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LaneReport‘THE JOURNEYIS AS IMPORTANT

AS THE DESTINATION’Recently retired President Lee T. Todd Jr.discusses his 10 years of service at

the University of Kentucky.Page 20

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2 JULY 2011 KYBIZ.COM • THE LANE REPORT

Kentucky’s Business News Source For 26 Years Volume 26 Number 7

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28 THE GOLD STANDARD FOR ENERGY USEPower system remake cuts utility use by 40 percent, trims Fort Knox bills $10 million in a year

32 QUIETLY MAKING THINGS HAPPENHaving linked Louisville’s unsung influences, community‘connectors’ project to launch in Central Kentucky next year

34 TRADE ROUTE TO INDIAState forging ties with enormous emerging market;Indo-Kentucky Chamber sprouts in Barren River area

36 LIFE SCIENCE TAKES ROOTFertilized by state incentives, start-up incubator bioLOGICis outgrowing its downtown Covington offices – again

FEATURES

2011®

KENTUCKY BUSINESS NEWSAVAILABLE ONLINE

ON THE COVERDr. Lee T. Todd Jr., depicted here is full academic regalia, retired June 30as president of the University of Kentucky after 10 years at the helm of thecommonwealth’s flagship education institution. He reflects on the highs,lows and important steps forward of his presidency in an extended One-on-One interview with Publisher Ed Lane in this month’s issue.UK Public Relations & Marketing photo

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DEPARTMENTS4 Perspective

6 Fast Lane

14 Interstate Lane

16 Kentucky Intelligencer

18 Corporate Moves

19 On the Boards

31 Going Green

39 Spotlight on the Arts

40 The Lane List

42 Passing Lane

44 Exploring Kentucky

20 Lane One-on-One:Dr. Lee T. Todd Jr.Retired President of the University of Kentucky



CHANGING the focus in Frankfortis a challenge. But it’s possiblewhen a compelling argument is

made based on documented researchreinforced with recommendations forpractical solutions.

That, in brief, has been the impact the“Leaky Bucket,” the Kentucky Chamber’s2009 study that found spending on correc-tions, Medicaid and public employeehealth insurance to be growing at a fasterrate than the overall state budget and Ken-tucky’s economy. The alarming trend hada disturbing bottom line: More money forthe unsustainable “leaks” in the state rev-enue bucket meant a diminishing com-mitment to education – the key investmentthe state can make in its future.

Since the report’s release, Ken-tucky’s elected leaders have madeprogress in addressing unsustainablespending. In addition, smarter spend-ing has become a bigger part of the con-versation about Kentucky’s budgetchallenges. Yet, no matter how muchrevenue the state collects, the bucketwill continue to leak until the areas ofunsustainable spending are addressed.

Our latest update on developmentssince the initial report is called “Build-ing a Stronger Bucket.” It details suchprogress as:

• Legislative action to reduce theannual growth in spending on publicemployee health insurance by almosthalf in the 2010-12 biennium

• Corrections reforms projected togenerate $422 million in gross savingsover 10 years, with $204 million of thatto be reinvested in programs to slow thegrowth in Kentucky’s prison population

• Expanded managed care to con-tain escalating cost increases in thestate’s Medicaid program

The update notes that the state facessignificant challenges in curtailing the sky-rocketing spending increases that under-mine prospects for economic growth.

A compelling case for the need toaddress spending was made in Marchwhen Moody’s Investors Service down-graded its rating on Kentucky bonds toAA2 and maintained a “negative out-look” for Kentucky. Moody’s noted Ken-tucky’s “significant fiscal stress related tothe economic downturn, a large andgrowing unfunded pension liability and

a trend of reliance on non-recurringbudget balancing measures.” Moody’saction followed that of Fitch Ratings,which downgraded Kentucky from “sta-ble” to “negative,” indicating concernsabout the state’s financial direction.

Kentucky’s pension performancealso continues to be of great concern,with a study by the Pew Center on theStates finding the state’s system to befunded at only 58 percent of its liabili-ties compared to a national average of78 percent in fiscal year 2009.

If Kentucky is to get and keep its finan-cial house in order, it needs to addressleaks in state spending and follow disci-plined spending principles. Toward thatend, the Kentucky Chamber encouragesstate policymakers to adopt the followingguidelines for state spending:

• The size of the state General Fundshould be maintained within 6 percentor less of the gross state product. Fornearly two decades the average hasbeen between 5 percent and 6 percentof GSP, dating to the 1990 passage ofthe state’s last broad-based tax increaseto support the Kentucky EducationReform Act. (The contracting economyresulted in the General Fund exceeding6 percent of GSP in 2009.)

• Limit borrowing costs to 6 percent ofthe state budget. Spending for paymentson state debt (supported by a state appro-priation) should be held to 6 percent ofthe General Fund. This will provide creditrating agencies with a basis on which toevaluate the state’s fiscal discipline anddiminish the extent to which higher debtpayments reduce education funding.

• Adopt a five-year plan to spend onlyrecurring revenues for recurring obliga-tions. If non-recurring revenues are avail-able, they should be spent for purposesthat do not have long-term obligations.

• Prioritize spending on areas thatinvest in the future (e.g., educationand economic development), ensurethat more education funds are spent toimprove student performance, andcontain spending on programs thathave had unsustainable growth (e.g.,corrections and escalating pension andhealthcare costs).

• Eliminate the practice of appro-priating all anticipated revenue duringevery budget cycle and re-establish a“rainy day fund” to ensure money isavailable to meet the state’s unantici-pated emergency needs. �

THE FOCUS FACTORChanging the focusin Frankfort is possible

BY DAVE ADKISSON

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A compilation of economic news from across KentuckyFAST LANE

OFFICIALS with the University of Louisville,Louisville-based Jewish Hospital & St. Mary’sHealthCare and Lexington-based Saint

Joseph Health System have formally approvedplans for the three entities to form a statewide health-care delivery system.

Though the partnership agreement must stillreceive regulatory and church approvals beforebecoming effective – a process that could take up to12 months – officials with the participating organiza-tions say they are excited about the possibilities thatlie ahead.

The new healthcare system will include hospitals,clinics, specialty institutions, home health agencies andsatellite primary care centers, and will bring togethermore than 3,000 academic and community physicians.

“There is so much more we can accomplishtogether,” said Bob Hewett, a long-time board mem-ber of the Saint Joseph Health System and its pred-ecessor who will be the first chair of the system’ scommunity board of trustees. “Most important, wewill be increasing access to basic and advancedhealth services. That will lead to improving thehealth not only of individual patients, but of entirecommunities.”

Plans include integrating medical research, education, technology and health-care services wherever patients receive care and extending UofL ’s research andteaching programs statewide, using technology – especially telemedicine – to allownetwork physicians to expand access to specialty care. For example, Saint Joseph hos-pitals and the University of Louisville Hospital now use telemedicine robots to pro-vide stroke, neurology and other specialty care in partnership with other facilities.

Plans are for Catholic Health Initiatives to make an incremental capital infu-sion of $320 million to support the system’s mission and healthcare servicesstatewide. The new system also will invest $200 million in capital to expand the aca-demic medical center in Louisville and $100 million in statewide healthcare services.

STATE: UofL, JEWISH & ST. MARY’S, AND SAINT JOSEPHFORMALIZE PLANS TO MERGE HEALTHCARE SYSTEMS

KENTUCKY’S general fund receipts for May 2011 were up 17.8 percent com-pared to May 2010, putting the state on track to finish up fiscal year 2011 aheadof budgeted levels.

Kentucky State Budget Director Mar y Lassiter attributed strong gains from coalseverance and corporate income tax receipts for driving revenues ahead of projectsfor the first 11 months of the fiscal year.

“Individual income tax receipts accounted for the majority of May’ s increase,exceeding the previous year’s total by $94.1 million, largely due to business activityfrom pass-through entities,” Lassiter said. “All of the large taxes are performing wellduring the economic recovery. We are now more confident that we will end the fiscalyear ahead of budgeted levels; June’s receipts will determine by how much.”

Among the major accounts:• Sales and use tax receipts increased 4.9 percent for the month and have grown

4.3 percent year-to-date.• Corporation income tax receipts increased $7.7 million and have increased 27.7

percent for the year.• Individual income tax collections rose 37.5 percent in May and have grown 9.3

percent though the first 11 months of FY11.• Property tax collections decreased 3.4 percent and are down 0.9 percent year-to-date.• Cigarette tax receipts fell 12.5 percent and have now fallen 6.5 percent year-to-date.• Coal severance tax receipts rose 37.1 percent due to timing issues and are up

10.9 percent through the first 11 months of the fiscal year.

STATE: 17.8% RISE IN MAY REVENUE PUTS KENTUCKYON TRACK TO FINISH FY11 AHEAD OF BUDGET LEVELS

THE Alltech FEI World EquestrianGames held in 2010 at the Ken-tucky Horse Park had an economic

impact of $201.5 million, according todata released by the state.

According to the report commis-sioned by the Tourism, Arts and Her-itage Cabinet, the Alltech W orldEquestrian Games Foundation reportedthat it sold or provided complimentar ytickets to 419,853 visitors who came from63 countries and all 50 states.

Direct spending associated with thegames – such as guest expenditures atthe Horse Park, lodging, restaurants,shopping centers and retail outlets –accounted for $128.2 million.

The report also considered indirectspending, such as such as money spentfor food and lodging suppliers, con-struction and other services that wereneeded to support the influx of guests.That figure came in at $73.3 million.

The report found that $55.4 millionwas spent on tickets, food, souvenirs andother items at the event while $39.6 mil-lion was spent on lodging. The gamesalso generated nearly $18.4 million instate taxes and nearly $4.6 million inlocal taxes, the report said.

The games also had a direct impacton passenger travel at Lexington’s BlueGrass Airport. In October 2010, pas-senger enplanements increased by 39percent from the previous year, accord-ing to the airport’s 2010 annual report.The airport and its partners hostedmore than 700 private and corporate air-planes, welcomed more than 460 inter -national athletes and facilitated 18special event charter flights.

“While these financial impact numbersare quite impressive and stronger thaneven anticipated, the impact extends farbeyond the monetary evaluation,” said All-tech founder Dr. Pearse Lyons. “For yearsto come, our community will reap thebenefits of the Alltech FEI World Eques-trian Games, from a new sense of commu-nity pride to statewide improvements andinfrastructures that continue to drivetourism today.”

STATE: FEI WORLD GAMES CREATED A $201 MILLIONECONOMIC IMPACT FOR KY

A merger between the University ofLouisville, Jewish & St. Mary’s andSaint Joseph Health System will helpincrease use of telemedicine to giveKentuckians increased access to spe-cialty care. Here Dr. Alex Abou-Chebl, a neurological interventionistwith UofL Health Care, consults viaa remote presence medical robot atUofL’s University Hospital with Dr.Kerri Remmel, director of UniversityHospital’s Stroke Center.

The Alltech FEI World Equestrian Games was heldat the Kentucky Horse Park over the course of 16days in the fall of 2010.

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FAST LANE

AT&T is adding 200 new jobs at its wireless call centerin Grayson as part of its plan to continue to investaggressively in network enhancements nationwide.

The company has already invested more than$525 million in Kentucky networks over the pastthree years. Last year, those improvements includedadding more than 35 new cell sites and upgradingmore than 150 existing sites. So far this year , thecompany has expanded mobile broadband to Lon-don, Bardstown, Corbin, Mt. Sterling and Murray.

“In addition, our recently announced agreement to acquireT-Mobile USA also represents a major commitment tostrengthen and expand our network in Kentucky,” said Mary PatRegan, president of AT&T Kentucky. “If approved, this dealmeans that we’ll be able to expand the next generation ofmobile broadband – 4G LTE – from our current plan of 80 per-cent of the U.S. population to more than 97 percent.”

“Smartphones, tablets and laptops are continuing to driveunprecedented demand for wireless access everywhere,” saidChris Percy, AT&T’s vice president and general manager ofmobility and consumer markets for Tennessee and Kentucky.“We’re investing in and deploying a combination of technologies to meet these needs and ensure an advancedbroadband experience.”

AT&T currently employs more than 3,200 employees inretail and office locations throughout Kentucky.

GRAYSON: AFTER $525M IN KY UPGRADES,AT&T TO ADD 200 JOBS AT CALL CENTER

ASHLAND� AK Steel has closed its coke plant in Ashland, saying the plant was nolonger cost competitive due to maintenance issues and increasinglystringent environmental regulations. As a result of those issues, thetotal per-ton cost of coke produced there had become significantlyhigher than all other sources of coke for the company. The coke plantemployed 263 employees, but the company has moved all but 25 jobsto its Ashland Works steel plant. Company officials say replacing Ash-land’s high-cost coke helps make the balance of Ashland Works, whichnow employs more than 1,000 employees, more competitive.

BARDSTOWN� Heaven Hill Distilleries Inc. has acquired the worldwiderights to the Admiral Nelson family of rums from St. Louis-based Luxco Inc. “Admiral Nelson is a very strong brand thatis experiencing phenomenal growth in a rapidly expandingsegment of the rum category,” said Max L. Shapira, presidentof Heaven Hill, which is headquartered in Bardstown. “Its five-year growth has outpaced both the overall spirits industry andthe rum category specifically, and it has won multiple ImpactHot Brand Awards and Beverage Information Group GrowthBrand Awards. We believe our sales and distribution capabili-ties will further build on this success in the coming years.”

� More than 150 people gathered lastmonth in Bardstown to celebrate thecompletion a $3 million downtownstreetscape project. The projectincluded a redesign of the court square, aswell as the construction of new water lines,sidewalks, handicap ramps, streetlights,landscaping, and benches. The project wasfunded by a combination of stimulus funds,transportation enhancement funds and afederal earmark from Kentucky Congress-man Brett Guthrie’s office.

ERLANGER� Toyota says it expects North American vehicleproduction levels to return to 100 percent in Sep-tember, as part suppliers have recovered earlierthan originally anticipated following the March 11earthquake and tsunami in Japan. Eight of the com-pany’s 12 North American-built models returned to 100 percent pro-duction on June 6, and Toyota is hiring 3,000 to 4,000 temporaryworkers in Japan to help the company regain full production. Toyota’sNorth American manufacturing headquarters is located in Erlanger.

