sisterpublication of Crain’s ClevelandBusiness.


This is how ironic life and the attendant news business can be.In a week that sawCrain’s and ideastream

draw 600 people to a sold-outsummit on Ohio’s new energyindustry, a Youngstown com-pany gave that same industry’sopponents a gift-wrapped rea-son for being.

An oft-repeated message atour summit last week at Execu-tive Caterers at Landerhavenwas balance. From the morn-ing keynote speaker, John Hofmeister,through the end of the day, speakers dis-cussed the economic promise of Ohio’srich Utica shale but urged a balance withappropriate regulation.

And at the same time, someone wasdumping — against state laws and allcommon sense — 20,000 gallons offracking wastewater into a storm sewerin Youngstown.

Herein lies the problem with a suddenabundance of money. It creates mistakesspringing out of greed, stupidity, or both.

National energy interests are spendingbillions of dollars in Ohio to find, extract,process and transport these new gases

and oil, and that means that some peo-ple will try to latch onto those riches, by

whatever means possible. Mostof them are interested in legiti-mate business or investmentopportunities. But as with anyother economic boom, therewill be corner-cutters andcrooks.

Mr. Hofmeister, former pres-ident of Shell Oil, told the crowdthat Ohio and the nation standat a pivot point, and that thenext few decades could mark

America’s return as a dominant energysuperpower. But, he urged, there is legit-imate need for regulation and, he pre-dicted, the technology will only get bet-ter and better and safer and safer,because of that regulation.

There are risks, he said. This is a dan-gerous, messy business, and safety needsto be forefront in the minds of those en-gaged.

“Let me tell you,” he said, “you would-n’t want to be on an active drilling site. Itis noisy and messy.”

That said, if the companies adhere to,and even support, the efforts of regula-tors, the advent of shale oil and gas could

guarantee America’s national securityfor decades to come.

But this dumping incident raised con-cerns that should trouble anyone inter-ested in this new industry.

It’s clear that this new industry is enticing because of its scope andpromise for Ohioans. Our state’s unem-ployment rate is a point below the na-tional average, and there is little otherreason other than the manufacturing,transportation, road-building, excava-tion and all the other work that accom-panies the start of widespread drillingin the Utica shale.

But as Mr. Hofmeister and others noted throughout the day, this is a busi-ness that is risky, dangerous and messy.It needs — and we should demand —stringent oversight so that it continues tochange the economic landscape of theBuckeye State and its citizens.

Gov. John Kasich and his administra-tion have been aggressive in their callsfor appropriate levels of taxation on theenergy industry. Regardless of whatthose taxes end up being, some of thatmoney should be spent on the safetymeasures needed to protect Ohioansnow, and in the future. ■


Come on

Fiddle-dee-dee. Fans of the movie “Gone Withthe Wind” will recognize the phrase as theone Scarlett O’Hara uttered whenever shewas frustrated by something or someone.

Gov. John Kasich had a fiddle-dee-dee momentrecently when he teed off on the organization pur-suing a legal challenge to JobsOhio, his pet econom-ic development program. Only his catchphrase isn’tquite as catchy. It’s simply, “Come on.”

An exasperated governor spoke those words as hechallenged the motives of ProgressOhio, a left-lean-ing public policy group, for its lawsuit that looks toderail JobsOhio on constitutional grounds.

“There’s no legitimacy to this,” he said during aJan. 31 news conference. “Constitutional issue?Come on. This is a political issue designed to wreckthe progress we’re having in Ohio.”

Our response to the governor?Come on. Or, if you’d prefer, fiddle-dee-dee.The organization that has put the roadblock in

the governor’s way definitely doesn’t share his poli-tics, but that doesn’t make its lawsuit illegitimate.

ProgressOhio opposes the shift of Ohio’s eco-nomic development duties from a state agency —the former Ohio Department of Development — toJobsOhio, which the governor established as a pri-vate entity. Its lawsuit alleges the legislation thatcleared the way for this transfer of authority violatesthe Ohio Constitution in a handful of ways. Amongthem are that it would funnel public money — prof-its from the state’s liquor operations — to JobsOhiofor its operations and would lend the credit of thestate to a private corporation.

The constitutional issues raised by ProgressOhiodeserve to be debated in a court of law. However,the substance of the lawsuit has yet to be heard, astwo lower courts have ruled that ProgressOhio doesnot have legal standing to bring the action beforethem.

It’s now up to the Ohio Supreme Court to deter-mine whether ProgressOhio can bring its case. Ourhope is that the Republican-dominated high courtwon’t serve as the governor’s surrogates and simplyreject ProgressOhio out of hand, but instead willgive fair and honest consideration to the matter.

That’s cool

Right about now, most residents of NortheastOhio already have had their fill of winter.While warm weather isn’t just around thecorner, here is sure sign that spring is on the

way: Pitchers and catchers report this week to theCleveland Indians’ spring training camp inGoodyear, Ariz.

And if that thought doesn’t do enough for you, innine more Mondays the Tribe will hold OpeningDay festivites at Progressive Field April 8 against theNew York Yankees. Fans may need to wear parkas tothe game, but it won’t be long before cool springevenings give way to sultry summer nights.

Hold that thought.

FROM THE PUBLISHER

PERSONAL VIEW

BRIANTUCKER

Balance essential in Ohio’s newest industry

Place bets on technology with an edgeBy HERB KLEIMAN

It is still a formidable challenge.Northeast Ohio continually seekseconomic growth similar to otherregions of the country. Leveraging

lessons learned elsewhere can con-tribute to refocusing our efforts and re-fining the way we invest.

Northeast Ohio can focus on improv-ing investments in technological research and development. As ideasmove up the chain to a viable startup,how can we identify the most promisingones and vigorously back them?

Sometimes our efforts may lead usdown the path of the “law of large num-bers.” Most problematic, picking win-ners and losers is tricky and elusive. And

there is always the continuing competi-tion for funding of such worthy pro-grams, as schools, police and fire, andthe like. What to do?

The effort proposed should focus ontechnological R&D funding. Keep in mindthat the more radical the innovation, themore difficult it is to predict future salesand particularly its profitability. Howev-er, history shows payoffs can be huge.

The methodology consists of lookingfor three different markets. Admittedly,the lines between them are blurred andthey tend to merge. Still, a theoretical approach may prove to be beneficial.

A company conceives a product that

in its initial years has no competition. Itneeds vigorous patent protection andthe capacity to grow, sometimes quickly.Even a lead of just a few years will bemost beneficial.

A prime example is provided by Xerox.The company introduced the first dryprinter with plain paper in 1961. Themarket it was entering was relativelysmall — especially when compared withthe market it would eventually create.The Xerox 914 ushered in an entirely newdemand. For the decade of the 1960s ithad no competition, and growth wasphenomenal. When its initial patent ex-pired, the Japanese flooded the market,particularly with smaller versions, andXerox first encountered competition.

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

EDITOR:Mark Dodosh ([email protected])

MANAGING EDITOR:Scott Suttell ([email protected])

OPINION

Mr. Kleiman is president of Kleiman Associates, a marketing relations firm serving high-technology companies.

See VIEW Page 11


Another product that was trulyinnovative was the Polaroid cameraintroduced in 1946. It offered instant photography, breaking themonopoly then held by Kodak. Forabout 10 years, as Polaroid built upits manufacturing capabilities, itgrew quickly. It competed with Kodak in many of the traditionalmarkets, and it opened new ones.Polaroid won a patent suit againstKodak in 1986 giving it sole status ininstant cameras. Later, Polaroid senior management did not re-spond quickly enough to the grow-ing threat of digital photography.

More typically, markets are char-acterized by a “price elasticity of demand.” When price decreases,demand goes up. Price may godown for any of several reasons,such as the manufacturer’s learningcurve. Most industrial and especial-ly the consumer markets followthese laws.

The transistor typified this prin-ciple. At relatively high prices, it wasdesigned into expensive militaryand high-end systems. As its pricewas reduced, the volume of appli-cations toward the lower end grewgreatly. Transistors were inventedin 1947 by Bell Telephone Labs andfirst manufactured by WesternElectric, the manufacturing arm ofAT&T. In 1952, it decided to licensethe product to all comers.

Personal computers have beenavailable since the mid-1970s. Theywere sold as kits, and their future

was in doubt. Then with introduc-tion of Macintosh by Apple Com-puter, the consumer became inter-ested.

Competition emerged from newvendors such as Dell. As price keptdescending, the personal computercrossed the “magical” point of$1,000. Sales expanded rapidly. Atthe same time, manufacturers ofknown integrity entered, such asIBM and Hewlett-Packard, givingthe industry needed respectability.

A company may choose the mar-ket that is characterized by its highquality of products and, therefore,its higher price. Success in this typeof a market is relatively hard toachieve. The company must be ableto differentiate the product.

Sony Corp. decided many yearsago to serve its customers high-endproducts. It first established itself inthis enviable position with the in-troduction of the Trinitron color re-ceiving tube. It utilized a three-gunconfiguration, which resulted in ahigher quality image and more dis-tinguishable colors. From 1966, thehigher-end color TV market wasdominated by Sony. The companyhas maintained its position eversince.

Apple has consistently priced itsproducts at the high end of therange. This was personified by itslate CEO, Steve Jobs. Since itsfounding in 1977 Apple has broughtout many innovations, includingthe mouse, which became an in-dustry standard. As added product

lines were offered, Apple eventual-ly became the world’s most highlyvalued technology company. ■


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■ Crain’s Shale Summit last Tues-day at Executive Caterers at Lander-haven was a day to remember. Areal palpable sign of what is comingto our region and what the transfor-mative potential might be. Congrat-ulations to your entire staff.

One major takeaway for me wasthe sense permeating the entirevenue that something big is com-ing — like a storm you can sense,but cannot yet clearly see. Everyoneknows it is coming, but there is noconsensus of the exact form it willor should take.

There is a tangible positive en-ergy, long absent in Northeast

Ohio. There was much discussionof the need to “get it right.” Theneed for transparency. The need tomake certain that when develop-ment comes, it provides maximumbenefit, economic and otherwise,with minimum disruption to theland and ecosystems.

People are eager to be involved,be part of the process and get apiece of the action. But, most don’tknow how to connect.

Crain’s and its Shale magazine,particularly, are perfectly posi-tioned to be the vehicle of connec-tivity between all the various stake-holders.

