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FAST LANE - May
2002
Kentucky’s efforts to improve its stance in the business world – particularly the high-tech arena – are commendable but they’ve not yet brought the state to a competitive level, according to a recent review of states’ business and industrial growth. Kentucky received an overall grade of “D” in the annual review conducted by the Corporation for Enterprise Development, a non-profit independent think tank that looks at states’ overall business performance, business vitality and development capacity. The 2001 review ranked Kentucky as follows: Performance Index – D. Kentucky’s performance remained a D, after declining since earning a B in 1998. Equity dropped from a C to a D, led by a decline in income distribution (36th to 45th) and a change in income distribution (8th to 26th), indicating a tendency for inequitable wealth accumulation. Employment remained steady, with long-term employment growth average ranking 24th and mass layoffs at 15th. Quality of Life and Resource Efficiency indicators remain steady overall, with an improvement in the amount of renewable energy consumed in the state (from 36th to 19th). Business Vitality – C. The disturbing news here is that despite a steady – though only average – performance, existing companies are becoming less competitive. The traded sector strength dropped from 30th to 34th and investment in manufacturing capital declined from 11th to 24th. On the up side, however, the review notes that the state is becoming more structurally diverse, which will provide a broader economic base better equipped to weather future economic downturns. Development Capacity – D. For the sixth straight year, Kentucky has earned a D in this category, with a below-average high school graduation rate and low (44th) college attainment. Innovation assets remain poor, “limiting the potential of developing long-term growth in the technology sectors, even though the state ranked 11 in university spinouts.” Still, Kentucky’s one shining star is in this category, with low energy costs and low urban housing costs earning the state an A in Amenity Resources and Natural Capital. In the state’s favor, however, is the recognition of what needs to be done, as evidenced by the creation in 2000 of the Cabinet of the New Economy, charged with stimulating high-tech job growth in the state. STATE
Results of a referendum by the U.S. Department of Agriculture showed that on a national level, 75 percent of burley growers supported the grading system. In Kentucky, 85 percent of burley tobacco growers favored grading. All burley tobacco is graded by USDA graders at auction, but that sold under contract directly to cigarette companies has no USDA grade and does not qualify for price supports. The legislation
for the referendum would require all tobacco to be graded at the point
of sale. The actual grading procedure will be decided by the Agricultural
Marketing Service. STATE Two federal programs that provide substantial tax credits to employers have been extended according to the Kentucky Department for Employment Services, which administers the programs in Kentucky. The Work Opportunity Tax Credit (WOTC) and Welfare-to-Work (WtW) tax credit programs have been extended through December 31, 2003 for employers who hire members of qualified groups of people. WOTC provides employers with up to a $2,400 tax credit per eligible hire for individuals who meet a designated criteria such as: recipients of welfare, food stamp and supplemental security income; youth who live in areas designated as federal empowerment zones and enterprise communities; ex-felons; and people with disabilities. The WtW program provides employers with up to $8,500 tax credit per eligible hire for individuals who are long-term welfare recipients. To qualify for the tax credits, the employer must submit a form to the Department for Employment Services requesting certification within 21 days of the eligible worker’s first day of employment and receive from DES a form certifying that the individual was eligible when hired. Employers may not claim the tax credits for hiring former employees or relatives. The actual amounts of the tax credits for both programs are based upon wages paid and length of time the worker is employed. For more information about the programs, contact state coordinator Barbara Gilley or other program staff at (502) 564-7456. STATE
The new company will operate under the name of Old Rip Van Winkle Distillery. Under the new arrangement, Buffalo Trace will distill, age, bottle and sell the Van Winkle family of whiskies, with Julian Van Winkle in charge of marketing and promoting the brand. Buffalo Trace Distillery will continue all of its normal operations, including distilling, aging, bottling and selling its current family of whiskies. The Old Rip Van Winkle Distillery LLC reunites the Van Winkles with the W.L. Weller bourbon brand. In June 1972, Pappy Van Winkle sold the Stitzel-Weller Distillery in Louisville, which produced W.L. Weller at the time. After changing hands a number of times, Buffalo Trace purchased the Weller brand in 1999 and moved the remaining production of the bourbons to its distillery in Franklin County. The distillery had been producing bourbon for the Weller brand for several years prior to the 1999 acquisition. NORTHERN KENTUCKY The Federal Aviation Administration has approved $100 million in funding for a third north-south runway at the Cincinnati/Northern Kentucky International Airport.