FLORENCE� Mazak Corp., a Florence-based company that designs and manufac-tures machine tool solutions, has opened a new 30,000-s.f. technologycenter and regional headquarters facility in Houston, T exas. The newresearch and development facility will provide support to manufacturersin all sectors, with a special focus on those ser ving the energy and oiland gas service industries.

GLASGOW� Sitel is in the process of hiring more than 300workers for its call center in Glasgow. The com-pany is adding staff to help support the com-pany’s contract with Best Buy to handle

customer service issues. The Glasgow call center currently employs astaff of approximately 335.

LEXINGTON� The owners of the Orange LeafFrozen Yogurt franchise in Lexingtonhave secured rights to open storesthroughout the Bluegrass state, accord-ing a report in The (Lexington) Herald-Leader. Plans call for the franchise to open 10 locations by the end of2011 and up to 20 by the end of 2012. A fifth store is slated for Lexing-ton as well as several in Louisville and locations in Bellevue, Elizabeth-town, Georgetown, Owensboro and Richmond.

BUSINESS BRIEFS

WILD Turkeyhas unveileda new $50

million distillery thatrepresents Ken-tucky’s first majordistillery expansionin decades.

The new facilitywill allow the com-pany to double itsproduction to meet agrowing globaldemand for bourbon and r ye whiskies. The first aged WildTurkey from the new distillery will be available in 2016.

The new 134,000-s.f. facility expansion makes Wild Turkeynot only one of the biggest whiskey distilleries in Kentucky ,but in all of North America. It is capable of producing up to11 million proof gallons of liquid annually , up from the 5million proof gallons of the previous distiller y that was firstput into operation back in 1869.

“I was surprised to learn that no major distiller y expan-sion had occurred in Kentucky for several decades,” said BobKunze-Concewitz, CEO of Gruppo Campari, a global com-pany that acquired the Wild Turkey business in 2009. “Thisproject reflects the confidence we have in the growthprospects of the iconic Wild Turkey family of brands.”

The entire Wild Turkey line is getting a new U.S. market-ing campaign entitled “Give ’em the Bird” and in Australia,the brand is getting a packaging upgrade, new advertisingand a new premium brand added to its ready-to-drink prod-uct line. Wild Turkey is also introducing a new mixable bour-bon in the United States called Wild Turkey 81.

LAWRENCEBURG: WILD TURKEY DOUBLESPRODUCTION TO 11 MILLION GALLONS

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FAST LANE

CLARK Associates is investing $3.3 million to locate anew distribution center in Madisonville that will even-tually employ some 95 workers.

The distribution center will serve Clark’s e-commerce busi-ness, WEBstaurantStore Inc., a company that specializes inonline distribution of food service equipment and supplies.

Clark Associates, which is headquartered in Lancaster,Penn., is a 40-year-old family-owned company that has multi-ple divisions and branches in mechanical, sales and manu-facturing and employs more than 400 people. The companyestablished WEBstaurantStore in 2004 and has seen it gaincustomers throughout the United States and Canada, dis-tributing approximately 40,000 items.

Dave Groff, vice president of distribution for Clark, saidthe new facility, which will be the company’ s second distri-bution center in Madisonville, was needed due to the rapidgrowth WEBstaurantStore has experienced. Groff said theMadisonville location provides “excellent transit times” tothe company’s customers in the Midwest and South.

Clark has acquired a 148,000-s.f. facility previously ownedby Autoliv Corp. and expects to have renovations completeand bring in the first wave of employees by late summer.

MADISONVILLE: CLARK ASSOCIATES TOHIRE 95 FOR DISTRIBUTION FACILITY

LEXINGTON� The University of K entucky hasapproved an operating budget of nearly$2.7 billion for 2011-2012, a 7 percentincrease over the previous year . Theincrease in the budget is being driven primarily by the continued growthof UK’s health care enterprise. While the budget for the state’ s flagshipuniversity has grown in recent years, state support has continued todecline: In the proposed budget, state support is 11.3 percent, down from25.6 percent in 2001. The new budget includes a proposed 3 percentmerit raise pool for non-hospital faculty and staff. The hospital budgetincludes a 2 percent merit raise pool for its employees. Other increasedcosts include additional support for academic support ser vices, studentfinancial aid, and utilities and maintenance, among other items.

LEXINGTON/LOUISVILLE� Total Quality Logistics (TQL), a third-party logistics brokeragecompany, is adding sales associates for its new offices in Lexington andLouisville, which are scheduled to open this summer . The Cincinnati-based company currently operates satellite offices in Ohio, Illinois, Col-orado, South Carolina, North Carolina, Florida and Indiana, and hasmore than 1,100 employees. TQL facilitates more than 400,000 truck-loads annually for approximately 7,000 clients.

LOUISVILLE� The (Louisville) Courier-Journal has laid off 50 employees as partof companywide cuts implemented by parent company Gannett inresponse to declining advertising revenue. The Louisville layoffs, whichinclude 24 newsroom employees, represent approximately 10 percentof the total Courier-Journal staff. The layoff is the third time since 2008that The Courier-Journal has been forced to reduce its staff: 51 were laidoff in 2008 and another 44 in 2009. According to The Courier-Journal,Gannett – which operates 82 daily newspapers, including USA Today –has seen its annual revenue has fall by more than $2 billion –nearly 30percent – since 2006.

� Churchill Downs was forced tosuspend operations on June 23after severe storms caused signifi-cant damage to nine barns, alongwith a number of stable area struc-tures, including some living accom-modations for backstretch workers.No injuries to workers or horses onsite was reported and racingresumed on June 24. Prior to thestorms, the track reported higher

than expected wagering levels for its spring meet and as a result,increased overnight purses by 15 percent for the last three weeks of themeet, which ended on July 4.

� BAE Systems has received a $26.6 million contract from the Naval SeaSystems Command for two additional propulsor units for submarines thatwill be produced at the company’s Louisville manufacturing facility, where itemploys approximately 300 people. The Minnesota-based company said thecontract was “an important step in strengthening BAE Systems’ propulsormanufacturing based in Louisville.” Production is slated to begin this sum-mer with work expected to be complete by March 2014. BAE has also beenawarded a $55 million contract for mechanical components and assembliesof the Mk41 vertical launching system, the primary missile launching systemon board Navy combatants. Production will take place at five BAE sites,including Louisville, and will run through 2013.

� RxCrossroads, an Omnicare-owned company that provides spe-cialized solutions for the biotech and pharmaceutical industries, hasopened a new pharma-grade warehouse facility in Louisville to supportthe company’s third-party logistics business. Company officials said theexpansion has the potential to create dozens of new jobs. The new98,925-s.f. National Turnpike Pharma and Bio Logistics Centergivesthe company increased controlled room-temperature storage and theoption for an additional 30,000 s.f. of space. Future plans call for addingrefrigerated storage space. The new facility is in addition to RxCross-roads’ existing 132,000-s.f. facility in Louisville that offers controlledroom, refrigerated and frozen storage capabilities.

BUSINESS BRIEFS

THE National Insti-tutes of Health hasawarded $20 mil-

lion to the Universityof Kentucky to moveresearch discoveries tohealthcare solutionsmore quickly.

The five-year fund-ing is the largestresearch funding awardever received by UK andwill be used to supportresearch at UK’s Centerfor Clinical and Translational Science, making it part of aselect national biomedical research consortium.

The funding will also support infrastructure such as the Clin-ical Research Development and Operations Center at UKAlbert B. Chandler Hospital, where patients participate in clin-ical research studies; educational programs for future investiga-tors; research pilot grants and an informatics program.

“Receiving this award not only provides significant fund-ing but also the recognition of being among the top bio-medical research universities in the country,” said UKProvost Kumble Subbaswamy. “This award is the end resultof much hard work and diligence by many , many people atthe university who have demonstrated their expertise in clin-ical research and their ability to build successful interdisci -plinary collaborations.”

“By receiving CTSA funding we will be able to accomplishgoals that truly impact the health outcomes of people in Ken-tucky and beyond,” said Dr. Michael Karpf, executive vicepresident for health affairs at UK. “Having a top biomedicalresearch program is imperative in our plan to become amajor regional academic medical center and today’sannouncement is an acknowledgement we are continuing todo what we need to do to meet that goal.”

LEXINGTON: $20M NIH GRANT PUTS UKINTO ELITE U.S. BIOMED CONSORTIUM

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The $20 million grant from the NationalInstitutes of Health will support researchat UK’s Center for Clinical and Transla-tional Science.

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FAST LANE

BLUEGRASS Oakwood, a facility for the developmentallydisabled that is one of Somerset’ s largest employers, hascut 200 positions as the organization works to align its

staffing with the number of residents it is now serving.Ironically, the cuts come as a result of the organization’s

success. Jill Midkiff, a spokesperson for the Kentucky Cabi-net for Health and Family Services, which oversees Oak-wood, told The (Somerset) Commonwealth Journal that one ofthe facility’s goals was to help Oakwood residents move outinto the community when they were ready. When BluegrassRegional Mental Health-Mental Retardation took over thedaily management of Oakwood in 2006, there were around240 residents. Now, the number of residents is nearly halfthat.

With a drop in the number of residents, the state reducedits financial support of the facility from $69.9 million to$54.4 million.

“As a result of this census decrease, and in order to begood stewards of taxpayer dollars, staff reductions appear tobe necessary,” Midkiff said.

The cuts affect all levels of staffing, including doctors,nurses, case managers, home managers, and floor managers,among others.

Prior to the layoff announced in late June, Oakwood hadapproximately 1,000 employees.

SOMERSET: FEWER RESIDENTS, FUNDINGCUTS REQUIRE LAYOFFS AT OAKWOOD

LONDON� Employees at Hearthside Food Solutions have voted 416 to 168 infavor of remaining union-free, according to a report by The (London)Sentinel-Echo. The London facility, formerly known as Laurel Cookie Fac-tory, was acquired in 2010 as part of Hearthside’s purchase of Consoli-dated Biscuit Corp. Employees of Hearthside’s Ohio bakery also votedin favor of remaining union-free.

MAYFIELD� MVP Group International, a South Carolina-based company thatproduces candles and home fragrance products, is investing more than$2.5 million to upgrade its facility in Mayfield and add new equipment.The upgrades will enable the company to add a new product line to itsgroup of products, which includes brands such as Olde South CandleCompany, Colonial Candle and Carolina Candle. The expansion willadd 16 new jobs to the existing Mayfield employment base of 110.

MOREHEAD� St. Claire Regional Medical Center has acquired two buildings andan adjacent lot from the Rowan County Board of Education for$370,000, according to The Morehead News. The hospital plans to relo-cate some of its administrative offices to the newly acquired facilities.

SOMERSET� SafeAuto insurance company hasopened a new 20,000-s.f. call center in Som-erset that replaces the facility it has beenleasing for the past several years. The Ohio-based company began its Somerset opera -tions in 2008 with 48 employees and hassince grown to a staff of 83. The new callcenter has room to accommodate 250.

SPRINGFIELD� North American Pipe Corp. has closed its PVC pipe productionplant in Springfield, which is one of the Houston-based company’ ssmallest pipe plants. The company said the closing is part of an effort toreduce costs and optimize production operations in the face of excesscapacity in the PVC pipe market. The closing eliminates some 47 jobs.

WURTLAND� The U.S. Department of Commerce has granted foreign-tradezone status to the Ohio River port at Wurtland, making it one of onlythree general-purpose foreign-trade zones in Kentucky. (The others arelocated in Louisville and Boone County.) A foreign-trade zone is a des-ignated location in the United States where companies can use specialprocedures that help encourage U.S. activity and value added – in com-petition with foreign alternatives – by allowing delayed or reduced dutypayments on foreign merchandise, as well as other savings. The desig-nation offers numerous benefits to businesses and could be beneficialin helping recruit new companies to the area.

STATE� For the first time since February 2009, Kentucky’s seasonallyadjusted preliminary unemployment rate fell below the 10 percentmark to 9.8 percent in May 2011, according to the Office of Employ-ment and Training (OET). The standout industry in the most recentreport was the leisure and hospitality sector , which added 700 jobs inMay 2011 and a total of 11,500 positions since May 2010. OET officialsattributed the increase primarily to a rise in restaurant openings. TheUnited States’ seasonally adjusted jobless rate increased from 9 percentin April 2011 to 9.1 percent in May 2011.

� Kiplinger’s Personal Finance Magazine’s June issue lists Kentuckyamong its top tax-friendly states for retirees. The magazine citesexemption of Social Security benefits from state income taxes; allowingresidents to exclude up to $41,110 per person in retirement incomefrom a wide variety of sources, including public and private pensionsand annuities; a homestead provision that exempts part of the value oftheir property from state taxes; and an exemption of immediate familymembers from inheritance taxes. The states that were included inKiplinger’s top 10 were: 1) Wyoming 2) Mississippi 3) Pennsylvania 4)Kentucky 5) Alabama 6) Georgia 7) Oklahoma 8) South Carolina 9)Delaware and 10) Louisiana.

BUSINESS BRIEFS

IN D U S T R I A LmanufacturerEaton Corp. has

opened two newstate-of-the-art datacenters inLouisville andSimpsonville thatshowcase the com-pany’s energy-effi-cient powerdistribution, powerm a n a g e m e n t ,power quality andairflow manage-ment solutions.

“As a power management company, finding innovativeways to enable our customers to reduce energy costs and touse power more efficiently, effectively, and safely is centralto Eaton’s mission,” said Alexander M. Cutler , Eaton chair-man and chief executive officer. “Our new data centers areenergy efficient by design, deploy Eaton’s most sophisticatedpower management technologies, and support our com-pany’s growing data processing needs while conservingenergy and water.”

The Simpsonville facility has already received LEED (Lead-ership in Energy and Environmental Design) Gold Certifica -tion; the Louisville center, which is identical to the one inSimpsonville, is expected to be certified later this summer.

Each facility will employ nine workers with an averagehourly wage of around $32.

Cleveland-based Eaton employs approximately 70,000employees and sells products to customers in more than 150countries. The company had 2010 sales of $13.7 billion.

LOUISVILLE/SIMPSONVILLE: EATON OPENSTWO ENERGY EFFICIENT DATA CENTERS

Eaton photo

Kentucky Gov. Steve Beshear presents EatonChairman Sandy Cutler and CFO Rick Fearonwith a Kentucky Colonel Certificate as Eaton CIOBill Blausey looks on.


