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FAST LANE - August
2004
It was only last August that DHL, a global express delivery company, opened its $220 million facility in Hebron, creating 1,200 new jobs. Since then, however, the company has launched a $1.2 billion endeavor to better compete with companies such as FedEx and UPS and establish itself as an alternative in the U.S. shipping market. As a result, DHL has announced plans to consolidate its air hub operations from Greater Cincinnati/Northern Kentucky International into a primary facility at DHL’s Wilmington (Ohio) Air Park, where it employs some 6,000 workers. The company will transfer much of the work from its Northern Kentucky facility to Wilmington over the next 18 months. The company will retain its facility in Northern Kentucky, which will be used as a back-up hub. Though DHL’s Kentucky staff will be reduced to approximately 300 by next year, company officials say that with a 40 percent attrition rate at the sorting center, they do not expect the move to lead to involuntary severance. Still, the loss of some $72 million in wages – a figure that takes into account jobs affected both directly and indirectly – is a major blow for the Northern Kentucky region. In addition to the lost wages, the area is also bracing to lose nearly $65 million in retail sales. The region is hopeful that new jobs being created by a new FedEx distribution center in Northern Kentucky will help offset the losses, said Chamber President Gary Toebben. While it won’t be an immediate fix, the new FedEx facility is expected to eventually create more than 1,500 new jobs and lead to another 1,600 jobs. STATE
The WEG are comprised of the world championships for seven equestrian sports – eventing, show jumping, dressage, driving, endurance, vaulting and reining. The event would bring international competitors and tourists to Kentucky for up to two weeks in September 2010. The 2002 World Equestrian Games in Jerez, Spain attracted close to 300,000 spectators, 800 equestrians from 45 countries, and 1000 media representatives. “Kentucky is the Horse Capital of the World and is the ideal location for this equestrian sport,” said Commerce Secretary Jim Host. The games would have an estimated $90 million economic impact for the commonwealth, he added. John Long, chief executive officer of the United States Equestrian Federation, the National Governing Body for equestrian sport said, “This is extremely exciting for our organization. We fund and send the United States’ equestrian teams to international competitions throughout the world, including the Olympic Games. It’s long overdue that these games be held in the United States and we are energized by the enthusiasm the governor’s office has for this bid.” LONDON ABC Group Inc. has announced plans to open an automotive parts plant in London’s Laurel County Industrial Park. The Canadian company expects to hire 165 people to operate the 140,000-square-foot plant, which is slated to open by late 2004 or early 2005. The plant will produce a line of thermo-plastic systems and components for auto manufacturers. The Kentucky Economic Development Finance Authority has granted preliminary approval for $19 million in tax credits for the Toronto-based company. Since its formation in 1974, ABC Group has grown from a single plant operated by its three founding partners to a worldwide organization with more than 30 production facilities in North America, South America, Europe and Asia. GALLATIN COUNTY
An environmental impact study is now the next step in determining the feasibility of the site. The area’s largest industries, which include Gallatin Steel, North American Stainless and Dow Corning, have put their support behind the effort, as have state and federal officials, who have taken a renewed interest in the project due to the area’s rapid commercial growth. Kentucky Speedway officials maintain that an airport is crucial to their bid to win a NASCAR Nextel Cup race. In addition, Indiana’s Belterra Casino, which just completed a $35 million expansion project in May, is less than 10 miles away. The estimated cost of the airport has been cited as being between $10-$15 million, much of which will come in federal funding. LOUISVILLE The University of Louisville has launched a collaborative program with California-based Large Scale Biology Corporation to jointly develop and evaluate new therapeutics to prevent and treat cervical cancer and other cancers caused by human papillomaviruses (HPV). The collaboration between U of L and Large Scale, which operates a biomanufacturing facility in Owensboro, will utilize each group’s complementary skills and expertise. Large Scale’s role will be to design and produce vaccine and antibody products, while University scientists will evaluate the products in animal models of various HPV diseases. The new project is being led by Drs. Alfred B. Jenson and Shin-je Ghim at the University of Louisville along with Dr. Kenneth Palmer, director of Large Scale’s vaccine program. The collaboration is also notable due to the fact that the program is being jointly funded by Large Scale and the University of Louisville, which is a recipient of a grant agreement with the Kentucky Economic Development Finance Authority (on behalf of the Office of the Commissioner for the New Economy) to develop a new initiative known as the Kentucky Cancer Experimental Therapeutics Program. LEXINGTON
