Robert Rosenbaum

Monday, 22 July 2002 10:09

From the editor

Manufacturing makes the world go 'round, and Northeast Ohio does more than its fair share of it.

Depending on whose numbers you believe, manufacturing still accounts for something like 20 percent of all jobs in the region. It's hard to get a handle on the earnings contribution manufacturing makes to the area's total corporate profits, but anecdotal information tells me it's disproportionately high.

Ohio is among the nation's top exporters, and Northeast Ohio is among the top suppliers to the auto industry and other vital economic sectors.

Make no mistake, manufacturing is alive and well.

That's why we're pleased to introduce a new feature to the pages of Small Business News.

It's called "Best Practices" and it focuses on the issues that affect manufacturers in Northeast Ohio.

Presented with technical assistance and support from one of the most admired aids to manufacturing in Ohio-CAMP Inc.-it will run every month in the magazine's feature section, and will be clearly marked with a little bit of color and some banners to help you find it easily.

The feature is being spearheaded by Associate Editor Dustin Klein, who has a sharp eye for spotting trends and issues in an increasingly technical business environment.

"Best Practices" is our way of demonstrating a commitment to the one in five Small Business News readers who are in the business of making stuff. We want to help them, because prosperity for the rest of us is based on their success.

At the same time, I suspect this feature will have a wide base of interest among readers in the distribution, sales and service sectors, too. Even if you don't make a product, you probably sell, ship or service manufactured goods-or you support them directly with consulting or professional services.

So while this feature has been created with the manufacturers in mind, I believe it's going to be of value to everyone who enjoys Small Business News.

Bob Rosenbaum can be reached at (216) 529-8587, or by e-mail at brosenbaum@sbnnet.com.

In this issue, we recognize 10 companies-run by 14 individuals-that have been named Entrepreneurs Of The Year in the annual program presented by Ernst & Young LLP and sponsored by Small Business News.

There are 75,000 businesses in Northeast Ohio. So what makes these people so special?

It's not their background or education. You'll read about the 25 finalists in this issue, and while some had companies handed to them by parents, others started from scratch with nothing but an idea.

It also isn't economics. Ken Conley founded a computer services business with his wife and another couple more than 15 years ago after being laid off-with about 15,000 other people-from IBM.

On the other hand, Carol Latham quit a perfectly good-and high-paying-job less than 10 years ago to start a company with no money in an industry where she was completely unknown.

If it sounds like a strange thing to do, I'm sure Latham had plenty of moments, when she was short on cash and customers, when she thought the same thing.

But when Intel started endorsing Latham's heat-dissipating products to all computer makers, her company suddenly looked like one of those overnight successes we all dream about.

For the most part, these entrepreneurial superstars aren't poets and dreamers, either.

Who, after all, wakes up in the middle of the night with a passion to become a world leader in producing rubber gaskets for doors and windows?

But 30 years ago, Dale Foland invested $7,000 to start Lauren International and sure enough, today it's a world leader in continuous rubber seals.

But there are some things that these successful business people do have in common.

For one, they all carry a presence of intensity and intelligence. You don't need to know them well to understand that these are simply people who know how to get things done.

Also, if you talk to them at length, you'll find they are all deeply concerned that their customers like them. It may sound like an obvious point. But how many times can you recall looking at a vendor's bill and thinking, "Wow! I'm really happy to pay this." That's the standard by which they operate.

While their personalities are varied-ranging from cheerful to sullen-all are passionate. You'll find that out if you start asking some detailed questions about their business. The eyes flash, the words start to move faster and there's suddenly a new energy to the conversation-even if it's about supplying axle parts for the heavy truck aftermarket.

These people also have outside interests. They have families and hobbies that they pursue with the same kind of enthusiasm that they put into their business.

And contrary to what the popular press often seems to assume about business owners, they are not necessarily in it to get rich. And when they do start making money, many are inclined to share it-not only with churches, charities and the community, but with their employees.

And finally, if you ask them the key to success, every one will say something to this effect: "It's the people. I couldn't have done it without the help of my team."

So what do the most successful entrepreneurs have in common?

Simply the knowledge that being good in business means being good in life.

Bob Rosenbaum can be reached at (216) 529-8584, or by e-mail at brosenbaum@sbnnet.com.

Monday, 22 July 2002 10:02

From the editor

For as long as I've been on the business beat, I've been hearing executives and CEOs talk about "giving back to the community."