INDIANA� The Purdue Research Park network in Indiana provides an annualeconomic impact of $1.3 billion to the Hoosier State’s economy, accord-ing to an independent report compiled by Thomas P. Miller and Asso-ciates. The report states that the research park, which is the largestuniversity-affiliated business incubator complex in the country, provides$48 million in annual tax revenue for the state. The average annualwage for employees in park-based companies is $63,000.

� Fronius USA is investing more than$26.6 million to move its North Americanheadquarters from Michigan to Portage,Ind. The move is expected to create up to512 new jobs by 2016. The Austrian com-pany plans to lease 400,000 s.f. of space inPortage to assemble and manufacture itssolar electronic products for the NorthAmerican market.

� Berry Plastics is adding 120 jobs at itsEvansville, Ind., headquarters, the result ofboth company growth and the consolida-tion of the company’s Rolling Meadows, Ill., and Minneapolis, Minn.,office operations. Originally established in 1967 as Imperial Plastics,Berry Plastics has grown into a major manufacturer of plastic packag-ing including containers, bottles, closures, prescription vials, trash bags,duct tape and other packaging materials.

OHIO� Ford Motor Co.’s BrookPark, Ohio, manufacturingplant is only closing for oneweek this month as opposedto the traditional two-weeksummer vacation in order tohelp keep up with risingdemand for trucks with thesmaller, more efficientengines the plant produces.Brook Park’s Engine PlantNo. 1 produces two V -6engines that are used inFord’s popular F-150 pick-up.

TENNESSEE� Kingsport, Tenn.-based Eastman Chemical Co. has announcedplans to acquire petrochemical producer Sterling Chemicals Inc. for$100 million in cash. The transaction includes Sterling’s plasticizer andacetic acid manufacturing assets in Texas City, Texas, which Eastmanplans to use to produce non-phthalate plasticizers. Eastman says theacquisition will enable the company to keep pace with growing demandfor non-phthalate alternatives.

� Convergys Corp. is hiringapproximately 375 employ-ees to support work at its cus-tomer contact center inClarksville, Tenn. The com-pany is adding about 300 on-site employees, with theremainder being work-at-home positions. Cincinnati-based Convergys employs some 70,000 employees at 68 customercontact centers around the world.

� SL Tennessee, an automotive parts supplier for General Motors,is expanding its operations in Clinton, Tenn., where it produces gearshifters and lighting products. In 2001, SL Tennessee became the firstKorean-owned automobile parts manufacturer in Tennessee and hassince grown the facility from 35,000-s.f. to more than 500,000 s.f. Thelatest expansion will add 100 new jobs to the existing 325-memberstaff.

BUSINESS BRIEFS


ENGINE manufacturer Cummins Inc. has announcedplans to grow its professional staff at the company’ sColumbus, Ind., headquarters with the addition of 600

new employees. The announcement is the third expan-

sion project in southern Indiana to beannounced by Cummins in the past yearand represents an investment of $18 mil-lion. Once the new building is filled, in2013, Cummins will employ nearly 3,000professionals in a two-block area of down-town Columbus, three times its local presence in 2008. Con-struction of the new 130,000-s.f. facility is already under way.

“Our success in global markets over the past few yearsallowed us to remain strong during the recent economicdownturn and has positioned the company for a period ofaccelerated growth,” said Cummins President and ChiefOperating Officer Tom Linebarger.

Cummins reported its most profitable year in company his-tory in 2010, largely on the strength of significant growth in largeinternational markets such as China, India and Brazil.

“Cummins is proof that strength in international marketsresults in economic and job growth here in the U.S.,” saidU.S. Sen. Richard Lugar.

Last July, Cummins announced a $200 million expansionof its Seymour engine plant to create a technical center andmanufacturing line to design and produce a new high horse-power engine. That expansion is expected to result in 200new technical jobs over the next three years.

In October, the company announced plans to purchase aformer bank office and branch in Columbus and expects tohave 350 employees in that facility by the end of the year.

INDIANA: FOREIGN SALES POWER PLANBY CUMMINS TO ADD 600 TECH JOBS

IQT, a customer contact, business process outsourcing andinformation technology solutions company , hasannounced plans to establish its United States headquar -

ters and create a customer relationship and technical ser v-ices center in Nashville.

The privately held company, which had had its corporatefunctions in New York, will occupy approximately 60,000 s.f.of space in downtown Nashville and expects to hire morethan 900 people over the next five years.

IQT will be hiring employees for a wide range of posi-tions, from customer-facing service agents with postsec-ondary education and technical skills to people withsupervisory, training and human resources experience tosenior executives with backgrounds in finance, operationsand enterprise technology.

“IQT has developed a reputation for solving complexproblems for client companies when it comes to customerinteraction,” said Tennessee Department of Economicand Community Development Commissioner Bill Hagerty.“Business leaders know developing and managing customersis the single most important challenge they face and the typeof technically-trained workforce IQT will develop in Ten-nessee will have a significant impact on our economy.”

The three-year-old company, which presently has about1,500 employees, has done much of its business in Canadaand currently has operating centers in Quebec and Ontario.

TENNESSEE: IQT LOCATES HEADQUARTERSIN NASHVILLE, PLANS STAFFING OF 900

Business news from Indiana, Ohio, Tennessee and West VirginiaINTERSTATE LANE


A sampling of economic development dataKENTUCKY INTELLIGENCER®



ADVERTISING/MARKETING� ChristyHiler has beennamed chiefstrategic officerfor CornettIntegrated Mar-keting Solu-tions. DavidCoomer hasbeen namedchief creative officer for the Lexington agency.

COMMUNICATIONS� Larry Dolot has been named vice presi-dent/general manager for T-Mobile USA’sOhio/Kentucky/Western Pennsylvania region.

EDUCATION� Pam Stackhouse has been named associ-ate director of athletics at Bellarmine Univer -sity in Louisville.

� Harvey W. Wallmann has been nameddirector of Western Kentucky University’s newphysical therapy program. Brian W. Meredith

has been named associate vice president forenrollment management at WKU.

� Dr. David L. Dunn hasbeen named executive vicepresident for health affairs atthe University of Louisville.

� Dr. Frederick C. de Beerhas been named dean of theUniversity of Kentucky Col-lege of Medicine and vicepresident for Clinical Aca-demic Affairs.

FINANCE� Reed Weinberg hasbecome an equity partnerwith the Louisville firm ofPRG Investments.

FOOD SERVICE/HOSPITALITY� Mark Murphy has joinedD.D. Williamson, a Louisvillecompany that provides color-ing for the food and beverageindustry, as sales manager forNorth America.

� James Franks has beennamed vice president of fran-chising for Lexington-basedFazoli’s.

GOVERNMENT� Dr. LaQuandra S. Nesbitthas been named to head theLouisville Metro Departmentfor Public Health and Wellness.

HEALTHCARE� Frances J. Feltner has been named direc-tor of the University of Kentucky Center forExcellence in Rural Health – Hazard.

� Diane Partridge has been named vice pres-ident of marketing and communications forUniversity of Louisville Physicians. MikeMitchell has been named vice president ofoperations for the practice.

LEGAL� Amy D. Cubbage has joined the Louisvilleoffice of McBrayer, McGinnis, Leslie & Kirk-land as of counsel.

� Lauren Armstrong has joined Sturgill,Turner, Barker & Moloney as the Lexingtonfirm’s marketing director.

TELECOMMUNICATIONS� Sean D. Lloyd has been named vice presi-dent of sales for Louisville-based LightyearNetwork Solutions Inc.

OTHER� Karl Waekerle has been appointed regionalsales manager for CLARK Material Handling Co.

David Coomer

Reed Weinberg

Mark Murphy

Dr. LaQuandraNesbitt

Dr. David Dunn

Christy Hiler

New leadership for Kentucky businessesCORPORATE MOVES

DEPARTURES� Lori Gonzalez, dean of the Universityof Kentucky College of Health Sciences,has been named provost and executivevice chancellor at Appalachian State Uni-versity in Boone, N.C.


AMERICAN BAR ASSOCIATION� Bart L. Greenwald, a member of the legalfirm of Frost Brown Todd, has been appointedto the Council of the American Bar Associa-tion Section of Litigation. The Section of Liti-gation is the largest specialty section of theAmerican Bar Association and is dedicated tohelping litigators become more effective advo-cates for their clients.

CHURCHILL DOWNS INC. � Churchill Downs Inc. CEORobert L. Evans hasassumed the additional roleof chairman of the board forthe company, succeedingChairman Carl F. Pollard,who has retired from the posi-tion. Four new members havebeen elected to the CDIboard of directors: MichaelB. Bradsky, co-chief executive officer for Fed-erated Sports & Gaming Inc.; Robert L. Fealy,president and chief operating officer for TheDuchossois Group Inc.; Daniel P. Harrington,president and chief executive officer of HTVIndustries Inc.; and Darrell R. Wells, generalpartner for Security Management Co.

CONSORTIUM OF HIGHER EDUCATION FOR CENTRAL KENTUCKY� The following individuals have been namedto the board of directors of the Consortiumof Higher Education for Central Kentucky, anorganization made up of nine Lexington-areacolleges and universities: President – MustafaMahdi, Strayer University; Vice President –Jeff Price, University of Phoenix; Secretary –Candy Bahn, Eastern Kentucky University;and Marketing and Public Relations – JillMcBride, Morehead State University.

FORT KNOX FEDERAL CREDIT UNION� Fort Knox Federal Credit Union has electednew board officers for the coming year: Presi-dent – Howard Williams, Vice Chairman – JoExler, Treasurer – Richard L. Ardisson, andSecretary – Rosemary Deaton. Also servingon the board are Richard Brandenberg, J.Marvin Hawk, Gene Keith, Henry Wheatleyand Reba Watson. Director Emeritus Leo C.Pike is a non-voting member of the board.

KENTUCKY AGRICULTURAL DEVELOPMENT BOARD� Betty B. Bailey and Roy G. Collins havebeen named to the Kentucky AgriculturalDevelopment Board. Bailey, of Owingsville, isa self-employed farmer and retired educationadministrator. Collins, of Manchester, is anattorney with Morgan, Madden and Brashear.

KENTUCKY DERBY FESTIVAL� The following individuals have beenelected to the 2012 Derby Festival board ofdirectors: Chair – Wendy Jacob, BB&T;Immediate Past Chair – James “Ja” Hille-brand, Stock Yards Bank; Chair-Elect – ChrisWhelan, LG&E; Vice Chair – David Nett,The Kroger Co.; Treasurer – Trish Osborn,American Founders Bank; Secretary – WesRutledge, Hilliard Lyons. Elected to the fes-tival’s executive board were Jim King, KingSouthern Bank; Jim Lacy , Zirmed; andScott Watkins, Norton Healthcare. Joiningthe 75-member board as newly elected direc-tors were: Patsy Allen, The Fillies Inc.; GailBecker , Louisvil le Metro Government;Helen Davis, Jefferson Community andTechnical College; Bill Fisher, I.E. DuPontde Nemours & Co.; Terry Jenks, Galt HouseHotel & Suites; and Julie Pogue, Julie PogueProperties.

KENTUCKY EMPLOYERS MUTUAL INSURANCE AUTHORITY� Sam H. Newcomb, of Campbellsville, andJohn Caudill, of Hindman, have been namedto the board of directors for the KentuckyEmployers Mutual Insurance Authority.

KENTUCKY HISTORICAL SOCIETY FOUNDATION� Four new members have been elected tothe board of directors of The Kentucky His-torical Society Foundation: Robert M. “Mike”Duncan , Inez; John S. Greenebaum ,Louisville; Crit Luallen , Frankfort; andBosworth M. Todd Jr., Louisville. The foun-dation has also announced its officers for2011: President – John R. Hall, Lexington;First Vice President – Ann Rosenstein Giles;Second Vice President – Henry C.T. Rich-mond III, Lexington; Treasurer – BucknerWoodford IV, Paris; and Secretary – KentWhitworth, Frankfort.

LOUISVILLE ASSOCIATION OF INSURANCE PROFESSIONALS� Kim Graeter has been elected to a two-yearterm as president of the Louisville Associationof Insurance Professionals. Graeter is the avia-tion manager for Market Finders InsuranceCorp. in Louisville.

MIDWAY COLLEGE� Bob Hutchison has joined the Midway Col-lege board of trustees. Hutchison, ofPaintsville, is the owner of 13 McDonald’s fran-chises throughout eastern Kentucky.

PHARMERICA CORP.� The following individuals have been electedto serve on the board of directors of PharMer-ica Corp., a Louisville institutional pharmacyservices company: Frank E. Collins, Esq.; W.Robert Dahl Jr.; Marjorie W. Dorr; ThomasP. Gerrity, Ph.D.; Thomas P. Mac Mahon;Robert A. Oakley, Ph.D.; Geoffrey G. Mey-ers; and Gregory S. Weishar.

SPEED ART MUSEUM� The Speed Art Museum in Louisville hasannounced the election of four new trustees andfour new governors. New trustees include MaryLouise Barr, an art collector and member of themuseum’s collections committee; Richard H. C.Clay, partner with the law firm of Dinsmore &Shohl; Eric Doninger, vice president, globaldirector of design for Brown-Forman Corp.; andBruce Merrick, chairman and co-founder of theDant Clayton Corp. Those elected to the boardof governors include: Johanna Geier Howard,member of the board of the Kentucky Museumof Art and Craft; Benton Keith, partner andlicense property and casualty agent with SterlingG. Thompson Insurance; Chase Kirkwood,president of United Mail LLC; and MarthaWinans Slaughter, visual arts coordinator forBernheim Arboretum and Research Forest.

SOUTHERN CONFERENCE OFLIBRARIANS SERVING THE BLIND AND PHYSICALLY HANDICAPPED� Barbara Penegor has been named presi-dent of the Southern Conference of LibrariansServing the Blind and Physically Handicapped.Penegor, a resident of Lexington, is managerof the Kentucky Talking Book Library and theKentucky Department of Libraries andArchives.

New leadership for Kentucky organizationsON THE BOARDS

Robert Evans



Kentucky’s leaders express their opinionsLANE ONE-ON-ONE

Ed Lane: Today is my fourth one-on-oneinterview with you. Our last inter viewwas one year prior to the release of UK’sinnovative Top 20 Business Plan that seta goal for UK to be a national top 20research university by 2020.

