TLRdecember_CoverFinal.indd 1 Lane Report KENTUCKY’S BUSINESS NEWSSOURCE FOR27YEARS The Kentucky futureiseven industry’s brighter waves of tourists suggest this signature touristssuggest thissignature waves of Growing production,new distillers, Page 21 DECEMBER2012$4.50 LANE ONE-ON-ONE: CEO, KentuckyOne Health RUTH BRINKLEY 11/30/12 10:51AM

lanereport.com ® TLRdecember_CoverFinal.indd 2 11/30/12 10:51 AM December Lane 1-20.indd 1 11/30/12 11:05 AM December Lane 1-20.indd 2 11/30/12 11:05 AM December Lane 1-20.indd 3 11/30/12 11:06 AM DECEMBER LaneThe Report 2012 Kentucky’s Business News Source For 27 Years Volume 27 Number 12

21 COVER STORY BOOMING BOURBON BUILDING AN EVEN BRIGHTER FUTURE Production expansions, new distillers, waves of tourism – all in a down economy – bode well for a signature Kentucky industry

26 KENTUCKY SPACE WANTS FINANCIAL STARDUST Its engineering is earning global notice, gaining the state a foothold in the entrepreneurial aerospace industry

30 HIGH RETURNS, BROAD IMPACT Kentucky higher ed endowments, Part II: Future Profits

32 DEMAND-SIDE ECONOMICS Taking a look at Nominal GDP Targeting and its implications for Kentucky

34 ANALYSIS PARALYSIS Avoid consensus overload and keep the venture moving forward with rapid yet thoughtful decisions

Departments 6 Perspective 36 Going Green 8 Fast Lane 37 The Lane List 14 Interstate Lane 38 Exploring Kentucky 15 Kentucky Intelligencer 40 Spotlight on the Arts 16 On the Boards 41 Sales 17 Corporate Moves 42 Passing Lane

18 Lane One-on-One: 44 Kentucky People Ruth W. Brinkley President and CEO of KentuckyOne Health

On the Cover lanereport.com Kentucky bourbon is at the height of pop- Kentucky Business News Online ularity. Sales are up across-the-board, the Read up-to-the-minute Kentucky business news stories, industry is in its largest expansion phase current and archived copies of The Lane Report, since Prohibition ended, and interest in Market Review, BG – A way of life, Next – Your Future After High School in Kentucky, Health Kentucky, Prep Magazine, bourbon heritage is driving thousands of special reports, white papers and community profiles. visitors from all over the world to Kentucky distilleries. The way distillers are showcas- Faster Lane ing bourbon is “the best thing that has Email news bulletin happened to the Kentucky tourism indus- Three or more times a week, the editors of The Lane try since the development of the state park Report publish the Faster Lane email bulletin of fast breaking system,” according to Marcheta Sparrow, and important business and economic news from across secretary of the Kentucky Tourism, Arts Kentucky. Visit lanereport.com to sign-up for this free, must- and Heritage Cabinet. have, at-your-fingertips news service.

December Lane 1-20.indd 4 11/30/12 11:06 AM December Lane 1-20.indd 5 11/30/12 11:06 AM The PERSPECTIVE Lane Report ® Kentucky’s Business News Source for 27 Years

EDITORIAL DIRECTOR Mark Green ing swift and meaningful action to help ASSOCIATE EDITORS SAME SONG, Karen Baird improve Kentucky’s fiscal condition. Lorie Hailey NEXT VERSE Taxes will also warrant serious discus- sion in 2013, but won’t likely be addressed CREATIVE DIRECTOR 2013 General Assembly will Jessica Merriman in a meaningful way in the short session. see new faces, familiar issues The Governor’s Blue Ribbon Commis- CORRESPONDENTS Amanda Arnold; Rena Baer; sion on Tax Reform is scheduled to pres- ent recommendations to the General Katherine Tandy Brown; Anne Charles Doolin; BY DAVE ADKISSON Debra Gibson; Susan Gosselin; Robert Hadley; Assembly for consideration in late Decem- Anne Sabatino Hardy; Feoshia Henderson; ber, but it appears the deadline to do so Kara Keeton; Meredith Lane; Abby Laub; could be extended again. Tax reform is Nancy Miller; Greg Paeth; Eddie Sheridan; HEN the General Assembly con- always a difficult undertaking, and any tax Mariam Williams; Gary Wollenhaupt venes in Frankfort this Januar y, proposal will require a supermajority (23 SYNDICATED COLUMNS Wit will be full of new faces, but of 38 votes in the Senate; 60 of 10 0 votes Creators Syndicate riddled with familiar issues. This year’s is

DESIGN a “short session,” as it falls in an odd year Stone Advisory and runs half the time of the even-year It’s up to the legislature now

PRINTING, OUTPUT & PRE-PRESS SERVICES budget sessions. Legislators will meet to implement bold change in Publishers Printing Co. only four days in Januar y to elect mem- order to secure the future of ■ bers to leadership positions and organize our state’s economy. the committee structure for the next two CHIEF EXECUTIVE OFFICER Ed Lane years. But the new members and sea - PUBLISHER soned veterans alike will face a number in the House) in an odd-year session, Bob Earley of familiar but critical issues despite the making it even more difficult to achieve. limited timeframe. None of these issues This increases the likelihood of a special ASSOCIATE PUBLISHERS Dick Kelly could be more daunting than reforming session for any vote on tax reform; how- Donna Hodsdon Kentucky’s severely underfunded public ever, the debate will likely begin during pension systems – a key priority for the the regular 2013 General Assembly. CHIEF FINANCIAL OFFICER Steve Rohlfing, CPA business community. Unresolved during the 2012 session Several studies have noted the dire was state legislative redistricting – the COMPTROLLER financial condition of the common - Jeromie Kirk process of properly redrawing legisla - wealth’s pension system. In its recent tive boundaries. The Supreme Court CIRCULATION publication of the State of the States found the 2012 plan unconstitutional P&B Services report, Barron’s magazine identified and has directed the legislature to com- WEB MARKETING & PUBLISHING Kentucky as 47th worst in overall finan- plete the task before the next General WebMedley cial health. Just last year Moody’ s and Election in 2014. Redistricting is an IT SERVICES Fitch rating agencies downgraded Ken- extremely political exercise and will NetGain Technologies tucky’s bond rating – both citing the have to be negotiated by the leadership Lane Communications Group unfunded pension liabilities. The Bar- of each legislative chamber. Some are is a member of ron’s report serves as another sobering content to wait until 2014, while others reminder that our unsustainable state would like to complete the task in 2013. pension system must be addressed. Although this issue doesn’t generally The nature of the pension system, in impact employers directly, it will be which costs are constantly accruing, The Lane Report is published monthly by: important to watch as it can easily turn Lane Communications Group requires that action be taken now to put the political environment bitter. 201 East Main Street 14th Floor the system on a sustainable track. Every A number of other issues will be dis- Lexington, KY 40507-2003 year that passes without significant cussed – many of which will impact [email protected] changes simply kicks the can down the employers and taxpayers. Issues like

For more information and road and increases the cost of any even- education, unemployment insurance, advertising rates contact: tual solution. Failure to take action also workers’ compensation, healthcare, PHONE: 859-244-3500 continues the current spending trend of environmental regulations and liability less funding for education and more for issues can have a serious impact on The annual subscription rate is $29. retirement benefits – leading to lower employers and job creation. As always, (Kentucky residents add $1.74 sales tax.) Newsstand price is $4.50. investments in the training and educa - the chamber’s public affairs team will tion that Kentuckians require to be com- be at the Capitol following the action Send check or money order to: Circulation Manager petitive in our economy. and keeping small and large employers The Lane RepoRT The legislature must address this alike informed on the critical issues. 201 East Main Street 14th Floor issue in the upcoming session. A task Keep up with legislative action at Lexington, Kentucky 40507-2003 force was created to study the public kychamberblog.com and learn about The Lane RepoRT corrects all significant errors that employee pension system, and it deliv - the issues at policy.kychamber.com. ■ are brought to the editors’ attention. ered recommendations for improve- © 2012 Lane Communications Group ment in late November. It’s up to the All editorial material is fully protected and must not be legislature now to implement bold reproduced in any manner without prior permission. change in order to secure the future of Dave Adkisson is president and CEO of the Kentucky Chamber of Commerce our state’s economy. The Kentucky Chamber will be there in Frankfort urg-

6 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 1-20.indd 6 11/30/12 11:06 AM December Lane 1-20.indd 7 11/30/12 11:06 AM FAST LANE A compilation of economic news from across Kentucky

FLORENCE: L’OREAL BREAKS GROUND ON $42 MILLION STATE: WITH NEW CONTRACT, EXPANSION; PROJECT WILL ADD MORE THAN 200 JOBS SOUTHERN COAL RECALLS LOBAL cosmetics and MINERS; OTHERS CUT JOBS hair care manufacturer OVEMBER was another volatile GL’Oreal USA broke ground last month on a major month in the Kentucky coal indus- expansion project at its plant Ntry as one company announced in Florence that will add plans to recall workers and hire more, 110,000 s.f. and create more while three others announced layoffs. than 200 new jobs over the West Virginia-based Southern Coal next three years. Corp. announced on Nov. 27 that it was L’Oreal USA Plant Manager calling 500 miners back to work in Ken - Eric Wolff said the expansion is tucky, Virginia and West Virginia and plans tied to an increase in consumer to hire another 650 after negotiating a demand for the popular hair multiyear deal with American Electric care brands produced at the Power. The company did not disclose the Kentucky plant, which include exact number of workers being recalled at specific mines, but Southern Coal spokes - Garnier Fructis, L’Oreal man Mark Liebermann told the West Vir- Boone County Judge-Executive and Northern Kentucky Tri-ED Paris and Soft Sheen-Carson Chair Gary Moore, Gov. Steve Beshear, Kenton County Judge- shampoos, conditioners and ginia Gazette that the Kentucky mines Executive Steve Arlinghaus and L’Oreal Plant Manager Eric Wolff styling products. involved include those operating under toured L’Oreal’s Florence plant, where the company produces The expansion plans the Kentucky Fuel Corp. name in Pike several lines of consumer hair care products. include renovations to the and Knott counties and the Sequoia existing 560,000-s.f. plant, new construction and the purchase of new equipment. Energy operation near Harlan. At the other end of the spectrum, L’Oreal acquired the Florence facility in 1993 as part of its acquisition ofRedken three other coal companies announced Laboratories and currently employs a staff of 200. The Kentucky Development Finance Authority has approved L ’Oreal for tax layoffs in November, eliminating more incentives of up to $5 million through the Kentucky Business Investment program, a than 200 Kentucky jobs. performance-based incentive that allows the company to keep a portion of its invest- Patriot Coal Corp., which filed for ment through corporate income tax credits and wage assessments if it meets job and Chapter 11 bankruptcy in July, plans to investment targets. KEDFA also approved L’Oréal for tax benefits up to $800,000 close its Bluegrass Mine Complex in through the Kentucky Enterprise Initiative Act, which allows approved companies to Henderson County by the end of the recoup Kentucky sales and use tax on construction costs, building fixtures, equip- year, eliminating 89 jobs. Earlier this ment used in research and development, and electronic processing equipment. year, 196 mining jobs were lost when Patriot closed its Freedom underground mine in Henderson County, citing a LOUISVILLE: GE ADDS 150 JOBS TO SUPPORT NEW LINE decreased demand for coal due to a mild winter, increased competition from OF ENERGY-EFFICIENT TOP-LOAD WASHING MACHINES the natural gas industry and “challeng- ing environmental regulations affecting E’s Louisville appliance the cost of producing and using coal.” plant started produc- In the eastern part of the state, TECO Gtion last month on a GE photo Coal Corp. has laid off 90 employees as new energy-efficient top-load it works to match its staffing levels with washing machine, creating 150 reduced demand. According to TECO, new jobs in the process. the jobs affected include sur face min- GE said the popularity of ing, preparation plant, and administra - high-efficiency (HE) washing tive and support positions throughout machines that drove the the company. Paul Matney, personnel growth of frontload machines director for TECO, told The Floyd County for the past decade has now Times that most of those layoffs will be spread to top-loading taking place at the Clintwood Elkhorn machines, creating the fastest- Mining Co. in Pike County. Matney said growing segment in the the company is hopeful that the coal industry. In fact, GE said that market will rebound in 2013, enabling over the last couple of years, GE’s new energy-efficient top-load washing machines are about 60 the company to call back some of the sales of HE top-load washers percent more water efficient than a traditional top-load washer. employees who have been laid off. have increased while sales of In Harlan County, Alpha Natural frontload washers have declined over the same period. Resources has closed its Still House The new line represents a $60 million investment by GE and is also boosting busi- Branch thermal coal underground ness for some 40 domestic suppliers, many of which are local or regional. mine. The closure will eliminate 40 jobs, Earlier this year, GE opened its GeoSpring hybrid water heater facility in Louis- while another 40 positions are being ville, kicking off an $800 million investment. Since Januar y, GE has hired approxi - transferred to mines in Harlan County mately 1,500 production workers and added nearly 500 engineers. and Letcher County.

8 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 1-20.indd 8 11/30/12 11:06 AM LOUISVILLE: UofL HOSPITAL GETS DEAL TO BUSINESS BRIEFS JOIN KENTUCKYONE HEALTH NETWORK BOWLING GREEN HE University Medical Cen- ■ Davert, a Canadian company that provides solutions for metal fabri- ter and the University of cation, engineering, design and prototype needs, has selected Bowling TLouisville have entered a Green for its first U.S. location. The company is investing $2.3 million partnership that brings University to purchase equipment and plans to lease a building in Bowling Green to house the operation. The new location will create 20 full-time jobs. Hospital and the James Graham Brown Cancer Center together ■ Kobe Aluminum Automotive Products is investing $11 million to with KentuckyOne Health, a expand its operations in Bowling Green, where it forges aluminum nonprofit health system formed suspension products for the automotive industry. The expansion proj- earlier this year that consists of ect will enable the Bowling Green plant to produce cast aluminum bars for vehicle air conditioning compressors, which are currently made in Jewish Hospital & St. Mary’s Japan. The expansion will add 15 full-time employees to the existing HealthCare and the Saint UofL President Dr. James Ramsey 200-member staff. Joseph Health System. and KentuckyOne Health CEO The agreement calls for Ken- Ruth Brinkley announce a CAMPBELLSVILLE partnership between the two tuckyOneHealth to invest ■ Thirty-six employees have been laid off from Campbellsville Apparel entities that will entail a $543.5 million in the medical and another dozen have taken retirement as a result of a decreased KentuckyOne investment of center over the first five years, demand for the military clothing the plant has produced for the U.S. more than $543 million. expanding to $1.4 billion over Defense Logistics Agency for the last 10 years. Campbellsville Apparel 20 years. President Chris Reynolds said in a press release that reductions in the U.S. defense budget are resulting in less demand for the T -shirts and Highlights of the investment include: $75 million for aca - briefs produced by the plant and left the company with no choice but to demic and program investments and another $95 million over cut staffing. The layoffs leave the plant with a staff of 109. the first three years for key service lines and departments; $70 million for critically needed IT infrastructure upgrades at UMC; ■ Automotive supplier INFAC North America Inc. is investing $6.5 $3 million dedicated annually for research; and $7.4 million per million to build a new 100,000-s.f. manufacturing, assembly and ware- year for capital investment in technology. house facility in Campbellsville. The new building will be nearly double UMC President and CEO Jim Taylor said the agreement – the size of the company’s existing space and will allow for increased manufacturing of brake and transmission control cables. INF AC was which is the result of a year -long effort to find a partner that established in South Korea in 1969 and opened its U.S. operation in would suit the needs of the hospital – “ens ures that we not only Campbellsville in 2008. The company currently has 60 employees and maintain our current academic and medical services, but that we plans to add 20 employees to support the expansion. have the financial resources and statewide network to continue to expand and innovate those services for the future. EDGEWOOD All current UMC policies for women’ s health, end-of-life ■ St. Elizabeth Healthcare has joined the Mayo Clinic Care Net- care and its pharmacy remain unchanged. UMC will continue work, becoming the first health system in the Kentucky/Ohio/Indiana region to have passed Mayo’s review process and be selected as a mem- to manage and operate University Hospital’ s Center for ber of the year-old network. St. Eliza- Women and Infants (CWI) and all women’ s health services beth physicians will now be able to will continue to take place at CWI, at the same lo cation and connect with Mayo Clinic specialists provided by the same people. Hospital officials said the Cath- on questions of patient care using electronic consulting and will have olic health directives of KentuckyOne’s primary owner, Cath- access to Mayo-vetted medical information. Founded in 1861, the olic Health Initiatives (CHI), would not be an issue. Edgewood-based healthcare system is one of the region’ s oldest and A previous proposal for UofL to align with CHI was nixed largest medical providers, with six facilities throughout the Northern Kentucky area. last year by Gov. Steve Beshear, who cited concerns about a public hospital having ties with a Catholic organization, creat- ELIZABETHTOWN ing church-and-state issues. ■ Bluegrass Cellular, an Elizabethtown-based telecommunications “This partnership enhances our academic and research company, has launched the first phase of its 4G LTE network as part of mission at a critical time when our commonwealth faces a the Verizon Wireless LTE in Rural Amer- shortage of 3,000 doctors in less than 10 years,” said Dr. David ica program. The cities of Bowling Green, L. Dunn, executive vice president for health affairs at the Elizabethtown, Glasgow, Radcliff and Bardstown are among the first to experi - University of Louisville. “Our new academic affiliation with ence significantly faster data speeds on their wireless devices as a result KentuckyOne Health will also help the University of Louis- of the network launch. Bluegrass Cellular 4G customers and V erizon ville recruit and retain highly sought-after faculty as we trans- Wireless customers will now have access to LTE-speed data services late research into new and innovative treatments and care for within Bluegrass Cellular’s 4G LTE coverage areas and Bluegrass cus - our patients and community.” tomers will also have access to V erizon’s 4G LTE network throughout the United States.

ERLANGER Submissions Welcome ■ The 23rd annual Toyota Opportunity Exchange To submit news and photographs for publication in Fast event held by Erlanger-based Toyota Motor Engineer- Lane, please mail information to: The Lane Report, 201 East ing & Manufacturing North America drew some Main Street, 14th Floor, Lexington, KY 40507-2003 or send via 1,600 people last month to what has become one of the e-mail to [email protected]. largest minority business events in the countr y. The Color photographs are preferred, either in standard form or digi- two-day event provides minority-owned businesses the chance to network tal. For digital photographs, a resolution of 300 dpi is required, for- with Toyota’s direct suppliers. Over the last two years, more than $75 mil- matted in either jpeg or tif. lion worth of contracts has been generated by minority business enter - prises as a result of the Opportunity Exchange event.