We all know it's a noble ideal, but at so many businesses, reality keeps getting in the way. Time is short and extra cash isn't as easy to come by as it once was. And with the kind of lean staffing that it now takes to run a profitable company, it's not always reasonable to expect your hard-working staff members to spend their own time in service to the community.

So while the nonprofit community needs our help more than ever, conditions seem to conspire against it.

In this issue, you'll read about three companies-two from the Akron area and one from Barberton-that are setting the pace for community service.

They are winners-along with eight other companies in Cleveland-in the first annual Medical Mutual Pillar Award for Community Service, a program created by SBN and Medical Mutual of Ohio.

The program has a threefold mission:

1. To recognize outstanding contributions to the nonprofit community;

2. To foster and encourage an environment of community service among the mid-market and small businesses served by both SBN and Medical Mutual;

3. To share creative ideas how companies that may not be rich in resources can still make an impact in the community.

As a fourth element, we have promised to donate proceeds of the program to charitable causes. To that end, our sister publication in Cleveland, which is managing the Pillar Award, has created the SBN/Pillar Award Fund, a sustaining gift that will grow each year while making annual contributions to worthy causes throughout Northeast Ohio. While we still haven't finished our accounting of the program for this year, SBN has committed to a minimum donation of $10,000.

So enough about us. What about the companies that have been honored in the first class of Pillar Award winners?

They represent an interesting mix of business types and sizes, which tells me that charity is alive and well across Northeast Ohio. Locally, the honorees include Connecting Touch Therapy & Wellness Center in Cuyahoga Falls-a near start-up that has made cash donations to a different charity every month, and has continued to grow even while its accountant pleads with the owner to be a little less selfless.

There's also SS&G Financial Services, a well-established accounting and consulting firm with a long history of charitable giving, and a story of rallying behind an ailing co-worker and a specific cause.

And in Barberton, there's PPG Industries, which has demonstrated an exceptional level of commitment for a multinational corporation in a nonheadquarters location.

These companies and the others, which you'll find listed in our Pillar Award coverage on page 10, will be honored at a Dec. 3 banquet in Cleveland, which was deliberately scheduled at a time of year when charity seems to be on everybody's mind.

But make no mistake, these companies are being honored because giving back to the community is something they do every day of the year.

Bob Rosenbaum can be reached at (216) 529-8584, or by e-mail at brosenbaum@sbnnet.com.

Monday, 22 July 2002 10:00

From the editor

A recent issue of the New Yorker magazine carried an article about the Anasazi, a native American tribe that quietly disappeared from its New Mexico homeland nearly 1,000 years ago. Why they suddenly fled has been one of the great mysteries for archaeologists working in the American Southwest.

One researcher, according to the article, has come up with at least a fragment of a theory that involves cannibalism.

But his studies have been hampered, in part by other researchers who cling to the long-held belief that the Anasazi were an oasis of enlightened leadership and culture, and in part by the Anasazi’s descendants, who simply don’t want to help anyone rewrite their own history to include mankind’s strongest taboo.

Whether or not cannibalism took place in the desert 10 centuries ago may never be determined with any certainty, but in the minds of people on both sides of this issue, the truth couldn’t be any clearer. They just happen to hold different versions of what that truth might be.

This month, as we start the final countdown for the biggest calendar change any of us will ever experience (whether you want to view it as the turn of a century, a millennium or a computer-induced Armageddon makes no difference), such mysteries—which have always been interesting to me—hold special fascination. They make me wonder how we’ll be judged, what our defining moments will be and who will fight to keep our memories in line with current mores.

Our cover story this month, a team effort that we call “The 99 Greatest Moments in 99 Years of Business,” is, perhaps, an outgrowth of that kind of introspection. It forced us to make a curious comparison: how big events from the first part of the century did affect us, vs. how we think the big events from the second part of the century will play out.

It also raised the question: How often do historic events make themselves immediately known? Certainly, the stock market crash of ’29 was historic from the moment it happened. But was that due to its economic impact? Or to the deeper psychological grip that it maintains, even over people who weren’t born until two generations later?

If you insist on finding a business lesson in all of this (I avoid the temptation), it will have something to do with how you make decisions—and if you think too hard about it, you run the danger of becoming immobilized.

If all goes well, I’ll live as much or more of my life in the 21st century as in the 20th, and I’ll see some of the questions answered that we raised when preparing the 99 Greatest.

