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Posted on Sun, Jun 2, 2013 : 5:59 a.m.

Emerging from the Great Recession: How Ann Arbor area companies bounced back

By Lizzy Alfs


Espresso Royale CEO Marcus Goller at the company's roasting plant in Whitmore Lake.

Melanie Maxwell |

By: Lizzy Alfs and Ben Freed

Editors Note: Follow throughout this week for "Survival Strategies" profiles of recession-beating companies in the Ann Arbor area.

Slim down or double down? Invest and innovate or hunker down and liquidate? When the economy started to plummet in 2007, Ann Arbor area companies responded with a variety of strategies that helped the region bounce back more quickly than most in the state.

Not every local company survived the downturn, but six years down the road, Washtenaw County has more jobs than ever before and the companies that made prudent decisions in the face of the crises are reaping benefits.


NuStep vice president Steve Sarns poses for a photo near a NuStep exercise machine at the company's Pittsfield Township headquarters.

Melanie Maxwell |

With cost-cutting measures and some strategic new hires, one Pittsfield Township-based manufacturer slowly rebounded.

“It has been a building game,” said Steve Sarns, vice president of sales and marketing for exercise equipment manufacturer NuStep.

“Our sales can tend to look like the stock market. It takes a long time to get back to where it was after a big drop.”

NuStep — which designs and manufactures devices that allow those with low mobility to exercise more easily — saw its big drop in business in mid-2007, when sales decreased by 50 percent in one month.

“But, just like the stock market, we’ve recovered… It took us a few years to get there, but in late 2011, we made it back to where we were in 2007 and now we’re continuing to build,” Sarns said.

For some Washtenaw County-based companies, the economic downturn dealt a blow too harsh to survive. As part of its 2011 liquidation, book chain giant Borders Group Inc. shuttered its Ann Arbor headquarters and laid off hundreds of workers. Meanwhile, owners of some independent stores in the region, such as Tree Town Toys, Rider’s Hobby and This & That candy store, cited economic factors in their decisions to close. Nationally, many chains downsized, while some - like Circuit City - closed, leaving thousands unemployed.

But like NuStep, many Ann Arbor area companies are rebounding after the region experienced four consecutive years of job losses, growing unemployment rates and stagnation in the real estate market.

According to an economic forecast conducted by University of Michigan economists, Washtenaw County employment levels are at an all-time high, surpassing its previous peak level of employment from 2002. Fueled by job gains across most major sectors, the forecast predicts the region will add 12,961 new jobs from 2013 to 2015.

Washtenaw County economic forecast

Job growth in the county 2005-2015

  • 2005: 442 gain
  • 2006: 1,240 loss
  • 2007: 2,594 loss
  • 2008: 3,883 loss
  • 2009: 5,712 loss
  • 2010: 5,178 gain
  • 2011: 3,100 gain
  • 2012: 3,700 gain
  • 2013: 3,619 gain (forecast)
  • 2014: 4,361 gain (forecast)
  • 2015: 4,981 gain (forecast)

“It’s sort of remarkable how quickly we have turned around,” U-M economist Donald Grimes told in March. “I don’t think we would have expected that three years ago.”

While individual companies took different approaches to challenges presented by the economic downturn, Ann Arbor SPARK CEO Paul Krutko said that many businesses were able to deal with the recession more easily thanks to forward-thinking economic development in the area that began more than 10 years ago.

“The weathering of the recession here had more to do with the structure of the Ann Arbor and Washtenaw County economy than what individual companies did,” he said.

Krutko said that the diversity of the local economy and the focus on providing goods and services to customers outside the region meant that even during difficult times, new capital was constantly making its way into the area. The rising tide of export-driven industry helped to raise ships in the local service sector that was harder-hit in other areas of the state and the country.

Art Trapp, executive director of the Saline Area Chamber of Commerce, said the improving economic climate is also helping to attract new businesses into Saline and smaller outlying communities in Washtenaw County.

While the region’s overall economic health may have softened the hardest blows of the recession, many local businesses were still forced to adapt and make significant changes. Some of the most forward-thinking local businesses have found that decisions they made during the depths of the crisis have positioned them to grow at an ever-increasing pace as the local, state and national economies continue to recover.

Efficiency is the name of the game

For Ann Arbor real estate firm Charles Reinhart Company, the steep real estate market decline forced a reduction in expenses.

“2007 to 2009 were years of great cost cutting for us, but we tried very hard to project a steadiness in the marketplace,” said Reinhart president Dave Lutton.

“Our sales declined 25 percent and our average sale price dropped by 27 percent. Over a three-year period, we couldn’t cut expenses fast enough or deep enough to get ahead of the revenue loss.”

