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FAST LANE - June
2004
Many Kentuckians have long maintained that their beloved state is nothing short of heaven. But putting emotions aside, is it a good place in which to do business? That all depends on who you ask and what’s being factored in. A recent report by Forbes magazine lists Lexington as one of the top 10 cities in the nation for business. “The horse capital of the world has the second-lowest business costs, after Albuquerque, N.M., of any area with a population greater than 200,000,” says Forbes, “and they’re 19 percent below the national average.” Lexington’s figures placed it No. 9 in the country among large metropolitan communities. The Cincinnati/Northern Kentucky area was ranked No. 43, while Louisville came in at No. 74. In a similar ranking of smaller metro areas, Owensboro was ranked No. 81. The Huntington, West Virginia area, which includes Ashland, Kentucky, was listed at No. 114. Forbes’ viewpoint was echoed by Site Selection magazine, a publication that provides expansion-planning data for 45,000 executives. Site Selection’s analysis of 10 economic development criteria ranked Kentucky as one of the most competitive states in the nation for economic development. This year, Kentucky was ranked No. 2 in the nation, just behind Indiana. Last year, Kentucky was listed at No. 7 in the ranking. On the other hand, a study conducted by the National Policy Research Council in Washington, D.C. paints a different picture. According to that organization’s “America’s Best Cities and States: The Annual Gold Guide to Leading Rankings,” Kentucky placed 37 out of the 50 states. The report, which is a compendium of rankings published by leading American institutions, ranked states and cities in 11 different categories: business climate, economic dynamism, entrepreneurship and small business, environment, government, health and welfare, infrastructure, public safety, quality of life, technology and education. MURRAY
The Michigan-based company, which produces roof systems for the automotive industry, plans to construct a 105,000-square-foot expandable building that will be dedicated to the stamping division of the company. It will supply products both to Webasto assembly plants and directly to customers. Webasto first established a presence in Kentucky in 1998, when it opened an assembly plant in Lexington. A second Lexington facility was added in 2002. The new Murray plant will have an employee base of 150 within two years, bringing Webasto’s total Kentucky employee group to approximately 575. The company has received preliminary approval from the Kentucky Economic Development Finance Authority (KEDFA) for tax incentives under the Kentucky Industrial Development Act, an incentive program aimed at increasing manufacturing employment within the Commonwealth. MAYFIELD More jobs cuts have been announced at Continental General Tire’s Mayfield plant as the company struggles to contain rising costs and remain competitive. In the ’70s, the company employed more than 2,000 people. Since then, however, much of the production has been shifted overseas in order to achieve lower labor costs. With previous layoffs of 230 jobs last June and another 150 just before Christmas, the community has been hard-hit. Martien de Louw, president and chief executive officer for Continental’s North American operations said the company “agonized over a number of scenarios” for improving manufacturing logistics, but was faced with the fact that the Mayfield plant continues to be Continental’s highest-cost production facility in North America. MEANS
Boneal Incorporated, of Means, Ky., became the United States Postal Service’s sole provider of motorist mail chutes late last year. Boneal is a prime contractor for the United States Air Force, Coast Guard, Department of Defense, and several other U.S. government agencies. It also works with companies such as Lockheed Martin and Northrop Grumman providing solutions to manufacturing problems. The new Boneal chute looks exactly like the traditional design that has been in use for 50 years, but looks can be deceiving. The Boneal engineering team, under the direction of company President David Ledford, greatly improved the design and durability of the product. The team spent two years developing and testing a system that allows Boneal mail chutes to hold up to vandalism and extreme weather much better than the old design. As a result, the improvement could save the Postal Service millions of dollars in annual maintenance costs. Boneal was given the task of redesigning the motorist mail chute as part of a massive effort by the Postal Service to re-evaluate the way in which it collects mail following the biohazard attacks of 2001. STATE Alcan Inc. has announced plans to spin off its rolled aluminum business into a new company that will include three Kentucky plants. The as-yet-unnamed company, which will be owned by Alcan shareholders, will rank as the world’s largest aluminum rolling company by both revenue and production. Its products will include beverage cans, automotive sheet, foil-stock, lithographic sheet, painted sheet and a number of other industrial products. The Kentucky plants involved in the spin-off include an aluminum can recycling plant in Berea with 110 employees; the Alcan facility Louisville, where 105 workers manufacture aluminum foils for cigarette packages and candy wrappers; and a 950-employee plant in Russellville. The new company will have approximately 10,000 employees worldwide and is expected to generate some $6 billion in revenue. By spinning off its rolled aluminum business, Alcan officials say the company is better positioned to focus on bauxite, aluminum, packaging and engineering aluminum products. Six existing Alcan plants in Kentucky, with a total of approximately 1,250 employees, will remain under the Alcan name. The new company will be headquartered in Canada, but will have executive offices in the U.S. LOUISVILLE
