Home » Fast Lane — Sept. 2012

Fast Lane — Sept. 2012

By wmadministrator

Fast Lane – A compilation of economic news from across Kentucky

LEXINGTON: Lexmark pulls plug on inkjet division, eliminating 550 Ky. jobs

Lexington-based technology company Lexmark International Inc. announced on Aug. 28 that it plans to phase out development and manufacturing of the company’s remaining inkjet hardware as part of the company’s plan to improve profitability through restructuring.

Lexmark is phasing out its inkjet printers as it repositions itself as a technology solutions provider.

The plan involves eliminating inkjet development worldwide by the end of 2013 and closing the company’s inkjet supplies manufacturing facility in the Philippines by the end of 2015.

The move will eliminate approximately 1,700 jobs worldwide – about 13 percent of the company’s total workforce – with some 550 of those jobs located at the company’s headquarters in Lexington. According to local published reports, the restructuring will leave approximately 2,300 employees in Lexington.

Lexmark Chairman and CEO Paul Rooke said the decision to restructure was “necessary to drive improved profitability and significant savings.”

“Our investments are focused on higher value imaging and software solutions,” Rooke said, “and we believe the synergies between imaging and the emerging software elements of our business will continue to drive growth across the organization.”

Over the last several years, Lexmark has been working to broaden its scope. The company has acquired five software companies since 2010 and has seen significant growth in that area. The recently announced restructuring is a move to reposition the company as a technology solutions provider and is expected to result in annualized savings of $95 million once fully implemented.

The company said it will continue to provide service, support and aftermarket supplies for its inkjet installed base and is working with its strategic advisors to explore the sale of the company’s inkjet-related technology.

LEXINGTON: UK unveils new $20.8 million research and development center for renewable energy

The University of Kentucky has opened a new $20.8 million energy research building that will be devoted to the growing field of renewable energy and energy storage.

The Center for Applied Energy was specifically designed to focus on the development and implementation of advanced manufacturing processes for batteries and other types of energy storage devices.

The new facility will enable UK to expand research that focuses on growing renewable energy industries, including biomass and biofuels, electrochemical power sources (such as capacitors and batteries) and distributed solar energy technologies.

In addition to housing non-fossil fuel research, the 43,000-s.f. building is home to the Kentucky-Argonne Battery Manufacturing Research and Development Center laboratories, which is jointly affiliated with the state, the Argonne National Laboratory in Chicago, the University of Kentucky and the University of Louisville.

The Kentucky-Argonne Center is an advanced “open access” battery manufacturing R&D facility, which enables industrial users to contract to use the lab space and equipment, or contract to have the center’s experts conduct research for them, all while protecting the intellectual property rights of the industrial partner.

Gov. Steve Beshear noted that the facility is one of the first federal battery manufacturing labs in the country.

“Part of our plan for the new facility is to attract high-tech companies – and their high-value jobs – from across the nation and around the world that want to locate near the laboratory to facilitate research collaborations,” said Beshear.

One company that has already located nearby for this reason is nGimat Co., based in Atlanta, which opened a facility in Lexington to better access the Kentucky-Argonne Center’s expertise and resources. The company is developing advanced lithium titanate energy storage materials for use in next-generation automotive batteries.

STATE: KentuckyOne Health to terminate all of its contracts with Medicaid provider CoventryCares

KentuckyOne Health has announced that it plans to terminate all contracts with CoventryCares of Kentucky, a company that operates as a Medicaid managed care organization (MCO) under contract with Kentucky’s Cabinet for Health and Family Services.

CoventryCares is one of four MCOs that provide managed Medicaid services for Kentucky’s recipients. KentuckyOne Health – which was formed earlier this year with the merger of Saint Joseph Health System and Jewish Hospital & St. Mary’s Healthcare – will continue to be contracted to participate with the other three MCOs: Kentucky Spirit, Wellcare and Passport.

The contract terminations will be effective for the former Saint Joseph Health System facilities on Dec. 1, and for the former Jewish Hospital & St. Mary’s HealthCare on Nov. 1.

KentuckyOne officials said the decision to end its ties to CoventryCares were prompted by Coventry’s decision in April to terminate services to Our Lady of Peace, a Louisville hospital that is one of the largest private, non-profit psychiatric hospitals in the country and offers unique services to what KentuckyOne called a “very high-risk patient population,” many of which “have no other facility to meet their highly specialized mental and behavioral health needs.”

KentuckyOne maintains that CoventryCares also terminated its contract with Taylor Regional Hospital “without cause.”