But as I look around the corner at this amazing moment in our calendar, that’s no consolation. The simple fact is, I want the answers. I want them all. I want them now.

Bob Rosenbaum can be reached at (216) 529-8584, or by e-mail at brosenbaum@sbnnet.com.

Monday, 22 July 2002 09:57

From the editor

I have overdosed on information about the Year 2000 computer problem, and I am certain that the worst-case scenarios are tremendous exaggerations of what will actually occur.

So why is SBN running a cautionary piece on the subject? Because any way I look at it, if anyone suffers, it will be business owners; and the smaller your business is, the bigger the problem.

Before you decide I’m just another alarmist and turn the page, let’s assume that the impact of Y2K is minimal — scattered brownouts, occasional equipment failures and some random errors in computer programs across the country. But your systems indeed prove Y2K compliant, and in homes across the country, life goes on as normal.

But in Detroit, maybe somebody missed a single line of code in the ERP system of a major car maker, and the system tries to order precisely as many steering systems for its SUV line as needed for the month of February — based on a lean inventory model and sales data as of Jan. 1, 1900. That data, of course, doesn’t even exist, and an alert manager catches the error. While programmers are trying to fix the bug, the word goes out to input the order manually, using last month’s numbers, plus 5 percent to be safe.

Nobody notices when the system automatically cross references the order with those of other components, and adjusts them upward to match the higher number of steering systems.

The orders are sent electronically to suppliers, who buy raw materials, schedule overtime and crank up production.

Within days, the error has been discovered and adjusted. But the suppliers have already spent the money to ramp up. Their margins are tight, and the auto makers have taught them well; the call goes out that cash is going to be tight this month and noncritical payables need to wait.

And so it goes down the food chain — one month after the next, through the hardware distributor, to its information systems consultant, to its public relations firm, to its printer of brochures ....

By now it’s June, and the car maker long ago installed the steering systems ordered in January. In fact, the Y2K glitch proved to be such a nonevent that consumer confidence has surged and car sales have actually picked up.

But somewhere along the way is a small business with 17 or 18 employees, chronic cash flow problems and an owner who is probably more lucky and determined than skilled.

And for the third consecutive month, he’s waiting for a check from a client he probably should have walked away from, who does business with someone who does business with someone who does business with a supplier of components in steering systems for a car maker in Detroit.

He’s about to dip into the home equity loan to make payroll. He’s going to have to drum up some new business fast. He should probably notify his banker, and maybe call his lawyer about the problem client. And one thing has become very clear: This isn’t the year he’s going to be able to buy a new car.

But ask him about Y2K, and he’ll at least be able to tell you, thank goodness, that despite all his problems, that was a whole lot of nothing.

Bob Rosenbaum (brosenbaum@sbnnet.com) is SBN’s editor. While his money is staying in the bank, he has a small cache of water and canned food in the attic — just in case.

Monday, 22 July 2002 09:58

Something a little more stylish

My dad once gave me an Armani suit, and until I finally wore the knees and elbows shiny, it was my favorite.

Actually, he bought it for himself, in a mood to wear something other than his accustomed Brooks Brothers styling.

So he went into one of those shops where the hired hands communicate by sniffing, and eventually settled on the Armani. They chalked the waist and the cuffs and sent it out for tailoring.

A week or so later, my dad picked it up, took it home and tried it on.

“No matter how long I looked in the mirror, I just didn’t feel like I was looking at me,” he later told me. So he went to another tailor, who took a nip and a tuck, straightened some of the curves and curved some of the edges. My dad looked at himself in the mirror again and still thought it looked like someone else’s suit. That’s when he offered it to me.

“Wow,” I said when I saw the label.

“Don’t get too excited,” he replied. “I think I’ve had all the Armani tailored right out of it.”

I’m telling the story now because the magazine you have in your hands is a little bit like a new suit for us. At first, it seemed like someone else’s clothing. But the cut and fabric are nice, and the more I look at it, the more I like it.

We started with a new flag (that’s publishing jargon for the title on the front cover). From now on, we’re just calling ourselves SBN and invite you to do the same. Why the change? Because we got tired of telling people that Small Business News isn’t just for small businesses and it offers a whole lot more than just news.

In addition, we have a new tagline (that’s jargon for the short phrase beneath the flag) to help set an expectation for our readers. It’s Smart Ideas for Growing Companies.