The news is particularly welcome in light of the fact that the company nearly decided to leave Louisville and locate its company headquarters in California after it merged last year with ARV Assisted Living, a company headquartered in Costa Mesa, California. However, following a management change, the decision was made to retain Atria’s headquarters in Louisville. The company recently closed its California office and is moving some of that location’s functions to Louisville. Among those are training, marketing, human resources and business analysis. Atria is currently searching for a location on which to build new headquarter offices with approximately 40,000 square feet. The new facility will accommodate the newly expanded Louisville staff as well as provide for future growth. Atria owns and manages 135 assisted-living communities in 26 states. STATE
The goals of the Kentucky Equine Education Alliance include educating the public and key state constituencies regarding the value of the horse industry to all sectors of Kentucky’s economy, including its importance to the state’s agriculture and tourism industries – and contribution to the environment and land preservation. Other objectives include building a state grassroots coalition in all 120 counties involving Kentucky’s 128,000 horse industry-related participants and expanding the state’s economic base through the enhancement of the Commonwealth’s world-class horse industry. A principal focus of the Alliance’s efforts will be an educational program that will include fact-based Kentucky horse economy information, which will be disseminated through a website (www.equinealliance.com). Other segments include a speakers program, teacher’s kits and other outreach initiatives. The Alliance’s programs also include the organization of a coalition of key state and local business, labor and trade association stakeholders as well as a state advisory committee consisting of prominent state horse industry representatives. In addition, the Alliance will encourage the development of a pro-jobs and economic opportunities agenda for the Kentucky horse economy, which includes increased state advocacy of the Kentucky horse industry; initiatives to stimulate jobs and economic growth through incentives and tax reform to solidify Kentucky’s horse economy leadership and to attract new horse industry interests to the state; and expansion of existing state horse incentive programs such as the Kentucky Thoroughbred and Standardbred development funds to encourage ownership of Kentucky-bred horses. The Alliance’s charter members include Airdrie Stud, Darby Dan Farm, Four Star Sales, Gracefield, Gaines-Gentry, Hill ‘n’ Dale, Dr. J. David Richardson, Jack H. Smith III, Thoroughbreds, Lane’s End, Runnymede Farm, Three Chimneys, Taylor Made Farm and WinStar Farm. NORTHEAST KENTUCKY
The objective of the Kentucky Entrepreneurial Coaches Institute is to train and develop entrepreneurial coaches in Northeast Kentucky who will help aspiring and existing agricultural entrepreneurs succeed and work to develop the entrepreneurial climate of the region. The project will work to facilitate development of new business ideas and ventures among tobacco farmers in Bath, Bracken, Carter, Elliott, Fleming, Grant, Greenup, Harrison, Lawrence, Lewis, Mason, Menifee, Morgan, Nicholas, Owen, Pendleton, Robertson, Rowan and Wolfe counties. Eric Scorsone, a UK agricultural economist, said one of the intended results of the project is to promote more cooperation among tobacco-dependent counties and to create more business start-ups. It’s estimated that more than 1,500 farm families, citizens and community leaders in the 19-county area will benefit from the project during its first year. By encouraging entrepreneurship and providing support to the regions tobacco farmers, new enterprises are likely to emerge, leading to higher farm income. The new program is being funded through a $1.3 million grant from Kentucky’s Agricultural Development Board. LOUISVILLE
The program offers Toshiba customers the convenience of dropping off laptop computers in need of repair at one of UPS’ 3,300 store locations. Toshiba officials hope to reduce the turnaround time from the current time frame (generally eight to 10 days) to four days or less. The new streamlined process involves utilizing a specially-designed repair center at UPS Supply Chain Solutions’ logistics and technology campus in Louisville. The two million-square foot campus, which specializes in high-tech support, is adjacent to the UPS Worldport global air hub. The proximity to the air hub means it is possible that a laptop can be received, repaired and shipped directly to the owner in the same day, with delivery as early as 8:30 a.m. the next morning. UPS Supply Chain Solutions repair technicians are certified to repair the entire laptop. “This move is an industry first that will streamline our service and support efficiencies and give Toshiba an edge in the fiercely competitive PC market,” said Mark Simons, vice president and general manager for Toshiba’s Digital Products Division. The company expects to save “millions of dollars” as the process streamlines Toshiba’s service operations. UPS officials note that similar arrangements have taken place with InFocus, a manufacturer of digital projectors, and with Lexington-based Lexmark International. UPS