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FAST LANE -
December 2000
Among the annually listed 500 fastest-growing private companies in Inc. magazine this fall were eight from Kentucky. Thirty-eight percent of the overall 500 firms come from the computer software and services sector. California led the rankings with 69 companies, followed by distant-second Texas with 39 and Virginia with 31. “We’ve had to do a lot of things differently since we first appeared in the Inc. 500,” said SIS president Steve Sigg. “We’ve re-tooled and re-engineered in many areas, and yet we have continued to grow in terms of revenue, employees and geography.” “We’ve expanded our focus to encompass areas like “Business-to-Business” e-Commerce and Internet development & connectivity, in addition to more traditional services like hardware sales and application development.” “By strengthening and growing relationships with our partners and vendors, we feel we can provide our customers with the best products and services. Our partnerships include: IBM, Microsoft, Cisco, Lotus, and Siebel, (among others).” “Since we first appeared in the Inc. 500 list in 1997, we’ve grown from a Lexington-based company to one that now encompasses 6 offices in 4 states, with over 50 employees.” STATE The Fall 2000 Kentucky Business Confidence Survey went out to more than 2,000 businesses, but only 341 responded. More envelopes were returned as “undeliverable” (219) than were returned with responses from the “businesses of all sizes” sample (200). Nevertheless, of those responding, about 56 percent expect an increase in profits in the coming year, down from 69 percent one year ago. Of the 141 responding businesses with more than 100 employees, more than 70 percent expect an increase in sales. Only 43 percent expect an increase in production in their respective industries, down from 55 percent in 1998 and 51 percent in 1999. Mark Berger, director of the Center for Business and Economic Research at the University of Kentucky Gatton College of Business, calls the response rate low, but typical. As for all those that didn’t respond, they’re either unwilling to tell us the bad news, or too busy to share any news at all. “All surveys are having this drop in response rate,” says Berger. “You try to make it as convenient as possible, but people are inundated with them. People never want to tell you about bad stuff and with the unemployment rate so low, they don’t have time to talk to us. If they’re having trouble filling positions, this is the last thing they want to do.” In other recent surveys, The Business Council – consisting of 300 current and former CEOs from around the U.S. – sees a slowdown at hand, with two-thirds forecasting higher consumer prices in 2001, and 80 percent seeing a general slowing of economic growth, according to Dow Jones News. The most recent Business Confidence Index poll conducted by Preston-Osborne of Lexington surveyed a 40-member panel from the Lexington Chamber of Commerce. It found 67 percent who were optimistic about the state’s economy – a falloff from 71 percent in July 1999 and 80 percent in March 1999. Here are some other recent key economic indicators:
LOUISVILLE Members of the Louisville chapter of the National Association of Women Business Owners recently were honored with national awards. The chapter was selected as Top Chapter in the Nation for the intermediate category. Louisville/Jefferson County Metropolitan Sewer District CEO Gordon Garner was chosen as Top Corporate Partner of the Nation, beating out such notable organizations as Wells Fargo, Lucent and Merrill Lynch. And Katherine Autin, owner of Jewelry Search, Inc., was selected as Team Builder of the Nation. INEZ On the heels of the environmental mayhem caused by one Kentucky staple – bourbon from the Wild Turkey fire in Lawrenceburg – comes another disaster caused by coal. A 30-year-old, 72-acre Martin County Coal Corporation impoundment gave way in mid-October, dumping 250 million gallons of slurry mixed with 155,000 solid cubic yards of sludge into Martin County streams. Martin County Coal is a subsidiary of A.T. Massey Coal Inc. The gooey sludge escaped through an abandoned mine that collapsed beneath the pond. Even while cleanup efforts were going on, the slug of dark water made its way down the Big Sandy River and into the Ohio. As the spill reached the Ohio, the Catlettsburg Refinery had to begin shipping in water via barge from upstream and was forced to clean out an outgoing fuel pipeline to a facility in West Virginia in order to convert it to an incoming water pipeline. The spill kept one Ohio business busy. Employees at National Sorbents of West Chester were working plenty of overtime making extra booms containing its specialized waste absorbing filters. The booms were being put to use by Enviropro, a Pikeville coal mine cleanup company under contract to Massey. According to the Associated Press, there are 225 