Connecting low-wage jobs to public transit riders

I recently came across an interesting article from the Federal Reserve Bank of Cleveland, “A Long Ride to Work: Job Access and the Potential Impact of Ride-Hailing in the Pittsburgh Area.” (While the content was interesting in itself, it also made me think about a column in our magazine this month by Aradhna M. Oliphant. She provided a few highlights from her TEDx talk on the parallels between cities and leadership.)

A Long Ride to Work found that while Allegheny County residents typically have shorter commute times than other regional counties of its size or the nation as a whole, approximately 20 percent of transit commuters experience commute time of more than an hour each way.

What’s even more alarming for employers is that the study found that four of the top 10 employment centers have access to less than 5 percent of the county’s workforce within a 60-minute transit commute — places like Carnot-Moon, which has the highest concentration of low-skill jobs.

This is a continuing problem for many cities. Columbus, which doesn’t have a light rail system, has struggled with the same thing. The local social enterprise EmpowerBus, for example, charges employers a weekly flat rate per bus to provide transportation for employees. The organization provides the bus, the driver, organizes routes, handles logistics, insurance, etc.

The Federal Reserve Bank of Cleveland’s study of Pittsburgh’s environment explores another possible avenue for increasing job access: using ride-hailing services to supplement public transit. I thought this was a great idea for Pittsburgh, which has unique challenges, due to its geography and city layout, adding to its public transit system.

However, the study found that “the difference between commute times with ride-hailing and without ride-hailing, tend to favor workers with higher wages and higher educational levels.” Obviously, ride-hailing isn’t the only answer to help connect low-wage workers to jobs, but it is something to think about.

Click here for the complete report, A Long Ride to Work: Job Access and the Potential Impact of Ride-Hailing in the Pittsburgh Area.

Am I going to be living in a sci-fi novel soon?

I had fun putting together this issue of Smart Business — and I learned a lot, too. Many of the business executives were doing interesting things with technology.

The Germain Automotive Group took a gamble on an automotive subscription service, Drive Germain, that works like Netflix. For a monthly fee, you can switch cars as often as you’d like.

Hiten Shah of MES Inc. shared how his supply chain logistics company is very intertwined with technology, which it uses to communicate across the globe and find efficiencies. The company even converted every one of its Chinese engineers to iPhones, so it only has to support its quality control app, MESH-Quality®, on one operating system.

Pillar Technology’s Bob Myers is very connected with the development of autonomous and electric vehicles, including receiving a $2 million grant from Ohio to help build an autonomous vehicle research center. His company is also building the operating system for Smart Columbus.

“We eventually will be tapping into connected vehicles, and we’ll be communicating in the winter where there are slip zones,” Myers says. “So, if there’s a certain place, say on 71, where there’s a slip zone and an accident, we have several cars put on their anti-lock brakes. It will communicate that to a smart city infrastructure and we’ll know to go salt that area, versus just salting in the routes they do today, which are just pre-determined routes.”

While Myers couldn’t talk specifically about a lot of the technology his company is working on, he says the development will happen faster than most people realize.

“We build technology because it’s inevitable that this technology is going to be built,” he says. “We might as well build it. But there’s some social issues that we also have to be concerned about.”

Myers has spent time talking with people, including government officials, about how to equip the workforce of tomorrow. He’s also aware that cybersecurity will continue to be a huge issue as systems become increasingly connected.

So, in spite of my fears that come from reading “1984” or watching the “Matrix”, I find myself more excited than not about the society we’ll be living in a decade from now.

Good, sustainable growth requires careful analysis first

You’ll be reading a lot about growth in this month’s issue. While most of it is strategic growth — related to our ASPIRE conference that will be held Sept. 25 — A Kid Again is growing organically as the nonprofit scales into a national organization.

President and CEO Oyauma Garrison, a 20-year veteran of the insurance industry, says if you’re expanding, there’s a lot of similarity between the for-profit and nonprofit arenas. It requires careful thought to make sure you’re entering into a sustainable market, which means looking at market analytics and data.

With some help from others, A Kid Again has identified five key metrics, and weighted them, to help determine the most viable markets.

“We’re using the rankings of the top national children’s hospitals to give us some barometer of their level of success, the quality of care and their connection to providing services for kids who are facing life-threatening illness,” he says.