There are changes on the inside, too—all with the goal of making it easier for busy executives to glean the most useful ideas and information from the publication each month. To that end, you’ll find:

  • Shorter stories;

  • An increased use of bullet points and other visual aids;

  • “Idea ladders” throughout the magazine that provide quick-hit news items, resources, tips and data you can use;

  • A contents page that is easier to read and summarizes more of the issue;

  • A “Smart Ideas Index” that offers a quick reference guide to the best ideas in the current issue.

This is our first major redesign in three years and we looked at everything. We’ve moved the Managing Your Business section to the front of the publication because reader surveys tell us this is one of the most popular parts of the magazine. And because we firmly believe that too much of a good thing can, in fact, be wonderful, we’ve lengthened that section and are already developing new features to keep it fresh and lively every month.

As you read the magazine, you’ll find more information about how to reach the people who serve as sources and subjects in our stories, because based on the phone calls we get each month, we know people want to use SBN as an active resource for doing better business.

And finally, on the technical end, we’ve refined some typesetting issues that have been gnawing at us for awhile. I won’t bore you with the details, except to say that all of it is supposed to serve a single purpose: Simplify and improve the reading experience of people who look forward to spending some time each month with Small Business News... excuse me ...SBN.

I hope you like it, and I’m sure you’ll let us know.

Bob Rosenbaum (brosenbaum@sbnnet.com) is SBN’s editor.

Monday, 22 July 2002 10:03

From the editor

You probably thought the story about Chuck Gentile, the photographer who wanted to sell unlicensed posters of the Rock Hall, was resolved. Last most of us heard, the restraining order against Gentile had been overturned.

In fact, the story is alive and well and looking more like David and Goliath every day. The Rock Hall is still pursuing him on the grounds of trademark infringement, and Gentile still maintains he has a First Amendment right to sell photos of a publicly funded building.

Read it that way and you can't help but root for the little guy.

On the other hand, you have the ironic twists and turns of the public interest. While it can be argued the Rock Hall is a public building constructed with public funds (and if you say that to the Rock Hall's lawyers, you will, indeed, get an argument), it very well might be to our fiscal benefit if the trademark argument prevails, maximizing revenue to the Rock Hall itself.

The museum is still in a start-up state, which means it's still trying to figure out its revenue stream. According to the museum's first annual report, (made public only recently in what I interpret to be acknowledgement of public pressure for some small level of accountability to the community that has a very large stake in its success), the place is running at break-even if you don't count a few niggling little line items-such as bond repayments and legal fees-that add up to several million dollars.

If there is any financial exposure to the local government and the general public, it's in the area of the publicly backed bonds used to build the place.

Does that make the building a public structure? It didn't, as you'll learn in John Ettorre's cover story this month, when a group of Native Americans was denied permission to protest Chief Wahoo in the similarly financed plaza of Jacobs Field.

But such court opinions might quickly change if the Rock Hall were to fall behind on debt service and the county entity that underwrote the bonds was called on to make payment.

And if the building were ruled to be a public facility, then nobody could stop Gentile, or anyone else, from making money off its likeness.

The problem? That's the very time when it's in all our best interest to help the Rock Hall maximize revenue.

There is another level to this story, and it too contains no small amount of irony. Before he started selling his posters, Gentile did, in fact, offer to pay royalties to the Rock Hall. The response he received was as arrogant and disinterested as you might expect from the high and mighty and out of touch.

If the executives at the museum had only listened to Gentile's voice, they might have heard the roots of the very art form they are trying to memorialize.

But they apparently had bigger things on their minds than a small-time freelance photographer from Cleveland. They had sponsorships to sell; international superstars to entertain; T-shirts to hawk.

Just like the NBA (someone suggested it stands for No Basketball Anywhere) has learned, when the money gets bigger than the mission, bad things start to happen. And that may be the biggest lesson in this story.

So now, the Rock Hall and Chuck Gentile find themselves heading toward a final showdown that seems most likely to take place in the Supreme Court.

In true David-and-Goliath fashion, Gentile began his defense without a lawyer or any financial support, and the Rock Hall seemed determined to crush him with corporate clout.

The final irony of this case is that regardless of the outcome, the Rock Hall can ill afford it.

Bob Rosenbaum can be reached at (216) 529-8486, or by e-mail at brosenbaum@sbnnet.com.

Monday, 22 July 2002 10:02

What your customers know

It's probably fair to say that Dick Feagler has never had an opinion that he kept to himself. But how many times have you heard Cleveland's legendary commentator talk about serious business issues, such as quality and service and profitability? There's a good reason for that.

