"This is the biggest business news to hit Lexington since IBM came here in the 1950s. It’s a high-tech company of the future. The investment is tremendous. The new jobs will be high paying and high quality ones and that is what Lexington’s future is all about."

—Lexington Mayor Pam Miller on the recent Lexmark expansion

The impact of the Lexmark expansion on Lexington will be multi-faceted. Some of those facets are revealed by a view of Lexmark itself and what the company has brought to the area.

Brightening Lexington’s future

"We are a heads down, get the job done kind of company," says Tom Lamb, executive vice president at Lexmark International, the Lexington-based Fortune 500 company that has become a global leader in printing solutions. "Everyone here knows the goal," Lamb says. "We’re a teamwork company."

The Lexmark goal is "customers for life," as stated in the company’s vision statement. The full statement is framed and displayed near the main reception desk. Huge banners hang from high ceilings in production areas reminding the teams of that goal. In 1991, when Lexmark emerged from under the IBM umbrella, a group of employees formulated the new company’s vision statement. The same group recently revisited that statement and didn’t change a word.

Lexmark’s strategy has proved a winning one. Sales for 1998 reached $3.02 billion, a 21 percent increase when compared to 1997, and Lexmark has reported earnings growth for the 15 consecutive quarters since being listed on the New York Stock Exchange. Return to shareholders since the stock’s initial public offering in November of 1995 has been a whopping aggregate growth rate of 403 percent. Business Week’s list of the 100 top information technology companies ranked Lexmark as Number 10 in 1998 and Number 11 for 1999.

Lexington serves as Lexmark’s global headquarters and company Research and Development is also centered in Lexington (except for some focused R & D on laser toner being done in Boulder, Colorado). Customer support services for North and South America, offered in English, French and Spanish, are stationed at the Lexington offices. Of the company’s 8,000-plus employees worldwide, more than 5,000 are employed in Lexington. And the Lexington operations are about to undergo a major expansion.

Since the Lexmark announcement in late May regarding the planned $70 million expansion, which will add two new buildings and 700 employees all dedicated to R & D, media people have been more frequent visitors at the company. Recently a reporter from the Wall Street Journal spent a couple of days taking in the scene at Lexmark. Now, on this afternoon in late June, Tom Lamb sits at a table in a conference room adjacent to his office and talks about the company and its growth.

"We have an incredible alignment between senior management and what the needs of the company are," says Lamb. "We are a very focused, entrepreneurial company. One of our goals is to have everyone -- right down to the factory floor -- have some ownership." He has on a short sleeve sports shirt -- a reflection of the casual atmosphere that creates open communication throughout the company.

Grow and innovate or perish is the dictum ruling the world of high technology producers. The competition is intense and technological advances make products obsolete at a swift rate.

"We’re a company whose key strategy is investing in our technology," Lamb continues. "Our R & D initiative is critical to our success. We need to bring products to market quickly. And we need to continually control and drive down costs. We have a lot of work to do in a short time to compete with tough guys out there. That’s why we have a lot of team-oriented things."

That’s also why the Lexmark expansion will add substantially to the company’s capacity for R & D.

The choice to stay

Two reasons, says Lamb, account for why Lexmark chose Lexington as the site for its expansion. First is "synergy." Having R & D located alongside manufacturing and sales and marketing makes for a more integrated approach. Second is the competitive package put on the table by state and local officials.

"Without doubt this is a major announcement that will positively impact Lexington and the whole region for several decades," says Bob Douglass, president of the Lexington Chamber of Commerce, speaking of the Lexmark expansion. "This type of movement builds a community of high-tech talent. The increased presence of researchers and technology-based people will foster start-up high technology businesses. An innovative company may start in someone’s garage, for example, and grow into a big business. This will affect our area in ways we don’t even know yet."

Douglass says that it sometimes takes a show of support -- not just words -- to keep a company’s growth rooted in a given locale.

"I know that there was a community in Indiana making a strong play with a multi-million dollar package to lure them (the Lexmark R & D expansion)," he notes.

"Lexmark is a very desirable corporate citizen," says Mayor Miller. "Other communities were interested in making them significant offers. We felt that it was imperative to keep the growth here."

To that end, state and local officials put together a package of incentives that helped cinch the deal. Tax incentives total $9.6 million over a 10-year period (80 percent from the state and 20 percent, local). The package also includes $3.5 million for infrastructure improvement to storm water drainage and roadways. The Lexington Industrial Foundation, a private foundation managed by the Lexington Chamber, added several hundred thousand dollars to the state and local funds for the infrastructure improvements.