Countywide, home values started falling in 2006, punctured by the loss of Pfizer in 2007. According to the Ann Arbor Area Board of Realtors, the average home sale price fell from $266,600 in 2005 to $182,287 in 2009.

Reinhart decided to cut expenses by reducing employee salaries and closing offices in Ypsilanti Township and Jackson County. The efforts allowed Reinhart to reduce expenses by about 22 percent, Lutton said.

Other local companies, especially in the vibrant Internet and software startup community, were able to take advantage of the fact that they were already smaller than their competition.

“If you’re a very lightweight capital efficient software startup company you can deliver products in ways that big companies can’t because they’re bloated and inefficient,” Duo Security CEO and Tech Brewery co-founder Dug Song said. “The bigger companies end up passing those costs on to customers and they’ll turn to newer small companies that can do more innovative work.”

Ann Arbor-based coffee shop chain Espresso Royale was able to slash expenses by relocating corporate offices from downtown Ann Arbor to Whitmore Lake, closing underperforming stores, and cutting corporate positions. Owner Marcus Goller said the changes helped the company to grow sales year over year, even as many consumers reduced their coffee purchases.

“We really liked our office on Main Street, but it was more money than we needed to spend” he said. “You do what you have to do to make the business work.”

Taking advantage of available talent

One company’s trash can be another’s treasure. When the economy takes a dive and bigger employers look to cut costs, opportunistic businesses can swoop in and collect top employees and executives who are suddenly out of a job.

Few companies go on hiring sprees during a recession, but those that are able to identify talented individuals who fit positions of need often come out stronger and better prepared to deal with revamped demand.

“With the downturn, there was a lot of talent available, so we took the approach at the time to bring in really good people who wouldn’t have been available otherwise,” NuStep vice president Sarns said.

Strategic hiring — like Reinhart’s of Realtor Dawn Foerg, who became the leader of a new Ann Arbor office in 2008 — also sets the foundation for further growth. Lutton said Foerg’s office now has more than 40 sales agents and the company as a whole has boosted its employee count by 20 percent from its pre-recession level.

“We emerged with a larger organization and a much-larger share of the market,” he added. “We’ve been able to build on that, and now have the largest market share in our history.”

Meanwhile, Sarns said employment at NuStep is up to 95 people at its Pittsfield Township headquarters and manufacturing facility, after reaching a low of about 78 in 2007.

“The customer is in a recession, too”

The average American spends more than $20 a week, or $1,040 per year, on coffee, according to Accounting Principals’ 2012 Workonomix survey. But as people’s discretionary spending decreased during the recession, coffee shop purchases dropped slightly.

To remain profitable, Espresso Royale raised average prices twice — by 3.2 percent in 2010 and 1.25 percent in 2011 — but Goller used customer loyalty programs, daily sales and coupons to target the deal-savvy customer.

“Pricing is an art and I think we do a good job. To raise prices much more would be dangerous,” he said. “We can’t act like a gas station and put up a new price every day."


Busch's Fresh Food Market CEO John Busch poses inside the store on South Main Street in Ann Arbor.

Melanie Maxwell |

John Busch, CEO of the Ann Arbor-based Busch’s Fresh Food Market chain, said the economic downturn meant people were also smarter about their food purchases. Some customers were choosing to shop at grocery stores instead of dining out, but they also were purchasing lower-priced products. In response, Busch’s 15 stores stocked a larger selection of those items and listened to customers’ requests.

“You had to respond to what people wanted,” he said. “As people became very, very cautious — especially in the early years of the recession — they were often trading down in what they might have purchased previously.”

The company also pushes its weekly sales, and in 2010, it launched its online loyalty program called MyWay, which allows members to create lists, check sale prices and place online orders.

Smaller companies attempting to increase market share can also flourish during recessions when the economic conditions can make survival difficult for competitors who have more built-in costs. Duo Security, an Ann Arbor startup offering two-factor authentication services, was founded at the tail end of the recession and has grown from 5 to 35 people in the past year.

“The authentication industry has been around for 20 years and is dominated by one company that is basically on autopilot,” CEO Song said.

“You have to remember that when you are in a recession, so are your customers. We can charge a lot less on average than our major competition can and we offer great solutions.”

Duo Security is now used by nearly 1,500 companies in more than 80 countries and has attracted venture capital from local firm Resonant Ventures and California-based Google Ventures.

“I prefer to start businesses and build during recessions,” Song said. “It clears the playing field of competition and gets a lot of the wannabes out of the way.”

Lizzy Alfs and Ben Freed cover business for Reach them at and



Sun, Jun 2, 2013 : 10:01 p.m.

An article about the recovery of several companies, most if not all, that do not sell goods manufactured in this country? In a county where over 70% of employees work for one government agency or another. That's not a good sign.


