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FAST LANE - April
2004
Ashland Inc. has announced that it will sell its 38 percent interest in Marathon Ashland Petroleum LLC (MAP) to joint venture partner Marathon Oil Co. The deal, valued at $3 billion, represents Ashland’s departure from the core business on which it was founded 80 years ago. MAP currently ranks as the nation’s fifth-largest gasoline refiner and marketer. “This transaction represents the best opportunity for Ashland and its shareholders to capture the value that has been created through this joint venture,” said James J. O’Brien, Ashland’s chairman and chief executive officer. “While we have been pleased with both the performance of the joint venture and our relationship with Marathon, the transfer of our interest in MAP to Marathon is an important step in achieving our strategic objectives.” Under the terms of the agreement, Ashland’s shareholders will receive approximately $4.50 in Marathon stock for each share of Ashland stock. Though O’Brien has acknowledged that future acquisitions are likely, the immediate focus will be on the company’s existing core businesses. Ashland’s operations include road construction, specialty chemicals, lubricants, car-care products, chemical and plastics distribution and transportation fuels. Brands include Valvoline motor oils, Eagle One appearance products, Zerex antifreeze and Pyroil performance products. So far, that approach has been met with hearty approval with investors: Ashland’s stock has seen a 75 percent increase over the past year as a result of O’Brien’s refocus on the company’s core businesses, combined with appropriate cost-cutting. Assuming the necessary shareholder and government approvals, the transaction is expected to close by the end of 2004. LOUISVILLE
The news was music to the ears of city and state economic development officials, who made a strong bid for the company. With the announced departure of major employers such as Brown Williamson Tobacco, Frito Lay, Providian Financial and Sears, the city was faced with seeing hundreds of workers left jobless. In an effort to stem the losses, the state in January approved $20 million state tax incentives over 10 years to lure Citicorp to Louisville. Citicorp already employs more than 500 people at its existing Louisville facility, which it acquired late last year as part of the company’s $32 billion purchase of Sears’ credit card portfolio. The company plans to build a new 167,000-square-foot facility behind the existing center that is expected to be complete by the end of the year. According to company officials, the average salary for new Citicorp employees will be around $32,000, resulting in an annual payroll of $47 million. Citicorp is part of Citigroup, Inc., which ranks as the one of the world’s largest credit card companies. Citigroup also operates a call center in Florence, Kentucky that employs around 3,200. STATE Citing aging facilities, inefficient machinery and location factors, Jockey International has announced plans to close its three textile plants in Kentucky. The company operates a bleaching and dying plant in Carlisle with 137 employees, a cutting and storage facility in Mt. Sterling that employs 74, and a sewing operation in Maysville with 229 workers. Officials with Wisconsin-based Jockey, which produces undergarments, say the decision is part of the company’s plan to consolidate its operations, utilizing more modern and efficient plants in Georgia, North Carolina and the Caribbean. Though exact numbers have not been announced, those facilities will be adding more positions, say Jockey officials, and Kentucky workers could have an opportunity to relocate. Operations at the three Kentucky plants will begin being phased out in June, with production coming to a complete close by the end of the year. GEORGETOWN
The award was presented to VASCOR Corp. in recognition of its “outstanding contribution to the U.S. automotive logistics sector and in particular its commitment to the support of Toyota’s production system at its North American plants. “Getting parts to the production lines just as they’re needed demands meticulous planning and execution along with solid cooperation, all of which VASCOR has achieved with quality,” said Kieran Ring, CEO of Global Institute of Logistics. “VASCOR’s contribution to Toyota in Kentucky has contributed to Toyota being recognized as one of North America’s most efficient vehicle manufacturing plants.” VASCOR (an acronym for “Value Added Service Corporation”) is a joint venture between APL Logistics and Fujitrans. Headquartered in Georgetown, the company provides value-added supply chain services to a variety of automotive industry companies in North America through more than 60 locations in the U.S., Canada and Mexico. The company began operations in 1988, coinciding with the start of production at the Toyota Motor Manufacturing Kentucky plant. The company initially concentrated on its Toyota contract, but today, VASCOR’s methods and systems have proven so successful that it provides a wide range of supply chain service to other automotive manufacturers and suppliers as well. LEITCHFIELD FACED with declining profitability, the Robert Bosch Tool Co. is closing its plant in Leitchfield and plans to move the facility’s operations to China. The shutdown will result in the loss of 175 workers. The news is particularly bad for a county that currently has an unemployment rate of nearly eight percent. Company officials regretfully noted that increased competition from overseas has made it virtually impossible to profitably produce tool parts in the U.S. The Leitchfield plant manufactures circular saw blades. Bosch also operates a plant in Elizabethtown, where a staff of 100 produces electric screwdriver bits. Though that plant has experienced layoffs in the last year as the company moved its packaging operations to Mexico, Bosch officials said that for now, there are no plans to close the facility. The company will, however, continue to assess plant profitability, they added. Layoffs at the Leitchfield plant will begin in August and will continue until the final closing next March. LOUISVILLE
