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FAST LANE - February
2006
Louisville-based Humana Inc. has signed a letter of agreement to acquire CHA Health, a Kentucky-based health plan with headquarters in Lexington. Terms of the agreement have not been disclosed. Humana is one of the nation’s largest publicly traded health benefits companies, with approximately seven million members. The company has approximately 590,000 commercial members in the Kentucky market, with another 5,000 in Northern Kentucky that are included as part of the Ohio market. “With the addition of the Commonwealth of Kentucky account to Humana earlier this year, and the acquisition of CHA Health, Humana will be working to compete for commercial business throughout Kentucky – especially in areas outside the population centers of Louisville, Lexington and Northern Kentucky, where Humana has traditionally been strong,” said Jeff Bringardner, president of Humana’s commercial operations in Kentucky. Dr. Michael Karpf, University of Kentucky executive vice president for health affairs, said selling CHA will enable UK HealthCare to be “completely focused on our mission of caring for patients.” “With our attention focused squarely on our clinical services,” Karpf said, “we will continue to build our nationally recognized programs, recruit renowned physicians and researchers, provide highly specialized care on our Lexington campus and help local providers enhance their capabilities.” Humana officials have said they plan to keep the CHA operations in place in Lexington and that there are no plans to eliminate any positions at CHA or Humana. CHA employs approximately 150 people at its Lexington headquarters. The transaction is subject to regulatory approval. LEXINGTON
Some 200 of the jobs being cut will come from the Lexington-based company’s headquarters – where it currently employs 3,500 – and will primarily involve sales support and other similar positions. The announcement represents Lexmark’s second wave of cuts at the Lexington plant in approximately six months. Last summer, 275 Lexington jobs were eliminated. The bulk of the jobs affected by the recently announced restructuring will come as part of the company’s decision to close its inkjet cartridge plant in Rosythe, Scotland. That shutdown will result in 700 positions being eliminated. Though Lexmark finished the year with a profit, figures for the fourth quarter showed a steep decline, the result of an industry-wide slump in printer sales. The company’s fourth-quarter net income fell to $82.3 million from $155 million a year earlier. For the year, net income fell to $356.3 million from $568.7 million in 2004. Still, investors viewed the restructuring news as a good sign. On the day of the announcement, January 24, Lexmark stock saw a $5.18 per share gain to close at $51.08 for the day. LOUISVILLE
The job gains show Louisville is rebounding from the national recession and capitalizing on a unified team approach to economic development, one of the major selling points of the 2000 campaign to merge city and county governments, said Louisville Mayor Jerry Abramson. In the three years since the merger, Louisville has landed nearly 12,000 new jobs and attracted almost $850 million of private investment in salaries, construction and equipment, Abramson said. “Our job is jobs,” he added, “and the numbers we are highlighting today show that we are doing our job.” Most of the city’s economic development effort is focused on helping Louisville’s existing businesses prosper and grow, said Joe Reagan, president of Greater Louisville Inc., the metro chamber of commerce. Reagan said that three out of every four new jobs added are from expansions of current Louisville businesses. Of the new jobs created in 2005, the average salary was above the $40,000 level for the first time ever. STATE Gov. Ernie Fletcher has introduced two businessleaders to work in support of “Employee Choice,” an initiative that supports workers’ freedom to choose union representation. Fred Mudge of RJ Corman Railroad Group, LLC will serve as chair of the Kentucky “Employee Choice” campaign. Bill Stone of Louisville Plate Glass Company will serve as vice chairman. State officials are hopeful that the initiative will help create economic opportunity for Kentucky. In recent years, personal income grew at a rate of 37 percent in states with employee choice – compared to 26 percent in states without employee choice, according to the U.S. Department of Commerce. “To not have employee choice is to send economic opportunities – well-paying jobs – to states like Tennessee, North Carolina, South Carolina and Georgia, among others,” Fletcher said. A recent study to measure the economic impact of employee choice in Kentucky found that such a measure would create nearly 9,500 new jobs within three years, with a total personal income of $428 million. The study also found employment grew almost one percent faster in employee choice or right to work states between 1970 and 2000 compared to non-employee choice states like Kentucky, and the percentage of people living in poverty dropped nearly seven percent in employee choice states from 1969 to 2000. “Kentucky’s efforts to raise our quality of life and standard of living will succeed when we increase the education level of our people and remove those regulatory barriers which prevent us from competing in regional and world markets,” Mudge said. “National site-selection consultants from major corporations report that states, such as Kentucky, without employee choice lose out on at least 30 percent of new business opportunities,” Stone said. “That is simply unacceptable.” According to the U.S. Bureau of Economic Analysis, Kentucky currently ranks 41st in per-capita personal income – a ranking that has remained virtually unchanged for more than three decades. LEXINGTON
