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FAST LANE -
September 1999 STATE The Ashland Inc. Foundation has committed to donate $200,000 over the next four years to support two major initiatives of the Kentucky Community and Technical College System. Ashland’s gift, which is the first received by KCTCS’ new system foundation, will be matched dollar-for-dollar by money KCTCS is receiving from the state’s Workforce Development Trust Fund. The Ashland gift will be used to fund an employability certification program and to help underwrite the costs of mounting a statewide resource "advancement initiative," which will focus on raising and managing private funds for KCTCS. "Not surprisingly, the demand for our services is far greater than the resources available to us through traditional sources of funding," said Dr. Michael McCall, president of KCTCS. "As a new organization, we need the help of companies like Ashland to build our capacity and supplement state funding with significant investments from the private sector and other state and federal sources." The Employability Certification Program will be geared towards teaching skills such as "success-oriented" teamwork, effective communication, resource management, problem-solving and critical thinking. The interdisciplinary coursework will include mathematics, applied physics, computer literacy, job readiness, communications, drafting, quality and safety. The curriculum is designed to prepare individuals to work in a variety of jobs and perform multiple tasks. Funds from the Ashland gift will provide the equipment, faculty training and curriculum development for up to five pilot sites throughout the state, which are expected to serve more than 1,000 students over the next four years.
STATE New leaders of the state’s AFL-CIO maintain that they have "totally turned around" the labor organization following a debilitating financial scandal that involved an unsolved burglary, a suspicious fire at union headquarters in Frankfort and the apparent suicide of the group’s bookkeeper. The National AFL-CIO imposed mandatory monitoring until the groups’ convention, which was recently held in Louisville. Speaking at a news conference following the convention, new President Bill Londrigan vowed that the AFL-CIO will be "a reinvigorated voice" for workers and will begin an "all-out push" for collective bargaining for state employees. The state AFL-CIO has 99,000 members and will also begin an initiative to attract two major unions that are not affiliated -- the Teamsters, with 36,000 members statewide, and the National Education Association, with 34,000 members.
LOUISVILLE
As a result, Vencor has apparently reported to a Texas state regulator that it will seek protection under Chapter 11 of the U.S. Bankruptcy Code. Ventas has made no public statement, but the company derives 99 percent of its income from rental payments from Vencor, payments that have been repeatedly delayed and now total $225 million. The government maintains that Vencor received more than $600 million in revenues in 1997 alone from one division that may have billed both Medicare and private insurers for the same services. The complaint follows a whistle-blower suit filed in 1997 by two former employees that is still pending. Vencor’s woes began in 1998 when it lost $650 million after acquiring a national nursing home chain. Its stock has fallen from a high of $45 per share in 1997 to less than $1. The three original founders have all resigned, although two, Bruce Lunsford and R. Gene Smith, remain directors of Ventas.
CENTRAL KENTUCKY
Mundy said that during the time the Urban County Council conducts its study, Kentucky-American Water Company will postpone its immediate plans to pursue the pipeline project and will only work on data that will assist the council in its study. "When formulating the equation for a solution to our current water needs -- utilizing engineering facts, cost-effectiveness, feasibility and environmental sensitivity -- we are still of the firm belief that the BWP [Bluegrass Water Project pipeline] best meets this equation," said Mundy. "However, due to the unique dynamics of many issues that have come forward in our community, possibly other elements should be added to this equation. We look forward to working toward that final equation of consensus in order to move forward expeditiously with a solution that will bring quicker resolution."
LEXINGTON
Video Vending currently has three machines in use in Lexington at Images Dry Cleaners, Slone’s Signature Market (Park Hills), and a Shell Food Mart near the U.K. campus. The company plans to install three to four CineVault machines each month in the Central Kentucky area. Michael McLaughlin, president of Video Vending North America, Inc., explained that in addition to the fact that Lexington serves as the North American headquarters for his company -- which has operated in Bermuda, Italy and several other countries for some time -- the Central Kentucky area is a perfect test market for the product. "It’s not too big, not too small, and relatively forward-thinking enough to accept something new like this," he continued, noting that in larger markets such as Atlanta or Chicago, the concept would simply get lost in the shuffle. "If the international success of these machines is any indication, we should really make an impact in the United States," he said. "By the end of this year, our plans are to branch out into other U.S. cities with corporate-owned networks and by offering franchise opportunities."
VANCEBURG The Jones Apparel Group has announced that it will close its Nine West shoe plant in Vanceburg in November, leaving 250 people without jobs. The announcement comes on the heels of the recent merger between Jones Apparel Group and Nine West Group Inc., which was completed in June. Officials with the company, which is also closing its Indiana and Dominican Republic operations, said that they anticipate meeting production requirements through their "global sourcing network." The shut-down of the Vanceburg facility hits that community particularly hard. Nine West had already eliminated two-thirds of the plant’s positions over the last two years (in addition to closing its plant in nearby Flemingsburg) and unemployment in the area has been running over 12 percent in recent months.