Weighing in at some eight million pounds, the new press will be one of the largest of its kind in the world, according to Ford. When the expansion is complete in 2006, the company will run both presses around the clock, with employees working 12 hours per day, three to four days a week. Most importantly, say Ford officials, the company will be able to provide virtually all the major parts needed for the vehicles it produces, rather than relying on other suppliers. The new employees needed at the plant will come from other Ford plants where the company has been reducing operations as part of a worldwide reorganization. The announced expansion represents a significant commitment in terms of Ford’s intent to remain in Louisville. Last year, the company invested $50 million to expand the plant’s paint shop and renovate the body shop and chassis line. WOLFE COUNTY Several years of declining sales combined with increased foreign competition have led to the decision by a Cincinnati bedding company to close its manufacturing facility in Wolfe County. Whiting Manufacturing employs 115 workers at its Wolfe County plant, which produces comforters and other bedding items for national retailers. The facility was opened in 1991 as a joint industrial development project undertaken by Wolfe, Morgan and Magoffin counties. Since then, however, much of the work conducted in the textile industry has been sent overseas, where labor costs are less expensive. The Whiting plant pays an average of $7 per hour, with a total payroll of some $1.5 million. Aside from its corporate headquarters in Cincinnati, the 200,000-square-foot Kentucky manufacturing plant is the only facility the company owns, so consolidation is not an option, say Whiting officials. In fact, the company brought more work to its Kentucky plant in 2000, when it closed its Cincinnati facility and consolidated operations in Wolfe County. The company plans to close the Kentucky plant within the coming weeks. LOUISVILLE SHPS Holdings, Inc., a Louisville-based healthcare and employee benefits outsourcing provider, has acquired National Health Services Inc. (NHS) for $10 million. NHS, a care management services company with approximately 450 employees, is also headquartered in Louisville. “There is a natural synergy between these two companies – a combination that will create a strong national presence in care and demand management,” said SHPS CEO Dave Nelson. “ We are also very excited that NHS is located in Louisville. It contributes to the city’s position as a vibrant location for national healthcare companies.” The acquisition of NHS will enable SHPS to expand its healthcare segment, which makes up approximately a third of the company’s annual revenue. The combined company’s 750 clinical professionals include the largest independent employment base of registered nurses working in care, demand, and utilization management. With the acquisition of NHS, SHPS will provide benefit administration and total population healthcare management services for more than 900 customers in both the large and mid-size market, including employers, carriers/health plans and government agencies. As such, SHPS is the only firm in its industry that combines care management and benefits administration into one platform, and is one of the few firms with a large government and union client base. SHPS Holdings has also announced plans to merge with Landacorp, an Atlanta-based provider of population health management solutions. The transaction is valued at approximately $56 million. However, a Landacorp Inc. shareholder has filed a lawsuit in an attempt to derail the merger, claiming that the deal benefits only the company’s executives and directors but is “woefully inadequate, unfair and clearly does not represent the true value of the company.” The suit seeks to put the deal on hold until the “highest possible price” can be determined. LOGAN COUNTY
The company is a marketer of casual and sports socks, sold under the Wilson and Converse brands. The socks are knitted in the Adairville plant and then completed and shipped from the company’s Auburn facility. The shutdown, slated to be effective at the end of this month, will result in the loss of 160 jobs in Adairsville and 40 positions in Auburn. The Auburn plant will remain in operation as a distribution and administrative facility. STATE
KCTCS also is participating in a national initiative called “Prepare America,” a network of America’s community colleges who have offered to assist the Department of Homeland Security in the training of first and second responders and providing other preparedness programs. The program will focus on three major initiatives: Physical security will concentrate on internal security issues such as property and personnel. The first responder project team will focus on training such as fire and rescue and emergency medical. The information and communications team will focus on issues such as cyber security. As part of the homeland security program, the KCTCS Kentucky Information Technology Center (KIT Center) will begin conducting regional “train-the-trainer” workshops that will teach basic security principles and introduce components of cyber security. The workshops will provide hands-on training to community and economic development coordinators, academic faculty in information technology, and college IT staff. The participants will then be able to train others within their organization regarding community security principles for business and personal computers. The workshops are being held at Hopkinsville Community College, Madisonville Community College, and Owensboro Community and Technical College. For more information, contact Jay Box, president and CEO, Hazard Community and Technical College, (606) 487-3100. NORTHERN KENTUCKY