THE LANE REPORT • LANEREPORT.COM DECEMBER 2012 9

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BUSINESS BRIEFS HEBRON: TIMCO AVIATION TO HIRE 165 TO SUPPORT NEW MAINTENANCE BASE FLEMINGSBURG ■ Peoples Bank of Kentucky, a Flemingsburg bank that has six IMCO Aviation Services branches in Fleming and Mason counties, has acquired Salt Lick has purchased the assets of Deposit Bank, a subsidiary of Central Bancshares that operates two TPEMCO World Air Ser- branch locations in Bath County. Under the acquisition agreement, the vices’ former aircraft mainte- Salt Lick branches will operate under the Peoples Bank name. Financial nance, repair and over haul details of the agreement have not been disclosed. (MRO) operation at the Cincin- TIMCO Aviation TIMCO Aviation photo nati/Northern Kentucky Inter- HEBRON national Airport (CVG) and ■ Pomeroy, a Hebron company that provides managed ser vices to opti- mize IT infrastructure, has acquired the assets of BluePoint Data Inc., a signed a lease agreement for Florida company that provides a comprehensive menu of cloud-based man- the 126,000-s.f. former PEMCO aged services for networks, servers, storage, security, applications and data- hangar there. bases. The acquisition strengthens Pomeroy’s remote monitoring and Tampa-based PEMCO North Carolina-based TIMCO management offering, doubling the size of its portfolio of devices under closed its Northern Kentucky Aviation has purchased the former PEMCO World Air Services facility management, and will also allow the company to deliver enhanced man - operations in early October aged cloud services for those clients seeking a private cloud platform. Finan- at the Cincinnati/Northern Kentucky cial details of the transaction have not been disclosed. after filing for Chapter 11 bank- International Airport. ruptcy, citing the effects of the LEXINGTON nation’s economic downturn and a slowdown in the number ■ Transylvania University has received a $5 mil- and magnitude of MROs. The shutdown affected 64 employees. lion restricted endowment-matching grant from The chance to acquire PEMCO’s facilities gave North the William R. Kenan Jr. Charitable Trust to estab- Carolina-based TIMCO the opportunity it had been seeking lish the William R. Kenan Jr. Endowment Fund to add regional aircraft ser vices to its MRO business. In for Student Scholarships. It is one of the largest single gifts the university has ever received. The announcing the purchase, TIMCO said the availability of an conditions of the grant require that Transylvania existing workforce and customer base at CVG was “an ideal raise an additional $5 million over the next three way to accomplish this objective.” years to fully establish the endowment. In addition to the displaced PEMCO employees – some 50 of which have now joined TIMCO – TIMCO Vice President of ■ The law firm of Stoll Keenon Ogden has announced plans to open Industry and Government Relations Kip Blakely told The an office in Evansville, Ind., that will focus on mineral and environmen- (Greensboro) Business Journal that there is also an abundant tal law. The new location is expected to open in Februar y and will be the seventh location for the firm and the second location outside Ken- pool of aviation talent in Northern Kentucky , which long tucky. In addition to its Lexington headquarters, SKO has offices in served as corporate headquarters for Comair Inc. Comair Louisville, Frankfort, Henderson and Morganfield, Ky., and opened an ceased operations in September, leaving some 1,000 North - office earlier this year in Pittsburgh, Pa. ern Kentucky/Cincinnati residents without a job. “There’s just a lot of people with an aviation work force ■ The state has conveyed approximately 12 acres in Lexington that background,” Blakely said. “That was very appealing to us.” previously served as the site of the Department for Juvenile Justice com- Kentucky has approved a $1.7 million incentive package plex to the Kentucky Community and Technical College System (KCTCS). The land will be used to provide for future growth and pro- for the company, which expects to invest $3.4 million in the gram offerings at Bluegrass Community and Technical College’s project and create 165 full-time jobs within five years. The new campus on Newtown Pike that is now under development. The jobs will have an average annual salar y of approximately property currently includes seven buildings, which will be thoroughly $50,000. assessed to determine the scope and cost estimate for renovation. Reno- vations are scheduled to be complete by the end of 2013, with BCTC occupancy and use starting in January 2014. PIKEVILLE: AIRPORT RECEIVES $1M GRANT TO PURSUE COMMERCIAL AIR SERVICE ■ Webasto Sunroof Systems Inc. is investing $10 million to increase $1 million multicounty coal severance tax grant has manufacturing capacity and been awarded to the city of Pikeville to support the upgrade equipment at its plant in development of commercial airline service at the Pike- Lexington, creating 65 new full-time photo Webasto A jobs. The Germany-based company’s ville-Pike County Regional Airport (PBX). Lexington plant, which currently Pikeville’s elected officials, along with the Pikeville-Pike employs nearly 650 employees, is County Airport Board and the Southeast Kentucky Cham- Webasto’s largest U.S. production ber of Commerce have been spearheading efforts to develop site for sun and panorama roofs. W ebasto has been developing and scheduled passenger airline service at the Pikeville field for manufacturing products for the automotive industry for more than 75 more than two years. The grant will be awarded once an air- years and has grown into one of the world’s largest 100 suppliers for line is selected to provide the public service. The proceeds of the automotive industry. the grant will be matched with a $750,000 federal grant that the city of Pikeville received last year, and will be used as part ■ Blue Grass Airport is now offering mobile boarding pass check-in for passengers flying with American, Delta, United and US Airways. of the project’s revenue guarantee program to assist a carrier Passengers can retrieve their mobile boarding pass by checking in on in reaching sustainability during the start-up phase of service. their airline’s website or mobile app and choosing to have their board- As of early November, two airlines – the names of which ing pass emailed directly to their mobile device. They then scan the were not disclosed – had expressed interest in serving PBX. barcode on their mobile boarding pass at the TSA checkpoint and “New airline service at PBX will make it much easier for again at the gate upon boarding. If connecting at another airport, pas- sengers are encouraged to check with their respective airline to see if our business and professional community to compete in the their next airport offers mobile check-in as well. In the event that it global economy,” said Jared Arnett, president and CEO of the does not, passengers can check in at their airline ticket counter to print Southeast Kentucky Chamber of Commerce. “This grant a paper boarding pass. helps us get closer to our goal of securing service.”

10 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 1-20.indd 10 11/30/12 11:06 AM LOUISVILLE: HUMANA ACQUIRES FLORIDA BUSINESS BRIEFS HEALTH PROVIDER FOR $850 MILLION LONDON has announced plans to acquire a Florida- UMANA Inc. ■ Goldman Sachs and the Goldman Sachs Foundation have based medical provider for $850 million in a deal that pledged $5.5 million for Kentucky businesses through the Kentucky Hexpands the Louisville-based health insurer’s capability to Highlands Investment Corp. Of that, $5 million will go directly into branch out into other areas of healthcare, pa rticularly federally KHIC’s loan fund and will be available for lending to small businesses subsidized Medicare and Medicaid programs. located in low- and moderate-income areas throughout Kentucky . Another $250,000 will be used as a loss reserve grant, and the remain- Metropolitan Health Net- , headquartered in Boca ing $250,000 will be used to build the capacity of KHIC so that it can works continue to provide vital business services to Kentucky entrepreneurs. Raton, Fla., is a medical ser - KHIC works to stimulate growth and create employment opportunities vices organization that provides and coordinates medical in a 22-county region of southeastern Kentucky. care for approximately 87,500 customers who are covered by Medicare Advantage and Medicaid. The company has LOUISVILLE been a Humana partner for more than 13 years and includes ■ All-electric buses with zero air polluting emissions will become part of 35 primary care medical centers as well as a network of affili- Louisville’s public transportation fleet as a result of a $4.4 million federal ated physicians that primarily serve Humana members. grant awarded to The Transit Authority of River City (TARC). The grant from the Federal Transit Administration Clean Fuels Program will pay for Humana Chairman and CEO Michael McCallister has said five electric buses that will replace the oldest, high emission trolleys now cir- before that the privatization of government-backed programs culating downtown along Fourth Street and the Main-Market corridor . like Medicaid and Medicare offer a major opportunity for The electric buses are expected to be in operation in about a year. Humana, which has seen a significant amount of its total pre- mium revenues generated by Medicare this year. ■ Southwest Airlines is now offering daily In addition to the Metropolitan acquisition, Humana was nonstop flight service between Louisville and recently selected by the Illinois Department of Healthcare Denver. Southwest is utilizing the 143-seat Boeing 737 aircraft for the route. Flights and Family Services to participate in a demo project aimed at depart Louisville at 4:05 p.m. EST and arrive in Denver at 5:10 MST . integrating healthcare for people who qualify for both Medi- Departures from Denver are scheduled for 11:15 a.m. MST, arriving in care and Medicaid, known as “dual eligible.” Humana is one Louisville at 3:40 EST. of the largest Medicare companies in Illinois and has worked to develop comprehensive health centers focused on low- ■ Pediatric cancer researcher Dr. Kenneth Lucas has joined the Univer- income seniors in medically underserved areas and on com- sity of Louisville Department of Pediatrics, bringing with him a Phase 1 plex care management of dual-eligible populations. trial of a vaccine to prevent the recurrence of neuroblastoma and sar - coma, which are among the most common and deadly of all childhood The company continues to branch out into other areas as cancers. The trial began at Pennsylvania State University 18 months well. Last month, the company announced the acquisition of ago and has already generated referrals from around the world. Certify Data Systems, a health information exchange tech - nology company. ■ Dupont is closing its Solae plant in Louis- Certify will operate as a subsidiar y of Humana. Financial ville, where it produces soybean-based coatings details of the acquisition have not been released. used to protect cardboard packaging. The Del- aware-based company said economic condi - tions were the driving force behind the decision to close the plant, LOUISVILLE: BEAM INC. TAPS LOUISVILLE which has been in operation since 1919 and has become a well-known FOR NEW BUSINESS SERVICES CENTER Louisville landmark: Its silos sit alongside I-65 adorned with a large “University of Louisville” banner. The plant is slated to close by Dec. 31 , the company that produces leading and will eliminate 38 jobs. The company is cutting a total of 1,500 jobs EAM Inc. after a disappointing third-quarter earnings report. spirits brands that include Jim Beam and , plans to locate a new global BMaker’s Mark ■ Southern Graphic Systems Inc., a wholly owned subsidiar y of business services center in downtown Louisville that Louisville-based graphics services company SGS International, has will bring 60 professional jobs to the area. acquired Stevenson Color Inc., a Cincinnati company that is a fully The center will be located in the heart of integrated provider of graphics services. Stevenson, which has been in Fourth Street Live!, Louisville’s popular entertain- business since 1926, has more than 170 employees and is managed by ment and retail district, providing a highly visible the fourth generation of the founder’s family. Stevenson will continue to operate under the Stevenson Color name with current manage - presence for the company. Beam is investing $1.7 ment remaining in place. Financial details of the transaction were not million in building materials and equipment to released. SGS International was acquired in October by private equity retrofit the 24,000-s.f. space. Construction is firm Onex Corp. expected to begin early next year, with the open- ing projected for the second quarter of the year. ■ Spalding University has received a $5.4 million grant from the Beam’s Global Business Services Center is U.S. Department of Health and Human Services that will be used to part of a companywide efficiency and effective - assist economically disadvantaged students. The grant will support students in Spalding’s occupational therapy, clinical psychology and ness initiative that will combine select financial and human social work programs, with the goal of increasing diversity in the resources transactional activities into one centralized hub. health professions. The center will act as the primary point of contact for Beam’s North America business in the areas of benefits, compensa - ■ Deyta, a Louisville company that measures healthcare quality , has tion, accounts payable, payroll and other key business pro - announced plans to acquire Amplicare, an Alabama-based provider of cesses. Half of the 60 positions have already been hired and decision support tools for hospice and home care organizations. are operating out of an interim site in Shepherdsville, Ky. The According to Deyta President and CEO J. Kevin Porter, the acquisition of Amplicare strengthens Deyta’s technology platform and will dramati- remaining positions will be filled over the next 12 months. cally improve how post-acute care providers manage their business. Beam currently employs more than 850 people through - Amplicare will assume the Deyta name, but will retain its office in Bir- out Kentucky at its manufacturing plants in Boston, Cler- mingham. The acquisition is expected to be complete by the end of mont, Frankfort and Loretto. December.

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BUSINESS BRIEFS PADUCAH: CONTRACT WITH TELETECH WILL CREATE 450 CALL CENTER JOBS LOUISVILLE ■ ConeXus World Global, a two-year-old Louisville IT services and solu- HE Greater Paducah tions provider, is expanding its operations with the addition of a 7,200-s.f. Economic Develop- technical center that will handle support and dispatch operations. The Tment Council Inc. $1.8 million expansion will create 30 new full-time jobs and will help fulfill (PED) has reached a deal the company’s growing installation service agreements for the mobile telephone technology. The company currently has eight Louisville with Colorado-based employees and two employees at a satellite location in Belgium. TeleTech Services Corp. to operate a cus- PAINTSVILLE tomer care center and call The Commerce Center building in downtown ■ The Kentucky Public Service Commission has accepted a proposed set- center that will bring 450 Paducah will house 150 TeleTech call center tlement in a rate adjustment case filed by Big Sandy Rural Electric jobs to Paducah. jobs. The company is also building another facility in the Paducah Commerce Park that Cooperative Corp. Under the agreement, Big Sandy RECC will receive As part of $4.25 mil - its requested 3.7 percent increase in annual revenue, but the settlement will house 300 employees. requires that more of the increase be generated from usage-based energy lion incentive package charges rather than a flat monthly customer charge. The increase will approved by the City of Paducah, the McCracken Fiscal Court raise the cooperative’s annual revenue by approximately $911,000 to and PED, a building in downtown Paducah will be renovated $25.3 million. Big Sandy RECC serves about 13,200 customers in Breathitt, and another new building will be built at the Paducah Com- Floyd, Johnson, Knott, Lawrence, Magoffin, Martin and Morgan counties. merce Park to house TeleTech’s operations. The facilities will be offered to the company rent-free for five years, contingent RICHMOND upon TeleTech providing the promised number of jobs within ■ and the Eastern Kentucky University eight months of construction being complete. University of Kentucky have launched a joint initiative to help prepare students for The downtown location will house 150 call center jobs, while success in doctoral degree programs and the Commerce Park building will accommodate 300. The posi - careers in biomedical research. Funded by tions will pay a minimum salary of $9.50 per hour with benef its, a five-year, $1.8 million grant from the which translates to some $9 million in annual payroll production. National Institutes of Health, the Ken- TeleTech will be hiring a range of positions in Paducah, includ- tucky Bridge to a Biomedical Doctorate for ing trainers, human capital managers, talent acquisition special- Appalachian Students program will allow students from the Appalachian region to ists, facilities managers, senior desktop support technicians, team attain a master’s degree at EKU in either leads, business analysts, service delivery managers and customer chemistry or biological sciences while per - service representatives. forming biomedical related research. Upon completion of the master’s degree program at EKU, “Kentucky Bridge” students will have the LEXINGTON: RESEARCH GRANTS DRAW 5 opportunity to transition to the UK Integrated Biomedical Sciences program, where they can pursue doctoral studies in biomedical HIGH-TECH COMPANIES TO LEXINGTON research. The universities hope to have applicants begin in the coming Spring 2013 semester. IVE high-tech companies have relocated to Lexington, thanks to federal Small Business Innovative Research (SBIR) SOMERSET grants and a new program funded by the ■ is investing $1.2 million to expand its manufac- F Bluegrass Busi- CCI Industrial Services turing operations in Somerset. The company, also known as Cable Contract- ness Development Partnership (BBDP) that is designed to ing Inc., will move its existing 2,400-s.f. operation into a 20,000-s.f. facility help emerging technological companies succeed. and plans to add 10 new full-time jobs. CCI Industrial Ser vices opened in BBDP, a collaborative partnership comprised of the city of Somerset in 2011 and currently employs 37 people. The company uses raw Lexington, Commerce Lexington Inc. and the University materials such as steel, plastic and wood to manufacture product s custom- of Kentucky, offers a rent subsidy program that provides ized specifically for customers. Its services include machinery moving, pip- young tech companies up to $10,000 the first year they are in ing system installations and repair, sheet metal and duct work, conveyor Lexington. The program is available to companies that have design, as well as overhead bridge crane installation and removal. received a SBIR matching grant from the state. STANFORD The five companies relocating to Lexington are: ■ Affinia Brake Parts Inc. is eliminating 75 jobs at its plant in Lincoln Biomedical Development Corp. (San Antonio, Texas), a County by the end of the year. Affinia currently employs approximately 28-year-old company that develops healthcare technologies. The 300 people in Lincoln County, making it one of the community’s largest company’s Kentucky operations will focus on a medical mouth employers. According to the company, the cutbacks are tied to a rinse that fights gingivitis and improves heart health. decreased demand in North America and excess global capacity. Innovative Energy Solution (Chicago, Illinois) is a TODD COUNTY clean-tech company that develops waste-to-energy technolo- ■ A $500,000 state grant will be used to help build aCareer Path Insti- gies for the petroleum and coal sectors. tute at Todd County Central High School that will offer vocational Invenio Therapeutics Inc. (Cleveland, Ohio) is an early- training classes for high school students during the day and adult voca- stage biopharmaceutical company developing drug treatments tional and technical training courses sponsored by Hopkinsville Com- that target acute myeloid leukemia, which currently has no cure. munity College in the evening. Among the courses offered by HCC Minerva Systems &Technology (Middleton, Rhode will be electrician training, household plumbing, welding, business Island) specializes in navigation and guidance, satellite & courses, computer science, construction, computer-aided design, hydraulic/pneumatic troubleshooting and engineering. wireless communications, signal processing, and embedded hardware and software design and development. WILLIAMSBURG TeleHealth Holdings (San Antonio, Texas) develops, manu- ■ The loss of a federal contract has resulted in Computer Sciences factures and markets health status monitoring solutions for home Corp. laying off virtually its entire 250-member staff in Williamsburg. health and assisted-living markets. Its core product is Medsignals, The company’s contract to handle record digitization ser vices for the a cellular-embedded medication reminder and monitor. U.S. Citizenship and Immigration Services ended Oct. 31 and has The companies will directly create over 50 high-tech jobs. not been renewed.

12 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 1-20.indd 12 11/30/12 11:06 AM COVINGTON: GATEWAY ANNOUNCES PLAN BUSINESS BRIEFS TO DEVELOP $80M DOWNTOWN CAMPUS WILMORE ATEWAY Community and Technical College has ■ Asbury Theological Seminary dedi- announced plans to develop an $80 million urban cated two new single-student housing Gcampus in downtown Covington with the goal of pro- facilities last month that are part of the viding easier access for urban residents and transforming the largest housing construction expansion in the seminary’s history. The two newly city’s urban core into a vibrant college community that will opened residence halls each feature 11 spur opportunities for economic development. suites clustered around a large commu - The plan calls for adaptive re-use of nine existing proper- nity space, two study rooms and a laundry ties along with new construction. Gateway President and CEO facility. In January 2011, Asbury opened Ed Hughes said the college is in the process of acquiring the 100 new townhomes for married students and is currently working on nine properties that will form the nucleus of the new campus, Phase 2 of that project, which will include 50 more townhomes, green which will be primarily in a six-block area from 4th to 7th spaces and recreational amenities. streets and from Greenup to Madison avenues in Covington. STATE Gateway will continue to occupy its existing facility in ■ Universal Woods Inc., Denyo Manufacturing Corp. and Catletts- downtown Covington, a former middle school that it acquired burg Refining LLC have been named as r ecipients of the 2012 Ken- in 2010. Coupled with existing facilities, the additional build- tucky Manufacturer of the Year awards. The awards are presented ings will provide nearly 300,000 s.f. of space for instruction, each year based on the following criteria: innovative and entrepreneur- student services and related academic purposes. ial leadership with regard to products, production method or services; Hughes said the goal of the plan was to create a framework recognized leadership in making a key contribution to quality of life in the commonwealth and the community; and active involvement in that would imbed the college into the community and enable organizations that advance industry and manufacturing. Louisville- even greater collaboration between the two. A key element of based Universal Woods was the winner in the s mall business manufac- the plan is to work with existing community partners like the turing category, while Danville-based Denyo and Catlettsburg Refining library, Northern Kentucky Convention Center, Baker won in the mid-size and large manufacturing categories, respectively. Hunt Cultural Center and Carnegie Visual and Perform- ■ ing Arts Center. Natural gas costs at the start of the 2012-2013 heating season are pro- “The increase in students, faculty and staff will boost the jected to be lower than at any time in the last 10 years, according to the Kentucky Public Service Commission. On average, Kentucky cus - local economy with more jobs, retail and restaurants,” said tomers can expect to pay about 12 percent less, with the average total Covington Mayor Chuck Scheper. “It will invigorate Coving - bill for 10,000 cubic feet – including base rates – projected to be about ton’s Madison Avenue corridor and restore it to the vibrant $85.55. That is down more than $65 since November 2008 – a decrease district it once was.” of 43 percent over the last four years.

