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Comment on the 2011 economyPage 23

• James T. Wood• Daniel Needham• Dave Maples• Bill Crouch• Bill Bissett• Lori Meadows• Dave Adkisson• Dr. James Ramsey• Greg Higdon• John Roush

• Dr. James C. Votruba• René F. True• Mary Pat Regan• Malcolm Bryant• Greg Heitzman• Wil James• Vicki Fitch• Nick Rowe• Skip Miller• Dr. Lee Todd

• Roger Fries• Crinda Francke• Pearce Lyons• Steven Klein• Greg Fischer• Dr. Doug Whitlock• Eric J. Frankl• Dr. Andrew Clark• Barry Bishop• Dan Tobergte

• Steve Stevens,• Bob Quick• Michael Tetterton• Vic Staffieri• Ted Prewitt• Joe Reagan• Larry Hayes• Dr. Gary Ransdell• Jim Gray• Bob Babbage

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2 JANUARY 2011 KYBIZ.COM • THE LANE REPORT

Kentucky’s Business News Source For 25 Years Volume 26 Number 1

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23 COVER STORY: GOOD THINGS BEGINNING TO HAPPEN IN 2011Kentucky’s private sector begins to see improvementin manufacturing, business investment; public sector still focused on doing more with less

28 RX FOR HEALTHCARE: EFFICIENCYRestructuring includes value-based purchasing, physician practice acquisition, electronic medical records

31 QUANTITATIVE EASING 1 AND 2Recent Federal Reserve activity opens it tocreeping political influence, lack of independence

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ON THE COVERThe Lane Report’s annual survey of Kentucky’s business leaders, public andprivate, finds them cautiously optimistic about the economy for 2011. Somealready seeing sunnier times.

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KENTUCKY’S state parks are losingmoney, even though the state hasspent millions on improvements

over the past several years. That conclu-sion of a state audit two years ago was con-firmed by a more recent consultant’sstudy, making it clear that Kentucky needsto change the way it does business wherestate parks are concerned.

Key findings of the 2008 audit ofpark operations from 2000 to 2007,available at auditor.ky.gov/Public/Audit_Reports/Archive/2008Parks-AnalysisReport-PR.htm, included thefollowing:

• Since a major bond issue in 1995,$316 million has been spent on expand-ing and renovating park facilities.

• Despite the improvements, operat-ing losses increased by 14 percent,prompting the parks to seek additionalstate funding of $5 million.

• Occupancy rates at state lodges, thenumber of meals served and the roundsof golf played all declined.

A more recent review by PROS Con-sulting that was released earlier this yearconfirmed these findings. AlthoughKentucky’s parks generate the third-highest amount of revenue in thenation ($53 million, behind Californiaand New York), the revenue only coversabout two-thirds of the costs of operat -ing the system.

The consultant’s study, in recom-mending that the parks reduceexpenses and improve quality to remainviable, pointed out that the state subsi-dizes the cost of the average park mealby about $2. That means, essentially,that the parks are spending more to pre-pare a meal than they charge for it.

Clearly, this is not a sustainable busi-ness model.

To stave off additional losses, thestate recently announced that the parkswill be closed Sunday through Tuesdayduring the winter, that some fees will beincreased and that seasonal workers willbe hired through employment agencies.

From our perspective, a more prom-ising development is the proposal by theBeshear administration to turn foodservice and golf operations over to pri-vate companies and to allow alcoholsales in selected parks that are in wetprecincts, such as Lake Barkley, GeneralButler and Jenny Wiley.

The Kentucky Chamber supportsthis proposal and has been a long-timeadvocate of allowing the sale of alco-holic beverages in park restaurants toincrease the parks’ ability to attract con-ventions and other meetings.

This would be a good first step, butwe encourage state officials to go fur -ther and develop a pilot project involv-ing the full operation of a state resortlodge by a private hotel or resort com-pany. Private-sector companies knowhow to keep costs below expenses whileensuring a high quality of service.

This idea was one of the first col-lected by the chamber’s New Agendaproject, an initiative that invited Ken-tuckians to share their suggestions forways to improve the state.

The chamber also has addressed theneed for the state to find smarter andmore efficient ways to spend taxpayers’

money in its Leaky Bucket report. Thisnew approach to operating state parksoffers great promise for doing just that.

It has often been said that Kentuckyhas the finest park system in the nation.Without question, the natural beauty ofthe parks is unsurpassed. But theirtrend of spending more than they takein cannot continue. Failing to addressthe issue with creative solutions now willlead to a decline in quality and, poten-tially, access to the parks for Kentuck-ians and visitors from outside ourcommonwealth. ■

SAVING OUR STATE PARKSPark system would benefitfrom private partnership

BY DAVE ADKISSON

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Dave Adkisson is president/CEO of the Ken-tucky Chamber ofCommerce and a member of the Governor’s Task Force on Unemployment Insurance

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A compilation of economic news from across Kentucky

FAST LANE

FORD Motor Co. has announced plans to invest$600 million to transform its Louisville Assem-bly Plant (LAP) into what it says will be the most

flexible, high-volume plant in the world. The state-of-the-art facility will build Ford’s

next-generation Escape for the North Americanmarket. Production is expected to start in late2011 and will require a second shift, creating1,800 new jobs.

The plant will reopen with tooling and facilityupgrades in its final assembly area and body shop. Reprogrammable tooling in thebody shop will allow the plant to produce multiple vehicle models at the same timewithout requiring downtime for tooling changeover. The new technology will enableLAP to build up to six different vehicles at the same time, allowing Ford to meetdemand more quickly in the event of shifting customer preferences dictated bychanging economic conditions.

“Our Louisville Assembly Plant transformation further provesour commitment to American manufacturing and our commit-ment to deliver the high-quality, fuel-efficient vehicles peoplereally want,” said Mark Fields, Ford’s president of The Americas.

“Working closely with the UAW and Kentucky officials, we have found a way to competi-tively deliver an important new vehicle that is good for our customers and supports ourplan to deliver a well-balanced product portfolio of cars, trucks and utilities.”

LAP is the third North American body-on-frame truck plant that Ford is re-toolingto enable production of fuel-efficient products from its global vehicle platforms.

To solidify the state’s commitment to Ford’s growth in Louisville, the KentuckyEconomic Development Finance Authority approved up to $240 million in tax incen-tives for fully realized investment and hiring.

LOUISVILLE: FORD GIVING ASSEMBLY PLANT $600 MILLIONOVERHAUL, ADDING 1,800 KY MANUFACTURING JOBS

PLANS have been announced for the con-struction of a $150 million theme park inNorthern Kentucky that will create approxi-

mately 900 new jobs. The centerpiece of Ark Encounter will be a 500-

foot long, full-scale Noah’s Ark. In addition, thecomplex will include a Walled City similar to whatwould have been found in ancient times, live ani-mal shows, a children’s interactive play area, areplica of the Tower of Babel with exhibits, a 500-seat 5-D special-effects theater, an aviary, and afirst-century Middle Eastern village. To showcasethe “green” construction methods and materials

that will be used, the complex will also include a special events area for large gather-ings, highlighting some of the Leader in Energy and Environmental Design (LEED)building techniques used to construct the Ark Encounter.

Missouri-based Ark Encounter LLC is partnering on the project with Answers inGenesis (AiG), a non-profit organization that operates the Creation Museum inPetersburg, Ky. Since opening in 2007, the Creation Museum has become a majortourist attraction for the area, welcoming more than 1 million visitors. A feasibilitystudy conducted by America’s Research Group indicates the Ark Encounter couldattract 1.6 million visitors in the first year.

One of the factors that influenced the decision to launch the ark project was aNovember 2009 CBS News survey, the results of which revealed that the remains ofNoah’s ark would be the greatest archaeological discovery of our time.

The Ark Encounter is scheduled to open in spring 2014.

GRANT COUNTY: $150M THEME PARK PROJECT EXPECTEDTO CREATE 900 JOBS, ATTRACT MILLIONS OF VISITORS

AK Steel has announced that it willpermanently close its Ashlandcoke plant, where it produces the

blast furnace fuel for the company’siron- and steelmaking facility that is alsolocated in Ashland.

The closing will affect 263 hourly andsalaried employees.

The company said the Ashland cokeplant is no longer cost competitive dueto increased maintenance and increas-ingly stringent environmental regula-tions. As a result, the total per-ton cost ofcoke produced by the plant is signifi-cantly higher than all other sources ofcoke for the company. Officials with theOhio-based company also noted thatreplacing Ashland’s high-cost coke helpsmake the balance of its Ashland W orksfacility, which employs nearly 900 work-ers, more competitive. The company hassecured alternate sources of coke tomeet the needs of its blast furnaces.

“AK Steel recognizes that this is a diffi-cult time for the employees who areaffected,” said James L. Wainscott, chair-man, president and CEO of AK Steel. “Weare committed to helping them as much aspossible during this transition, including,where possible, placing them in jobs avail-able elsewhere at the Ashland Works orother operations within the corporation.”

AK Steel produces flat-rolled carbon,stainless and electrical steels, primarilyfor automotive, appliance, constructionand electrical power generation and dis-tribution markets. The companyemploys approximately 6,200 workers atlocations in Ohio, Pennsylvania, Ken-tucky and Indiana.

The closing is expected to be com-pleted early in the second quarter of 2011.

ASHLAND: AK STEEL WILLCLOSE COKE FUEL PLANT,263 EMPLOYEES AFFECTED

SUBMISSIONS WELCOMETo submit news and photographs forpublication in Fast Lane, please mailinformation to: The Lane Report, 201East Main Street, 14th Floor, Lexing-ton, KY 40507-2003 or send via e-mailto [email protected].

Color photographs are preferred,either in standard form or digital. Fordigital photographs, a resolution of 300dpi is required, formatted in either jpegor tif.

Production of the Ford Escape is slated tobegin at the Louisville Assembly Plant inlate 2011.

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Ark Encounter photo

The Ark Encounter theme park will bebuilt on 800 acres of land in GrantCounty, just off I-75.


THE LANE REPORT • KYBIZ.COM JANUARY 2011 7

BOWLING GREEN■ American Howa Kentucky Inc. has announced an $11.5 mil-lion expansion of its Bowling Green facility , where it manu-factures sun shades and dash insulators for the automotiveindustry. The expansion, which will add 56,000 s.f. to the com-pany’s existing 138,000-s.f. plant in the Kentucky T ranspark,will create 86 new jobs.

CENTRAL KENTUCKY■ The Kentucky Public Service Commission (PSC) has grantedKentucky-American Water Co. a rate adjustment that will increaseits annual revenue by $18.8 million, which will result in the aver-age residential customer seeing an increase of about 29 percentas opposed to the 38 percentincrease originally requested byKAWC. KAWC said the increaseis needed to pay for a new watertreatment plant on the KentuckyRiver in Owen County and thepipeline from the plant to Lexington, which went into service inSeptember. As permitted by Kentucky law, KAWC put its pro-posed rates into effect on Sept. 28. As a result of the PSC decisionto set lower rates, the company will have to refund the amount ithas over-collected, plus interest, to its customers. KAWC servicessome 119,000 customers in 10 Central Kentucky counties.

COVINGTON■ Omnicare Inc., a Covington-based provider of pharmaceu-tical care for the elderly, has reorganized its Pharmacy Ser v-ices business into two groups: Long-Term Care and SpecialtyCare. The reorganization involves taking the Long-Term Care

Group from 11 regions to five divisions aspart of a plan to improve coordinationacross the organization. Omnicare’s Spe-cialty Care Group will consist of the spe-cialty pharmacy and specialtypharmaceutical services businesses as wellas Omnicare’s hospice pharmacy and

pharmaceutical case management business. Omnicare plansto focus additional resources on these businesses and willleverage existing capabilities and pursue complementingavenues for growth.

EDGEWOOD■ Northern Kentucky Heart PSC and Cardiology AssociatesPSC have entered into agreements to join St. Elizabeth Physi-cians, the multi-specialty physician organization of St. Eliza-beth Healthcare. Upon completion, the arrangement willcreate the St. Elizabeth Physicians Heart and V ascular divi-sion, which will result in a regionally integrated cardiologyservice for the residents of Northern Kentucky and GreaterCincinnati. Hospital officials said the integration will offerpatients the benefit of more streamlined scheduling of testsand referrals and inter-connected electronic medical records.Together with the existing St. Elizabeth cardiologists, the newSt. Elizabeth Physicians Heart and Vascular division now haseight cardiology office locations and 23 cardiologists practic-ing in the Greater Cincinnati area.

BUSINESS BRIEFS

THE Louisville Orchestra has filed for Chapter 11 bank-ruptcy protection as it works to bring its operating costsin line with historic levels of income, a move that will

require approximately $1 million in cost reductions. The board of directors and management of the 74-year -old

orchestra are seeking court approval to operate within an indus-try-standard average of 55 full-time musicians, which will be sup-

plemented by 16part-time professionalmusicians to fill out its71-musician roster.

Organizat ionalleaders have been engaged in contract talks with the orches-tra’s musicians since July, but no significant agreements forcooperative restructuring have been forged.

“It’s understandable that our musicians may not be ableto agree to voluntarily restructure the orchestra,” saidorchestra CEO Robert Birman, “but the steps we are takingare in line with the tough choices that orchestras through-out the U.S. are facing to preserve live orchestral music.”

“Our orchestra has repeatedly faced insolvency through-out the past 30 years due to an unsustainable cost structure.We survived through the incredible generosity of bequests,bailouts and emergency funding,” said Board PresidentChuck Maisch. “We simply must have the integrity and disci-pline to live within our means. The Louisville Orchestra is avital thread in the fabric of this community. In many respectswe are viewed as a cornerstone of the arts community , pro-viding a foundation for music education and communityengagement services that extend all the way to our partner-ships with the opera and ballet. It is essential that we sustainthe orchestra for future generations; the steps we are takingwill help to preserve this important cultural treasure.”