My first question today is how didyou reach the decision to resign as thepresident of the University of Kentuckyeffective June 30, 2011 – after a decadeof service?Lee T. Todd, Jr.: I thought about retire-ment throughout the summer of lastyear. I turned 65 in May. I’ve been at UKfor 10 years, and June 30 looked like away to package up this part of my career.Part of me was ready to focus in a cou-ple areas for which I have really had apassion for all of my career.

One is entrepreneurship, working withearly-stage companies. The other is K-12math and science education. But I’d evenadd a third: I’d really like to quantify aconversation about how the state of Ken-tucky is going to have to change the way itinvests in higher education in particular,and education in general.

I was extremely pleased when the Ken-tucky General Assembly funded the Top20 business plan in FY05, but since thattime that money has been cut away. I got

kind of worn down having to tell employ-ees they will not be receiving raises againthis year; it was just a struggle. So Ithought maybe it’s time to hand it off tosomeone who has more energy. Thiswould allow me to focus on trying to figure out and suggest better ways toinvest in Kentucky’s educational system.

EL: Is being president somewhat likebeing the mayor of a city? Ar e you oncall all the time?LT: You really are on call 24/7. On anygiven day, it is more than that. You couldbe doing three other things than whatyou’re doing because there are so manyrequests. You love it because you’reeager to get out and sell the universityand spread the message. But you can’ tdo everything you’re asked to do.

It does weigh on you a little bit. UKhas over 10,000 staff members, about2,200 faculty and 29,000 students.You’re right; being UK president is likerunning a city. It’s something I lovedoing, but I felt it was time to move on.

EL: How is UK’s Top 20 business planprogressing?LT: Many people give me the credit forsetting this Top 20 goal, but really it was

the Kentucky General Assembly and Gov.Paul Patton that set it in 1997. I came toUK in 2001, but I realized there was noreal plan on how to achieve a goal thatwasn’t even defined. Nobody knew howmuch it was going to cost.

Therefore, we took 18 months (I had areally great team and we worked with thefaculty) to set goals of what we wanted UKto achieve. We defined a Top 20 universityand then calculated how much it wouldcost. We sold the plan around the stateand to the legislators. If you compare UKversus Michigan or Ohio State – two of theschools we’re trying to catch – they aremuch bigger than UK. If you make UKbigger, it will have more tuition moneywith which to work.

This is the fourth year that we’ve hadto hold UK freshman admissions toaround 4,000 students. We had plannedto admit more students, but we made acommitment to the faculty that we’re notgoing to expand the student base any-more until UK can add faculty. So if youlook at research, UK ranked 27th the lasttime it was measured in comparison topublic universities. So UK is in the 20s.

The biggest Top 20 ranking challengeUK has is undergraduate measurements.UK hasn’t been able to change the stu-dent-faculty ratio because of funding. Thegraduation rate takes time to change, andit will improve in probably two years. For asix-year graduation rate, UK is the highestrated among Kentucky state universities at61 percent. When Provost Kumble Sub-baswamy came shortly after the Top 20plan was funded, he declared war ondropouts. UK has improved its freshman-to-sophomore retention rate from 76 per-cent to 82 percent since that time, andannual increases will flow through andboost UK’s future graduation rates.

The entering ACT score rate is achallenge because UK is in a state wherethe average ACT is 19.1. Every semesterhas improved, and last year UK’s aver-age ACT went from 24.7 to 25.2, whichis a big move when you consider thatUK had 4,300 freshmen. If UK was justtrying to improve the ACT average,without changing the educational levelsin our state, it could recruit more ver ygood out-of-state students who may notqualify to get into other SEC schoolsthat already have over 40 percent oftheir freshman from out-of-state.

Out-of-state students pay moretuition, so there is more money to oper-ate. They have higher ACTs, so thathelps in the U.S. News and World Reportrating, and they’ll graduate in probablyfour years. But I don’t think they willstay in the state.

So UK targets about 75 percent Ken-tuckians for its freshman class. The way UK

‘THE JOURNEY IS AS IMPORTANT AS THE DESTINATION’Recently retired president Lee T. Todd Jr discusses his 10 years of service at the University of Kentucky

BY ED LANE

Lee T. Todd JrDr. Lee T. Todd Jr. stepped down lastmonth as president of the University ofKentucky after serving in the position for10 years. During his tenure, Todd focusedon helping the university achieve greaternational prominence and gain status as aTop 20 public research university. Since2001, UK’s research expenditures havemore than doubled, student enrollmenthas grown by more than 13 percent and thepercentage of students graduating hasincreased as well. Prior to being namedpresident of UK, Todd was senior vice president of Lotus Development Corp. andwas the founder, president and CEO ofDatabeam Inc. After receiving his bachelor’s in electrical engineering fromUK, Todd earned masters and doctoraldegrees from the Massachusetts Institute ofTechnology and received six patents forhigh-resolution display technology. Hereturned to UK in 1974 as an electricalengineering professor where he had anactive display devices research program andwon several teaching awards.


THE LANE REPORT • KYBIZ.COM JULY 2011 21

is going to achieve a Top 20 in undergrad-uate measurement is, Kentucky is going tohave to change K-12 education; that maytake awhile. UK’s priority is to improve theeducational levels of Kentuckians as well asimprove UK’s Top 20 rankings.

EL: What do you think would be a goodgraduation rate to be in the Top 20?LT: To be Top 20, UK needs a 72 percentgraduation rate. That was the beauty of theTop 20 plan: One of the most power fulpictures in the plan shows UK’s 61 percentgraduation rate versus the 72 percent rateit needs to achieve.

Our faculty and staff look at that andsay, “How do we close that gap?” Theyforget the words “business plan” – it isjust “How does UK close that gap?”Then with the leadership of the provostthey say let’s declare war on increasingfreshman-to-sophomore retention.

EL: Do you feel UK can achieve Top 20status by 2020?LT: UK will be there in some rankings, butto meet all the goals will take a little longerthan 2020. It might not have been possiblein the very beginning to reach a Top 20ranking. It is clearly one of those caseswhere the journey is as important as thedestination. UK is a much stronger, morecompetitive university now than it wouldhave been had we not tried.

EL: What macroeconomic and competi-tive factors outside of UK’s control affectits efforts to move up in the rankings?LT: UK anticipated continued invest-ment from the state for operations aswell as for capital projects so it couldcontinue to improve classrooms andbuild more research space. UK has beenable to do some building, but right nowthere is no research space available.

And the other factor was the eco-nomic decline – it didn’t allow UK togive salary increases. UK retained mostof its faculty and staff. Some might have

been somewhat disgruntled. I’m veryproud of the vast majority who just kepton working and said, “That’s just tough,everybody’s having a hard time.”

The down economy also caused a lot ofpeople who were close to retirement agenot to retire when their 401k’s dropped.

This affects our ability to recruit freshtalent at the assistant level. As a resultwe’ve offered a retirement enhancementthis last year to try to help people, provid-ing them with a little more resources – andthe economy has picked up now. There’sa natural flow of talent at a university asthe older professors leave and you bringyounger ones in. When you get the situ-ations we’ve had recently nobody leaves.

EL: Could you provide a brief commenton several subjects: first, the increase inUK’s total student enrollment over thelast decade.LT: UK has really cranked up recruiting,and I give Don Witt, who is now UK’s viceprovost for enrollment management, aton of credit. UK wasn’t recruiting thathard because it was a state flagship, andwasn’t offering scholarships like it now is.The scholarship pool is now over $50million. UK is attracting children ofalumni who live out-of-state because itoffers a legacy scholarship that allowsthem in-state tuition.

EL: UK’s annual budget growth sinceyou became president.LT: It has increased from $1.2 billion to$2.7 billion, so that’s pretty good in this 10-year period. The budget has grown inthree different areas. Medical center rev-enue have grown from $300 million toalmost $900 million. Tuition has gone up.Research has gone up from roughly $200million to around $350 million annually.

UK’s payroll in the medical centerhas gone up about $350 million since2003. UK employees are paying about$20 million more in annual personalincome tax to the state of Kentucky.

One of my goals in retirement is to tr yand show state legislators that they needto think about educational institutionsdifferently. How many states would havejust turned cartwheels to get a businessto increase its revenue by $1.5 billion ina 10-year period – even when the econ-omy hasn’t been very good?

EL: State funding as a percentage ofUK’s total annual budget.LT: My first year, UK received $303 mil-lion from the state. Receiving the $24million increase in 2005 was a huge dealbecause it showed faith in our Top 20business plan, and it gave the campus abelief that the legislature really wantedUK to go for this goal. If you were tointerview the deans and some of theother high-profile individuals who havecome to UK, they’ll tell you it wasbecause of that Top 20 plan. They reallythought it was important to see a long-term plan, and it made a difference.

EL: Annual tuition costs for students –10-year trend.LT: UK had to increase tuition morethan I wish it had. I still feel that accesswas not severely affected; UK has takensome of the income from tuition andmoved it to the need-based scholarshiparena. While I regret the tuitionincreases, they have been necessar y forUK to stay competitive.

EL: UK HealthCare revenue growth?LT: When I became president, there wasinitial discussion that UK really needs tobuild another $200 million hospital. Butthe revenues weren’t there to give me con-


fidence in the plan. UK was losing somegood doctors, and it just didn’t make youfeel good about building a new hospital.We made some changes in leadership andbrought in Dr. Michael Karpf, and otherscame shortly thereafter.

One of the UK HealthCare missionswas to keep rural patients in their hospi-tal beds as long as possible, because fam-ilies just couldn’t afford to live inLexington while their loved ones werepatients. But when patients had severemedical conditions, we wanted them tocome to UK Hospital. As a result, UKnow has a lot of subspecialties, and thenumber of patients UK attracts has goneup substantially as well. A key to UK’ sprogress was the purchase of GoodSamaritan Hospital (near campus inLexington), which gave UK HealthCaremore beds and allowed it to continue togrow. It’s been a phenomenal success,and I never would have believed thatUK would have a $570 million new hos-pital sitting over there as I retire.

EL: Is it the vision of the UK and Nor-ton alliance to ser vice the entire stateand boost the quality of healthcare?LT: It really is. UK’s reach has primarilybeen in Central and Eastern Kentucky,and Norton Healthcare has really been inLouisville and Western Kentucky. UK andNorton have the only two children’s hos-pitals in the state. For UK HealthCare tocontinue to grow to be a Top 20 institutionrequires a larger patient base. To offer aregional transplant center for a givenorgan requires a large population fromwhich to attract patients.

UK is not only looking to expand inWestern Kentucky but also to get into WestVirginia to increase the service area. Nor-ton Healthcare has extremely strong busi-ness practices. W e know Norton’ sleadership team, and we are going to beselective about certain areas in pediatricsand cancer when we work together. UKdidn’t give up any voting rights, and ouralliance with Norton is more of a workingpartnership. UK still has full control of themedical center like we did before.

EL: While president, what were two ofthe lowest and top points of your tenure(biggest disappointments and bestachievements) from your perspective?LT: The lowest point was going throughprobation with UK football – which wasn’tjust one moment; it lastedfor three years. The coach(Hal Mumme) had beenfired by the time I got here.UK athletics was underinvestigation when I tookover. Then we had the(NCAA) hearing in Indi-anapolis, and UK was puton probation after that. Sothat probation started myfirst year here. It just took alot of time, and a lot waswritten about it. It’s hard toturn a football programaround when you’re play-ing 19 scholarships short.

I took a lot of heat hiring MitchBarnhart, who was not a Kentuckian, asthe new athletic director. Then we hiredCoach Rich Brooks, who was an oldergentleman – who nobody thoughtwould be successful. That whole footballscenario was pretty much a challenge.

The other low spot was nine budgetcuts in 10 years. UK had cuts under Gov.Ernie Fletcher; but to get a mid-year cut(in 2009) when you’ve already setsalaries is tough and took a lot of finan-cial management. UK initially cut oper-ating costs a lot – $112-$120 million.That was going to be my push (the Top

20 plan) money. So the secondlow point came during one ofthe budget-cut periods; that iswhen I knew it wasn’t going toturn around quickly – it wasn’ tjust a short-term thing; it was along-term global economicproblem.

The high point would have tobe passing the Top 20 businessplan. Our management team andfaculty really had to work hard onit. We went to 22 cities through-out the state with the communi-cations plan that Tom Harris, JayBlanton and Kelley Bozeman

worked on, and met with about 100 indi-vidual legislators. UK got a front-page arti-cle in the Chronicle of Higher Education, aNew York Times Sunday article and othernational recognition. The faculty began tobelieve that the Top 20 plan was some-thing to take seriously. That really was ahigh point.

When I came to UK, the target was toraise $400 million for UK. We extendedthe campaign to $600 million; when wegot to that level we celebrated. But then Iworked with Terry Mobley, and we felt wecould go to $1 billion. It was more thanjust the money; it was the big goal of a bil-lion dollars. At that time, there were only31 universities in the country, public andprivate, that had achieved this. So that wasanother way to say UK is different – UKsets big goals and achieves them.

The new $570 million UK Med Centerhad its grand opening in May and then ontop of that we won the Clinical and Translational Science Awards (CTSA)grant last week. UK tried for CTSA fourtimes, and the NIH $20 million grantcame right on top of the grand opening.

There were also a lot of individualhighs on sports.

EL: Are you worried about long-rangefunding for the new UK Medical Center?LT: The numbers look good. When Con-gress starts monkeying with the whole U.S.health system, it bothers you about reim-bursements. What keeps me from worr y-ing too much is that UK will be one of thetop healthcare providers, and our man-agers are smart enough to figure out howto adapt to whatever healthcare changesoccur. I watch the financials ever y monthto make sure we’re making payments andputting money away.

EL: Were there major goals you wantedbut were unable to achieve?LT: Building new law and businessschools are two of the buildings that I’dmoved up to the high-priority level.Alumni in both of those colleges madesignificant pledges toward new build-ings, yet UK has not been able to deliverstate funding on these facilities.


LANE ONE-ON-ONE

Mitch Barnhart

Rich Brooks

Continued on page 24



EL: How does UK Basketball CoachJohn Calipari compare with previousUK basketball coaches?LT: I haven’t known all theprevious coaches as well asI know Coach Cal, but Iwould have to say that heembraces this job as well asany coach we’ve had. He’swilling to sell the job, serv-ice the Big Blue Nation, go anywhere anddo anything people want him to do to letpeople know he’s the coach of the Uni-versity of Kentucky Wildcats.

