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FAST LANE - January
2005
The new design center is being established to handle work for Sikorsky Aircraft Corporation, a world leader in the design, manufacture and service of advanced helicopters for commercial, industrial and military uses. Belcan, which is headquartered in Cincinnati, has been providing engineering services to Sikorsky Aircraft for more than three years with an off-site engineering and technology development center. Belcan will perform targeted engineering detailed design activities in support of projected growth in Sikorsky’s domestic and international development program requirements. “This is a great opportunity to continue developing our relationship with Belcan Engineering Group,” said Mark Miller, Sikorsky’s vice president of research and engineering. “Belcan’s expansion into Lexington, Kentucky is fully aligned with our strategy of utilizing domestic engineering design centers for targeted airframe and subsystem detail design activities. The work performed at the Lexington design center will be complementary to the system integration, vehicle definition and dynamic systems design activities ongoing at our home office in Connecticut, and will be a key element in meeting anticipated growth in engineering requirements.” Belcan plans on working closely with the University of Kentucky’s College of Engineering to cultivate opportunities for graduates. “Building partnerships like this is exactly how we all move forward,” said University of Kentucky President Lee Todd. “Belcan, the university and the state all benefit from this type of cooperation. It creates opportunities for our students and faculty, Belcan capitalizes on UK’s talents and resources and the state’s economy grows from the addition of significant jobs.” LOUISVILLE A St. Louis steel tube manufacturer has announced plans to purchase 50 acres of land in the Jefferson Riverport Park on which to build a 400,000-square-foot plant. Maverick Tube Corporation expects to begin construction on the plant early this year, with completion slated for the end of 2005. The company’s total investment in the facility, including the land, building and equipment, is estimated at approximately $63 million. Last fall, Maverick received preliminary approval for up to $7.5 million in state tax credits over 10 years from the Kentucky Economic Development Finance Authority. The company’s new plant – which will consolidate steel conduit production currently handled at Maverick facilities in Michigan, Ohio and Georgia – will employ some 240 workers with an average salary of about $32,000. The total annual payroll is expected to be nearly $7.8 million. Maverick officials said the company elected to close its Michigan and Georgia plants and move to Louisville in order to improve access to customers and reduce freight and operating costs in addition to creating improved efficiency and production capacity. The Youngstown, Ohio plant will remain open, producing other steel products. BOWLING GREEN Pan-Oston, a supplier of custom metal and wood store fixtures, has announced plans to move its headquarter operations to Bowling Green, where it will expand its existing operations. The company is currently headquartered in Glasgow. The expansion will create an additional 125 new jobs, bringing the company’s total employment in Bowling Green to 340. Pan-Oston will be investing approximately $6.5 million to acquire the former Treasure Quest/Service Merchandise property in north Warren County as well as additional automated fabrication and painting equipment. The expansion comes as a result of the company’s increased business with current customers – which include major retailers such as Wal-Mart, Target, Sears and Michaels – as well as the addition of wood technology to its historical metal fabrication technology. In addition to the new facility in Bowling Green, Pan-Oston also operates a facility in Peterborough, Ontario, which serves the company’s Canadian customer base as well as customers in the northeastern United States. Pan-Oston is owned by Houchens Industries, a Bowling Green-based company that owns 40 Houchens Markets as well approximately 200 Save-A-Lot stores, 40 Jr. Foods convenience stores and 23 Tobacco Shoppe cigarette outlets. Houchens, with over $2 billion in annual sales and a staff of 10,000, is 100 percent employee owned, making it one of the largest such companies in the nation. LEXINGTON
“We are putting forth a bold vision that will move UK HealthCare into the upper echelons of academic medical centers by expanding research and strengthening our nationally recognized clinical specialty programs,” said Dr. Michael Karpf, UK executive vice president for health affairs. “It will also enhance the university’s mission as a land-grant institution by working in partnership with rural providers and hospitals to bring additional specialized care to the communities we serve.” Highlights of the plan include:
The cost of the patient care facility is currently estimated between $330 and $375 million. The initiatives will be funded through existing hospital revenues and a $250 million bond issue financed by UK HealthCare. The bond issue will require state legislative approval. Karpf said the hospital is in a strong financial position to handle the capital construction costs, noting that UK HealthCare has an excellent credit rating and that UK Hospital has experienced a significant increase in clinical activity, with discharges up 13 percent from the first quarter of fiscal year 2004. During the peak of construction, 1,600 jobs will be created. When construction is finished, there will be 1,300 additional jobs created at the medical complex, with the potential for more jobs as the research portfolio of the university expands. LOUISVILLE As part of a strategy to enhance its presence in South Florida, Humana Inc. is acquiring CarePlus Health Plans of Florida as well as its 10 Florida medical centers and a pharmacy management company. CarePlus provides Medicare Advantage HMO plans and benefits to nearly 50,000 Medicare recipients in Miami-Dade, Broward and Palm Beach counties. Humana currently has more than 230,000 Medicare Advantage members statewide. The transaction is expected to close within the first quarter of this year. The company anticipates seeing immediate financial benefits, with added earnings of 15 to 18 cents per diluted share during the first year, including the impact of integration costs incurred. The company now expects full year 2005 diluted earnings per common share to be in the range of $2.10 to $2.13. “CarePlus is a well-known Medicare Advantage plan in the South Florida area,” said R. Eugene Shields, Humana senior vice president for government and senior products. “In addition, it has a strong and positive presence among the area’s Hispanic population, particularly in Miami-Dade County.” Louisville-based Humana is one of the nation’s largest publicly traded health benefits companies, serving about seven million medical members located primarily in 15 states and Puerto Rico. LEXINGTON
AHS is a private company headquartered in Brentwood, Tennessee that owns/leases and operates seven hospitals in Georgia, Kentucky, Tennessee, Arkansas and Louisiana, including two critical access hospitals. The company is led by CEO A. Ronald Turner, a Kentucky native and graduate of the University of Kentucky. Turner served on the board of the Business Partnership Foundation of the UK College of Business and Economics from 1988 through 1994 and is currently a member of the board of visitors of the UK Martin School of Public Policy and Administration. He has also served on the UK National Alumni Board. According to AHS, the company intends to implement a business plan at Samaritan Hospital that includes a joint venture partnership with local physicians. Turner said AHS plans to hire all of Samaritan Hospital’s employees at comparable salaries, benefits, job duties and responsibilities, and will honor prior length of service. In addition, AHS plans to keep the current executive team in place, including hospital CEO Frank Beirne. LEXINGTON
In addition, the National Horse Center, also located at the Horse Park, produced an economic impact of some $100 million. Since its inception more than 30 years ago, the Kentucky Horse Park has become one of the world’s premier equine entertainment facilities, attracting international events and visitors while sweetening the state’s economy by hundreds of millions of dollars. Several projects in the works could bring even higher visibility to the park. The park is bidding to host the 2010 World Equestrian Games, a prestigious event that attracts hundreds of thousands of visitors and would have an estimated $90 million impact on Kentucky’s economy. Gov. Ernie Fletcher has also announced that the state is actively seeking a partner to build a hotel at the Horse Park and is supporting the development of a new 5,000-6,000-seat, climate-controlled equestrian arena for the park. Both projects would further enhance revenues for the park. “The Kentucky Horse Park is on the eve of rocketing to an entirely new level,” said John Nicholson, executive director of the park. “It will continue to be an important travel destination, but it will also be, without question, the leading equestrian competitive facility in the world as the next pieces of the puzzle are in place.” LOUISVILLE The James Graham Brown Foundation has committed $15 million – matching the largest gift in University of Louisville history – to the James Graham Brown Cancer Center’s “Finding Answers to Cancer” capital campaign. The gift, to be spread over five years, matches a $15 million gift from the foundation in 2001 and will significantly boost the center’s drive to achieve national prominence. The cancer center announced the “Finding Answers to Cancer” campaign Oct. 27 with a goal of raising more than $41 million for strategic goals designed to position it for National Cancer Institute designation as a comprehensive cancer center. As the only comprehensive cancer center in the area, the Brown Cancer Center would be able to provide patients with the latest cancer treatments, receive guaranteed annual research funding that would help researchers and physicians deliver new treatments to patients, and provide a catalyst for economic development in the region as more patients and physicians are attracted to Louisville. LEXINGTON