Accurate and actionable infor-mation, as always, will be key tomaking smart decisions. A good,unbiased clearinghouse is clearlyneeded. I look forward to Shalemagazine providing regular up-dates of plans and participants inshale-related developments. Aone-stop source for connecting thedots will be a very valuable re-source.

Steven A. BelmanOwnerManufacturers Wholesale Lum-

ber, ClevelandTroymill Wood Products, Middle-

field

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SMALL BUSINESSI N S I D E

FEBRUARY 11 - 17, 2013 CRAIN’S CLEVELAND BUSINESS 13

15 TAX TIPS: KEYASPECTS OF IRS’VOLUNTARY COMPLIANCE PROGRAM.

MINDING THEIRP’S AND Q’S

Whether it’s with casual conversations or formal introductions, etiquette consultants stress importance of putting best foot forwardBy KIMBERLY [email protected]

The average person decideswhether they like you withinseven seconds — 60% isbased on appearance, 30%

on voice and 10% on the content ofconversation.

And if someone doesn’t like you,chances are they aren’t going to buywhat your company is selling, ac-cording to Colleen Harding, founderof the Cleveland School of Etiquette

and Corporate Protocol.More employers are realizing their

employees are an extension of theirbusinesses, and they are calling onetiquette consultants to smooth overthe rough edges.

After 22 years in corporate sales,Mrs. Harding said she is all too aware

See ETIQUETTE Page 14 See ARBORWEAR Page 16

Arborwearestablishesroots withstrong gearBainbridge Townshipcompany generatesmore than 50% of itssales via outdoor prosBy SHARON [email protected]

At one time, Arborwear’s ruggedclothing was sold out of a truck bed.These days, not only is Arborwear abooth regular at tree care industrytrade shows, it’s a well-known andrespected special events sponsorand online vendor.

And, with the company’s relocation and consolidation toBainbridge Township from severalother Geauga County locations,more opportunities for growth, visibility and brick-and-mortar retail are possible.

Arborwear specializes in clothingdesigned for arborists, tree climbersand utility workers.

“The clothes are designed towork with someone who movestheir body — who works in the dirtand in the woods,” said MelissaLeVangie, a U.S. Department ofAgriculture tree climbing inspectorbased in Massachusetts, who scalestrees from 20 feet to 120 feet eachworkday.

Arborwearwas founded inNortheast Ohioin 1997 by PaulTaylor. Mr. Tay-lor and Bill We-ber, 44, who for-mally joined thebusiness in 2001,previously ownedrespective tree service businesses.

“Back when we were climbingtrees, there were no clothes de-signed specifically for what we did,”Mr. Weber said.

Arborwear introduced durablegarments that allowed a full rangeof movement. In 2008, Mr. Weberbecame sole owner.

“Bill and Paul were respected.They understood the business.

INSIDE: The Northeast Ohio MedicalUniversity has prescription for improving student behaviors. Page 14

MARC GOLUB

Colleen Harding, founder of the Cleveland School of Etiquette and Corporate Protocol, is shown at WestwoodCountry Club in Rocky River.

SHARON SCHNALL

Weber


of how important it is to presentoneself in a favorable light.

Mrs. Harding, who started hercompany five years ago, said ingeneral she is seeing a rising num-ber of calls to her Bay Village firmfrom companies eager to shapetheir employees into more favor-able company representatives.

Similarly, Catherine Holloway,owner of Etiquette Consulting Ser-vices in Beachwood, said requestscan come in from business owners,concerned spouses or civic andprofessional groups — all lookingfor an edge in the marketplace.

Both Mrs. Harding and Mrs. Hol-loway offer everything from groupseminars to one-on-one coaching,depending on the situation and request. They also might work withbusiness professionals one day andyoung children the next.

“When a company hires some-one, it says to the market I approveof this individual and think they canrepresent my company in the mar-ket in a favorable manner,” Mrs.Harding said. “A lot of times theydon’t realize they are not represent-ing themselves, but the corpora-tion, when they are in the market.”

A different generationMrs. Harding said although the

millennial generation grew upthinking everyone has the sameopportunities, the boss isn’t goingto name them the general manag-er right out of the box to be fair.

“Our current graduates justspent eight years in sweatpantsand hoodies and wearing flip-flops to school,” she said.“They grew up in a generationwhere everyone got a trophy andeveryone was a winner; and nowthey have to report to a guy wholooks like Lee Iacocca.”

On the flip side, people who entered the business market in the’60s, ’70s and ’80s were brought upin the era of IBM, during whicheveryone wore a blue or gray suit,good shoes and good pantyhose.

Put the two generations togeth-er and there inevitably can be acommunication problem.

Since people judge according to their own standards, Mrs. Hard-ing said it’s important for compa-nies to teach their employees —whether they are fresh out of college or in the work force for 30years — what is expected.

Robert J. Pacanovsky, owner ofRobert J. — Training & Design in

Akron, added an etiquette consult-ing specialty in 2012 after seeing aneed for such a service in thecourse of running his events andcatering business. Indeed, he seesproper etiquette as a way to brandyourself and your company.

“Wherever you go, once youidentify yourself, the next questionis what do you do or who do youwork for? Once you answer that,you’ve branded yourself and yourcompany for the rest of the event,”Mr. Pacanovsky said, adding thatthe soft skills of etiquette can potentially make or break a careerand a company’s success.

“There is a lot of competitionout there for business, and every-body has the same thing,” he said.“I still believe business is all aboutrelationships and, more impor-tantly, the personal relationships.”

How do you do?Mr. Pacanovsky said part of the

problem is that society has be-come more casual.

“I love technology, but I do believe it’s outpacing us at times,”he said. “People are so reliant ontechnology they forget how to actin a formal manner.”

Turning a cell phone off duringan interview, and refraining fromchecking text messages or answer-ing emails at a business lunch,may seem like common sense, buttoday’s graduates have grown upwith technology at the ready and

think nothing of throwing a cellphone on the table.

Mrs. Holloway, who started herbusiness in 1994, said peoplecome to the workplace with a lotof baggage — good and bad — thatgoes back to how they were raisedand the circumstances they facedin becoming an adult.

Over the years, Mrs. Hollowayhas worked with PTA groups, cor-porate clients, children, publicand private schools, and even college and university employees.She said the key is to speak to theappropriate age level, gender andeconomic background of herclients to ensure success.

One of the top requests etiquette consultants are asked tocover with employees are intro-ductions.

Mrs. Holloway said profession-als want to walk into a room with confidence — not like a tornado. She said it can be a challenge for some people to maneuver through a networkingevent and hold conversations. Regardless, she said it’s a choicefor individuals to step outside oftheir comfort zone and learn the appropriate behaviors.

“I think that once you come outof college and are in the work force,you realize people are doing thingsdifferently,” she said. “You eitherrise to the occasion and learn theskills to play with the big boys, oryou stay where you’re at.” ■


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Etiquette: Generations often don’t mix

■ Dining: Dining is done in acertain environ-ment. Everythingis done methodi-cally and is con-trolled. Eating iswhat people dowhen they are hun-gry. There is a difference, accord-ing to Colleen Harding, founder ofthe Cleveland School of Etiquetteand Corporate Protocol.

■ Grooming: How you dress is alanguage that speaks to the eyes,Mrs. Harding said. Casual Fridaydoes not mean it’s OK to throw on apair of yoga pants and flip-flops.

■ Introduction: Be able to intro-duce yourself, carry a conversationand sell your company in the bestway possible. Catherine Holloway,owner of Etiquette Consulting Ser-vices, said there is a correct way to

enter and exit aroom while convey-ing professionalismand confidence.

■ Interpersonal& ElectronicCommunications:Use proper Englishin all correspon-

dence. Emoticons and abbreviatedwords are not appropriate. Proof anemail before sending it, and pay attention if others are copied on theresponse. It’s not OK to have yourcell phone on the table or to send oranswer text messages or emailswhile with a client.

■ Image: Does a client need tomove papers and boxes to sitdown? Does your car resemble atrash can? Presenting a neat andclean image to a client — whetherin the office or in the car — goes along way in the workplace.

TOP 5 RULES FROM THE ETIQUETTE PROS

Dr. Elena M. Rossi, an adviserfor medical students at the Northeast Ohio Medical University(NEOMED), took matters into herown hands, coming up with theidea of doing an etiquette programwith medical students after takinga group out to dinner.

One student ordered the mostexpensive item on the menu, whileanother dipped his breadstick intothe unity butter dish and promptlyplaced it in his mouth.

While some behaviors wouldmake Miss Manners and EmilyPost blush, Dr. Rossi said some-times it’s just a matter of notknowing how to act appropriately.

“They still don’t know certain

things,” said Dr. Rossi, associatechairwoman of pediatrics at AkronChildren’s Hospital, chairwomanof pediatrics at St. ElizabethHealth Center in Youngstown anda clinical professor of pediatrics atNEOMED. “They don’t know thetable setup; they don’t necessarilyknow where everything goes. Theydon’t know what to do with thebill. They don’t get the alcohol andcell phone question correctly.”

Her idea grew into the annualNEOMED Business Etiquette Dinner and Professional FashionShow for College of Medicine, College of Pharmacy and Collegeof Graduate Studies students.

Laura C. Cessna, assistant direc-

tor of Student Development andLeadership in the Office of StudentAffairs at NEOMED, said the program, which began in 2010,provides students with an oppor-tunity to learn proper dining anddress etiquette for clinical, busi-ness and social occasions.

“This is a tool to help them dothe right thing,” Dr. Rossi said.“Medicine is a business.

“The overall message is thatwhen you are eating a meal, theyreally do look at how you eat. I’mnot sure people realize that youare judged on your manners andyour handshake.”

— Kimberly Bonvissuto

Medical school offers dose of good manners

Subscribe to Crain’s Cleveland BusinessCall toll-free at 1-877-824-9373 or on-line @

CrainsCleveland.com Click on “Subscribe Now.”


Alittle more than a yearago, the IRS announceda new voluntary compli-ance program to offer

employment tax relief to business-es that improperly classify workersas independent contractors.

Two IRS notices issued in December expand the program inseveral meaningful ways. Some ofthese expanded benefits expire ina very short timeframe, so busi-ness owners should examine anyworker classification issues now todetermine whether they can bene-fit from the expanded program.

Some businesses may improp-erly characterize workers as inde-pendent contractors in order toavoid paying employment taxes,but more often that not, such clas-sification occurs because businessowners are simply not sure whattypes of workers need to be treated as employees.