I even told him his first summer, “Youdon’t have to do everything people askyou to do.” I was afraid he was going toburn himself out. He said, “Once the sea-son starts I may not even return yourphone calls – I’ll just focus on basketball.”So in that way he’s really set himself apartand is quite a contrast to Billy Gillespie.Billy G didn’t like that part of the job.

Part of the result of UK sports popu-larity is UK shares royalties with the Ath-letic Department on athletic wear that issold. This year, both athletics and the UKgeneral fund got an extra $2 million eachin increased sales royalties. When UK goesto five bowl games and a Final Four peo-ple buy more, and that helps us as a uni-versity. The coach has been phenomenalwith respect to his outreach.

I give Senior Associate AthleticsDirector/Student Services Sandy Belland Mitch Barnhart high ratings for get-ting the overall sports culture right.Sometimes it’s not the coaches that hurtyou as much as some booster who doessomething that gets UK in trouble.When I interviewed for this job, I saidUK has got to play honestly and thenyou hope UK can still be competitive.

UK has shown that across the board inso many of the sports, it is competitive now.UK has one of the best compliance depart-ments in the country. I was initially con-cerned about John Calipari, and he knowsit. Mitch had considered hiring him backwhen we hired Billy G. I didn’ t feel com-fortable with hiring John at the time

because of some of the recruits that Johnhad on his Memphis teams; they had grad-uated from non-certified high schools.

When Billy G. left, Mitch called me thenext night or so and asked me if I’d beinterested in interviewing John Calipari.He and Sandy had already checked withthe NCAA and SEC, and they were finewith him. We flew up from Bardstown,and I spent three hours with John in hishotel room and asked him questions. Herecruited those players because in his con-ference if he didn’t recruit them he’d playagainst them, because all the teams wererecruiting them.

But he loves a student athlete; hekeeps track of them after they play withhim. He told me he assigns an assistantcoach to each student athlete to tracktheir academic progress. John is worriedabout the right things. Now I’ve seenhim execute for two years, he’s doingthose things and has really been tremen-dously successful with the program andrecruiting. People complain about theone-and-done, and he would like tochange that as much as anybody would.But he goes for the talent, and he’sshown that he can develop that talent ina pretty short period of time, whichcauses those kids to jump to the NBA.But he seems to come up with anothercrop of new recruits that are ready to go.

EL: Did being responsible for UK sports,and men’s basketball especially, consumea lot more of your executive managementtime than you initially anticipated?LT: It did the first year and maybe a lit-tle bit into the second year. Once MitchBarnhart and his people got in place, Ispent very little time on it. I go to thegames. Mitch and I talk every week andsometimes every day; he doesn’t do any-thing he doesn’t pass through me.We’ve really grown up together in thisjob. But it doesn’t take much time. Ifyou go to the Final Four it takes quite abit of time, but it’s worth it. But that firstyear or so was pretty challenging.

EL: How would you rate the ser vices ofUK Director of Athletics Mitch Barnhart?

LT: Mitch has gotten all of our pro-grams competitive by recruiting com-petitive coaches. He is willing to raiseticket prices in football and basketball tohave the resources to help those twosports but to also help the Olympicsports. He knows every athlete at UK,and they know he knows them. Becauseof cleanliness, competitiveness and pro-fessionalism, I’m extremely pleased withMitch and his selection of personneland the decisions that he makes ever yday. He’s just a solid, solid person.

People don’t understand that MitchBarnhart and Rob Mullen (now AD at Ore-gon) interviewed quite a few coaches, andto this day nobody knows who thosecoaches were because they were so careful.I give them a lot of credit for that becausethese coaches don’t want their alumni,presidents or donors to know they are look-ing at other jobs. UK tried to hire BillyDonavan, but that didn’t work out.

When Billy Gillespie was selected,most people were positive. He hadbeaten Louisville on Rupp Arena’s floorand in the NCAA tournament, andeverybody who knew him and saw himwas very impressed.

When he did his first press confer -ence at Memorial Coliseum, you could-n’t have asked for a better performance.He was very tearful and was very pas-sionate. It just seemed to be a job thatdidn’t fit him very well. He didn’t enjoya lot of the aspects of the job thatneeded to be done.

I tell students the best thing you can dois hire the right person for the right joband then give them the resources and letthem go. But if you make a hiring decisionthat’s not working out, the best thing to dois terminate as fast as you can; it’s not goingto get any better. So Mitch and I decidedafter two years it was time to make achange. We didn’t know who the newcoach was going to be, but we just knew weneeded to make a change.

EL: Any other issues about sports onwhich you would like to comment?LT: I have to give Rich Brooks an awful lotof credit for the turnaround in UK foot-

LANE ONE-ON-ONE

Continued from page 22

John Calipari


ball. He stuck to it. Why he and Mitchstayed in this town when they were gettingblasted like they were at one point I don’tknow. But I’m glad they did.

I’m as surprised about going to fivebowl games in a row as I am about the newhospital sitting over there. That’s some-thing I really didn’t expect to happen whenUK football was placed on probation.

EL: During your 10 years as presidentyou’ve worked with Governors Paul Pat-ton, Ernie Fletcher and Steve Beshear.Briefly, how would you evaluate yourrelationship with each governor?LT: Gov. Patton was really committed toHB1 because it was his vision that pushedthat and the “Bucks for Brains” program.Gov. Fletcher was hampered with theeconomy turning south, and it limitedwhat he could do to help state universities.Gov. Beshear has had many of the sameissues. He has certainly held education asharmless as possible in the budgetingprocess compared to other state agencies.Gov. Beshear has had several meetings try-ing to assist UK with fundraising for thelaw building in particular; he’s a graduate

of that program. During this period oftime, he hasn’t had the luxury of havingany money to invest either.

EL: How well is UK’s Agriculture Exten-sion program serving Kentucky?LT: UK has one of the most progressiveextension networks in the country. Themain thing I asked extension agents to dois to just be a broker for the ser vices UKoffers. The agent didn’t have to be anexpert in everything. Agriculture itself haschanged a lot in this period. UK has a lotof patents and innovation coming throughthe extension program.

The UK Agriculture College teachesentrepreneurship in the 19 mosttobacco dependant counties in North-ern Kentucky. One of the powerfulthings UK did is it started an equine ini-

tiative. The MRLS syndrome hit the firstyear I was president. UK’s Gluck EquineCenter, along with some of our exten-sion agents, was very actively involvedtrying to figure out what caused MRLS.UK was in communication with a lot ofthe surrounding horse farms, and I real-ized that UK wasn’t doing that much toaid them. UK put together a Common-wealth Collaborative called the EquineInitiative, and it now has a couple hun-dred students in that program. UKoffers two degrees: in equine manage-ment and equine science.

EL: UK is a par tner in economic devel-opment with the Lexington-FayetteCounty Urban County Government andCommerce Lexington Inc. How effec-tively has the Bluegrass Business Par t-nership served Central Kentucky?LT: I still remember the day former DeanDick Furst came in to suggest that UK moveits small business development group intothe Commerce Lexington building. Thepartnership UK has had with the city and

Paul Patton Ernie Fletcher Steve Beshear



Commerce Lexington has just been phe-nomenal. When I recruited Hughes Air-craft to Kentucky, they were overwhelmedby the fact that Lexington had a mergedgovernment. Hughes management didn’thave to negotiate with the judge executiveand a mayor. With the partnership, an out-side business is able to talk to the city, cham-ber and the university at the same time inone office. That is very powerful, and thepartnership has had many announcementstogether, especially with some of our start-up companies as well as Tempur-Pedic andother businesses that have recently chosento expand in Central Kentucky.

EL: Based on news reports, the UK Boardof Trustees’ annual evaluations of your jobperformance were generally characterizedas very good to exceptional. Did thetrustees’ support and counsel help youexcel as UK’s president?LT: Yes, the trustees have been very sup-portive. I’ve always received a good ratingfrom their evaluation process. The chal-lenge is, the bonus was always sitting outthere. While the trustees would vote for meto take the bonus, with the economic timesas tough as they were I couldn’t. I eithertook part or didn’t take any of it, or donatedit back. Bonuses were not a good part of acompensation plan. Bottom line: TheBoard of Trustees has been very supportive.

EL: Last week the National Institutes ofHealth (NIH), the largest governmentfunding source for biomedical research inthe U.S., awarded $20 million to the Uni-versity of Kentucky to move r esearch dis-coveries to healthcare solutions morequickly. What is the significance of theNIH’s five years of funding for UK?LT: The NIH started forming researchtranslation centers to get the ideas from thelaboratory bench to the bedside and at thesame time create jobs to grow that industry.NIH is very particular because when itselects centers its goal is to have 60 in thenation. When NIH selects a university, itgives you $4 million a year for five years.

But more importantly, NIH allows justthose 60 entities to compete for certainprojects. When you look at the NIHannouncement in June 2011, it was Penn-sylvania State University; the University ofCalifornia, Los Angeles; University ofKansas Medical Center; the University ofMinnesota; and the University of Kentucky.Those first three universities are Top 20universities. UK has attracted the attentionof the nation, not only because of the hos-pital growth but also because of the caliberof people we have on our research staff andthe entrepreneurial work we are doing.

EL: Many of the top people on yourstaff helped UK achieve exceptionalresults. Could you identify the top five

executives at UK who have shown greatleadership over the last 10 years?

LT: I’d have to putProvost Kumble R. Sub-baswamy as one of those.He has recruited about15 deans, and helped UKfocus its investments(with what money wehave had available) tokeep some positive actionon the academic side. Hehas also overseen thereform of our generaleducation core.

Dr. Michael Karpf isobviously very visible to thecommunity and the state.He has helped transformnot only UK’s ability to

generate a large revenue stream but alsothe way in which UK treats patients exter-nal to Lexington and hence has grownthat capacity tremendously.

Mitch Barnhart has saved me a lot oftime, so I don’t have to worry about athleticdifficulties; and when I do he is there to helpme get through those. But he’s also not onlymade basketball and football competitive,he’s made all UK sports competitive.

I can’t select any one dean and wantto group them together. The fact thatwe’ve been able to attract 15 deans andretain the other two is a pretty goodtransformation of the intellectual capac-ity of the university.

Len Heller has reallygiven the Office of Com-mercialization, Innovationand Economic Develop-ment a tremendous boost.He knows how to structuredeals. He has been willingto spend the time with university personnelto try to improve our ability to move intel-lectual property through the patentprocess to the market, and been very activein raising investment funds.

The other person isDon Witt, our vice provostfor enrollment manage-ment. He was the registrarwhen I came, but then Igave him admissions, finan-cial aid and scholarships.He now has the entire group reporting tohim and is responsible for recruiting UKstudents. I give Don a lot of credit for thequality of each UK freshman class, which isgetting better and better.

EL: UAB Provost Eli Capilouto has beenelected the 12th president of UK. Whatin your judgment were Dr. Capilouto’sstrengths that impressed the UK Boardof Trustees?LT: His integrity and his personal inter-action were there things I heard a lot

about early. His knowledge about themedical area, which is the strong pointfor UAB, would be a second one. Dr.Capilouto really devel-oped the undergraduateprogram at UAB, whichwas primarily a researchmedical institution. Hisefforts helped UAB cre-ate a strong undergradu-ate program.

EL: How long will you be involved in thetransition process?LT: I start my leave of absence July 1 butwill be available to Dr. Capilouto anytime he needs me during that year.We’ve already had several conversations.

EL: Do you and your wife Patsy have anyspecial plans after June 30th?LT: We are going to take the month of Julyand stay home and just do things aroundthe house. Then go to Maine and St.Thomas; then plan a trip to Europe.

EL: What will your future role at UK be?LT: I’m going to come back and join theUK engineering faculty after this year’ sleave and focus on economic develop-ment for start-up companies, K-12 mathand science education, and investigatingat how states can better fund highereducation. I will be back as a full profes-sor of engineering, but I am not goingto teach classes. I may teach seminars onleadership and entrepreneurship.

EL: Do you have a closing comment?LT: I’ve said this so many times, butbeing a native Kentuckian who went toschool at UK, taught here and then hadthe opportunity to be the president hasbeen something I never imaged beingable to do. It’s been a tremendoushonor and a pleasure for both Patsy andme. We wish the Capiloutos the verybest. We love students. �

Eli Capilouto

LANE ONE-ON-ONE

Lee and Patsy Todd plan to take trips to Maine, St. Thomas and Europe in the coming year.

Ed Lane ([email protected]) is chief executive of Lane Consultants,Inc. and publisher of The Lane Report.

KumbleSubbaswamy

Michael Karpf

Len Heller

Don Witt


FORT Knox energy manage-ment has undergone a remark-able makeover from a snafu ofinefficient buildings served byantiquated systems several

years ago to the new gold standard ofthe Army today.

Commanders, administrators andenergy managers at the 93-year-old gar-rison have slashed energy use 41 per-cent the past 20 years. Energy efficiencymeasures will save $10 million this yearand more next year, they estimate. FortKnox has changed its culture, akin tothe transformation untold thousands ofraw Army recruits have undergone inboot camp there over the years,.

“Our commander (Col. Mark Need-ham) is very interested in energy con-servation,” said Patrick Walsh, directorof public works at Fort Knox. “We wentfrom pulling him to get interested inenergy conservation to being pushed bythe commander.”

A competitive atmosphere has takenhold. Fort Knox has won seven consecu-tive Secretary of the Army Energyawards. There is competition among

buildings to improve. A 76-year-oldbuilding earned Energy Star certifica-tion (it uses at least 20 to 30 percent lessenergy than federal standards).

All Army bases were mandated by2015 to reduce their energy use 15 per-cent from 2003 baselines; Fort Knox didit by 2010.

Other garrisons are calling foradvice and to find out how Fort Knoxwon this battle. It did so with a holisticapproach that attacked the problem onmany fronts. Drafty older buildingswent through refitting or were demol-ished to reduce the base energy foot-print. Creaky and worn out equipmentwas replaced with high-tech, high-effi-ciency systems. With a little humanhelp, intelligent monitoring technol-ogy watches over everything.

“A different attitude has permeatedthe garrison,” Walsh said.

Most of the heavy lifting occurred inthe past decade. Around $190 millionhas been invested, but the money camemostly through a utilities energy servicecontract with Nolin Rural Electric Coop-erative Corp., the local power provider.