The study was commissioned by Northern Kentucky Tri-ED, a private regional economic development organization, and conducted by AngelouEconomics of Austin, Texas. Based on its findings, the firm recommended:
The study also recommends focusing on expanding technical aspects within the area’s existing economic base, such as automotive suppliers, financial services, logistics, biomaterials and medical supplies. MAYSVILLE Mitsubishi Electric Automotive America has announced plans for a $60 million expansion of its Maysville plant that is expected to add approximately 100 new jobs. The plant currently employs 308. The expansion is expected to be complete by the end of the year. Mitsubishi’s announcement comes as welcome news for a community that has been hard hit by layoffs in recent months. With the closings of Jockey, Crystal Tissue and TechnoTrim Inc., Maysville has seen the loss of some 600 jobs. BROWNSBORO Strata Space, a subsidiary of Rogers Group Investments, is moving forward with plans to convert a former limestone mine into an underground industrial center. So far, the company has developed 25,000 square feet of the available 500,000 square feet and enclosed it with overhead doors that require an access code to be opened. Water, sewer and power systems have already been installed as well as a ventilation system that continuously pumps fresh air. A dehumidifier keeps the humidity levels at around 70 percent. Since the cavern’s temperature remains at a constant temperature of 59 degrees, companies can cut their heating and cooling bills by up to 50 percent because the climate control system doesn’t have to work as hard. And, of course, security – an increasingly important issue since 9/11 – is another major asset. The facility’s location near 1-71 in Oldham County and its proximity to UPS’ distribution hub in nearby Louisville is also an important factor. The center has been modeled after a similar underground facility in Kansas City, Missouri that has proven to be quite successful. The center there features 25 million square feet of underground industry and employs 12,000 people. LEXINGTON In an effort to attain a larger segment of the regional advertising market, Meridian Communications and Cornett Advertising are merging to form a new company, Main & Broadway Communications LLC (M&BC). Still, the promise of bigger and better wasn’t enough for Meridian to retain one of its primary accounts: Lexington-based Fazoli’s restaurants. The company’s print and broadcast ads will now be handled by Freedman, Gibson & White, a Cincinnati firm. However, Meridian’s Right Place Media unit will continue to purchase ad space in newspapers and commercial time on television and radio, a role that will bring approximately $14 million in annual billings. Meridian has handled the entire Fazoli’s account since its inception some 13 years ago. “That’s a very long relationship, abnormally long for this type of business,” Fazoli’s Chief Marketing Officer Greg Lippert told the Lexington Herald-Leader. “Sometimes you outgrow your agency and that’s the situation here.” OHIO The J. M. Smucker Company has announced plans to purchase International Multifoods Corp. in a transaction valued at approximately $840 million. Minneapolis-based Multifoods owns a broad array of well-known U.S. product lines, including Pillsbury, Hungry Jack, Martha White and Pet. Its top-selling Canadian brands include Robin Hood flour and baking mixes and Bick’s pickles and condiments. With the acquisition, Smucker’s total retail sales are expected to more than double, from $3 billion to over $6.5 billion. The J. M. Smucker Company was founded in 1897 when its namesake and founder sold his first product – apple butter – from the back of a horse-drawn wagon. Today, the company has more than 2,700 employees and is the North American market leader in fruit spreads, peanut butter, shortening and oils, ice cream toppings, and health and natural foods beverage, with icon brands as Smucker’s, Jif and Crisco. The company, which has been headquartered in Orrville, Ohio since its inception and been family-run for four generations, was recently recognized as the top company in FORTUNE magazine’s 2003 annual survey of “The 100 Best Companies to Work For.” TENNESSEE The University of Tennessee College of Dentistry has officially dedicated a new dental simulation center, a facility made possible by state funding approved in 2001. The center is the only one of its kind in the world and includes a renovated laboratory with 40 interactive, virtual-reality simulators in one room and 80 conventional simulators in the other. Using the revolutionary computerized dental training systems, students will receive case history information on simulated patients; the units track the procedures using on-screen visual systems. In addition, the units provide real-time feedback and evaluation, with all of the advantages of hands-on clinical experiences. A $1 million gift from Delta Dental Plan of Tennessee, the largest in the history of the College of Dentistry, will be used to maintain and upgrade the laboratory.