If workers treated as independentcontractors should instead havebeen classified as employees underthe tax law, this creates a significanttax risk to the business. There hasbeen significant focus by the IRSand other governmental agenciesover the last few years on whetherbusinesses are appropriately char-acterizing workers as employees orindependent contractors.

Legislation has been proposedfrom time to time over the lastseveral years to enhance penaltiesfor failure to make the appropriateclassification, and to take away thebenefit of some of the exceptionsto these penalties.

Recognizing that part of the mis-classification problem is caused byemployers who believe that theymay have misclassified a worker,but who are reluctant to change theclassification due to the exposure toadditional taxes, the IRS an-nounced a program in late 2011called the Voluntary ClassificationSettlement Program, or VCSP.

Under the VCSP, employerswho voluntarily change the classi-fication of their workers from independent contractors to em-ployees going forward essentiallywill not be penalized and will notbe subject to audit for prior years.

Under the original program,two of the requirements were thatthe business must:

■ have satisfied the Form 1099reporting requirements for theseworkers for the three years preced-ing the year that a request for partic-ipation in the program is filed; and

■ not be under audit by the IRS.The recent announcements

make beneficial changes to theprogram relating to these require-ments. First, the IRS makes it clearthat taxpayers can apply for thisprogram even if they are underIRS audit for a different issue.

Many businesses do not focus onthe worker classification issue, sooften the issue only comes up whenadvisers are consulted to deal withother parts of the IRS audit. The rulecontinues to be that no participa-tion is allowed for taxpayers whoare currently being examined by theIRS or other government agencyspecifically with respect to workerclassification issues. The incentive istherefore to obtain this relief beforethe issue comes up on audit.

The most significant change an-nounced provides an exception tothe requirement that Form 1099s

have been filed for the prior three-year period. That is no longer re-quired. This relief is only availablethrough June 30 of this year. TheIRS was made aware that many

businesses wanted to participate inthe VCSP but had not filed some orall of the necessary Forms 1099.

These businesses can nowparticipate as long as they furnishto the workers and electronicallyfile with the IRS all required Forms1099, consistent with the non-employee treatment, with respectto the workers being reclassifiedfor the previous three years priorto executing the closing agree-ment with the IRS.

The cost of this expanded pro-gram is more than the cost for anemployer who did file the appro-priate Form 1099s. However, this

cost is still dramatically less than ifthe IRS determines upon audit thatthe workers were misclassified.

Many advisers have appropri-ately advised their clients to exer-cise caution with their decision toparticipate in this program. Abusiness considering relief underthis program must realize that it isnot binding on any state or othergovernmental agency.

There was some concern that theIRS would share the informationprovided in the VCSP applicationwith such agencies. Surprisingly,the IRS has indicated in its FAQpublication that it will not share the

information with the Departmentof Labor or any state agency.

The expansion of this programis very favorable, especially withrespect to businesses that previ-ously did not qualify, either be-cause they were currently underaudit by the IRS or had not filedForm 1099 for the workers at is-sue. The terms of the expandedprogram should be considered byany business using independentcontractors whose status as suchmay be in doubt. ■

Mr. Grassi is president of McDonald Hopkins LLC.


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They came from the business; theydid the business. They could speakthe same language to the profes-sionals,” said Ms. LeVangie, whoalso is a certified arborist and ownsTrees New England, a Barre, Mass.,tree care consulting company.

The clothing product line includes: tree-climbing pants;heavyweight sweatshirts; jackets;high-visibility outerwear; and raingear. Prices range from $9.95 for a stocking cap to $179.95 for ascender pants.

Branching outAll clothes are conceived and

designed in-house and manufac-tured in overseas and U.S. facto-ries; tailored design and flexiblefeatures contributed to crossoveruse by mainstream consumers.

Purchases for outdoor profes-sionals — including mono-grammed uniforms — represent50% of the company’s 2012 grossrevenues, which were under $10million. And although Mr. Weberdeclined to discuss specifics abouthis company’s revenues, he did sayhe anticipated a 30% increase in2013.

Lake Metroparks utilizes Arbor-wear products for operations andnatural resource staff, but espe-cially the tree care crews. Theclothes give employees a uniformand professional appearance, saidJohn Grantham, director of parkoperations. The Lake County-based park district encompassesmore than 8,100 acres.

“You can walk through prickersand briars,” Mr. Grantham said.“The pants wear like a pair of bluejeans, but they function like a pairof coveralls.”

Arborwear has attracted otherniche followers: horseback riders,motorcyclists, stone masons, ce-ramicists, rock climbers, carpen-ters and hikers, Mr. Weber said.The company serves customers inall 50 states and in Canada and Europe; their largest online accounts include Dick’s SportingGoods, Amazon and Cabela’s.

Last September, Arborwearmoved operations to 18,500 squarefeet of 10-year leased space — formerly a U.S. Post Office branch.Previously, the 15 full- and part-time employees utilized 12,000square feet of rented and ownedspace in several Newbury and Burton locations.

Renovation and relocation coststotaled $100,000 to $150,000 andwere financed by landlord and in-vestor loans — investors have beeninvolved since the company’s inception, Mr. Weber said.

This headquarters location fea-tures ample warehouse and officespace; a training center for offeringcontinuing education courses totree care professionals; and for thefirst time — a retail store.

The store’s floors feature hard-woods of different species. Thecounters, display units and dress-ing rooms also highlight differentwoods: mulberry, basswood, blackwalnut and even sweet gum from atree that once graced Yale Univer-sity’s campus in Connecticut.

Adding to the rustic atmosphereare vintage chainsaws, some customer donated, others ownedby Mr. Weber.

True to its rootsThe retail portion was dubbed

“man heaven” by one customer,said Mr. Weber. Perhaps, but theintent is about paying homage tothe business’s roots in the tree careindustry and the loyal customerbase — tree care professionals.

“I kind of choked a bit at thecost,” said Ms. LeVangie about herlatest personal purchase of Arbor-wear pants. Any lingering reserva-tions were addressed the day sheaccidentally walked into a barbedwire fence; the reinforced pantswere not cut, neither was she.

Safety features — albeit attrac-tive — are purposeful: pocket angles prevent catching on treelimbs; breathable fabrics reducefatigue; zippered exterior pocketsmaximize easy access to tools;mid-leg fiber panels prevent tear-ing by belt-slung chainsaws.

“If you’re constantly fixing yourclothes, you’re not paying atten-tion; you’re more likely to get intoan unsafe situation — that doesn’thappen with the (Arborwear)clothes,” said Jim Skiera, executivedirector of the International Soci-ety of Arboriculture (ISA). ISA is a21,000-member arborist-certifica-tion and tree care education orga-nization, based in Champaign, Ill.

Beginning this month, Arbor-wear is offering discounted cloth-ing to ISA members featuring theISA logo. Additionally, attractingnew customers to the store, growing the brand and reaping the benefits of the relocation and consolidation are on the agenda.

“Our goal is to maximize thechanges we’ve made, to smoothout the wrinkles,” Mr. Weber said.“It’s been a big transition.” ■


SMALL BUSINESS

Arborwear: Retail storepossible at new location continued from PAGE 13

SHARON SCHNALL PHOTOS

Arborwear has attracted other followers such as horseback riders, motorcyclists, stone masons and rock climbers.“The pants wear like a pairof blue jeans, but theyfunction like a pair ofcoveralls.”

– John Granthamdirector of park operations,

Lake Metroparks


At the end of 2012, the InternalRevenue Service released a new setof regulations to “provide guidance… with respect to the shared re-sponsibility for employers regard-ing employee health coverage.”

As most of you know, the employ-er is required to provide health cov-erage to its employees or pay a tax.

This only applies if the employerhas 50 or more full-time employ-ees or full-time equivalent em-ployees. Employers are requiredto track that number monthly.

As the proposed regulationpoints out, however, “determiningfull-time employee status on amonthly basis may cause practicaldifficulties for employers. …”

To provide assistance with thisproblem, the proposed regulationsadopt a look-back safe harbor period that a business can use tomore effectively determine year toyear its number of employees.

Here’s how it works for a firmwith regards to its current employ-ees. Employers in 2013 determinean initial “measurement period,”which can be no less than threemonths but no more than 12months. During the measurementperiod, employers must determinewhether employees work a minimum of 30 hours per week.

The employees who are deter-mined to be full-time during themeasurement period are thentreated as full-time employees inthe subsequent “stability period,”

the duration of which must begreater than six months or thelength of the measurement period.

This means once an employee isdetermined to be full-time duringthe measurement period, that employee is considered full-timefor the subsequent stability period regardless of hours.

Employers also will be permit-ted to elect an administrative peri-od of no more than 90 days be-tween the measurement periodand the stability period.

This period may not, however,reduce or lengthen the measure-ment or stability periods. Howev-er, to prevent the administrativeperiod from creating potentialgaps in coverage, it must overlapwith the prior stability period.

Also, an employer may changeits measurement and stability periods for subsequent years butmay not change the measurementor stability periods once the measurement period has begun.

If you are an employer that uses

a fiscal year plan instead of a cal-endar year, the proposed regula-tions allow for transitional relief.

If an employer provided a fiscalyear plan as of Dec. 27, 2012, thatemployer will avoid any applicablepenalties so long as the applicableemployee is offered affordable, min-imum value coverage no later thanthe first day of the 2014 plan year.

The measurement and stabilityperiods must be uniform for all employees, but the employer mayapply different measurement, stability, and administrative periodsto each group of collectively bargained employees covered by aseparate collective bargainingagreement; collectively bargainedand non-collectively bargained employees; salaried employees andhourly employees; and employeeswhose primary places of employ-ment are in different states.

The IRS also provides guidance toemployers on how to apply thelook-back period for high-turnoveremployees, new hires and variable-hour employees — those employeeswhose hours an employer cannotdetermine at the date of hire.

The proposed regulations containa number of requirements and thisis only meant as a general road map.For more details, you should consultan attorney or benefits provider. ■

Mr. Clevenger is a partner withDay Ketterer Ltd., which has officesin Cleveland, Hudson and Canton.


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How companies can best measure up


By DAN [email protected]

Those expecting another semi-nar on how water molecules breakup rocks or ways to dissect a 40-page mineral rights lease mighthave gotten a surprise at Crain’sShale Summit 2013. While therewas ample talk of engineering andeconomic opportunities, many at-tendees said they were surprisedby the themes of “collaboration”and “community” that dominatedmuch of the event.

