Crain’s health care reporter Katherine Davis joins host Amy Guth to talk about the medical device subsidiary of a Japanese company expanding its operations here with a $20 million commitment and promise to hire 100 more workers.
Plus: City Council members push back as Johnson appoints new CPS board, McDonald's alleges major beef companies fixed prices in new lawsuit, Shore Capital raises $1.9 billion for three investment funds and a Rivian misstep triggered the parts shortage that's hobbling its EV output.
City Council members push back as Mayor Johnson appoints a new CPS board and a medical device subsidiary of a Japanese company is expanding its operations in suburban Chicago. It says Max is also promising that they will continue to retain and maintain the nearly 550 person workforce that they already have here in offices and sites across Lincolnshire, Buffalo Grove, Vernon Hills and Mendeline. I'll talk about that and other health care news with Crane's health care reporter, Katherine Davis. I'm Amy Gooth and this is Crane's Daily Jist for Wednesday, October 9th. Wanna dive deeper into the topics you've heard here? Read the full stories and get access to all of Crane's award-winning coverage with a Crane's Chicago Business subscription. Crane's Daily Jist listeners can get 20% off a one-year Crane's Chicago Business digital subscription by visiting ChicagoBusiness.com/GIST and using promo code GIST at checkout. Once again, to redeem this offer, visit ChicagoBusiness.com/GIST and enter code GIST to get this deal while it lasts. A medical device subsidiary of a Japanese company is expanding its operations in suburban Chicago with a more than $20 million investment. Here to talk about it, Crane's health care reporter, Katherine Davis. Katherine, welcome back to the podcast. Always a pleasure to have you here. Hey, Amy. Thanks for having me on. Of course. So talk to me about this company and this investment and what they do and all of that good stuff. Sure. So the company is called Sismek's America and they are a medical device subsidiary of a Japanese conglomerate called Sismek Corp. And this new deal to bring $20 million and about 110 new full-time jobs to the Chicago suburbs was announced in conjunction with Governor J.B. Pritzker's trade mission to Japan. And so he's been there for a couple of days on a trip that's really designed to attract more Japanese firms to Illinois. So far, Japanese companies currently employ about 56,000 people in Illinois. And this Sismek's announcement is just sort of the latest development in what's been a long time's work of getting companies from Japan, but I think from countries across the globe to invest in Illinois. Yeah. And this over $20 million investment, do you have a sense of what that will be going towards with this company? Yeah. So we do know so far that Sismek's will use the money to expand its northeastern Illinois facilities at about 110 new full-time jobs ranging from scientists to engineers, healthcare professionals. That's really important because we know those are typically high-paid jobs that require advanced degrees, which is the kind of jobs that we know economic development experts really care about and make a difference in the local economy. And then of course, Sismek's is also promising that they will continue to retain and maintain the nearly 550-person workforce that they already have here in offices and sites across Lincolnshire, Buffalo Grove, Vernon Hills, and Mandaline. You described them as a medical device maker. Is there a particular area they focus on or is it fairly general? So they focus on hematology, which is like blood testing, blood diagnostics, blood clotting tools. And they are selling these devices to hospitals, laboratories, research facilities, really a variety of clients across the healthcare sector. And talk to me a bit about kind of the life sciences development cycle. It seems like there's so much, you know, so many companies that are coming together, there's so much M&A that goes on, but also it seems like a company will grow kind of spin into smaller ones and then they will grow and they will kind of spin off. Talk to me about that. I'm just kind of a snapshot of the state of that in Chicago right now. Well, you know, when this news was announced, the Illinois Department of Commerce and Economic Opportunity really positioned it as a win for the local life sciences industry. Amy, you'll probably remember, we've talked a lot about how this is an industry that local government officials, industry insiders, and of course, economic development leaders have really focused on in recent years. You know, the life sciences industry can touch everything from food innovation to developing new therapies and medications to medical device companies. And often the sector employs, you know, high paid folks with advanced degrees and can really bolster a local economy. And so what you're alluding to is sort of this, you know, startup cycle, I think we see that can be attached to the life sciences industry broadly. And we have been saying that here in Chicago, good examples are our big Fortune 500 companies in this area. If you think about Abbott Laboratories or the pharmaceutical company at the or even Baxter International, you know, we'll often see some of those execs, you know, leave those big companies and go off and start their own thing. And those will become the startups that we're talking about being incubated in places like portal innovations or Fulton Labs. You know, I think I've come on here and talk several times about