impoundment ponds in Appalachia at an equal or greater risk of giving way than the one in Martin County, including 60 in Kentucky. There are over 600 coal slurry ponds across the country. STATE A new U.S. Census Bureau report based on 1998 data from 50,000 households reveals that 51 percent of married couples with children both work at least part-time jobs. That’s a dramatic leap up from 33 percent in 1976. Similarly, while only 31 percent of women with babies younger than a year old worked in 1976, 59 percent find it necessary to do so today – and that figure jumps to 73 percent for mothers of children older than one year. A separate study by the AFL-CIO shows that 51 percent of women workers work opposite shifts from their husbands in order to maintain parent-child contact. Only 24 percent of households report that the father is the sole breadwinner. Meanwhile, the proportion of childless women aged 40-44 has jumped from 10 percent in 1976 to 19 percent in 1998. An unrelated study by the Business Women’s Network has found that one million women in the U.S. have incomes surpassing $100,000 and more than 50 percent of households with a high net worth are headed by women. In addition, since they’re starting businesses at twice the rate as men, around 40 percent of all companies will be owned by women by year’s end. LOUISVILLE When the National FFA convention descended on Louisville last year for its first-ever visit after years of meeting in Kansas City, there were a few snafus. But while this year brought a repeat of last year’s 46,000-plus visitors and estimated $22 million economic impact for the area, new publications, more transportation and extended hours at attractions like the Kentucky Derby Museum were put in place to further boost the city’s image as well as visitors’ spending. Over 40,000 rooms were filled from Lexington to Elizabethtown, giving the blue-jacketed youths a broad view of the region as well as the River City. “Last year, neither Louisville nor our students knew what to expect,” said FFA spokesperson Kathryn Whitaker after the convention, acknowledging that “there’s a comfort level we achieved this year.” The FFA, based in Indianapolis, is slated to hold its convention in Louisville through 2005. LOUISVILLE As rival giants Philip Morris and R.J. Reynolds answer to European Union charges of abetting international cigarette smuggling, Brown & Williamson is taking aggressive – but comparatively tame – steps to combat faltering cigarette sales and rebrand its image. The most visible step was the naming of marketing expert Susan Ivey as the company’s new president and CEO, the first time a woman has headed a major tobacco company. Present CEO Nick Brookes will accept an executive position with the company’s British holding company, British American Tobacco, and current president Earl Kohnhorst will retire. More than 380 employees, including 68 in Louisville, accepted severance packages offered by the company in September. The company also formed a new subsidiary, BWT Direct LLC, that will endeavor to sell second-tier brands through catalogs and over the Internet. B&W officials have pledged to verify that catalog recipients are adults. The initial mailings will focus on nine states, including North Carolina and Kentucky – but won’t include Nevada, which just beat out Kentucky for the distinction of having the most smokers. The U.S. Centers for Disease Control and Prevention revealed that Nevada leads with 31.5 percent, followed closely by Kentucky at 29.7 percent (a 1.1 percent drop), and Ohio at 27.6 percent. Another state on the B&W catalog list, California, displays one of the lowest smoking rates in the nation. Brown & Williamson recently sued the state of New York over a new law banning the sale of cigarettes by phone, mail-order or the Internet. STATE Racing simulcasters across the country breathed a big sigh of relief in late October, thanks to yet another save by U.S. Representative Hal Rogers, R-Somerset. During discussion of Internet gambling law, a Justice Department statement had called into question the legality of interstate simulcast wagering, citing The Wire Act of 1961, which was designed to fight organized crime. Instead, the Interstate Horse Racing Act of 1978, which was designed to promote such betting (now responsible for 80 percent of all horse wagering) was amended and clarified in an appropriations bill “to protect the thoroughbred racing industry from being subject to federal prosecution for longstanding interstate wagering activities,” according to Rogers’ office. In other horse racing news, The Keeneland Association announced a $4 million rehab of its Thoroughbred Center on Paris Pike, the addition of a third yearling auction, continued contributions of one quarter of one percent to the NTRA’s buyer recruitment program, and the reduction of its own sales commission from 5 percent to 4.5 percent beginning in January. The racecourse hosted