First Bank has been struggling to recover financially since losing some $5 million in 2003 after falling victim to a residential loan scam in Indianapolis. In September, the Federal Deposit Insurance Corp. and the Kentucky Office of Financial Institutions issued orders that, among other things, required the company to meet certain financial goals by March 2005. The acquisition by Central Bancshares resolves those financial issues, while giving the Lexington company the foothold in the Louisville market that it has been seeking. Central Bancshares, which is the holding company for Central Bank & Trust Co., Central Bank FSB, Salt Lick Deposit Bank, Central Bank Insurance Agency Inc. and Central Investment Center Inc., currently has 19 banking centers in the central Kentucky area. As of September 30, the company had assets of $1.3 billion. SOUTHEAST KENTUCKY
Known as blue gem, the coal is found only in a small area of the Cumberland Mountains along the Kentucky-Tennessee border. In order to meeting the growing demand of the product overseas, Blue Gem Mining Co., a subsidiary of a Norway firm, acquired TECO Coal’s blue-gem operations in Whitley and Knox last year. With the increased demand has come a need for more miners, according to Steven Gardner, CEO of Lexington-based Specialty Coal Processing. In addition to miners, the company is also needing mechanics, electricians, engineers and surveyors to help get the work done. Mining blue gem also presents unique challenges because it is so thin and because the mines themselves are extremely tight, ranging in height from only 19 to 24 inches. As a result, however, it also brings a higher price, averaging approximately $50 more per ton than other coal mined in the area. STATE Kentucky has filed for approval from the federal government to join a multi-state drug purchasing pool in an effort to negotiate better discounts and lower the cost for the state’s Medicaid program. The commonwealth’s participation in the program is expected to save $42.2 million annually. Kentucky is currently facing a $526 million shortfall for the 2004-2005 fiscal year in its Medicaid program. Kentucky is joining eight other states (Michigan, Vermont, New Hampshire, Nevada, Maine, Hawaii, Arkansas, and Montana) in the National Medicaid Pooling Initiative, the nation’s only Centers for Medicare and Medicaid Services-approved pool of its kind. The pool began last April and currently has a combined purchasing power of $2 billion. “This will help Kentucky hold down the rising cost of pharmaceuticals by increasing the states supplemental rebates,” said Gov. Ernie Fletcher. “It will also help Kentucky avoid doing what other states have had to do – which is remove vulnerable and needy persons from the Medicaid rolls and reduce services.” BOWLING GREEN Western Kentucky University’s new $20 million Complex for Engineering and Biological Sciences is expected to not only serve as a hands-on learning laboratory for students but as an economic development tool for the region as a whole. Western began offering bachelor’s degrees in engineering in the fall of 2001 after the Council on Postsecondary Education approved joint engineering programs between WKU and the University of Kentucky and the University of Louisville. Western’s program is awaiting accreditation from the Engineering Accreditation Commission of the Accreditation Board for Engineering Technology. The program currently has an enrollment of 300 students with that number expected to grow. The engineering program is already paying dividends for area industries, such as the General Motors Corvette plant, Trace Die Cast, Sumitomo Corp., Dana Corp., Span Tech Inc., Bowling Green Municipal Utilities and Kentucky Department of Transportation. “A tremendous manufacturing base around south-central Kentucky was unable to hire graduates from other engineering programs in the state,” Dr. John Reis, head of WKU’s engineering department. “This inability to fill engineering positions made it more difficult for those industries to remain competitive. One of the primary purposes for the creation of the engineering programs was to create engineering graduates who would stay here and fill those positions.”