The company has already downsized the number restaurants it operates. There are currently 359 restaurants; in 2002, there were more than 400 Fazoli’s locations. The new cutbacks involve outsourcing office functions such as accounting, product development and property management, as well as some aspects of menu development. In addition, with the price of real estate continuing to escalate, the company is exploring a new restaurant model and the idea of locating its stores within shopping centers rather than stand-alone restaurants. WINCHESTER A Japanese company that manufactures interlayer and sound acoustic film for automotive glass has announced plans to build a new facility in Winchester. Sekisui S-LEC America, LLC will construct a 129,000-square-foot plant on 23 acres in the Winchester-Clark County Industrial Park. The project represents a $43 million investment. According to Sekisui, the Clark County site’s proximity to its major customers, many of which are located along I-75, and the availability of land in a developed industrial park influenced the company’s decision to build there. Sekisui anticipates the new facility will be operational by fall 2007, employing 80 workers with an annual payroll of over $4 million. The company’s Winchester plant will produce solar control interlayer film for automobile and truck windshields. Unlike traditional filters, the Sekisui film reportedly filters 99 percent of ultraviolet rays as well as heat rays. Sekisui S-LEC America is a subsidiary of Sekisui Chemical Co., Ltd, established in 1947, in Osaka, Japan and employer of more than 17,000 people worldwide. NORTHERN KENTUCKY
Location and accessibility play a major role in making the area attractive to a range of business. For example, Integrated Energy Technologies, a manufacturer of engineered components for turbine engines and fuel cells, moved its corporate headquarters from Evansville, Indiana to Erlanger in July, 2005, in part because the Cincinnati/Northern Kentucky International Airport allowed for greater accessibility to its customers and suppliers across the country. Furthermore, these new jobs reflect a rising wage level, boosting the economy of Boone, Kenton and Campbell Counties. Data gathered from a study commissioned by Tri-ED shows that the Northern Kentucky region has an annual average earnings figure of $54,965 in primary industries, surpassing expectations for new job wages by more than $11,000. “High-paying jobs are moving to our region as companies realize the advantages of having an international airport and the assets that our skilled workforce presents,” said Ralph Drees, Kenton County Judge Executive and Chairman of Northern Kentucky Tri-ED. OWENSBORO
The company began operating in Owensboro in 1991 and heralded the 33,000-square-foot facility as the “world’s first commercial-scale biopharmaceutical production facility.” Among the projects being worked on was the utilization of tobacco plants to create preventative and therapeutic treatments for diseases such cancer and AIDS. At one time, Large Scale discussed plans to eventually create a seven-building complex in Owensboro that would employ more than 200 workers. The company also hoped to have more than 50,000 acres of farmland that would be dedicated to the production of genetically altered corn and tobacco for use by the biopharmaceutical industry. The company’s revenues declined instead. By the end of 2005, with only 17 employees in Owensboro, the company was unable to meet payroll. Large Scale’s presence in Owensboro played a significant role in the decision by the University of Louisville to create a cancer research center there, a project that is still in the design phases. However, Dr. Don Miller, director of the University of Louisville James Graham Brown Cancer Center, told the Owensboro Messenger-Inquirer that Large Scale’s issues will not put an end to the plans. “We’re just moving ahead,” he said. “We believe that the (Large Scale) facility is going to be there, and whoever owns it, when we get ready to make something in tobacco, we’ll have access to them.” SIMPSON COUNTY Cumberland Molded Products, a Tennessee company that manufactures injected molded plastic products, has announced plans to build a new manufacturing plant in Simpson County. The 24,000-square-foot facility will be built on a 12-acre parcel in the Sanders East Industrial Park, joining tenants that include Camping World, New Mather Metals and Toyo. Cumberland anticipates breaking ground on the new plant in early spring. The company plans to begin operations with approximately 25 employees and expects to increase that number to 50 within one to two years, according to officials with the Franklin-Simpson County Industrial Authority. Cumberland is headquartered in Woodbury, Tenn., and manufactures products for clients such as Ford, Mercedes-Benz, Nissan and Toyota. STATE The Kentucky Science and Technology Corporation (KSTC) and the Council on Postsecondary Education have announced 105 awards totaling $6 million for business start-ups and faculty research for the first half of this fiscal year. The council contracts with KSTC to implement Kentucky’s knowledge-based economy programs. All