Remainder of MDG Medical Inc. moving to Cleveland from Israel

By Kaye Spector

Plain Dealer Business Writer

 

One of the first Israeli medical companies to locate part of its business to Northeast Ohio will move the remainder of its operation to Aurora by early 2012.

MDG Medical Inc., a developer of automated pharmacy technology equipment and software, will move its research and development group from Lod, Israel, to its Aurora headquarters by March. The company’s electromechanical assembly also will relocate from Israel to the same site by early 2012.

With the move, MDG expects to make between 20 and 30 new hires in the next 18 months: programmers, engineers and manufacturing managers, as well as assembly workers. Some jobs will be filled by MDG Israeli employees who will relocate here.

President and Chief Executive Mark Saffran said Wednesday that the move will reduce expenses and simplify business processes.

MDG has 150 customers in five countries, but 95 percent of them are in the United States, Saffran said.

“It was my feeling that we want to get research and development and assembly closer to the core of our customer base,” he said.

MDG Medical was founded in Tel Aviv in 2001 and moved its headquarters to Beachwood a year later, keeping its research and development staff in Israel.

BioEnterprise Corp., a Cleveland organization that helps the region’s bioscience industry, offered business development services, such as selecting a U.S. management team and finding sources of capital, to help lure MDG Medical to Northeast Ohio.

In January, MDG’s headquarters moved to the Aurora site, which will expand by 18,000 square feet to accommodate the Israel operations.

MDG makes drug-dispensing technologies that can streamline the administration of drugs and reduce medication errors. The company serves rural and community hospitals across the nation and has partners servicing correctional facilities and nursing homes.

Saffran said the company hopes to receive grants from the state and approach local hospitals to be test sites for new technology.

“The whole goal here is to reduce costs, improve quality and hire more people,” Saffran said.

AT&T, Verizon may have to alert customers near useage limits under FCC proposal

By Kaye Spector

Plain Dealer Reporter

 

After a monthlong business trip to Asia a few years ago, Les Wagenheim of Pepper Pike had an ugly surprise waiting for him when he returned home: a $2,500 bill for his BlackBerry.

This was despite signing up and paying for a plan that was supposed to keep his mobile phone bills lower while he was traveling.

What happened? Somehow, neither of the two AT&T employees he had contact with while signing up for the overseas plan told him to switch his phone’s roaming feature off.

“I took comfort in the fact that I was covered. Lo and behold, I was not,” he said.

“They cheerfully took my money but they didn’t say, ‘Hey be careful, don’t operate the phone in this mode.’ ”

Wagenheim, who eventually got his bill reduced to $500, would have been warned by AT&T that he was facing higher service charges if a measure under consideration by federal regulators had been in effect.

The Federal Communications Commission wants to stop cell phone “bill shock” by requiring wireless companies to alert subscribers before they run out of minutes, hit data usage or text messaging caps or start racking up international roaming charges.

The FCC will propose rules today and may take a final vote in coming months. Subscribers may get voice or text alerts when they use too many minutes in a month or place calls using more expensive networks outside the United States, the agency said in a summary distributed by e-mail.

The FCC has reports of unauthorized “mystery fees” popping up on bills, Chairman Julius Genachowski said Wednesday in a speech in Washington, D.C.

“It’s hard to keep track of everything you’re being charged and too easy to find yourself paying more than you had planned on,” Genachowski said.

A survey by the FCC showed 30 million Americans, or one in six mobile-phone users, had experienced bill shock, Genachowski said.

Carriers led by Verizon Wireless, under FCC investigation for overcharging 15 million customers for data, have said mandatory messages aren’t necessary because carriers give customers ways to track use of data, voice and text features.

AT&T’s iPhone app, for example, gives subscribers such information, which is also available on the company’s web site.

Providers are concerned about “prescriptive and costly rules,” Christopher Guttman-McCabe, a vice president for CTIA- the Wireless Association, a Washington-based trade group, said in an e-mail.

“The industry continues to develop tools to keep customers informed about their level of usage,” he said.

The FCC’s proposal would require clear disclosure of the tools to track minutes of use, in part because “too many consumers don’t know about them,” according to the summary.

Wagenheim, owner of Bedford Heights-based Pearlessence home fragrances, called the FCC proposal “brilliant.“

“Obviously, a lot of people have been burned, so it’s good that we’re headed in this direction,” he said. “Now that somebody’s on to protecting the consumer, we’ll all benefit from this.”

Bill shock typically happens only once, said computer consultant Spike Radway. After that, the customer is highly motivated to learn the details of how to use their phone.