almost 210,000 people during its short, 16-day fall meeting, and reported a total combined mutuel handle of over $99.5 million, a rise of 6.5 percent from last year. Just down I-64, Thomas Meeker of Churchill Downs spoke of expanding the company’s reach overseas as he reported on CDI’s phenomenal growth over the past few years. But there wasn’t much time to bask in accomplishment, as early in Churchill Downs’ fall schedule came an exciting day of racing at the Breeders’ Cup on Nov. 4. (See story on p. 63.) Among the coming changes at the track will be a new way to bet the Derby, as the Kentucky Racing Commission approved expanding the race’s wagering opportunities from 14 to 20 slots, thus erasing the time-honored tradition of betting the field. LEXINGTON In the wake of the departure of its dynamic director of minority business development De Asa Nichols and the imminent retirement of president and CEO Bob Douglass, the Lexington Chamber of Commerce is hoping to have a new president in place by Jan. 1, and has also initiated a search for Nichols’ replacement. “The next several months will be critical ones for our community as we begin the search for a new chamber president and the University of Kentucky continues its search for a new president,” said chairman Bill Thomason, owner of Mill Ridge Farms. Among the organization’s new leaders is Kentucky-American Vice President – Operations Nick Rowe, recently elected to serve as chairman-elect. LEXINGTON Over the past two years, more than 3,400 manufacturing jobs have been lost due to plant closings. But nearly 21,000 have been added. That’s how many are viewing the initially disconcerting news that 600 manufacturing jobs are being cut from Lexmark’s Lexington facility and shipped overseas to printer plants in Mexico and China. At the same time, the company will, by the end of 2002, add 700 higher-paying jobs at its new $70 million R&D facility expected to come on line in Lexington next year. While there will be a short-term restructuring cost of $35-45 million, the overall cut of 900 jobs worldwide is expected to save Lexmark $100 million annually. And while company and community officials are anxious to help the displaced find work, they’re also hopeful about the new opportunities the company is offering. “I think it is essential to note that from the state’s perspective the types of jobs that Lexmark has committed to bring to the state are important and will help propel Kentucky forward,” says Kentucky Economic Development Cabinet spokesperson Pamela Trautner. “While it is regrettable to lose jobs, we understand that companies must evaluate all facets of their operations and make tough decisions that enable them to compete in the global marketplace.” The new manufacturing jobs came from 99 new firms and 490 plant expansions since January ’99 – totalling over $3.6 billion in investment. STATE Chattanooga-based CBL & Associates Properties, Inc. has acquired the interests of Cleveland-based Richard E. Jacobs Group in Fayette Mall in Lexington, Jefferson Mall in Louisville and Kentucky Oaks Mall in Paducah. The transaction was part of a 23-facility, $1.2 billion deal that will make CBL one of the top five owners of shopping centers in the country. The acquisition is expected to close in the first quarter of 2001, and will bring the company’s properties to 55 million s.f. in 26 states. BARBOURVILLE Union College dedicated its new Sharp Academic Center at a ceremony featuring the building’s namesakes, Dr. Phillip A. Sharp and his wife Ann, graduates from 1966. Dr. Sharp has served as head of the MIT Department of Biology since 1991, and won the Nobel Prize for Medicine or Physiology in 1993 for his work in molecular genetics. Besides classrooms, labs and offices, the new center offers the area’s CenterNet site, part of Kentucky’s program to offer distance learning and video-conferencing capabilities to counties throughout the state. STATE Largely through the clout of Sen. Mitch McConnell, burley farmers in Kentucky will benefit from a $510 million bailout, which declares the 1999 crop a disaster and writes off federal loans used to buy it. Because of the aid, what was projected to be yet another year of quota cuts may instead turn into an effective quota increase, keeping many small farmers in business for another year. According to the USDA’s Farm Service Agency, Kentucky farmers have received over $612 million in disaster and price support payments and loans in the past year. Through joint efforts by the state agriculture department and the cabinet for Economic Development, nearly $1 million worth of cattle have been sold to Mexican livestock and dairy farmers over the past two years, including a recent $411,000 sales of 280 heifers from five counties. Live animal and meat exports totaled $212.6 million of the state’s total agricultural exports of $889.4 million in fiscal 1999. Business
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