KSTC projects fall within five priority research areas: biosciences, environmental technologies, human health and development, information technology and communications, and materials science and advanced manufacturing. Unique to the program is a profit-sharing feature. Companies that receive awards totaling $25,000 or more are required to pay back twice the amount of the award if their businesses are successful. The money helps replenish the award funds, enabling investments in more technology companies. As a result, Kentucky has received a $394,089 return on investment as of June 30, 2005. Through June 30, 2005, KSTC investments have resulted in 120 new companies, 1,542 new jobs, three new patents, and 56 other invention disclosures and patent applications. “Today’s announcement reflects the momentum that is building around our efforts to create the critical mass of researchers and entrepreneurs that Kentucky needs,” said Dr. Jim Applegate, the council’s vice president. “This partnership is a leapfrog strategy that focuses on wealth creation and is our best hope to improve dramatically the state’s per capita income as the primary indicator of the success of our economic development efforts.” KSTC President Kris Kimel added: “This announcement is not about funded projects...but about investments in the imagination, innovation and know-how of Kentucky’s rural and urban entrepreneurs, college and university scientists and engineers and knowledge-driven companies whose success will form the basis for the state’s future economic growth.” DRY RIDGE
The two-year expansion will add $9 million worth of equipment and 200 more jobs, bringing the total employment of the Dry Ridge plant to more than 500. The positions created by the expansion include jobs for process engineers, supervisors and production (assembly). The company chose the Dry Ridge facility as an expansion site due to its location: Dana’s largest customer based is located in the Midwest. The Ohio-based company is a major supplier of axles, drive shafts, engines, frames, chassis and transmission technologies. The company employs 46,000 people in 28 countries and reported $9.1 billion in sales for 2004. FLORENCE PediaMed Pharmaceuticals has sold the sales organization of its company to Connetics Corporation for $12.5 million in cash. Connetics is a California pharmaceutical company that develops and commercializes dermatology products. The sale enables PediaMed to more fully focus on drug development. PediaMed’s sales force is structured with 80 territories and 11 sales managers who call on 8,000 pediatricians nationwide. Approximately 20 sales employees work in PediaMed’s Florence headquarters and will continue to operate from that facility. “We see significant opportunity for our dermatology products in the pediatric market, particularly acne treatments and low- to mid-potency topical steroids,” said Thomas G. Wiggans, chairman and chief executive officer of Connetics. “This transaction is a cost-effective way to leverage our commercial platform in an important market where we currently have limited presence. The PediaMed team has an outstanding reputation with their called-on pediatricians and has a successful track record detailing prescription acne medicine to these physicians.” PediaMed President and Chief Executive Officer Cameron Durrant will serve as a consultant to Connetics. LEXINGTON
The previous high of $66,694,900 was set during the 1988 January sales, driven by the $46,912,800 generated from the Nelson Bunker Hunt dispersal. “The January sale has come of age,” said Keeneland Director of Sales Geoffrey Russell. “It’s no longer a local, domestic sale, but a continuation of the November (breeding stock) sale. There was a very international contingent of buyers here from Japan, South Korea, Taiwan, South America and Mexico. These are countries which representatives from Keeneland, in conjunction with the Kentucky Thoroughbred Association, have made an effort to visit as part of an emerging markets initiative. We are building relationships with horsemen in these markets, and they are coming to Central Kentucky because it is the horse capital of the world.” During the seven-day auction, Keeneland sold a record 1,624 horses for $72,174,900, an increase of 35.1 percent over last year’s six-day sale. OHIO COUNTY Ohio County has received a $1 million Community Development Block Grant from the state that will be used to assist in the expansion of Tamarlane Industries. Tamarlane provides employment and training for mentally and physically challenged citizens. Begun as a not-for-profit workshop in 1983, the initial work of gardening, greenhouse work and printing evolved into subcontract work for local business and industry. Today, 86 percent of the company’s income is derived from subcontract work. Tamarlane currently employs 89 individuals and has committed to the addition of at least 50 more new jobs within the next two years. The community development block grant will be used to renovate Tamarlane’s existing facility in Ohio County. “Not only does this funding produce jobs for Kentuckians with disabilities, it will help educate others on the positive contributions that these individuals can make,” Gov. Ernie Fletcher said. “This will provide the opportunity for economic development and help those individuals continue to develop skills for life.” As part of the expansion project, a cross-training program will be added in which employees will receive training as fork lift operators, bronco nail