“For parents or someone getting their first smart phone, I think it’s a good idea that they are doing the legislation,” said Radway, owner of Team Spike Consulting LLC. “I think it’s going to prevent people getting big bills one time for something they didn’t think about.”

Bloomberg News and the Associated Press contributed to this article.

Willoughby shop opposes FDA plan to require safety tests of e-cigarettes

By Kaye Spector

Plain Dealer Reporter

 

When electronic cigarettes hit the United States about three years ago, Sebastian Cangemi was among the first wave of entrepreneurs who entered the business.

 

He set up a 17,000-square-foot shop in an industrial park in Willoughby and began selling e-cigarettes to retail outlets and individuals nationwide. Electronic cigarettes, or e-cigarettes, are designed to mimic cigarettes and transmit nicotine to the user in a vapor. But now, after the Food and Drug Administration recently announced its intent to regulate electronic cigarettes – which it views as unapproved drugs and drug delivery devices – Cangemi fears he may have to shutter his business.

 

The FDA wants e-cigarette companies to obtain drug marketing approval from the agency. That means Cangemi would have to conduct extensive clinical safety testing and apply for formal FDA approval – a process he says he cannot afford.

 

For now, he's being careful about how he talks about his products because of warning letters the FDA recently sent to five electronic-cigarette companies. The letters said the companies' products were being marketed illegally as stop-smoking aids or were produced using poor manufacturing practices.

 

“You have to be very, very direct in your claims that they are not medically based,” Cangemi said. “You can't say they are healthier. You can't call it a smoking cessation device. We are marketing ours as an alternative to tobacco.”

 

Cangemi also says his manufacturing processes are up to snuff. So he hopes he can continue to make and sell Liberty Stix brand e-cigs.

 

“We have a premium product,” Cangemi said. “Our manufacturing process eliminates all the variables.”

 

The FDA is not looking at an outright ban on e-cigarettes, Michael Levy, director of the FDA's Division of New Drugs and Labeling Compliance, said at a recent media briefing. But the agency will continue to evaluate the marketers of e-cigarettes on a case-by-case basis.

 

The FDA already has had some discussions with firms that are interested in obtaining drug approval for e-cigarettes, Levy said.

 

The FDA has had health and safety concerns about e-cigarettes, which hit the U.S. market in 2007, for some time.

 

In July 2009, the agency released an analysis of 18 electronic cigarettes and components from two leading brands. Half the samples contained carcinogens, and one contained diethylene glycol, a toxic chemical used in antifreeze. The FDA also said cartridges labeled as having no nicotine had low levels of the chemical. The tests also suggested that quality control processes were inconsistent or nonexistent.

 

Cangemi said his product does not contain diethylene glycol or carcinogens such as those found in the tested samples. Liberty Stix's “juice” – the liquid that contains the nicotine, as well as distilled water, propylene glycol and flavorings – is made in the United States, he said.

 

Most of the e-cigarette components and liquid sold in the United States come from China. The FDA has been examining and detaining shipments of e-cigarettes at the border.

 

EXPLAINING E-CIGS

• What are they?

Electronic cigarettes, or e-cigarettes, are products designed to mimic cigarettes and deliver nicotine to the user in the form of a vapor, which the user inhales.

• Where are they sold?

E-cigs, which have been on the market since 2007, are sold in stores and mall kiosks and on the Internet. Estimated U.S. sales were $100 million in 2008 and are growing rapidly, the Electronic Cigarette Association says.

• What's the FDA's beef?

While the industry touts electronic cigarettes as a healthier alternative to tobacco, the Food and Drug Administration is increasingly asserting jurisdiction over the products, saying they are a drug delivery system. People who use, or "vape" - as opposed to "smoke" - e-cigarettes are assuming unknown risks, the FDA says. In some cases, companies are selling other substances to be inhaled via e-cigs, such as liquid forms of an erectile dysfunction drug or a weight-loss drug - substances that the FDA has not approved.

The agency has been challenged regarding jurisdiction over e-cigarettes in a case pending in federal court springing from the detained shipments. Oral arguments were heard in the case late last month.

Family culture helps agency do better work

David Rosenberg, 55, is president of Rosenberg Advertising, a Lakewood company he founded in 1981 with one employee – himself – and one client. Today, the full-service marketing and advertising firm employs 14 and has served more than 200 clients. Since 1997 Rosenberg's company has dwelled in an unusual office space: a renovated three-story, century-old home in Lakewood. These are excerpts from a recent chat between Rosenberg and Plain Dealer reporter Kaye Spector.