December Lane 1-20.indd 13 11/30/12 11:06 AM INTERSTATE LANE Business news from Indiana, Ohio, Tennessee and West Virginia

BUSINESS BRIEFS INDIANA: 5-HOUR ENERGY TO EXPAND IN WABASH, CREATING 200 NEW JOBS

INDIANA , the producer of ■ IVING Essentials Professional Transportation Inc. is investing $5.45 million to expand , is expanding its its Evansville, Ind., headquarters and plans to add up to 100 new jobs to the 5-Hour Energy existing 230-member staff. PTI provides rail crew logistical services for com- Loperations in Wabash, Ind., creating panies in the eastern United States such as Norfolk Southern, Union up to 200 new jobs. Pacific and CSX. Once the rail crew has reached its destination with its The company, which produces, pack- cargo, PTI picks them up and drives them to their next location. With the ages and distributes the dietar y supple- recent acquisition of Coach America, the company is expanding its ser- ment, is investing more than $25.5 million vices to the northwest region of the country, serving BNSF Railway, Cana- to construct and equip a manufacturing dian Pacific Railroad, Utah Railway, Portland and Western Railroad. building on 46 acres in the W abash Busi- PRNewswire photo The economic impact of the expansion on the Evansville region is expected to total more than $127.5 million over the next 10 years. ness Complex. The facility, which will total 1 million s.f. in two to three phases, will be ■ Jayco Inc., a recreational vehicle devel- the company’s third location in Wabash, oper and manufacturer, plans to add up to bringing its total footprint there to more 65 new jobs to support the expansion of its than 1.8 million s.f. Middlebury, Ind., headquarters. Jayco will Michigan-based Living Essentials ini- Professional golfer Jim invest $2.9 million to add a 77,000-s.f. tially moved its production operations Furyk is currently the extension to an existing 62,000-s.f. facility product representative in Middlebury. The new addition, slated to to Wabash in 2007 and located its distri- for Living Essential’s be complete in May, will house production for Entegra Coach, the bution center there a year later. Since company’s high-end motor home line. Jayco currently employs more then, it has expanded its northeast Indi- 5-Hour Energy product. than 1,700 workers at its 373-acre campus in Middlebury. ana campus twice in 2010 with the addi- tion of eight production lines and the company’s research OHIO and development operations, totaling more than $55 million ■ Emery Oleochemicals has launched a $50 million expansion proj- in capital investment. ect at its Cincinnati manufacturing facility that will allow the company to produce high-performance bio-based polyols products for the auto- Today, Living Essentials makes more than 9 million bot - motive, furniture and appliance industries, among others. Malaysia- tles of 5-hour Energy per week at its W abash plant. The based Emery is one of North America’ s leading producers of dietary supplements are sold in retail and convenience oleochemicals, which are chemicals derived from plant and animal fats. stores in the United States, Canada, Spain, the Netherlands, the United Kingdom and Ireland. TENNESSEE The company currently employs 370 people in Indiana ■ Nike Inc. is investing more than $300 and has already begun hiring new engineering, manufactur- million to expand its Northridge distribu- tion footprint in Memphis to create a cen- ing and administrative associates to support its latest expan- tralized, multi-product engine for sion. The new facility will add capacity for up to four new PRNPhoto photo wholesale and retail distribution. Accord - production lines and is anticipated to be operational in ing to local reports, the expansion will gen- September 2013. erate 250 new jobs, increasing the company’s local employment to more than 1,900. The new facility is expected to come TENNESSEE: OBERTO TO HIRE 300 FOR online in 2014. NEW NASHVILLE PRODUCTION PLANT ■ MacLean Power Systems has announced that it will locate a manu- , a Washington-based producer of meat facturing plant in Trenton, Tenn., that will create 250 new jobs. BERTO MacLean is a leading manufacturer of products used by electric utilities snacks, plans to open a new production plant in Nash- for building transmission and distribution lines and substations. The Oville that will create approximately 300 new jobs. new Trenton plant will produce hardware and connector products and The new facility, which is slated to open in the first half of is projected to begin initial operations in the first half of 2013. 2013, is being added to help keep up with increased demand for the company’s products, which the company says has doubled ■ AGRANA Fruit US Inc., a company that over the last few years “and shows no sign of slowing down.” produces fruit preparations for the dair y Oberto’s three core brands industry, is investing approximately $10 mil - lion to expand its facility in Center ville, include Oh Boy, Oberto!, Tenn. “The North American yogurt industry Lowrey’s Meat Snacks and has seen explosive growth in the past five Pacific Gold Beef Jerky. years,” said AGRANA Fruit US President and CEO Bob Prendes. “This Oberto CEO Tom Ennis trend is expected to continue and is driving the need for significant said the new facility will help expansion in our business.” The company plans to add 64 positions at ensure that all of Oberto’ s the Centerville plant to support the additional production lines. U.S. products are made in the United States, a commitment ■ Wright Medical Group Inc. and BioMimetic Therapeutics Inc. have entered into an agreement to combine the two businesses, both of that started in 2010 when the company brought its manufac- which are publicly traded, Tennessee-based companies. Wright is an turing capabilities back to the U.S. from Brazil, creating orthopedics company, while BioMimetic is focused on development nearly 300 jobs. The company’s other production facility is regenerative medicine products to promote the healing of musculoskel- located at its headquarters in Kent, Wash. etal injuries and diseases. The transaction will combine BioMimetic’ s Last year, the company revamped its popular Oh Boy! breakthrough biologics platform and pipeline with Wright’s established Oberto jerky line with an all-natural recipe featuring no pre- sales force and product portfolio, to further accelerate growth opportu- nities in Wright’s extremities business. The transaction is valued at servatives or artificial flavors. Under the new all-natural rec- approximately $380 million. ipe, sales for Oh Boy! Oberto have increased significantly.

14 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 1-20.indd 14 11/30/12 11:06 AM KENTUCKY INTELLIGENCER® A sampling of business and economic data

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December Lane 1-20.indd 15 11/30/12 11:06 AM ON THE BOARDS Kentuckians named to organizational leadership roles

AMERICAN ASSOCIATION Jack van Nagell, Brookfield Farm; Griffin KENTUCKY TRAVEL OF STATE HIGHWAY AND VanMeter, Bullhorn Inc.; and Holly Wiede- INDUSTRY ASSOCIATION TRANSPORTATION OFFICIALS mann, AU Associates. ■ The following individuals have been ■ Kentucky Transportation Cabinet Secretary elected as officers on the 2013 Kentucky Mike Hancock has been elected vice presi - GLOBALIZATION AND Travel Industry Association board of direc - dent of the American Association of State LOCALIZATION ASSOCIATION tors: Chair – Sherry Murphy, executive Highway and Transportation Officials. ■ Terena Bell has been elected to serve a two- director – Elizabethtown Tourism and Con- year term on the board of directors of the vention Bureau; Chair-Elect – Barbara Doz- BIG BROTHERS BIG SISTERS Globalization and Localization Association. ier, vice president of sales and marketing OF KENTUCKIANA Bell, who will be the only American to serve on – Northern Kentucky Convention and Visi - ■ The following individuals have been elected the board, is chief executive officer of In Every tors Bureau; Treasurer – Grady Walter, co- to the board of directors of Big Brot hers Big Language, a language translation and inter - owner – Stablemate Creative, Lexington; Sisters of Kentuckiana: John Gant, Carbide pretation company that has its main offices in Secretary – Jerry Summers, director of com- Industries LLC; Diane Seaman, Wellpoint Louisville and New York. munity relations – Jim Beam, Clermont; Inc.; Thomas Johnson, Norton Healthcare; Immediate Past Chair – Jim Wood, president Scott Dingle, Ameriprise Financial; Reginald KEENELAND CONCOURS D’ELEGANCE and chief executive officer – Louisville Con - Bruce, Uni- ■ Chris Cashen, Ken Hold and Mary Quinn vention and Visitors Bureau. Also elected as versity of Ramer have been elected to the executive board members to the Kentucky Travel Industry Louisville; of the Keeneland Concourse d’Elegance, a classic Association board of directors were: Jay Dr. Bernard car show held on the grounds of Keeneland Race Cary, Sulphur Creek Resort; Mary Ham- Minnis, Bel- Course in Lexington. mond, Paducah-McCracken County Conven- larmine Uni- tion and Visitors Bureau; Mary Quinn versity; and Ramer, Lexington Convention and Visitors Sara Marti- Bureau; John Shake, Crowne Plaza Louis- neson, UPS. Diane Thomas ville; Ann Stewart, Glasgow-Barren County Seaman Johnson Tourist Commission; Nancy Turner, Win- chester-Clark County Tourism Commission; Marnie Walters, Woodford Reserve; Cindy Wheat, Paintsville Tourist Commission; and Chris Ken Mary Quinn Sandra Wilson, Horse Cave-Hart County Cashen Hold Ramer Tourist Commission.

KENTUCKY REAL LEXINGTON CONVENTION ESTATE COMMISSION AND VISITORS BUREAU Scott Reginald Bernard ■ Gov. Steve Beshear has appointed Kimberly ■ Martin Rothchild has been appointed to Dingle Bruce Minnis G. Sickles to the Kentucky Real Estate Com - the board of directors of the Lexington Con - mission. Sickles, of Louisville, is a Realtor at vention and Visitors Bureau. Rothchild is gen- EDUCATION LAW ASSOCIATION Sickles Inc. Realty. eral manager of the Hilton Lexington/ ■ William E. Thro, chief legal adviser for the Downtown. University of Kentucky, has been named presi- KENTUCKY HORSE dent of the Education Law Association, one of PARK FOUNDATION LOUISVILLE CONVENTION the nation’s premier sources of information ■ The following individuals AND VISITORS BUREAU on education law. have been elected to ser ve as ■ Donald Lassere has been appointed to the officers of the Kentucky Horse Greater Louisville Convention and Visitors EXECUTIVE BRANCH Park Foundation, the non- Bureau Commission, the policy-making body ETHICS COMMISSION profit, philanthropic arm of of the bureau. Lassere is the new president ■ the Kentucky Horse Park that Gov. Steve Beshear has appointed Martin E. Alston and chief executive officer of the Muhammad helps support the needs of the Johnston and Richard L. Masters to serve Kerr Ali Center in Louisville. on the Executive Branch Ethics Commission. park: Chair – Caroline H. Johnston, of Prospect, is a Supreme Court Jus- Boone, Vice Chair – Linda L. UNITED STATES tice and represents the auditor of public Green, Secretary – Jane K. DEPARTMENT OF COMMERCE accounts. Masters, of Goshen, is an attorney Beshear, Treasurer – Orson ■ Robert Brown, a partner in the Louisville and will represent the governor. Oliver, Commission Chair – law office of Bingham Greenebaum Doll LLP, Alston M. Kerr, Executive has been elected to the U.S. Department of FAYETTE ALLIANCE Director – Laura Harrison Commerce 2013 District Export Council ■ The Fayette Alliance, a coalition of citizens Klumb. Board members National Steering Committee. dedicated to achieving sustainable growth in include: Lisa Ball, Rogers Ann Lexington-Fayette County through land use Beasley, Nina Bonnie, McBrayer UNIVERSITY OF advocacy, education, and promotion has Andrew Clark, Nancy Cole, KENTUCKY GLUCK announced its board of directors for 2012- Kip Cornett, Mary Anne Cronan, Roger Dal- EQUINE RESEARCH 2013: Chairman – Don Robinson, Winter ton, LuLu Lenihan Davis, Dave Fishback, FOUNDATION Quarter Farm; Secretary – John Phillips, George Jeffrey Fisk, Jennie Garlington, ■ Case Clay has been Darby Dan Farm; Treasurer – Greg Good- Mary F. Glasscock, Clay Green, Dell Han- named chair of the University man, Mt. Brilliant Farm; Jimmy Bell, Darley; cock, Timothy Haymaker, Bill Hilliard, Wil- of Kentucky Gluck Equine , Nicoma Bloodstock; , , , Research Foundation’s board Price Bell Jr. Todd liam Hintze William C. Hurt Andrew Jacobs Case , Clark Farms; , Green- , , , of directors. Clay is president Clark Susan Enlow Meg Jewett Becky Jordan Alston Kerr Clay brier Neighborhood Association; Thomas Elizabeth LeBus Lang, Deirdre Lyons, Zeff and chief executive officer of Gaines, Gaines-Gentry Thoroughbreds; Gay Maloney, Ann McBrayer, Kathy Meyer, Judy Three Chimneys Farm in Lexington. Haggin VanMeter, Polo in the Park; Dave Miller, Misdee Wrigley Miller, Robert Mor- Harper, Sequoia Farm; Stan Harvey, Urban gan, Allen Northcutt, Mary Jane Nuckols, UNIVERSITY OF LOUISVILLE Collage; Barry Holmes, Lexington Housing Lynn Pedigo, P.G. Peeples, Catharine Peter- ALUMNI ASSOCIATION Authority; Patrick McGee, Churchill McGee son, Nicole Pieratt, Michelle Primm, Tom ■ Ronald R. Van Stockum Jr., of LLP; Tom Poskin, Huntington Bank; Sam Riddle, William G. Robbins, Walt Robertson, Shelbyville, has been elected as national pres- Razor, Allies of the Alliance; Walt Robert- Justin Sautter, Martha Slaughter, Dan Stew- ident of the University of Louisville Alumni son, Keeneland Association Inc.; Sasha art, Donna Ward, Mary Wathen, Benny Bell Association. Sanan, Padua Stables; David Switzer, KTA; Williams and Steve Wilson.

16 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 1-20.indd 16 11/30/12 11:06 AM CORPORATE MOVES New leadership for Kentucky businesses

BANKING EQUINE ■ Mark ■ Monica Edwards has been named vice DEPARTURES ■ Myrick has president of marketing at Churchill Downs. Nathan L. Hodges, president of Bowling been named Green Technical College, has announced senior vice FOOD/SPIRITS/HOSPITALITY that he will retire effective July 2013. president ■ Caroline and chief Oyler has ■ credit officer Mark Mike been named Bruce D. of First Secu- senior vice , Myrick Goad Broussard rity Bank of president of president of Owensboro Inc. Myrick succeeds Mike Goad, legal affairs Louisville- who has accepted a new role with the company for Louis- based as senior vice president and manager of bank ville-based Humana Inc., relationships and special projects. Papa John’s Caroline Steve will also International Oyler Higdon assume the ECONOMIC DEVELOPMENT Inc. has joined the company as responsibili- Bruce Michael Steve Higdon Broussard McCallister ■ Craig J. Richard has been senior director for partnership marketing and ties of chief named as the new president integration. executive officer effective Jan. 1. Current CEO and chief executive officer of Michael B. McCallister, who is retiring from the Greater Louisville Inc. – The GOVERNMENT position and will become non-executive board Metro Chamber of Commerce. ■ Jane Driskell will join Gov. Steve Beshear’s chairman. administration as state budget director in Jan- ■ Kathy King Allen has been uary. The addition of Driskell to the staff will LEGAL named executive director of enable current State Budget Director and Sec- ■ Harry L. Dadds has the Floyd County Chamber of Craig retary of the Governor’s Executive Cabinet joined Stoll Keenon Ogden Richard Commerce. Mary Lassiter to expand her role as secretary as counsel to the firm. Dadds of the cabinet. will work out of the Lexing - EDUCATION ton office. ■ Dr. Maggie Schmid Shelton has been HEALTHCARE ■ appointed vice president of academic affairs Dr. Thomas Van Gilder has been named Harry for Bowling Green Technical College. national medical director for HumanaVitality, Dadds a joint venture between Louisville-based ■ Beth Boehm has been named dean of the Humana Inc. and Discovery Holdings Ltd. School of Graduate and Interdisciplinary Stud- ies at the University of Louisville.

THE LANE REPORT • LANEREPORT.COM DECEMBER 2012 17

December Lane 1-20.indd 17 11/30/12 11:06 AM LANE ONE-ON-ONE Kentucky’s leaders express their opinions

improvements. Longer-term, we are Ruth W. Brinkley investing in information technology so Ruth Brinkley is president/CEO of Kentucky- that KOH will be operationally and cost One Health, an organization formed earlier this year from the merger of Jewish Hospital & effective in the future world of health - St. Mary’s HealthCare and the Saint Joseph care as we go for ward with the Afford- Health System. Brinkley brings more than 35 able Care Act (implementation). KHO’s years of healthcare experience working in pri - computer systems will help keep better vate and public healthcare organizations, most track of patients’ care and help patients recently serving as president and CEO of keep informed so they can be active Carondelet Health Network. Prior to joining partners in their care. KOH is also mak- Carondelet, Brinkley was an executive with Catholic Health Initiatives and ser ved as presi- ing significant investments in program - dent and CEO of Memorial Health Care System matic development. It’s not just a in Chattanooga, Tenn. A registered nurse who bricks-and-mortar strategy; we are holds bachelor and masters degrees in nursing, investing in several of our key service Brinkley has also served as chief nurse executive areas. Heart and vascular ser vice is and associate dean of clinical practice at the important to us because KOH provides University of Alabama Hospitals in Birming - more heart care than anyone in the ham. Brinkley was recently appointed to the Kentucky Health Benefit Exchange Advisor y commonwealth, and heart disease is Board, and is a member of the National Associa- one of the many healthcare issues in tion of Health Services Executives and the Kentucky. KOH is also making invest - American College of Health Care Executives. ments in women’s services, orthopedics and cancer care. So that’s what KOH has been doing to date. We expect that the partnership with the UofL and UofL ‘FORGING SUSTAINABLE, AFFORDABLE Medical School will enhance those efforts in a positive way. AND ADAPTABLE HEALTHCARE IS EXCITING’ KentuckyOne Health CEO Ruth Brinkley discusses upgrading EL: Under the ter ms of the recently announced JOA with UofL and Univer- and integrating three systems to serve all commonwealth markets sity Hospital, KOH will invest $543 mil- lion during the initial five years. How BY ED LANE will these funds be invested? RB: It’s too premature to specifically address that question since we want to Ed Lane: KentuckyOne Health was evolve as a system. W e are extremely collaborate very closely with the leaders formed Jan. 6, 2012, when Jewish Hos - excited about the benefits KOH can of the University Medical Center and pital & St. Mar y’s Healthcare deliver across the commonwealth to resi - University of Louisville to decide how announced it was merging with St. dents who need healthcare and have not those funds will be invested. It will be a Joseph’s Health System of Lexington had access. collaborative decision, and physicians without UofL’s University Hospital, Our JOA with UofL and UofL Medical will definitely be actively engaged in which had negotiated inclusion and was School helps bring missing components to making those decisions. Our current part of an original announcement. Sub- our partnering in terms of educating and KentuckyOne physicians and the physi - sequent exclusion of University Hospi - training health professionals, and cians from the University Medical Cen- tal in the merger was based on a legal enhances our research efforts across the ter as well as executives will be involved. opinion by Kentucky Attor ney General state. What drives us is providing health - Seventy million dollars will be invested Jack Conway and objections by Gov . care to more and more people – in the in IT; that’s for sure. A lot of people may Steve Beshear. more rural and remote areas of the state not know this, but KOA and our predeces- On Nov. 14, 2012, UofL and University and in some of our urban ar eas where we sor entities have had partnerships with Hospital announced a joint operating have underserved residents. UofL for 60 years. So some of the KOH agreement (JOA) with KentuckyOne, which financial support will be a continuation of Gov. Beshear approved and executed. How EL: How many locations, employees what was already being provided. will this new JOA benefit Kentuckians? and physicians will KOH manage in Ruth Brinkley: That’s a great question and Kentucky and Southern Indiana under EL: What are the major impacts of the the question I was hoping you would ask the terms of the JOA? finalized JOA as they r elate to doctor- me first. If you look at the (federal) RB: If you’re talking total locations, patient relationships, insurance cover- Affordable Care Act and where healthcare meaning physician offices and hospitals age and services for the poor, at risk is going in this country, we clearly have to and everything, then it’s more than 200 and uninsured? do something different. The difference is facilities. Roughly 18,000 employees RB: Let me take those apart. KOH will creating sustainability around our health and 3,000 physicians comprise our maintain these services through the new systems; we want to not only be s uccessful workforce. Hospitals alone will be 16. operating agreement. We listened to the but to also be financially sustainable. concerns of the governor and the attor- There are three components of a sustain- EL: Catholic Health Initiatives initially ney general and, as importantly, our able health system – affordability, adapt- announced it was investing $320 million communities. The JOA means that ability and acceptability. This new to launch KOH. How is this investment UofL will be operating part of the orga- partnership allows KentuckyOne Health being utilized? nization, and KentuckyOne will be to move forward and incorporate these RB: In the short-term, we’ve made some operating another part of the organiza- important principles as we continue to much-needed capital infrastructure tion. So that’s an inherent part of the

18 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 1-20.indd 18 11/30/12 11:06 AM JOA. In terms of charity here, our two need to bend the cost curve in order to EL: What are your major concer ns as organizations have provided almost decrease the cost of care. KOH also will CEO of KOH regarding the upcoming $300 million in free or charity care: be modifying its operations to provide implementation of ObamaCare? KentuckyOne provided $150 million more outpatient services, in-home ser- RB: There are going to be new rules and the University provided about $125 vices and to bring the care vertically or and regulations. It’s clear that health- million. Collectively we have had a ver y physically to places that are closer to the care is moving forward with the Afford- strong commitment to free care or char- patients and to the communities we able Care Act, which I think is a good ity care, which is the nature of both serve. KOH already has two virtual clin- thing for our state and citizens. I’m not organizations’ mission. We will continue ics running in rural and remote areas: concerned, but I want to be diligent and to do that. one is in Clay County and the other is in aware of what’s going to be written into As the Affordable Care Act goes for- Whitley County. those rules and regulations. Through ward, some of those persons will have insurance and easier access to health - care. Right now, the way our overall health system across the countr y is set up, people who don’t have insurance – private or commercial – Medicare, or Medicaid often have trouble accessing the system. We are very excited about those additional persons who will have insurance, so we can reach them. How- ever, this does not decrease in any way KOH’s commitment to the uninsured, underinsured and underserved because there will still be patients who don’ t have insurance.