Airport officials hope that the new 8,000-foot runway which has been in the planning for eight years will relieve some of the traffic issues the airport has experienced in recent years. In 2000, the airport ranked 17th in the nation in terms of delays. Business and local government officials are lauding the plan, pointing to the tremendous economic impact the airport has on the area. The airport and related businesses and industries support nearly 70,000 jobs and pump $3.9 million each year into the regional economy. STATE Louisville-based Kindred Healthcare is the latest Kentucky company to break into the Fortune 500 listing. Kindred, one of the nation’s largest operators of long-term acute care hospitals, came in at 496 on the list, with a 2001 revenue of $3.081 billion. Formerly known as Vencor prior to a bankruptcy reorganization, the company operates 53 long-term acute-care facilities and four general acute-care hospitals in 23 states. Kindred’s nursing home and rehabilitation division operates 305 nursing homes in 32 states. The company just recently purchased Specialty Healthcare Services for $45 million in cash, which gives Kindred additional facilities in Southern California, Cleveland, Philadelphia, and Charleston, South Carolina. The four other Kentucky companies included on the 2001 Fortune 500 list – Humana, Ashland, Tricon Global Restaurants (now known as YUM! Brands), and Lexmark – have been featured in previous years. They ranked as followed (listed with rank, name, headquarters, last year’s ranking and 2001 revenue in billions of dollars):
SIMPSONVILLE
The pharmaceutical
wholesaler plans to move into a recently completed building in the business
park in early July with a staff of 75. Company officials say they hope
to add another 100,000 square feet to the building’s existing 122,000
square feet and increase the number of employees to 250 within three
years. Tom Smith, general manager of Walsh Dohmen, said the business park’s proximity to Interstate 64 and the area’s work force were determining factors in selecting the Simpsonville site. OWENSBORO Large Scale Biology, a California-based company that operates its bioprocessing division in Owensboro, has obtained a patent for Nicotiana excelsiana, a new plant species that looks like tobacco but is actually a hybrid the company is using as a “bioreactor” to create proteins for the production of “biopharmaceuticals.” According to company officials, the new hybrid plant offers “enhanced properties for protein production.” Such proteins are being used by the company, previously known as Biosource Technologies, in an effort to formulate a vaccine for non-Hodgkin’s lymphoma, a cancer that strikes some 55,000 Americans each year. The company is also working on vaccines to fight smallpox and other diseases that might be used by bioterrorists. Last year, the company contracted for 50 acres of Nicotiana excelsiana to be grown in Owensboro. Though it has not yet been determined how much will be grown in Owensboro this year, the company hopes to eventually need more than 50,000 acres of tobacco, corn and other plants that have been genetically altered for biopharmaceutical purposes. PERRYVILLE
The property will eventually serve as the site of a new orientation center for battlefield visitors. Perryville is scheduled to host a national Civil War re-enactment in October that is expected to draw as many as 10,000 participants. Preservation efforts are also escalating in the community’s Merchant Row district. The Perryville Enhancement Project has purchased the town’s former Opera House with plans to include the historic building in its renovation of Merchant’s Row, thought to be the only intact 19th-century business district in the nation. The Opera House, one of 10 buildings in the district slated to undergo renovation, has served as a photographer’s studio, post office, and apartments at various times over the years. LOUISVILLE Several Jefferson County hospitals are in the process of expanding their facilities in an effort to respond to the needs of a growing population on the county’s east side.