new upstarts in Chicago in the life sciences sector, raising funding, and their founder happens to be a former AVV scientist. Well, I'm sure we will be talking about this company more down the road. While I have you here, though, talk to me about news you reported earlier about Walgreens naming a new chief commercial officer. So, you know, a chief commercial officer in any company is a big deal, but I think particularly it's a big deal at Walgreens right now, just because of so many of the challenges this company is facing. Amy, we've talked sort of extensively now about Walgreens dropping stock price, how upset investors are with leadership and with the company, and sort of how all of that links back to a flailing healthcare strategy that was designed to offset losses in the traditional business, but those investments have just not quite paid off yet. And so that brings us to news that Walgreens is named Jason Stenta. It's near chief commercial officer. He is tasked with leading Walgreens growth strategy and driving development and commercialization of its healthcare services, which we know are a really important part of the business right now. And you'll also be in charge of enhancing partnerships with insurance plans, health system providers, and life sciences companies. And his background is healthcare. That's right. He brings nearly 20 years of experience to this new role, particularly in healthcare. So, he was most recently the senior vice president of payer sales at Optum, which is the health services unit of United Health Group. And before that, Stenta held several leadership roles at CBS Health, which interestingly is the archrival of Walgreens, as we all know. So, it would be really interesting to see what kind of insights he can bring to Walgreens after having worked at their competitor for so long. And then, of course, that healthcare experience at Optum, I think Walgreens is expecting that to be really useful as they move forward with a healthcare plan that is in need of some deep repair. Yeah, certainly. Well, we will talk more about both of these topics, both biotech startups and Walgreens down the road. But thanks so much for stopping by today. Sure, Amy. Thanks for having me. Coming up in a new lawsuit, McDonald's, alleges that major beef companies fixed prices. We'll talk about that and more right after this. Thanks for listening to Crane's Daily Jist. Remember, we provide a daily news brief that drops right in your inbox. It's our newsletter called The Crane's Morning 10. They're the 10 stories that will fuel a smarter workday. To subscribe, visit chicagobusiness.com/morning10. This is The Crane's Daily Jist with Amy Gu. Members of the Chicago City Council are pushing back against Mayor Brandon Johnson's efforts to replace the city's Board of Education, calling for a special meeting on Wednesday to discuss the new appointees following the resignation of the entire board last week. Crane's poi Naidu reported that the mayor unveiled his new picks at a contentious press conference on Monday. The event started with protesters holding signs that read "Fire Johnson" and shouting, "This mayor is not legit." Naidu reported that the protesters were escorted out before the mayor named six replacements for board seats vacated by current members on October 4th. And Johnson said a seventh replacement is still being determined. And as Naidu also reported, the announcement raised concerns from several older persons about the future of Chicago public schools. As of Sunday, 41 of 50 elders signed a letter calling for greater scrutiny of the appointees, including members of the Progressive Reform Caucus that helped propel Johnson to victory in 2023, according to reporting from Block Club Chicago. The City Council, which does not have authority over CPS or the Board of Education, is calling for testimony from board members who just resigned and new appointees at Wednesday's special meeting. Naidu also reported that the mayor stood his ground during Monday's press conference and reiterated on multiple occasions his authority to replace outgoing board members. Johnson emphasized his campaign promise to address shortcomings in the school system and criticized his opponents for using arguments similar to those used against abolishing slavery. Naidu noted in reporting that board members resigned in the face of pressure from Johnson to fire CPS CEO Pedro Martinez after he refused to step down. Johnson and Martinez have been at odds over the CPS leader's refusal to take on a loan to cover the cost of a pension payment for non-teaching staff and part of a potential new contract with the CTU, which is in the midst of heated negotiations with the district. The controversy is unfolding as the city is facing its own budget woes, including a $225 million gap for 2024 and a nearly $1 billion shortfall projected for 2025. Crenes Brandon Dupre reported that McDonald's is suing big-name beef companies over allegations they conspired to limit beef supplies and boost profits at the expense of the fast food giant. The Chicago-based company alleges that meat suppliers, including companies Tyson Foods, JBS and Cargill, have conspired to reduce their output to drive up industry prices since at least 2015, according to the complaint filed in the U.S. District Court for the Eastern District of New York. The lawsuit accuses the meat producers and processors of violating federal antitrust laws. McDonald's attorneys wrote in the complaint, quote, "defendants colluded during the conspiracy period to reduce supplies of beef in