is Louisville’s largest private employer, with more than 20,000 employees. LOUISVILLE Independence Air, a new low-fare airline, will begin offering air service between Louisville and Washington’s Dulles International Airport this summer. Louisville is among the first 35 destinations being offered by the new carrier, which is owned by Atlantic Coast Air. Independence Air will operate a fleet of at least 112 jets, including 25 Airbus A320/A319 aircraft as well as 87 CRJs. The non-stop flights between Louisville and Washington, D.C. are slated to begin August 23, with one-way fares beginning at $69. The airline anticipates adding new service to Florida, points in the Midwest and the West Coast later this year. LOUISVILLE Paradise Tomato Kitchens Inc., a Louisville company that supplies pizza sauce for national restaurant chains, has purchased the former Frito-Lay plant and 12 acres of land for $1.9 million. Paradise Tomato Kitchens will retain its current Louisville facility, which is used for research and production, and will utilize the newly-acquired plant for processing. The company expects to have its new facility operational by this fall. The operation will initially employ 18 workers, but company officials say they anticipate eventually needing up to 100 or more workers. Paradise Tomato currently employs a staff of 65. Frito-Lay closed the plant in January as a part of parent company PepsiCo’s reorganization of its snack food division. Frito-Lay employed some 325 workers in Louisville. ELIZABETHTOWN Fort Knox National Company, an Elizabethtown company that is a leading provider of electronic payment services, has announced plans to locate a second call center facility in Madisonville, Kentucky, creating 192 new jobs with an annual payroll of more than $3.6 million. The Madisonville expansion is designed to support the growth of and increased demand for Fort Knox National Company’s biller direct payment solutions, which allow consumers to pay bills by Internet and telephone, using a variety of credit card, debit card, and electronic check payment options. The company’s existing Elizabethtown call center facility currently takes 500,000 calls per month for clients such as GMAC Financial Services, Household Automotive Finance, and Mitsubishi Motors Credit of America, Inc. The addition of the Madisonville facility will ensure optimal availability during peak call periods and provide reliability and backup support. The company’s rapid growth path has taken it from 60 employees in February 2000 to more than 300 employees today. In 2001, Fort Knox National Company opened a 20,000-square-foot call handling center in Elizabethtown; the facility has since been expanded to 49,600 square feet. In 2003, the company also expanded to Louisville, where it has satellite offices and production facilities. The Madisonville facility will undergo a $3.1 million renovation that is expected to be complete and the site operational by year-end. The new jobs will consist of 168 customer service representatives to assist consumers in making electronic payments by phone, as well as 24 managerial, technical, and support staff positions. The proposed expansion will bring Fort Knox National Company’s total workforce, in all locations, to more than 600 employees over the next two years. TENNESSEE
Exedy is a supplier of torque converters to major automotive companies such as Nissan, Ford Motor Company and GM. Exedy America’s parent company, Exedy Corp., is headquartered in Japan, with annual revenues of $1 billion. With the recent expansion announcement, Exedy becomes one of three Japanese companies to announcement significant investments in Tennessee this year. The expansion project will accommodate the six-speed transmissions being development by Ford and General Motors as well as the continuously variable transmission, which uses belts instead of gears for shifting, resulting in better fuel efficiency. The expansion will also improve the facility’s manufacturing capacity, enabling Exedy to increase its production from 700,000 parts per year to some 1.4 million units per year. The company currently employs 340 people and expects to add 200 new jobs by next June. INDIANA DePuy Inc. has announced plans to invest $81 million in new technology at its Warsaw, Indiana headquarters. Among the new products being funded by the investment is a system for computer-aided surgery. DePuy was established in 1895 as the first commercial orthopedics company in the U.S. The company is now considered a global leader in orthopedic and healthcare advancements, manufacturing and distributing orthopedic devices and supplies such as hip and knee replacements and operating room products. The company is now part of Johnson & Johnson, Inc. and presently employs a total of more than 1,200 individuals in Warsaw. In addition, the state of Indiana is contributing $161,000 to help enhance the skills of 388 of DePuy’s existing employees. “Warsaw is seen by many as a model for economic development,” said Warsaw Mayor Ernie Wiggins. “In a global economy, knowledge is the only sustainable competitive advantage. This grant shows that our state government recognizes this simple truth and is prudently investing our tax dollars to prime the economic engine that drives us all.” Warsaw is also home to two other major orthopedic firms: Biomet and Zimmer. Zimmer Holdings recently announced plans to invest $64 million in its Warsaw facility over the next three years. The company anticipates adding some 400 jobs by 2007 and creating an additional $15 million in payroll by next year. Biomet Inc. recently expanded its company, spending $580 million on two acquisitions.