OWENSBORO The Kentucky Department of Insurance has taken over MedQuest, an Owensboro-based health maintenance organization whose financial struggles will finally end when it officially goes out of business effective October 31. Until then, the state will oversee the affairs of Medquest and its 11,000 HMO policyholders, who have until November 1 to find new health insurance. Their choices are few, however. Though there are 22 HMOs in Kentucky only three insurance companies have established provider networks in the Owensboro: Anthem Blue Cross-Blue Shield, Principal Life Insurance Co. and Aetna US Healthcare. Medquest and the state are working with Anthem to provide the option of continuation of coverage for MedQuest policyholders.
Chuck Bredesen, interim CEO of MedQuest, has said that efforts to offer low rates to attract more people left the company’s finances suffering as underpriced policies and hefty claims took their toll. When the company raised rates in an effort to break even, the move prompted customers to leave, even though the higher rates were competitive with what other companies were charging. MedQuest formed in 1996 and also operates a preferred provider network, which it will continue to offer to larger, self-funded employers.
LOUISVILLE
ASHLAND
Cincinnati-based Comair, which has provided service at Tri-State for almost 20 years, has announced that it will discontinue service effective September 30. Comair officials say that despite company efforts, the Huntington market has not been profitable for some time, with the average passenger load around 16 percent lower than the company’s systemwide rate. "A discontinuation of Comair service will cause an undue hardship on existing commerce and make the attraction of new commerce more difficult and place the traveling public in a captive market only served by one airline," the resolution states. If Comair does leave as planned, U.S. Airways Express (owned by U.S. Air) will be the only carrier remaining at Tri-State.
CAMPBELLSVILLE After suffering through a series of plant closings and job losses, things are looking up in Campbellsville. Just months after learning that Amazon.com would open a distribution center that will eventually employ around 1,000 people, the Taylor County town has now received word that a marketing research firm and an account management company both plan to move operations to Campbellsville. National Data Questing, a company specializing in marketing research, analysis and planning, has announced plans to move its headquarters operations from Louisville to Campbellsville, where it will also open a telephone operations center. (The firm plans to maintain its present Louisville operations through its sister company, Wilkerson & Associates.) The company is expected to be operational this month and hopes to employ more than 100 people within two years. Frost-Arnett Company, which currently has 10 accounts receivable/collections offices throughout the South, plans to locate a regional call center in Campbellsville and will be hiring up to 150 people over the next two years. Officials with both companies say they were attracted to the area because of the readily available labor supply, an issue that has become increasingly significant as record low unemployment levels in many areas of the country have made it difficult to find a good workforce.
MADISONVILLE Furniture manufacturer Period Inc., whose Henderson plant suffered a devastating fire at the end of last year, will be moving its operations to nearby Madisonville later this year, company officials have announced. The institutional furniture manufacturer, which has been in Henderson since its inception in 1937, was purchased earlier this year by Krueger International, a Wisconsin-based furniture manufacturer. With the fire forcing Period to operate from three separate facilities, efforts were made to locate a single location that would enable the business to consolidate its operations. Krueger found the solution in Madisonville, where it has purchased a 192,000-square-foot facility that was formerly a Goodyear tire plant. In addition to locating an existing facility at a price below the cost of building new, there was also another financial consideration involved. Because the annual unemployment rate in Hopkins County has ranked above the state average for the past five years, businesses that locate in such areas are eligible for more lucrative tax breaks than would be offered in counties with healthier statistics. The move to Madisonville will reportedly save Period between $600,000-800,000 per year for the next 15 years. Period employs approximately 150 people, most of whom are expected to remain living in Henderson and commuting approximately 30 miles to Madisonville. With more room for expansion there, the company anticipates increasing the workforce to as many as 350-400 over the next five to seven years.
LOUISVILLE
LOUISVILLE General Electric has formally reported to employees that it has tentative plans to close its long-running refrigerator line at Louisville’s Appliance Park and move the operation to a new facility in Mexico. The notification, required under the collective bargaining agreement, triggered a 45-day period (which will end this month) during which the Electronics Workers Union, Local 761, can attempt to persuade the company to reverse its course. If enacted, the plan would eliminate 1,500 jobs at the complex, where 300 people within the company’s refrigerator and laundry operations have already been laid off. (GE had originally expected to have to cut as many as 550 jobs, but was able to reduce the layoff numbers by implementing a "short-weeks" plan, whereby parts of the operation are closed for one day each week, when possible.) The bad news was at least partially offset, however, by G.E.’s announcement that it will invest $15 million to produce its new "Triton" dishwasher at Appliance Park, a decision that could preserve many of the jobs there. Although the Triton announcement did not specify how many jobs would be affected, the company did call the product a potential "home run," noting its high-speed, super-quiet operation. While the job reduction at Louisville’s Appliance Park will be painful -- and has prompted at least one direct threat the Mexican officials visiting Kentucky -- the situation is worse in Bloomington, Indiana, where GE plans to permanently close its plant there.