LOUISVILLE: ORCHESTRA FILES CHAP. 11, MOVES TO CUT OPERATING COSTS $1M

THE Kentucky Public Service Commission (PSC) hasreversed its decision to create a new area code in farwestern Kentucky, saying there is no longer any imme-

diate need to increase the availability of new telephone num-bers in the region.

The PSC said if such a need arises in the future, theprocess of establishing a new area code would start againfrom scratch.

The implementation of the new area code, designated as364, has been delayed five times as the need for new numbershas dwindled, both because of declining demand and due tochanges in the process by which new numbers are assigned.

The latest projections show no need for a new area codeuntil late 2014. Because that is beyond the time frameneeded to implement new area codes, a cancellation makesmore sense than another postponement, PSC ChairmanDavid Armstrong said.

“Today’s decision ends the ongoing uncertainty overwhen a split of area code 270 would occur,” Armstrong said.“Restarting the process when needed is going to be far lessdisruptive to residents and businesses.”

STATE: PSC REVERSES PLAN TO CREATENEW WESTERN KENTUCKY AREA CODE



FAST LANE

ELSMERE■ Cincinnati ice cream companyGraeter’s Inc. has ended its franchisecontract with Elsmere, Ky.-based Inter-national Brand Services, which oper-ated four retail locations in Lexingtonand four Northern Kentucky locations. International Brandsclosed all eight locations effective Dec. 3, but Graeter’s CEORichard Graeter said the company plans to open retail locations inKentucky in early 2011 and may possibly reopen stores in the samelocations operated by International Brands. In the meantime,Graeter’s is continuing to sell its products in Kroger, Remke bigg’sand Meijer stores throughout Northern Kentucky and Lexington.

FRANKFORT■ MML&K Government Solutions, a Frankfort-based govern-ment affairs firm, has opened an office in Washington, D.C., andformed a strategic alliance with mCapitol Management, a bipartisan government relations and business development firmthat has an office in Washington as well as a strong presence inthe Midwest. MML&K currently operates government relationsoffices in Frankfort, Louisville and Lexington and law offices Lexington, Louisville, Frankfort and Ashland.

HARRODSBURG■ Hitachi Automotive Products (USA) is investing an addi-tional $48 million in the planned expansion of its plant inHarrodsburg, bringing the total project investment to $68million. The expansion involves the construction of a new170,400-s.f. facility that will produce advanced electronic con-trol modules used for controlling automotive engine and dri-vetrain functions, new fuel systems and other new productsfor the automotive industry. In addition, Hitachi expects toincrease the number of new jobs by 44, for a total of 145 newjobs over the next three years. The company currentlyemploys a staff of some 625 employees. The new facility isexpected to be complete by June 2011.

HEBRON■ ZoomEssence Inc., a start-up research and developmentfirm, is investing $1 million to develop its patented technol-ogy for creating liquid-quality flavors and ingredients in apowder form. The company, which was formed in late 2008, isdeveloping a new method of spray drying that is used to pro-duce products for the food and beverage, pharmaceutical andchemical markets, among others. The project will create 20new jobs in Northern Kentucky, 11 of which are consideredhigh-tech and technical support jobs paying an averageannual salary of approximately $67,000.

LEXINGTON■ NGAS Resources Inc., a Lexing-ton company that specializes in hor-izontal drilling and completiontechnology in the southernAppalachian Basin, has signed a

definitive agreement to be acquired by British Columbia-based Magnum Hunter Resources in an all-stock transactionvalued at $98 million. The acquisition is expected to be com-plete by the end of March, at which time NGAS will become awholly owned subsidiary of Magnum Hunter.

BUSINESS BRIEFS

KENTUCKY Highlands Community Development Corp.has received a $125,000 grant from Bank of America toassist with its small-business loan program. The funds

will help guarantee repayment of loans made from KentuckyHighland’s Micro-Enterprise Loan Fund, which recentlyreceived another round of funding from the Small BusinessAdministration. A total of $750,000 is available to small busi-nesses as a result. As many as 24 local companies areexpected to receive microloans from the new effort.

“It is through these small, locally owned companies that wecan rebuild the economy,” said Jerry Rickett, president and CEOof Kentucky Highlands. “The investment from Bank of Americaand the Small Business Administration will help provide crucialaccess to capital. There are 40,000 small businesses that employone to four people in KHIC’s 22-county service area. If only 10percent of those businesses hired just one additional person, wewould be creating 4,000 jobs.”

New and expanding businesses are eligible for loans, withthe exception of businesses engaged in gambling, specula-tion lending or investments, pyramid sales and floor plan-ning. Businesses also must meet the Small BusinessAdministration’s size requirements and be located in Ken-tucky Highlands’ service area.

LONDON: BOA GRANT BOOSTS FUNDING FOR SMALL-BUSINESS LOAN PROGRAM

CITING decreased demand for electricity caused by thepoor economy, East Kentucky Power Cooperative(EKPC) has canceled plans for a proposed coal-fueled

electric generating unit in Clark County.“This is a prudent business decision based on the condi-

tions that exist today and our projections of future condi-tions,” said Tony Campbell, presidentand CEO of EKPC. “Our analysis indi-cates that proceeding with constructionof Smith Unit #1 at this time is not inthe best interests of our cooperative orour members.”

The decision also puts to rest con-cerns voiced by several environmentalgroups that were opposed to the project, including the Ken-tucky Environmental Foundation, Kentuckians for the Com-monwealth and the Sierra Club. EKPC has agreed to partnerwith the environmental groups to establish a collaborativeworking group to study the deployment of renewable energyresources and demand-side management programs.

While the co-op will save the projected $819 million cost ofbuilding Smith Unit #1, EKPC has already spent approximately$150 million on structural steel and other materials for the unit.EKPC is requesting permission from the Kentucky Public ServiceCommission to establish a regulatory asset to recover those coststhrough rates over a 10-year period.

“Almost all of those costs were incurred several years agowhen the economy was roaring and construction costs wererising rapidly,” said Mike McNalley, EKPC’s chief financialofficer. “It made sense to go ahead and invest in materialsin order to protect against much higher prices later.”

EKPC is a not-for-profit organization providing wholesaleelectricity to 16 distribution cooperatives that serve 87 counties

CLARK COUNTY: EKPC CANCELS PROPOSALTO CONSTRUCT NEW GENERATING UNIT




FAST LANE

LEXINGTON■ The Quantrell Auto Group has acquired the factory-autho-rized Subaru dealership for central and eastern Kentucky.New and pre-owned Subarus will be displayed, sold and serv-iced from the Quantrell building that formerly housed theSaturn franchise. Quantrell Companies President Bill Bridgessaid the company anticipates hiring 12 additional employeesas a result of the acquisition.

■ Kentucky is one of only 11 states selected to receive a Rumi-nant Feed Ban/Feed Safety Support Program Grant from theU.S. Food and Drug Administration. The University of Ken-tucky College of Agriculture has received $493,120 that willsupport an increase in the college’s capacity to determinepotentially toxic levels of non-nutritive metals in minerals andother feeds for ruminant animals. The grant will further thecollege’s goal of protecting Kentucky consumers by monitor-ing and analyzing feed, fertilizer, milk, seed and soil.

■ The University of Kentucky hasunveiled an energy savings plandesigned to improve the efficiencyof 61 campus buildings. The projectwill install a wide variety of technolo-gies that focus on lighting, mechani-cal systems, and water usage. Whencompleted in about a year, the $24.6million project will save the univer -sity about $2.4 million annually. UKPresident Dr. Lee Todd said theimprovements will reduce UK’s car-bon dioxide emissions by nearly24,000 tons each year, the equivalent

of powering 5,251 homes; planting 62,257 acres of trees andremoving 45,755 cars from the road each year.

■ Escent Technologies, a research company formed last yearto develop and commercialize sensing devices used to analyzeorganic substances, has received $350,000 in incentive fund-ing from the state. The company’ s Spectroscopic IntegratedComputational Sensing device will initially be used within thelaw enforcement market to identify unknown substances suchas pills and powders. Other potential markets include foodsafety, raw material analysis, environmental and medical appli-cations. The company plans to hire 13 employees and invest$500,000 as a result of the new operation.

■ Summit Biosciences has been awarded a federal grant of$147,886, which will be used to further the development of anasal spray to treat nausea and vomiting associated with can-cer chemotherapy and wasting syndrome in AIDS patients.Summit CEO Greg Plucinksi said the grant for THC NasalSpray will enable the company to accelerate development ofthe drug without diluting its equity.

■ Lexington-based Whitaker Bank has acquired KentuckyTrust Co. for an undisclosed sum. Kentucky Trust, founded in1995, has locations in Danville, Bowling Green and Ashland,and has assets totaling $420.7 million. Whitaker operates in25 central and eastern Kentucky communities and has assetstotaling $2.1 billion.

BUSINESS BRIEFS

FINANCIAL services company Aegon has announced plansto move some 280 jobs out of Louisville as part of a deci-sion to consolidate the company’s United States operations.

The jobs, which areprimarily in asset manage-ment and corporate serv-ices, will be moved toAegon’s offices in Balti-more or Little Rock, Ark.The Netherlands-based company’s plans also involve consol-idating and outsourcing certain back office activities inCedar Rapids, Iowa.

Aegon officials said the consolidations are part of a long-termstrategy to focus on the company’s core activities and identifyways to better leverage resources and capture efficiencies. T othat end, Aegon is discontinuing new sales of executive non-qualified benefit plans and related bank-owned and corporate-owned life insurance business in the U.S.

As a consequence of these actions, Aegon will be reduc-ing the number of employees in its U.S. operations by 400 to500 over the next two years. That figure represents approxi-mately 5 percent of the company’s U.S. workforce.

LOUISVILLE: AEGON RELOCATES 280 JOBSAS PART OF COMPANY CONSOLIDATION

THE state has launched a new initiative designed toincrease exporting activity among small- and medium-sized businesses.

The Governor’s Kentucky Export Initiative is a statewideprogram that is loosely modeled on the National Export Ini-tiative announced earlier this year. The program will helpleverage the existing efforts of Kentucky’ s leading interna-tional trade organizations, as well as create new opportuni -ties for education and market exploration.

“For many small businesses, accessing markets outside theUnited States – which represents 95 percent of the world’s cus-tomers and two-thirds of the world’s purchasing power – is a keyelement to growth and prosperity,” said Gov. Steve Beshear.“With the right assistance and guidance, many more Kentuckycompanies can grow and create jobs through beginning orexpanded exporting activity. Our goal is to provide that neededassistance through the Kentucky Export Initiative.”

The Kentucky Export Initiative is composed of six alliancemembers, all engaged in providing international trade assis-tance and expertise to Kentucky businesses. They include:the Kentucky Cabinet for Economic Development; the Ken-tucky World Trade Center; the U.S. Department of Com-merce; the Kentucky Chamber of Commerce; the NorthernKentucky International Trade Association; and the U.S.Chamber’s TradeRoots program.

Alliance members and strategic partners will join forces toeducate qualified small and medium-sized businesses about theimpact of exporting, as well as provide information on new mar-kets; identify potential distributors, agents and end-users; andassist with compliance, logistics, legal issues and more.

Informational seminars will be held in various communi-ties beginning this month, followed by a series of in-depthtraining programs on the fundamentals of exporting. Formore information, visit kyexports.com.

STATE: EXPORT INITIATIVE LAUNCHEDTO BOOST SALES FOR SMALLER FIRMS

UK photo


LOUISVILLE■ CreoSalus, a Louis-ville life science com-pany, has obtainedFederal Drug Adminis-tration approval for itssubsidiary, Thorn Bio-Science, to produce andmarket an equine drug.SucroMate Equine,which regulates ovula-tion in mares toincrease the likelihood of conception when breeding horses,is the first drug of its kind to be developed and manufacturedin Kentucky. As part of obtaining FDA approval for Sucro-Mate, CreoSalus built the commonwealth’s only Class 100 ster-ile injectable filling room for pharmaceutical production. Inthe next year, CreoSalus will also begin soliciting productionwork for drugs currently being produced in other states.

■ Integrity Asset Management, a Louisville-based institutionalinvestment management firm, has been acquired by MunderCapital Management, a money management firm headquar -tered in Birmingham, Mich. Integrity, which has more than$3 billion in assets under management, will retain its name,location and management team. Financial details of theacquisition have not been disclosed.

BUSINESS BRIEFS

KENTUCKY Employers’ Mutual Insurance (KEMI) haspartnered with the Associated Builders and Contrac-tors of Kentuckiana (ABC) to launch a new workers’

compensation program that offers affordability for ABCmembers while also providing the resources and supportneeded to improve and maintain a safe work environment.

“Companies who demon-strate their commitment toworkplace safety through theSTEP (Safety Training Evalua-tion Process) Program will beeligible for KEMI’s preferred rates,” said ABC KentuckianaPresident Billy Parson. “This is an extremely valuable benefitto ABC’s members because by lowering their workers’ compcosts through a proactive approach to safety, they willimprove their bottom line and ultimately be more competi-tive in the marketplace.”

In addition, implementing the STEP Program can even-tually lead to a partnership between a company and the Ken-tucky Occupational Safety and Health program and will helpreduce a company’s incidence rates, which can lower annualworkers’ comp insurance premiums.

KEMI is the largest provider of workers’ compensationinsurance in Kentucky, providing coverage to more than20,000 policyholders. ABC of Kentuckiana is a full-ser vice“merit shop” construction trade association.