Four days after KentuckyOne announced its action, Aetna, one of the nation’s largest healthcare benefits companies, announced its plans to buy CoventryCare’s parent company, Maryland-based Coventry Health Care, in a $5.6 billion deal. However, representatives of both Aetna and Coventry say the acquisition will have no impact on Kentucky customers.

STATE: Business leader champions push tougher school standards

Dozens of business leaders from across Kentucky have come together to push for dramatic school improvement, citing the critical need for students to be better prepared for college and the workplace.

Business Leader Champions for Education is chaired by James R. Allen of Louisville, CEO of Hilliard Lyons, and is a joint initiative of the Kentucky Chamber Foundation and the Prichard Committee for Academic Excellence. The initiative has received the support of the Bill & Melinda Gates Foundation.

The group’s initial focus will be support for the new, tougher academic standards now being taught in Kentucky’s classrooms. The group will communicate to educators, students, parents and policy leaders about the vital importance of staying the course with the new internationally benchmarked standards – and the challenging work they require – to build a world-class education system in the state.

“Employer support for the new standards is critical to ensuring they guide the state toward achieving its goals for better schools,” said Stu Silberman, executive director of the Prichard Committee. “This is hard and challenging work, but it is work that must be done if we are to make significant and sustainable progress.”

STATE: Kentucky exports hit record high of $10.7B for first half of ’12

The latest numbers from the U.S. Department of Commerce’s International Trade Administration show Kentucky’s merchandise exports grew nearly 8 percent to more than $10.7 billion in the first half of 2012, breaking the previous record of nearly $10 billion set in the first half of 2011.

Kentucky’s export growth in the beverage and spirits sector has been particularly strong, increasing 30 percent for the first part of 2012.

Kentucky’s merchandise export sales for the first half of 2012 outpaced the 2011 figures for the same period to several nations, including Austria (up 164 percent), Sweden (123 percent), Italy (79 percent), Mexico (27 percent) and Japan (19 percent).

Kentucky’s 2011 export shipments totaled $20.1 billion, its highest annual total to date. The commonwealth’s largest market was Canada, reaching $6.5 billion and accounting for 32.2 percent of Kentucky’s total exports. Canada was followed by the United Kingdom ($1.5 billion), Mexico ($1.5 billion), Japan ($1.1 billion) and Brazil ($997 billion).

Merchandise exports include categories such as transportation equipment, chemicals, machinery manufactures, computer and electronic products, and electrical equipment.

HAWESVILLE: Aluminum smelter says it needs new utility deal for viability

Century Aluminum of Kentucky has issued a 12-month notice to terminate its power contract with Big Rivers Electric Corp., a move that could have a significant impact on both companies as well as the local economy.

If Century decides to close its Hawesville smelter, 700 jobs will be affected. There is also the possibility that some sort of deal can be reached to make the smelter financially viable or that Century could buy power from another supplier on the open market, but that would require approval by the Kentucky Public Service Commission.

The two companies, along with Rio Tinto Alcan, have been in talks for months in an effort to balance the needs of the companies involved.

In announcing the contract termination, Century President and CEO Michael Bless said that Century “is competitive on the global market in every category other than the price we pay for electric power, which is among the highest such rates for smelters in the U.S. The unavoidable truth is that the smelter is not economically viable with this power rate and under current market conditions. We need a power price that is reflective of the market, helps the plant weather these turbulent economic conditions and allows the plant to be competitive over the long term.”

Earlier in the summer, Big Rivers President and CEO Mark Bailey issued a statement regarding talks with Century, noting that the concessions Century had asked for were “staggering” – amounting to $110 million per year. That, said Bailey, “would have a monumental impact on all our customers by forcing a rate increase of approximately 37 percent for residential customers and 56 percent for industrial customers.”

“Make no mistake, this is a lose-lose situation,” Bailey said. “No one wants the plant to close, but to grant Century the concessions requested would lead to staggering rate increases. Losing Century would also mean a rate hike, it’s true, because of the significant revenue stream they represent due to their heavy power usage, but not to the degree it would cost to bail them out at the level they demand.”

LOUISVILLE: UofL and GE team up for employee classes, research work

GE Appliances and the University of Louisville are partnering by offering onsite graduate-level engineering classes at GE’s Appliance Park in Louisville and working together on research and development.

Jonathan Crosby was part of the team that designed the water filtration system for the new line of GE French Door refrigerators, which are produced at GE’s Appliance Park in Louisville.

Starting this year, GE’s Edison Educational Development Program engineers will be required to earn their master of science degrees in mechanical or electrical engineering. To do so, GE worked with UofL to modify the existing Edison program, which will be extended from two to three years.

Students will have five engineering job rotations while the company pays for their education. Professors from UofL’s J.B. Speed School of Engineering will be teaching at the manufacturer’s Louisville complex, eliminating the need for commuting or distance learning.