Business Briefs COALTON
FLORENCE
FRANKFORT
HAWESVILLE
HEBRON
LEXINGTON
LOUISVILLE
MAYFIELD
NICHOLASVILLE
OLDHAM COUNTY
OLIVE HILL
OWENSBORO
PADUCAH
SHEPHERDSVILLE
STEARNS
WHITLEY CITY
STATE
OHIO
INDIANA
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. |
In determining the rankings, Forbes considered the number of college degrees and advanced degrees held by local citizens, the overall cost of living, crime rates, culture and leisure activities, and net migration over a five-year period.
Webasto Roof Systems has selected a site in the Murray-Calloway County Industrial Park on which to build its third Kentucky manufacturing facility. 
The company has informed employees that daily tire production is being cut from 10,900 to 7,300, beginning in July. As a result, 200 jobs are slated to be eliminated next month, reducing the plant’s workforce to approximately 800. 
The next time you roll down your car window and drop a letter in the big blue mailbox at a post office, don’t be surprised if you see the name of a Kentucky company prominently displayed on the front of the mail chute.
Atria Senior Living Group has announced plans to expand its Louisville headquarters, adding some 85 new jobs. The jobs are expected to pay an average annual salary of $50,000 to $60,000. The additional jobs will nearly double the company’s existing staff. 
A group of Kentucky horse industry representatives has formed a new organization to build broad-based education and grassroots initiatives that will increase awareness of the benefits of the state’s $4 billion horse economy and the potential to increase its more than 50,000 jobs and economic opportunities. 
A new project is now underway in 19 counties of northeast Kentucky to build entrepreneurship support for the region’s tobacco farmers.
UPS has joined with the Digital Products Division of Toshiba America Information Systems Inc. on a new laptop computer repair process designed to reduce turnaround time for customers.
Under the proposed plan, Fort Knox National Company will lease a 10,125-square-foot facility in Madisonville’s Industrial Park.
Exedy America Corporation has announced a $56 million expansion of its auto parts plant in Knoxville’s Eastbridge Business Park.
Alcoa Automotive is releasing approximately 110 workers from its Kentucky Casting Center in Hawesville, where it employs some 360 workers. Company officials cited a decline in orders for the chassis and suspension components made at the plant as the primary reason for the layoffs, but emphasized that the plant will remain open. 
Pomeroy IT Solutions has entered into a definitive merger agreement to acquire Alternative Resources Corporation (ARC) for approximately $44 million. The merger will result in a $735 million IT solutions provider with a national, multi-faceted service network. “This merger is a testament to the company’s commitment to execute on its long-term growth strategy,” said Steve Pomeroy, president and chief operating officer of Pomeroy. “We believe the overall compatibility of the two companies’ business lines will create synergies that will positively affect our customers, partners and shareholders. The service offerings of Pomeroy and ARC complement each other well, which makes the two companies a natural fit for a merger of this nature. We believe the combined company will be better positioned and prepared to exploit an array of new opportunities.”
Tumbleweed Southwest Grill, a Louisville-based restaurant chain, has signed a license agreement that entails the development of at least nine new restaurants in the Middle East over the next five years. All current Tumbleweed franchise agreements and the restaurants operating in the Middle East will be placed under the master license with Sultan Center Food Products K.S.C., a franchisee operating in Kuwait. Current licenses cover Kuwait, United Arab Emirates, Bahrain, Egypt, Turkey, Jordan and Lebanon. 
Verizon Wireless has announced plans to invest $1.3 million to install 32 backup generates at both new and existing cellular sites throughout the state of Kentucky. Verizon officials say that having permanent generators, versus portable generators, will provide greater network reliability.