The international blockbuster exhibition, All the Queen’s Horses, accounted for $21.6 million of the total direct expenditures spent in Kentucky in 2003. By comparison, the Imperial China exhibition, presented in 2000, accounted for $14.4 million out of direct expenditures of $82.2 million and indirect expenditures of $50.2 million. The Kentucky Horse Park also generated $17.7 million in total taxes, with $15 million in state taxes and $2.8 million in local taxes. In addition, more than 4,000 jobs were generated in 2003 as a direct result of Kentucky Horse Park facilities and activities. The park, which is an agency of the Kentucky Commerce Cabinet, hosted 913,000 visitors and 80 special events and horse shows in 2003. “These numbers confirm that the Kentucky Horse Park is one of the commonwealth’s great success stories,” said John Nicholson, executive director of the Kentucky Horse Park. “With the support the park is currently receiving from the Fletcher administration, future economic impact figures promise to be even more impressive.” The Kentucky Horse Park is the largest state-owned tourist attraction in Kentucky. The park hosts more than 80 horse shows and special events annually, and presents special gallery exhibitions, educational classes and art programs that educate and entertain visitors from across Kentucky and around the world. The Kentucky Horse Park is also home to the National Horse Center, a collection of 20 national, state and regional equine associations and organizations. STATE Robert Half International Inc. and the Institute of Management Accountants (IMA) are now accepting nominations for the 2004 Financial Executive of the Year Award. The award was created by IMA in 1995 to recognize exceptional achievements of professionals in the finance and accounting fields. One person from each of the IMA’s more than 20 participating U.S. regions will be honored. In addition, one nominee will receive the prestigious national award. Both IMA members and non-members are eligible for the honor, and any person interested can submit a nomination. A nomination form and additional information can be found at www.rhi.com/feya. Nominations will be accepted through September 1, 2004. Awards will be presented in December. For more information, contact the Robert Half Lexington office at (859) 296-6519. MAYFIELD
Officials with the Charlotte-based company insist the closure is not permanent and maintain that they have no plans to close the plant. “This was not an easy decision, as we have been weighing our options at Mayfield for some time,” said Continental Tire CEO Martien de Louw. “We must remain cost-competitive in the market and our industry. Unfortunately, this was our only option, as Mayfield remains the highest-cost plant for Continental.” Some of the company’s mixing and warehouse operations will continue in Mayfield. PIKEVILLE Interstate Natural Gas Company of Pikeville is the 2004 recipient of Eastern Kentucky University’s Excellence in Entrepreneurship Award. The honor is presented by the university’s College of Business and Technology. “[Owners] Jerry Kanney and Denny Rohrer are excellent entrepreneurs who have coupled their vision with hard work,” said Robert Rogow, dean of EKU’s College of Business and Technology. “Their company continues to grow and significantly contribute to the economic and community of Eastern Kentucky.” Since its inception in 1989, Interstate Natural Gas has grown to a full-time staff of 60 employees and contract workers and increased its sales by nearly 200 percent in the past six years alone. The company produces oil and gas in Pike, Floyd, Knott, Letcher, Martin, Lawrence, Johnson and Perry counties in Kentucky and in Mingo and Wayne counties in West Virginia. Kanney noted that the company anticipates drilling “at least 50 gas wells each year,” in addition to purchasing gas wells that are in need of rehabilitation and developing more properties in Eastern Kentucky for residential and commercial purposes. The company also makes a concerted effort to purchase products and services from Kentucky-based firms. EKU evaluated the nominees based on the economic success of the enterprise, contributions to the community and operational achievement as measured by innovative employee training programs, superior use of technology and safety achievement and sustainability. Nominees for the award were required to reside or have businesses located in a 47-county region of southeastern and eastern Kentucky. STATE
“Ultimately, ratemaking decisions require weighing the needs of utilities against the impact of rate increases on consumers,” the PSC said in a statement issued announcing the decision. “This is always a difficult task, which neither the PSC nor its staff takes lightly.” The PSC noted that the approved rate increases were the first in many years. KU’s last electric rate increase was in 1984; LG&E last was allowed to increase electric rates in 1990. However, in 2000, LG&E’s electric rates were lowered to pre-1990 levels. LG&E’s gas rates were last increased in 2000. The rate increases grant LG&E and KU the opportunity to earn a return on equity ranging from 10 percent to 11 percent, a rate that is consistent with authorized returns on equity for similar utility companies in other states. The PSC emphasized that even with the rate increases, Kentucky’s electric rates will remain the lowest in the region and among the lowest in the nation. STATE