In addition, UofL’s Research Foundation Inc. and GE have forged a master research agreement that will allow UofL engineering and physics faculty and GE engineers to collaborate on research projects. Several projects are currently in development.

“These collaborations between UofL and GE will produce a better educated workforce, innovative technologies and, ultimately, more jobs in the Louisville area,” UofL President James Ramsey said.


OWENSBORO: New $44M Boardwalk HQ key part of downtown renaissance


A groundbreaking ceremony was held last month for Boardwalk Pipeline Partners’ new $44 million, 60,000-s.f. office building in downtown Owensboro.

The project will bring all 200 of Boardwalk’s local employees and operations to downtown Owensboro and serves as a key part of Owensboro’s downtown renaissance.

In addition to the Boardwalk building, the downtown project will include a Holiday Inn adjacent to the Owensboro Convention Center and residential development along the Ohio River.

More than $89 million in private investment has been announced as a result of the market-based downtown plan, which was approved by Owensboro-Daviess County governments in 2009. The plan resulted in $120 million in publicly funded infrastructure and amenities to reinvent downtown Owensboro as a walkable, mixed-use urban center. A $20 million Hampton Inn and Suites broke ground on March 13.

The downtown project is part of a renaissance being experienced throughout the Owensboro area. Economic development and infrastucture projects include a new hospital, a renovated airport terminal and several transportation projects.

Owensboro was among the top-performing metropolitan areas in Kentucky last year in job growth.

HEBRON: New CVG security screening speeds process for frequent fliers

Travelers who fly in and out of the Cincinnati/Northern Kentucky International Airport (CVG) frequently may find the process a little less frustrating with the addition of a new security system that is being put in place this month.

The Transportation Security Administration is implementing its TSA Pre-Check, a pre-screening process for selected frequent fliers or for those who are enrolled in the U.S. Customs and Border Protection’s (CBP) Global Entry program.  Passengers who meet the criteria are allowed to go through a designated security checkpoint lane without having to remove shoes, jackets, belts, laptops and liquids from carry-on baggage.

Participation in TSA Pre-Check and Global Entry involves an online application that takes 20-40 minutes and a 15-minute interview with CBP. Individuals may apply at globalentry.gov. The cost of the application process is approximately $100 dollars and is valid for five years.

CVG is the first airport in Ohio or Kentucky to offer the service. More information about the pre-check program is available at tsa.gov.

STATE: Ky. expands program offering services to innovative companies

Kentucky’s entrepreneurial community received a boost last month with the unveiling of an expanded and rebranded program designed to provide free business services to innovative start-up companies.

Enhanced with a new name, logo, focus and expanded locations, the Kentucky Innovation Network was unveiled by Gov. Steve Beshear at the Western Kentucky Innovation and Commercialization Center.

A program of the Cabinet for Economic Development, the Kentucky Innovation Network now provides business assistance from 13 locations across the state, including its newest Innovation and Commercialization Center (ICC) in London and three former Innovation Center offices that have been upgraded to full-service ICCs. Additionally, clients will have greater access to the expertise and assets at all locations, rather than just the resources of their local ICC.

In the network’s most recent annual report, the Kentucky Science and Technology Corp., which administers the program on behalf of the cabinet, reported the Kentucky Innovation Network helped create 198 new companies, 811 new jobs paying an average annual salary of more than $50,000, and assisted client companies in raising $127 million in private investments in the last fiscal year.

The network will serve all 120 counties throughout the state from offices in Bowling Green, Covington, Lexington, London, Louisville, Morehead, Murray, Owensboro, Paducah and Richmond, with satellite offices in Ashland, Elizabethtown, and Williamstown. For more information, visit KYInnovation.com.

STATE: India contracts for $7B in Ky. coal imports during next 25 years

FJS Energy LLC has signed a 25-year, $7 billion contract with India’s Abhijeet Group to purchase coal exports from Kentucky and West Virginia through its Kentucky-based affiliates FJSE Marshall Inc. and FJSE River Coal.

Gov. Steve Beshear lauded the deal and the boost it provides for an industry that has taken a beating of late.

“It’s no secret that the coal industry is in a state of flux in America, what with erratic market conditions, the uncertain regulatory atmosphere and the ever-changing energy picture. But international markets need coal, and this private partnership is a great example of a new market for Kentucky resources,” said Beshear.

India is one of the world’s fastest growing economies and needs additional energy sources to produce steel and generate electricity. While the country does produce coal, it’s not enough to keep up with demand. Under the agreement between FJS and Abhijeet Group, Kentucky coal companies will export about 9 million tons of coal per year to Abhijeet.