operators, chop saw operators and trim saw operators. They will also be trained in pallet nailing, aluminum cutting, aluminum grooving and other skills. HENDERSON Gamco Products Co., which produces parts for Delta and Peerless brand faucets, has eliminated 69 jobs as part of the company’s efforts to contain costs in the face of increased transportation and materials prices. Gamco, a subsidiary of Masco Corporation, is one of Henderson’s oldest companies, having been part of the business community there for 50 years. The lay-offs reduce the company’s workforce to 267. In response to rumors that the plant would be closed, a Masco spokesman told The (Henderson) Gleaner that there were no immediate plans to do so and that if economic conditions improve, Kentucky workers who have been laid off could be asked to return. SHEPHERDSVILLE
Central Bank USA, Bullitt County Bank and Brownsville Deposit Bank will be renamed PBI Bank, while Ascencia Bank will be renamed Ascencia, a division of PBI Bank. The banks operate in Henry, Bullitt, Hart, Edmonson, Butler, Barren, Green and Cumberland counties. In addition, Porter announced the purchase of Louisville-based Associates Mortgage Group. The company will now operate as PBI Associates Mortgage Group and PBI Title Services, LLC. David Kittle, the former owner, will serve as president of the company. BARDSTOWN The American Greetings Corporation has announced plans to move the production of cellophane-wrapped greeting cards to its facility in Bardstown, resulting in the addition of up to 90 positions. The Bardstown plant currently employs approximately 500 workers and is the community’s largest employer. Cellophane-wrapped greeting cards, called cellos, are currently manufactured at the company’s facility in Lafayette, Tenn. However, last October, American Greetings announced its decision to close the Lafayette facility as part of an initiative to make its supply chain more efficient and cost-effective. The process of transitioning production from Lafayette to Bardstown began last month and is expected to take approximately four months to complete. Ohio-based American Greetings also operates plants in Danville and Berea. LOUISVILLE
In his new role, Manassah will plan the creation of a new School of Communication, Mass Media and Culture at Bellarmine. “We are extremely fortunate to have a nationally known, highly successful media executive of Ed’s stature to lead our planning and development in the creation of this important new school,” said Bellarmine President Joseph McGowan. “In more than 30 years as a top communications executive at seven newspapers across the country, and with all his related professional and civic activities, he is perfectly positioned to help us bring this enterprise to a brilliant fruition. Ed has the intellectual, organizational and financial expertise, and the contacts and connections, to help us make this happen.” Manassah will seek a planning grant, endowment and funding for the school. He will also help to assemble and direct a task force of internal and external experts in the field “to develop a proposal for creating a nationally distinguished center for the study of media, popular culture, their interaction with and impact on society,” McGowan said. Tapping the expertise of executives is an approach McGowan has utilized to successfully launch other key initiatives. Executives-in-residence developed eMain’s CITÉ, the Center for Interdisciplinary Technology and Entrepreneurship, team teaching of ethics across the curriculum within the W. Fielding Rubel School of Business, and a program to improve diversity and multiculturalism at the university. INDIANA
Boston Scientific, headquartered in New Jersey, develops and produces medical devices that are utilized in a broad range of medical specialties. Indianapolis-based Guidant develops, manufactures and markets medical devices such as pacemakers and defibrillators. Despite being beset with dozens of lawsuits involving the safety of some of its products, both Boston Scientific and Johnson & Johnson were intent on acquiring Guidant, with hopes of gaining a bigger share in the growing cardiac management market. However, when Boston Scientific upped its bid to $80 per share, Johnson and Johnson – which had last offered $71 per share – opted to let its bid expire, saying that to proceed beyond that would not be in the best interest of its shareholders. OHIO
Company officials said that while Lord & Taylor has a strong customer following, it did not fit with Federated’s strategy to build on the Macy’s and Bloomingdale’s brands. The company expects to complete a transaction by the end of the year, although it did not make public who the buyer might be. Federated also announced that it is closing five of its 31 distribution centers as part of a nationwide consolidation of its distribution network. Facilities in Connecticut, Maryland, Colorado, Oregon and Utah are slated to close during 2006. However, the acquisition of May will result in the addition of new jobs at Federated’s Cincinnati headquarters. The company currently employs approximately 550 employees there and anticipates adding another 200 by the end of the year. The company has also announced plans to build a 595,000-square-foot facility in Portland, Tenn. - approximately 30 miles north of Nashville – that will serve to enhance its growing Internet and mail-order businesses. The new distribution center is slated to be operational by spring 2007 and will eventually employ more than 500 people.