OHIO
The Orrville, Ohio-based company has sold its industrial bakery ingredients business to Baldwin Richardson Foods Cos., a privately owned food company headquartered in Chicago. Smucker has also entered into a separate letter of intent to sell its dairy ingredients business – currently handled at Smucker’s Oxnard, California and Orrville, Ohio facilities – to Sabroso Company, a producer and distributor of fruit products headquartered in Medford, Oregon. The sale is expected to close by the end of the company’s fiscal 2005 third quarter; however, Smucker will continue to operate the Oxnard plant as a fruit processing facility. In addition, the family-owned company will close its plant in Salinas, California and plans to redistribute the production its facilities in Orrville and Memphis, Tennessee. The J. M. Smucker Company has over 4,500 employees worldwide and distributes products in more than 45 countries. The company operates two facilities in Kentucky, with plants in Lexington and Scottsville. INDIANA Johnson & Johnson has announced plans to acquire Indianapolis-based Guidant Corporation for $25.4 billion. Guidant and Cordis Corporation, a Johnson & Johnson Company, will become part of a newly created cardiovascular device unit within Johnson & Johnson. The newly created franchise will be named Guidant while the Cordis name will be retained for select businesses within the franchise. Guidant business units include cardiac rhythm management (e.g. pacemakers and implantable cardioverter defibrillators), vascular intervention, cardiac surgery and endovascular solutions, businesses that will complement Johnson & Johnson’s products and services in cardiology and medical devices. J&J officials noted that Guidant’s technology platforms, such as implantable micro-electronics, could be applied to current and future Johnson & Johnson products as part of future efforts to create innovative and advanced technologies in other health care areas, such as the neuromodulation market. For Indianapolis, however, the news is not as rosy. The acquisition will result in the loss of a Fortune 500 company and up to 170 corporate jobs.
Business Briefs BOWLING GREEN
COVINGTON
CRITTENDEN COUNTY
HIGHLAND HEIGHTS
IDLEWILD
IVEL
LEXINGTON
LOUISVILLE
MORGANFIELD
MURRAY
NICHOLASVILLE
NORTHERN KENTUCKY
OWENSBORO
PRESTONSBURG
WALTON
STATE
INDIANA
OHIO
TENNESSEE
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Copyright 1996-2005, by Kentucky Business Online. All rights reserved. Editorial content
is copyright 2005, Lane Communications Group The Lane Report is a trademark of Lane Communications Group. All other trademarks are the property of their respective owners. |
Belcan Engineering Group is opening a new engineering design center in Lexington that could employ up to 300 engineers by the end of the year. 
UK HealthCare officials have released details of a strategic plan designed to help move the state’s flagship university toward top-20 status, enhance specialized medical services and strengthen the rural health care system while also stimulating regional economic development growth. 
A notice of intent has been filed by Associated Healthcare Systems (AHS) to acquire Samaritan Hospital, a 336-bed Lexington facility currently owned by Ardent Health Services. 
Preliminary financial figures for 2004 indicate that the impact of the Kentucky Horse Park on the commonwealth’s economy is approximately $160 million, with more than $17 million of that generated in taxes.
Lexington-based Central Bancshares Inc. is expanding into the Louisville market with the acquisition of First Bank Inc. First Bank has been in operation since 1996 and has three locations in the Louisville area. The locally owned company has assets of approximately $193 million.
Specialty Coal Processing expects to open five coal mines within the next 24 months in the Knox and Whitley county area to retrieve a unique type of coal used in the refining of silicon. Silicon is used extensively in the computer chip industry and is in demand both domestically and internationally. 
The 72,000-square-foot facility, scheduled to open this month, will house the engineering department (civil, mechanical and electrical programs) on the first and second floors with the biotechnology and biodiversity centers on the third floor. Thanks to more than $2 million in federal earmarks, students and faculty will have access to state-of-the-art high-tech equipment. 
The J. M. Smucker Company has announced plans to sell its U.S. industrial business, discontinue operations at a California plant, and restructure its U.S. distribution operations in an effort to improve its cost base and service levels. 