“I expected this to be an indus-try meeting mostly, with just a lotof people talking about how tomake more money off drilling,”said Bruce Murphy, a commercialpainter and a member of the Rus-sell Township Zoning Commis-sion. “But it was interesting tohear people in the industry talkabout environmental issues andhow we should be doing this right.

“Now, we’ll see if they do it,”Mr. Murphy said laughing, notingthat he was drawing a lot of atten-tion with his beard and ponytail ina crowd of mostly clean-shavenbusiness types.

The theme of the summit was“Getting It Right,” and nearly 600attendees were attracted to theevent, which was presented byCrain’s Cleveland Business andpublic broadcasting organizationideastream with Huntington Na-tional Bank as chief sponsor.

The summit’s keynote speakerwas John Hofmeister, former pres-ident of Shell Oil Co. and founderand chief executive of Citizens forAffordable Energy. Mr. Hofmeisteremphasized that Ohio’s positionatop the Utica shale’s abundantreserves of oil and natural gas isboth a curse and a blessing whenit comes to managing the drillingindustry’s impact and also capital-izing on the economic opportuni-ties it presents.

“The curse that you are embrac-ing is complexity, a kind of com-plexity that will test you,” said Mr.Hofmeister, who also is chairmanof the National Urban League.“The blessing is prosperity, whichis an economic value creation. …(There are) opportunities herethat aren’t in other parts of theworld.”

Exploiting the Utica shale re-sponsibly will be a challenge forOhio’s drillers as well, he said.

“The burden comes back to the(energy) companies,” he said.“They should be compelled to en-gage, and that always hasn’t beenthe case. They must embrace sus-tainability and corporate respon-sibility, and they also have to makea commitment to explain a verytechnical process and dispel mis-

information.”

Avoiding a battlefieldAlso speaking at the summit

was Rich Cochran, president andCEO of the Western Reserve LandConservancy, a nonprofit conser-vation organization that controlsor protects about 35,000 acresfrom Sandusky to western Penn-sylvania.

In his speech, titled “Land Con-servation as an Economic Devel-opment Tool,” Mr. Cochran announced that the conservancywill set up a steering committeemade up of representatives of theenergy industry, local businessand political leaders, and environ-mental preservation groups todeal with drilling issues and envi-ronmental concerns.

The goal of the steering com-mittee, he said, will be to affecthow drilling and related infra-structure is planned and executedacross the Utica shale region in order to protect resources such assurface water, prime soils andwildlife habitat. Rather than digging in its heels to universallyoppose drilling, the conservancyhopes to build collaboration, Mr.Cochran said.

“There are no real winners andlosers when an oilfield becomes abattlefield. … The oil and gas always gets extracted, the opposi-tion loses and businesses spendmore money to make less money,”Mr. Cochran told the attendees.“What are we left with? An old bat-tlefield … on which the environ-mental and social devastation issometimes bad enough to createghost towns overnight.”

Mr. Cochran said he has beenwatching and visiting other shaleplays, including the Eagle Ford insouth Texas, which geologists sayhas resources much like thosefound in the Utica. He also hasbeen keeping a close eye on whathas been happening close tohome.

“Having studied this situation ineastern Ohio for more than twoyears now, we have drawn theconclusion that if this oilfield be-comes a battlefield we will all losebecause during battles it is impos-sible to be deliberate, cooperative,and constructive,” Mr. Cochransaid. “Everyone is angry. Thingsget destroyed.”

Calls for collaborationShale Summit 2013 also fea-

tured six different panel discus-sions on topics ranging from up-to-date information on Ohio’soil-and-gas development, the impact of drilling on NortheastOhio businesses, and communityleaders sharing their experiencesand concerns with regards to shaledevelopment thus far.

Dennis Saunier, president andCEO of the Canton RegionalChamber of Commerce, saidmany of his city’s leaders havegone from being skeptics ofdrilling to supporting it, as they’veseen the Canton area benefit eco-nomically from drilling. Tax receipts are up, while unemploy-ment and commercial real estatevacancy rates are down in Canton,he said.

“We have increased our hoteltaxes by 17% over the previousyear,” Mr. Saunier said. “There areso many skilled-labor jobs, com-panies can’t always fill them —and we are working to regenerateneighborhoods as more housingbecomes needed.

“Events like this are a great wayto show how we can work region-ally and collaboratively in com-mon interests that will have eco-nomic benefits that the entireregion will be participating in,” hesaid.

Al Heher, an attorney with theBuckley King law firm in Clevelandwho will lead a one-day seminarMarch 2 at Lakeland CommunityCollege on the legal issues of hy-draulic fracturing drilling, said hewas surprised by the “cohesive”message that was put out by thespeakers and panels at the sum-mit.

“I really like to see that there is aconscious effort to do the rightthing, for all the interests,” Mr.Heher said. “I think this is a realpositive step to know we are all inthis together, whether it be theblue-collar laborers or the proper-ty owners or the cities or the ener-gy companies. Working togetheron developing the energy industryon Ohio can keep the collateraldamage low and provide benefitsfor the entire community.” ■


Based on their well results to date,Utica drillers are on track to achievean internal rate of return of 91% overthe life of their wells, Mr. Tsuru said.That’s well above the next-best shaleplay, the Eagle Ford in south Texas,where rates of return are about 60%as drillers extract oil and “wet gas” —which consists of components suchas natural gas, ethane, butane andother chemicals that are helping drive drillers’ revenues and profits.

The rate of return in the Utica shalealso is leagues beyond the returns of-fered by pure “dry” natural gas playssuch as Arkansas’ Haynesville region,where a paltry rate of return of about4% essentially has brought drilling toa halt, Mr. Tsuru said.

It’s all because the Utica region isyielding not only dry methane gas,but also oil and an abundant mix of“wet gas” components. While theprice of natural gas has plummeted inrecent years, the price of oil and natural gas liquids has held up, Mr.Tsuru said.

“The rich gas in the Utica is worth(more). For 1,000 cubic feet of rich(wet) gas, it’s worth about $5 whenyou include the methane and all theliquids, as opposed to 1,000 (cubic)feet of dry gas, which is worth about$3.30.” Mr. Tsuru said.

The big differential is why drillersare flocking to eastern Ohio, and whyMr. Tsuru is focusing on the Utica aswell.

Big bucks are flowingMuch of Momentum’s Utica

investment already is under way nearCarrollton and should be online bythe middle of this year, Mr. Tsurusaid. Its investment includes a largepipeline project to help gather gasfrom wells that have yet to come on-line, or even to be drilled, and threelarge processing facilities that willseparate dry methane gas fromethane, propane, butane and othervaluable components.

“We’re planning on spending, inphase one, $1 billion in eastern Ohio,and this is only going to grow,” Mr.Tsuru said.

The initial investment will create fa-cilities that cryogenically can process800 million cubic feet of wet gas perday, separating methane from a mix-ture of more valuable liquids. It alsowill include the capacity to refine fur-ther about 135,000 barrels of those liq-uids per day, producing “purity prod-ucts” such as refined ethane, propane,butane and other ingredients used bya variety of industries, Mr. Tsurusaid.The processing plants are underconstruction near Kensington andnear Leesville Lake, with Kensingtonthe larger of the two, Mr. Tsuru said.The Kensington and Leesville plantswill be connected by 36 miles of 24-inch pipeline, which will serve as amain gathering line to bring gas fromwells in the area to the plants for pro-cessing, as well as to move gas backand forth between the two plants.

In addition, Momentum is con-structing a large processing, storageand shipping facility near the tinytown of Scio, which will be able tostore 200,000 barrels of refrigeratedliquids, along with additional pres-surized storage facilities. The Scio fa-cility, also known as the HarrisonHub, occupies 600 acres and includes7,400 feet of rail-line frontage and an-other 40,000 feet of its own internalrail lines to manage shipping.

Momentum has designed and will

operate the facilities, and has agree-ments with Chesapeake Energy Corp.to supply it with gas for processing,Mr. Tsuru said.

More investment awaitsThose are only some of the Ohio

developments taking place in the oiland gas industry’s “midstream” sec-tor. They range from the $3 billion ormore that Shell Oil plans to spend onan ethane processing facility justacross the Ohio River in Pennsylvaniato natural gas gathering and gastransportation lines built by compa-nies besides Momentum.

Momentum itself is involved inother pipeline projects within 50miles of the Ohio-Pennsylvania bor-der, though those are primarily to deliver gas from the Marcellus shaleregion, Mr. Tsuru said.

But Mr. Tsuru said he is aware ofpipeline projects in the works to shipnatural gas and its liquids from theUtica region to processors on the GulfCoast, refineries in the Philadelphiaarea, and to the western UnitedStates and Canada, where natural gasproducts will be used in sand andshale oil production.

In the Utica shale, the constructionof this midstream infrastructure willguide the progress and timing of itsdevelopment, said Ned Hill, dean ofthe Maxine Levin College of UrbanAffairs at Cleveland State University,which has been studying the Uticaand its economic ramifications.

While Momentum will have somefacilities operational later this year,the bulk of the infrastructure neededwill take longer to build, but is beingplanned — and drilling will continueto increase as more infrastructurecomes online, Dr. Hill said.

“The major uptick in the drillingactivity will take place once the mid-stream facilities are largely in place,”Dr. Hill said. “I see that as a two, two-and-a-half year period before thoseinvestments are on the ground.”

Only the beginningThe prospect that most excites Dr.

Hill and other economic develop-ment experts is the effect they believethe gas and its byproducts ultimatelywill have on Ohio industries.

Drilling already is giving a tremen-dous boost to Ohio’s steel industry,which produces pipe, tubing and oth-er materials that drillers use. But inthe long run, the new resources willhave a profound effect on industriessuch as specialty chemicals and plas-tics, which rely on natural gas and itscomponents for their raw materials,Dr. Hill said.

“In about three years, you are go-ing to see an increase in investmentby the users of the natural gas liq-uids,” Dr. Hill said. “When that takesplace, you’re going to see our nascentplastics industry do much more com-pounding here, much more formula-tion here.”

Mr. Tsuru said he is only beginningto make investments in Ohio. Backedby large private equity investors thathave pumped more than $1 billioninto Momentum already, Mr. Tsurusaid there is no shortage of resourcesto process and ship, nor a shortage ofcapital to build more midstream operations.