Another example, Garrison says, is looking at the city’s dynamics and what kind of amusement can be found within a one- to two-hour drive radius.

But not everything is the same in the nonprofit space.

“When I think about it from my for-profit world, it comes really down to what makes the most business sense, and does the data support our ability to enter into the market?” he says.

However, a number of nonprofits that have grown nationally have told him they’re constricting in and creating mega-regions because they oversaturated the market.

“Unlike an insurance environment, or any other franchise environment, where you would probably want your brand on almost every corner, that is not how we’re designed,” Garrison says. “We’re not looking to open up multiple chapters in a constricted space.”

Another key variable is the availability of corporate, foundation and donor support. It’s a slightly different dynamic than in the consumer world where you’re selling a product, he says.

But as Garrison learns the ropes of the nonprofit space and A Kid Again starts helping more children and families, it’s easy to see the excitement. Companies, individuals and hospitals are all raising their hands to help. Read more about A Kid Again in the Building Stronger Communities feature.

A case for organic growth

Aires is an interesting company. When Smart Business last spoke with CEO Bryan Putt for a cover story, it was 2012. The corporate relocation company had not only made it through the recession, it found new ways to grow despite a shrinking market. Five years later, it’s a different story.

Putt says the uptick in the economy over the past 18 months has been very beneficial for the downstream service provider.

“When business is good for the major industrials and the different sectors, they need their people moved,” he says. “We see the mobility programs grow in terms of volume as well as in terms of some of the benefits that are offered in it.”

The company’s market also has shifted. Today, the domestic business outstrips the international.

While most companies start in the U.S. before heading overseas, Aires was the opposite. The international aspect tends to have more moving parts, so as the business grew, it took that level of expertise and stepped into the domestic side that is typically less complex to manage.

But all that growth, whether here or overseas, has been organic.

“We are heavily biased in our thinking toward organic growth. We tend to feel that that is the healthiest way to move forward,” Putt says.

While there has been a continuing trend of consolidation, Aires believes two merged organizations have a either a neutral or negative affect on customers.

“It tends to be a forced environment where you’ve got two organizations that are merging for market reasons that aren’t always positive — and very rarely is it driven by the customer and creating a better solution for the clients,” he says. “They tell you that’s what it’s for, but we tend to see organizations merge and there’s a lot of fallout from that. We haven’t seen a better mousetrap being built that way.”

While those organizations might tell you a different story, Aires hasn’t seen a reason to change its strategy yet.

“We’re about controlled growth. We don’t want to have our business outstrip our services ability, and we target 15 percent annual growth, which basically doubles us every five years. At that rate we can ensure the quality of service that we’re delivering, and that’s paramount to what we do,” Putt says.

Challenges can prod you into a new, better direction

Sometimes challenges give you a nudge and the confidence to move on to other things. Other times, they can point you in new directions. This is how Paula Haines, executive director of Freedom a la Cart, described some of changes at the nonprofit, which assists the survivors of human trafficking.

At the end of last year, a grant that provided employment for about 70 percent of the organization’s survivors ended. They had been serving breakfast, lunch and dinner at a homeless shelter.

The women who’ve been doing those jobs transitioned into employment in the community. Freedom helped them get jobs, or they got them on their own.

“Sometimes life happens for a reason, and it was kind of that kick in the pants. ‘OK, you guys are ready,’” Haines says. “All of them had been with us for at least a year. They were ready. We had trained them well. They were ready to move on their way.”

The grant’s end also emphasized Freedom’s long-term plans to open a café, in addition to its catering business. In fact, she says, it helped accelerate those a bit because it demonstrated the need for more sustainability.

In June 2017, Freedom dipped its toe into the café model in one of the Columbus Metropolitan Library branches. Haines learned a valuable lesson from that.

“What we learned from that is that our model works better when we’re all together under one roof. Sending our survivors into a position where they’re working solely by themselves, that was a lot of responsibility that they weren’t ready for yet,” she says.

That’s why rather than opening satellite cafés, Freedom is focusing on launching one location that does both catering and public service. The café would be open for breakfast and lunch, and then close to focus on the catering.

Haines says they’ve put the wheels in motion. The organization is raising money and is in lease negotiations, with the goal of opening in the spring of 2019. Find out what else Freedom is up to in this month’s Building Stronger Communities feature.