"I don't know a damned thing about business," Feagler says with a certain amount of pride.

That's why we present the following interview. For any business that deals with the consumer segment, Feagler is just like every other customer. With one difference: If he's got a problem, he'll tell you about it.


What do you know about business?

I know I'm happy I never got into it. It sounds like work to me.

On a scale of, say, kids' play to neurosurgery, where do you rank the skill level of owning a business?

I don't necessarily think you need to have the same skill level to run the place in Tower City that sells the imitation brand-label aftershave as you need to run, say, General Motors. I think you need to have a notion of cause and effect to run a business: What's the result of what I'm going to do.

Now, cause and effect used to be a concept that was universal, and it's gotten to the point in America today where it's almost like Einstein's theory. Nobody seems to have that notion anymore but businessmen, so I'm glad they're keeping it alive.

On scale of Saddam Hussein to Mother Teresa, where do you think the average business owner fits in?

The average business owner is probably a lot closer to Mother Teresa than we give him credit for. But I don't mean close. Why, they allowed Princess Diana to come pretty close to Mother Teresa's level last year. I think a lot of business people are closer than Princess Di was, alright?

Can you think of a business that you admire?

I don't think of businesses per se as being admirable. Businesses exist primarily to make money. ... I mean, the medical profession has done things on the way to making money that have helped us. But I don't think of businesses as being admirable.

Since you bring up medicine, what about HMOs? Is it their job to help people, or to make money?

Both. [But] some of these people...could be in any business. They could be manufacturing Teletubbies for all they care about what they're supposed to be doing. I'm not smart enough to know how this medical business is all going to end up. I grew up in the era of Dr. Saltzman; when you had the measles, you stayed up in your room, and Dr. Saltzman came to see you. We've come light years from Dr. Saltzman, and I don't know where we're headed now.

In business, everybody is under tremendous pressure to change things around-every day. Do you feel that, and how does it affect you?

What bothers me about business today, I'll be quite honest, is we keep talking about how the economy's doing. We keep reading stories about mergers and takeovers and downsizing. And there is no particular concern anymore that I would say is for long-term. The only concern is for shareholders right now.

It used to be that a guy would go into business and think of it like starting a little dynasty. Perhaps his kid would take over the business, and his grandkids might come into it some day. The same guy starts a business today, but now he says, "I don't care; screw my kids and my grandkids. What's my quick hit on this? What's my immediate gratification?"

That isn't particularly good for the consumer. I haven't found that airline deregulation or the Ma Bell breakup-which was supposed to be eliminating something that was considered to be bad-has done anything for me but make my life more confusing and complicated.

AT&T probably wasn't too fond of it at first, either.

Now 30 different long distance carriers have to give me a choice, and every one of them has figured out its own ways to swindle me. So now I have to hire an accountant to go through my phone bill.

I can't even remember who my carrier is anymore. Anytime anybody calls me and asks me to change, I say yes. Then the form comes, and I never fill it out. It's my way of driving them crazy. Anyway, my bill comes, and it says I called some town in California 17 times. And these charges are very small....Turns out that my kid, when you call him at his phone number, it's routed through a city in California. I tried over a couple of days to get ahold of him, and when there was no answer, I just hung up. In the old days when that happened, they didn't charge me. Now there's a charge for that. So they've confused and complicated matters in an effort to make money.

Do you know what a profit margin is?

Yes.

What's a reasonable profit margin?

It appears there is no such thing as a reasonable profit margin. It's like there's no such thing as too much money. ... I think it's determined by what you do with your profits. If all you're doing with your profits is throwing them back at the shareholders...

I do know a little about the book business. You buy a book for 23 bucks, the bookstore has bought it from the publisher for maybe $11.50 to 12 bucks. As the author, I get a buck-eighty. I go out to a book signing and spend two hours signing books for 50 people. Everybody says, 'That was a real good outing.' They're all delighting because they think they're doing me this really great favor. They're buying my book and I'm getting about a hundred dollars. I think there's something drastically wrong with that profit margin.

When you walk into a business, what's your assumption? You're paying too much, or they're not getting enough?

My assumption is it's about right because over time, if it isn't right, I'm not walking into that business because it isn't going to be there. I have faith in that system. The problem comes in, according to me, with the amount of time it takes this process to work. So if a business comes out on the market looking for the quick-hit success, they don't care what happens in five years, because they're only worried about the next five months.