Wed, Jun 5, 2013 : 3:27 a.m.

Actually, Mr. Freed...of Busch's 15 locations, only 2 are in Ann Arbor and none are anywhere near East Lansing. You can get that info from their website. But, yes, they are a local company.

Ben Freed

Mon, Jun 3, 2013 : 1:26 p.m.

a2citizen, unfortunately the facts do not support your conclusion. I'd just like to point out that NuStep manufactures here in Washtenaw County, Espresso Royale imports coffee beans because our climate does not support growing them but does their own roasting in Whitmore Lake and Duo Security "manufactures" their code right here in downtown Ann Arbor. Reinhart is a real estate company, so no manufacturing there, but they are a locally owned and headquartered company. Busch's likewise is a local grocer with six stores in Ann Arbor and two in East Lansing.


Mon, Jun 3, 2013 : 12:56 p.m.

I'm pretty sure NuStep manufactures right here.


Mon, Jun 3, 2013 : 12:43 p.m.

Basic Bob - last I checked vehicles (what I assume you meant by checking parking lots) don't have manufactured label visible on the outside but require you to open a door or hood. Please do not use the make/brand to determine origin of manufacture.

Basic Bob

Mon, Jun 3, 2013 : 2:06 a.m.

Government employees don't care where their stuff is made. Check the parking lots.


Sun, Jun 2, 2013 : 8:13 p.m.

Busch's has very high prices, some higher than Whole Foods, and very uneven customer service at the Plymouth Rd store. It always feels mostly empty. I wonder how they stay in business.

Steve Bean

Sun, Jun 2, 2013 : 2:23 p.m.

This is a timely article. The stock market downturn that began on May 22 is likely to be extensive—beyond even the drop of '08-'09. I don't know that the lessons learned will apply again. I would suggest a focus on necessities, like food, and even more intensive energy efficiency and conservation innovations. Avoid debt and don't plan for large margins. The forecasts for '14 and '15 will likely prove to be doubly wrong by being of comparable magnitude but negative. This year might end with an overall, though lower, gain. Broader economic impacts tend to follow stock market downturns by several months to a year. The current precariousness of the economy will likely result in a faster tumble, especially given that the decline will probably be rapid.


Mon, Jun 3, 2013 : 8:58 p.m.

Steve your right on, history repeats time over time, many indicators prior to such drops are evident by those events and starting to take place. Why so many people think that this is just another hoax is beyond me. Many of the large commercial businesses are having a difficult time keeping themselves from going into bankruptcy. Many corporations are starting to hoard capital till the overall economy, many full time employees will be reducing the workforce or reducing hours for full time employee and reduction in workforce due to ObamaCare and the impact it will have (negative) on small business.


Mon, Jun 3, 2013 : 12:42 p.m.

I'll take the "over" on Dow 400.


Mon, Jun 3, 2013 : 3:07 a.m.

No, I didn't read Wikipedia, I've known about EWT for a long time. I formed my own opinion because I'm aware of the concept of "fitting your model to the data," which is what EWT essentially does with its complex system of cycles and waves. With a high dimension model you can always build a theory to explain past behavior, and then future predictions are revisited afterwards and amended to fit what actually happened. It's a classic case of even a broken clock is right twice a day.

Steve Bean

Mon, Jun 3, 2013 : 1:13 a.m.

So you've read Wikipedia. Have you read any of the several books on the subject by Robert Prechter, Jr. in order to form your own opinion?


Sun, Jun 2, 2013 : 5:51 p.m.

Elliott wave people have been predicting this huge plunge for years. EWT is not a predictive system, it's a "story" told in a vague way to make it subject to post facto revision, like Nostradamus. The market may well be "toppy" and due for a decline no one really knows.

Steve Bean

Sun, Jun 2, 2013 : 2:39 p.m.

This is also an example of the optimistic type of reporting that occurs around a market top. Elliott Wave International points to two May issues of The Economist touting the return of Japan and Wall Street, respectively. History shows that downturns follow such elevated market optimism. When everyone says things are good, that means they're all invested to the max, leaving no one else to buy. Prices necessarily fall. The wave pattern this time just happen to be such that it won't be a small correction but rather the deepest drop ever. EWI predicts a bottom for the Dow below 400, most likely in mid 2016.


Sun, Jun 2, 2013 : 2:17 p.m.