U.S. manufacturers can still compete

Augustine Die & Mold Inc., a manufacturer in Somerset, expects more than 500 percent revenue growth this year. Its sister company, Augustine Plastics Inc., also anticipates a strong year. When many U.S. manufacturers struggle, it’s a breath of fresh air to see this kind of success.

So, I asked President and CEO James Brown how the two companies are able to not just compete, but also grow. It’s especially impressive when you consider that he said many customers aren’t just asking for price decreases, they’re demanding them.

First of all, the company understands its niche — low to medium volume in aerospace, defense, health care, energy, and water and wastewater treatment.

There are interesting onshoring dynamics, as well. Brown continually keeps an eye out for acquisition opportunities, particularly across borders.

“Because if I can find an opportunity to produce less expensive product, it gives us a competitive advantage,” he says.

For example, he went down to Juárez, Mexico, to look at an injection molding company that was for sale. The material and utility costs were similar; the biggest difference was labor.

He says a U.S. plastics operator, with wages, payroll taxes and benefits, will cost between $19 and $22 an hour. By comparison, the labor cost down in Mexico, fully burdened, is less than $4.

So, how can you compete with that?

In Mexico, several people are positioned on each side of a conveyer belt. In the U.S., one person and a robot arm can equal the same output.

“The end result is, when we ran the math, there really wasn’t a significant economic benefit to us acquiring a Mexican-based operation,” Brown says. “Because through technology, I was able to create work cell systems that could be as effective as what I was competing against in Mexico.”

And customers are realizing this, too, he says. Unless there’s a large enough quantity, overseas production doesn’t deliver the savings they hoped to achieve because of costs like shipping, storage, working capital, etc. And that’s good for manufacturers like Augustine Die & Mold and this month’s cover story Channellock, which almost exclusively produces Made in the USA tools.

Those who break the mold and take the road less traveled

I’m never quite sure how to describe an entrepreneur. It can mean a founder who disrupts an industry, or a second-generation owner who finds new ways to operate. When you read about the winners and finalists from the Entrepreneur Of The Year® 2018 East Central awards, you’ll find both, and more.

One entrepreneur, for certain, is this month’s cover story: Howard W. “Hoddy” Hanna III, chairman of Hanna Holdings Inc. He and his family helped Howard Hanna grow into the largest privately owned real estate company in the U.S.

We spoke mainly about the company’s acquisition strategy because that’s where Hanna is focused today.

He says, before a deal, the price is usually an early decision. However, the company spends time learning about the organization’s people, culture and mission. This includes understanding the reason they want to sell and how they run their business.

“You’re not going to get that on the financial statement a lot of times. You’ve got to talk it through, talk it through, talk it through. So, we seldom do a deal that doesn’t take six, eight months from start to finish,” he says.

This is critical, because the easy part is buying, Hanna says. The tough part comes after the sale: integration.

So, why did I easily see the spirit of an entrepreneur in Hanna? One story, which didn’t make it into the article, perfectly demonstrates it.

In 1972, Hanna took a five-week residential broker course. As he was in Los Angeles finishing up, he took the opportunity to learn about branch office locations. The only places where this was common in real estate was California and Chicago.

So, he called up Forest E. Olson realtors and asked for the owner. That afternoon, Olson took him to a couple of offices, invited Hanna to dinner and asked him to change his flight so he could learn more.

“I told my wife I was coming back Sunday, and spent the next Saturday looking at offices with him and learning his whole system,” Hanna says. “I came back to Pittsburgh and I said, ‘We’ve got to open up branch offices.’”

A desire to learn more, be better and strive for the next great thing — now that’s an entrepreneur.

On to the next challenge: M&A from the experts

Dealmakers who have experience with mergers and acquisitions typically enjoy the challenge. They’ve learned how to navigate the negotiating table, deal terms, integration and more. Often, they’re looking for their next big deal.

Business owners and entrepreneurs, however, may only go through this process once or twice. That’s why it’s nice to peel back the curtain of M&A, with insights from those who know it best.

One of those involved in Columbus dealmaking is featured in this month’s cover story, Jim Wyland, founder and president of WealthStone. He believes in the power of long-term relationships, making connections and proper due diligence.