The City of Covington and the Madison Event Center are considering creating a retail “wedding district” similar to one that has seen tremendous success in nearby Reading, Ohio, a suburb of Cincinnati. Reading has developed what is essentially “one-stop shopping for weddings,” with more than 30 wedding-related businesses within close proximity to one another. Covington is hoping to assemble a similar group of retailers to develop what they are calling The Madison Wedding District of Covington. In order to accommodate the plan, work is already under way to renovate a two-story building on Covington’s Madison Avenue that could become a “wedding mall.” Organizers hope to attract 10 to 15 different retailers to the mall. 
Omnicare, Inc. has acquired Clinimetrics Research Associations Inc., a privately held clinical research firm headquartered in San Jose, California. Terms of the transaction were not disclosed. Covington-based Omnicare is a leading provider of pharmaceutical care for the elderly, serving long-term care facilities in 47 states and the District of Columbia. Clinimetrics provides comprehensive clinical research services with an emphasis on biotechnology and early stage pharmaceutical companies. “Given that approximately 70 percent of its clients are biotechnology companies, Clinimetrics will add resources and expertise that will serve to strengthen Omnicare’s clinical research efforts in this arena,” said Joel F. Gemunder, president and CEO of Omnicare. In addition, said Gemunder, the acquisition increases the size of Omnicare’s clinical research business by approximately one-third. 
General Cable Corporation has signed an agreement to purchase Comteq, a Massachusetts-based company that specializes in electronic cables and high-end data products. The acquisition, for which General Cable will pay between $5 and $10 million, will enable the company to “expand its position and capabilities in a number of high value-added product areas,” said Greg Lampert, vice president for the Highland Heights firm. General Cable plans to continue operations at the Massachusetts location. The deal is expected to close during the first quarter of this year. 
Arrington’s Inn Traveler magazine has named First Farm Inn in Idlewild as one of the top 15 bed and breakfast inns in North American for rest and relaxation, making it one of the top three percent of bed and breakfasts and country inns throughout the United States and Canada. The 1870s farm house is set on 21 acres in Western Boone County, where Indiana, Ohio and Kentucky meet, and offers amenities such as horseback riding and in-room massages by a licensed therapist. 
Two of Lexington’s largest hotels were recently placed under new ownership. The Marriott Griffin Gate Resort has been purchased for approximately $50 million by DiamondRock Hospitality Co., a Maryland-based real estate investment trust company. The 408-room resort, which has recently undergone a $10 million renovation, will continue to be operated as a Marriott hotel. The Hyatt Regency Lexington is part of a $366 million deal that involves the sale of 25 Wyndham International hotels to a partnership comprised of a private investment fund managed by Goldman Sachs and affiliates of Highgate Holdings. The 365-room downtown hotel is expected to remain under the Hyatt name, but will likely undergo an extensive renovation.
Murray State University will receive $300,000 in federal funding to benefit a math and science teaching program. The center is designed to develop new projects that incorporate new teacher-preparation courses and laboratory experiences as well as other programs that encourage the study of math and science.
The governing board of the Northern Kentucky Convention & Visitors Bureau (CVB) has approved the implementation of a regional tourism entity. Under the plan, the Northern Kentucky CVB will contribute one percent of the hotel bed tax collected from Boone, Kenton and Campbell County hotels annually, which, based on past history and current estimates, would amount to approximately $900,000. Northern Kentucky Convention & Visitors Bureau President Tom Caradonio applauded the board’s decision, stating that “marketing our area as a region makes sense, because we know together our combined resources are much more effective and efficient.” The momentum for the regional tourism push gained steam last year when consulting group C.H. Johnson recommended such action as a way for the region to best capitalize on garnering its share of the $550 billion U.S. tourism industry.
National City Bank has signed a definitive agreement to acquire Charter One Vendor Finance, LLC, an Illinois-based subsidiary of Charter One Bank. Terms of the agreement were not disclosed. Charter One Vendor Finance provides lease and debt financing to major vendors in addition to financing equipment and real estate for franchisees. The company will be renamed National City Vendor Finance, but will retain its existing senior management team. The deal is expected to close this month.