STATE: KEMI TEAMS WITH ABC ON NEWWORKERS’ COMPENSATION PROGRAM

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FAST LANE

LOUISVILLE■ Appriss, a Louisville-based provider of public-safety infor -mation services, has acquired Open Portal Solutions, an Indi-ana company that specializes in document and contentmanagement solutions for both government and private-industry clients. Appriss currently manages more than 65 dif-ferent criminal justice programs in 48 states. Its ser vicesinclude VINE, the nation’s first automated victim informationand notification service, and OffenderNet, one of the nation’slargest near real-time data networks of incarcerated persons.Appriss also provides the National Precursor Log Exchange,which is used by pharmacies and law enforcement investiga-tors to track the purchase over-the-counter cold medicinecontaining pseudoephedrine. Financial details of the trans-action were not disclosed.

■ Louisville-based GE Appliances & Lightinghas created a new division that will developand commercialize GE’s full line of energy-management solutions. The new businessunit will be headquartered in Louisville andwill employ 35 to 40 workers.

■ Cincinnati-based First Financial Bancorp’s decision to con-solidate selected banking centers will result in the companyexiting the Louisville market, where it has a single location asa result of its 2009 acquisition of Irwin Union Bank. The con-solidation will also affect four Michigan locations. First Finan-cial said it plans to shift its resources toward its core marketsin Cincinnati and Dayton, Ohio; Indianapolis; and southernand northwest Indiana.

■ Olin Brass, a leadingmanufacturer of copperand copper-alloy prod-ucts, has announcedplans to move its head-quarter operations fromEast Alton, Ill., toLouisville. The move willcreate up to 39 new full-time, professional jobs

over the next several years. The company plans a gradual tran-sition of roles and business functions throughout the comingyear and expects the new headquarters to be in full operationby the end of 2011.

■ Churchill Downs Inc. hascompleted the purchase of Har-low’s Casino Resort & Hotel inGreenville, Miss., a deal valuedat approximately $138 million.CDI’s acquisition of the casinoproperty follows its licensure by the Mississippi State GamingCommission. CDI Chief Operating Officer William Carstan-jen said the acquisition “is an important part of the diversifi -cation and growth strategies our management team hasimplemented for CDI’s racing, gaming and online businessoperations and well positions us to increase the value of ourshareholders’ investment.” The acquisition adds approxi-mately 480 employees to the CDI staff.

BUSINESS BRIEFS

TWENTY-TWO Kentucky companies have been designatedto receive a total of more than $5 million in new therapeu-tic discovery project credits and grants from the federal

government to help support biomedical research.The therapeutic discovery project program is targeted to

projects that show significant potential to produce new ther-apies, address unmet medical needs, reduce the long-termgrowth of healthcare costs, or advance the goal of curingcancer within the next 30 years. The allocation of the creditalso reflects which projects show the greatest potential to cre-ate and sustain high-quality, high-paying jobs in the UnitedStates and to advance competitiveness in the fields of life,biological and medical sciences. The U.S. biotechnologyindustry currently employs 1.3 million workers and contin-ues to be a key growth engine for the economy.

“We can’t afford to see promising discoveries discardedor innovative businesses move overseas,” said Secretar y ofHealth and Human Services Kathleen Sebelius. “Thanks tothe funding provided today, firms can avoid these roadblocksand continue to do business right here in the U.S.”

STATE: 22 KY COMPANIES RECEIVE FUNDSTO ASSIST NEW BIOMEDICAL RESEARCH

ASSURANCE Investment Partners (AIP), the parentcompany of Louisville-headquartered Arison Insur-ance Services Inc., has acquired an equity stake in Ver-

itas Merchant Services LLC, also of Louisville. Veritas delivers a broad range of financial services for use

by merchants and businesses, including credit and debit cardpayment processing and check authorization services. Veritasalso provides and consults on a number of point-of-sale hard-ware, software and integrated solutions.

“Arison’s client base includes thousands of small to mid-sizebusinesses throughout the state, some in remote locations inKentucky,” said Dan Needham, AIP managing director. “As wespent time with our clients, it became apparent that there was arather large gap in the quality of card processing ser vices theywere receiving, so we began looking for a partner to help deliverthe level of service, support and price they were looking for.”

Veritas Merchant Services was founded in February 2010 byStephanie Clements, who will remain CEO of the company.

Financial details have not been released.

LOUISVILLE: ASSURANCE INVESTMENT ACQUIRES EQUITY STAKE IN VERITAS

Kentucky Companies Awarded Federal Grants andCredits through the Therapeutic Discovery Program• Advanced Genomic

Technology LLC, Louisville• ALLTranz Inc., Lexington• ALT BioScience LLC,

Lexington• Apellis Pharmaceuticals Inc.,

Louisville• ApoImmune Inc., Louisville• Assenti LLC, Louisville• Bexion Pharmaceuticals LLC,

Covington• CeeLA Naturals, Louisville• CTI Science Inc., Lexington• EndoProTech Inc., Louisville• Kentucky Pharmaceuticals Inc.,

Louisville

• NeoCytex Biopharma Inc.,Covington

• OrthoData Inc., Louisville• Potentia Pharmaceuticals Inc.,

Louisville• Pradama Inc., Louisville• Re-Borne Inc., Simpsonville• Regenerex LLC, Louisville• RhinoCyte Inc., Louisville• Summit Biosciences Inc.,

Lexington• Suregene LLC, Louisville• US WorldMeds LLC, Louisville• Vindico NanoBio Technology

Inc., Lexington

Olin Brass photo


MIDWAY■ Midway College hasreceived official approvalfrom the Southern Associa-tion of Colleges and SchoolsCommission on Colleges tooffer a Doctor of Pharmacydegree. Midway PresidentDr. William B. Drake Jr. saidthe approval allows the col-lege to proceed with offer-ing the Doctor of Pharmacydegree and also developother doctoral-level degreesin the future.

MILTON■ Construction is now under way on a long-awaited projectto replace the 82-year-old Ohio River bridge that connectsMilton, Ky., and Madison, Ind. Walsh Construction Co., ofLaPorte, Ind., won the contract with a low bid of $103 million– $28 million below the original estimate – thanks to a con-struction technique that will require closure of the bridge foronly 10 days in all. The project received a $20 million grantunder TIGER – Transportation Investment Generating Eco-nomic Recovery, a part of the American Recover y and Rein-vestment Act of 2009.

BUSINESS BRIEFS

THE Kentucky Small Business Investment Credit(KSBIC) program, part of the Governor’s Incentives fora New Kentucky (INK) legislation designed to spur job

creation, is now accepting applications. The program provides state income tax credits ranging from

$3,500 to $25,000 per eligible small business that creates, fillsand maintains one or more new, eligible jobs and invests at least$5,000 in qualifying equipment or technology.

With certain exceptions, most for-profit small businesses with50 or fewer employees are considered eligible for the program.

Businesses may apply one year after the latter of creating andmaintaining at least one new eligible job and purchasing $5,000or more in qualifying equipment or technology. (Eligible hiresand qualifying equipment and technology purchases datingback to Jan. 1, 2010, will meet program requirements.)

All eligible applications will be scored and ranked, withthe highest ranked applications submitted to the KentuckyEconomic Development Finance Authority for approval.

In addition to meeting the required program criteria,other factors that will increase an applicant’s score include:the amount of qualifying equipment or technology pur-chased from businesses physically located in Kentucky; theaverage base hourly wage for the eligible position(s); thenumber of eligible position(s) created and filled inenhanced counties; and having not been previouslyapproved for a tax credit under the program.

STATE: KY SMALL-BUSINESS INVESTMENTPROGRAM NOW TAKING APPLICATIONS



STATISTICS released by the state show that nearly 230companies have received preliminary approval throughone or more of Kentucky’s new or expanded economic

development incentive programs. The business incentive programs – which include the

Kentucky Business Investment Program (KBI), the KentuckyReinvestment Act (KRA) and the Kentucky Enterprise Ini-tiative Act (KEIA) – are a result of the Incentive for a NewKentucky (INK) legislation passed by the Kentucky GeneralAssembly in 2009.

Of the 229 projects receiving preliminary approval by theKentucky Economic Development Finance Authority(KEDFA) for one or more of the INK-related programs, 223are considered active projects that have either announced orare still considering an investment in Kentucky.

According to the state, these projects represent a poten-tial investment of more than $2 billion across the common-wealth and could create more than 13,500 jobs, whilehelping to retain nearly 4,800 existing Kentucky jobs.

The 229 projects preliminarily approved through KBI,KRA or KEIA represent a nearly 53 percent increase in thenumber of companies receiving preliminary approvalthrough pre-INK incentive programs in the 18 months priorto the implementation of INK.

An online searchable database of financial incentives isavailable at thinkkentucky.com/fireports/fiintro.aspx.

FAST LANE

NELSON COUNTY■ A portion of the facility that formerly housed automotivesupplier Intertec has been renovated by Nelson County Indus-tries to accommodate the Guthrie Opportunity Center, whichprovides work for people who are developmentally disabled.The newly renovated, 80,000-s.f. space is double the size ofthe center’s previous location and will enable the center toexpand the Bardstown-Nelson County Recycling Program,allow for increased contract work from local industries, houseoffices for the providers of wrap-around services to theemployees, and provide a more conducive work environmentfor the 90 adults currently employed there.

RICHMOND■ Pattie A. Clay Regional MedicalCenter has formed a partnershipwith Central Baptist Hospital innearby Lexington that enables thetwo organizations to shareresources, reduce costs and main-tain affordability of services. Dr.Aaron Thompson, chairman of the

Pattie A. Clay board of directors, said the partnership providesflexibility and better positions the two hospitals to withstandanticipated reductions in reimbursement, while continuingto support their respective communities and preserve jobs.

BUSINESS BRIEFS STATE: 230 INCENTIVES BOOST FUTUREBUSINESS INVESTMENTS BY UP TO $2B



SALEM■ LHC Group Inc., a Louisiana-based provider of home health-care and hospice, has acquired the Livingston Hospital andHealthcare Services Home Health in Salem, which ser ves Crit-tenden and Livingston counties. The agency will operate underthe name of Lifeline HomeCare of Salem. LHC has also enteredinto a home health joint venture with Rockcastle Regional Hos-pital and Respiratory Care Center in Mount Vernon, Ky.

STATE■ A new report released by the Kentucky Council on Postsec-ondary Education shows substantial gains in college-going andcollege and career readiness levels of the 2008 high school grad-uates who subsequently enrolled in a college or university by fall2008. According to the study, 63 percent of graduates from Ken-tucky’s public and private high schools in 2008 entered collegeby the fall semester, with 57 percent attending colleges and uni-versities in Kentucky and an additional 6 percent attending out-of-state. In 2004, only 51 percent of high school graduatesentered a Kentucky college or university.

■ F.N.B. Corp., a Pennsylvania-based financial services com-pany, has entered the Kentucky market as part of an expan-sion of its consumer finance affiliate, Regency Finance Co.Regency has already opened offices in Bowling Green, Eliza-bethtown, Hopkinsville, Madisonville and Owensboro andplans to open in Henderson and Paducah by mid-January.

BUSINESS BRIEFS

HFL Sport Science Inc. hasopened a new laboratorythat will provide drug sur-

veillance, doping control andresearch to equine and other sportsindustries. The lab, which repre-sents a more than $4 million invest-ment, will create 48 new jobs,including 25 high-tech positions,paying an average salary of over$47,000, exclusive of benefits.

In March 2010, the KentuckyHorse Racing Commissionselected HFL to provide drug

testing for Kentucky racetracks. In addition to developinglab screening tests for fitness and nutritional health, HFLplans to provide services to the pharmaceutical and biotech-nology sectors. The company also anticipates research col-laborations with the University of Kentucky.

HFL’s parent company, HFL Sport Science Ltd, is basedin the United Kingdom, and has more than 40 years of con-tinuous experience in the science of sports doping control,including testing human and animal food supplements forsubstances prohibited in sports. The company also deliversboth operational screening services and research into pro-hibited substance detection.

LEXINGTON: NEW $4M HFL SPORT SCIENCE LABORATORY TO CREATE 48 TECH JOBS

HFL Sport Science plans tobegin processing samples fordrug testing in February.

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INDIANA■ American Commercial Lines Inc. has entered into a defini-tive merger agreement with an affiliate of Platinum Equity val-ued at $777 million. ACL, headquartered in Jeffersonville,Ind., is one of the largest inland marine transportation andservice companies in the nation, with approximately $850 mil-lion in revenue for 2009 and 2,570 employees.

■ Sallie Mae, which services more than $200 billion in stu-dent loans, is consolidating operations in Indiana as part ofits companywide restructuring effort following recent federallegislation. The consolidation will create some 350 new jobs atits existing facilities in Fishers and Muncie, Ind.

■ Multimatic Inc., a Toronto, Canada-based automotive com-ponents manufacturer, plans to expand its production opera-tions in Butler, Ind., with the goal of creating more than 200new jobs by 2013. Multimatic specializes in the production ofautomotive mechanisms, complex welded assemblies and sus-pension components, as well as the design and developmentof automotive body and chassis systems.

TENNESSEE■ Amazon.com Inc. has finalized its plans to establish two ful-fillment centers in Tennessee, one in Chattanooga and theother in neighboring Bradley County. The two facilities,

which represent a com-bined investment of upto $139 million, will cre-ate up to 1,400 new jobsin the next three years,

in addition to hundreds of additional seasonal jobs duringpeak season. The new fulfillment centers are expected to beoperational before the 2011 holiday season.

■ Asurion, a provider of technology protection ser vices, isexpanding its Nashville headquarters and has committed toadd more than 500 jobs over the next five years. Asurion relo-cated its corporate headquarters from California to Nashvillein 2003 with a plan to create 600 new jobs. Since that originalannouncement, the company has grown its Tennessee-basedworkforce by 1,800 people.