EL: KOH will operate as a non-profit? RB: KentuckyOne has always been a not-for-profit organization, as has Uni - versity Medical Center; it is important for the public to realize that by the very nature of its (not-for-profit) charter it is community owned. Our assets are owned by the community, and so that is the definition of a not-for-profit. Obvi- ously, the legal structures are a little dif- ferent when you’re talking about a “public not-for-profit” as opposed to “private not-for-profit.”

EL: In your discussions with the governor, did he seem to be pleased at the way the operating agreement with the University of Louisville was restructured? RB: All of our communications with the governor regarding this relationship came through the University of Louisville. Dur - OPEN SOONER. ing the (JOA announcement) press con - ference, UofL and the governor indicated OPERATE SMOOTHER. that all the attorney general’s legal con- cerns were satisfactorily addressed. The Bristol Group helps governor and the attorney general were not a part of negotiations. The way the clients build structures (UofL partnership request for proposals) bid process worked, KOH (which was cho- for operational success. sen) as well as other bidders were not involved in discussions with state officials for obvious reasons. EL: How will KOH modify its opera - bristolgrp.com tions in order to comply with the Patient Protection and Affordable Care Act, COMMERCIAL (859) 233-9050 commonly called ObamaCare or the 1115 Delaware Avenue Affordable Care Act? INDUSTRIAL RB: As will every healthcare system in Suite 200 the United States, KOH will obviously CIVIL Lexington, Kentucky 40505

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December Lane 1-20.indd 19 11/30/12 11:06 AM LANE ONE-ON-ONE

the Catholic Health Initiative’s national system and its advocacy in governmental relations functions, KOH wants to understand and give comment on pro - posed regulations and how they will impact Kentucky and the care KOH delivers. Ultimately, it’s about meeting the needs of those KOH ser ves, so we want to make sure regulations support that. I’m confident government wants the same thing.

EL: With the completion of the merger and JOA, how does your or ganization compare to others in the state? RB: KOH was Kentucky’s largest medical entity when organized in Januar y 2012. In licensed employees and operating rev- Another application is robotics. We Ruth Brinkley in her office in downtown Louisville. enue, Baptist Health after its recent have robotics across KentuckyOne, merger temporarily was larger than both in Louisville and Lexington and operations at Medical Center East and KOH. Now with this joint operation with other parts of the state. Robotics, vir - physicians who practice in that area. UofL, KOH is by far the largest. What’ s tual care, electronic medical records, important to me is not so much being the the development of systems and pro - EL: Have you made a decision as to largest but being able to reach people, to cesses that make workflow easier for where KentuckyOne’s headquarters is collaborate with all entities providing our patients and families all will revolu- going to be located? healthcare, because none of us can do it tionize healthcare in a very positive RB: KOH has been working through alone. I believe those who evaluate KOH way. That’s a lot of work, but KOH is this process with the University of Louis- will gauge our success on how well we are committed to doing that. ville. We will be announcing something able to do those things in terms of build- soon. We have something in mind. ing a sustainable system and taking really EL: How long will it take to implement Probably before the end of the year. good care of our patients. KOH’s strategic plan? RB: The agreement with UofL is for 20 EL: How would you describe your exec- EL: How will KOH manage operations years, with renewable options. KOH is utive team? at its 200 locations in Kentucky and certainly not going to take 20 years to RB: KOH’s team incorporates people Southern Indiana? integrate. We just started the integra - from the area, and we’ve brought in RB: I don’t have the answer yet, but the tion planning, and I envision it will take some people. KOH has a wonder ful principle would be that KOH is an inte - us two to three years to fully integrate. team of executives and physician lead - grated health system. What KOH will look The complexity of this effort is magni - ers. I’m excited to be working with a like is still to be determined; however , in fied because at the same time the whole great group of healthcare professionals. terms of being an integrated system we healthcare industry is making multidi- It’s the people that really make a system. don’t want duplication of ser vices. We mensional changes. What is most impor- We are very blessed. want to follow the same strategic plan – tant for KOH is developing a culture of having it adapted for each community that excellence and high per formance in EL: As a native of Geor gia who has we serve. How the strategic plan plays out terms of providing value to all of those worked in healthcare in Tennessee, Ala- in Louisville will be different from how it we serve. bama, Missouri, Illinois and most recently plays out in Martin and London and other in Arizona, how is your transition to Lou- cities around the state. As KOH partners EL: Are there some markets in Kentucky isville and Kentucky progressing? and collaborates with the University of that are underserved by KOH and that RB: I was born in a little town called Louisville, our teaching programs will look will require KOH to develop new or Wadley, Ga. I’m a farm girl. W adley is different in Martin than in Louisville. expand existing facilities in or der to about 100 miles southeast of Atlanta off KOH is being very careful, very disciplined provide adequate statewide coverage? of I-20 east, toward Augusta. I grew up and deliberate about making sure it econ- RB: That’s part of our strategic planning in a little town called Geord, Ga., and omizes where it can, because a part of a process. We are looking at where KOH is went to high school in Augusta and sustainable medical system is affordability. and where services may be needed. No Waynesboro. I love Louisville; it’ s a KOH will economize and make the opti - one system can do all this by it self. KOH great city. I lived here before, when I mum use of the resources it has. will constantly look for ways that not only first joined Catholic Health Initiatives advance our mission, but also serve more back in 1998. CHI had a regional office EL: Will KOH’s IT system be a key com- people better in a cost-effective way. KOH then, and so I lived here and loved Lou- ponent of its operations? wants to be both nimble and adaptable as isville at the time – and I still do. So RB: Yes. There are many applications of we grow and develop. coming back has been good, because IT. For instance, through our virtual Louisville has become an even better clinics KOH will be able to deploy a spe- EL: KOH recently announced the pur- city since I left in 2001-2002. ■ cialist to a remote site through virtual chase of a Dupont Circle office building in care – some call it telemedicine or tele- Louisville. How will KOH use this facility? health – so we’ll be able to use that. Cer- RB: We had been looking at that prop - Ed Lane ([email protected]) tainly electronic medical records will erty some time, so the timing of the is chief executive of Lane Consultants, make care easier because we won’t have announcement was coincidental. This Inc. and publisher of The Lane Report. to duplicate testing and procedures. facility could help support our existing

20 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 1-20.indd 20 11/30/12 11:06 AM COVER STORY

Booming Bourbon Building an Even Brighter Future Production expansions, new distillers, waves of tourists – all in a down economy – bode well for a signature Kentucky industry

BY LORIE HAILEY

t’s an exciting time for Kentucky bourbon. There are these bourbon makers. fantastic tours you can The commonwealth’s signa- take. There are bourbon ture spirit is at new heights of pop- magazines. Bourbon is ularity. Sales are up across the everywhere, and it’s an Iboard, premium brands are flying off exciting time.” the shelf, and the industry is in its larg- Kentucky benefits Eric Gregory, est expansion phase since Prohibition greatly from the industry, Executive ended. More than $225 million in capi- from the taxes it pays Director, tal projects have been announced or (“seven different taxes on Kentucky completed in the past year. every bottle of bourbon Distillers’ Interest in bourbon heritage is draw- before it ever hits your Association ing thousands of visitors from all over lips,” Gregory said), to the the world to Kentucky distilleries, where jobs it creates, directly and indirectly. But they learn the history and tradition of the interest it creates in the common- bourbon-making – and spend a lot of wealth is quickly becoming one of the money along the way. biggest feathers in its cap. “Bourbon has become not just a “I think being able to have the bour- Jim Beam in Clermont, Ky., recently opened drink but a lifestyle,” said Eric Gregory, bon industry showcased the way it is American Stillhouse, a new visitors center. The president of the Kentucky Distillers’ probably is the best thing that has hap- distillery is part of the Kentucky Bourbon Trail. Association. “There’s cooking with pened to the Kentucky tourism industry

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December Lane 21-44.indd 21 11/30/12 12:02 PM COVER STORY

since the development of Sometimes you dump them and they Bourbon By The Numbers the state park system,” are completely empty.” said Marcheta Sparrow, At Buffalo Trace, barrels are forecast Amount state, local governments secretary of the Kentucky through 2035, Prekse said. Every produc- $126 receive each year from Ky. spirits Tourism, Arts and Heri- tion run is planned, and adjustments are million production and consumption tage Cabinet. “It’s a signa- made along the way, depending on sales Percentage of all bourbon distilling ture industry.” and yields. jobs in the U.S. that are located in Ky. 43 Marcheta The KDA tracks barrel inventories Sparrow, Percent of the world’s Growth bringing Secretary, at each distillery, but does not share 95 bourbon made in Ky. unprecedented investment Kentucky that information outside of the organi- There’s a lot of bourbon Tourism, Arts zation. None of the distilleries The Lane Number of cases in Kentucky. Since 1999, and Heritage Report asked would share inventories or shipped to U.S. 10 consumers in 2010 million when bourbon invento- Cabinet sales figures. All claimed growth, but ries were at a historic low, few gave details. Bourbon’s annual the number of barrels in stock has The 2012 Liquor Handbook from the $2 gross state product grown 115 percent. Right now, there are Beverage Information Group lists the billion in Kentucky 4.9 million barrels aging in Kentucky, Jack Daniel’s brand (made in Tennessee) Number of gallons more than the number of people resid- as the top-selling bourbon in 2011. of Ky. bourbon 28.7 ing here (4.3 million). (Note: Although it meets the regulatory exported in 2010 million Nearly 3.2 million In some sectors, a higher inventory is criteria to be classified as bourbon, Jack Average revenue cases of Jim Beam not something to celebrate, but when it Daniels says it is not bourbon and mar- were sold in 2011. $123 per case in 2010 It is the top-selling comes to bourbon, inventory is a “pre- kets the spirit simply as Tennessee Whis- bourbon made in dictor for the future that we expect key.) Jim Beam was second and third was Number of countries Kentucky. strong future sales and continued Evan Williams, which is made at Heaven that import bourbon 126 growth,” Gregory said. Hill Distilleries. Rounding out the Top 10 Amount in bourbon inventory Forecasting future sales can be chal- are Maker’s Mark, Early Times, Wild Tur- $11.7 property taxes the state’s lenging, said Amy Preske, public rela- key, Ten High, Old Crow, Ancient Age million distillers paid in 2010 tions and events manager at Buffalo and Heaven Hill Bourbon. SOURCES: Kentucky Distillers’ Association Trace in Frankfort. Even more difficult No. 18 was Woodford Reserve, which and the 2012 Liquor Handbook is managing the inventory of a premium had a 15.7 percent increase in sales over bourbon like Buffalo Trace’s Pappy Van 2010. Jim Beam had two of its other Winkle, which ages for 15, 20 and 23 bourbons in the Top 20 sellers: Red Stag But all of Kentucky’s 19 major distill- years and is currently one of the most by Jim Beam and Jim Beam Small Batch. eries have seen tremendous growth in sought-after bourbons. More than 4.6 million 9-liter cases of the past year, Gregory said. That success “It is a tricky game to try to forecast Jack Daniel’s were sold in 2011. Nearly has translated into investments into consumer’s drinking habits more than 3.2 million cases of Jim Beam were sold, their properties and brands. 20 years out,” she said. “You have to a 4.3 percent increase over 2010. Heaven “Just in the last year, either com- remember that bourbon evaporates in Hill sold 1.3 million cases of Evan Wil- pleted or under way, there has been the barrel at a rate of 8 to 9 percent the liams, up 1.2 percent over 2010. more than $225 million in investment first year, and 2 to 3 percent every year Maker’s Mark by far had the biggest in Kentucky in the bourbon industry – thereafter. It’s considered a good day increase of the Top 10 brands. Its sales during a down economy. That’s the when a barrel of 23-year-old Pappy is of 1.03 million cases were up 13.2 per- amazing thing,” he said. dumped and gives you five gallons. cent in 2011. Beam built American Stillhouse, a new visitors center at its Clermont, Ky., Jim Beam distillery this year, and opened its doors to the public for the first time. It also opened a state-of-the- art Global Innovation Center. The two projects cost $30 million. In November, Beam announced plans to locate its Global Business Ser- vices Center on Fourth Street in down- town Louisville, creating 60 jobs and investing $1.7 million in building mate- rials and equipment to retrofit the office. Construction is expected to begin early next year. Other recent developments: • Gruppo Campari is spending $44 million on a 125,000-s.f. packaging facil- ity at its Wild Turkey site in Lawrence- burg. Construction also has begun on a $4 million, 8,500-s.f. visitor center at Wild Turkey. In the past year, a $50 mil- lion new distillery also was constructed at Wild Turkey. • Barton 1792 Distillery in Bardstown A worker empties bourbon from aged barrels at Heaven Hill Distilleries in Bardstown, Ky. recently purchased a 300,000-s.f. build-

22 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 21-44.indd 22 11/30/12 12:27 PM ing to be used as a distribution center. The distillery also expanded its process- ing area with additional bottling tanks and bulk storage, and added new equip- ment to each line. • Four Roses opened its 5,000-s.f. visi- tors center and gift shop in September, part of a $2.4 million expansion of the Lawrenceburg distillery property. • In September, Alltech opened a new $9.2 million, 200,000-s.f. distillery, the first in Lexington in more than 100 years. Already, CEO Dr. Pearse Lyons has announced a $40 million expansion of Town Branch Distillery. • Heaven Hill Distilleries in Bard- stown is building a multimillion-dollar equipment, and had this successful tour- An artist’s rendering of Heaven Hill’s Evan tourist attraction in downtown Louis- ism component,” Gregory said. Williams Experience depicts the multi-million ville called the Evan Williams Experi- dollar artisanal distillery that will be part of the ence. Located on historic Whiskey Row, Tourism riding bourbon’s popularity downtown Louisville tourist attraction. It will open the new attraction will celebrate the The industry began to focus on tourism in September 2013. legacy of Evan Williams, Kentucky’s first in 1999, Gregory said, after several distiller and namesake of Heaven Hill’s decades of market ambivalence toward all of the participating distilleries with a flagship bourbon brand. bourbon. The strategy is working. complimentary T-shirt. That year, 189 • In 2010, Maker’s Mark began a The KDA has been keeping records people turned in fully stamped Pass- $110 million distillery expansion proj- since 1880 and began tracking barrel ports. This year, as of Nov. 20, more ect in Loretto to increase capacity by 50 inventories in the 1960s. In 1967, bour- than 16,000 completed trail Passports percent and double bottling capacity bon was booming, and there were 8 mil- had been cashed in. and warehouse storage. lion barrels aging in Kentucky. But in the Visitors are “literally Distillery developments have come 1970s and ’80s, consumers discovered so- beating a path to (Ken- with new jobs for Kentucky workers. The called neutral spirits, clear liquors such as tucky distilleries’) doors,” state’s distilleries employ more than 3,000 vodka, gin, rum and tequila, and started said Larry Kass, Heaven workers, but “spin-off” jobs at related using them in mixed drinks like daiquiris Hill director of corporate industries, such as cooperages, bourbon and margaritas. communications. transportation and tourism, employ “Bourbon was your father’s drink or Bourbon tourism has another 6,000, according to a University even your grandfather’s drink, and it been so successful that a Larry Kass, of Louisville study commissioned by the just wasn’t cool anymore,” Gregory said, complementary tour of Director of KDA. The annual payroll from those “so it really took a nosedive.” artisan distillers across Corporate Com- 9,000 jobs is about $413 million. The resurgence of bourbon began in the state was added in munications, Heaven Hill “In past 10 years, while the majority of the 1980s and ’90s, when single-barrel October. In testament to Kentucky’s industries have lost jobs, the and small-batch bourbons picked up the passion of bourbon lovers, several bourbon industry has added 4 percent in steam in America and around the globe. had already completed the new Ken- jobs, we’ve invested hundreds of millions “One great thing about this industry, it tucky Bourbon Trail Craft Tour in its of dollars in facilities and manufacturing is always reinventing itself,” Gregory said. first month, according to Director “Booker Noe with Jim Beam is a great Adam Johnson. example. He used to carry around a flask “The craft distilleries, Fun Fact and it was barrel-strength bourbon, and that’s the next step in somebody said, ‘Why don’t we bottle that telling our story about T is a myth that bourbon can only be and sell it?’ So you had Booker’s (Small bourbon,” Sparrow said. called bourbon if it is made in Ken- Batch) come on the market and then “People are fascinated by tucky, according to Eric Gregory, direc- I some other single-barrel bourbons.” the story of bourbon. tor of the Kentucky Distillers Association. Adam Johnson, The “native spirit” can be made anywhere As premium bourbons took off, Ken- They also are very inter- Director, in the U.S. tucky distillers jumped at the opportunity ested in our moonshine Kentucky “My predecessor used to say, ‘You don’t to ride, and perhaps extend, bourbon’s history, and that’s some- Bourbon Trail have to make bourbon in Kentucky, but if still ongoing wave of popularity. thing that we have talked you want to sell it, it better have Kentucky Inspired by the success of California about for years and years. Now, with on the bottle,’” Gregory said. wine country tours and Scottish whiskey these craft distilleries, we can get a lit- Tourism Secretary Marcheta Sparrow echoes that sentiment. She and Gov. Steve trails, KDA members joined forces and tle closer to that process and really Beshear joke that Kentucky makes 95 per- created the Kentucky Bourbon Trail in explain what happens when you distill cent of the world’s bourbon and the other 1999 and haven’t looked back. The tour the grain spirits.” 5 percent is counterfeit. currently features Four Roses and Wild The auxiliary tour is likely to bring So what makes it bourbon? It must be Turkey in Lawrenceburg; Heaven Hill in tourism dollars and growth to the seven made in the U.S. from a grain mixture that Bardstown; Jim Beam in Clermont; Mak- communities where the artisan distill- is a minimum 51 percent corn, according er’s Mark in Loretto; Woodford Reserve eries are located, and create even more to the federal standards issued by Con- gress in 1964. Only yeast and water can be in Versailles; and, as of Nov. 1, Town buzz about bourbon making. The par- added to the grain mixture, and it must be Branch in Lexington. ticipants are: Barrel House, Lexington; aged in new, charred-oak barrels. In 2007, the trail began a Passport Corsair Artisan Distillery, Bowling program to reward visitors who toured Green; Limestone Branch Distillery,

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December Lane 21-44.indd 23 11/30/12 12:02 PM COVER STORY

Lebanon; MB Roland Distillery, Pem- broke; Old Pogue Distillery, Maysville; Silver Trail Distillery, Hardin; and Wil- lett Distillery, Bardstown. Bourbon tourists come from all 50 states and several foreign countries; only 18 percent of completed Passport holders live in Kentucky. On average, tourists who visit all the distilleries spend $737 each, according to the UofL study. From 2007 to 2011, that’s an eco- nomic impact of $18.4 million. And the Kentucky Bourbon Trail dis- tilleries aren’t the only ones open for tours. Visits to Buffalo Trace in Frank- fort, for example, are up 30 percent this year, Preske said. Alltech unveiled its new Town Branch Distillery in downtown Lexington, Ky., earlier this year. Part of Bourbon lovers are lured to Ken- the Kentucky Bourbon Trail, Town Branch opened tucky by the heritage of the United its doors to visitors Oct. 1. States’ only native distilled spirit, according to Sparrow. (See box, The History of Bourbon on page 25.) because they’re always drinking bour- The typical premium bourbon con- bon on there,” Gregory said. “The lead sumer is an affluent, young adult male, Pop culture lifts its glass … of bourbon character, Don Draper, drinks an Old a very desirable demographic, he said. Bourbon’s move back into the main- Fashioned, and you go to your bar and Another factor driving high-end bour- stream has been slow but steady over you say, ‘I want what Don Draper is bon’s rise is the local foods, or slow foods, the past 10 to 15 years. The rise of sin- drinking.’ ” movement. Bourbon is tightly regulated gle-barrel and small-batch bourbons, a The fictional advertising man isn’t and is made only with natural ingredients. burgeoning cocktail culture and the the only TV character ordering up Ken- “Bourbon kind of fits very nicely with ingenuity of bourbon distillers com- tucky’s signature spirit. Bourbon makes the modern trends toward things like bined to create what Gregory calls the regular appearances on television and slow food, the local foods movement, Bourbon Revolution. in movies. the whole interest in eating and putting “People are enjoying all of the old “The bourbon category is very hot. things in your body that are better, high cocktails again, the Old-Fashioned, the American straight whiskey in general is quality, well made, those types of Manhattan, the Sidecar, the Julep. hot, which includes rye and bourbon,” things,” Kass said. Those are all very classic bourbon Kass said. “At the upper end of the cat- In the past 10 to 15 years, the distillers drinks,” he said. egory, the very ultra-premium, super- have done a great job marketing their Bourbon has made its way into pop premium end of things, there is a lot of products, Gregory said, using social culture, which has only added to its activity. A lot of us are introducing very media and customer loyalty programs, popularity. special, rare, limited edition, high- such as the Maker’s Mark Ambassadors, “I’m sure (AMC network’s popular priced bottlings and generally selling the Woodford Reserve Stable and the TV show) ‘Mad Men’ didn’t hurt, them all out.” Four Roses Mellow Moments Club. Bour- bon tastings at events all over the country also are helping reach new drinkers. New products have driven interest, too. For example, Heaven Hill is trying to reach a different demographic, mainly women, with its flavored bour- bons, Kass said.