“It’s going to look like a house thatyou’ve added on to 10 times,” he saidof his company’s ultimate network offacilities and pipelines in Ohio.

“I think we’re going to be here along time.” ■


Momentum: CEO says rich gasin Utica is much more valuable

Summitexpresseshope forbalanceSeminar speakersbelieve both sidescan reap benefitsin shale business

HAL STATA PRODUCTIONS

Former Shell Oil Co. president John Hofmeister was the keynote speaker atthe Shale Summit on Feb. 5.

“The curse that you are embracing is complexity, a kind ofcomplexity that will testyou.” – John Hofmeister, formerShell Oil president, during hisShale Summit keynote speech

ON THE WEB For photosand videos from theShale Summit, log on to www.crainscleveland.com


According to the nonprofit Brew-ers Association, there are 2,126craft breweries in the United States,more than there have been since1890. About 1,000 more are in theworks. Craft brewers sold about11.5 million barrels of beer in 2011,up about 14% from 10.1 millionbarrels in 2010.

Ohio has 84 licensed breweries,with nine pending permits, includ-ing Granite City Food and Breweryin Lyndhurst, according to the OhioDivision of Liquor Control.

The state has added 50 craftbreweries since 2007.

Even pioneer brewer Jack McAuliffe, who in 1976 foundedNew Albion Brewing Co. in Califor-nia — considered the first modernmicrobrewery in the country — recently expressed interest in open-ing a brewpub in Cleveland.

“I look at 2013 as the year Ohiotops 100 craft breweries,” said JohnNajeway, vice president of the OhioCraft Brewers Association.

Not your parents’ frigA larger age demographic has be-

come more quality conscious andconnected to the creative, indepen-dent craft brewers, said Mr. Najew-ay, owner of Akron-based ThirstyDog Brewing Co., which has seenits capacity surge from 7,000 barrelsa year in 2010 to 25,000 currently.

“When I was growing up, theStrohs and the Buds were in myparents’ refrigerators,” he said.“Many of the 20-somethings nowwere raised with craft beer in theirfridges, so that’s what they’rechoosing to drink.”

That market is part of what is dri-ving Thirsty Dog’s productionswell, though Mr. Najeway, likemany of his Northeast Ohio artisanbrethren, are controlling theirgrowth. Thirsty Dog is currently in14 states, and although other mar-kets have their hands out for hisbeer, Mr. Najeway is refraining.

“We want to continue to satisfymarket penetration in our existingfootprints,” he said. “We don’twant to double distribution just todouble it.”

Fred Karm of Hoppin’ FrogBrewery in Akron, which recentlywas rated the 17th-best brewery inthe world by RateBeer.com, emphasized similar thoughts ofmethodical growth, even as demand for his beer outpaces itscurrent capacity.

“We’ve been expanding our pro-duction by a factor of two since2010,” Mr. Karm said. “We can pickand choose our markets. It’s notabout trying to sell a million gallonsa year, but making sure we’re mak-ing a superior beer that we can gohome and drink with our friendsand family at night.”

Customers of the Brew Kettle inStrongsville over the years alsohave spanned a larger age range,said founder Chris McKim. He not-ed his customers mainly were edu-cated, middle- to upper-middleclass consumers when Brew Kettleopened in 1995 as Ohio’s first brew-on-premise microbrewery wherecustomers can make their ownbrew.

Brew Kettle has expanded fivetimes since then and has logged100% output growth, from 2,500barrels in 2011 to 5,000 in 2012.The brewery is on pace to doublecapacity again this year.

“We’ve had a constant problemof trying to keep up with produc-tion,” Mr. McKim said. “It’s terrify-ing sometimes. It’s like you keepgoing down a roller coaster hill, andyou’re not sure when it’s doing tostop.

“You just keep picking upspeed,” he said.

Great Lakes in a can? MaybeExpansions and investments are

part of the brewing vernacular atGreat Lakes Brewing Co., whichnow is at a point where it is land-locked because of its inability tocontinue adding production capac-ity to its 65,000-square-foot brew-house in Ohio City, said co-founderPatrick Conway. The nation’s 18th-largest brewer is “working closely”with the city of Cleveland to identi-fy as much as 160,000 square feetfor additional production and

warehousing, Mr. Conway said.“We need to expand, but we

don’t have room to expand,” Mr.Conway said.

Great Lakes Brewing last yearmaxed out its tank farm capacitywith the addition of three fermen-tation tanks, to bring to 38 thenumber of 300-barrel stainless steelvessels on premises. The currentannual brewing capacity of 200,000is double its production of about103,000 barrels in 2010, although itexpects to roll out 150,000 barrelsthis year.

The challenge for his company,Mr. Conway said, is “how do we getto 300 or 400” thousand barrels peryear.

But expanding the company’sbrewing capacity isn’t the only potential investment on Mr. Con-way’s mind. Other investmentscould include opening brewpubs in

other markets, producing larger,750-milliter bottles and purchasinga canning line to put its brew insomething other than bottles.

“We’re hurt in the summer whenour bottles can’t be in ball parks,golf courses and other venues,” Mr.Conway said.

A palace of fermentationA couple blocks over from Great

Lakes Brewing, another MarketDistrict stalwart is planning for pro-duction increases and other invest-ments. Sam McNulty, owner ofMarket Garden Brewery & Distilleryand four other area beer-centricspots, said Phase I construction willbegin this year on the 43,000-square-foot Culinary Market Build-ing on West 24th Street, which hebought last year for $800,000.

Phase I will include retrofittingthe building for additional brewing

and distilling, a retail store and acharcuterie, the latter of which willintegrate cheeses, vinegars, pickles,yogurt and any other foods tied tofermentation.

“We may call it the FermentationPalace,” Mr. McNulty said.

The expenditure still is uncer-tain, but will be higher than the $4million investment associated withthe Market Garden Brewery & Dis-tillery on West 25th Street. The “Fer-mentation Palace” also will con-duct workshops and tours.

His brewpub tanks in 2012 nour-ished the area with about 1,600 bar-rels of beer, and in 2013 he expectsto reach a capacity of producing2,000 barrels annually. He plans toproduce “several multiples” of thatcurrent target at the new facility.

“We want to grow methodicallyand intentionally remain a bou-tique operation,” Mr. McNulty said.

The growth strategies Mr. Mc-Nulty and other area brewers aredeploying suggest that demand forcraft beer still may outpace supplyfor years to come, according tothose who work in the industry,which means more microbrewerieslikely will continue to pop uparound Northeast Ohio.

“I hope so,” Mr. McNulty said. ■



Brewing: Industry grew about 14% in one year

Beer drinkers who want tocraft their own recipes can doso at Cleveland Brew Shop,which opened in November asCleveland’s first home brewhub, at 2681 W. 14th St. inTremont.

Cleveland Brew Shop offers avariety of supplies for homebrewers and vintners, includinghops, grains, brewing equip-ment, fermentation vessels, andwine- and beer-making kits.

The shop conducts monthlybeer-making classes; the nextone is scheduled for March 2.Owner Paul Benner also is working with Fresh Fork Market,a local community-supported agriculture program, to holdboth a beginners’ and advanced brewing class for that CSA’ssubscribers.

“We would then have an Oktoberfest party for membersand unveil the (home brews) thatwere created by the partici-pants,” he said.

Mr. Benner, who is director ofadmissions for Chamberlain College of Nursing’s ClevelandBranch, said he’s consideringapplying for state permits thatwould enable him to sell bottledbeers and function as a small-scale brewery.

For store hours or more information, visit:clevelandbrewshop.com.

— Kathy Ames Carr

Tremont shopspecializes inhome brewing

JANET CENTURY

John Najeway, the owner of Thirsty Dog Brewing Co. in Akron and vice president of the Ohio Craft Brewers Association,says his beer is being sold in 14 states, and there is demand for more.

SUBMITTED

Paul Benner is the owner of theCleveland Brew Shop, which isthe area’s first home brew hub.

20130211-NEWS--19-NAT-CCI-CL_-- 2/8/2013 11:50 AM Page 1


NE OHIO SOFTWARE DEVELOPERSRANKED BY LOCAL FULL-TIME EMPLOYEES

Number of localfull-time employees

Rank

NameAddressPhone/Web site 1-1-2013 1-1-2012

Full-timelocal

programmers Industry specialization Software productsYear

foundedTop local executiveTitle

1Hyland Software Inc.28500 Clemens Road, Westlake 44145(440) 788-5000/www.hyland.com

1,168 1,000 294Health care, higher education,government, financial services, insurance,manufacturing

OnBase, enterprise content managementsoftware suite 1991 Bill Priemer

president, CEO

2MRI Software LLC28925 Fountain Parkway, Solon 44139(800) 321-8770/www.mrisoftware.com

320 266 NABusiness solutions for commercial andresidential property management and realestate portfolio management

MRI Commercial, MRI Residential,Workspeed, Bostonpost, VaultWare 1971 David M. Post

CEO

3Snap-on Business Solutions Inc.4025 Kinross Lakes Parkway, Richfield 44286(330) 659-1600/www.sbs.snapon.com

240 230 65 Global electronic parts catalogs Global EPC 2006 Timothy L. Chamberspresident

4TMW Systems Inc.21111 Chagrin Blvd., Beachwood 44122(216) 831-6606/www.tmwsystems.com

230 207 109 Trucking and logistics softwareTMWSuite, TL2000, TruckMate, Innovative,IDSC Netwise, IDSC ExpertFuel, TMT FleetMaintenance

1983 David W. Wanglerpresident

5OEConnection4205 Highlander Parkway, Richfield 44286(330) 523-1800/www.oeconnection.com

197 202 36Online parts and service exchange in theautomotive original equipment partsbusiness

OEC 2.0, D2DLink, CollisionLink,RepairLink, LinkIQ 2000 Charles Rotuno

president, CEO

6Turning Technologies255 W. Federal St. , Youngstown 44503(330) 746-3015/www.turningtechnologies.com

158 170 9Assessment delivery and data collectionsolutions including student and audienceresponse technology

TurningPoint, Triton Data CollectionSystem, ResponseWare, RemotePoll,PresenterWare, QuestionPoint

2002 Mike BroderickCEO, co-founder

7BrandMuscle Inc.1100 Superior Ave., Suite 500, Cleveland 44114(216) 464-4342/www.brandmuscle.com

145 154 21 Marketing solutionsBrandBuilder, BrandPlanner,BrandWorkshop, BrandLibrary, DigitalAsset Manager