It seems that it must also be very difficult for people to figure out how much something should cost. About four years ago, I bought a 32-inch Zenith television set. It cost me $1,000, and that was a good price. The same set today is going to cost me $695. Did I pay too much then? Is it a bargain now?

I've never understood why the price of everything in the electronics world has dropped while the price of autos has risen. I don't know how that works. OK, so they've figured out how to make the TV better and faster. What about a Chevy? Aren't they getting any better at making Chevys too? I would think.

If you're going to be doing business with a company again and again, what's important to you?

I like to buy a product from a guy who knows more about the product than I do. It's amazing how rarely that happens anymore. The computer business is now beginning to have some order and sanity because they have the big outlet stores. But when I first had to buy a computer, I didn't know anything about computers. Neither did the people selling them. I'd go to a store and say "Here's what I need to know" and the guy couldn't help me.

I'm not sure I've ever heard anyone say that the strength of the big-box outlets is their knowledgeable salespeople.

When you put it like that... I also like businesses that have been around awhile. That's what I deplore about what's happening today. They come and they go. I used to buy a lot of stuff from, what is it, Northeast Appliance? They're gone. Sun just announced that they're gone. It's nice to go back to a place that's been there awhile because you just tend to have more faith in the fact that they do a good job for you or else they wouldn't be there.

Let's talk about bosses. What's a boss' responsibility to employees?

To be a good manager of employees and not a good manager of boardroom concepts. There used to be a phrase "managing up," which meant that I work for you, you work for a big corporation and you s pend all your time trying to please people who I don't even know.

I think you have to worry about the people who are under you, and worry about their welfare, their understanding of what we're all trying to make here. You have to worry about civility, fairness and as much openness as it's possible to give them so they know what's up. I'd say those are the same things in my life that I've cherished most from the people I've worked for.

Do more bosses get it right? Or wrong?

Based on hearsay as well as my own experience, I'd say more get it wrong.

There's a new concept called "industrialized personalization." An example is a hotel chain that takes note when you sign up for a tennis court. The next time you stay at any of the hotel's locations, they'll call that up on the computer and ask if you want to make a court time. What do you think of this "one-on-one" marketing?

Now there's a topic I want to talk about. They call it personalization, but it's just a sales pitch. Hell, if I want to play tennis, am I going to forget to mention it to them? That's not personal service. That's a sales pitch.

Now if they know the last time I stayed at one of their hotels that I used two extra bath towels, and they had my room all ready with two extra bath towels and didn't make me call down to the desk to have them brought up to me, that would be personalized service.

It's the same with voice mail. It was supposed to make us all more responsive. But when the guy I work with at one of the TV stations got voice mail, he stopped answering the phone. He just stopped. So now, when I want to talk to him, I have to call the newsroom and ask if he's in. Then I have to say in a hurry, "Wait wait wait! Don't switch me over. Yell over to him that Feagler is on the line and wants him to pick up the darned phone."

None of this is what I would call personalization or customer service. It's a pain in the ass.

It sounds like you really do have some thoughts about business.

I'm quite concerned about this short-term gain deal. It's getting to the point now that it's really everywhere and I don't think it's good. I don't think it's healthy for business in general or for the country.

If I make gloves for a living, I ought to have some interest in making gloves. I know it's quite common today to take the attitude that, "Hell, I don't care what I make. I'm making money, and I don't care if it's gloves or pretzels or magazines."

It seems obvious to me that that attitude is going to lead to inferior gloves, pretzels and magazines. You have to have some interest in the quality-and some appreciation for what is quality-of whatever you're producing in order for you to produce it well.

What we've tried to do more and more to make up for lack of quality is put money into hype. If I can con you into thinking I'm giving you something that's really good, and you buy it, that's no different than actually making something good. Or is it?

Monday, 22 July 2002 10:00

From the editor

If you're at all like me, you avoid articles that go into detailed discussion of the money supply and other macro-economic issues. The Fed may as well be the moon, and the trade balance hits as close to my home as a sunburn in February.

My concern about economics is strictly micro. While book knowledge tells me how a quarter-percent cut in the prime interest rate sends an important signal to people who borrow money 12 figures at a time, it doesn't do anything to cool the burn of my Visa card.