Harshaw Trane, which has worked withFort Knox since the 1970s, won a contractin 2002 from Nolin RECC. It includesinstallation of:

• Trane’s Tracer Summit™ computerand control system for monitoring the airquality and temperature of 6 million s.f. ofspace in approximately 250 buildings

• Geothermal heat pump systems witha common well field for cooling and heat-ing 4 million s.f. of building space

• Insulation upgrades• Low-flow toilets, faucet retrofits and

a golf course water collection pond forirrigation, among other water conserva-tion strategies

• Energy efficient windows• Energy-efficient lighting systems

that harvest natural light when availableand use occupancy sensors

• A new boiler system at the hospital• Sustainability services that keep the

systems running at peak performanceWhat has been accomplished goes

beyond finances and the environment,Walsh points out. “What we’ve done is takecare of soldiers and their families,” he said.

Old buildings add up to big challengeEstablished during World War I in 1918as an artillery training center, the basewas named in honor of Gen. HenryKnox, chief of artillery in the Revolu-tionary War and first Secretary of War.Some of its buildings dated to the earli-est days, when energy management wasessentially unknown. Among today’s450-plus structures, 186 are historic.

The Gold Standardfor Energy SystemsPower system remake cuts utility use by 40 percent,

trims Fort Knox bills $10 million a year

BY MARK GREEN


ENERGY MANAGEMENTFort Knox has made $190 million in energy efficiency upgrades to building and infrastructurein the past decade and cut its power usage far more than any military base in the United States.

Harshaw Trane measurement and verification engi-neer Jason Volz works in the Fort Knox energy man-agement control center monitoring real-time datafrom all base HVAC systems and from individualbuildings room-by-room. Intelligent Services soft-ware generates a wide range of analytics.

Fort Knox photo

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“In 2000, the biggest unmet need washeating and cooling,” Walsh said. “Inold days we had a heating system and anair-conditioning system; only one couldoperate at a time.”

Service was uneven from building tobuilding, even room to room. It all oper-ated manually. The garrison had 50employees whose jobs were to inspect,maintain and turn on and off the heat-ing and cooling systems that had beeninstalled, added onto, repaired andreplaced over the years. The hospitalalone had 11 full-time workers runningits power systems; it now has less thanone FTE.

The utility budget was inadequate.The approach essentially was to operatea system until it broke down, then patchit back up.

After the energy services contract wentinto place, the base could legally borrowthe money – enough to redo it all.

The giant central boiler with its tallchimney and the huge chiller werereplaced with a geothermal system ofground-coupled heat pumps. Geothermalsystems use the earth’s 50- to 54-degreeunderground temperature as a heatsource in winter and a heat sink in thesummer, tapping it via water circulatedthrough special wells.

The base’s cen-tral well fieldincludes morethan 5,400 separateholes and 900-plusmiles of pipe, saidRobert “R.J.” Dry-dek, energy pro-gram managerwith the Direc-torate of PublicWorks at FortKnox. They trieddrilling to various

depths but standardized at 500-foot-deepholes spaced 20 feet apart, he said. A park-ing lot covers the main base well field.

For geology at the garrison, the first50 to 70 feet is the high-risk zone wheredrilling sometimes encounters voids orwater, Drydek said. Beyond that is con-sisten shale and clean sailing.

The geothermal wells only have to belarge enough to accommodate pairs of 1.5-inch polyurethane pipe through which thewater circulates. Drydek explained thatpolyurethane is more flexible than thePVC common in home plumbing and tol-erates the minor shifts that Kentucky sub-strata experiences. It is durable and doesnot corrode, resulting in long life, esti-mated to be at least 50 years.

So far, the small handful of breaks inFort Knox’s miles of geothermal pipehave occurred only in the header sec-tions tying the wells together just a fewfeet underground.

Geothermal is the standardModern closed-loop geothermal systemshave been around since the 1940s. J.Donald Kroeker designed the first com-mercial geothermal heat pump for theCommonwealth Building in Portland,Ore., in 1946, and professor CarlNielsen of Ohio State University builtthe first residential open-loop version inhis home in 1948. Geothermal systemsremained rare and were consideredeccentric into the 1990s.

Robert R.J. Drydek, Fort Knox Energy Program manager

Fort Knox is the only U.S. base with natural gas wells. All 12 wells drilled so far by Trico/Tiger LLC of Suttons Bay, Mich., are producingand feed to this demoisturizing, odorizing and compression station.

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ENERGY MANAGEMENT

By 2004, one million systems were inuse worldwide. Walsh said Fort Knox’ssuccess has vanquished any residualstigma that remained, and now otherU.S. military bases in the Southeast areinstalling geothermal systems. Today’sArmy is good about sharing informa-tion, according to Walsh.

“We proved it worked,” he said, “Nowpeople have picked our brains.”

Geothermal “is the acknowledgedbest practice.”

Exchanging energy from its centralcore geothermal loop, the systeminstalled by Harshaw Trane has the flex-ibility to distribute heating and coolingcapacity and follow changing loaddemand from building to building androom to room all over Fort Knox.

“Heat, air conditioning and ventila-tion systems are unique from buildingto building but, by and large, they con-sume the most energy in any givenfacility – more than lighting, hot water,even computers,” Frank Harshaw, pres-ident and CEO of Harshaw Trane, tolda trade journal recently. “With theupgrades we’ve made to these systems,significant energy savings will continue,maximizing building efficiency andminimizing maintenance and new con-struction expenses for years to come.”

There is, of course, a computerized“brain” at the core of the system.

Fort Knox operates one of thenation’s largest building automation sys-tems, with a control center overseeingabout 7 million s.f. in 275 communitybuildings. The Intelligent Services sys-tem put in place by Harshaw Trane man-ages energy consumption, conductsdiagnostics and gathers intelligence.

Energy analytics find wasteIntelligent Services analytics can quicklydisplay energy use metrics on the controlroom’s large wall-panel screen – an energy-use comparison of two buildings, compar-ison of a building’s present and past usage,chart it against baselines, present usage bysquare footage and more.

Building occupants, of course, can callin complaints or report any problems.Meanwhile, the control system operatorregularly tracks through data on eachbuilding and the overall system to monitorperformance. Buildings and individualrooms each have a system-specific ID.Measurement and verification engineerJason Volz of Harshaw Trane demon-strated how operators can see air-dischargetemperatures and that of system water leav-ing a building to a tenth of a degree. Har-shaw Trane’s service vans have wi-fiInternet and can assess the same info fromoutside buildings they are near on base.

The federal Energy Policy Act of 2005requires submetering for electric and gasby 2012. Fort Knox has 540 electric andgas smart meters that make readings aminimum of every 15 minutes.

The central system monitors allmeters, compiling and analyzing data onhow much energy all individual buildingsuse over time. It detects any HVAC failureand alerts to energy use problems.

When problems do arise, the systemoffers technicians immediate access tothe operator manual and all service bul-letins for every piece of Trane equip-ment ever made, Volz said.

With many of the HVAC and buildingimprovements having been made, theHarshaw Trane Intelligent Services systemis put to use identifying abnormal energyusages for individual buildings. Techni-cians are sent to find out why, and Dyrdeksaid they have tracked unusual usage toouter doors left open during a furnituremovement project and exhaust fans lefton; the latter was causing $400 to $500 inmonthly charges for one building.

Base energy managers are seeking toidentify and lower each building’s top15-minute demand usage period. Inaddition to costs for their cumulativetotal energy usage, commercial cus-tomers pay a demand charge based ontheir peak usage measured in 15-minuteincrements. The demand charge is 51percent of Fort Knox’s average $1 mil-lion monthly bill, which ranges fromapproximately $800,000 to $1.4 million.

Identifying and flattening those 15-minute peaks can yield big dollars.

It’s a challenge. There are 41,000 res-idents and employees at Fort Knox whoall use power but don’t pay the billthemselves.

Commanders and managers areseeking to create incentives, however, byestablishing baseline targets for a build-ing, then factoring the exact dollar costof missing a target into the budget for itsuser. Overspending on energy must beoffset by cutbacks in other budget line-items, even eliminating an employee.

The base is setting up reward systemsfor buildings and barracks as well.

One method will be installing kiosksat the entrance of buildings displayingenergy usage. They can be linked to aGoogle gadget managers and workerscan install on their smart phones toaccess energy use data. Plans call for try-ing them in five or six buildings, whichwill cost $3,000 to $4,000.

With access to daily data, managerswill be encouraged to operate at EnergyStar standards, to wonder why theirbuilding efficiency fluctuates andbecome more aware of energy use. FortKnox wants to engender an efficiencycompetitiveness among buildings.

Under baselinestoday, an individualbuilding powerusage of 40,000kWh/year is goodand earns an EnergyStar rating, and115,000 kWh/yearis bad, HarshawTrane vice presidentTom Abele said.

Fort Knox for-merly had build-ings using 280,000kWh but now hasmany in the 40s. The top new buildingswith efficiency measures designed in arein the mid-20s.

Six Fort Knox buildings now haveEnergy Star ratings, Dyrdek said, butofficials believe about 115 could qualify.Certifying them as such would be costlybecause of the labor and time requiredfor the certification process, he said.

Meanwhile, Fort Knox now also has 12natural gas production wells, the only mil-itary base in the nation with that distinc-tion. Each well drilled by Tiger/Tricobeginning in January 2009 has been pro-ductive. The wells feed to one compressorstation that demoisturizes and odorizes themethane and feeds it at 50 psi into thebase supply lines.

Walsh said the base commander refersto the sound the compression station gen-erates as “the hum of freedom.” �

Tom Abele, Vice President, Harshaw Trane

Fort Knox has reduced power consumption evenwhile adding the 900,000-s.f. Lt. Gen. Timothy J.Maude Complex that houses the Army’s HumanResource Center of Excellence. Opened in 2010, itis Kentucky’s largest office building.

Fort Knox Energy Program Manager Robert Dyrdekstands with equipment that exchanges heating andcooling from the base’s central geothermal loop fordistribution to more than 250 buildings.

Mark Green is editorial director ofThe Lane Report. He can be reachedat [email protected].

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U.S. Army photo



THE U.S. Green Building Council’sLeadership in Energy and Environ-mental Design, or LEED, designa-

tion has gained international acclaim asthe leading green building credentialsystem and recently surpassed 1 billions.f. of certified space.

In 2011, 25 per-cent of all new con-struction and 1percent of all existingbuildings are ontrack for certifica -tion. By USGBC cal-culations, 1 millions.f. a day certifies to

LEED. More than 3,000 projects havecertified outside the United States.

LEED project statistics are eye pop-ping and an important indicator of pub-lic and private adoption, but who arethe people behind LEED?

It begins with the Washington, D.C.-based non-profit USGBC, whose moti-vating mission is that “buildings andcommunities will regenerate and sustainthe health and vitality of all life within ageneration.” There are 79 chaptersthroughout the United States, 17,000national member organizations and30,000 individual chapter members.LEED International was unveiled in2010 with 19 countries participating.

Here in Kentucky, we have morethan 100 commonwealth-based nationalmember organizations and 286 individ-ual chapter members. Individual mem-ber volunteers support this mission onthe front lines with education, advocacyand outreach programs.

Beyond members, another groupvital to the process is the 147,107 LEEDAccredited Professionals worldwide.While projects are certified at variouslevels, individuals in several professionaland construction sectors can achieveLEED Accredited designation.

The Green Building CertificationInstitute administers these project certi-fications and professional designations.

The initial Accredited Professional(AP) credential was augmented in 2009by a Green Associate (GA) designation– creating an entry point demonstratingknowledge of green building principles,practices and LEED. More than 18,000already hold a LEED GA credential inprofessionals from business owners toproduct suppliers to those commonlyfound in the built environment.

The LEED AP credential went througha recent overhaul with addition of a newLEED AP+ Speciality credential. Its candi-dates must demonstrate expertise with averifiable LEED project experience to beeligible to sit for any of the LEED AP spe-ciality exams. To keep their credential,LEED AP+ holders must earn set amountsof continuing education credits regularlyto remain current with this rapidly evolv-ing world of green building.

Additionally, a new LEED Fellow cre-dential recognizes distinguished LEEDAPs who have made a significant contri-

bution to the field of green buildingand sustainability at a regional, nationalor international level.

LEED credential holders who achievedAP status prior to July 2009 will remainvalid credential-holders but may enroll ortest into the AP+ speciality program.

These professional designation changeshave come in response to the evolution ofLEED itself, which is an open and trans-parent process where technical criteria isproposed, publicly reviewed and approvedby USGBC members. New certificationstandards and programs continue to trans-form the built environment.

To obtain a LEED Accredited Profes-sional credential, candidates must meetcertain eligibility requirements and passa two-part exam; each portion consistsof 100 randomly generated multiple-choice questions to answer within twohours. The LEED Green Associate cre-dential can be obtained by sitting forpart one of the exam.

Recommended exam preparation isa one-day LEED workshop and study

guides. The Kentucky USGBC offersworkshops that meet the educationrequirements. Upcoming classes areposted at usgbckentucky.org.

Individuals can schedule computer-based exams through GBCI and takethem at testing centers throughout Ken-tucky. Detailed testing information isavailable at gbci.org.

The LEED Green Associate exammeasures ability to understand and sup-port green design, construction andoperations. Candidates must proveexperience in any of three manners:

• Documented involvement on aproject registered or certified for LEED

• Employment (present or previous)in a sustainable field of work

• Engagement in or completion ofan education program addressing greenbuilding principles

Candidates must agree to the Disci-plinary & Exam Appeals Policy, creden-tial maintenance and an applicationaudit. The application fee is $50.

The exam fee is $150 for USGBCmembers and full-time students and$200 for all others. Credential Mainte-nance Program (CMP) renewal is $50every two years. To maintain their cre-dential, LEED GA holders must earn 15continuing education hours every two-year reporting period.

The LEED AP exam assesses knowl-edge of the LEED Rating System andability to facilitate certification. Candi-dates must have experience, withinthree years of application, with a projectregistered for or certified in one of theLEED Rating Systems.

Applications require project detailsbe documented in LEED Online or witha letter from a supervisor, client or proj-ect manager describing the applicant’sinvolvement – as direct personnel or asa consultant who reviews projects seek-ing LEED certification approval; a con-tracted worker; member of a ProjectTeam; LEED for Homes Provider; LEEDReviewer, LEED for Homes GreenRater; or staff member of a CertifyingBody. The application fee is $100.