The primary goal of the Life Sciences/ Biosciences Consortium will be to encourage the growth of life science and biotechnology jobs in the Commonwealth. The consortium will be led by Alex Day, manager of Kentucky Natural Products Fund in Louisville. “My recent attendance at the BIO 2004 Conference in San Francisco inspired me to coordinate a group to develop a timeline and plan to attract life sciences and medical device entrepreneurs to Kentucky,” said Fletcher. “I am committed to attracting and retaining the highest quality biotechnical companies to our great commonwealth.” The governor also announced that creative incentive packages will be developed to enable Kentucky to compete with other states who are also trying to attract such businesses. The consortium includes representatives from Kentucky’s research universities, the Council on Postsecondary Education and KCTCS. In addition, the consortium will focus on attracting technology-related venture capital to Kentucky. The new initiative will capitalize on Kentucky’s existing expertise within the private sector, as well as the Office of the New Economy, the Cabinet for Economic Development, and the Commerce Cabinet. PADUCAH Small business developers now have a one-stop resource office located in the Paducah area to provide targeted business tools for technology and knowledge-based business. The primary objective of the Innovation and Small Business Center – a joint office for the Innovation Center and Murray State University Small Business Development Center – is to encourage business development and to facilitate a change in the entrepreneurial culture and knowledge-based economy in rural and small communities throughout the state to create new jobs and wealth. The center in Paducah is one of 15 proposed innovation centers that extend the Kentucky Innovation Network to the rural regions of the Commonwealth to serve as local catalysts for growth and development. Business development services provided by the Innovation and Small Business Center include funding assistance, financial analysis and review, business plan coaching and assessment, business valuation review, business start-up assistance, certification and permitting assistance, marketing assistance, and seminars and workshop offerings. The Paducah center is headed by Loretta Daniel. LOUISVILLE
National Processing, a public company that is 83 percent owned by National City Corporation, supports over 700,000 merchant locations, representing one out of every six MasterCard and VISA transactions processed nationally. National Processing also provides financial settlement and reporting solutions to large and mid-size corporate customers in the travel and healthcare industries. The company employs approximately 1,300 workers in the Louisville area. Bank of America is one of the world’s largest financial institutions, serving 33 million consumer relationships with 5,700 retail banking offices, more than 16,000 ATMs and online banking with more than 10 million active users. The combination will create the nation’s second-largest bankcard merchant acquirer, with nearly $250 billion in annual processing volume. The newly combined Bank of America Merchant Services will be headquartered in Louisville. No information has yet been released as to whether the acquisition will bring more jobs to Louisville. Bank of America does not currently have a banking presence in Louisville. According to G. Patrick Phillips, Bank of America’s president of Card Services and e-Commerce, the acquisition better positions the combined companies to deliver a broader suite of payment solutions as transactions migrate from cash and checks to electronic payments. Mark Pyke, currently the chief operating officer of National Processing, Inc., will lead the combined merchant services business once the transaction is complete. LEXINGTON The University of Kentucky has announced plans to purchase a 165,000-square-foot industrial building in the Coldstream Research Park in an effort to both retain the park’s existing businesses and attract new ones. UK will pay $9.6 million for the facility, which currently houses Lexel Imaging Systems, a company that produces cathode ray tubes. Lexel will continue to occupy half of the building, leaving the other half open for a new tenant. The available space is already well-equipped for an engineering firm. UK is also planning to build a $12 million Center for Pharmaceutical Science and Technology at Coldstream. Both projects are receiving kudos from the state level. “Expanding this area for UK research centers and private companies will complement the amazing work in the biomedical field currently being conducted at UK,” said Governor Ernie Fletcher. TENNESSEE
The expansion will add 50,000 square feet to the existing plant. Construction is to begin next spring with the forging process to start late summer 2006. When at full production, the new plant will produce one million crankshaft forgings annually. The company will invest $47.3 million to develop the new facility, which will require approximately 60-70 employees for its operation. “Nissan was able to consider adding this new capability in Tennessee because of a number of reasons, including the competitive and positive business climate currently found in the state, evidenced by recent changes such as the governor’s support of workers compensation reform and a commitment to improving education in Tennessee,” said Dan Gaudette, senior vice president, North American Manufacturing and Quality Assurance for Nissan North America. Opened in May 1997, the 960,000-square-foot Decherd powertrain assembly plant has a capacity for building 950,000 engines and 300,000 transaxles annually. It builds all the engines for the complete line of Nissan and Infiniti vehicles manufactured in the United States. INDIANA Safeco Corp. has announced that it will move its East Coast financial institutions operations (FIS) to Indianapolis, bringing 100 new jobs to the area. The positions will range from managerial to data-entry and data-processing positions. Safeco FIS provides insurance products and services to financial organizations involved in mortgage lending. The division is based in Santa Ana, Calif., and will make Indianapolis its Eastern U.S. headquarters. Indianapolis is already home to the insurance company’s Northeast region headquarters, which covers 16 eastern states. The regional headquarters employs approximately 700 employees and handles sales, claims, commercial underwriting, a commercial service center and information technology services. The Indianapolis expansion makes the city the second-largest base of operations for Safeco, outside the company headquarters in Seattle.