2000 Philip Alexanderpresident

8Fleetmatics Group(1)31500 Bainbridge Road, Suite 1, Solon 44139(888) 837-7243/www.fleetmatics.com

122 101 15 HVAC, telecom, cable, construction,plumbing and security industries Mobile Control 2003 Dennis Abrahams

COO

9Virtual Hold Technology LLC3875 Embassy Parkway, Suite 350, Akron 44333(800) 854-1815/www.virtualhold.com

108 100 26Technology, software, telephony, virtualqueuing, multichannel customerexperience

Conversation Bridge 1995 Wes HaydenCEO

10Explorys Inc.8501 Carnegie Ave., Suite 200, Cleveland 44106(216) 767-4700/www.explorys.com

78 50 40 Health care transformation, health care IT EPM: Explore, EPM: Measure, EPM:Registry, EPM: Engage 2009

Charlie Lougheed,president, chiefstrategy officer;Stephen McHale, CEO

11Knotice526 S. Main St., Suite 705, Akron 44311(800) 801-4194/www.knotice.com

75 88 13 Data management, analytics and digitalmessaging solutions The Knotice Platform 2003 Brian Deagan

CEO

12Foundation Software150 Pearl Road, Brunswick 44212(800) 246-0800/www.foundationsoft.com

72 58 12 Accounting software for construction Foundation for Windows 1985 Fred Odechairman, CEO

13MIM Software Inc.25200 Chagrin Blvd., Suite 200, Cleveland 44122(216) 455-0600/www.mimsoftware.com

67 61 NA Medical imaging MIM, Mobile MIM, MIMcloud, MIMSymphony, MIM Encore, MIM Maestro 1999 A. Dennis Nelson

CEO

14Software Answers Inc.6770 W. Snowville Road, Suite 200, Brecksville 44141(440) 526-0095/www.progressbook.com

54 53 24 Web-based K-12 student, classroom,school and district management software

ProgressBook, GradeBook, ParentAccess,StudentInformation (SIS), SpecialServices,DataMap

1994 Paul ChaffeeCEO

15Urbancode Inc.2044 Euclid Ave., Suite 600, Cleveland 44115(216) 858-9000/www.urbancode.com

53 29 23 Technology AnthillPro, uDeploy, uBuild, uRelease 1996 Maciej ZawadzkiCEO

16TOA Technologies3333 Richmond Road, Suite 420, Beachwood 44122(216) 925-5950/www.toatech.com

52 30 0 Field service management software ETAdirect software suite 2003 Yuval Briskerpresident, CEO

17Easy2 Technologies1220 Huron Road E., 7th floor, Cleveland 44115(216) 812-3200/www.easy2.com

44 44 12 Consumer product manufacturers andretailers MYO (Make Your Own) Demo 1999 Ethan Cohen

CEO

17New Innovations Inc.3743 Boettler Oaks Drive, Uniontown 44685(330) 899-9954/www.new-innov.com

44 38 15 Medical Residency Management Suite 1995 Steve ReedCEO

19Main Sequence Technology Inc.4420 Sherwin Road, Hamilton Hall, Willoughby 44094(440) 946-5214/www.pcrecruiter.com

43 45 9 HR applicant tracking, recruiting CRM,staffing software

PCRecruiter, PCRecruiter Resume Inhaler,PCRecruiter Outlook Portal, MacRecruiter 1998

Martin H. Snyder,president; William F.Kubicek IV, vicepresident, marketing

20FeneTech Inc.260 Campus Drive, Aurora 44202(330) 995-2830/www.fenetech.com

42 35 20 Fenestration ERP, Sales Automation FeneVision 1997 Ronald W. Crowlpresident, CEO

20ID Networks Inc.7720 Jefferson Road, Ashtabula 44004(440) 992-0062/www.idnetworks.com

42 41 15 Software solutions for law enforcementagencies

Jail Management, Records Management,ImageNet, FingerRoll Livescans, CAD andMobile Systems

1991 Douglas Blenman Sr.president

22Data-Basics Inc.9450 Midwest Ave., Cleveland 44125(216) 663-5600/www.databasics.com

41 37 21 Service management and accounting SAM Pro Enterprise, TechAnywhere forAndroid 1974 Arthur K. Divell

CEO

23Tribute Inc.1696-F Georgetown Road, Hudson 44236(330) 656-3006/www.tribute.com

40 36 8Industrial distribution, fluid power, hose,gaskets, seals, power transmission,process equipment, automation

Tribute Software, TrulinX Software 1981 Timothy Reynoldspresident, CEO

24Imaging Science and Service Inc.95 Executive Parkway, Suite 500, Hudson 44236(330) 342-7760/www.issimage.com

39 37 8Regulatory document compliance - salesand use tax exemptions, freightforwarding, product liability

TEAMS Express, LineLink 1994 Philip C. HodgeCEO

25PreEmptive Solutions LLC767 Beta Drive, Mayfield Village 44143(440) 443-7200/www.preemptive.com

35 30 13 Software security, application analytics Dotfuscator, DashO, Runtime Intelligence 1996 Gabriel TorokCEO

26ONOSYS, a LivingSocial Company1220 W. Sixth St., Suite 200, Cleveland 44113(216) 426-0000/www.onosys.com

30 20 11 E-commerce, SaaS (Software as a Service) ONOSYS Online Ordering 2005Oleg FridmanStan GarberAlex Yakubovichco-founders, partners

26Segmint Inc.One Cascade Plaza, Suite 1800, Akron 44308(888) 734-6468/www.segmint.com

30 22 12 Financial services, health care, highereducation, sports and entertainment SegmintOne 2008 Russel R. Heiser II

president, CEO

28Pointe Blank Solutions Ltd.7055 Engle Road, Suite 304, Middleburg Heights 44130(440) 243-5100/www.pointeblank.net

29 25 NA Health care, government CasePointe, PropertyPointe, LivingPointe,ProjectPointe, DocuPointe 2000

Thomas J. Courychairman, chiefsoftware architect

29Associated Software Consultants Inc.7251 Engle Road, Suite 400, Middleburg Heights 44130(440) 826-1010/www.asconline.com

26 24 7Mortgage, consumer and business lendingsoftware solutions for mortgage banks,community banks, credit unions

PowerLender Loan Origination &Processing System, PowerSellerSecondary Marketing System

1978 Timothy W. Listonpresident

See LIST Page 21



AUCTION

BUSINESSSERVICES

FOR SALEBUSINESSES FOR SALE

REAL ESTATE CLASSIFIEDPhone: (216) 522-1383 Fax: (216) 694-4264

Contact: Denise Donaldson E-mail: [email protected] Deadline: Wednesdays @ 2:00 p.m.

All Ads Pre-Paid: Check or Credit Card

Real Estate Auction

Bambeck Auctioneers Inc.www.bambeck.com

Another Bambeck Auc t i oneers Inc .

March 21 • 11:00 AM On-Site

Redevelopment OpportunityFormer 50 Bed Long-Term Care Facility

Ashtabula OHSee Web Site For Terms of Sale:

Business for SaleWell established Ohio retailer, with 2 prime locations withinCleveland metro, specializing in army-navy surplus, workwear,and outdoor products. Company has clean financials and stronggrowth potential. Price: $575K Terms: Cash. May consider partialowner finance over two years. Seller will stay on as consultant for3 months. Only pre-qualified buyers will be considered.

Email: [email protected] or call 800-880-2485

LOOKING TO SLOWDOWN and SELL

YOUR BUSINESS?Motivated Entrepreneur

Seeking An Owner Who WillTRAIN and Eventually

SELL Business.Contact Me Confidentially at

216-952-0428 or [email protected].

Want to Buy or Sella Business?

Free Seller Market AnalysisSee our listings at

www.empirebusinesses.com

440-461-2202

Dining room set andbreakfront for sale

From Stafford Company. Mahogany; table, 68” length, 45”

width. Six chairs, three 18” leaves,½” leather pad for entire table.

Excellent condition. Purchased atSedlak’s for $13,000; sale price,

$6,000. Moving -- must sell.Rocky River. Free delivery.

440-596-0230

For daily on-lineupdates, sign up @

CrainsCleveland.com/Daily

List your Industrial,commercial or

Retail Space Here!CCrraaiinn’’ss CClleevveellaanndd BBuussiinneessss’’ ccllaassssiiffiieeddss wwiillll

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Submit your business card topromote your service.

To find out more, contactDenise Doanldson at

216.522.1383

Number of localfull-time employees

Rank

NameAddressPhone/Web site 1-1-2013 1-1-2012

Full-timelocal

programmers Industry specialization Software productsYear

foundedTop local executiveTitle

30Axentis Inc.1660 W. Second St., Suite 250, Cleveland 44113(216) 896-8300/www.axentis.com

25 22 NA Governance, risk and compliancemanagement Axentis Enterprise 1999 NA

30Dakota Software23240 Chagrin Blvd., Suite 620, Cleveland 44122(216) 765-7100/www.dakotasoft.com

25 22 12 Environment, health and safetyProActivity Suite, Dakota Profiler, DakotaAuditor, Dakota Tracer, Dakota Scout,Dakota Metrics

1989 Reg Shiverickpresident

30VeDiscovery LLC1382 W. Ninth St., Suite 400, Cleveland 44113(216) 241-3443/www.vediscovery.com

25 17 NAElectronic data discovery for legal,medical, regulatory and knowledgemanagement

VeHOLD (includes VeAGENT),VeANALYTICS, VeREVIEW, VePROCESS 2012 Ronald K. Copfer

founder, CEO

33Datacore Consulting LLC5755 Granger Road, Suite 777, Independence 44131(800) 244-4241/www.datacoreonline.com

20 18 6 Backup and disaster recovery BDR 1998 Jim ConleyCEO

34Specialized Business Software6325 Cochran Road, Unit 1, Solon 44139(440) 542-9145/www.specializedbusinesssoftware.com

16 23 NA Financial services, government, technology Docunym Document Imaging and Workflow 1999 Steve Wiserpresident

34Tharo Systems Inc.2866 Nationwide Parkway, Brunswick 44212(330) 273-4408/www.tharo.com

16 15 NA All industriesEASYLABEL 5 Silver, EASYLABEL 5 Gold,EASYLABEL 5 Platinum, EASYLABEL 5Print Only, EASYLABEL 5 Multi-User

1982 Randy Thatcherpresident

36Monarch Teaching Technology Inc.20600 Chagrin Blvd., Suite 703, Shaker Heights 44118(800) 593-1934/www.monarchtt.com