■ Memphis-based FedEx Corp. has signed an agreement toacquire MultiPack, a Mexican domestic express package deliverycompany. MultiPack offers a range of package deliver y, trans-portation, warehousing and logistics services with an establishedpick-up and delivery network across all 31 Mexican states and theDistrito Federal. Founded in 1939, MultiPack currently operates48 distribution centers, 13 warehouses and more than 500 retailoutlets across the country.

WEST VIRGINIA■ Armstrong World Industries has broken ground on a30,000-s.f. plant in Millwood, W. Va., that will produce min-eral wood fiber used in acoustic ceiling tile products. Theproject is expected to create up to 200 jobs during the con-struction phase and an initial 45 permanent jobs when thefacility becomes operational.


Business news from Indiana, Ohio, Tennessee and West Virginia

BUSINESS BRIEFS

INTERSTATE LANE

CINCINNATI-based Macy’s, Inc. has announced plans tobuild a major fulfillment center near Martinsburg, W. Va.,to support the continued growth of its online business.

Construction on the 1.3 million-s.f. facility is expected tobegin in spring 2011, with operations beginning in April2012 and order shipments beginning in summer 2012. Whenfully operational, the Martinsburg fulfillment center isexpected to employ approximately 1,200 full- and part-timeemployees year-round. In addition, another 700 temporar yseasonal workers are expected to be hired each year to han-dle the higher level of online orders that come during theholiday shopping season.

“Our Internet sales continue to grow rapidly as part of theomnichannel strategy at Macy’s and Bloomingdale’s - allow-ing customers to shop seam-lessly in stores, online and viamobile devices in a mannerthat meets their needs andpreferences,” said Macy’s Pres-ident and CEO Terry J. Lund-gren. “In the first 10 months of fiscal 2010, our online saleswere up by about 29 percent compared with the same periodlast year. This is on top of growth of about 20 percent in2009. The new Martinsburg fulfillment center will representa significant expansion of our online capacity , and will beused in particular to prepare and ship orders to macys.comcustomers in Northeast and Middle Atlantic states.”

Online orders from macys.com currently are handled primarily by Macy’s, Inc. fulfillment centers located in Portland, Tenn., and Goodyear, Ariz. Bloomingdales.comorders are handled primarily from a fulfillment center inCheshire, Conn. As previously announced, the Portland facil-ity, with 600,000 s.f. of space, now is being expanded by374,000 s.f. in a project expected to be completed in fall2011. As part of the omnichannel strategy, the company alsois investing in website enhancements, systems infrastructureand customer service to improve the shopping experience.

WEST VIRGINIA: MACY’S TO EMPLOY 1,200TO STAFF MAJOR FULFILLMENT CENTER

ELECTROLUX has announced that it will locate a new $190million facility in Memphis, where it will produce majorcooking appliances. The 700,000-s.f. facility is expected to

employ more than 1,200 workers when it is fully operational. State officials said that taking other construction, pro-

curement and additional supply chain activity into account,the project could bring an additional 2,260 jobs and $550million in additional capital investment to the region.

Workers at the new facility, which will be built to LEEDcertification standards, will manufacture the company’s Elec-trolux ICON, Electrolux and Frigidaire product lines, includ-ing drop-in/slide-in ranges, wall ovens, specialtyfree-standing ranges and cook tops. Construction is expectedto begin in early 2011 with production to begin in mid-2012.

Electrolux also operates a manufacturing facility for free-standing gas and electric ranges in Springfield, Tenn. TheSpringfield facility currently employs about 2,900 people.

TENNESSEE: NEW ELECTROLUX PLANTWILL CREATE 1,200 JOBS IN MEMPHIS




A sampling of economic development data

KENTUCKY INTELLIGENCER®



BANKING■ Fifth Third Bank has announced the fol-lowing promotions: Jay Cowden - seniorvice president of private banking for theKentucky affiliate;Dan Poposki - vicepresident, wealthmanagement advi-sor manager forthe Kentucky affili-ate; and GuthrieCulbertson – sen-ior vice presidentand regional direc-tor of portfoliomanagement.

■ Tammy Nucci has joined Louisville-based Republic Bank as vice president,personal trust administrative officer forits personal trust department.

BUSINESS DEVELOPMENT■ Ron Bunch has been hired as thenew chairman and chief executive offi-cer of the Bowling Green Chamber ofCommerce.

EDUCATION■ Dr. Ronda Tal-ley has beennamed executivedirector of theSuzanne VitaleClinical Educa-tion Complex atWestern KentuckyUniversity.

GOVERNMENT■ M. Holliday (Hollie) Hopkins hasbeen named general counsel for theOffice of the Governor.

■ Ellen Hesen has been named chiefof staff for Louisville Mayor-Elect GregFischer.

■ Josh Holmes has been named chief ofstaff for U.S. Sen. Mitch McConnell’sWashington, D.C. office.

■ Tim Longmeyer has been named secre-tary of the Kentucky Personnel Cabinet.

FOOD SERVICE/HOSPITALITY■ Tony Thompson has been promotedto executive vice president of Louisville-based Papa John’ s International.Thompson will also continue in his roleas president, Global PJ Food Service andResearch & Development.

HEALTHCARE■ M. Suzanne Riedman, senior vicepresident and general counsel forLouisville-based Kindred Healthcare

Inc., has been named chief diversity offi-cer for the company. Riedman will con-tinue to serve as general counsel.

LEGAL■ John Y. Brown III has joined theLouisville office of Miller Wells PLLC asof-counsel to the firm.

MANUFACTURING■ GE Appliances has named DaveMcCalpin general manager of its HomeEnergy Management Business.

■ Toyota Motor Engineering & Manufac-turing North America, Inc. (TEMA) hasannounced the following senior manage-ment changes: Yoji Suzuki - president ofToyota Motor Manufacturing West Vir-ginia; Tim Platt - vice president of infor-mation systems at TEMA; Bob Young - vicepresident of purchasing at TEMA; SusanElkington - vice president of administra-tion at Toyota Motor Manufacturing Indi-ana; Bob O’Leary - vice president ofmanufacturing at Toyota Motor Manufac-turing Indiana; and Mike Price - vice pres-ident of administration at Toyota MotorManufacturing Kentucky.

PHARMACEUTICAL■ John G. Figueroa has been named chiefexecutive officer of Omnicare, a Coving-ton-based pharmaceutical company.

OTHER■ J. P. Miller Jr. has been named presi-dent and general manager of PaulMiller Autogroup in Lexington.

New leadership for Kentucky businesses

CORPORATE MOVES

Jay Cowden

Dr. Ronda Talley

Guthrie CulbertsonDan Poposki



New leadership for Kentucky organizations

ON THE BOARDS

BLUEGRASS CONSERVANCY■ John Mahan, Bart McFarland and Con-nie Jo Miller have been named the boardof directors of The Bluegrass Conser-vancy, a private, nonprofit land trust.Mahan is a fourth-generation FayetteCounty farmer and president of theFayette County Farm Bureau Federation.McFarland is a dentist and owns the Rest-ing Acres Angus cattle farm in Paris.Miller, of Lexington, is the founder ofGroup CJ Creative Communications.

CONFERENCE OF STATE BANK SUPERVISORS■ Department of Financial Institutions(DFI) Commissioner Charles A. Vice hasbeen appointed treasurer of the Confer -ence of State Bank Supervisors, the nation-wide organization for state banksupervision, representing the bank regula-tors of the 50 states, the District of Colum-bia, Guam, Puerto Rico and the VirginIslands, and approximately 6,000 state-chartered financial institutions. Comple-menting this role, Vice will also ser ve astreasurer on the State Regulatory RegistryLLC (SRR) Board of Managers and theEducation Foundation of State BankSupervisors (EFSBS). The SRR operatesthe Nationwide Mortgage Licensing Sys-tem and Registry on behalf of state finan-cial regulators. The EFSBS sponsorsprofessional training programs for statebanking department examiners and sen-ior staff.

CTIA – THE WIRELESS ASSOCIATION■ Ron Smith ,president of Blue-grass CellularInc., has beenelected to the2011 executivecommittee of theboard for CTIA –The WirelessAssociation. The appointment followsSmith’s election to the CTIA board ofdirectors in October.

EASTERN KENTUCKY UNIVERSITY CENTER FOR THE PERFORMING ARTS■ Sarah Warner and Virginia Rollins havebeen named to the board of directors forThe Center for the Performing Arts atEastern Kentucky University. Warner isexecutive director of the Ronald McDon-ald House Charities of the Bluegrass.

Rollins is co-owner of the Chestnut TreeGallery in Richmond. Dr. Robert Rogow,dean of the College of Business and Tech-nology at EKU, has been selected to chairthe board. Richmond attorney David Fer-nandez has been elected vice-chair. JanTunnell, an educational leader and retiredMadison County teacher , has beenappointed to serve on the board’s execu-tive committee.

FEDERAL HOME LOAN BANK OF CINCINNATI■ David Kreher, executive director forPeople’s Self-Help Housing of Vance-burg, Ky., has been named to the 2011advisory council of the Federal HomeLoan Bank of Cincinnati. The 15-mem-ber council provides guidance to theboard and staff on housing needs andprograms that will enhance the FHLBank’s affordable housing and eco-nomic development programs in itsFifth District territory of Kentucky, Ohioand Tennessee.

GAS TECHNOLOGY INSTITUTE■ Kentucky Public Service CommissionVice Chairman Jim Gardner has beennamed to the Public Interest AdvisoryCommittee of the Gas Technology Insti-tute, which conducts research and devel-opment for the natural gas industry.

KENTUCKY ASSOCIATION OF COUNTIES■ Pike County Magistrate Chris Harrishas been installed as president of theKentucky Association of Counties. War-ren County Sheriff Jerry “Peanuts”Gaines has been elected to serve as sec-

ond vice president. KENTUCKY BANK■ Bobby Shiflet has been named to Ken-tucky Bank’s regional board of directorsfor the Bourbon County market.

KENTUCKY BOARD OF ELECTIONS■ Stephen S. Huffman and David M.Cross have been appointed by Gov.

Steve Beshear to serve on the StateBoard of Elections. Huffman, of Lex-ington, works for HCM GovernmentalRelations. Cross, of Albany, is a self-employed attorney.

OMNICARE INC.■ James D. Shelton, interim president andchief executive officer for Omnicare Inc.,has been named non-executive chairmanof the board for the Covington-based phar-maceutical company.

PHARMERICA■ Geoffrey Meyers has been namednon-executive chairman of the boardfor Pharmerica, a Louisville-basedprovider of institutional pharmacy andhospital pharmacy management serv-ices. Meyers is the retired chief finan-cial officer and executive vice presidentand treasurer for Manor Care Inc.

PRICHARD COMMITTEE FOR ACADEMIC EXCELLENCE■ Twenty new members have beennamed to the Prichard Committee forAcademic Excellence, a statewide citi-zens’ organization working to improveeducation in Kentucky: Shawn T. AllenSr., Shelbyville; Nancy M. Collins, Haz-ard; Lt. Col. (Ret.) Darrell E. Crawford,Auburn; Scott P. Davis, Henderson;Laura M. Douglas, Louisville; W. ClayH. Ford, Owensboro; Bonnie Lash Free-man, Louisville; Bill Garmer, Lexing-ton; Jill L. Giordano, Princeton; OuitaP. Michel, Midway; Herbert A. Miller Jr.,Lexington; Helen W. Mountjoy ,Utica; Patrick W. O’Leary, Louisville;Paul E. Patton, Pikeville; Cindy Price,Somerset; Joshua Santana, Lexington;Julie H. Schmidt, Louisville; Ben Self,Lexington; Jon L. Sights, Henderson;Susan Rose Spurlock, Prestonsburg.Sam Corbett, CEO of Sam Myers For -mal Wear and former chair of the Jef-ferson County Board of Education, wasre-elected to chair the committee andretired educator and former stateBoard of Education member HilmaPrather of Somerset was continued asvice-chair. Harvie Wilkinson, vice presi-dent at Keeneland Association Inc. andformer chair of the Fayette CountyBoard of Education was elected as sec-retary/treasurer. The committee alsonamed two new board members:Louisville attorney Franklin Jelsma andLois Weinberg of Emmaline.

Ron Smith

Chris Harris Jerry “Peanuts” Gaines



BY definition, a “net zero” or “zeroenergy building” (ZEB) uses thesame amount of energy (mea-

sured annually) as it produces, using on-site renewable energy resources. Anybuilding, existing or new, can achievenet zero by harnessing sufficient renew-able energy sources – but at what cost?

The critical issue is that energy derivedfrom renewable sources today is not con-sidered “cheap energy.” Typically it is notnearly as cost-competitive as energy pulledfrom the fossil-fueled grid. To realize afinancially viable net-zero goal, whichlikely incorporates high-cost solar or windpower, a significant reduction in energyconsumption is essential.

It’s being done, though, and Ken-tucky companies have proven expertisein designing and building these real-world projects.

From its conception, RichardsvilleElementary in Warren County – thenation’s first net-zero public school –was designed to be an affordable net-zero facility. According to KentuckyDepartment of Education guidelines in2008, a conventional school buildingcost approximately $203 per s.f. tobuild. Richardsville Elementary, whichbid in December 2008, cost $196 pers.f., including its $2.7 million solar panelarray. Today is educates 445 students.

In Richardsville’s planning stages, thedesign team quickly realized that captur -ing the renewable energy – in this case,with solar panels – really was the easy part.The real challenge was to profoundlyreduce the energy consumption and con-struction cost of the building through itsdesign and operation so the solar arraycould be included in the overall budget ofthe project. To compare, a conventionalschool in Kentucky consumes 73 energyunits (kBtu’s per year), while Richardsvilleconsumes only 18 units.