Another decade of 100 percent growth? Bourbon makes $2 billion in gross state product every year, Gregory said, “and that has doubled in the past 10 years. We think it is only going to double again in the next 10 years, if not sooner.” As the KDA and distillers look to the future, managing that growth is one of their biggest challenges. In late 2010, KDA slowed its Bour- bon Trail marketing campaign to assess its growth and allow distillers to catch up on infrastructure improvements, Gregory said. The idea was inspired, in part, by Bill Samuels, then-president of Maker’s Mark. Maker’s Mark bottles are transported down an assembly line at the distillery in Loretto, Ky. The brand was “We were at the Alltech FEI World the 18th best-selling bourbon last year; sales of it were up 13.2 percent. Equestrian Games (at the Kentucky

24 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 21-44.indd 24 11/30/12 12:02 PM Horse Park) and I went into the Maker’s Mark Lounge and there was Bill Samu- els,” Gregory said. “He said, ‘Get over here.’ He took one of the big World Equestrian Games programs and rolled it up and started hitting me on the head. And I was like, ‘What did I do?’ and he said, ‘Slow down; we’ve got to figure out a way to get a hold of the Kentucky Bourbon Trail before it gets out of control because we don’t want visitors to have a negative experience.’” Gregory took to heart the advice from Samuels – he is, after all, the god- son of “the” Jim Beam. KDA hired a consultant who studied other suc- cessful industries and Bill Samuels came up with ideas to Jr., Chairman continue trail growth in a Emeritus, The History of Bourbon responsible way, “so we’re Maker’s Mark HAT became bourbon-making began in the 1700s with the first settlers of Kentucky, not just herding visitors who distilled corn and other grains not needed for sustenance into spirits that made in,” Gregory said. The KDA also hired Wthem easily transportable and prevented excess production from rotting – plus it Johnson to work with trail members to provided some welcome diversion from frontier life. make sure visitors still had an intimate Kentucky farmers shipped their corn whiskey in oak barrels stamped Old Bourbon, then experience at each distillery. one of the state’s large original counties, down the Ohio and Mississippi rivers to New Figuring out how to handle success is Orleans. The long trip aged the whiskey, with the charred oak giving it a distinct mellow flavor a good problem to have, Gregory said, and amber color. Well received in the Louisiana port, it became known as bourbon whiskey. Since then, generations of Kentuckians have continued the heritage and time-honored tradi- but other industry stumbling blocks, tion of making bourbon, unchanged from the process used by their ancestors centuries before. Kentucky’s annual barrel tax chief among them, require a little more work. Source: The Kentucky Distillers’ Association The barrel tax is an ad valorem levy on every barrel of product aging in Ken- tucky. The industry has been fighting it Adkisson, president/CEO of the Kentucky A bill is likely to be drafted for the 2013 for nearly a century, he said. Kentucky Chamber of Commerce. Earlier this year, General Assembly short session to keep bourbon distilling is the only alcohol he urged lawmakers to give serious consid- the issue on lawmakers’ radar. The KDA manufacturing industry in the world eration to finding a solution. also hopes the Governor’s Blue Ribbon that pays such a tax, which costs them The KDA has worked with state legis- Commission on Tax Reform will include $12 to $15 billion a year. About 60 per- lators to draft bills and legislative the issue among its recommendations. cent of every bottle’s retail cost goes to amendments relating to the barrel tax. With the national economy struggling taxes, according to the KDA. They have passed the Senate twice, but the past few years, another industry con- “Our friends in Tennessee at Jack gotten nowhere in the House. cern is a possible increase in federal alco- Daniels do not pay such a tax,” Gregory Barrel tax revenue is used at the state hol excise taxes, Gregory said. An increase said. “That puts us at a competitive dis- and local levels to fund education, fire in the early ’90s was devastating. advantage in the global marketplace.” departments and public safety, among “It took our industry 10 years to get The tax discriminates against the state’s other community needs. The distillers back to the (income) numbers it had signature bourbon industry, said Dave would “never want to do anything to before that tax,” he said. hurt those,” Gregory said. The KDA maintains contact with To avoid a hole in the Kentucky’s congressional delegation, budget, distillers and the encouraging opposition to raising fed- KDA have come up with a eral alcohol taxes. plan to provide relief with- On the bright side, the challenges out doing away with the tax: the industry faces currently pale in com- Distillers would continue parison to the recent success and its paying ad valorem tax on optimism, Gregory said. each aging barrel but get a “We’re in a down economy, the worst credit toward their state cor- economy the nation has seen in genera- porate income taxes and be tions. We have an industry that is grow- required to reinvest that ing, that has just scratched the surface amount into their Kentucky of its potential from a sales and tourism operations. standpoint, that gets along and has “So you’re expanding broad support from elected leaders,” he Buffalo Trace in Frankfort, Ky., is the oldest continually operating and creating jobs,” Gregory said. “We couldn’t be more happy with distillery in the country. There has been distillation there since said. “It is an incentive really. where we are.” ■ 1775. It even distilled bourbon during Prohibition, when a special It is not a handout by any permit was granted for Buffalo Trace to produce bourbon for means, shape or form, so it Lorie Hailey is associate editor of The Lane Report. “medicinal purposes.” is a win-win.” She can be reached at [email protected].

THE LANE REPORT • LANEREPORT.COM DECEMBER 2012 25

December Lane 21-44.indd 25 11/30/12 12:02 PM TECHNOLOGY

Among the special facilities built into Space Science Center at Morehead State University is an anechoic chamber where electromagnetic waves do not reflect for testing satellites systems and other devices the Kentucky Space program builds.

build and test specialized devices that withstand launch forces of hundreds of Gs, then operate in a vacuum, in extreme cold and heat, without gravity but with plenty of electromagnetic bombardment and the occasional gamma ray. “If they can be success- Morehead State University photo ful with these items,” Lumpp said, “they can do Dr. Jim dishwashers, cars and Lumpp, smartphones.” Director of Having established Engineering, Kentucky Space “flight heritage” for its work, Kentucky Space is winning grants and contracts from the U.S. Depart- ment of Defense, NASA, the University of Rome (Italy), Honey- well International, Lock- heed Martin, Radiance Technologies, Tethers Kentucky Space Wants LLC and others. It launched a space science bachelor’s degree program in 2008 at More- Dr. Ben head State University that Malphrus, Financial Stardust is one of only a half Space Operations dozen in existence. Director, Its engineering is earning global notice, gaining the There have been eight Kentucky Space graduates and another 49 state a foothold in the entrepreneurial aerospace industry now in the program, said Dr. Ben Mal- phrus, professor of space science and BY MARK GREEN chairman of the MSU Earth and Space Science Department. Since 2009, MSU’s faculty includes the highly regarded Dr. Bob Twiggs, VERY 88 minutes since shortly community. But its team is nothing if who during more than 20 years at Stan- after a September rocket not ambitious: The goal is a cottage ford University developed the CubeSat launch in California, a high- space industry in Kentucky, spinning off – a 10-centimeter square satellite format tech nanosatellite built in high-tech businesses that offer the com- that NASA initially scoffed at as absurdly Morehead by members of the monwealth’s best and brightest job small but which now is an international EKentucky Space program passes overhead options in their home state rather than standard. at 17,500 mph in low Earth orbit. Small Southern California, Texas or Florida. enough to fit in one hand, it holds enough “It’s engineering in the extreme,” said advanced microelectronics to create and Dr. Jim Lumpp, director of engineer- store power, orient its orbit, gather data ing for Kentucky Space and asso- and transmit info every 30 seconds for ciate professor in the University of

receipt by its makers. Kentucky Department of Electri- Kentucky Space photo During each orbit bringing the cal and Computer Engineering. “If CXBN above the sky horizon of a ridge you want to be the best in basket- near downtown Morehead, a nine-story, ball, you go to the NBA. If you want 21-meter radio telescope manned by to be the best in engineering, you Kentucky Space faculty and students build spacecraft.” precisely swivels its huge white dish, Program participants do intently listening for data. build modern-day space- Still primarily educational but gain- craft. They envision, ing increasing commercial work, Ken- design, fabricate parts, tucky Space is the offspring of a The first cubesat built by Kentucky Space program relationship nonprofit Kentucky Sci- students and faculty was KySat-1. Its power generation ence and Technology Corp. developed and storage, orientation, communications and other systems with officials at NASA and the space all fit within a 10 centimeter (3.87-inch) cube.

26 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 21-44.indd 26 11/30/12 12:02 PM The Space Science Center is located inside Smith-Boone Hall on the campus of Morehead State University. “Twiggs is a rock star of space science,” Malphrus said. He helped found Kentucky Space in 2004. Today space science fresh- men at MSU hear lectures in their introductory class Dr. Bob Twiggs, Professor of from a man who spent Space Science, much of his academic Morehead State career training Stanford University graduate students. The CubeSat format Twiggs developed along with Jordi Puig- Suari of California Polytechnic State Uni- versity is small: 10 centimeters is just less than 4 inches, slightly wider than a man’s has carried experiments to “Kris Kimel is a visionary,” said Mal- palm. However, Twiggs and his Kentucky the space station and phrus, who also is space operations Space associates hope within the next few returned them. Cube Lab director with Kentucky Space and direc- months to establish flight heritage for a is able to use ISS power tor of Morehead’s $15.6 million Space successor format, the PocketQub, which is and communication sys- Science Center, which opened in 2009. a mere 5 centimeters square. tems, plugging into a sim- Others in the program use exactly the ple USB port. same phrase to describe Kimel. Kris Kimel, Spinoffs begin to orbit the program President, Exomedicine is a term It is his brainchild. Kentucky Space recently spun off its own Kentucky coined by Kris Kimel, KSTC keeps an office in Southern Cali- nonprofit entity, the Exomedicine Insti- Science and president of Kentucky fornia at NASA’s Ames Research Center. tute, originating the practice of micrograv- Technology Space and president and While there on unrelated business, Kimel ity medical research. It was able to do so Corp. founder of Kentucky Sci- was introduced eight or nine years ago to because Kentucky Space is one of only 11 ence and Technology Twiggs, who was doing work for NASA. entities in the world approved for access to Corp., which advocates for and supports “One of the things that interested us the International Space Station. innovation and entrepreneurship in the from the beginning … was the emerg- The commonwealth’s space engineers state. Kentucky Space is one of KSTC’s ing entrepreneurial space industry,” helped create the Cube Lab module that many undertakings. Kimel said.

December Lane 21-44.indd 27 11/30/12 12:02 PM TECHNOLOGY Staff photo The private space business began 2011 podcast from the Ken- happening as a byproduct of the ongo- tucky Space Movie Project ing miniaturization of electronics and (http://bit.ly/Y6m5Pn) is mechanical devices, he said, the same any evidence. innovation stream from which smart- “We’d like to build a group phones and other technological innova- of rebels,” Twiggs begins, tions have emerged recently. Costs were “because the aerospace indus- miniaturizing, too. try is stuck in a rut.” Always alert to opportunity, Kimel He urges today’s students began to see one as he got to know Twiggs to challenge convention and and learn about his tiny satellites. They especially naysayers who tell were gaining fans who were finding uses them their idea was tried 25 for them. And he realized a new private years ago and didn’t work. space industry was coming into existence. As of late summer, at least Kimel stitched together funding from 75 CubeSat format satellites Belcan, the Cincinnati-based engineering were in orbit, according to firm that has a major presence in Lexing- Wikipedia. And that number ton, and other private donations and uni- will only grow. versities, and arranged for a core group “They are the worldwide from Kentucky to go learn about space defacto standard for small sat- systems from experts at Stanford. ellites,” Malphrus said. Dr. Ben Malphrus, space operations director for “Both Jim (Lumpp) and I knew CubeSats are being viewed for Kentucky Space, holds a dependable multiprocessor (Kimel) well enough to sign on” imme- group deployment in low Earth orbit unit being developed for the Department of Defense. diately, Malphrus said. “constellations.” That’s the case also It has eight computer processor cores to handle the increasing volumes of data small satellites generate. with the PocketQub format for which Bringing a star to Kentucky Twiggs and Kentucky Space hope to That first Kentucky contingent took off for establish “proof of technology” in Feb- Their work’s flight heritage has led Palo Alto in late May 2006. There were 10 ruary. The PocketQub is one-eighth to international connections. to 12 students plus several faculty mem- the size of a CubeSat. In February, for the second time, bers, including Lumpp, who had joined Malphrus will travel to Italy, Russia and the UK faculty in 1993, and Malphrus, ‘We can build it all ourselves’ Kazakhstan for final assembly and who had been working in various capaci- Kentucky Space faculty, launch of an Italian satellite including ties at Morehead since 1998. students and its one full- parts Kentucky Space is creating under “Basically, they spent the entire sum- time employee, space sys- a contract with the University of Rome. mer there working with Bob (Twiggs) tems engineer Twyman Kazakhstan’s desolate Baikonur Cosmo- and learning satellite design,” Kimel Clements, work with stu- drome is where Moscow-based Cosmotras said. The Stanford training took place dent groups around the offers inexpensive launches with Dnepr under contract with Kentucky Space. state and perform contract Twyman rockets – former Soviet SS-18 missiles mod- Clements, ified into a system to put small satellites “We paid them.” work for private corpora- Space Systems The initial training partnership tions and public agencies. Engineer, into orbit, according to parabolicarc.com. became an ongoing relationship. Then “We can build it all our- Kentucky Space The program is a trusted name also when Twiggs was reaching retirement age selves,” Clements said. “We at the launch facilities of France, Japan, but still had ideas he wanted to pursue in don’t need anybody else.” NASA and SpaceX, the latter being the innovation and education, Kimel and Mal- The program has machine tools, clean first private sector launch entity. phrus recruited him. Although there was rooms and sophisticated testing equip- Its growing flight heritage makes no nationally recognized program or bud- ment that can simulate launch and space Kentucky Space hardware “much more get, Twiggs agreed for “the opportunity to environment conditions. MSU has the valuable,” Malphrus said. follow some of his passions.” 21-meter astrophysics and deep-space The skilled engineers the program is He remains impassioned about push- tracking system with a modern control producing are valued, too. “They all get ing the space engineering envelope if a room. A pair of much smaller UHF anten- hired,” Clements said.

Morehead State University photo nae Clements helped place on the roof of UK’s Anderson Hall engineering building Creating the space medicine research field can gather data beamed from satellites and The Exomedicine Institute begun in monitor ISS chatter – listening especially 2012 is attracting plenty of attention. for any query regarding “Cube Lab” when Kentucky Space issued a request for pro- Kentucky Space hardware is in use. posals for microgravity medical research The program’s capabilities allow and selected 12 for development into quick reaction to opportunities, Clem- white papers; subjects include cystic ents said. fibrosis, diabetes, cancer and regenera- “Building a satellite in six months is tive medicine. not easy and not something many peo- Exomedicine arose from the pro- ple can do,” he said. gram’s involvement building and suc- Students and faculty members built the cessfully flying the Cube Lab for the The digital Theater in the MSU Space Science Center now-orbiting CXBN – Cosmic X-Ray Back- International Space Station. immerses visitors with surround sound and six high- ground Noise – satellite at MSU’s Space “That led us into a deep interest in definition projectors creating images on its 40-foot Science Center, except for its small cosmic understanding how biomedical processes dome ceiling. It presents frequent public and school ray detector, which required an exotic cad- operate in the microgravity of space,” programs; visit moreheadstate.edu/startheater. mium zinc telluride alloy. Kimel said. “Once you leave the gravity, all

28 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 21-44.indd 28 11/30/12 12:02 PM Kentucky Space photo Kentucky Space students and faculty build the Cosmic X-Ray Background Noise satellite in Morehead. CXBN went into orbit in September to measure remnant energy from the Big Bang.

your assumptions about how cells of the body work basically go out the window.” Exomedicine Institute’s goal of new insights and medical solutions for here on the ground has drawn private sector interest in partnering with or participat- ing in its research. And this, in turn, is creating another Kentucky Space spinoff expect to launch soon, a for-profit that will be called e10 Space. It will conduct sales and marketing for Kentucky Space and Exomedicine Institute. In addition to fee-for-service reve- nue, e10 Space’s financial model will include an ownership interest in intel- lectual property arising from the work Kentucky Space and Exomedicine Insti- tute performs. Discussion about creating e10 Space began about a year ago, Clements said, and three months ago, Kentucky Space officials began talking to potential investors and interviewing CEO candidates with strong backgrounds in biopharmaceuticals. After a CEO is selected, the new company will build its team. Estimates are e10 Space will need $2 million to $5 million to begin. Exomedicine Institute and e10 Space have attracted one startup company to move to Lexington and two to locate in Morehead. Optimally, said Kimel, “what emerges is a world-class entrepreneurial space industry” within the next several years. “If we are successful, it holds out the possibility of leapfrogging Kentucky in the economic arena. Linear change is never going to get us where we want to be,” he said. “We’re not getting Boeing to relocate here, and we don’t need that. Today’s world is driven by innovation and diversity. We need lots of small companies working on the cutting edge.” ■

Mark Green is editorial director of The Lane Report. He can be reached at [email protected].