The Question: How would you describe your company's culture?

The Answer: It starts with having the atmosphere here, which is part of the house itself.

I moved here from the Warehouse District and was looking for something that I liked but was also our brand. Our brand is the fact that we do have this family culture, which we think helps us to do better work.

We have a magnolia tree outside. In our brand now we show the tree. We think the tree is very symbolic: fresh ideas, honest roots.

The honest roots comes in with how our culture is. We believe we are the roll-up-your-sleeves-and-work-hard mentality.

The Question: Making hiring decisions is particularly important in a small business. How do you choose new hires?

The Answer: First I try to identify what we need, the skill that we need. We want to make sure we hire somebody who has the skill to do the job.

But then, once that is given, that’s where the culture part comes in. We’re looking for the right person. We are looking for someone we feel we could see as a good team member and who has the same can-do attitude.

This is not a business where only I know the clients. Our clients know the people who work on their accounts. So we visualize, ‘Does this person represent us well, do they have the right type of spirit?’ ”

The Question: What’s the most important thing you’ve learned about management?

The Answer: Some people say the advertising business is an idea business or a communication business. I definitely realize we are a people business.

But even before that, you have to have the right mix. We basically start with a blank piece of paper every day and it’s the people who fill it in. If you get the people part right, you’re going a long way to establishing a successful business.

The Question: You allow your employees to work from home a day or two a week. What made you decide to do that?

The Answer: When I started the business, everybody had to start work at 8:30 and leave at 5:30 and take an hour lunch. And if they came in at 8:35, then I was not happy.

I realize now flexibility is huge in people’s lives. And so we came up with a schedule that would provide us with enough face-to-face time together so that we can do what we do.

We figured out the technology, which wasn’t that hard to do. The phones roll over to a cell phone at home. With e-mail and technology we still can communicate very well.

There’s enough face time where I feel we have not lost anything in terms of what we need to do to be productive, proactive and good at our jobs. And I realized our work gets done. It gets done just as well.

The Question: : What did you gain from such a schedule?

The Answer: I think people were dedicated before, but I definitely feel that they are happier. I think their stress level went down a tad.

My job is to provide them the right environment so they can do their best work.

The Question: How do you foster creativity?

The Answer: We all get along here and I think people are open to talking and disagreeing, just communicating with each other. That is what we do, but it spawns creativity.

Creativity is basically allowing any idea to come out, and then collectively you figure out what can we work with, what can we not work with. The open communication goes a long way into being open to come up with good work.

If I want to get a meeting moving and sometimes the ideas aren’t good, I catch myself saying, “That’s not a good idea,” and I know better. That is so counterproductive.

Sometimes a bad idea spawns a good idea, which spawns a great idea.

If at the core, people get along and can talk with each other, that’s not fancy but that’s how we do good work and get creative ideas.

Right from the crib, children hear advertising promoting unhealthy food and drinks

By Kaye Spector

Plain Dealer Reporter

 

Do our kids really have a chance? From the minute they wake up until the moment they go to bed, they are bombarded by messages pushing unhealthy foods and drinks.

It's a fully integrated, cross-platform, cross-promotional media assault.

Even though a number of major food manufacturers made changes in 2006, consider the many ways they get to children:

Commercials for sugar-laden cereal still monopolize early-morning cartoons.

Billboards and radio ads blare specials for double-decker burgers and extra-large fries.

School parent-teacher groups push sales of Market Day products, such as 10-inch, deep-dish apple pies and breaded mozzarella sticks.

Post cereal boxes direct kids to the Internet to play games aligned with their sugar-sweetened brands.

The checkout lines at grocery stores, pharmacies, big-box discount stores and even Home Depot are lined with sugary treats, many at kid's-eye level.

Science has yet to prove indisputably that food marketing is a direct cause of the climbing childhood obesity rate. But with one in every three U.S. youngsters ages 2 to 19 overweight or obese, food marketing to children is coming under increasing scrutiny.

Healthy-food advocates and many parents argue that the abundance of media messages for unhealthy foods is making it ever more difficult for impressionable young minds to resist the temptations — and for parents to say no.

At the same time, the advertising world insists it has the right to sell products and that parents must take responsibility and oversee their children’s media consumption and food choices.

Virtually all of the more than $1.6 billion that advertisers spend annually on youth-directed marketing is for processed, manufactured foods, such as baked goods, candy, frozen desserts and breakfast cereals.