The combined exam (GA and AP+)fee is $300 for USGBC members and$450 for non-members. The specialtyexam only is $150 for USGBC membersand $250 for non-members. CMPrenewal is $50 every two years

LEED APs must maintain their cre-dential by earning 30 continuing educa-tion hours every two-year reportingperiod. �

THE PEOPLE SIDE OF LEEDA look at what it takes to become a green expert

BY JOAN PAULY

GOING GREEN

Joan Pauly is executive director of the Kentucky chapter of the U.S. Green Building Council.


SOCIAL media and instantcommunication buzz withhuman interaction at rateshigher than ever in history.But making meaningful con-

nections in ways that improvethe life of a region is a morecomplex matter.

Effective human connections,however, can be boiled down toa mathematical process, accord-ing to corporate anthropologistand management guru Dr .Karen Stephenson. She hasdeveloped a process to identifythose she refers to as “community con-nectors” and unsung heroes who bringabout lasting change and prosperity.

“Connectors are the hubs ofhuman social networks and are oftenresponsible for the bringing about ofrapid and widespread change,” author

Malcolm Gladwell wrote in his book“The Tipping Point.”

Gladwell’s book helped popularize theconnector philosophy that Stephensoncalls quantum social chemistry. She has

used her same mathematic andsocial principles to help manycompanies and government agen-cies identify their connectors.Now Stephenson is helping com-munities “connect,” too.

The flagship connectorsproject was launched in 2009 inPhiladelphia. She helped Lead-ership Louisville launch a con-

nector campaign in 2010 for Louisvilleand Southern Indiana, and spoke to agroup of Bluegrass leaders earlier thisyear about launching The BluegrassConnectors Project.

“When you put smart peopletogether, when you put people who are

doers and active leaders together, greatthings happen,” said Lyle Hanna, presi-dent of Hanna Resource Group in Lex-ington and leader of The BluegrassConnectors Project. “When you put oneand one together, often you get three.”

More than 500,000 Bluegrass regionresidents live in distinct communitiesthroughout Anderson, Bourbon, Clark,Fayette, Jessamine, Madison, Mont-gomery, Scott and Woodford counties.Hanna is convinced there is enormouspotential to find and tap into the influ-ential yet invisible “connectors.”

Stephenson aims to “connect com-munities in central Kentucky and builda network of trust by identifying theunsung heroes – those who keep thingsgoing and get things done.”

Gladwell described connectors as peo-ple who get things done through others byserving as pockets of trust. They lead to atipping point in collective community atti-tudes. Their role often is unrecognized.

Holly Prather, vice president of mar-keting at Leadership Louisville, said the2010 project in the River City identified128 connectors through a rigorous nomi-nation and mathematical vetting processwith the help ofStephenson. Therewas a healthy mixof natives andtransplants, with 39percent from thecorporate andsmall business sec-tor, 37 percentfrom nonprofits,and the rest fromacademic, faith-based and govern-ment sectors.

Like the soonto launch Blue-grass Connectors Project, Louisvillesought to identify people quietly wield-ing community influence, then linkthem up.

“It’s been somewhat organic,”Prather said about the process.

In August 2010, LeadershipLouisville recognized those the processfound at a luncheon at ChurchillDowns. They now they hold monthlyconnector cafes.

In the Bluegrass region, Hanna saidnominations (through peer identifica-tion) are to start this fall after the pro-gram is adequately publicized. Louisvillehad almost 6,000 nominations. Hanna

Quietly Making Things Happen

Having linked Louisville’s unsung influences, community ‘connectors’ project to launch in Central Kentucky next year

BY ABBY LAUB

ECONOMIC DEVELOPMENT


A “connectors” project in Louisville identified 128people who influence community-level decision-making and facilitate business activity becausetheir reliability creates pockets of trust withinwhich progress takes place. Connectors are now encouraged to network with each other to build theprocess. A Bluegrass Connectors Project is plannedin 2012 for Central Kentucky.

Dr. Karen StephensonCorporate anthropologist


hopes to see nearly 2,500 people nomi-nated in Central Kentucky.

The Bluegrass Connectors should beidentified by early 2012, he said. Then itwill be up to the connectors to worktheir magic.

Prather suggested having connectorsprojects active in both of Kentucky’slargest cities could create a “super region”in the state. Newly elected LouisvilleMayor Greg Fischer was one of the con-nectors identified in his community, andLexington Mayor Jim Gray has beeninvolved in the Bluegrass process.

“We do expect to see an agenda ofLouisville and Lexington being more col-laborative as we move forward,” Prathersaid, adding that the project has created anew buzz and a lot of community pride inLouisville. “Connectors are the people thathave the power to move people to a tip-ping point. This is a call to action to goforth and continue connecting.”

Mike Mays, co-owner of Heine Broth-ers Coffee in Louisville, was selected asa connector and said he really has notdone anything differently than he didbefore being identified.

His successful coffee shop, which heruns with fellow connector Gary Heine,employs more than 130 in nine stores.

He said the coffee shop model isgreat since people from all walks of life,belief systems and races are all togetherin one place without fear of beingjudged or excluded. Connections hap-pen easily there.

“I know a lot of people from justgrowing up here and going to highschool here, but through the businessI’ve been blessed with the opportunityto meet a whole breadth of people,”Mays said. “Through our coffee shops, Iconnected to so many different people.”

He helps run the connector cafes. “A lot of people got all jazzed up about

being named connectors, and then it was

like, ‘What do we do now?’ So this (con-nector cafe) was giving it some legs.”

The nature of the project is entirelyopen to interpretation, almost toomuch so, he said.

“In some ways I’m relieved that it’ snot more formal ... most of us aren’tlooking for another meeting to attend,”Mays said. “Maybe that’s part of thebeauty of the project. There was noth-ing too formally planned once thisgroup was identified.”

It is too early to tell where the proj-ect will lead, Mays said, but he senses itwill add to the “soul of the community.”And some new businesses could form.

To those in the Bluegrass region, heoffered some advice.

“Keep your mind wide open andembrace whatever possibilities comeup,” he said. “We’re all busy; the lastthing I’m looking for is other boards tojoin or other committees to be part of.It’s difficult to define what’s going tohappen because of these groups, but mygut tells me there are some really greatpossibilities in this. Keep your mindwide open and don’t think of it asanother commitment.”

Results will be hard to map, but Hanna

is eager to see what kind of connectors willbe chosen for the Bluegrass.

Connectors, he said, are generally splitinto three groups – the hubs, gatekeepersand pulse takers. The aim of the BluegrassConnectors Project initially will be to helpeducate the public about what connectorsdo and who they are and then go aboutidentifying them. He said it’s about get-ting beyond traditional hierarchies andfinding out who the true movers and shak-ers are in the region.

“We have distinct communities and werecognize the value of those communitiesand we know many of them want toembrace that uniqueness,” Hanna said.“We also know that to be successful we allneed to be working together on things. Wethink there will be magic; it’s like quantumchemistry – we need the different ingredi-ents from each community.”

Central Kentucky’s diverse commu-nities may not be as connected as theycan be, he said. “We have rapid growth.We have a lot of new people in the area,so I think it will be even more valuableto take the effort to bring those peoplecloser together.”

“Our primary goal is to recognizeunsung heroes, to recognize peoplewho are doing great things who are notnecessarily in the spotlight,” he said.“And the reason for doing that is toencourage them and by way of settingthem as role models, encourage othersto continue to do great things for ourcommunity ... The whole process here isso healthy for the community.” �

Abby Laub is a correspondent for The Lane Report. She can be reached at [email protected] Williams of Stoll Keenon Ogden PLLC speaks during a connectors café event that included Tibetan

monks from the Drepung Gomang Institute. Others include Terry Taylor, second from left, of Interfaith Pathsto Peace; and Mike Mays, sitting, co-owner of Heine Brothers’ Coffee.


Regular connectors café events encourage thoseidentified in the Louisville Connectors Project in2010 to network and broaden “pockets of trust” in the community. Participants at a recent café include, at table from left, Deborah Bulleit, IUSand Harrison Education & Literacy Program; Allison Pullen, QK4 Architecture Engineering; and Graham Honaker, UofL College of Business.


WITH operations up andrunning at Kentucky Cop-per in Morgantown, andgroundbreaking under-way at UFLEX in Eliza-

bethtown, Indian-owned manufacturinghas been added to the roster of interna-

tional compa-nies doingbusiness in theBluegrass State.

According toDeputy Com-missioner ErikDunnigan of

the Kentucky Cabinet for EconomicDevelopment, Kentucky offers its Indianbusiness partners stable markets, anaffordable infrastructure and attractivetax incentives. But as importantly, bylocating in the region, Indian compa-nies benefit from a direct access toNorth American markets.

Kentucky Copper already has clientson the East Coast and will producewiring for high-speed rail as well as inno-vative components to upgrade theenergy grid at its $32 million facility.UFLEX is spending $180 million in Ken-tucky to supply North American foodretailers with a versatile polyurethanepackaging material called PET film.

Unlike trade partners in China andJapan, Indians and Americans share acommon language and democraticideals. India does business in English. Ithas a parliamentary democracy headedby a prime minister, a bicameral legisla-tive process and separation of powersamong three branches of government.

To capitalize on these synergies, thosecharged with economic development

within the state have been busy network-ing across time zones and continents.

Former Indian President A.P.J. AbdulKalam visited Kentucky in 2008 andspring 2010, hosted by the Gatton Col-lege of Business & Economics at theUniversity of Kentucky. Kalam and Gov.Steve Beshear participated in a forumtitled, “A Global Business Bridge: Link-ing Kentucky & India.”

Last fall, Beshear lead the state’sfirst official economic developmenttrip to India.

And now in south-central Kentucky,with support from the Kentucky Cabinetfor Economic Development, a newlyformed organization called the Indo-Kentucky Chamber of Commerce ishelping facilitate the exchange of infor-mation so Indian companies can feelmore comfortable doing business inKentucky and vice versa.



Trade Routeto India

State forging ties with enormous emerging market;Indo-Kentucky Chamber spouts in Barren River area

BY MARY NESTOR

Members of the steering committee of the recentlycreated Indo-Kentucky Chamber of Commerce areRaja Bhattacharya, from left, Richie Sanders,Steve Garrett, Fred Barkey, Nick Cooke, RodneyRogers, Debbie McCarty, Ashwani Sarvaria andVikram Patel.

India at a glancePopulation: 1.2 billion (80% Hindu)GDP: $3.5 trillion

5.7% growth8.0% 5-year compound annual growth$2,941 per capita

Unemployment: 10.7%Inflation: 10.9%Foreign direct investment:

$34.6 billionSource: 2011 Index of Economic Freedom/HeritageFoundation & The Wall Street Journal

Gov. Steve Beshear poses for media in Mumbai,India, with Anand Mahindra, managing directorof Mahindra Satyam, last Oct. 21 during Ken-tucky’s first official economic development trip toIndia. Global consulting and IT services providerMahindra Satyam, part of the Mahindra Group,secured a Kentucky Cabinet for Health and FamilyServices contract to design and deliver a documentmanagement system to improve child support over-sight and customer service.

Miranda Pederson photo



Franklin busi-nessman AshwaniSarvaria is one ofIndo-Kentucky’sfounding membersand acts as some-thing of a one-manchamber when hetravels home toIndia. Sarvaria haslived in the UnitedStates for over adecade.

“When I used to go home to India, Iwould tell people, ‘I live in Kentucky’and most of the people would say: ‘Ken-tucky? Where’s that?’ ” the Delhi nativesaid. “They knew the U.S., but they did-n’t know Kentucky.”

Sarvaria recognized the need for acentral organization to overcome cul-tural and physical barriers and to pres-ent both economies in their best light.He shared his insights with DennisGriffin, who heads the Simpson CountyIndustrial Authority, and Griffin imme-diately saw the value. Bowling Greenbusinessman Raja Bhattacharya cameon board and the Indo-KentuckyChamber of Commerce was born.

The trio made a presentation to Rod-ney Kirtley, execu-tive director ofBarren River AreaDevelopment Dis-trict (BRADD).They agreed tolaunch this pilotwithin the same10-county regionserved by BRADD,but their inten-tion is to eventu-ally duplicatetheir effortsacross the state

and the region. The organization held a public

unveiling event in March at the NationalCorvette Museum in Bowling Green.

Despite its ties to economic develop-ment in state government, Bhattacharyasaid the Indo-Kentucky Chamber is astand-alone entity and predicts that theorganization will eventually become self-sustaining by charging fees to members,hosting paid seminars and even perhapssharing in the profits from whatever tradedeals they help establish.

In India, Sarvaria has laid the foun-dation for partnerships between itslargest Chambers of Commerce and hisassociates here in the United States.His goal is to help people there under-stand that America’s relatively highwages are mitigated by lower interestrates, affordable land and a stableinfrastructure that includes cheap, reli-able energy.

Benefits flow both waysThe Indo-Kentucky Chamber will focusnot only on explaining the benefits oftrade between the two nations, it will take ahands-on approach in helping newcomersfeel at home in both countries. Because, asBhattacharya explains, this is far from aone-way street.

“A lot of economic developers are tr y-ing to attract investors from India to comehere and do business, but the other objec-tive is that there are some companies fromsouth-central Kentucky that either providea service or a product, and so why notexport that to India?

“It is a market of a billion people andthe economy is growing at almost 10percent a year,” Bhattacharya said.“That’s huge.”

The U.S. domestic market is largelysaturated, according to Bhattacharya,who graduated from the Western Ken-tucky University MBA program in 1998.

“Growth (for Kentucky businesses)will come from exports and finding newmarkets,” he said.

India is the world’s second most pop-ulated country behind China. Land inIndia sells not by the acre but by thesquare foot. While major metropolitanareas are on the rise, its countryside stillfaces significant challenges from a busi-ness perspective. India’s rural infra-structure is sometimes non-existent.Locating even 100 miles outside thedensely populated urban regions meansa significant capital outlay for essentialslike roads, water and power.

And even with a shared language andsimilar systems of government, certainproblems have emerged due to the differ-ences in capital markets. In America, busi-nesses and individuals alike live and die bytheir credit scores. However, if a relativelysmall business opportunity arises for an

Indian company to relocate to Kentucky,it may not have the necessar y credit his-tory to secure bank financing.

Sarvaria says many of his friends arefaced with having to pay 100 percent ofup-front costs, and this can be especiallyburdensome for smaller companies.