I think the author and the business people interviewed have some facts wrong. We all know the recession started Jan 20, 2009, not in 2007. Mr Sarns clearly does not understand economics or business cycles with this comment "It takes a long time to get back to where it was after a big drop." Anybody that listens to talk radio knows that the economy should have bounced back immediately after the Great Recession, because the president should have snapped his fingers and made the economy right. Mr Sarns 40+ years in business does not give him better insight into cycles than that of people that talk on the TV or radio for a living. And those so-called UM economists don't know anything either. How could they know what Wash Counties employment history was and what the job numbers are now? Don't they know the pundits are telling us that unemployment is rising because people stopped looking for work? (these people used to be lazy, now they are victims or teachers that deserve to be re-hired). Real estate pricing is not a good economic indicator, real estate is not part of the free market. The rising home prices are a Liberal Plot to drive out low income citizens. And it is well known that with Ann Arbor anchoring Wash County, business leaders will never come to the area because of the communist influence and anti-business climate. Any positive gains must be a fluke or a lie put forth by the Liberal MSM. It is our responsibility as Patriots to keep downplaying the economic gains so that consumer confidence wains and the economy continues to suffer.


Tue, Jun 4, 2013 : 11:35 a.m.

The Market continued to drop, by going up 138 points. 6/3/2013-15254.03+138.46 (0.92%)


Mon, Jun 3, 2013 : 12:11 p.m.

C/F - I'd love to add other examples (like getting us out of Iraq was a bad idea and diving into Syria is a good idea) but I'm laughing too hard. I'm just happy because after the Great Recession all but one of my extended family is not employed (and she's helping care for Dad). My house is worth a reasonable amount (no, not that 2006 bubble fantasy $$). And I've taken a bunch of money from the "we're doomed" crowd in the markets. I'm expecting another couple of years of "two steps forward and one back". And that's good enough as the US recalibrates to globalization.

Steve Bean

Sun, Jun 2, 2013 : 2:48 p.m.

"what depression?" The one that will begin in the next year. "Why not use long term history? " Elliott wave analysis is based on the entire recorded history of financial markets, beginning with data from England and continuing with modern American stock markets and others around the world. The wave pattern rules have held true over that entire time. The two week period of decline was anticipated by the completion of five waves up that ended on 5/22/13 (S&P 500 and DJIA). Politics is irrelevant in this regard. Politicians and Federal Reserve presidents follow the market (including interest rates), they don't make it. While you're combatting conservative pundits and their followers (to what end?), the market will continue to drop. Are you prepared for that and the economic fallout? Will you pay attention to something you have control over (i.e., your own assets and life-necessity preparations) rather than continue to be distracted?


Sun, Jun 2, 2013 : 2:38 p.m.

Steve, what depression? Did the people blame the last president for the Great Recession? Nope, they blamed Obama. I have been hearing for 5 years that " It will only get worse in the next few years." It is getting better. Slowly, because it was a long drop, but things are getting better. Inflation is not 10%, as we were told it would be. Unemployment is not double digits, as we were told it would be. Stock market is on it's way to a bubble, that may be true. Using a two week span as a metric for the stock market is a pretty weak argument. Why not use long term history? Because that would be a positive sign and we must NEVER point out positive signs of economic growth. That would be UN-patriotic.

Steve Bean

Sun, Jun 2, 2013 : 2:31 p.m.

Well played, clownfish. However, I invite you to see that as the last battle and move on to taking care of your own business and leaving the politics to those who aren't able to do so. Nothing can stop the current president from becoming the next Herbert Hoover in the eyes of most Americans. People blame those in office when a depression sets in. There's no getting around it. It will only get worse in the next few years.


Sun, Jun 2, 2013 : 11:40 a.m.

It's interesting that Washtenaw job growth flat-lined as early as 2005 with '06-'07 negative leading into the bust years of '08-09. It's been a long eight years.


Sun, Jun 2, 2013 : 11:03 a.m.

"It's sort of remarkable how quickly we have turned around," U-M economist Donald Grimes told in March. "I don't think we would have expected that three years ago." I guess those who stopped trying to find a job can start looking again, or maybe those teachers that were recently being terminated think they must being living in some type utopia but dont realize it. Easy for someone to say when they have a guaranteed job for life. Nice try.


Sun, Jun 2, 2013 : 2 p.m.

I wonder why teachers are looking for work? Could it be because conservatives want teachers fired or their salaries/benefits drastically reduced? I love it when people get what they want, then use it as an example of how bad things are. (when they are commenting on a story about how well some business are doing)


Sun, Jun 2, 2013 : 1:06 p.m.


Basic Bob

Sun, Jun 2, 2013 : 11:30 a.m.

No one has a guaranteed job for life. Not economists, teachers, or unskilled laborers. In the local economy, there is actually a severe shortage of workers who are qualified and willing. As qualified applicants accept the remaining jobs at YCS, they leave behind unfilled positions in other public school districts, charters, and private schools. There is great opportunity for the teachers released from YCS to continue their careers, but they might have to compete.


Sun, Jun 2, 2013 : 11:21 a.m.

I've never heard anyone say they have a guaranteed job for life. This is a gross misconception of union workers.