Only a very small percentage — less than 1 percent — is for healthful foods, such as fresh fruits and vegetables. So says a report by the Federal Trade Commission to Congress in 2008 on spending by 44 leading food and beverage companies.

All this brand marketing has an impact, healthy-eating advocates say.

A recent study by research scientist Jennifer Harris and others in Yale University’s psychology department examined the effect of cumulative brand exposures on children ages 3 to 5. Children were asked to taste two sets of identical foods: one in a popular fast-food restaurant packaging and another in generic packaging.

After tasting each set, the children were asked whether the food tasted the same or if one tasted better. In four of five comparisons, the children were significantly more likely to prefer the taste of a food or drink they thought was from the fast-food restaurant.

“There’s really grave concerns about this stuff,” says Kelly Brownell, director of Yale University’s Rudd Center for Food Policy and Obesity. “The number of ways that marketing is done has exploded. . . . Marketing is undermining parental authority and making it very hard for parents to raise healthy children.”

But parents can exert some influence on the food-marketing messages their children see day in and day out. It can be as simple as talking to their kids about the ads they see. Around the age of 7 or 8, children can begin to understand that ads are trying to persuade them to action, according to the American Psychological Association.

“Parents can try to teach children as much as possible and help them realize when they are being marketed to,” Brownell says. “They can tell their children there are companies attempting to manipulate them.”

The power of the Internet

In recent years, food-advertising dollars have increasingly begun to move from traditional media to digital media, says Jim D’Orazio, a marketing instructor at Cleveland State University.

“Social media, online games and contests and mobile applications are all seeing major investment” from advertisers, he says.

Online is where some nutrition and child advocates are beginning to focus their attention, too, saying there are some important differences between food marketing in traditional media and that through digital media.

Most important, they say, is that on television, commercial messages are clearly separate from programming. But in digital media, the advertising, editorial content and content often are intertwined.

On General Mills’ website millsberry.com, for example, children can create a personalized character who operates in a virtual, Webkinz-like world: gobbling Fruit Gushers in a Pac-Man-like game. The player earns Millsbucks, which he can redeem at a virtual candy store that features more virtual, branded food products.

These advergames — the most frequently used strategy to encourage ongoing and return website visits — typically engage players for an average of nearly 30 minutes at a time, all the while inundating the player with images of products such as Trix or Lucky Charms cereal.

Long periods of time spent playing an advergame translates into sustained exposure to a brand name, and creates pleasant memories and associations, which builds brand loyalty, says Kathryn Montgomery, a communications professor at American University who has studied Internet food marketing.

“It’s different from an ad impression,” Montgomery says. “The way we think about it is different, the depth of involvement, emotional levels, things that are along multidimensional lines.”

Such intermingling of advertising and youth entertainment content is not allowed on television under federal law, which also limits ads directed at children to about 10 minutes per hour.

While the point of an Internet advergame appears to be fun, the marketing is in the game and “you’re not even aware of the message,” says Robin Kelly, an assistant professor of marketing at Cuyahoga Community College and former marketing executive. “But your subconscious absorbs it.”

While television advertising has been studied for a few decades, much remains unknown about the effects of digital food marketing and its unique characteristics.

“These are qualitatively different kinds of exposure and we need to understand them,” Montgomery says.

The tussle over advertising

Does that mean food marketing is to blame for obesity rates doubling for children and tripling for teens over the last 20 years?

There’s no clear consensus.

Even a well-known study on the point in 2006 by the Institute of Medicine is claimed by opposite sides on the issue.

Child and health advocates point to the study’s conclusion that television is associated with increased rates of obesity among children and youths; and that there’s strong evidence television advertising influences what children ages 2 to 11 choose to consume — and what they pester their parents to buy them to eat.

At the same time, the food and advertising industries point to the institute’s statement in the same study that “a causal link between marketing and increasing childhood obesity rates has yet to be firmly established.”

Among the institute’s recommendations in 2006 was that food and entertainment companies improve the balance of foods marketed to children within two years; otherwise, Congress should step in.

After the report came out, the Council of Better Business Bureaus established the Children’s Food and Beverage Advertising Initiative, or CFBAI. Its goal was to change the ratio of food and beverage advertising messages directed to children younger than 12 to encourage healthier eating and habits.

Since then, 16 major U.S. food companies have pledged to devote at least half of their child-targeted advertising to those goals. The group, which includes Burger King, Campbell Soup, Dannon, General Mills, Hershey, McDonald’s, Nestle, Post Foods, Coca-Cola and PepsiCo, represents 80 percent of television food, beverage and restaurant advertising directed to children younger than 12.