The high-performance envelopebegan with a compact design that couldultimately reduce the amount of build-ing perimeter and help reduce theHVAC load. An insulated concrete formstructure more than doubled the build-ing’s insulation. Further reductionsincluded the elimination of attic spaceand incorporating heat pumps inmechanical closets between classrooms.These strategies reduced the first cost ofthe building shell and “shifted” con-struction dollars to offset the more-expensive yet more-efficient geothermalHVAC and CO2 monitoring controls.

A geothermal HVAC system reducedboth the building’s energy consumptionand the physical area needed for mechan-ical space. In addition, several of the geot-hermal units are used solely for hot-water

generation, eliminating the need for waterheaters. Occupancy and motion sensors,as well as CO2 monitoring, maintain anoptimum learning environment andreduce the system’s power demands.

The use of wireless computer tech-nology reduced plug loads and furtherreduced the overall area of the facilityby eliminating the traditional computerlab from the program spaces. Laptopcomputers can be utilized in any space,indoors or out.

A conventional school kitchen canaccount for up to 25 percent of a build-ing’s energy demands. By substitutingcombi-ovens and steam kettles for morecommon deep fryers and tilting skillets,the overall area of the kitchen and thecommercial cooking hood was down-sized, and energy used in food prepara-tion was greatly reduced.

The building was oriented north-south to optimize the classroom day-lighting strategies. Exterior light shelveson south-facing walls reflect light intothe classroom via a clerestory windowand decrease the cooling loads. Interiorlight shelves and roof-mounted solartubes reduce glare and direct naturallight toward the ceiling. Coupled withautomatic dimming controls, naturaldaylighting has reduced the artificiallight load by 70 percent.

Richardsville Elementary was built atcosts comparable to other “conven-tional” schools in Kentucky. Yet it haslower operating costs than comparableschools; in fact, it has no energy costs. Itwas not necessary to take the energy sav-ings into account in order to justify con-struction costs. There is no “pay back”period; this school began saving dollarsits first day of operation.

The design strategies that characterizethe Richardsville Elementary School proj-ect teach us that, while “green” or “highperformance” features can cost more, theyalso can be incorporated with little or noimpact on the overall budget of a buildingthrough careful and purpose-drivendesign focused on energy and materialresource reductions. ■

NET ZERO AT CONVENTIONAL COSTEnergy-reducing design features make zero energy possible

BY KENNY STANFIELD

Kenny Stanfield AIA,LEED® AP, is a principal at ShermanCarter Barnhart architects inLouisville.

GOING GREEN

Flexible solar panels designedinto the roof of RichardsvilleElementary School in BowlingGreen generate energy for thenation’s first net zero publicschool building.

Sherman C

arter Barnhart PSC photo


“We forecast a slightrebound in hotel occu-pancy and averageroom rate for 2011. Weare seeing significantdemand for short-termsmall meetings for2011. We expect atten-dance at NationalTrade Shows hosted inLouisville to reboundto their pre-2007 num-bers. Good news for thehospitality sector.”

“We are optimisticabout Kentucky’s 2011business climate andbelieve there will becontinued consolida-tion within the insur-ance brokerageindustry. Businesses willrequire more sophisti-cated advisors andexpect brokers to helpthem control costs,maintain benefits and

meet and understand federal mandates.”

“Record or near-recordcattle prices are fore-cast for 2011 and 2012.Higher fed-cattle priceswill bring higher retail– and maybe menu –prices. Exports will beup 6 percent in 2011and another 6 percentin 2012. Kentucky’sbeef herd shrank 2 per-

cent (630,000 head) in 2010, the 13thdecline in 15 years. Expect a 250,000-headdecline in 2011 to 30.5 million by next Jan.1. Production will be down 2 percent in

2011, and further in 2012. Domestic beefdemand is forecast steady to slightly betterthe next couple of years. Competitionfrom pork and poultry will limit increasesin beef demand.”

“Higher educationconcerns includetuition increases,unfunded mandates,decreased philan-thropy, continual tech-nology investmentneeds, rising bookcosts, even increases ingas prices. Old businessmodels no longer

work. Georgetown College recently hiredan executive director of new businessstrategies to help find ways to fund a newmodel. Cutting expenses meets immediateneeds, but long-term sustainability requiresnew revenue. Speaking of sustainability,every institution is morally bound toaddress energy needs. Many campuses, likeGeorgetown’s, are covered with old, ineffi-cient buildings. We have the resolve tomake the changes necessary to thrive!”

“Maintaining Ken-tucky’s low-cost elec-tricity through coalproduction remainsthe primary focus ofthe Kentucky CoalAssociation. Alongwith Gov. Beshear andnational and neighbor-ing state mining associ-ations, our litigation

against the EPA will be an important indi-cator regarding Appalachian coal’s future.We will make certain that supporting Ken-tucky’s most important natural resourceremains a topic this election cycle.”

“The arts are essentialin community andtourism development.Though facing chal-lenges in the currenteconomic climate,many arts groups aresuccessfully developingnew fundraising strate-gies and partnerships.The buy-local emphasis

is creating high-quality products; the desirefor a high return on spending has had apositive effect on Kentucky’s arts industry.”

“Recovery, recovery,recovery … and hope-fully a dose of eco-nomic momentum.That’s how I hope wecharacterize 2011 ayear from now . IfWashington can makeprogress in getting itsfiscal house in order(i.e., deficits, entitle-

ment spending, debt) and Frankfort canmanage its way through this recessionwithout incurring major debt or new taxes,business confidence will increase, invest-ments will flow and thousands of Kentuck-ians will go back to work.”

“The University ofLouisville is becomingone of the nation’spremier metropolitanresearch institutions.Our focus is onresearch that drivesthe economy andimproves quality oflife. UofL research ismaking a differenceby getting tobacco

COVER STORY

Good Things Beginningto Happen in 2011

Kentucky’s private sector begins to see improvement in manufacturing, business investment;

public sector still focused on doing more with less


James T. Wood,FCDMEPresident & CEOGreater LouisvilleConvention & Visitors Bureau

Daniel NeedhamManaging DirectorAssurance InvestmentPartners, parent ofArison InsuranceServices

Bill CrouchPresidentGeorgetown College

Lori MeadowsExecutive DirectorKentucky ArtsCouncil

Dave Adkisson President & CEOKentucky Chamberof Commerce

Dr. JamesRamsey PresidentUniversity ofLouisville

Bill BissettPresidentKentucky Coal Association

Dave MaplesExecutive VPKentucky Cattlemen’sAssociation


plants to produce cancer drugs and help-ing people with spinal-cord injuries walkagain. And moving research to the mar -ketplace is solidifying our economic role.UofL was tied to 9,600 new jobs andadded $1.2 billion to Kentucky’s economythe past seven years, a study found.Together, top-flight academics andresearch are making sure the jobs oftomorrow are “happening here.”

“2010 has been moreprosperous than 2009for many Kentuckymanufacturers, bring-ing increased produc-tivity, output andprofitability. Manycompanies, especiallymanufacturers, willcontinue to struggleuntil policy makers at

the federal level address the economicuncertainty created by their actions andinaction. In 2011 the economy will con-tinue to improve slowly and will acceler-ate more quickly when companiesexperience enough economic certaintyto take more dramatic business actionsto move their companies forward.”

“There are reasons tobe optimistic, but realeconomic challengesremain for the foresee-able future. Our bestshot is high-qualityeducation at all levels;creative, determinedleadership in govern-ment and business;

and partnerships between enterprises andin directions unimagined heretofore.Centre’s role is to offer a premiere under-graduate education – evidenced in part bythe college’s top ranking in Forbes andother national publications – that pre-pares graduates for service and leadershipat a global level.”

“The recession is chal-lenging public highereducation in Kentuckybut far less than inmany other stateswhere budget reduc-tions have been dra-conian. NKU will seestrong enrollmentdemand in 2011,reduced administrativeinfrastructure, higher

faculty productivity and investment in ourpeople, academic programs and support

for student success. As we turn the corner,investment in higher education will be crit-ical to post-recession growth for our com-munities and the commonwealth.”

“In 2010, over $300million in federalgrants was awarded forlast-mile broadbandinfrastructure in Ken-tucky. Deploymentmoves into full swingin 2011. Many under-and unserved Kentuck-ians finally will receive

high-speed Internet. The broadbandprovider industry will experience greatergrowth than the economy as a whole asmobile applications and consumer videouploads continue to propel the need forgreater bandwidth.”

“AT&T invested morethan $80 million inKentucky the firsthalf of 2010 in itswireless and wirelinenetworks to continueimproving service.Upgrades includednew cell sites,expanded mobile

broadband coverage, increased networkcapacity and extended broadband serv-ices reach. We are continuing effortsthroughout Kentucky to bring advancedservices and products to customers.”

“Real estate develop-ment and manage-ment success today isdependent uponunlimited informa-tion gathering. With-out confidence wecan do projects well,it is not worth wastingthe resources. It is anexciting time in ourbusiness, limited only

by the bureaucracy of a situation. We seesuper events ahead.”

“A slow economy anddeclining consumptionis impacting the drink-ing water industr y.North American waterconsumption hasdeclined steadily for 15years, and the recessionhas accelerated thistrend. In the Louisvilleregion, a shift from a

manufacturing- to a service-based economyalong with the prevalence of low-flowplumbing fixtures have reduced consump-tion and revenue. New drinking water reg-ulations and aging infrastructure willrequire rate increases above the consumerprice index to assure a safe, reliable supplyof drinking water to customers.”

“The economic recov-ery may be slowerthan initially thought,but we are optimisticabout the economy,the auto industry andToyota in particular.The automotive sec-tor, like many indus-tries, has seenchallenges. This yearmarks our 25thanniversary in Ken-

tucky; we are thankful for the friendsand business relationships that havedeveloped, and I am fortunate to havereturned recently to Georgetown whereI started my Toyota career in 1987.”

“Economic condi-tions are looking upin South Central Ken-tucky, specifically intourism. Hotel occu-pancy is on anupward trend andprices are holdingsteady. Attractionattendance is on theplus side. With expan-sions in Bowling

Green currently underway or nearlycomplete at Beech Bend Park & SplashLagoon, Lost River Cave & V alley,Knicely Conference Center and Avia-tion Heritage Park, the area is posi-tioned for positive business conditions.”

“Completing our newwater treatment plantand pipeline projectin 2010 was a signifi-cant accomplishmentfor the Central Ken-tucky region becausewe can now confi-dently meet currentand future water sup-ply needs. That’s amust for a region’s

economic viability. Keeping up with nec-essary utilities system investments is crit-ical to provide ample, quality waterservice to their customers, and we arecommitted to that.”


COVER STORY

Greg HigdonPresident & CEOKentucky Associationof Manufacturers

René F. TrueExecutive DirectorConnectKentucky

Wil JamesPresidentToyota Motor Engineering &ManufacturingNorth America

Vicki FitchExecutive DirectorBowling Green AreaConvention & Visitors Bureau

Nick RoweSenior Vice President,American Water,Eastern Division

Mary Pat ReganPresident AT&T Kentucky

Malcolm Bryant,CCIMPresidentThe MalcolmBryant Corp.

Greg HeitzmanPresident & CEOLouisville WaterCompany

John RoushPresidentCentre College

Dr. James C.VotrubaPresident Northern KentuckyUniversity



“The nation’s airlinesproject a modestincrease in capacity in2011, coming predom-inantly from better uti-lization of existingfleets and additionalservice on interna -tional routes. Consoli-dation will allowcarriers to strengthen

their financial positions but may reduceservice to some airports and mean fewerproviders. Fuel costs remain a concern.Louisville International Airport (SDF), theseventh-largest cargo airport in the world,continues to aggressively pursue opportu-nities. As global economies rebound, weexpect long-term growth in our air cargoand logistics business.”

“Even though the num-ber of students enrolledand degrees earnedcontinue to increase,the state must reinvigo-rate its financial sup-port for postsecondaryeducation if progress isto continue. State sup-port is down 10 percentsince December 2007.

Poor economic conditions cannot be anexcuse for retreating from our goal of sub-stantially increasing Kentucky’s educationalattainment because the present and futurebelongs to the well-educated.”

“The workers’ compen-sation insurance mar-ket in Kentucky isexpected to remain softin 2011. Employersshould be cautious inselecting insurers, mak-ing certain carriers andgroup funds are finan-cially stable and provideprofessional, responsiveservice. Businesses

should evaluate their insurance providerand consider what can be done to reduceworkers’ compensation insurance costs.”

“Indicators show com-panies we work withare planning to investin employee trainingand developmentprograms at a higherlevel than in 2010 asmore businesses real-ize their greatestinvestment is their

employees. We look forward to a steady2011 after a year of uncertainty as com-panies start to reinvest in technologyand readjust to the current businessenvironment.”

“At Alltech, wedescribe the pre-(World Equestrian)Games and the post-games Alltech. 2010was our biggest everin terms of revenue,and we reached awhole new norm. All-tech has set its sightson $1 billion in sales

in 2011 as more avenues open: venturesinto Alltech Life Sciences, geared to thehuman-health side of our products; andacquisition of the Martek facility in Win-chester consolidated our expertise andexpands possibilities for producing bio-diesel carbon sequestering in one of theworld’s largest algae-production units.”

“Marquee performerscan still command apremium ticket price,but most artists willfind it hard to fill the-aters. Arts lovers willbe more price-con-scious in 2011. Addthe continuing strug-gle for corporatesponsors, withoutwhich not even the

biggest shows can make a profit, and itlooks to be a tough year. The strategy formost will be to rely on familiar namesthat fit into the public’s comfort zone.”