15 12 4 Education VizZle 2005 Terry MurphyCEO

36Workflow.com875 Westpoint Pkwy, Suite 510, Westlake 44145(440) 827-2000/www.workflow.com

15 13 5 Medical records software Workflow EHR, Workflow PM 2004 Packy HylandCEO

38Apteryx Inc.313 S. High St., Suite 200, Akron 44308(330) 376-0889/www.apteryx.com

13 13 4Custom applications for medical, dentaland synthetic imaging, image processing,data security

Apteryx Imaging (dental imaging software),DICOM Capture View (DCV), DataGrabber,Continuum

1995 Kevin Crucspresident

39IQS Inc.25000 Country Club Blvd., Suite 400, North Olmsted 44070(440) 333-1344/www.iqs.com

12 12 NADiscrete and process manufacturing,automotive, aerospace and defense,medical device manufacturing

IQS Quality and Compliance Software 1988 Michael Rapaportpresident, CEO

40Bearware Inc.7160 Chagrin Road, Suite 210, Chagrin Falls 44023(440) 893-2327/www.bearwareinc.com

11 11 1 Logistics and supply chainRetail Distribution System, webTMS, RetailPayment System, Claims ManagementSystem

1987 Robert J. Brooks IIIpresident, COO

40Henning Industrial Software Inc.102 First St., Suite 211, Hudson 44236(330) 650-4212/www.henningsoftware.com

11 11 4 ERP and accounting software Visual EstiTrack ERP, Visual BooksAccounting, Visual WebTrack, iVET Mobile 1990 Richard G. Henning

president

42Factivity Inc.23400 Mercantile Road, Suite 1A, Beachwood 44122(216) 514-5141/www.factivity.com

10 10 NA Manufacturing Factivity, Planet Together 1984 John Leibertpresident

42Incom Integrated Computer Systems Inc.7353 Austin Powder Drive, Glenwillow 44139(440) 439-7000/www.netincom.com

10 10 4Lawfirms, membership organizations;unions, political organizations, gyms,neighborhood associations

Membership Tracking Program, BenefitsTracking Program, LPA Tracker 1988 Jon P. Lorenzo

president, CEO

44Linestream Technologies1468 W. Ninth St., Suite 100, Cleveland 44113(216) 862-7874 /www.linestream.com

9 5 3 Software SpinTAC 2008 David Neundorferpresident, CEO

44Point2 Property Manager6001 E. Royalton Road, Suite 150, Broadview Heights 44147(866) 602-9007/www.point2propertymanager.com

9 9 4 Property management Point2 Property Manager 2007 Don Kattdirector of development

46Curtis Research Inc.520 S. Main St., Suite 2442, Akron 44311(330) 376-7665/www.curtissoft.com

8 8 NA Health care Proclaim ZAP 1985 David Kosakowskivice president, sales

46LogicJunction Inc.23950 Commerce Park Road, Beachwood 44122(216) 292-5760/www.logicjunction.com

8 8 2Hospital wayfinding, software developmentand 3D animations; custom solutions formedical, retail, government

LogicalEngine, Remote Agents 2000 Mark JowellCEO

46Spede Technologies24864 Detroit Road, Cleveland 44145(440) 808-8888/www.spede.com

8 9 3Real-time inventory control systems forwarehouses and manufacturing, PLC-controlled labeling

SPEDE Material Control System, SPEDELine-side Labeling System 1980 Bob Bunsey

president

Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee theselistings are complete or accurate. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Formerly SageQuest.

RESEARCHED BY Deborah W. Hillyer


To merchants who have accepted Visa and MasterCard at any time since January 1, 2004:

Notice of a 6+ billion dollar class action settlement.

Notice of a class action settlement authorized by the U.S. District Court, Eastern District of New York.

This notice is authorized by the Court to inform you about an agreement to settle a class action lawsuit that may affect you. The lawsuit claims that Visa and MasterCard, separately, and together with banks, violated antitrust laws and caused merchants to pay excessive fees for accepting Visa and MasterCard credit and debit cards, including by:

Agreeing to set, apply, and enforce rules about merchant fees (called default interchange fees);

Limiting what merchants could do to encourage their customers to use other forms of payment through, for example, charging customers an extra fee or offering discounts; and

Continuing that conduct after Visa and MasterCard changed their corporate structures.

The defendants say they have done nothing wrong. They say that their business practices are legal and the result of competition, and have benefitted merchants and consumers. The Court has not decided who is right because the parties agreed to a settlement. On November 27, 2012, the Court gave preliminary approval to this settlement.

THE SETTLEMENT Under the settlement, Visa, MasterCard, and the bank defendants have agreed to make payments to two settlement funds:

will pay valid claims of merchants that accepted Visa or MasterCard credit or debit cards at any time between January 1, 2004 and November 28, 2012.

of the interchange fees attributable to certain merchants that accept Visa or MasterCard credit cards for an

Additionally, the settlement changes some of the Visa and MasterCard rules applicable to merchants who accept their cards.

This settlement creates two classes:

A Cash Settlement Class (Rule 23(b)(3) Settlement Class), which includes all persons, businesses, and other entities that accepted any Visa or MasterCard cards in the U.S. at any time from January 1, 2004 to November 28, 2012, and

A Rule Changes Settlement Class (Rule 23(b)(2) Settlement Class), which includes all persons, businesses, and entities that as of November 28, 2012 or in the future accept any Visa or MasterCard cards in the U.S.

WHAT MERCHANTS WILL GET FROM THE SETTLEMENT

Every merchant in the Cash Settlement Class that files a valid

merchants who exclude themselves from the Cash Settlement Class. The value of each claim, where possible, will be based on the actual or estimated interchange fees attributable to the merchant’s MasterCard and Visa payment card transactions

merchants who file valid claims for a portion of the Cash

The money available to pay all claims,

The total dollar value of all valid claims filed,

The cost of settlement administration and notice, money awarded to the class representatives, and attorneys’ fees and expenses all as approved by the Court.

that accept Visa and MasterCard during the eight-month

Visa and MasterCard credit card dollar sales volume during

The money available to pay all claims,

The total dollar value of all valid claims filed, and

The cost of settlement administration and notice, and any attorneys’ fees and expenses that may be approved by the Court.

Attorneys’ fees and expenses and money awarded to the class representativessettlement by the district court, Class Counsel will ask the Court for attorneys’ fees in an amount that is a reasonable

all of the lawyers and their law firms that have worked on the

distribute both funds, and through any appeals, Class Counsel may seek reimbursement at their normal hourly rates, not

request reimbursement of their expenses (not including the administrative costs of settlement or notice), not to exceed

awards for their efforts on behalf of the classes.

HOW TO ASK FOR PAYMENT

To receive payment, merchants must fill out a claim form.

exclude yourself from the Cash Settlement Class, you will receive a claim form in the mail or by email. Or you may

OTHER BENEFITS FOR MERCHANTS

Merchants will benefit from changes to certain MasterCard and Visa rules, which will allow merchants to, among other things:

Charge customers an extra fee if they pay with Visa or MasterCard credit cards,

Offer discounts to customers who do not pay with Visa or MasterCard credit or debit cards, and

with Visa and MasterCard.

Merchants that operate multiple businesses under different trade names or banners will also be able to accept Visa or MasterCard at fewer than all of the merchant’s trade names and banners.

LEGAL RIGHTS AND OPTIONS Merchants who are included in this lawsuit have the legal rights and options explained below. You may:

You will receive a claim form in the mail or email or file online at:

from the Cash Settlement Class (Rule

can sue the Defendants for damages based on alleged conduct occurring on or before November 27, 2012 on

exclude yourself, you will not get any money from this

yourself, you must make a written request, place it in an envelope, and mail it with postage prepaid and postmarked no later than to Class Administrator,

signed by a person authorized to do so and provide all of

and taxpayer identification number, (3) the merchant that wishes to be excluded from the Cash Settlement Class (Rule 23(b)(3) Settlement Class), and what position or authority you have to exclude the merchant, and (4) the business names, brand names, and addresses of any stores or sales locations whose sales the merchant desires to be excluded. Note:

(Rule 23(b)(2) Settlement Class).

is:

settlement.

IF THE COURT APPROVES THE FINAL SETTLEMENT

Members of the Rule Changes Settlement Class are bound by the terms of this settlement. Members of the Cash Settlement Class, who do not exclude themselves by the deadline, are bound by the terms of this settlement whether or not they file a claim for payment. Members of both classes release all claims against all released parties listed in the Settlement Agreement. The settlement will resolve and release any claims by merchants against Visa, MasterCard or other defendants that were or could have been alleged in the lawsuit, including any claims based on interchange or other fees, no-surcharge rules, no-discounting rules, honor-all-cards rules and other rules. The settlement will also resolve any merchant claims based upon the future effect of any Visa or MasterCard rules, as of November 27, 2012 and not to be modified pursuant to the settlement, the modified rules provided for in the settlement, or any other rules substantially similar to any such rules. The releases will not bar claims involving certain specified standard commercial disputes arising in the ordinary course of business.

THE COURT HEARING ABOUT THIS SETTLEMENT

On September 12, 2013, there will be a Court hearing to decide whether to approve the proposed settlement, class counsels’ requests for attorneys’ fees and expenses, and awards for the class representatives. The hearing will take place at:

United States District Court for the Eastern District of New York

You do not have to go to the court hearing or hire an attorney.

appointed the law firms of Robins, Kaplan, Miller & Ciresi

QUESTIONS?In re Payment Card

Interchange Fee and Merchant Discount Antitrust Litigation, MDL 1720), you may:

Write to the Class Administrator:

relating to the settlement or the settlement approval process.

www.PaymentCardSett lement.com

Si desea leer este aviso en español, llámenos o visite nuestro sitio web.

LEGAL NOTICE LEGAL NOTICE LEGAL NOTICE

LEGAL NOTICE LEGAL NOTICE LEGAL NOTICE


Akron Law to cut startups a break■ Beginning this Thursday, Feb. 14, the Uni-versity of Akron School of Law will offer at itsLakewood campus, 14725 Detroit Ave., freeand discounted legal advice to small startupbusinesses.

The school’s new Small Entrepreneur andEconomic Development, or SEED, LegalClinic is booked with appointments for itsfirst office hours, according to Gary Spring,clinic director.