You might think that a business editor would have more concern than this about the declining value of the yen. And yet, I have to admit that I've never actually seen or held a yen. (Although I have held 30,000 or so pesos, which was kind of exciting until I inquired about the cost of a couple of cervezas.)

Anyway, economic doomsayers have been talking about the Asian monetary crisis for a little over a year now, and aside from a few burps and hiccups, there haven't been any indications that it's slowing down business in Northeast Ohio.

Despite the wild swings of the various Wall Street averages, the U.S. economy seems to be doing just fine. In the last 12 months, we've seen gas prices lower than they've ever been since I've owned a car. The interest rate on my recently refinanced mortgage is so low that the bank is almost paying me.

Which, I understand, is precisely the problem in Japan and all the other troubled economies of the Pacific Rim, where deflation has created a crisis for the world. And it leads me to ask: So what's the problem? For the first time in my life, computer hardware isn't the only thing going down in price. That oughta be a good thing.

But it's not, and we are not quite as isolated here in Northeast Ohio as you might think.

That's the point of our special focus on deflation, which you'll find on page . The articles were researched and written by our Washington correspondent William Hoffman and Cleveland Associate Editor Dustin Klein-the same team that last year produced our highly readable and award-winning examination of electric deregulation.

It seems to be a specialty when they collaborate: a subject that is technical and, potentially, devastatingly dull suddenly becomes entertaining, concise and useful.

The upshot of their work this time around is, that while the risk of widespread economic meltdown seems remote, Asia's deflation is already a drag on our economy. The business owner who understands why can protect against a worsening of the economy, and in some cases, perhaps even benefit from it.

That's my roundabout way of making a very serious recommendation that when you see the word "deflation" as you wade through this month's issue, don't dismiss it as remote and technical mumbo-jumbo from people who only do business in theory.

This is real stuff, and if you want to understand how the issue affects you, this is probably the only article you need to read on the subject.

Bob Rosenbaum can be reached at (216) 529-8584, or by e-mail at brosenbaum@sbnnet.com.

Monday, 22 July 2002 09:57

Margin notes

Michael D. Roberts, one corporate communicator who knows how to navigate a mine field, has left Orion Consulting Inc. to become a vice president at Watt, Roop & Co.

Orion, which creates management software for hospitals and health insurers, acquired Roberts when it bought the health practice at William Silverman & Co. PR firm. (Silverman, now retired, was the pugilistic PR guy who lost in one round to 60 MinutesMike Wallace in an ambush interview about Columbia/HCA’s failed purchase of Silverman’s main client, then Blue Cross of Ohio.)

Today, the Silverman firm is gone and an embattled Columbia/HCA has retreated from Cleveland (see next item). How Roberts managed to be in the middle of all that and come out smelling like fresh laundry demonstrates why he has the reputation as one of the best-connected PR guys in town.

In his first life, Roberts was a journalist, reporting from Vietnam, the Mideast and the White House before doing a fiery 2-year stint as city editor of The Plain Dealer. He spent 17 years as the editor who put the first generation of Cleveland Magazine on the map, and then took an editing job in Boston. He joined Silverman on his return in ’94.

At Watt, Roop — a full-service PR/marketing agency (which does work for SBN) — Roberts says he’ll put to use his knowledge of the media, health care and the community.


Builder’s Square only lasted a few months in Northeast Ohio under an onslaught from Home Depot and Lowe’s.

Columbia/HCA Healthcare Corp., the nationwide consolidator of the hospital business, lasted longer than that in direct competition with the Cleveland Clinic and University Hospitals Health System (UHHS) — but not much.

To be fair, Columbia/HCA never had a strong foothold. After failing to buy the former Blue Cross at a fire-sale price, it settled for partial ownership of St. John West Shore Hospital, St. Vincent Charity Hospital and St. Luke’s Medical Center. All three — known collectively as Caritas — are respected more for their charitable mission and ethics than for their financial returns. It made for an interesting pairing with the investor-owned Columbia/HCA, which stands accused of overcharging Uncle Sam on Medicaid claims.

Columbia/HCA has sold its share in these hospitals — plus a fourth in Canton — to UHHS for $65 million.

The most understated benefit for UHHS may be that the deal includes Ohio Health Choice, a Cleveland-based PPO that claims to be one of the state’s largest.

That should address UHHS’s main weakness in its battle with the Cleveland Clinic — a strong referral system of doctors to help fill hospital beds. UHHS’s own HMO, QualChoice, has constantly struggled for market share.

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