Business Briefs BARDSTOWN
BOWLING GREEN
COVINGTON
DANVILLE
DEVON
EASTERN KENTUCKY
ERLANGER
FLORENCE
FORT WRIGHT
FRANKFORT
FRANKLIN
GALLATIN COUNTY
HEBRON
LEXINGTON
LOUISVILLE
MAYSVILLE
MERCER COUNTY
MORGANFIELD
OWENSBORO
PERRYVILLE
PIKE COUNTY
SHELBY COUNTY
SHELBYVILLE
WINCHESTER
STATE
INDIANA
OHIO
TENNESSEE
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Copyright 1996-2006, by Kentucky Business Online. All rights reserved. Editorial content
is copyright 2006, Lane Communications Group The Lane Report is a trademark of Lane Communications Group. All other trademarks are the property of their respective owners. |
CHA Health was founded in 1991 by Kentucky medical providers and now serves approximately 96,000 members. The University of Kentucky is the company’s majority shareholder. Other owners include Appalachian Regional Healthcare, Mary Chiles Hospital, Our Lady of Bellefonte Hospital, Pattie A. Clay Hospital and Rockcastle Hospital, St. Luke Hospitals.
Lexmark International has announced a companywide restructuring plan that includes eliminating some 825 jobs, changes to its pension plan and the closure of one of its plants. In addition, some 525 jobs will be transferred from various locations worldwide to other sites in countries with lower costs. 
Other changes include plans to freeze Lexmark’s U.S. pension plan, beginning in April. The plan is expected to save the company up to $50 million this year and $80 million per year after that. Money already in the plan will be frozen and will continue to earn interest. Lexmark will, however, increase its corporate 401 (k) contribution. The company will now put up a 100 percent match for the first 6 percent contributed to the plan by employees. It previously offered a 50 percent match. 
Louisville landed more than 5,200 jobs in 2005, marking the most successful year for job creation since 2000.
Lexington-based Fazoli’s Restaurants Inc. is trimming its corporate staff in an effort to boost the company’s profitability. The cutbacks will eliminate 32 corporate positions, leaving approximately 50 employees at Fazoli’s headquarter offices in Lexington. 
Figures released by The Northern Kentucky Tri-County Economic Development Corporation (Northern Kentucky Tri-ED) indicate that the region saw more than $412 million in new capital investments and nearly 3,000 new jobs in 2005. Furthermore, 41 new and expanding projects were announced last year, the second highest since 1987. 
California-based Large Scale Biology Corporation has closed its biomanufacturing plant in Owensboro and filed for Chapter 11 bankruptcy. 
Dana Corp.’s plan to consolidate some of its operations is resulting in the expansion of the company’s Dry Ridge facility, which produces light-truck axles.
Keeneland’s January Horses of All Ages Sale established a new January gross sales record of $72,329,100.
Porter Bancorp has announced a decision to consolidate its four independent Kentucky bank charters into a single bank charter.
Edward E. Manassah, who has served as the president and publisher of the (Louisville) Courier-Journal since 1993, has announced his plans to retire from the job in order to accept a new position as executive-in-residence at Bellarmine University.