“I hope 2011 is theyear Louisville, andKentucky as a whole,begin to emerge fromthe recession. Thereare reasons to be posi-tive. Louisville’s repu-tation as the globalheadquarters locationfor aging care/long-term healthcare com-

panies is being established; new productsare being in-sourced to General Electric’sAppliance Park, and the Ford AssemblyPlant is being retooled to be the mostadvanced automotive facility in theworld. I hope to make Louisville Amer -ica’s great entrepreneurial capital, wherethe best ideas come alive in the easiestcity in the country to start, grow or relo-cate a business.”

“I am guardedly opti-mistic about businessconditions in Ken-tucky. Educationalattainment is up,state revenues areimproving and newbusinesses, such asthe Japanese startupcoming to MadisonCounty, are comingonline. Demand for

programs and services at EKU continuesto increase, while diminution of statesupport has caused us to become moreefficient. I think we are on a slow, steadyrebound that will require nurture.”

“Blue Grass Airportexperienced a signifi-cant increase in pas-senger traffic in 2010with the addition ofAirTran Airways andnew destinations byexisting airlines. Theairline industry willcontinue to stabilize in2011 if it’s disciplined

about growth. The United/Continentalmerger and Southwest’s acquisition of Air-Tran could result in a stronger industr y,but perhaps at the cost of consumerchoice. The fragile economy and volatileoil prices could impact airlines’ successand profitability. Blue Grass Airport willcontinue to find ways to partner with theairlines to improve service to customers.”

“ T h o r o u g h b r e dequine veterinary med-icine is struggling, butthe sport horse sectoris prospering. TheThoroughbred marketis shrinking, plus Ken-tucky is losing marketshare – simultaneouslyenduring an economicdownturn, an unprece-dented market correc-tion and an extremely

challenging banking/credit environmentwhile other states seriously outcompete us.Thoroughbreds are leaving to race andbreed where incentive programs arestronger. Meanwhile, as a legacy of theWorld Equestrian Games, the KentuckyHorse Park is the undisputed finest showfacility in North America. Horse showentries are up, which is not the case inmost markets. Sport horse trainers arerelocating to Central Kentucky, bringingjobs and customers for local businesses.”

Skip MillerExecutive DirectorLouisville RegionalAirport Authority

Dr. Lee ToddPresidentUniversity ofKentucky

Roger FriesPresident & CEO Kentucky Employers’Mutual Insurance

Crinda FranckeExecuTrainVice President

Pearse LyonsPresidentAlltech

Dr. DougWhitlockPresidentEastern KentuckyUniversity

Eric J. Frankl,A.A.EExecutive DirectorBlue Grass Airport

Andrew R. Clark,DVM, MBAChief Executive Offi-cerHagyard EquineMedical Institute

Stephen KleinPresidentThe Kentucky Center for thePerforming Arts

Greg FischerMayor Louisville


“Windstream will con-tinue its focus on busi-ness customers in2011. With the acquisi-tion of Kentucky DataLink, Windstreamexpanded its fiber net-work, allowing fasterInternet speeds andenhanced dependabil-ity. We are expanding

our data center and cloud computingofferings to meet business demands as wellas offering a robust suite of advanced com-munication solutions.”

“We’re priming thepump in NorthernKentucky for targetindustry employerswith two new, stellareducational attrib-utes: the Center forAdvanced Manufac-turing at the GatewayCommunity & Tech-nical College, and the

NKU College of Informatics GriffinHall. We’re buoyed about an evenstronger 2011 than the solid year we hadin Northern Kentucky in 2010.”

“Businesses are moreoptimistic going into2011. In our region ofKentucky, more than90 percent of busi-nesses are budgetingrevenue growth andmore than 30 percentpredict growth greaterthan 30 percent. Thisis much stronger thanthe rest of the countr yis feeling. W e are

encouraged by growth in the constructionsector due to projects the past year andrecent announcement of new projects.”

“Signs of growth in2010 in manufactur-ing, high-tech, bio-lifesciences and health-care, combined withCentral Kentucky’squality education sys-tem and plethora ofcolleges and universi-ties, lead us to expect2011 will continue

the momentum generated by the All-tech FEI World Equestrian Games andcompletion of numerous city projects. Adiverse economy and strong workforce

continue to bolster our community intough economic times. Lexington wasnamed among U.S. cities in 2010 foreducation, families, retirement, qualityof life, manufacturing, banking, busi-ness and careers, and overall well-being;accolades will continue.”

“Hit hard in 2009 and2010, the hotel indus-try experienced aslight improvementthe second half of2010; all our busi-nesses are experienc-ing a slight increase.Policy decisions inWashington, D.C.,have slowed recoveryand the economy.”

“Federal environmen-tal legislation thatfocused on carbon cap-and-trade in recentyears could requiremajor upgrades toLG&E and KU’s coal-fired generating sta-tions over a tighttimeframe. We are eval-uating cost-effective

strategies, but the best options likely willcost our customers an estimated 20 percentincrease in customer bills, by 2019. Wehope final regulations allow more flexibil-ity to meet environmental needs in a morecost-efficient manner for our consumers.”

“Through restructur-ing and a recommit-ment to sales, the firstand second quartersof 2011 project to bevery strong. Opportu-nities there nowrequire us to worksmarter and be moreaggressive searchingout new customers

and finding new ways to service ourexisting customers.”

“2011 will be a pivotalyear for Louisville’seconomy and thestate’s business cli-mate. We’re emergingfrom recession withmajor investments byFord and GE, contin-ued growth in logisticsand strengths in thefast-growing aging-care

sector. Policies that increase educationalattainment and create fiscal reforms tosupport investment and business growthwill develop the skilled workforce and busi-ness climate for innovation and entrepre-neurship that create sustainable jobgrowth across Kentucky.”

“A slow economy andstubborn unemploy-ment translate into significant city govern-ment budget shortfallsas my administrationbegins. Our team isfocused on finding effi-ciencies. We have toleverage resources todrive economic growth

and create jobs. Lexington has a wonder -ful brand as a great place to live, work andretire, and it has a great business climate. Iwill market our city to investors, get entre-preneurs connected with resources andhelp existing businesses expand. Our fam-ily business survived this downturn withgood planning, innovation and doingmore with less. The city will do the sameand come out of this recession stronger.”

“Economic conditionsin South Central Ken-tucky are relatively sta-ble. Unemployment inWarren County isslightly below the stateaverage; other countiesin the region are at orjust above the stateaverage. Educationand healthcare con-

tinue to be the bellwether sectors.”

“Gov. Beshear’s mod-ernization of economicdevelopment capabili-ties through Incentivesfor a New Kentuckylegislation in 2009greatly enhanced ourability to encouragecompanies to invest inthe commonwealth.Nearly 70 percent of

companies approved through INK programs have announced plans to makecapital investments totaling over $1.3 billion, and retain and create thousands ofjobs for Kentuckians. Though our economy continues to struggle, activity levels are increasing, and Kentucky will successfully attract new companies and gain expansions of existing businessesin 2011.” ■


COVER STORY

Barry BishopRegion VPWindstream

MichaelTettertonPresidentCreative LodgingSolutions

Ted PrewittPresidentHayden Company Inc.

Joe ReaganPresident/CEOGreater LouisvilleInc.

Dr. Gary RansdellPresident Western KentuckyUniversity

Larry HayesSecretary Cabinet for EconomicDevelopment

Jim GrayMayorLexington

Vic StaffieriPresidentLG&E and KUServices Co.

Dan TobergtePresident/CEO Northern KentuckyTri-ED

Bob QuickPresident and CEOCommerce LexingtonInc.

Steve Stevens,CCEPresident Northern KentuckyChamber ofCommerce



WITH the cur-tain up onthe Frank-

fort political stage, theaction is framed by agifted trio in starroles. By year’s end,either Gov. SteveBeshear or SenatePresident DavidWilliams will hold thechief executive’s spot.While not a candidatenow, House SpeakerGreg Stumbo couldeasily be a front-run-ner in 2015.

The scene bearsout the politicaladage: It’s alwaysabout the next elec-tion. Democracyshows that this ishow things work.And work is happen-ing fast.

Beshear would raise the drop-out agefrom 16 to 18, a proposal he’ s pushedbefore.

Williams’ Senate super-majority burstinto week one with a wide range ofstands, from immigration enforcementto setting the pegs for major compre-hensive tax reform.

Louisville’s assignment of students toschools, a process long contentious,would be altered by the Senate. Publicpensions, a state government cost-driver,would change to 401(k)-type plans fornew hires.

Stumbo is heading the House towarddecisions to contain prisons costs, limitpayday lending rates and better manageMedicaid, all major moves.

Getting moregraduates at all levelshas been a theme forthe governor as wellas First Lady JaneBeshear, an ardenteducation supporter.One area of potentialHouse and Senate

agreement could be upping the dropoutage to 18.

As much heat as immigration reformdraws, the Senate proposal conveys a com-mitment to enforcing the law. A similar lawin Arizona is in federal court now. Arizonahas won strong praise from conser vativesand condemnation from the left. Majorconventions headed to Phoenix have can-celled in protest, costing millions. Never -theless, Georgia, Mississippi, Nebraska,Oklahoma, Pennsylvania and South Car-olina have new legislation under review,just like the Kentucky Senate. More statesstill could, showing the issue’s popularity.

The state Housealready has a proposalto solve illegal immi-gration throughenforcement in theworkplace, sponsoredby Rep. Bob Damron,who chairs the Demo-cratic caucus. SpeakerStumbo says currentlaws allow for policeenforcement.

Two House mem-bers, Rep. JimWayne, D-Louisville,and Rep. BillFarmer, R-Lexing-ton, have cam-paigned to updateKentucky’s aged,outdated tax code.

The Senateapproach would forcethis complex issuethrough a creativelens – the state’s topeconomists – and then hold an up ordown vote in 2012. Without such aprocess, tax change comes in pieces, giv-ing only gradual improvement. Any taxvote is tough politics. A vote on an entirepackage would devolve into endless horsetrading, experts fear. Williams suggests theonly way home on this is one vote on onenew system.

Another area of potential agreement iscrime and punishment. A brain trust hasstudied myriad problems, costs and solu-

tions, led by the twochairs of judiciar y,Rep. John Tilley, D-Hopkinsville, and Sen.Tom Jensen, R-Lon-don, along with ChiefJustice John Minton.The prestigious PEWCenter has been avaluable source alongwith Justice Sec. J.Michael Brown andCorrections Commis-sioner LaDonnaThompson.

A new Class Efelony category couldbecome law, easingsentencing while bet-ter balancing solu-tions to challengespresented by drugsand increased arrests.

As the Senateaddresses spiralingpublic employeeretirement costs, theHouse wants to undothree unpaid fur -lough days for publicworkers, used by Gov.Beshear to balancethe state budget.

At issue is $15 mil-lion tied to upset stateworkers, who resideheavily in DemocraticFranklin County.

Medicaid andhealth costs loomlarge, with one in sixKentuckians coveredby Medicaid. Beshear is pushing a majormove to managed care, determinedmake ends meet and services work. Thefederal government covers 80 percentof the cost, but this could fall back to 70percent, a huge budget impact.

All in all, the issues set the electionstage for November, and provide a pre-view of decisions that spill over into2012 and beyond. ■

STAR-CROSSED SLUGGERSPolitical calculation a big factor in ciphering out budget efficiencies, tax and prison reform, and illegal immigration

BY BOB BABBAGE

Bob Babbage, formersecretary of state andstate auditor, headsBabbage Cofounder.

KENTUCKY LEGISLATIVE OUTLOOK

Gov. Steve Beshear

Jane Beshear

John Tilley

Tom Jensen

John Minton

J. Michael Brown

LaDonna Thompson

Bob Damron

Jim Wayne

Bill Farmer

David Williams

Greg Stumbo


Editor’s note: Part 2 of a two-part seriesexamining major trends reshaping healthcarein the commonwealth. Last month: new part-nerships, the rise of the ‘hospitalist’ andaccountable care organizations. This month:value-based purchasing, acquisition of physi-cian practices, electronic health records andcommunity health initiatives

AS is the case across thenation, Kentucky’s health-care industry is goingthrough major change in itsbusiness operations. Health-

care is a sixth of the U.S. economy, butpublic, private and retail consumer com-plaints about steeply rising costs that haveoutpaced consumer price index (CPI)increases for decades are forcing reformsfocused on financial discipline.

Under federal value-based purchasingprocedures for medical care, formerlyknown as pay-for-performance, the gov-ernment will allot its finite dollars to theproviders providing the best care. Value-based-purchasing assessments of the qual-ity and worth of various inter ventions areto base 70 percent on clinical analysis and30 percent on patients’ perceptions.

“Pressures oncosts at hospitalsare ever-increasing.It is a zero-sumgame. Hospitalswill lose their per-formance dollars ifthey don’t figurethis out,” saidAraby Thornewill,vice president ofclinical and opera-tional products inKentucky for PressGaney, a healthcareperformance consultancy. “Accountablecare and value-based purchasing go handin hand in the age of healthcare reform.”

By 2013, up to 1 percent of Medicarereimbursements will be determined bymeeting both clinical and patient satis-faction benchmarks. Phasing in gradu-

Rx for Healthcare:Efficiency

Restructuring includes value-based purchasing,physician practice acquisition, electronic medical records

BY DAWN MARIE YANKEELOV


HEALTHCARE

Araby Thornewill, vice president of clinicaland operational products, Press Ganey



ally, the number goes up to 2 percent ofMedicare reimbursement by 2017.

“What is sobering is that when wemodel current methodology, fewer than100 hospitals in the U.S. will recapturetheir (current) performance dollars outof the 4,000-plus facilities out there,”Thornewill said.

“Hospitals no longer have (local) mar-ket competitors – they have national com-petitors. We are breaking ties at theseventh or eighth decimal point regardingperformance at the patient level. Everypatient encounter matters,” she said.

Meanwhile, hospitals still sing theblues on costs – average cost for a one-time Medicare client stay is $11,348 witha loss of $652 per patient.