A generous corporate citizen

Lexmark is not a company to take such incentives and neglect giving back to the community. The company has earned great respect for its generosity.

Consider the much-needed YMCA planned for Lexington’s north side.

"Lexmark is a key partner -- if not the integral partner -- with our north side YMCA project," says Dan Hecker, president and CEO of YMCA of Central Kentucky. Lexmark donated the site for the new YMCA, which Hecker says is valued at approximately $1 million. Lexmark also contributed an additional $600,000 to the project. Miller sees Lexmark’s involvement in the north side YMCA as a good sign for the redevelopment of northern Lexington.

"Lexmark volunteers are great workers and build beautiful houses," says Mary Jo Votruba of Habitat Humanity. Lexmark has fully sponsored the building of two homes, one in 1998 and the other this year. Lexmark employees volunteer for construction work and the company pays the costs. "Lexmark is the only corporate sponsor doing the whole thing this year," says Votruba, "and we hope that other corporations will be challenged to do the same."

One of Lexmark’s most outstanding achievements in giving to the community is the company’s raising of over a million dollars for the ‘98-’99 United Way of the Bluegrass fund drive. The highest award given by United Way to a company, the Pillar Award, was presented to Lexmark for that achievement.

"Lexmark commits tremendous resources to the United Way campaign," says Van Florence, executive vice president of United Way of the Bluegrass. Each year a Lexmark executive takes on the role of campaign coordinator. A campaign team of approximately 30 Lexmark employees works on the project for about five months. An additional 30-plus Lexmark employees serve on United Way committees during the fund drive. Company representatives also serve on the United Way Board, the Executive Committee, the Vision Team and the Quality Team. Six Lexmark employees are on loan for three months to help raise money in the community at large. Over 400 canvassers work within the company making one-on-one solicitations of Lexmark employees. In addition to all this, Lexmark participates year-round in the United Way Care Days program. In 1998 over 200 employees signed up for 26 different projects and donated more than 1,100 hours of labor and service as a part of Care Days.

Enrichment to education

The University of Kentucky has set as its goal to be ranked among the nation’s top 20 public research universities. In order for that to be achieved, electrical engineering, computer science and mechanical engineering all have to be ranked among the top 25 in public engineering schools, says Tom Lester, dean of the College of Engineering at UK.

"We may already be, in terms of our performance, among the top 25 programs nationally," says Lester, "but public perceptions change more slowly than performance. It may take 20 years of performance at this level for perception to catch up. Without this Lexmark expansion it would be much more difficult to aspire to greater national prominence in electrical engineering and computer science. The Lexmark expansion was also a key factor in our ability to recruit two chaired professors in electrical engineering."

One of the professors was recruited from Purdue University; the other from the University of Texas.

Lester explains that there is a symbiotic relationship between high technology companies and college engineering programs.

"Our relationship with Lexmark goes back to when IBM came to Lexington," says Lester. "You find IBM locating near major engineering schools, as do other technology companies."

And, top teaching talent in the engineering field are drawn to colleges located near such companies. UK has a policy of allowing professors one day a week to work outside the university as consultants.

These developments have dove-tailed nicely with the university’s selection of electrical engineering and computer science as two disciplines to be enhanced under the Research Challenge Trust Fund, which was established by the state’s General Assembly in the 1998 session. Paul J. Curlander, chairman and CEO of Lexmark, has played an active role in the process.

"Dr. Curlander has been a part of my advisory board," says Lester, "making sure that I know, and that the university president knows, that electrical engineering and computer science are key disciplines in terms of future economic expansion of the state economy.

"Lexmark has also been very active in recruiting students," Lester adds. "Currently, 250 of our graduates work for Lexmark."

The company also hires UK engineering students to work as interns, where students gain practical experience while earning money to finance their education. Wages in the range of $10 to $15 an hour are typical for interns at Lexmark, Lester says.

Increased prosperity is the obvious impact that the Lexmark expansion will have on Lexington. Expanded R & D capacity will bring more cutting edge innovations that will bring greater market share to the company’s printing solutions. In turn, that success will finance homes, enrich the retail market, and provide even more in the way of community enrichment.

Campbell Wood is a staff writer for The Lane Report.

Inset: The Secret: Lexmark Tailors Printing Solutions to Fit Customers’ Needs.