Business Briefs BEREA
COVINGTON
DANVILLE
DRY RIDGE
GEORGETOWN
GLASGOW
HARDIN COUNTY
LEXINGTON
LOUISVILLE
MOUNT STERLING
NORTHERN KENTUCKY
OLDHAM COUNTY
PADUCAH
PARK CITY
SCOTTSVILLE
SOUTHEASTERN KENTUCKY
TAYLOR COUNTY
WINCHESTER
STATE
INDIANA
OHIO
TENNESSEE
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Copyright 1996-2004, by Kentucky Business Online. All rights reserved. Editorial content
is copyright 2004, Lane Communications Group The Lane Report is a trademark of Lane Communications Group. All other trademarks are the property of their respective owners. |
The agreement also includes Ashland’s maleic anhydride business and 61 Valvoline Instant Oil Change centers in Michigan and northwest Ohio, which are valued at $94 million. 
Ashland plans to use a substantial portion of the transaction proceeds to retire all or most of the company’s outstanding debt and other financial obligations. After payment of these obligations, Ashland would have a material net cash position.
Citicorp Credit Services has announced plans for a new $35.8 million call center in Louisville that will bring 1,600 new jobs to the community.
A Kentucky company has been recognized by the Global Institute of Logistics as the 2004 “U.S. Automotive Logistics Provider.”
Ford Motor Co. has announced a $73 million expansion of its stamping facility at the Kentucky Truck Plant that will add approximately 100 more jobs. The project will nearly double the size of the existing 100,000-square-foot plant, where the company molds parts used for Ford’s Super Duty trucks and the Excursion SUV. The expansion, which will make room for a second stamping press, will enable Ford to more than double its current output. 
Rising operating costs, lower profits and increased competition from foreign competition are being cited as the primary factors contributing to the decision to close Auburn Hosiery Mill’s manufacturing operations in Adairville and Auburn. 
The Kentucky Community and Technical College System (KCTCS) has established a Homeland Security training program that will provide specialized training across the state to meet the current and emerging needs for operational security. The program will be coordinated by a team led by Hazard Community and Technical College President Jay Box. 
Tax reform, educational programs and cooperation among area civic organizations are among the topics addressed in a study by a consulting firm hired to help the Northern Kentucky region attract more high-tech, “new economy” jobs. 
The project will add 100,000 square feet to the existing 500,000-square-foot plant, where the company produces ignition coils and automotive electronics. 
With a total of 67 employees and combined billings of $38.6 million, the newly formed company ranks as the largest advertising and public relations firm in the Central Kentucky region and one of the state’s largest, as well. According to the two principals involved – Meridian Chairman Mary Ellen Slone and Cornett President and CEO Kip Cornett – the merger combines the creativity of the Meridian staff with Cornett’s expertise in the area of public relations. As a larger entity, the newly combined firm will also be in a better position to attract creative talent that is often lured away from Lexington. 
“These brands are complementary to our own, expand the categories in which we participate and add significantly to our existing market presence in Canada,” said Tim Smucker, chairman and co-chief executive officer. “The acquisition will generate significant cash flow and, coupled with our already strong balance sheet, will strengthen our position to be able to acquire other complementary food brands and provide additional opportunities in the future.” 