THE LANE REPORT • LANEREPORT.COM DECEMBER 2012 29

December Lane 21-44.indd 29 11/30/12 12:30 PM WEALTH MANAGEMENT High Returns, Broad Impact Kentucky higher ed Endowments at Kentucky Colleges and Universities endowments, Ranked by 2011 figures 2011 2010 Part II: Future Profits U.S. SCHOOL NAME ENDOWMENT ENDOWMENT PERCENT RANK (MILLIONS) (MILLIONS) CHANGE

BY FRANK GOAD 79 Berea College $978.7 $846.8 15.6 81 University of Kentucky $915.9 $778.9 17.6 97 University of Louisville $772.2 $669.0 15.4 262 $212.9 $174.9 21.8 Kentucky’s college endowments, a two- Centre College part series: Part one last month examined 342 Asbury Theological Seminary $137.2 $124.3 10.4 the unique nature of super long-term 359 $124.8 $112.9 10.5 investment oversight. Part two this month Transylvania University focuses on the strategies Kentucky endow- 382 Western Kentucky University & Foundations $114.4 $102.7 11.4 ment managers use. 445 Louisville Presbyterian Theological Seminary $81.9 $72.7 12.6 T is said the people who guide 502 Northern Kentucky University Foundation Inc. $69.1 $55.5 24.4 Kentucky’s college and university 579 Eastern Kentucky University $49.0 $41.4 18.3 endowment funds have the tough- 610 Bellarmine University $42.3 $33.7 25.4 est jobs in higher education. Imagine managing a savings 634 Asbury University $38.0 $30.9 23.0 account to build needed financial security I 651 Kentucky Community and Technical College $35.3 $29.0 15.4 for this generation of your family – and System the next one, and ones after that for as Murray State University* $82.8 70.5 17.4 long as you can picture. You can only ever $32.7 $26.1 25.0 use the interest earnings from what you’ve Morehead State University* set aside, no touching the principal, and Kentucky total $3,687.4 $3,169.5 16.3 you must constantly add funds. (NACUBO reporting schools, plus Morehead) Sound daunting? * Murray State and Morehead State figures from the school are not part of NACUBO report The importance of a robust endow- ment operation in the face of budget cuts, Source: National Association of College and University Business Officers survey responses rising costs and an uncertain economic by 839 NACUBO members in U.S. and Canada future cannot be understated. Endow- ments are more crucial than ever to FY 2012, though, that range is down, rang- mixes of 60 percent stocks and 40 percent schools and critical to their ability to ing from a high of 4 percent to as low as bonds and avoid alternative investments. ensure long-term viability, employ high- -0.9 percent, which is in line with schools Because it takes considerable acu- caliber faculty, educate students, expand across America, according to preliminary men to manage endowments, schools opportunities and promote Kentucky’s figures from the National Association of employ outside firms; large funds use economic growth. Endowments are College and University Business Officers. several firms, each handling an area of schools’ bulkhead against turbulent eco- NACUBO’s early reports show an average expertise like commodities or real nomic times and provide a financial foun- of -0.3 percent for all reporting schools. estate. Schools’ boards of trustees do dation that keeps them stable and viable Because endowment managers usu- review and have to approve outside long into the future. ally employ a five-year rolling average experts’ plans for their endowments; Students and parents paying rising for earnings, spending should not investment or finance committees first tuition bills might question the policy of change this year at most schools despite consider the advice and bring recom- not spending the millions of dollars the 2012 investment numbers. mendations to the full board. mounting in endowment funds. However, ensuring support in the decades ahead Alternative vs. conventional investing Huge returns for Kentucky requires that today’s spendable income The trend for schools with larger endow- Kentucky higher education spending ben- comes from earnings. Over time, annual ments is to invest in “alternative strategies.” efits all of the commonwealth. A 2011 income expectations are often the Con- These more complex investments include: study by the Campaign for College Oppor- sumer Price Index plus 4-5 percent. The private equity (e.g., financing leveraged tunity in California showed that every dol- result: Endowments typically have a buyouts, and merger and acquisition lar that a state spends in higher education “spend rate” of 4-5 percent of total funds, funds); “marketable alternative strategies” yields a net return of $4.50 for its economy. after earnings. This provides money for (e.g., hedge funds and derivatives); ven- People completing college average at scholarships, endowed chairs, research ture capital; private equity real estate; com- least $1 million more lifetime income ver- and other current academic efforts. modities; managed futures; buying sus those with a high school diploma. As Last month’s Part I reported that distressed debt; and other opportunities. more people graduate college, states get endowments at Kentucky schools showed Schools with smaller endowments tend better skilled workers who contribute investment returns ranging from 10.4 per- to be more conservative and conventional. more to local economies and state reve- cent to 25 percent for fiscal year 2011. For They stay with the traditional investment nues; there is less poverty, thus less related

30 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 21-44.indd 30 11/30/12 12:02 PM government aid services cost, which frees Why do people give? are especially critical to the school’s those dollars for other public needs. “When people give,” future. But because of its mission, it Endowment contributions, there- Richey said, “it’s gener- tends not to develop multigenerational fore, produce amazing returns in many ally because they want to alumni relationships ways for all of a state’s citizens. leave a legacy and help “Once they graduate people and the school from here and go on to Reconsidering philanthropy advance.” their careers, their suc- Endowment operations require a change D. Michael Someone might cess makes their children Richey, Vice in thinking by charitable donors, who President Of donate specifically to the ineligible,” said Jeff often like to see immediate, tangible Development, UK College of Medicine, Amburgey, vice president results from their gifts, such as their name University of for example, because of a for finance. on a new building, prop- Kentucky positive experience a Jeff Amburgey, Rather than alumni, erty or program – and family member had at the Vice President most of Berea’s large schools welcome that type UK Chandler Hospital, the school’s For Finance, donations come from Berea College of support, too. Endow- teaching medical center. Some give people inspired by the ment donations, though, because they believe they would be less school’s mission and its consistently out- are often the result of successful without their college experi- standing results, Amburgey said. someone’s desire to affect ence and want to see others do well, too. Additionally, many Berea graduates Jamey Leahey, lives directly for as long Want to create a scholarship endow- feel compelled to return to their com- Associate Vice and as often as possible. ment in your name? Most schools require munities and enter service professions President Of Jamey Leahey, associate at least $25,000 to do so because anything such s nursing, teaching and social work Legal Affairs vice president of legal less does not generate enough interest to – jobs that are important but not high- And Gift affairs and gift planning at provide significant support. A 5 percent paying, meaning many alumni who give Planning, Centre College in Danville, annual return on that amount is $1,250 do so in smaller amounts. Centre College related a story of one per- and, depending on the way the endow- Morehead State shares that alumni son’s endowment gift. ment is set up, only a portion of that characteristic with Berea, said Shaw. “While reviewing their will with their amount would be available. “Educating our constituents about children, they discussed how best to Development staffs also encourage our projects, priorities and our constant donate to something powerful that contributor interest by helping poten- push for excellence is a full-time effort,” would change lives,” Leahey said. “They tial donors understand the financial the Morehead official said. “Today, fun- considered their church, a hospital and realities the school faces. draising and endowments are a require- other possibilities, and settled on a Cen- “It used to be that the ment, not an option, and donor circles tre scholarship fund because they knew state gave us 60 percent must extend beyond alumni.” the school is solid, would always be of our funds, and we pro- there, and their donation would change vided 40 percent,” said Endowments make a difference many lives over the years.” Jim Shaw, vice president At the University of Kentucky, creating Bob Jackson, associate for advancement at More- an salary-enhanced endowed chair vice president for institu- head State University. requires a minimum of $1.5 million to tional advancement at Jim Shaw, Vice “Now, that has reversed, generate the income needed to bring in Murray State University, President for and we’re responsible for someone at the top of their field. echoes that. Endowments Advancement, 60 percent. Not only that, Endowed chairs help schools attract top Morehead “provide schools a margin State if I want to build a build- students who want to learn from a pro- of excellence. They fill University ing, my endowment must fessor, and they can increase a college’s Bob Jackson, financial gaps and ensure include funds for its per- rankings. Such endowments elevate a Associate Vice that a department or pro- petual maintenance and operation, as school’s status without impacting its President for gram can maintain high the state no longer helps with that.” operating budget. Institutional standards despite changes Most colleges and universities get a All of the development officers agreed, Advancement, Murray State in (annual) funding to the large part of their donations from though, upon the need for more unre- University school. Endowments keep alumni, including multiple generations stricted gifts. Specific endowments have our schools and students of family members who successively very rigid rules on how money can be from falling behind.” attend a school. spent; even when schools identify another University fund drive proceeds go into Berea College has the largest endow- need – academic, capital, maintenance, an endowment; for Kentucky’s public uni- ment of all Kentucky schools at $978.7 administrative, or any unexpected situa- versities, all private donations must go into million in its 2011 report to the National tion – endowment funds cannot be used one. Support campaigns are vital. Association of College and University Busi- no matter how pressing the issue. Unre- “As much as 90 percent of the time ness Offices. However, multiple genera- stricted gifts allow schools to correct situa- when people give gifts to the university, it’s tion alumni donations usually don’t tions no one can anticipate. during fund drives,” said D. Michael happen. As part of its mission, Berea Col- Given the returns on every dollar Richey, vice president of development at lege is one of only a few in the United invested and the countless ways they the University of Kentucky. States that does not charge tuition to its contribute to the state, development When a particular department or students, who must meet an eligibility officials say donating to Kentucky’s college at a university such as agricul- requirement of coming from financially schools might be the most important ture or business seeks contributions, challenged families. Some 70-80 percent gift you ever give. ■ what is received goes into a specially come from Appalachia. Students help sup- designated fund. The number of differ- port the college by working for the school Frank Goad is president of the Frank Communications ent funds within an individual universi- while they attend. Lexington, a marketing, advertising and social media ty’s endowment can range from Since Berea does not have a tuition consulting firm (linkedin.com/in/frankgoad). He was hundreds to thousands. and fee revenue stream, endowments the first employee of Lane Communications 27 years ago.

THE LANE REPORT • LANEREPORT.COM DECEMBER 2012 31

December Lane 21-44.indd 31 11/30/12 12:02 PM ECONOMIC COMMENTARY

tion, avoid booms and busts in dollar income growth. (Some also call this approach “nominal income targeting.”) Figure 1 shows how this would work. The Fed would set a target growth rate, say 5 percent per year, for nominal GDP and adjust monetary policy so that spend- ing hit this target. This would lead to a steady increase in nominal GDP over time. In the top panel of Figure 1, this steady growth is seen as the solid black line. If a spending boom were to sud- denly emerge, say due to a housing bub- ble, then the Fed’s job would be to tighten monetary policy and bring total current dollar spending back to its tar- geted path. This is represented in the figure by the red line. Conversely, if total current dollar spending were to suddenly collapse, say due to a panic, the Fed would have to ease monetary policy to restore nominal GDP to its target path. This is seen in the bottom panel of Fig- ure 1. The goal is to make the future path of total dollar spending and, as a result, total dollar income as predictable and Demand-Side stable as possible, which assists business in strategic planning for investment.

Seeking price stability didn’t pay off To understand the appeal of this Economics approach, consider how the Fed operated Taking a look at Nominal GDP Targeting FIGURE 1 and its implications for Kentucky

BY DAVID BECKWORTH

NE of the hottest ideas including Chairman Ben Bernanke. today in monetary policy Some observers believe the Fed’s most is “nominal GDP target- recent large-scale asset purchase pro- ing.” It is not a new idea, gram, a third round of quantitative eas- but it has gained a lot of ing known as QE3, is an attempt by the Oattention the past few years because of Fed to move its policy goal in the direc- widespread dissatisfaction with the Fed- tion of a nominal GDP target. eral Reserve. Many view it as a way to So what is nominal GDP targeting and improve how the Fed conducts mone- what is its appeal? With nominal GDP tar- tary policy. Nominal GDP targeting has geting, the Fed’s policy focus is to stabilize supporters across the political spec- the growth of total current dollar spend- trum, from conservatives at the National ing – or nominal GDP – in the U.S. econ- Review to liberals at The New York Times, omy. The idea is to avoid booms and busts and has been discussed by Fed officials, in dollar spending growth and, by implica-

32 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 21-44.indd 32 11/30/12 12:02 PM prior to the fall 2008 economic crisis: Easier route to a balanced budget FIGURE 2 During this time it generally aimed to Nominal GDP targeting has another maintain price stability, which for the benefit. It makes it easier for the fed- Fed meant adjusting short-term interest eral government to cut spending and rates so that inflation remained around balance the budget. One reason gov- 2 percent. Thus, during the early to mid- ernment spending cuts are avoided is 2000s, when rapid productivity gains were the concern that they would be a drag pushing down costs and the inflation rate, on the overall economy. But if the Fed the Fed responded by easing monetary is there to offset any dollar spending policy; it was worried that inflation could shocks so that nominal GDP stays on its get too low at this time, even though eas- target path, these government spend- ing meant further fueling the housing ing cuts become easy. That is, for every boom. Likewise, in the fall of 2008 when dollar reduction in government spend- surging commodity prices were creating ing, the Fed would ease monetary pol- upward price pressures, the Fed was wor- icy so that there would be a dollar ried that inflation might get too high. increase in spending by the private sec- toward riskier, higher-yielding ones. Consequently, it decided at its September tor. This is what happened in Canada This rebalancing would raise assets 2008 meeting not to ease monetary policy in the latter half of the 1990s. Though prices and, in turn, further reinforce even though the economy was already not explicitly targeting nominal GDP, the recovery. For these reasons, if the contracting at a rapid pace. the Bank of Canada eased monetary Fed were to adopt a nominal GDP tar- With a nominal GDP targeting strat- policy as the federal government get, it would probably do so with the egy, the Fed would have approached brought its budget into balance. There intention to return nominal GDP these developments very differently were no adverse economic effects from somewhere near its previous trend. than it did with the policy of maintain- this fiscal retrenchment because of the This would require temporarily faster ing price stability. Since nominal GDP monetary easing. “catch-up” growth in total dollar spend- targeting solely aims to stabilize the A related point is that the adoption of ing to return nominal GDP growth to growth of dollar spending, the Fed nominal GDP targeting would eliminate its trend. would not have worried about the drop the argument for countercyclical govern- Doing so would most likely raise in inflation coming from the productiv- ment fiscal policy. Imagine if the Fed had Kentucky dollar spending and dollar ity gains, but it would have worried been targeting nominal GDP going into incomes, too, since they tend to closely about the surge in nominal GDP growth 2008. It is unlikely in this scenario that the follow U.S. nominal GDP as seen in coming from the housing boom. It sharp drop in total dollar spending that Figure 2. Currently, Kentucky total would have tightened monetary policy occurred in late 2008-early 2009 would personal income growth is about 3.9 sooner in the early to mid-2000s, poten- have happened in the first place. If so, percent or roughly $6 billion below its tially averting some of the housing there would have been no need and no trend path. The Fed adopting a nomi- boom. Similarly, in late 2008 when total justification for the federal government’s nal GDP target would probably erase current dollar spending was crashing, almost $800 billion fiscal stimulus pack- this shortfall. Since there is still slack the Fed would have ignored the higher age. Similarly, imagine if the Fed in 1929 in the Kentucky economy – the unem- commodity prices and eased monetary had been targeting nominal GDP. In this ployment rate is 8.4 percent compared policy to stabilize nominal GDP. counterfactual, it is unlikely that total dol- to a pre-crisis average of about 6 per- Another way of saying this is that lar spending would have collapsed by 50 cent – this rise in Kentucky dollar using a nominal GDP target strategy, percent over 1929-1933 and, as a result, it spending and dollar incomes should the Fed would ignore these and other is unlikely FDR and his New Deal would translate into real economic growth as shocks to the supply side of the econ- have emerged politically as they did. well. omy, but it would respond to demand Now that the presidential election is shocks by keeping total current dollar Rapid income growth for Kentucky over, it is more likely that the Fed will spending stable. One of the big appeals So what does all of this mean for the think seriously about adopting a nomi- to nominal GDP targeting, then, is that Commonwealth of Kentucky? If the Fed nal GDP target. The Fed’s QE3 pro- it avoids boom-bust cycles in spending were to adopt a nominal GDP target, it gram, which has the Fed buying assets that can arise when the Fed tries to would probably mean some temporarily until labor market conditions improve keep inflation stable. rapid dollar income growth for Ken- in the context of price stability, could Ironically, even though nominal GDP tucky. Here is why: U.S. nominal GDP is easily be reoriented into a nominal GDP targeting would make the Fed less con- currently below its pre-crisis trend path, target strategy. All the Fed would have cerned about changes to inflation over as seen in Figure 2. Advocates of nomi- to do is explicitly announce a nominal the business cycle, it would still anchor nal GDP targeting say that the Fed GDP target and continue buying assets long-term inflation expectations because needs to return nominal GDP to its until this target was hit and vice versa. of its commitment to keeping dollar trend path because that is the path busi- This could be an important change in income growth on its long-run targeted ness firms and households expected monetary policy in the near future. It is path. That is, by keeping expected dollar when they entered long-term debt con- in the interest of all Kentuckians to fol- income growth stable over many years, tracts prior to the crisis. Restoring the low this development. ■ expected price level growth on average trend for nominal GDP growth would also would become stable. This is another consequently restore the creditor- appeal of nominal GDP targeting – it debtor relationship and thus allow for a David Beckworth, Ph.D., assistant eco- would add more long-run certainty about robust economic recovery. nomics professor at the Gordon Ford future dollar income growth and price The resulting expected higher nom- College of Business, Western Kentucky University, is editor of “Boom and Bust level growth. This would make it easier for inal income growth also would encour- Banking: The Causes and Cures of the businesses and households to make long- age investors to rebalance their Great Recession.” term economic plans. portfolios away from liquid, safe assets