“This is a speeding train that must beanalyzed. Every car of the train is anopportunity to get paid less if not exam-ined for efficiencies. For the commu-nity-based hospital with 40 percentMedicare patients, this is an ongoing,pervasive issue,” Thornewill said. “Wewill continue to see consolidations ofservices, mergers and alliances acrossthe board with hospitals because theyare trying to address these pressures,but these actions do not guarantee thatpressures regarding reimbursement willgo away. The answer is to look at varia-tions within each hospital and do a root-cause analysis for each facility.”

The search for efficiencies will bethorough, others agree.

Healthier residents less costlyA Kentucky partnership between med-ical benefits provider Humana and Nor-ton Healthcare was recently selected asone of four national pilot accountablecare organizations.

“It is very early in the game on howto help out the state’s rural institutions.The pilot program, which goes threeyears, is expected to produce someanswers,” Dr. Steve Hester, Norton sen-ior vice president and chief medical offi-cer, said. It will require transparencyand partnership with Humana to get itright, Hester said.

Saving money will mean addressinghealth problems, too, according toMarty Bonick, CEO of Jewish Hospital &St. Mary’s HealthCare (JHSMH).

“The changing incentive structuresare a major shift,” Bonich said. “Thoseof us in the state of Kentucky must lookat our high incidence of cancer, heartdisease, diabetes and stroke and combatthis. It will require working with the aca-demic institutions, like UofL, and doingthe research and reviewing the entire

statewide pres-ence we have.”

Jewish is partici-pating in one ofthe two newstatewide “regionalprovider” groupsthat wereannounced withina week of eachother in Novem-ber. The firstincludes JHSMH,University of Louisville Healthcare and St.Joseph Health System/CHI. The other isNorton Healthcare and University of Ken-tucky HealthCare.

Putting together the letter of intentbetween Jewish, CHI and UofL was amajor step, but just a first step. “This is nota meet over lunch and do this on the backof the napkin issue,” Bonick said.

CHI is Denver-based Catholic HealthInitiatives, the parent organization of St.Joseph Health System. CHI committed toinvest $300 million into the Kentucky deal.

Strengthening the fabric of health-care in the commonwealth medicallyand financially is a motivation for build-ing bigger organizations, according toStephen A. Williams, CEO of Norton,and Dr. Michael Karpf, UK vice presi-dent for healthcare.

They said they expect the nationalstage will end upwith only 50 to 75major regionalproviders that areable to offer themost advancedcare. Norton-UKseeks to target aregion thatincludes Ken-tucky and parts ofOhio, West Vir-ginia and T en-nessee and ishome to 7 millionresidents.

“Costs have tocome down,”Williams said.“Healthcare hasto change.”

Acquisition ofphysician prac-ticesBaptist HospitalEast, in Louisville,anticipates it will engage in more physi-cian practice acquisition activity. Thenumber of physicians interested in being

bought out is rising in part because offears surrounding healthcare reform andefficiency modeling, according to TimMarcum, senior vice president of strategicplanning at Baptist Hospital East.

“Sometimes the solutions for maintain-ing or enhancing a relationship with aphysician group are not about a pur-chase,” Marcum said. “In Henry County,we co-located an employed physicianwithin another practice to maximize every-one’s investment in space and expenses.”

Baptist East has 94 doctorsemployed, 40 of whom are specialists.Since Sept. 1, the hospital has hiredeight cardiologists, one cardiac surgeon,three neurologists and three primary-care physicians.

All types of affiliations, includingwith other hospitals and acute-careproviders, etc., are not to be ruled out.

“We span the state from Paducah toCorbin, and in order to stay strong foraccountable care, even more partnerswill be identified. Some will be physicianpractices,” Marcum said.

Louisville-based Baptist Healthcareincludes five hospitals with 286,000 patientdays in 2009 as well as the Bluegrass FamilyHealth medical benefits operation.

Norton Physician Ser vices hasemployed physicians for more than 14years and has the largest network ofemployed physicians in the region withmore than 270 employed providers repre-senting nearly 40 specialties at 67 physicianoffices in and around Greater Louisville.

The Jewish Physician Group (JPG), asof late November, is comprised of morethan 250 employed healthcare providersthroughout Louisville. The final decisionson what physicians to own or havealliances with may come from the statehealth information exchange level, andhow it helps providers come together.

“More physicians are coming to usfor alliances, and we realize that physi-cian reimbursement is changing,” Bon-ick said. “Employment is often viewed asthe answer, but it is a short-term, quickanswer and we will need to study this.”

Electronic health recordsWhile Norton Healthcare owns a signifi-cant and growing number of doctors,management attentions are moving tohow to add value with an electronicmedical records (EMR) system. It is keyto integration and ultimately assists inmanaging costs.

“In all these initiatives, it is data that isreally important. We need to pull data intoa single interface. There is a lot of changeinvolved and monitoring of patient safety

Marty Bonick, CEO,Jewish Hospital & St.Mary’s HealthCare

Dr. Michael Karpf, vice president forhealthcare, UK

Stephen Williams,CEO, Norton Healthcare


and the ambulatory EMR is a big piece ofthe pie in the next 18 months,” said Hes-ter, the Norton chief medical officer.

The hospital has an EMR solution, butis seeking another more comprehensiveand physician-centric model as well.

Baptist East has had a hospitalwideEMR for more than five years. Howeverthe hospital is seeking a solution for itsindependent physician offices thatwould allow doctors to see hospital testsand patient records. Some physicianscome into the system with their ownEMR and Marcum says they work withthat. “We acquired a sub-specialty prac-tice that had an electronic health recordand so we wrote the inter face for it towork with Baptist,” he pointed out.

Jewish Hospital has a partial imple-mentation of an electronic healthrecord, but has found it not to be robustenough and is seeking more solutionsthat can work.

Through the Health InformationTechnology for Economic and ClinicalHealth (HITECH) Act, doctors’ officescan receive up to $64,000 per practicingphysician for implementing a certifiedelectronic health record, making this apivotal time in healthcare reform forhospitals and physicians to worktogether. The federal government hasset aside $19.2 billion for physician prac-tices and acute care hospitals.

Kindred has a robust investment inits electronic health record efforts thatbuild bridges to their nursing facilities,and it is a pre-condition to working withcertain hospitals. Rick Chapman, theCIO of Kindred Healthcare, serves on afederal task force on developing stan-dards for electronic health records inthe health care industry.

Community health initiatives to growHospitals must also grapple with a not-yet-defined community health mandate

that is likely to mir-ror current serviceareas and providemore access forareas that hospitalsserve. Hospitals seethis as a collabora-tive assessment, sothat multiple groupsare not overlappingefforts in communi-ties served. In taxforms, individualhospitals will have to

show what areas they are covering andwhat they are doing, particularly tomaintain not-for-profit status. Forexample, the first community healthassessment form is due in July 2012 forBaptist East. “The trend is moving to thehub and spoke system for patients,”Marcum said.

“This community health boost willmean more well care will be provided,”said Mark Carter, managing director ofconsulting services for Dorton, Dean,Allen & Ford and a founding member ofGreater Louisville Inc.’s Health EnterpriseNetwork. “We will see more marketing and

patient education about the clinics associ-ated with the hospital, and explanations ofhow to mitigate risk factors for diseasemanagement, like diabetes.”

Norton’s Hester said programs arealready successfully underway that support the validity of this thinking,including Norton’s program with Jefferson County Schools for flu immunizations and Healthy Start fornew moms. Norton will soon be offeringhealthcare opportunities to athletictrainers in the JCPS school system for athletic programs.

He added that the hospital identi-fies 60-plus quality indicators on itswebsite for patients to understand whatis important in this healthcare evolution. “We want patients andemployers to know,” he said. “We wantto be responsive to changes and to theneeds of our patients and we will modify to best respond.” ■

Dawn Marie Yankeelov is the president ofAspectx, a Louisville-based marketing andconsulting firm serving the healthcare andtechnology markets in the U.S. and Europe.

HEALTHCARE


After acquiring a number of area physician practices, Baptist East Hospitalin Louisville now employs 94 doctors.



THE actions of the FederalReserve have been impor-tant news in the last part of2010 with its current policyof renewed “quantitative

easing” (QE2), as well as with therecent publication of documents per-taining to its previous quantitative eas-ing (QE1). These recent actions,especially QE1, are in sharp contrast toprior Fed activity, and raise seriousquestions about the appropriate roleand powers of the Federal Reserve.QE2 is a more traditional monetaryexpansion, but there are concernsabout igniting inflation and whethermonetary policy is an appropriate toolfor the present economic environment.We relate our discussion to concernsand prospects for 2011.

Traditional fed actionsA primary role of banks in the economyis to coordinate the activities of borrow-ers and savers. Consumers and busi-nesses deposit funds into savings and

checking accounts, and banks, in turn,keep a portion on hand to meet day-to-day transactions (reserves) and lendmuch of the remaining balances to con-sumers and businesses that want to bor-row. When banks have excess reser vesthey don’t lend to consumers or busi-nesses, they may purchase Treasurysecurities or lend to other banks that arelow on reserves. Through lending, bankreserves are multiplied into additionaldeposits so that the “money supply”(currency plus deposits in banks) is amultiple of the “monetary base” (cur-rency plus reserves held in banks). Priorto the financial crisis in 2008, the Fedprimarily controlled this money supplyand interest rates using open-marketoperations – the buying and selling ofTreasury securities.

Appropriate monetary policy is stilldebated. One view is that the Fedshould engage in “aggregate demandmanagement,” so that if there is highunemployment, monetary policy shouldstimulate the economy through the

expansion of reserves to achieve fullemployment without igniting inflation.Other views argue that the Fed shouldhave a more modest purview, such asmaintaining price stability or supplyingliquidity in times of financial marketunease when otherwise solvent banksmay run short of reserves. Some alsoemphasize the importance of minimiz-ing Fed interference in the marketdetermination of interest rates. Regard-less of the Fed’s policy orientation, itsactions in the past have largely takenplace through open-market operations.

QE 1At the onset of the financial crisis and theslowing of the economy, most agreed thatthe Fed should inject liquidity into themarket, i.e., engage in “quantitative eas-ing.” However, the Fed did so in a highlyunusual way and went well beyondstraightforward monetary expansion.

Under normal monetary expansion,the Fed purchases Treasury securitiesfrom banks, which provide them moreloanable reserves. But during the crisis,the Fed also initiated many short-termliquidity and credit programs where bor-rowers were allowed to put up a varietyof debt obligations as collateral, includ-ing mortgage-backed securities ofunknown value. In effect, the Fed putreserves into banks by purchasing a grabbag of securities, many of which likelywere bad assets. Additionally, the Fedbegan making loans not only to banksbut government-sponsored agencies,nonbank financial institutions, foreignbanks and nonbank entities. Moreover,unlike funds available through TARP(Troubled Asset Relief Program), bor-rowers through these facilities were notsubject to direct oversight by Congress.The original intent of TARP was for theTreasury to buy troubled assets. Treas-ury gave up on this approach, but theFed did it instead.

According to the Fed, its short-termliquidity and credit programs fell “intothree broad categories – those aimed ataddressing severe liquidity strains in keyfinancial markets, those aimed at provid-ing credit to troubled systemically impor-tant institutions, and those aimed atfostering economic recovery.” The secondcategory – providing credit to troubledinstitutions – is highly unusual. In fact,this is bailing out insolvent institutions.

Though the Fed did succeed inincreasing liquidity in the market, muchof its “quantitative easing” was offset byother actions. An important measurewas the Fed’s initiation of paying inter -

ECONOMIC COMMENTARY

Quantitative Easing 1 and 2

Recent Federal Reserve activity opens it tocreeping political influence, lack of independence

BY CATHY CAREY AND JOHN GAREN


est on banks’ excess reser ves and sug-gested long ago as an alternative way forthe Fed to manage banks’ reserves.Instead of requiring minimum reserves,the Fed could induce more or lessreserves by moving the interest rate itpays up or down. In 2006, legislationallowing the Fed to pay interest onreserves and to reduce the reserverequirement to zero was passed. Imple-mentation date was moved up to Oct. 1,2008 by the Emergency Economic Stabi-lization Act of 2008.

The initiation of payment onreserves (with no change in reserverequirements) naturally induces banksto hold more reserves, reducing themoney supply. The Fed’s purchases ofan assortment of securities expandedthe volume of banks’ excess reser ves tounprecedented levels. However, themoney supply did not expand propor -tionately, in part due to the payment ofinterest on these reserves. Thus, oneaspect of “quantitative easing” was notabout increasing the money supply.The Fed acquired mortgaged-backedsecurities from banks in exchange forinterest-bearing reserves.

Another offset to the expansionarynature of QE1 was the U.S. Treasury’sSupplementary Financing Program.Under this program, the Treasury sellssecurities to the public and supplies theproceeds to the Fed to either lend orhold. Because the action by the T reas-ury removes banks’ reserves, this allowsthe Fed to buy troubled assets withoutcreating new reserves. Therefore, thisactivity of the Fed is not an effort toincrease the money supply.

The Fed has been quite successful inremoving many mortgage-backed securi-ties off of banks’ books. Until 2008,nearly all its assets were Treasury securi-ties. However, by late 2009, its holding ofmortgage-backed securities outstrippedthat of Treasuries.

Many economists (including theauthors) are concerned that these newlyexercised powers of the Fed puts more dis-cretion in the hands of the Fed and sub-jects it to more political pressure inallocating credit as opposed to letting mar-kets decide winners and losers. The Fed’s

targeted lending activities included notonly nonbank financial institutions such asAIG, Fannie Mae, Freddie Mac, BearStearns and central banks, but also such“systematically important institutions” asMcDonald’s, Harley-Davidson and Toyota.