Business Briefs ASHLAND
BOONEVILLE
BOWLING GREEN
CORBIN
COVINGTON
EDMONSON COUNTY
ERLANGER
FRANKFORT
GEORGETOWN
HAWESVILLE
HOPKINSVILLE
LEXINGTON
LOUISVILLE
MIDWAY
MURRAY
NORTHERN KENTUCKY
PADUCAH
PIKEVILLE
WARREN COUNTY
WEBSTER COUNTY
STATE
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. |
DHL’s decision to relocate most of its Northern Kentucky sorting operations to Ohio will result in the loss of nearly 2,900 area jobs, according to statistics from the Northern Kentucky Chamber of Commerce. Of those, nearly 1,300 are directly employed by DHL or Astar Air, a company that flies for the company out of the Cincinnati/Northern Kentucky International Airport.
Governor Ernie Fletcher has announced that Kentucky, on behalf of the United States, will submit a formal bid to the International Equestrian Federation (FEI) to host the 2010 World Equestrian Games (WEG). The games are the most important high-performance equestrian competition in the world, and are held every four years – two years prior to the Olympic Games - in a country designated by the FEI, the international governing body for equestrian sport headquartered in Lausanne, Switzerland.
The area’s Tri-County Airport Board has selected a 350-acre site near the Kentucky Speedway as the best location on which to build a proposed regional airport.
The Kentucky Horse Park had an economic impact of $163.7 million in total expenditures on the Kentucky economy in 2003, generating direct expenditures of $100.2 million, and indirect expenditures of $63.5 million. 
After announcing this past spring that it would lay off some 200 employees, Continental Tire North America has now informed its remaining staff that the company is suspending production at the plant for an indefinite period of time. The decision will leave more than 800 people without work. 
The Kentucky Public Service Commission (PSC) has granted rate increases to the Louisville Gas & Electric Co. (LG&E) and the Kentucky Utilities Co. (KU), although the increases were substantially smaller than the amounts originally requested by the companies.
Governor Ernie Fletcher has announced the formation of an advisory group comprised of government, industry, and education representatives to develop an economic model to attract additional life sciences companies to Kentucky. 
Bank of America has announced a definitive agreement to purchase all of the outstanding shares of Louisville-based National Processing, Inc. for $1.4 billion in cash, or $26.60 per share.
Nissan North America, Inc. (NNA) has announced it will expand its engine assembly plant in Decherd, Tennessee to produce crankshaft forgings for the engines it manufactures for all Nissan and Infiniti vehicles built at the company’s two U.S. manufacturing plants as well as some vehicles manufactured in Mexico. 
Toyota Motor Manufacturing, Kentucky, Inc. (TMMK) has launched a new advertising campaign with the theme “Kentucky Driven.” The goal of the branding campaign is to promote awareness of TMMK’s commitment to Kentucky and the “driving force” behind the company’s philanthropy, diversity, business, community, educational and environmental support and growth. The yearlong campaign will be seen through a series of full-page, full-color print ads as well as outdoor advertising and radio.
Cincinnati-based Pierre Foods Inc. has been acquired by Madison Dearborn Partners, a Chicago private equity investment company. Pierre specializes in meat and bakery products for the food service industry. No changes are expected to be made to Pierre’s operations as a result of the acquisition.