THE LANE REPORT • LANEREPORT.COM DECEMBER 2012 33

December Lane 21-44.indd 33 11/30/12 12:02 PM MANAGEMENT

I could quickly maneuver around flaws in the decision if I was wrong, provided I kept everyone focused on the end game and made adjustments as we Analysis Paralysis moved forward.” Have a “ready, aim, fire” attitude Avoid consensus overload and keep the venture Feuer’s own method for making diffi- moving forward with rapid yet thoughtful decisions cult choices is to follow the time-tested formula of ready, aim, fire. He takes emotion out of the equation, gathers FTEN, the biggest road- tunities. Absolutely, you respect the people the facts, decides where he wants to go, block to execution at com- on your team, but you also realize the and determines how to get there. panies is consensus. Leaders point when talking must come to an end “After OfficeMax’s first year, we’d actu- spend valuable time and and the decision must be made.” ally grown nicely and were operating stores money trying to get every- He suggests these benevolent dicta- in Ohio, New York and Michigan,” Feuer Oone on board with a decision, and end up tor decision-making tips: said. “Better yet, we’d done so with no real stalled in a state of extended debate – aka casualties and just a few wounds. In hind- analysis paralysis. But in today’s business Learn to make “battlefield” decisions sight, the key to that first year’s success was environment, it’s those who can make Being a leader in business is somewhat our ability to make on-the-run decisions speedy (yet thoughtful) decisions – in like being a battlefield commander – rather than conduct lengthy analysis that hours, days or weeks instead of months – things happen quickly, and many of would have meant waiting weeks – if not who not only survive but excel. them are outside your control. months – before taking the next step. I Michael Feuer (pronounced “foyer”) “Generals and general managers are learned a few things that helped me make says it’s important for leaders to make a lot alike,” Feuer said. “Neither group choices that were as smart and calculated well-informed, wise decisions, but it’s always has the luxury of going over as possible, given the circumstances. also crucial to know when it’s time to “One doesn’t always have to be 100 stop talking and start acting. percent sure to make a decent decision; “The job of an entrepreneur, man- you just have to have a good sense some- ager or CEO is to say, ‘We’re taking this thing will work. The ‘smell test’ is one of fork in the road, for better or worse, the best tools to use if you aren’t posi- and it’s on my head,’ ” said Feuer, tive about a decision; essentially, that cofounder and former CEO of Office- means if something doesn’t ‘smell’ Max and author of the new book “The (feel) right to you, it most likely isn’t Benevolent Dictator: Empower Your going to work, so take a pass.” Employees, Build Your Business, and Leading benevolently means never Outwit the Competition” (Wiley, 2011, having to say you’re sorry. Sometimes ISBN: 978-1-118-00391-6, $24.95, www. when leaders must quickly put their benevolentdictator.biz). “It’s this deci- decisions into practice, they feel like the sion-making responsibility and the schoolyard bully. But, as Feuer explains, pressure that comes with it that causes that’s where the benevolent side of your leaders to constantly go to their teams leadership must kick in. for input. Unfortunately, doing so Being a benevolent dictator may sound leads to analysis paralysis or plain old- autocratic, but when the emphasis is on fashioned inertia.” the benevolent portion, meaning you’re Treading water is fine until exhaustion doing what is right for the greater good, sets in, and you begin to sink. When you the odds for success move in your favor. spend too much time trying to build con- every little detail or asking their people “In OfficeMax’s early days, I was mak- sensus, you fail to accomplish anything what they think should happen. They ing a lot of quick decisions without con- that moves the venture forward, which will have to move fast; they have to think on sulting the team,” Feuer said. “During this lead inevitably downward. their feet. To take advantage of a com- time I remembered the quote from the Success today means executing petitor’s weakness, you have to be able movie ‘Love Story’: ‘Love means never quickly and effectively. In his book, to move quickly, and you can’t do that if having to say you’re sorry.’ I thought this Feuer writes sometimes it’s best to put you spend too much time trying to fig- would be the perfect preface for strong- consensus aside and “just do it.” He ure out what every last person on the armed decisions, and gave my team a presents a leadership style – being a team thinks. quick synopsis of the movie and the back- benevolent dictator – that combines “At OfficeMax, when we had to move ground behind the statement. After the appreciation for consensus and the from mind to market and implement tutorial, I would occasionally use the line input of the team with the ability to rec- must-make changes, I didn’t have the when I knew I’d been aggressive in mak- ognize when debate, conversation and luxury of time to build consensus and ing a decision. analysis can take you no further. sway everyone over to my position on “I also always made it clear to my “When you’re an entrepreneur and a what would work and what wouldn’t. I employees how much I appreciated and leader, make-or-break decisions are made had to, out of necessity, make many pro- valued them. During high-stress peri- on a daily basis,” Feuer said. “There’s just nouncements that became gospel. It ods, I would explain, ‘You know the no way around it. When you lead as a wasn’t that my decisions were always bet- next few days are critical for us, so if I benevolent dictator, you can move faster ter than someone else’s. I simply knew ask for something, infer that I said than the competition and save time, that a decision had to be made, and “please,” and when you do it, know that money and energy to capitalize on oppor- there wasn’t time for debate. I knew that I mean “thank you.” ’ ”

34 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 21-44.indd 34 11/30/12 12:02 PM Avoid the b.s. and consensus building in an attempt to Michael Feuer cofounded OfficeMax People are willing to do just about any- have ‘zero risk,’ ” explains Feuer. “But in 1988 with $20,000, a partner and thing for their leader as long as he is you’ll never be 100 percent guaranteed a small group of investors. He grew it to 1,000-plus stores and $5 billion in honest about his intentions and avoids to succeed – you’ll be stuck studying, sales. He is CEO of the Max-Ventures falling back on an excuse for why he researching and consensus building in a venture capital and retail consulting wasn’t able to use an employee’s idea circular fashion. Continued delays and firm, and founder/CEO of Max-Wellness, a health or ask for others’ opinions on a certain can doom a project from ever getting and wellness retail chain launched in 2010. decision. off the ground. Remember that you “Most of my team members accepted must always be moving forward – there’s this allowed me to hit the ground run- the ground rules that came along with no such thing as a pause button or ning every morning. I’d be at my desk at my being a benevolent dictator,” Feuer instant replay in business!” 7:30 a.m. ready to tackle whatever came said. “They understood there would be my way.” situations where I couldn’t open a deci- Sleep on it sion up for debate or would have to rein There will, of course, be decisions that Make decisions for the love of the company in a discussion. Most of them appreci- require analysis and deep thinking. When you do what is right for the com- ated this directness because they Often, the best way to work out these pany, not just to please this or that respected and understood that we problems is to put your subconscious group, then you’re halfway there in needed to forge ahead quickly.” to work. making your undertaking work. “At all “Soon after launching OfficeMax, I costs, avoid making decisions based on Beware the desire for ‘zero risk’ started thinking about some of my big- how they will affect the ‘us’ or ‘them’ Analyzing data and making informed gest challenges right before going to groups in the company,” Feuer urges. decisions is good. The problems start bed,” Feuer recalls. “I had read a lot “Business is not a popularity con- when analysis is used as a crutch to about subconscious and subliminal test,” Feuer concludes. “To make your avoid pulling the trigger. You second- thinking, and had determined that if I move, you must listen and learn. Always guess yourself and give more and more focused on a problem, my subconscious study the consequences of your deci- thought to “what ifs” … and before you would help me come up with plans A, B sions from all perspectives – short- know it, you’ve lost the use of speed as a and C. Amazingly, I would wake up after term, intermediate-term, and competitive advantage. The team four or five hours of sleep and presto – I long-term – but learn to do so quickly becomes terrified to move forward. would have answers (or at least possible and effectively. As time goes by, you’ll “Some entrepreneurs and business answers) to the problems I had been become better and more comfortable leaders get stuck in analysis paralysis pondering when I went to bed. Doing with making smart decisions.” ■

Stay on top The Lane Report, Kentucky’s monthly business news magazine, serves people across the commonwealth who are passionate about leading our economic resurgence. People with a single-minded focus on winning strategy and flawless execution. The Lane Report can help you “stay on top” in a dynamic new economy. Visit lanereport.com/subscribe to sign up. The Lane Report ® Where the news is made by the readers. lanereport.com

TLR-12100December Lane HalfPageAd.indd 21-44.indd 35 1 11/30/1211/1/12 12:02 1:21 PMPM GOING GREEN

Trane at Norton Suburban Hospital in Louisville led to annual utility savings of $460,000, a 40 percent decrease. The hospital had grappled with an aging and unreliable central utility plant that made temperature monitoring difficult – affecting patient and employee com- fort – and led to excessive utility bills. The improvements included “Intelli- gent Services” monitoring – which allows staff to adjust temperatures remotely and to customize tempera- tures for common areas, patient rooms and offices. The use of Intelligent Ser- vices also led to a 75 percent decline in customer comfort complaints at Clark Memorial Hospital in Clarksville, Ind. At the 3M plant in Cynthiana, Har- shaw Trane conducted an energy audit and created a custom energy-reduction plan to meet the differing needs of plant spaces, such as offices used five days a week and other areas that require 24/7 operation. The improvements enable 3M staff to monitor energy data on a web-based dashboard, which staff can adjust as needed to minimize energy consumption. Estimated energy savings of $235,000 are expected in the first year of the project, completed on April 1. In Shepherdsville, Bullitt County Public Schools faced imminent HVAC failures at three of its elementary schools and one middle school. Har- shaw Trane completed an HVAC retrofit WASTED ENERGY EQUALS OPPORTUNITY in the four schools and also made Most 10-year-old buildings can cut costs 20% via common upgrades changes districtwide, including lighting retrofits and installation of Intelligent Services monitoring. Bullitt County BY TY VIERLING Public Schools received eight Energy Star awards as a result. The four schools decreased energy use by 13 percent, HE buildings where we work, shop For existing buildings, the greatest and the overall improvements are and attend school consume $200 energy savings generally are achieved expected to save the district nearly Tbillion in energy each year, accord- through upgrades to HVAC, plumbing $400,000 annually – leaving more ing to the U.S. Department of Energy. and lighting systems; for five- to 10-year- money for education-focused efforts, Yet about a third of that expense can be old facilities, a 20 percent reduction in including hiring teachers. attributed to wasted energy. In response, energy usage is common. For new con- We encourage Kentucky business the Department of Energy has created struction, the initial cost of building to leaders to take the Better Buildings the Better Buildings Challenge with the greater energy efficiency standards (i.e. Challenge, which starts by committing goal of “making American commercial Energy Star or LEED) may initially seem to reduce energy spending by at least 20 and industrial buildings at least 20 per- high, but the Natural Resources percent by 2020. The goals of the Chal- cent more efficient by 2020.” Defense Council notes that upfront lenge are attainable, as illustrated in the The Better Buildings Challenge is costs of green building can be as low as examples from Kentucky businesses. vital to our nation’s future. A national 2 percent more. It is important to con- More than 100 U.S. companies and commitment to auditing energy usage sider more than the initial cost. Of far other entities have committed to date, and installing systems that use energy greater concern are the operational including the Kentucky Community and more efficiently can reduce America’s costs during a building’s lifecycle, which Technical College System, 3M, Alcoa dependency on foreign oil, decrease account for 60 to 85 percent of its life- and Ascension Health. For more infor- emissions and save money – money that time costs. By designing energy-efficient mation about the Challenge, visit www4. can be invested in technologies and new buildings and customized solutions, sig- eere.energy.gov/challenge. ■ business and used to create new jobs. By nificant savings are possible and prioritizing the issue of energy effi- achieved with practical returns on the Ty Vierling is energy services leader at ciency, business leaders can focus on investment(s). Recent examples in Ken- Harshaw Trane, a building technology growing their businesses rather than tucky include: and energy services provider based in Louisville with offices in Kentucky dealing with shrinking budgets due to The new central utility plant and Indiana. wasted energy and rising energy prices. designed and installed by Harshaw

36 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 21-44.indd 36 11/30/12 12:08 PM THE LANE LIST

TOP ARCHITECTURAL DESIGNS IN KENTUCKY FOR 2012 CITATION FOR EXCELLENCE N November, eight architectural proj- IN ARCHITECTURAL DESIGN: ects were recognized as the best of Shawnee Library addition and renovation, Louisville I2012 by the Kentucky Society of Archi- Architect of Record: Luckett & Farley Architects, tects (AIA Kentucky), a chapter of The Engineers & Interior Designers, Louisville American Institute of Architects. A jury Design Architect: MS&R Architects, issued five Honor Awards and two cita- Minneapolis, Minn. tions for Excellence in Architectural Owner: Louisville Free Public Library, Design, and one citation for Technical Louisville Jefferson County Metro Government Merit. Eight special awards of recogni- tion also were presented.

HONOR AWARD: s-ky blue solarhouse, Lexington Architect: Gregory Luhan, AIA – Luhan Studio, Lexington Design Team: University of Kentucky – s-ky blue solarhouse team Owner: University of Kentucky

CITATION FOR TECHNICAL MERIT IN TERRA COTTA RESTORATION: TrusT Lounge, Lexington Architect: GRW, Inc., Lexington Owner: Andy Shea

THE JURY HONOR AWARD: Meadow View Rich Varda, FAIA, ASLA (chairman), senior Cemetery Pavilion, Louisville vice president of store design for Target, Min- Architect: JRA Architects, Louisville neapolis; E. Tim Carl, AIA, LEED AP, design Owner: Metro Parks principal, HGA Architects and Engineers, HONOR AWARD: Minneapolis; Thomas J. DeAngelo FAIA, Market Street Barbers, Louisville Architectural Alliance, Minneapolis; Julie Architect: Architectural Artisans, Louisville VandenBerg Snow, FAIA, principal, Julie Owner: Market Street Barbers, Inc. Snow Architects, Inc., Minneapolis.

The jury evaluated each project based on the suc- cess with which the project met its own individual requirements. It considered energy efficiency and accessibility to persons with disabilities, as well as functional utility, economy, environmental HONOR AWARD: harmony and attention to the social concerns of Jx2 House, Lexington the profession. Architects: Margaret Jacobs, AIA and Michael Jacobs, AIA SPECIAL AWARDS OF RECOGNITION Owner: Withheld at owner’s request C. Julian Oberwarth Award: H. Gibbs Reese, AIA (Reese Design Collaborative, Louisville) Distinguished Firm Award: Arrasmith, Judd, Rapp, Chovan, Inc., Louisville Distinguished Service Award: Alvin J. Cox, AIA of Cox Allen & Associates, Louisville Distinguished Service Award: Wayne M. Meyer, AIA, of Arcodect Code Consulting, Florence Emerging Professional Award: Jonothan C. “Chris” Bowling, AIA, of K. Norman Berry CITATION FOR EXCELLENCE Associates, Louisville IN ARCHITECTURAL DESIGN: John Russell Groves Citizens Laureate Award: Urban Active Fitness at Polaris, Patricia A. Clare, deputy director of Louis- HONOR AWARD: Columbus, OH ville Metro Economic Growth & Innovation Private residence, Louisville Architect: EOP Architects, Honorary Membership: David K. Karem, pres- Architect: De Leon & Primmer Architecture Lexington ident of Waterfront Development Corp., Workshop, Louisville Owner: P&P Real Estate Louisville Owner: Withheld at owner’s request Allied Professional Award: George Mann, retired deputy commissioner of Kentucky Department of Housing, Buildings and Con- struction, Frankfort

THE LANE REPORT • LANEREPORT.COM DECEMBER 2012 37

December Lane 21-44.indd 37 11/30/12 12:02 PM EXPLORING KENTUCKY

Cliffview Resort commands great views of the Cowan Fork area of the Red River Gorge .

Gorge Away! Cliffview Lodge (888) 596-0525 cliffviewresort.com Marks Mountain BBQ (606) 668-6441 Miguel’s Pizza (606) 663-1975 miguelspizza.com Red River Gorge Zipline (888) 605-2609 redrivergorgezipline.com Red River Outdoors (859) 230-3567 redriveroutdoors.com

An attached 125-attendee confer- ence center and banquet hall with a fully equipped kitchen is included in a buyout of the lodge. Open all year, the resort can arrange meeting speakers, storytellers and catering for as many meals as a group requires or guests can choose to fire up an enormous commer- cial gas grill for a cookout extraordi- A Place to Reconnect and Refocus naire. For smaller groups, Cliffview Manor, Red River Gorge lodge provides an ideal setting for corporate retreats a 2,400-s.f. four-bedroom cabin, can sleep 15 people. Crowning a hilltop, this BY KATHERINE TANDY BROWN authentic log structure commands a panoramic view of a gorgeous mountain valley. It, too, has a great room, dining ESTLED in Eastern Kentucky’s the views are awesome. It’s easy to get a room and kitchen, plus a wrap-around Appalachians is a corporate retreat team to focus when they’re out of the deck and an outdoor sunroom and hot Nthat brings new meaning to the city hustle-bustle in a rustic lodge with tub for relaxing amid spectacular views. term “off site.” Surrounded by the dense beautiful scenery.” Even more private are 30-plus cabins evergreens and hardwoods of Daniel The area’s largest log structure, of varying sizes scattered in the hills Boone National Forest, limestone cliffs Cliffview’s Lodge commands a spectacular nearby. Many are hidden in the trees. that draw rock climbers from around the view of Cowan Fork Gorge and has 16 Also on the property is an 800-s.f. world, and wildlife galore, Cliffview Lodge rooms; two are suites that can connect, for activity and event center that can seat is way off site and is an ideal place to clear a maximum sleeping capacity of 64. Most 225 – complete with an exhibit hall for a the workplace cobwebs for management guestrooms, which have flat-screen TVs trade show and dance floor capacity – and employees alike. but no phones, connect by sliding glass and a heliport. The space is roomy “Our resort is remote, yet it’s only an doors to a wide wrap-around porch with enough that a car-related meeting hour’s drive from Lexington,” said comfy rockers and swings for quality star- brought several vehicles in for display. Blake Bookstaff, who has been the co- ing-into-space time. A great room features This center’s wrap-around is a veranda owner of Cliffview Resort near Campton a massive stone fireplace surrounded by with the same stunning views. with his dad, Jim, since 2005. “We’re handmade log furniture, a country The resort’s menu of meeting areas tucked in the Red River Gorge area and kitchen and a dining room. and lodgings is broad and groups can rent

Celebrate the Season at Kentucky State Parks.

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38 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT 3.5x2_Gift Card ad.indd 1 11/28/12 3:50 PM

December Lane 21-44.indd 38 11/30/12 12:02 PM each separately or lease the whole she- National Wild and Scenic River, the bang by the day or for an extended period. mighty Red. Also nearby, Torrent Falls Packages can include meeting space, lodg- Climbing Adventure, open March ing, zipline and rock-climbing tours, other through November, offers the nation’s activities and/or catering. first Via Ferrata, a system that aids rock “Whatever a client’s needs are or climbers by using cables and hand and whatever budget they’re working with, foot rungs, making the learning process we’ll do our best to make it work,” said easy for first-timers. Bookstaff. “We’re very flexible.” In addition, Cliffview can arrange Team-building options focus on com- group yoga classes, horseback riding, muning with nature. Red River Out- hiking, fishing (catch and release) and, doors, an experienced outfitter that is since July of 2011, ziplining. Right next 20 minutes away, leads guided rock- to the lodge, Red River Gorge Zipline Ziplining is increasing in popularity in Red River Gorge, combining spectacular climbing expeditions and canoeing and (RRGZ) is a part of the new Zip the views and excitement. kayaking trips on the state’s only Bluegrass trail that currently includes five in-state ziplines and is open year- round. This company’s tours on five ziplines last two to three hours. such favorites as hickory-smoked pulled “The first three are through the tree pork and barbecued chicken. Or groups canopy, evergreens and hardwoods, where can discover the seasoned rock climbers’ you always see wildlife, with tons of photo culinary nirvana, Miguel’s Pizza and Rock ops,” said Nancy Griffin, RRGZ represen- Climbing Shop, a fixture near Natural tative. “After that, you climb to 300 feet or Bridge State Park in Slade since 1984, for more, going up to 55 miles per hour and anyway-you-want-‘em, to-die-for home- can see the cliffs the gorge is famous for. made pizzas. As many times as I’ve taken the zip line, it All in all, says Bookstaff, Cliffview still takes my breath away.” Resort is a one-stop, meeting planner’s When attendees have zipped, climbed, dream, set smack in the middle of some paddled, galloped and bonded with their of Kentucky’s loveliest lands. ■ teammates, Marks Mountain BBQ, a The log Cliffview Manor can sleep 15 and has a Gorge favorite now located at Cliffview, Katherine Tandy Brown is a correspondent for The Lane panoramic view from its wraparound porch. can sate a mountain-sized appetite with Report. She can be reached at [email protected].