Only a few blocks away is Norton Suburban Hospital, which is adding more than 196,000 square feet as well as an attached 580-space parking garage. Like its neighbor, Norton is adding more maternity, endoscopy and physical therapy space. At Jewish Hospital, a new out-patient center is under construction, expected to open early next year. In addition to responding to a growing population, hospital administrators say the expansions also highlight the way in which healthcare is changing. For instance, aging baby boomers – reluctant to give up their active lifestyles – are increasingly requiring physical therapy services. A combination of better technology, an aging population and increased coverage by insurance companies is leading to more widespread use of endoscopy, which is used to screen for colon cancer as well as other diseases. And while Jefferson County’s overall birth rate hasn’t experience a huge surge, a shift in the county’s population has been making increasing demands on medical services on the east end of the county. Plus, many patients come to the hospitals from outlying counties. For instance, between 1997 and 2001, Suburban’s in-patient admissions went up 44 percent, with emergency room visits increasing by 30 percent. The maternity ward saw an 87 percent increase during that period. MURRAY Rudolph’s Inc., a wholesale tire distribution company, has been approved for a state grant of $200,000 to build a 90,000-square-foot warehouse and distribution facility in Murray. Another $100,000 has been committed by the Murray-Calloway County Economic Development Authority. The remaining $1.6 million needed for construction will be financed through a bank loan. News of the $1.9 million project comes as welcome news in Murray, which is losing hundreds of jobs due to the shutdown of the Mattel distribution facility. Rudolph’s currently employs 35 people at its existing Murray facility, with an annual payroll of $2 million and $45 million annual sales. The new project calls for the work force to reach 55 in five years, boosting the annual payroll to $2.8 million. LEXINGTON
The new facility will be located directly across the street from Webasto’s existing assembly plant, which opened in 1998. Approximately 200 new jobs are expected to be created as a result of the expansion, bringing Webasto’s total Kentucky employment to around 425. The company is investing an initial $28 million on the plant, which will include two roof system assembly lines. However, based on projected growth in the automotive roof system industry, Webasto is building enough space to support seven to eight lines. Mark Wallace, general manager of Webasto’s Kentucky operations, cited an overall good experience in dealing with the Kentucky business community as pivotal in the company’s decision to further expand here. In addition, he said, the area is centrally located among its automotive customers, which include Ford, General Motors, Toyota, Daimler Chrysler and Mazda. GEORGETOWN The city of Georgetown is reeling from the news that Johnson Controls Inc. will shut down one of its three Georgetown automotive supply plants, leaving 500 workers without jobs. The plant produces metal frames for automobile seating systems. Johnson ranks as one of the nation’s largest automotive seating and battery suppliers. The company employs approximately 3,000 people at its seven Kentucky facilities. The first segment of layoffs will come in mid-July, with production ending in December. The plant will officially shut down by February 2003. Johnson plans to shift the plant’s production lines to its facilities in Cadiz, Kentucky and Tennessee. According to company officials, Johnson simply does not have the business to support three Georgetown plants. Hyundai’s recent decision to locate its first American manufacturing plant in Alabama rather than Kentucky was not a factor in the decision to close the Georgetown plant, they added. Jack Conner, Scott County’s economic development director, has said he plans to help Johnson sell or lease the 250,000-square-foot building, although a facility of that size may be hard to fill. Scott County is currently in the process of developing a new business park expressly to attract new business and diminish the county’s reliance on the automotive industry. LOUISVILLE Sypris Solutions has landed a $75 million contract to produce circuit boards for BAE Systems PLC, a major defense contractor. The circuitry will be used in handheld chemical-detection devices and produced by Sypris Electronics, the company’s Tampa-based subsidiary. According to industry analysts, the contract is a big win for the Sypris: BAE represents the last of the “big five” defense contractors to develop a business relationship with the company, which already has contracts through Raytheon, Lockheed Martin, Northrop Grumman and Honeywell International. The announcement also boosted Sypris stock, raising it $1.85 to a 52-week high of $17.85 on volume of 739,400 on the Nasdaq Stock Market. Noting the company’s recent success in landing fairly large contracts, Needham & Co. analyst Jim Ricchiuti has rated the stock a “buy” and projected earnings of 80 cents per share for 2002 and $1.12 for 2003. LOUISVILLE Just three years after luring the National FFA (Future Farmers of America) Convention to Louisville from Kansas City – where it had been held for nearly 70 years – the organization has announced plans to move the convention to Indianapolis.