LOUISVILLE Three Louisville investors are organizing a $30 million venture capital fund that will seek designation as a Small Business Investment Company (SIBC) from the Small Business Administration. With that designation, the Prosperitas Investment Partners LP fund can leverage its $10 seed capital with an additional two-for-one federal match, for a total of $30 million. The three organizers, R. Gene Smith, Johns S. Greenbaum and Steven Bing, have raised the base funding from 35 local investors. The new fund will invest in start-up companies, early-stage businesses and turnarounds, primarily in the Louisville metropolitan area, according to Bing, the fund’s chief operating officer. Although there are no defined geographical restrictions, SIBC regulations limit investment in any one company to 20 percent of the money raised by private investors, or $2 million. The fund will recoup its investments through common or preferred stock in its client companies, or it may issue public stock itself. Kentucky has two other SIBCs but both are considered specialized funds. Equal Opportunity Finance Inc., a subsidiary of Ashland, Inc., invests only in minority-owned businesses located in Kentucky, Indiana, Ohio and West Virginia. Kentucky Highlands Investment Corp. is based in London and focuses on 11 southeastern Kentucky counties.
Business Briefs ASHLAND
BARDSTOWN
BOWLING GREEN
CORBIN
COVINGTON
EASTERN KENTUCKY
ELIZABETHTOWN
FORT CAMPBELL
HEBRON
HENDERSON
LEXINGTON
LOUISVILLE
MAYFIELD
MERCER COUNTY
MOREHEAD
NORTHERN KENTUCKY
PARIS
PIKE COUNTY
RUSSELL COUNTY
SHELBYVILLE
WESTERN KENTUCKY
WINCHESTER
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Copyright 1996-98, by Kentucky Business Online, LLC. All rights reserved. Editorial content is copyright
1998, Lane Communications Group Buzzword and the Buzzword balloon are registered trademarks of Buzzword, Inc. The Lane Report is a trademark of Lane Communications Group. All other trademarks are the property of their respective owners. |
Vencor, Inc., and its real estate spinoff,
Ventas, have been sued by the U.S. Department of Justice, which is seeking restitution of
hundreds of millions of dollars in Medicare reimbursements.
Noting that the issue of whether or not to
install a treated water pipeline between Lexington and the Ohio River was creating
polarity rather than consensus, Kentucky-American Water President Roy Mundy has said the
company will stand behind the Lexington-Fayette Urban County Government’s resolution
to find another way of dealing with the area’s water treatment and supply problem.
Lexington-based
Video Vending North American, Inc. will use its hometown as the first U.S. test market to
preview CineVault, an 24-hour automated movie rental service. Designed to offer more
flexibility in renting and returning movies, the CineVault machines are configured to rent
any combination of VHS tapes, CDs and DVD disks. Similar to automated teller machines, the
customer inserts a special electronic membership card (available from businesses listed on
the machine), selects a movie from the browser screen and the movie is dispensed through a
slot in the machine. 
Although Kentucky passed health care reform
legislation in 1994 in an effort to provide insurance for a broader population, the law
eventually resulted in scores of companies leaving the state. Additional changes to the
law in ‘96 and ‘98 have left insurance companies leery of coming into a state
where the laws are frequently being altered. 
David Jones, one of the original founders of
Humana, Inc., has returned to the company as interim chairman following the sudden
resignation of CEO Gregory Wolf. Wolf resigned following disappointing second-quarter
earnings and an announcement that Moody’s Investors Service might downgrade
Humana’s issuer and short-term borrowing ratings, actions that could increase the
cost of raising operating capital. Jones has reorganized the troubled healthcare provider,
creating a new "office of the chairman" to plan long-term strategy. Local
analysts attribute Humana’s decline to industry-wide troubles for managed-care
companies, primarily a result of reductions in Medicare reimbursements and poor pricing
decisions by Humana in several unprofitable markets. 
In an effort to not lose ground in its economic
development efforts, the Ashland Board of City Commissioners has voted in favor of a
resolution asking Kentucky’s congressmen and senators for assistance in convincing
Comair to continue servicing the Tri-State Airport in nearby Huntington, West Virginia. 
Bakery Chef, Inc. has bought the frozen foods
line of Continental Mills, Inc., a privately-held company based in Seattle, Washington
that markets products under brands such as Krusteaz, Alpine, Classic Hearth and
Ghirardelli. The transaction between Bakery Chef, which produces frozen biscuits and
pancakes as well as dry mixes at its two Louisville facilities, includes Continental
Mills’ manufacturing facility and the frozen waffle, French toast and pancake product
lines. Bakery Chef has also acquired the license for the use of the Krusteaz frozen brand
as well as the CMI frozen and private label frozen businesses. Continental Mills’ dry
mix businesses, which includes a new manufacturing facility in Hopkinsville, is not
affected by the transaction. Continental Mills’ current management and approximately
220 employees will continue to operate out of Seattle.