THE LANE REPORT • LANEREPORT.COM DECEMBER 2012 39

December Lane 21-44.indd 39 11/30/12 12:02 PM SPOTLIGHT ON THE ARTS

New Grant Program Will Support Access to the Arts for Underserved Populations new Arts Access Assistance Grant program will support programming for spe- cific underserved Kentucky populations each year. The first round of grants A will target people 65 and older. The grant theme for the 2013-14 fiscal year is “Creative aging and lifelong learn- ing.” Eligible projects will use arts to directly serve individuals or communities with a majority of people who are 65 and older. “One of the main functions of the arts council is to provide opportunities in the arts for all Kentuckians,” said Lori Meadows, executive director of the Kentucky Arts A metal and ceramic work by Steve Heartsill, one Council, which is launching the effort. “Factors like age, geographic location, ethnic- of 18 artists added to the Kentucky Crafted roster. ity, economic status, disability and many others, can decrease a person’s access to the arts. The Arts Council wants to reduce those obstructions any way we can.” 18 Artists Added to Groups eligible to apply include: • Public libraries, extension offices, social service agencies, health departments Kentucky Crafted and community-based organizations • Nonprofit organizations with 501(c) 3 status Program Roster • Government agency and higher-education projects primarily serving the theme population NOTHER 18 artists have adjudi- • For-profit social service agencies with resident populations (nursing homes, cated into the Kentucky Crafted mental health facilities, independent living centers, group homes, etc.) and correc- program, bringing the total to tional facilities. A more than 400 in the Kentucky Arts Council’s marketing assistance program. The new artists are: Kentucky Arts Council Board Chairman • Pamela Clegg, Fine Art by Pamela Clegg, Georgetown Elected to Serve on National Arts Board • Ed Newell, photography, Win- chester ENTUCKY Arts Council Board Chairman Todd Lowe has been • Cathie Brown, My New Purse, Rich- elected to a three-year term on the National Assembly of State mond KArts Agencies board of directors. Lowe, of Louisville, has been a • Mary Rezny, photography/paper, state Arts Council board member and chairman since 2005. Lexington “It is a privilege to serve on the NASAA board and represent the • Tracey Buchanan, Tracey interests of the 56 state and jurisdictional arts agencies in the nation,” Buchanan Studio, Paducah Todd Lowe Lowe said. “The arts contribute to and enrich the lives of all Ameri- • Sherrie Cocanougher, Bobcat Hol- cans. I will work to preserve and fortify the impact our individual state low Beadery, Danville arts agencies make through their work every day.” • Melissa Oesch, ReImagined by Lowe is president and founder of the Parthenon LLC investment advisory firm Luna, Lexington and previously was senior vice president of J.J.B. Hilliard, W.L. Lyons Inc. He is past • Ron Cooper, Ron Cooper Stone & president of the Partnership for Creative Economies in Metro Louisville; president- Wood Craftsman, Mount Vernon elect of Actors Theatre of Louisville; immediate past chair of The Speed Art Museum • Jason Cohen, jc woodartisan, board of trustees; and immediate past chair of the South Arts governing board. Louisville • John Hockensmith, Fine Art Edi- tions, Georgetown Arts Events Around the State • Cathy Ridge, Designs by Cathy Wade, Prospect NUDE – Self and Others The Threads that Bind: • James O’Brian, Chicken Feather Lexington Art League, Lexington Textile Works by Kentucky Artisans Woods, Louisa Jan. 11-March 10, 2013 Kentucky Artisan Center at Berea • Mary Kinney, Kinney Studio, Old- [email protected] Through Feb. 23 ham County (859) 254-7024 kentuckyartisancenter.ky.gov • Christopher Krauskopf, Classic (859) 985-5448 Hair Matters … Live Curly Woodworking, Louisville presents “A Gathering of Queens” Tribute to the Boston Pops: • Brian and Sara Turner, Cricket Lyric Theatre & Cultural Arts Center, Louisville Orchestra Press, Lexington Lexington The Kentucky Center for the Performing Arts • Steve Heartsill, Steve Heartsill 12-6 p.m., Jan. 26 Whitney Hall, Louisville Ceramic & Metal Design, Lexington lexingtonlyric.com 8 p.m., Jan. 26 • Walter Lay, wood, Louisville (859) 280-2201 kentuckycenter.org • Dan and Ida Barbee, Bluegrass (502) 562-0100 Beauty and the Beast Country Soap, Georgetown Paramount Arts Center, Ashland Themes and Variations 7 p.m., Jan. 10 in Judy Martin’s Quilts paramountartscenter.com The National Quilt Museum, Paducah (606) 324-3175 Through March 11 Lori Meadows is executive director quiltmuseum.org of the Kentucky Arts Council. (270) 442-8856

40 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 21-44.indd 40 11/30/12 12:02 PM SALES

means the customer receives before buy- DO YOU HEAR WHAT I HEAR? ing. Give value – don’t add value. My marketing philosophy and strat- What is the most misused word in the world of sales? egy is: I give value first. I put myself in front of people that can say “yes” to me BY JEFFREY GITOMER and I deliver value first. Doing that cre- ates “value attraction” – it’s the real law of attraction. HE most misused word in sales will • Do I have to buy something to get Providing continuous, value-based surprise you. It’s “value.” the value offered? information after the sale ensures loyalty. T Value is a misguided, misused, • Is there a pitch at the end of the Here are some specific examples of maligned word, whose meaning has free valuable information? before and after the sale “value ideas.” gone fallow. It is used without meaning, • Am I required to do something in Think about these and then create understanding and implication. It’s ban- exchange for the value? your own. tered about in a way that customers • Am I stating value in terms of me, • Sharing industry best practices. (including yours) are becoming numb my company or my products? • Manufacturing components and to anything related to the word. offering plant safety tips. Value has become an empty buzz- • Medical devices to doctors and word – it’s like the word paradigm, only teaching bedside manner. dumber, because you can’t define value The customer’s perception • Teaching clerks how to close sales in terms of the customer if your life of value is your reality and when a customer comes in to buy using depended on it. the customer’s perception your coupon or voucher. The reality is, when you print or is all that matters. • Office supplies and teaching cus- speak the word value, it’s usually from tomer service to receptionists and your perspective. Your self-defined accounting. value. The value you put on your prod- • Anything in favor of your customer uct or service, your value statement, If any of these questions are that helps them increase productivity, your value proposition, your added- answered in the affirmative, then the communication, operations, morale value, or worse (the slang that no one value you’re offering is perceived as and especially profit. can define), your “value-add.” negative. If you really want to deliver value, ask The grim reality is, whether implied, If you have a Value Proposition (most your customer what he or she considers given, added, printed or spoken, the companies do), and you talk about it as valuable. Whatever they say, do that, key word that makes “value” both mis- your “value prop,” it’s probably self-serv- offer that, share that, communicate used and misunderstood is perceived. If ing. My advice is: get rid of it and create a that, teach that, print that and say that. the customer or prospect does not per- new one. A value proposition is not about In a nutshell, that’s value. Real value. ceive value, no matter what you say, who you are, what you do or what your Value perceived. ■ there is none. The customer’s percep- benefits are – rather it’s how the cus- tion of value is your reality and the cus- tomer wins. Value must be expressed in tomer’s perception is all that matters. terms of them. Your sales hang in the balance. “Added value” is a phrase that makes Jeffrey Gitomer salesman@ gitomer.com) Ask yourself these questions to dis- my blood pressure rise. Don’t add value, is the author of The Sales Bible. cover if there’s any real value in your give value. Big difference. Adding value offering: implies you have to “buy to get.” Giving

THE LANE REPORT • LANEREPORT.COM DECEMBER 2012 41

December Lane 21-44.indd 41 11/30/12 12:02 PM PASSING LANE Commentary on Kentucky

Girl Scouts Honor ‘100 Kentucky Women of Distinction’

OR 100 years, Girl Scouts of the activist and author who founded the Ken- Micki King, former UK assistant athletic USA has inspired girls to find the tucky Foundation for Women; political director and two-time Olympic diver; Bar- Fleader within. cartoonist Linda Boileau; Helen Carroll, bara Kingsolver, author and poet whose To celebrate the centennial, the Wil- manager of community relations with Toy- books (since 1993) have derness Road Council of Girl Scouts of ota Motor Engineering & Manufacturing been on the New York Kentucky honored 100 Kentucky North America; Virginia Carter, executive Times Bestseller list; women who are positive role models for director of the Kentucky Humanities Reese Koffler Stanfield, young ladies across the commonwealth Council, Inc., and developer of the Ken- a United States Dressage and who have made a significant contri- tucky Chautauqua program; Federation medalist; bution to the lives of Kentuckians in Alice Headley Chandler, owner of authors George Ella Lyon northern, central and eastern Kentucky. Mill Ridge farm; Judith G. Clabes, for- and Bobbie Ann Mason; Micki The 100 Kentucky Women of Distinc- mer editor of The Kentucky Post who con- Pam Miller, former King tion have distinguished themselves in poli- ceived and saw to fruition the building of mayor of Lexington; tics, public service, medicine, the creative the Scripps Howard School of Journalism; Penny Miller (Harris), and performing arts, litera- quilter Jane Burch Cochran, whose work board member of the ture, science, communica- is displayed in the Smithsonian Museum; White House Commission tions, social service, Sara W. Combs, the first judge from the on Presidential Scholars agriculture and equine, eastern Kentucky counties of the 7th and the Kentucky Long- civil rights, philanthropy Appellate District to serve as chief judge of Term Policy Research Cen- and more. Thirty-three his- the Kentucky Court of Appeals and the ter; , the Barbara Pamela Mullins Kingsolver toric women were included first woman to serve on the Supreme Court first African-American on the list. Jane of Kentucky; Jockey Patri- woman elected to the Covington City Beshear Among the living hon- cia “PJ” Cooksey, who Commission (1997); Jacqueline orees were First Lady Jane had 2,137 wins; Diane Noonan, who discovered the Noonan Beshear; Ellen Calipari, Crump, the first female Heart Syndrome and helped establish the wife of and UK basketball jockey to ride in the Ken- Kentucky Children’s Hospital; Nicki Pat- coach John Calipari; Mary tucky Derby; ton, chairwoman of the Kentucky Demo- Lynne Capilouto, wife of Linda Scott DeRosier, cratic Party and the Governor’s Early UK President Eli Capi- who served as director of P.J. Childhood Task Force; louto; ; for- the Center for Research in Cooksey Wood artist ; Nina Clooney Gov. Martha Susan Pfeifferis Geor- mer Gov. Martha Layne Layne Collins Education and Psychology gia Davis Powers, the first African- Collins, the state’s first at Kentucky State Univer- American elected to the Kentucky Senate and only female governor; sity; Bennie Doggett, a in 1968; Lillian Press, who helped country music singers Covington social worker develop Kentucky’s first Regional Mental Crystal Gayle, Patty inducted into the Ken- Health Board and establish the first two Loveless and Loretta tucky Civil Rights Hall of Comprehensive Care Centers in Ken- Lynn; Heather French Fame; Sharon B. Fields, Nikky tucky; Charlotte Richardson, a Native Henry, Miss America 2000; the first African-American Finney American history teacher who served on the Judds – Naomi, Wyn- Heather woman to become a city the Native American Heritage Commis- onna and Ashley; former French Henry commissioner in Paris; sion; Julia Link Roberts, executive direc- state auditor Crit Luallen; Nikky Finney, a poet who tor of The Center for Gifted Studies and and Leslie Phillips, wife recently received the the Carol Martin Gatton Academy of of former UK football National Book Award for Mathematics and Science; Kristin Ropp, coach Joker Phillips. Poetry; Virginia Fox, for- vice president and general manager of Other living honorees mer secretary of the Ken- Virginia the Cincinnati Cyclones hockey team; include: tucky Education Cabinet Fox Diane Snow, professor of neuroscience Josephine Abercrom- and CEO of KET and the in the UK College of Medicine; Alice Ste- bine, founder of Pin Oak Crit National Educational Telecommunica- vens Sparks, president and CEO of SSK Stud in Versailles; Helen Luallen tions Association; Company Communities; Alexander, who estab- Laura Freeman, owner/creator of Jane Stephenson, founder of the lished Middlebrook Farm Laura’s Lean Beef; Akiko Gothard, thor- New Opportunity School for Women; in 1984 with her mother oughbred bloodstock agent, insurance Patsy Todd, UK’s first lady from 2001 and sisters; Ann Stewart agent, owner and trainer; Sandy Hatfield, until 2011; Lexington police officer Deb- Anderson, executive stallion manager for Three Chimneys bie Wagner; author and social activist director of the Kentucky Farm; activist Eula Hall, founder of the Gloria Jean Watkins, a.k.a. bell hooks; Foundation for Women; Mud Creek Clinic in Grethel; Debra Hens- Beverly L. Watts, former director of the Mira Snider Ball, CFO for Helen ley, owner of Hensley Agency of State Kentucky Commission on Human Rights; Alexander Ball Homes, which she Farm Insurance Companies; Nancy Hol- Ellen Williams, former Kentucky Republi- founded with her husband liday, general manager of Microsoft; Eliz- can Party chairman and owner of a govern- in 1959; Nelda Barton-Collings, busi- abeth L. (Libby) Jones, co-owner and ment affairs and lobbying firm; and Isabel nesswoman and five-time Kentucky dele- partner in operations at Airdrie Farm in Yates, a former LFUCG council member gate to the Republican National Woodford County; Sheila Kavanaugh, who is heading the campaign to restore the Committee; Sallie Bingham, feminist vice president of TKT and Associates, Inc.; historic Kentucky Theater in Lexington..

42 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

December Lane 21-44.indd 42 11/30/12 12:02 PM Hard Work Gets Forcht, Geary, Lunsford photo Staff into Entrepreneur Hall of Fame IVE a round of applause to the the developmentally challenged. An latest class inducted into the accountant and attorney, Geary was reve- GKentucky Entrepreneur Hall of nue secretary in Gov. John Y. Brown’s Fame. They deserve that and more. Suc- administration. He headed Cincinnati cessful entrepreneurs create the biggest, Bible College before joining ResCare and best economic impact a community, now is president and owner of Ellis Park Ron Geary, from left, Bruce Lunsford region or state experiences, and they do Race Track in Henderson. and Terry Forcht it by relentless hard word and willing- Bruce Lunsford founded Vencor ness to take a risk. Inc. He grew it into a Fortune 500 health- Marksbury, co-founder of Exstream Soft- Organizers of the three-year-old Hall care company that today is Kindred ware; Warren Rosenthal, who helped of Fame celebrated and inducted three Healthcare. During his 15-year tenure, build Long John Silver’s; John Schnatter, new members at ceremonies Nov. 13 in Vencor became the largest full-service, founder of Papa John’s International Lexington at Awesome Inc., which is long-term healthcare provider in the pizza; Lee Todd, founder of Projectron itself an entrepreneurship incubator. United States with 61 hospitals, 293 nurs- and DataBeam technology firms and for- The three are: ing centers and 65,000 employees. His mer University of Kentucky president; and Terry Forcht is founder, chairman Lunsford Capital LLC now invests in and the late William T. Young Sr., founder of and CEO of the Forcht Group. Its 95 com- advises a variety of start-ups, produces W.T. Young Foods, which created Jif pea- panies include banks, finance companies, independent films and owns Thorough- nut butter, and W.T. Young Storage Co. nursing homes, radio stations, insurance, breds. Lunsford also is a CPA and attor- The 2011 inductees were: Dana real estate, construction, newspapers and ney and served in the Brown Bowers, co-founder of iPay Technolo- more. The 35 banking centers have more administration as commerce secretary. gies electronic bill-payment provider, in than $1 billion in assets. An MBA and an The inaugural inductees in 2010 were: Elizabethtown; David Jones Sr. and attorney, Forcht began his career as a col- the late Ralph G. Anderson, founder of the late Wendell Cherry, co-founders lege business professor. engineering firm Belcan; Gov. John Y. of Fortune 500 health insurer Humana; Ron Geary took specialty human ser- Brown Jr., who built KFC into a national Kent Taylor, founder of Texas Road- vice business ResCare from near bank- chain; Jim Host, founder of sports mar- house; and Bill Samuels Jr., former ruptcy into a public company a few years keting firm Host Communications; president of Maker’s Mark, which later. It now employs about 40,000 helping Pearse Lyons, founder of Alltech; Davis launched the premium bourbon sector. Alltech Founder Honored for Midway College Names Connecting Irish, U.S. Business Marsden its 10th President RISH-born entrepreneur Dr. Pearse Lyons says the Irish are instilled FTER a six-month national search, Iwith a fiery passion that carries over the Midway College Board of Trust- into everything they do, “from making Aees has named Dr. John P. Marsden fine whiskey to conducting business the 10th president of the institution. with countries abroad.” Marsden was one of three finalists who His dream of building a top animal visited the campus in October and met nutrition company was fueled by the with members of the board of trustees, passion he inherited from the Irish, staff, faculty, students, alumni and commu- Dr. John P. Marsden Dr. Pearse Lyons, center, “but took flight in America, a land of nity members. He and his wife, Margaret, accepts the Irish-U.S. Council’s Outstanding great opportunity,” Lyons said. and their son will be relocating from Wilson, N.C., where Achievement Award from “During the past 30 years, it’s he serves as provost and vice president of academic affairs Dennis D. Swanson, left, been my pleasure to watch our sto- at Barton College. He will officially begin his tenure Feb. president of the council, and ries become intertwined as we work 1, 2013. Noel Kilkennuy, Ireland’s together to achieve economic “We (the board) truly believe Marsden’s experience, Consul-General in New York. growth and stability,” he said. academic background and personality are a great match Last month, the Ireland-U.S. Council honored Lyons for for Midway College and that he will build on our current strengthening the economic ties between the U.S. and Ireland, momentum and help develop and implement a long-term presenting him with the council’s Award for Outstanding strategic plan for the college,” said Donna Moore, board Achievement at its annual dinner in New York City. member and chairperson of the search committee. “Pearse Lyons has built an impressive enterprise that has its Midway has a long tradition of providing students with roots in Ireland but scored its early dramatic growth in the a professionally-oriented liberal arts education that pre- United States,” said Dennis Swanson, the president of the Ire- pares them for lives of leadership, service, and responsi- land-US Council based in New York. ble citizenship, Marsden said. A native of Dundalk, County Louth, Ireland, Lyons worked as a “I am enthusiastic about the opportunity to collabora- biochemist at Irish distilleries before establishing Alltech in 1980. In tively build a vision for the college based on its solid foun- the past 32 years, Alltech has grown to employ 2,800 people and dation,” he said. conduct business in 128 countries, with annual sales of $750 million.

THE LANE REPORT • LANEREPORT.COM DECEMBER 2012 43

December Lane 21-44.indd 43 11/30/12 12:02 PM KENTUCKY PEOPLE PIKEVILLE: HALE HONORED LEXINGTON: UK GATTON STUDENTS TRIUMPH AT AS ONE OF NATION’S WALL STREET JOURNAL NATIONAL BUSINESS QUIZ MOST POWERFUL BANKERS

Three University of Kentucky Gatton College of Business and Economics students formed the winning team at the annual Wall Street Journal National Biz Quiz competition, hosted by The Ohio State University last month. Bert Smith, Ryan McFerran and Scott Deschamp competed against students from 17 other top business schools across the nation, including Carnegie Mellon, Emory, Maryland, Michigan, North Carolina, Notre Dame, Purdue and Texas. The group brought home the team title while Smith took top honors individually. Pictured here are (left to right) Gordon Holbein, senior lecturer and team coach; Julie Spizzirri, Jean R. Hale, chairman, president and CEO of Ohio State student host; Smith; Deschamp; Sean Bell, Gatton student and assistant coach; and McFerran. Pikeville-based Community Trust Bancorp Inc., was recognized this fall by American Banker FT. MITCHELL: NORTHERN KY TRI-ED CELEBRATES magazine as one of the nation’s “25 Most Powerful 25 YEARS OF ECONOMIC DEVELOPMENT SUCCESS Women in Banking.” In addition to her role at Community Trust, Hale is chair of the Kentucky Economic Development and Finance Authority Board, a member of the Kentucky Economic Development Partnership Board and serves on the boards of Commonwealth Seed Capital, ARH Foundation and the University of Pikeville.

LOUISVILLE: MANNING SCORES AS NEWEST PAPA JOHN’S FRANCHISEE

The Northern Kentucky Tri-County Economic Development Corp. (Tri-ED) recently held its 25th anniversary, with both past and present leaders joining in the celebration. The organization was formed in 1987 to attract new companies to locate in Boone, Campbell and Kenton counties and encourage existing businesses to stay and expand. Since then Tri-ED has seen 554 companies locate or expand in the region and witnessed the creation of 44,617 primary jobs created as a result. Attending the festivities were (above, left to right) Tri-Ed Chair Elect and Campbell County Judge-Executive Steve Pendery, former Commissioner of the Kentucky Cabinet for Economic Development’s Department for Business Development Jim Navolio, former Secretary of the Kentucky Cabinet for Economic Development Gene Strong and Tri-ED President and CEO Dan Tobergte. Pictured below are (left to right) Tobergte with KMK Consulting Co. President and CEO Jim McGraw, Fidelity Investments Vice President for Public Affairs Kevin Canafax, and Tri-ED Secretary/Treasurer and Frost Brown Todd Member-in-Charge (Northern Kentucky) William T. Robinson.

Denver Broncos quarterback Peyton Manning (left) has become one of the newest franchisees for Louisville-based Papa John’s International. Manning, in partnership with Papa John’s, will own 21 restaurants in the Denver area. Manning is pictured here shooting a television spot with Papa John’s Chairman and CEO John Schnatter.

44 DECEMBER 2012 LANEREPORT.COM • THE LANE REPORT

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