Louisville’s contract with FFA runs through 2005, but the city had hoped to win another seven years when the contract came up for renewal last year. According to FFA officials, Louisville’s lack of enough hotel rooms was a major factor in the organization’s decision to move to Indianapolis. Also, the technical capabilities at Freedom Hall were not as extensive as those available at Indy’s new Conseco Fieldhouse. Plus, Indianapolis has recently expanded its convention center and opened a new 600-room Marriott hotel next to the center. A new $111 million Marriott is planned for downtown Louisville, but is only in the land acquisition stage. The Kentucky Fair & Exposition Center’s proposal for a $102 million expansion and renovation has not yet received funding. The greatest impact, however, may be in the lost opportunity to showcase the city to 50,000 young people each year. Mike Bosc, a spokesman for Greater Louisville, Inc., said, “It’s the type of audience that we are trying to attract – future young professionals.” BOWLING GREEN Preliminary findings of a site evaluation for the proposed Kentucky TriModal Transpark near Bowling Green indicate that the project would not produce any damage to Mammoth Cave National Park, according to a report released by the Inter-Modal Transportation Authority, Inc. (ITA). The proposed Transpark, which would feature air and rail facilities to meet transportation needs of area industries, has become a highly controversial issue of late, with a number of groups citing concerns about potential environmental effects if the project comes to fruition. The ITA’s assessment was based on existing groundwater and ecological studies performed over the past 22 years and compiled by Dr. Nick Crawford, director of the Center for Cave and Karst Studies at Western Kentucky University. According to the ITA, the study shows all groundwater in the area of the proposed Transpark flows toward the Barren River, directly away from the Mammoth Cave area. However, members of Karst Environmental Education and Protection, a group opposed to the transpark, claim that Crawford’s conclusions inaccurate. The group points to other potential problems as well, such as a recent collapse of a sinkhole in Bowling Green that engulfed an area the size of a football field. Although the sinkhole was 10 miles from the proposed transpark site, the group maintains that the geography is the same. The report is being forwarded to leading karst scientists around the world to obtain their opinions regarding the issue. LEXINGTON
The county has signed its first contracts to purchase conservation easements from landowners, in essence preventing development on more than 1,500 acres of land. Funding through the county’s Purchase of Development Rights (PDR) program compensates farm owners who voluntarily give up the right to develop their land. A total of 37 landowners applied for the program, which requires that farms meet certain qualifications. (For example, the farms must be at least 20 acres in size and must be located in Fayette County.) Twelve contracts were signed for a total purchase price of just under $4.5 million. A second round of applications is now is progress. As a legal agreement between the landowner and the Rural Land Management Board (a volunteer group that manages the county’s Purchase of Development Rights program) the easement stays with the land, thus ensuring that future owners will be bound by its terms.
Business Briefs DRY RIDGE
ERLANGER
FLORENCE
GEORGETOWN
HANCOCK COUNTY
HAWESVILLE
HENDERSON
HOPKINS COUNTY
LAWRENCE COUNTY
LEXINGTON
LOUISVILLE
MAYFIELD
MAYSVILLE
MORGANTOWN
NORTHERN KENTUCKY
OWENSBORO
PIKEVILLE
RICHMOND
SOMERSET
SPARTA
STATE
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Copyright 1996-2002, by Kentucky Business Online. All rights reserved. Editorial content
is copyright 2002, Lane Communications Group The Lane Report is a trademark of Lane Communications Group. All other trademarks are the property of their respective owners. |
A
vast majority of Kentucky burley tobacco growers would prefer using
government graders to set prices rather than the tobacco companies,
according to information from the Burley Tobacco Growers Co-op in Lexington.
Buffalo
Trace Distillery and J. P. Van Winkle and Son have joined together to
form a new limited liability company that will bring the largest portfolio
of acclaimed bourbons and ryes under one roof. 
The
newly-pledged funds will be added to $32 million the airport was already
slated to receive. The remainder required for the $246 million project
will come through an increase in passenger ticket fees; the Kentucky
County Airport Board plans to raise that fee from $3 to $4.50 per ticket
this June. 
Walsh
Dohmen Southeast LLC, a Birmingham pharmaceutical distributor, has announced
plans to open a new distribution center in Simpsonville’s Kingbrook
Commerce Center this summer. 
The
Perryville Battlefield Preservation Association has purchased more than
50 acres of private property near the Perryville Battlefield State Historic
Site, bringing the amount of protected battlefield land to more than
550 acres. The $200,000 purchase was funded with a state Department
of Parks bond. 
Baptist
East Hospital’s new five-story structure adds approximately 150,000
square feet of space, housing a new maternity ward, an endoscopy unit,
and physical therapy facilities as well as leasable space for physicians’
offices. 
Webasto
Roof Systems, Inc. has announced plans to build a new 200,000-square-foot
facility in Lexington, where it will produce complex, automotive roof
systems. 
The
pronouncement comes as a huge disappointment to civic leaders in Louisville,
where the annual event pumped some $20 million into the local economy,
making it Louisville’s largest convention last year in terms of
economic impact.
Fayette
County is making progress in its endeavor to maintain the natural landscape
surrounding it.