Economist James Hamilton views thisnew authority of the Fed as a potentialthreat to Fed independence: “The decision of where public funds are bestallocated is inherently political. Anyrisks on the Fed’s new balance sheet areultimately borne by the taxpayers. …The Fed is simply being naive if it thinksit can become involved in those deci-sions on a weekly basis and yet stillretain its independence.”

Despite the actions taken in QE1, theeconomy remained sluggish with highunemployment, and banks continued areluctance to engage in more lending.Demand for lending declined as well.Thus, the Fed decided to engage in a second round of quantitative easing.

QE 2The Fed’s goal with QE2 is to spur thestagnant economy and is expected to becloser to traditional monetary policy, witha slight variation. Instead of focusing onopen-market purchases of very short-termTreasury securities, the Fed will purchase$600 billon of longer-term securities.Because short-term interest rates are solow, the Fed can do little to lower themmore, so it is moving to reduce long rates. This may be viewed as the Fed usingthe last possible weapon in its arsenal. Tothis point, there has not been much success though.

An obvious question is whether theseactions will stimulate the economy and/orgenerate inflation. Traditional manage-ment will stimulate aggregate demand.The problem is that the Fed cannot forcebanks to lend or consumers and busi-nesses to borrow. However, if the econ-omy finally invigorates, and consumers,businesses and banks become embold-ened, then there could be significant infla-tionary pressure as the reserves created inQE1 and QE2 are lent out. To preventthat, banks must be induced to hold on tomany of those reserves. The Fed believesthat it can do so in a timely way by raising

the interest rate it payson reserves. Unfortu-nately, there is no evi-dence to suggest that theFed can steer the U.S.economy with such preci-sion. A harsh reminderis the steep tightening ofthe Paul Volcker-led Fed

in the early 1980s. The Fed pushed the tar-geted federal funds rate in excess of 19percent, leading to a sharp recession.

Where do we go from here? Given this flurry of unusual activity bythe Fed over that past two years, what isthe outlook for 2011? An importantissue to consider is whether activist mon-etary policy is critical to economic recov-ery. It seems that the main problems ofthe U.S. economy today are not relatedto liquidity, but to the real return oninvestment and productive activity.Right now, it is uncertain with a lowexpected value. The reasons for thishave been discussed widely: uncertain-ties and concerns about future incometax rates, the cost of healthcare reform,the prospect of higher energy costs,increased lending costs due to the finan-cial reform bill, and a growing federaldebt. None of these concerns is allevi-ated by expansionary monetary policy.Until these fundamentals are addressed,we are not sanguine about a robustrecovery developing in 2011.

One of the lessons from the 1970sstagflation was that quantitative easingcannot “buy” lasting economic strengthand ultimately leads to inflation.Another lesson was that it is difficult tofine tune the economy and efforts oftengo awry. The prospect of Fed attemptsto engage in fine tuning, rather thanfocusing on price stability, give us morecause for caution in looking to 2011.

Long-term, we are also concernedabout the role the Fed has taken on inQE1 – acquiring sketchy assets, bailingout insolvent institutions and discre-tionary use of Treasury funds. The Fedtaking on these powers and its collabo-rative actions with Treasury suggests acreeping political influence and lack ofindependence. Fed officials staunchlydefend its independence, but their ownactions have undermined it. A politi-cized Fed will surely lead to politicizedinvestment, with the associated lowreturns and stagnant economic growth.

Should Fed powers to intervene infinancial markets be trimmed? Weargue that it is better to undertake policies that lead to more stability in thefirst place (e.g., no government encouragement of high-risk real estateloans, efficient bankruptcy proceduresto deal with insolvency). These obviatethe necessity for a powerful governmententity to come to the rescue and also prevent the concentration of political and economic power into thehands of the few. ■

ECONOMIC COMMENTARY


Cathy Carey and John Garen areprofessors of economicsat, respectively, Western KentuckyUniversity and the University of Kentucky.


U.S. SenateRetiring U.S. Sen.Jim Bunning hasleft Washington,D.C., after a longcareer in publicservice. Bunningserved as a citycouncil memberfor Fort Thomas;a Kentucky statesenator; a mem-

ber of the U.S. House of Representa-tives; and in the U.S. Senate over athree-decade period. Although notalways politically popular, Sen. Bunningvoted his conscience, defended hisstrong set of conservative values andprinciples, and had hard core supportfrom many of his constituents.

K e n t u c k y ’ snew junior Sena-tor Rand Paulcampaigned onconservative polit-ical issues: smallergovernment isbetter govern-ment; debt is athreat to U.S.national security;the Federal

Reserve needs more supervision; andincreased transparency by the govern-ment is vital. Paul was endorsed by Bun-ning and will continue to deliver aconservative voice for Kentuckians astheir representative in Congress.

Kentucky Governor’s Race“Mayor for Life” Jerry Abramson electedto cut short his political reign with theLouisville Metro Government to throwhis hat into the ring for lieutenant gov-ernor as Gov. Steve Beshear’s runningmate. The Beshear/Abramson ticketwill be a very powerful entity with twoproven and successful politicians team-ing up. Their likely opponents will beveteran Kentucky Senate PresidentDavid Williams and top statewide vote-getter Commissioner of AgricultureRichie Farmer.

A lot of factors will influence the 2012governor’s race: voter disenchantmentwith incumbent politicians; the global

recession and its negative impact on thestate tax revenues needed to adequatelyfund government and education; highunemployment; the current weakness ofthe Democratic Party under PresidentObama’s leadership; the needs of Ken-tucky’s rural areas versus those of urbanvoters; and the Tea Party’s and inde-pendent voters’ influence on the primaryand general election.

There are so many factors that willlikely impact the 2011 governor’s racethat oddsmakers are sitting on theirhands. The governor’s race in 2011 willlikely be long, tedious, expensive andexciting (if you like to follow the risingand falling tides of political campaigns).

New Mayors of Major MetrosJerry Abramson is followed by newlyelected Metro Louisville Mayor Greg Fis-cher (D). Fischer is part owner of DantClayton Corp., a sports stadium design,manufacturing and construction com-pany. He ran against Council MemberHal Heiner (R), who was elected to thefirst Louisville/Jefferson County MetroCouncil in 2002. Heiner founded Cap-stone Realty Inc. in 1997. Both candi-dates were well regarded andconsidered high-quality candidates formayor. The race for mayor was very

close, with Fischeredging out Heiner51.0 percent to48.6 percent.

I n c u m b e n tLexington MayorJim Newberry losthis race for re-election to ViceMayor Jim Gray.Both candidatesran on a non-par-tisan ticket. Mayor Newberry inherited anumber of problems at the beginning ofhis four-year term. Issues on his desk thefirst day on the job included an EPA law-suit; failed implementation of the city’ sfinancial accounting system; under-funding of the police/firefighter pen-sion; and poor relations withuniversities, economic developmententities, and state government agencies.These issues coupled with three years ofdeclining or static general fund rev-enues (2009-2011); a strong, well-funded and organized campaign bymillionaire Gray; and a contentiouselection cycle led to Newberry’s losseven though he received high marksfrom the business community for man-aging local government.

Mayor Gray is the former CEO ofGray Construction, which builds indus-trial and manufacturing facilities for

major corporations worldwide. Gray hasstepped down from his managementposition upon election as mayor. Grayplans to use his business experience toreduce costs and increase operationalefficiencies as well as add more sizzle tomarketing Lexington, promote newbusiness and jobs creation, and providea higher and more meaningful level oftransparency for Lexington’s residentsand taxpayers. Gray’s significant self-financing of his campaign and theintensity of his political initiatives

Commentary on life in Kentucky

PASSING LANE


Kentucky Politicians on the MoveThe state’s two largest cities have new mayors

Jim Bunning

Sen. Rand Paul

Gov. Steve Beshear Jerry Abramson

David Williams Richie Farmer

Greg Fischer

Jim Gray Jim Newberry

Continued on next page



NINE notable Kentucky entrepreneurs were recognized as the inaugural class of inducteesfor the Kentucky Entrepreneur Hall of Fame recently in downtown Lexington at theheadquarters of Awesome Inc.

The 2010 inaugural class is: John Y. Brown Jr., KFC; Pearse Lyons, Alltech; the late William T.Young, W.T. Young Storage and Overbrook Farm; W arren Rosenthal, Jerry’s Restaurants/Jer-rico/Long John Silver’s; John Schnatter, Papa John’s; Jim Host, Host Communications and Print-ing; the late Ralph G. Anderson, Belcan; Davis Marksbury, Exstream Software; and University ofKentucky President Lee Todd, Projectron Inc. and DataBeam Corp.

Inductees were selected based on a variety of attributes, including revenue and profit growth,entrepreneur activity or visibility, innovativeness of product or service offered, contributions tocommunity-oriented projects and society, creating jobs, and contributions to their industry.

“I am humbled to be recognized alongside some of the heavyweights of Kentucky’s business world,”said Todd. “I thank all of the sponsors for this honor, and I applaud them for creating the KentuckyEntrepreneur Hall of Fame. We need more Kentuckians to realize that they can create their own jobsright here in Kentucky. I hope this hall of fame will help spark curiosity and imagination in peopleacross the commonwealth.”

Five emerging entrepreneurs were recognized also: Randy Riggs, Advanced Cancer Thera -peutics; Keith Ringer, Metro Mojo LLC; Ben Self, Blue State Digital; Randall Stevens, MersiveTechnologies and ArchVision; and Audra Stinchcomb, AllTranz Inc.

Sponsors are Kentucky Small Business Development Centers, Kentucky Science and T ech-nology Corp. and Awesome Inc.

ThorntonsGives $1M to

Speed Museum

Members of the inaugural class of the Kentucky Entrepreneurs Hall of Fame include, from left, Jim Host, David Marksbury,Lee Todd Jr., Warren Rosenthal and John Y. Brown Jr.

Nine CEOs Inducted in First Kentucky Entrepreneurship Hall of Fame Class

THORNTONS, one ofKentucky’s largest pri-vately held corpora-

tions, is making a $1 millioncontribution to The SpeedArt Museum in Louisville.The Thorntons, with 165convenience stores, carwashes and travel plazas infive states beginning in 1971,have a family history of sup-porting the arts.

Bonnie Thornton, wifeof founder James Thorn-ton, is a former board ofdirectors member withSpeed, which is the state’slargest art museum. Anongoing Changing Speedcapital campaign will fundexpansion and renovationof the museum (speedmu-seum.org) on the campusof the University ofLouisville.

“Since our inceptionalmost 40 years ago we havemade a dedicated commit-ment to recognize and assistthe multitude of diverse non-profit organizations in theLouisville area,” ThorntonsInc. CEO Matt Thornton said,“and we continuously exploreways to give back to the com-munities that we serve.”

Arts philanthropy makesa difference. An improvingquality of life is an eco-nomic development recruit-ment tool, but moreimportantly, creative stimu-lation is proven to nurtureentrepreneurship that isvital to lifting the prospectsof our state.

“Thorntons is a very impor-tant corporate citizen for themarkets in which it operates,”added Todd Lowe, chairmanof the Speed Board ofTrustees. “Their generosity insupporting community organi-zations is critical to the successof many nonprofits.”

should add up to a highly motivated mayorwho wants to be judged a success.

2011 will be an exciting year as the twolargest cities in Kentucky change leadershipand gubernatorial primary campaigns and

November general election select new lead-ership for Kentucky’s state government.

These political changes – tied to a hope-fully improving local, U.S. and worldeconomies – will likely make 2011 a bell-wether year for all Kentuckians.

Continued from previous page


KENTUCKY PEOPLE

PIKE CO: WRIGHT CONCRETE HONORED WITH 2010 ENTREPRENEURSHIP AWARD

Lonnie Lawson (right), president and CEO of The Center for Rural Develop-ment, recognized 2010 Excellence in Entrepreneurship Award (EIEA) recipientsKendall and Shannon Wright, owners of Wright Concrete and Construction Co.of Dorton, Ky., who were among the region’s leading small-business owners andentrepreneurs at an EIEA Hometown Event held Dec. 10 in Pikeville. TheEIEA program, which recognizes successful business owners and entrepreneursin 55 Kentucky counties, is sponsored by Eastern Kentucky University’s Collegeof Business and Technology, Kentucky Highlands Investment Corp. and TheCenter for Rural Development.

PROSPECT: LOUISVILLE WATER COMPANYCELEBRATES NEW FILTRATION PROJECT

Louisville Water Co.’s executive leadership team joined board members in Decem-ber to celebrate the completion of the company’s Riverbank Filtration Project at theB.E. Payne Treatment plant in Prospect. Louisville Water is one of the first waterutilities in the world to combine a gravity tunnel with wells as a source for drinkingwater and The American Society of Civil Engineers has honored the company as afinalist for the “Outstanding Civil Engineering Achievement Award.” Pictured hereare (front row, left to right) Dave Vogel, vice president of customer service and distribution operations; Barbara Dickens, vice president/general counsel; Kay Ball,project manager; Amber Halloran, vice president of finance; Gerald Martin, chair-man of the board of Water Works; Glenn Sullivan, Water Works board member. Sec-ond row (left to right), Ed Chestnut, vice president of operations; James Brammell,vice president of operations and chief engineer; Greg Heitzman, president andCEO; and John Huber, past president.

WILLIAMSBURG: COMPUTER SCIENCES CORP. DONATES MONEY TO MOUNTAIN OUTREACH

Employees of Computer Sciences Corporation (CSC) in Williamsburg look on as CSC Project Site Manager Gayle Troxell presents a gift of more than $3,000 to MarcHensley, director of Mountain Outreach, a student-led service organization of University of the Cumberlands. The money was used to purchase toys and gifts for the197 families who were registered for MO’s annual Gift Day on Dec. 11.



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