Jim Grote, the founder of Donatos Pizza, has worked with Wyland for more than 30 years. He says Wyland is an artist in his field.

“Jim has made and art out of displaying his color spreadsheet using a large monitor for viewing, always giving two or three alternatives to a plan. It’s kind of like he’s playing his computer keyboard like a piano, using numbers for notes and after some collective ‘brainstorming’ coming up with a plan that sounds really good,” Grote says.

Wyland is having fun getting involved with new ventures in Columbus’ deal market.

One change he’s noticed is that, pre-recession, the ultra-wealthy typically had one adviser. A decade later, most have multiple money managers helping them invest. They’ve diversified.

This is just the beginning of how Smart Business will explore the ins and outs of dealmaking and M&A. Our third and final ASPIRE conference for 2018 will be held Sept. 25 at the Hilton Columbus Downtown. Mark your calendars now because the event is just around the corner. The day will include sessions that focus on buying and selling a business, raising capital and liquidity events, and there will time for networking and a chance to ask questions of the experts.

I’ve learned a lot about what makes a deal successful, what missteps to keep an eye out for and the key ingredients to try to replicate — and I hope you do, too.

Now that’s impressive

Going from $6 million in annual revenue to $75 million is a big jump. It’s the difference between a small community organization and one that’s approaching 350 employees. But what’s even more impressive is that Equitas Health went through that much growth since 2011.

The nonprofit, featured in Building Stronger Communities, transformed itself to better meet the needs of its customers — people who are HIV positive or at risk of becoming HIV position — because the marketplace demanded a change.

What it didn’t expect was to fill such a large need in another disenfranchised community, the transgender community. Equitas Health serves between 700 and 800 trans patients, who often drive three or four hours to find culturally competent care.

“The organization we were in 1984 or 2010 is not the organization that we are today,” says President and CEO Bill Hardy. “It is certainly critical that we remain nimble, in responding to the needs of the communities we’re serving.”

Hardy, in his 26th year with the organization, is one of the nation’s longest serving directors of an organization like Equitas Health. He has a social work and mental health/behavioral health background, so he’s had to improve his management skills on the job.

“Every day I’m learning new skills, and it does keep me on my toes, to make sure that I’m providing and am able to provide the vision that we need for the organization and the leadership,” he says.

In addition to discovering the story of Equitas Health’s growth, as you read about the 2018 Smart 50 — the executives leading the smartest 50 organizations in Central Ohio — I want to point out one fact. This year’s class, which is the fourth one we’ve featured in our magazine, has only a few people who are prior winners. That’s pretty impressive, and I think it points to the great things business leaders and their organizations are doing in the region.

I always learn a lot as I get to know the winners throughout the judging process, but this year, it’s been especially interesting to see so many new names.

Hard work, reliance and integrity never go out of style

Holly Rowe’s passion is obvious the moment she starts talking about her job at ESPN. But that passion is underpinned by old-fashioned values — hard work, resilience and integrity.

She believes the worker bees in life are the ones who take advantage of opportunities. Because while Rowe is a nationally known reporter and commentator now, that didn’t happen overnight. She says showing up and volunteering to do the extra work is the way to succeed, no matter what your job or industry.

“If you do the work that other people don’t want to do, you will start small and get the opportunities,” Rowe says.

And that doesn’t mean you won’t fail, too. Legendary Hall-of-Fame women’s basketball coach Geno Auriemma of the University of Connecticut recently talked to Rowe about resiliency.

“There are student athletes who have come into his program who have never failed at anything, because their parents, their coaches, the system around them have made (it so) they never fail,” Rowe says.

Another critical value is integrity, which is something Rowe finds true in the media today. If she goes to a college basketball practice and sees they’ve shaken up the starting lineup, it’s important to have the integrity to keep that information to herself when talking to their opponent. Otherwise, she’ll never be let into practice again.

But the pressure of getting information out quickly can lead to mistakes. For example, Rowe and her team saw a tweet that a college basketball star was sick and wouldn’t play that night. The story ran on ESPN, but it was wrong.

Rowe says that’s when you admit your mistake and apologize to the people involved, like the athletic trainer and basketball player. As she’s grown older — and wiser — she appreciates the need for accountability.

“I didn’t research for myself. I went and apologized to them. I don’t think I did a good job of reporting that story,” she says.