After weeks of being at the center of a bidding war, Guidant Corporation has entered into a merger agreement with Boston Scientific. Under the terms of the agreement, Boston Scientific will acquire all outstanding shares of Guidant for approximately $27 billion. 
Cincinnati-based Federated Department Stores has announced that it will divest its Lord & Taylor division, the $1.6 billion group of upscale stores it acquired as part of its May Company purchase in 2005. 
Heaven Hill Distilleries, Inc. has introduced a new liqueur to its stable of highly regarded spirits. PAMA Pomegranate Liqueur is currently being sold in New York, Chicago, Miami and Southern California and will become available nationwide this spring. The liqueur was recently selected by Entrée magazine (the food industry magazine for New York/New Jersey) as a top pick for 2006. 
Ashland Casting Solutions, a business group of Ashland Specialty Chemical, is in the process of expanding its service in India, a region that is proving to be an important emerging market for the company. Ashland’s expansion into India’s castings market will be implemented in phases. Sales offices are now operating and will be followed by planned local manufacturing in 2008.
Givaudan, a Swiss company that produces flavorings for food products, will be adding more jobs to its Devon (Boone County) facility as a result of the company’s decision to close its U.S. production sites in Connecticut and Wisconsin. Operations from those plants are being moved to Givaudan facilities in Cincinnati and Devon, where the company has the capacity needed to handle the increased work load. The consolidations are expected to be complete by the middle of 2007. No information has yet been released as to how many jobs will be added to the Kentucky and Ohio plants as a result of the consolidation. The company currently has approximately 600 employees in the Cincinnati/ Northern Kentucky area. 
Erlanger-based Toyota Motor Manufacturing North America, Inc. has announced that the company produced 1,558,828 vehicles and 1,295,227 engines at its North American manufacturing facilities in 2005. Both figures represent new record production levels for Toyota, which began North American production in 1985 and has been growing ever since. The Toyota manufacturing plant in Georgetown – which handles production of the company’s Avalon, Camry, and Solara models – produced 509,127 vehicles.
Louisville-based Republic Bank & Trust Company has opened a new loan production office in Ft. Wright, bringing the bank’s total number of banking centers to 35. The center will offer both home mortgage and commercial loan products. The office is managed by Steve Brunson, vice president and chief operating officer. 
The parent company of PIC, a supplier of pig breeding stock that has its North American headquarters in Franklin, has been acquired by Genus plc. Officials with Genus, a bovine genetics firm based in Great Britain, say that there is no customer overlap between Sygen International and Genus and there will be no change in the way that Sygen, or PIC, will operate. The acquisition transforms Genus into the largest animal genetics company in the world. 
Marriott’s Griffin Gate Resort has completed a $12.5 million renovation, adding a new color scheme, luxury bedding and elegant new bathrooms. The resort is Kentucky’s only four-star, four-diamond resort. 
Bluegrass Brewing Company has partnered with the McLain & Kyne Distillery to produce Jefferson’s Reserve Bourbon Barrel Stout, a dark beer that is infused with the flavor of whiskey. The flavor is imparted by aging the beer for several months in barrels that have previously held McLain & Kyne’s Jefferson Reserve bourbon. The two companies are sharing both the expenses and the profits connected with the new product. McLain & Kyne Distillery is a small, family-owned distillery located in Bardstown that prides itself on producing very small batches of bourbon to ensure quality. Bluegrass Brewing is a Louisville microbrewery/brewpub. The new Jefferson Reserve Bourbon Barrel Stout will be distributed to liquor stores, groceries and bars within the next month, with four-packs priced at $10-16. 
Louisville-based Tumbleweed Restaurants, Inc. has signed an agreement with a North Carolina restaurateur to develop 21 new locations throughout the state. The agreement calls for the first five restaurants to open by 2009, concentrated in the Raleigh- Durham area. Tumbleweed operates more than 55 restaurants in eight states and five foreign countries. 
Churchill Downs Inc. has joined with Magna Entertainment Corp. and Racing UK to develop a subscription television channel that will broadcast races to the United Kingdom and Ireland from Churchill and Magna racetracks, as well as other North American and international tracks. The channel could be launched as early as this summer, according to a statement from Churchill Downs. Magna owns and operates racetracks, wagering operations and a 24-hour horse racing television network. Racing UK is a media rights management company owned by 31 British racecourses.