tandem, thereby raising and fixing beef prices at levels higher than prices that would have prevailed had the beef market been competitive." The complaint continued, quote, "as a direct result, plaintiff suffered antitrust injury by paying illegally inflated prices for a beef it purchased from defendants." McDonald's said it was seeking monetary damages and for a court to order an end to the alleged price-fixing conspiracy. Dupre noted that the lawsuit is the latest to take aim at the country's largest beef companies and their business practices. The beef producers are facing lawsuits from cattle producers and consumers that seek class action status in Minnesota. When Rivian Automotive's shares sunk nearly 9% on Friday, analysts were puzzled as to why the electric vehicle maker had to so drastically cut its 2024 production targets over yet another supply chain hiccup. But as Bloomberg reported, the answer lies in a miscommunication earlier this year between Rivian and its supplier, Atlanta-based Essex Verucawa, which has left the car maker without access to copper windings, a core component in the electric vehicle motors that Rivian makes in-house, that according to people familiar with the matter. And as Bloomberg noted, the ongoing shortage has already impacted production of Rivian's R1 pickup and SUV models, as well as the delivery van Rivian makes for Amazon, further tempering expectations for the EV maker. Bloomberg reported that the car maker miscalculated when communicating supply and demand needs with Essex. Rivian's sole supplier of what are essentially copper wires that carry the electric current inside the EV motors. Bloomberg reported, citing the people who asked not to be identified, discussing the confidential matter, that the car maker miscalculated when communicating supply and demand needs with Essex. Rivian's sole supplier of what are essentially copper wires that carry the electric current inside the EV motors. Essex Verucawa, a unit of superior Essex, subsequently committed its machines to support other customers, the people said. Rivian has identified other suppliers capable of providing appropriate replacements, but at too high a cost at such short notice. And the issue helps explain Rivian's decision on Friday to slash its production forecast as much as 18% to between 47,000 and 49,000 electric vehicles this year. Bloomberg noted that Rivian said on Friday that the shortage began to impact production in the third quarter and had become, quote, "more acute in recent weeks." And Bloomberg noted that the situation has also been exacerbated by a lack of backup vendors in its supply chain, the people said. Rivian lacks an immediate alternative to provide the parts after its misstep with Essex, allowing the shortage of a single part to mushroom into a significant bottleneck that has impacted production at its sole assembly plant in downstate normal. And as Bloomberg also noted, larger automakers often rely on multiple suppliers for their most important parts. But Rivian is still producing EVs at relatively low volumes. Bloomberg further noted that analysts have been reassessing their expectations since the surprise announcement. Following the move, Deutsche Bank analysts told investors they are concerned that the shortage could impact deliveries into the first quarter of 2025. They also questioned whether it's possible for Rivian to achieve its goal of reaching a positive gross margin for the final three months of the year. Crane's Mark Weinraub reported that Chicago private equity firm Shore Capital Partners, headed by billionaire Justin Ishpia, raised $1.9 billion for three investment funds. Weinraub reported that the biggest fund, the Health Care Advantage Fund, accounted for $1.4 billion of the total, and Ishpia said Shore Capital planned to buy about eight platform investments with the money. The Health Care Fund will target companies with $100 million to $1 billion in revenue above the firm's traditional acquisitions, which have $5 million to $100 million in revenue. On the opposite side of the spectrum, Shore Capital raised $65 million for its Shore Search Partners Fund, which will focus on executives looking for acquisitions of smaller companies. The firm hopes to fund around 20 deals with the money. Weinraub noted that the third fund, Business Services Fund 2, has $400 million to be used for six to ten platform investments. The fund will target lower middle market companies in IT and tech-enabled services, professional services, compliance, security, and risk management, software and data systems, environmental and waste services, facility and field services, and transportation and logistics. Weinraub further noted that in addition to the platform investments, money will be used to fund add-on acquisitions, an area in which Shore Capital has been active, despite an overall slowdown in the private equity market over the past two years. With the three new funds, Shore Capital will have 16 active funds, bringing the firm's total assets under management to $19.1 billion. That's Crane's Daily Just for Now. Check in on our continuous news feed at ChicagoBusiness.com. Thanks so much to today's guest, Crane's health care reporter, Katherine Davis. You can follow all of our conversations on Apple Podcasts, Spotify, or wherever you like to get your audio on demand. Don't forget to subscribe and please rate and review Crane's Daily Just. Our show is produced by Todd Manley at Earsight Studios. I'm Amy Gooth, thanks so much for listening, and I'll meet you right back here next time.