With its recent acquisitions of NCS Healthcare, Sunscript Pharmacy and Clinical Pharmacy, Omnicare is now in need of more space. The pharmaceutical supply company has announced expansion plans that include doubling the size of its Covington headquarters and the addition of some 240 jobs by the end of the year. The expansion will accommodate the company’s consolidation of services that are currently being handled at different locations throughout the country. Omnicare was recently named to the Fortune 500 list for the first time this year, making its debut at No. 475 with 2003 annual revenues of $3.5 billion. 
DaimlerChrysler’s decision to move axle production for its Jeep Grand Cherokee vehicles in-house has resulted in the loss of nearly 150 jobs at Dana Corp.’s Dry Ridge plant. The Dana plant assembles axles for the Jeep SUVs as well as other components. Dana’s plant in Fort Wayne, Indiana, which also assembles the axles, is being affected as well, with 200 jobs slated to be cut there. The cuts are expected to be completed by mid-May. Dana’s facility in nearby Erlanger, which makes truck frames for Ford F150 pick-up trucks, will not be affected by the decision. 
The Rolex Kentucky Three-Day Event, one of equestrian’s premier events, will be televised nationally on NBC this year. The competition, which will be held April 22-25 at the Kentucky Horse Park near Lexington, will give viewers a preview of the Olympic hopefuls as they prepare for the upcoming Olympic games in Athens, Greece. The United States Equestrian Federation (USEF), headquartered in Lexington, is responsible for selecting the human and equine athletes that will represent the United States in the Olympics.
ATA Connection has announced that it will end flight service out of Lexington effective June 1. A release from the Chicago-based airline, which has been credited with helping to lower overall fares out of Blue Grass Airport, said the company determined that its aircraft would be better utilized by eliminating its Lexington flights and adding additional service between Indianapolis and Chicago. ATA, which began service to Lexington in August 2002, offers connecting flights from Chicago to 40 other destinations. Though passengers may initially see some fares rise due to less competition, Blue Grass Airport officials have said the airport is well-positioned to recruit another low-cost airline to replace ATA and negotiate good fares with other airlines. 
Brown-Forman has terminated an agreement under which Miller Brewing Company produced and distributed Brown-Forman’s Jack Daniel’s Original Hard Cola. Brown-Forman has assumed responsibility for the production, sales and marketing of the malt beverage, but is also exploring the feasibility of future production with an outside co-packer.
A start-up healthcare company has teamed with supermarket giant Kroger to establish kiosks in two Louisville-area supermarkets where shoppers can get a quick medical exam in addition to picking up milk and eggs. FastCare Family Health Center’s kiosks are staffed with nurse practitioners, medical professionals who are authorized to conduct physical exams and screenings as well as write prescriptions. The centers are open seven days a week and until 8 p.m. during the week. The goal, according to FastCare partner Stuart Lowenthal, is a retail service that makes healthcare quick and easy. Most treatments are priced at $38, only slightly higher than many insurance co-pays. 
Ventas, Inc. has agreed to sell two million shares of its common stock to Merrill Lynch & Co., as sole bookrunning manager for an underwritten public offering. Ventas, a healthcare real estate investment trust, expects to receive net proceeds of approximately $51.2 million from the sale. The company plans to use the net proceeds to repay debt under its revolving credit facility and for general corporate purposes, including to fund possible future acquisitions. 
With revenues topping $12 billion in 2003, Louisville-based Humana Inc. is once again the largest publicly held company in Kentucky, according to the annual Fortune 500 listing compiled by Fortune magazine. Overall, the company was ranked at No. 159, up from No. 169 on the 2002 listing. YUM Brands Inc., with 2003 revenues of $8.38 billion, was the state’s second largest company and had an overall ranking of 245, down from last year’s ranking of 240. Ashland Inc. came in as Kentucky’s third-largest company, with 2003 revenues of $8.08 billion and an overall ranking of No. 252, down from No. 239 in 2002. Other Kentucky companies included on the 2003 Fortune 500 list include: Lexmark International Inc., with revenues of $4.75 billion (No. 364); Covington-based Omnicare Inc., with $3.5 billion in revenues (No. 475); and Louisville-based Kindred Healthcare, with $3.46 billion (No. 479).