And he expects it to keep busy.“Everywhere we go, there’s demand from

people looking for help with their business,”Mr. Spring said.

Mr. Spring and another attorney are lead-ing a team of six law school students whowill advise businesses on a variety of legalneeds, such as contracts and commercialleases. The clinic is scheduled to offer officehours every other week, but could ramp upif the demand is there, Mr. Spring said.

Initial consultation and services are free,but those businesses that seek continuingservices will be charged a $300 fee, which is“still a bargain,” Mr. Spring said. Such legalservices can cost tens of thousands of dol-lars, he said.

The aim of the clinic is to give practicalexperience to the law students while meet-ing the needs of businesses. The intent is notto compete with the Cleveland MetropolitanBar Association and its members, Mr. Springsaid.

To be eligible for clinic participation, abusiness must have operated for fewer than

five years, post annualized gross revenues ofless than $100,000 and be otherwise unableto afford an attorney, Mr. Spring said.

—Michelle Park

All the waywith A.J.?■ A.J. Hyland for presi-dent?

Don’t hold yourbreath. But don’t be sur-prised if at some pointyou see his name on aballot.

The former CEO of Westlake’s HylandSoftware Inc. said he is thinking about get-ting into politics at some point.

It may never happen, and even if it does,Mr. Hyland said he isn’t sure what office hewould seek. But he could start a third polit-ical party “that actually tries to make thecountry better instead of bowing to specialinterests,” he said via email, noting that he’sregistered as an independent.

If he did run for an office, he probablycould make a large donation to his own cam-paign: Hyland Software, which makes con-tent management software, has done partic-ularly well since Mr. Hyland took over as CEOfor his older brother Packy 12 years ago. Itemployed 1,168 people in Northeast Ohio asof Jan. 1, up from 134 at the start of 2001.

The younger Mr. Hyland stepped down asCEO last month, saying he wanted to focusmore on his family and philanthropic caus-es. He was replaced by chief operating offi-cer Bill Priemer. — Chuck Soder

Advertising ROI,and then some■ Local nonprofits looking to make a splashover the airwaves, in print, on billboards orother media could do so at a significantlydiscounted rate with the help of the Cleve-land chapter of the American AdvertisingFederation.

The group is looking for local nonprofitsthat want to maximize their media budgets,and AAF-Cleveland guarantees a three-to-one return on the investment. For instance,if a group has an advertising budget of$10,000, AAF-Cleveland guarantees $30,000in market value for the investment.

“It is a deeply discounted amount,” saidJim Gagen, president at SynerG Marketing &Media in Lakewood and the chairman of theAAF-CLE project. “They see value in it.”

This is the second year AAF-CLE has of-fered the service, which is made possiblethrough donated air time and other media.Last year’s participants included Big Broth-ers/Big Sisters of Greater Cleveland, theBeck Center for the Arts in Lakewood andGuidestone, an agency that offers social ser-vices ranging from assistance with findingwork to counseling for troubled youth.

All the revenue generated from the pro-gram supports the AAF-Cleveland’s scholar-ship program, which assists Northeast Ohiocollege students pursuing careers in com-munication. Interested groups should visitwww.aafcleveland.com/aafcle-non-profit-program for information.

— Timothy Magaw

WHAT’S NEW

COMPANY: National Safety Apparel,ClevelandPRODUCT: WorkWear line in Ultra-Soft AC fabric

The company describes the UltraSoft ACfabric as its “most comfortable flame-resis-tant material yet.”

National Safety Apparel, which makes pro-tective apparel for industrial safety workers,says its flame-resistant work garments havebeen revamped “to be more comfortable,modern, and customizable,” and the Ultra-Soft AC fabric is the latest variety to beadded. Work shirts and coveralls are avail-able in either 7-ounce medium blue or khaki,while coveralls and work pants are made with9-ounce navy fabric.

Each garment is offered with optional fea-tures to best fit the needs of the job. For in-stance, work shirts are available with multi-ple pockets, pocket flaps, and short sleeves.Work pants offer cargo pockets, flame-resis-tant hook-and-loop adjusters and additionalknee reinforcement patches.

The “enhanced softness” of the materialcomes from its 88% Pima cotton and 12%high-tenacity nylon blend, resulting in “an in-herently flame-resistant finished product,” Na-tional Safety Apparel says.

For information, visit www.nsamfg.com.

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

REPORTERS’ NOTEBOOKBEHIND THE NEWS WITH CRAIN’S WRITERS

THEINSIDER

THEWEEK FEBRUARY 4 - 10

The big story: It was no surprise that the two-year state budget Gov. John Kasich unveiled lastweek would reduce personal income taxes. Un-foreseen, though, was a call for a reduction in thestate sales tax to 5% from 5.5%, and another taxcut that would provide a significant reduction tosmall businesses. See analysis, Page One

Bridgework: The Ohio Department of Trans-portation announced the final three teams that willvie for an estimated $330 million contract to de-sign, construct and finance the second Inner Beltbridge in Cleveland and demolish the existing, ag-ing span. They are: Kokosing Construction Co.with Michael Baker Jr. Inc.; Trumbull Corp., GreatLakes Construction Co. and Ruhlin Co. with URSCorp.; and Walsh Construction with HDR Engi-neering Inc. The finalists will submit detailed fi-nancial and technical proposals that ODOT willscore on seven elements, including design, con-struction scheduling and green building initiatives.

Goodbye, Cleveland: Eaton Corp. plans to fin-ish moving into its new Beachwood building byFeb. 18. It began vacating its longtime downtownCleveland home Feb. 2. Eaton said it will refer tothe Beachwoodbuilding as“Eaton Center.”The company’sheadquartersnow is inDublin, Ireland,following its ac-quisition ofCooper Indus-tries of Irelandlast year. Thediversifiedmanufacturer said it will house about 700 em-ployees at the new Beachwood building in theChagrin Highlands corporate office park.

Sharing’s a virtue: University HospitalsHealth System is about to start sharing healthrecords with other hospitals. UH is the first ma-jor hospital system in Cleveland that has agreedto share records through the state of Ohio’shealth information exchange. The agreement isa big win for the CliniSync exchange, which istrying to get hospitals all over Ohio to share elec-tronic medical records. Not only will UH’s 10hospitals and 100 physician practices join the ex-change — which now has received commit-ments from 71 hospitals and hundreds of privatepractices — but the agreement also shows Clin-iSync can win over big hospital systems.

Time to think about it: Pepper Pike financierA. Eddy Zai was sentenced to more than sevenyears in prison and ordered to forfeit more than$23 million for his participation in a fraud againstthe now-defunct St. Paul Croatian Federal Cred-it Union in Eastlake. Last November, Zai pleadedguilty to nine federal counts in the fraud scheme.

After getting pasted …: Ferro Corp. sold itssolar pastes business, which has been a millstonearound the company’s neck the last couple yearsbecause of a decline in production of solar cells,where the pastes are used. Ferro said the buyer isHeraeus, a privately owned precious metals andtechnology company based in Hanau, Germany.Terms of the transaction were not disclosed.

This and that: Data analysis software devel-oper Segmint Inc. of Akron raised about $3.3million from a group of 50 investors, accordingto a filing with the Securities and ExchangeCommission. The money will be used to covergeneral expenses. … The Cleveland Clinic addedanother partner to its growing Innovation Alliance — a collaborative effort designed to leadto the commercialization of medical technolo-gies. Its newest partner, the Innovation Institute,is a newly launched for-profit company based inOrange County, Calif., owned by a group of non-profit health systems.


BEST OF THE BLOGSExcerpts from recent blog entries onCrainsCleveland.com.

In Ohio, things are cooking■ It feels like Ohio is the center of therestaurant universe — at least according totrade publication Nation’s Restaurant News.

The Penton Media property includedMelt Bar & Grilled andtwo Columbus-basedchains —Jeni’s SplendidIce Creams and PiadaItalian Street Food — inits list of 50 breakoutbrands for 2013.

Melt was singled outfor “breakout factors”that include a “distinctive beverage pro-gram,” an “innovative approach tofood/operations” and premium products.The Lakewood chain, started by Matt Fish,has four restaurants now and plans aColumbus eatery next year.

Jeni’s has a store in Chagrin Falls and hasmade its products widely available inNortheast Ohio grocery stores. Piada hasrestaurants in South Euclid and Canton.

In addition, Cleveland chef JonathonSawyer was named the MenuMasters Inno-vator for 2013. The awards are produced byNation’s Restaurant News and sponsored byVentura Foods. They honor outstandingmenu development plus excellence in food-service research and development.

Publisher Randall Friedman said Mr.Sawyer “is truly a trailblazer in culinary inno-vation and never rests on his latest success.”

Cold comfort■ There was a choice comment from aCleveland commodity futures trader in aWall Street Journal story about financialcon man Russell Wasendorf Sr., who recent-ly was sentenced to the maximum 50 yearsin jail after admitting to orchestrating afraud at his futures brokerage and mislead-

ing regulators for almost 20 years.Wasendorf, 64, pleaded guilty last Sep-

tember to the fraud at Peregrine FinancialGroup Inc. that federal prosecutors said“had cost clients $215.5 million and maskeda business that never was profitable,” ac-cording to The Journal. He also was orderedto pay the full amount of missing funds inrestitution.

But that’s a pipe dream;Wasendorf’s assets arebeing liquidated but theyaren’t expected to comeclose to covering theshortfall.

The Journal saidWasendorf’s sentencebrought little comfort to

Kevyn Davey, a 45-year-old independentcommodity futures trader in Cleveland. Mr.Davey told the paper that he lost around$5,000 when Peregrine filed for bankruptcy.

“To me, the fact that he rots in jail does-n’t matter,” he said. “The money would bethe thing.”

A game of concentration■ Poverty in the last decade has risen mostrapidly in neighborhoods that already havea lot of poor people, according to a com-mentary from three researchers at the Fed-eral Reserve Bank of Cleveland.

The increasing concentration of povertywas found in 83 of the 100 metro areas stud-ied by researchers Dionissi Aliprantis, KyleFee and Nelson Oliver.

In the Cleveland Fed’s service area ofOhio and western Pennsylvania, “the con-centration of poverty rose markedly in manymajor metro areas due to the severity of therecession in Ohio,” according to the bank.

The researchers found that between 2000and 2010, the total poverty rate of the Unit-ed States rose from 11.3% to 15.3%. The gov-ernment’s official poverty threshold is afamily of four earning just more than$22,000 a year.

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