The companies agreed to five tenets:

Food advertising would promote “healthier dietary choices” or “better-for-you” products.

Products in online games must be “better-for-you” goods or must give healthy lifestyle messages.

They would use fewer licensed characters in ads that don’t promote healthy dietary choices or lifestyles.

They would stop seeking product placement in children’s entertainment.

They would stop advertising in elementary schools.

Four companies — Cadbury, Coca-Cola, Hershey and Mars — pledged to not aim any advertising to children younger than 12.

“Advertisers have made significant efforts to police themselves, and while many think they are moving too slowly, we know that children [ages 2 to 11] are seeing fewer food ads,” D’Orazio says.

But the initiative has been the object of some debate. The FTC’s 2008 report noted that the CFBAI companies’ nutritional standards, as well as their definitions of advertising directed at children, vary. Also, each company developed its own standards for “better-for-you” foods or a “healthy dietary choice.” In addition, the FTC criticized the program for applying these standards only to some forms of advertising.

The agency recommended, among other things, that the CFBAI develop consistent and high-quality nutritional standards and extend them to all advertising and promotional techniques, including product packaging and point-of-sale advertising.

In the face of mounting public pressure — and in response to heightened consumer interest in healthy eating — food manufacturers also have tinkered with their products and their messages. Some efforts include:

Healthier alternative products and reformulation of existing ones. Kraft Foods reworked Oscar Mayer Lunchables to reduce the amount of calories, fat and sodium.

Calorie-limited snacks, like 100-calorie packs of cookies, crackers and popcorn sold by Procter & Gamble, General Mills and Nabisco. Also, some restaurants, such as T.G.I. Friday’s, have pledged to abandon supersize portions.

Logos or other marketing strategies to highlight lower-calorie and healthier products within a product line. Kraft Foods created the “Sensible Solutions” seal and PepsiCo introduced a “Smart Spot” seal to identify products that have reduced calories, fat, saturated fat, sodium or sugar.

Nutrition education programs or websites, phone lines and magazines to educate customers about good nutrition. General Mills created a program that awards grants to organizations to support the development of youth nutrition and fitness programs.

Concern about the success of the food industry’s efforts to self-regulate led Congress in 2009 to form the Interagency Working Group on Food Marketed to Children. The group, which included the FTC, Food and Drug Administration, the Agriculture Department and the Centers for Disease Control and Prevention, was to develop recommendations for uniform standards for foods marketed to children younger than age 17 and the media where the foods are marketed.

The group released tentative voluntary standards in December to mixed reaction: applause from healthy-eating advocates and boos from the food and advertising industries. Dan Jaffe, executive vice president of the Association of National Advertisers, says, if enacted, the proposal would “virtually end all food advertising as it’s currently carried out to kids under 18.”

The group was expected to publish proposed standards in the Federal Register for public comment in July, but the New York Times reported in July that it could be months before the report is ready because of industry opposition and deep divisions among regulators.

First Amendment issues raised

In May, the White House Task Force on Childhood Obesity weighed in on food marketing to children. Its report recommended that self-regulatory groups, such as the CFBAI companies, adopt uniform nutritional and marketing standards across multiple platforms — including in-store advertising — and that there be “broad compliance” by all companies that market food and beverages to children.

The task force also recommended that media companies limit licensing of their characters to food and beverages that are healthy. A July study by the Rudd Center showed that children significantly preferred the taste of foods that had popular cartoon characters like Shrek, Scooby-Doo or Dora the Explorer on the packaging.

Lastly, the task force said that if the industry didn’t regulate itself, the government should step in.

“The prospect of regulation or legislation has often served as a catalyst for driving meaningful reform in other industries and may do so in the context of food marketing as well,” the report says.

The advertising industry disagreed with the research the report used and raised freedom-of-speech issues.

“Any effort by the FCC to restrict food marketing or impose a commercial ratings and blocking system would raise very serious First Amendment concerns,” Jaffe wrote in his blog shortly after the report’s release in May. “It would also seriously undermine the economic foundation that advertising provides for television programming, particularly children’s television.”

Kelly, the Tri-C marketing professor, says healthy-eating advocates and educators should beat food marketers at their own game by adopting their methods.

“We are going to have to fight the under-the-radar messages with other under-the-radar messages. We will have to find cachet individuals like Hannah Montana eating good stuff and talking about how wonderful they are,” she says.

“Clearly, habit by emulation is very strong.”