Larger and better-capitalized startupscan secure funding through the inter -national banking community, but Indo-Kentucky wants to work to includeinvestors of all levels.

“Suppose I come from India tosouth-central Kentucky, and I’m lookingat a $2 million project,” Bhattachar yasaid. “If I go to a local bank right now, Iwill not get that credit.”

Taking local partners is one option,as is investing in projects with significantcollateral value such as hotels or con-venience stores.

This problematic financing effect isexacerbated for the smaller enterprise, butBhattacharya said even a company the sizeof Kentucky Copper faced quite a few chal-lenges working with a regional bank here,“even though they’re investing $32 mil-lion and hiring over 100 people.”

Bhattacharya said they are not dis-mayed, though. “It’s a problem that I thinkwill correct with time,” he said. And bothmen expect the Indo-Kentucky Chamberto be a part of that process. �

Mary Nestor is a correspondent for The Lane Report. She can be reached at [email protected].

For more information on the Indo-KentuckyChamber, contact Raja Bhattacharya [email protected]

Ashwani SavariaFranklin businessman

Raja BhattacharyaBowling Green businessman

Gov. Steve Beshear speaks at an April event in Elizabethtown announcing that Indian packagingmaterial maker UFLEX will invest $180 millionand put its first U.S. site in Kentucky.



COVINGTON’s two Fortune500 companies – Ashland,Inc. and Omnicare —occupy high-rise offices onthe city’s riverfront with mil-

lion-dollar views of the Ohio River andCincinnati skyline.

Rents and revenues are more modestsix blocks south, where the business dis-trict has been decimated by decades offlight to the suburbs. When Florence Mallopened 10 miles away in 1976, it sup-planted Covington as the region’s retailhub, leaving behind empty storefronts thathoused bustling businesses for a centur y.

Development officials now hope tobreathe life back into downtown withnew retailers and companies willing totransform retail space into offices nottied to walk-in traffic and fashiontrends. The city, with crucial help fromthe state, seems to have found one nicefit with bioLOGIC, an umbrella corpo-ration operating as a life sciences busi-ness accelerator.

It meshes with both Covington’s revi-talization initiative and the common-wealth’s ongoing emphasis on attracting

high-tech companies with potential togrow revenues and jobs.

Four-year-old bioLOGIC provides along list of support services to eightmodern technology companies operat-ing in a Civil War-era structure originallybuilt as a livery stable for customersarriving via horse and buggy at thenearby Covington railroad station.

Companies atbioLOGIC have,at minimum, com-pleted the “proofof concept” fortheir businessmodel, said Mar-garet M. van Gilse,vice president ofbioLOGIC andone of its part-ners. Togetherthe eight start-upshave raised about$18 million, she

estimates, for development of a wide-range of bio-tech products and services.

“The companies are looking for ahome, but they may need lab space, office

space,” van Gilse said. “They may needfront-office support. They may need con-sulting support on the business or scienceside. So we help accelerate those compa-nies to commercialize their product –that’s what bioLOGIC has morphed into.”

State incentives prompted move from CincyThe company’s roots are about four milesnorth across the river in Cincinnati, wherea number of its principals were working in2006 at BioStart, a life sciences start-upcenter and bio-tech incubator charteredto attract new jobs to Ohio.

In 2007, Dr. RayTakigiku and NigelM. Ferrey teamedup to create bio-LOGIC, establish-ing it as a consultingfirm to work withfledgling companiesat BioStart, withTakigiku as manag-ing partner andchief scientific offi-cer, and Ferrey asmanaging director.

Within a year,bioLOGIC neededits own offices, andseveral factors con-vinced them toselect space in asmall Covingtonbuilding that abutsthe ramp to the his-toric SuspensionBridge.

“We made themove across (theriver) primarily because of the opportuni-ties we felt Kentucky offered,” said CharlieLeCroix, another bioLOGIC partner andits chief operating officer. “Particularlywhen it came to how Kentucky, through avariety of its programs and incentive pro-grams, helps start-up companies, particu-larly bio-tech companies. That was theprimary draw over here.

“And one of our companies (NeoCy-tex BioPharma) already sat over hereand had experienced (state and localsupport) and said, ‘Come on over – thewater is better over here.’ ”

Life Science Takes Root

Fertilized by state incentives, start-up incubator bioLOGICis outgrowing its downtown Covington offices – again

BY GREG PAETH


Margaret van Gilse,Vice President and Partner

Dr. Ray Takigiku, Chief Scientific Officerand Managing Partner

Nigel M. Ferrey, Managing Director

The bioLOGIC life sciences incubator provides support services and consults with eight tenants in downtown Covington. The fledgling businessesseek to commercialize medical research.

Jim O

sborn photo



LeCroix holds a chemistry doctorateand worked 26 years for Cincinnati-based consumer products giant Procter& Gamble. He was among a number ofresearchers who left after P&G sold itsdrug unit in August 2009 to Warner

Chilcott for $3.1billion, and theIrish firm restruc-tured its U.S.operations. Halfof bioLOGIC’s 16h e a d q u a r t e r semployees for-merly worked inP&G’s pharma-ceutical division,LeCroix and vanGilse said.

K e n t u c k y ’ sincentive pro-

grams and responsive state economicdevelopment officials played a big rolein where the P&G diaspora landed.

One of bioLOGIC’s present center-piece companies is Takigiku’s BexionPharmaceuticals, which decided to movefrom Ohio to Kentucky because of thewarm welcome NeoCytex had receivedand because the state was ready with swiftassistance. Company officials said theylearned that the stereotype of governmentbureaucracies being unable to make quickdecisions and follow through with sub-stantive action was untrue.

Then based at BioStart, Bexionreceived a $100,000 federal NationalCancer Institute grant.

“They were in Ohio and they got theaward, and we said, ‘Let’s test the (Ken-tucky business hospitality) concept,’ ” van Gilse said. “Kentucky is the only statein the country that matches this type offunding so we applied, which would meanthat Bexion would get an additional$100,000 for this particular program.

“It took the commonwealth only threeweeks to award Bexion the match. We said,‘OK, we’re going to Kentucky.’ ”

Life sciences gaining tractionIn 2009, when bioLOGIC outgrew itsoriginal building, it moved a half mile toits current downtown Covington site; itoccupies 3,500 s.f. of office and labspace on the first floor and holds a one-third ownership stake in a building.

Bexion presently is BioLOGIC’s mosttangible success. Using patented tech-nology licensed from Cincinnati Chil-dren’s Hospital Medical Center, it hopesto conduct phase one clinical studies ona brain tumor and pancreatic cancertreatment later this year.

Bexion is attracting favorable atten-tion and substantial investment. Lastyear, the National Institute of Healthand the National Cancer Instituteawarded the company a $1.5 million

grant for its promising brain cancerresearch. In March, the KentuckyDepartment of Commercialization andInnovation in the Cabinet for EconomicDevelopment matched $500,000 of thatgrant. A month later, Bexion receivedthe first Biotech Innovation Award fromthe Cincinnati USA Regional Chamberand two other sponsors.

Commonwealth officials are pleasedabout how their incentives are workingand enthusiastic about the target com-panies and their potential to createhigh-tech jobs.

“Kentucky’s funding programs forhigh-tech companies have gained nationalrecognition,” Economic Development Sec-retary Larry Hayes said in a statement. “Todate, more than a dozen companies,including bioLOGIC and Bexion, havemoved to Kentucky from other states tobenefit from the programs.

“These innovative firms not only cre-ate new jobs for Kentuckians, they alsobring with them their federal funding,their intellectual properties and theirscientific expertise – all of which con-tribute to the commonwealth’s expand-ing high-tech resources and capabilities.

“This, in turn, makes it more attrac-tive for our college graduates and high-tech entrepreneurs to stay in Kentucky

and leverage these resources and ourpool of skilled workers,” Hayes said.

Covington is equally enthusiastic. “We’re working very closely with

them to help them grow their business,

Charlie LeCroix, Chief Operating Officerand Partner

The bioLOGIC LineupIn addition to Bexion and NeoCytex, theother companies operating under the bio-LOGIC umbrella are:

• PrimeDP LLC, which provides proj-ect development, regulatory approval andcommercialization leadership in the phar-maceutical, personal healthcare, pet andbeauty care markets.

• Molecular Diagnostics Lab, agenetic testing company that providesinformation to assist doctors in makingdecisions for patients.

• Hopewell Global Health InitiativeLLC, a nonprofit organization developingdrugs, diagnostics and devices to helpimprove the health of the neediest.

• Pure Water LLC, which is developing aportable pitcher system for purification, fil-tration and storage of drinking water.

• Surgical Energetics LLC, which hasdeveloped technology for the coupling oftissues never before reliably closable.

• Global Health Initiative LLC, whichis developing a holistic wellness initiativestarting with a “Stop Smoking in NorthernKentucky” program.




and the state incentives have been ver yimportant,” said Covington City Man-ager Larry Klein. “They understand theurban environment. And a companylike that can become a magnet for othercompanies with similar jobs. It alsohelps other small businesses in the area.

“These are the kind of jobs you liketo brag about. We want more of themhere,” Klein said.

While Bexion and the other bioLOGICcompanies all have lofty long-term goalsfor their products or research, the under-lying philosophy for all of the firms is goodold-fashioned capitalism and the prospectof turning a profit at some point in thenot-too-distant future.

Before co-founding bioLOGIC, Fer-rey built and sold a biotech company inFort Collins, Colo. He is CEO and chair-man of Fort Collins-based Spirited Indi-viduals Delivering Innovative Solutions,a bio-tech investment group that is theparent company of bioLOGIC.

SIDIS includes operations in Shang-hai, China, where four of bioLOGIC’sprincipals – Ferrey, LeCroix, Takigikuand Kevin Xu – are the top executives ofAxellerate China, a bio-tech firm. SIDISalso owns Bioscience Solutions, a Mel-bourne, Australia-based company thatproduces engineering software.

Helping start-ups creates potential payoffWith the exception of NeoCytex, which isdeveloping therapeutics to repair dam-aged tissues, bioLOGIC and SIDIS have anownership stake in all the companies atthe Covington life sciences incubator.

“We’re not going to get rich on thebasis of charging rent to start-up compa-nies,” LeCroix said. “They don’t havemoney anyway, and whatever little moneythey get, you want it to go into developingthe company rather than profits for us. Sowe do slightly better than break even.”

However, bioLOGIC provides SIDISan opportunity to study and potentiallyinvest in new businesses, he said. The

parent company’s “model is not somuch profit for right now; it’ s theopportunity for potential investment.”

SIDIS and bioLOGIC also realizepatience is important, LeCroix said,drawing a contrast with venture capitalinvestors who typically want to turn overan investment in a couple of years.

“In the drug and bio-science area, mostcompanies after two years are still in theirinfancy, so in the kind of businesses thatmost of the companies here are into, hav-ing two or three years in an incubator isn’tenough. So we see that we have a really sig-nificant role in helping companies matureto adults in a corporate sense,” LeCroixsaid. “For some companies that can takesix or eight years.”

Public-private partnershipsWhile SIDIS and bioLOGIC focus onresearch that might boggle the mind ofsomeone without an advanced degree inmolecular biology, one of bioLOGIC’s keyconcerns right now is far more mundane:expanding its office and lab space.

Every square foot of the Covingtonspace is occupied, forcing bioLOGIC toinform prospective tenants there’s noroom at the inn. bioLOGIC is in theprocess of piecing together what vanGilse calls a public-private partnershipto solve the office space problem.

The company’s top priority is renovat-ing a cavernous second floor for more laband office space in a former dance hall forCovington’s Germanic Society. Should bio-LOGIC need even more space, the City ofCovington has offered to give the com-pany a vacant four-story building aroundthe corner on Pike Street with 15,000 s.f.of usable space in return for a pledge tocreate jobs.

“It’s a private-public collaboration withthe City of Covington, Gateway College,

Northern Kentucky University, privateindustry and the E-Zone, which is theentrepreneurial arm of Tri-ED (Tri-CountyEconomic Development Corp.), to pulltogether the resources that we need to notonly complete and build out our secondfloor but to gut and renovate anotherbuilding around the corner,” van Gilsesaid. “It could be used for more labs, moreoffices, training and potentially even asmall manufacturing facility.

Gateway Community and TechnicalCollege, the public two-year institutionbased a couple of miles west in ParkHills, offers classes in Covington and isseeking a permanent downtown campussite. It might tailor some of its classes tobio-tech jobs, van Gilse said.

The E-Zone is a high-tech incubatorin Covington owned by Northern Ken-tucky Tri-ED, the economic develop-ment organization for Boone,Campbell and Kenton counties. bio-LOGIC is a logical partner, van Gilsesaid, adding that it also could dovetailwith plans by the Catalytic Develop-ment Funding Corp. of Northern Ken-tucky, which has raised $6.5 million of a$10 million fund to go toward revital-ization projects for five urban coresalong the Ohio River.

“As the next part of this, we’re tr yingto answer the question: Can we be a cata-lyst for a life sciences corridor here in Cov-ington, a real starting point? We said, yes,we’re already doing it, but we need somehelp to keep going forward.” �

Greg Paeth is a correspondent for The Lane Report. He can be reached at [email protected].

Frank Genbauffe, Ph.D., laboratory director forMolecular Diagnostics Laboratories, a life sciencestart-up business at bioLOGIC in Covington,works with a DNA purification robot.

Alan Melvin, director of engineering for bioLOGICtenant Surgical Energetics LLC, works with a cryogenic tissue grips device he created to test tensile strength of surgical specimens.

Jim O

sborn photos



GOV. Steve Beshear has appointedthree new Kentucky Arts Councilboard members: Carla Bass

Miller, John S. Hockensmith andRoanne Victor.

Bass Miller is a community volunteerfrom Louisville who has been active withthe Kentucky Tourism Council, DiscoverLouisville Orchestra, the Business andProfessional Women’s Association, theBellarmine Women’s Council and theKentucky Commission on Women.

Hockensmith is a professional pho-tographer, author and artist who residesand maintains a studio in Georgetown.Best known for his equine photography,Hockensmith is the author and photog-rapher of two books: “Gypsy Horses andthe Travelers’ Way” and “Spanish Mustangsin the Great American West.”

Victor, also a community volunteer

from Louisville, serves on the boards ofActors Theatre, the Center for Inter-faith Relations and LOOK, which is anonprofit consortium of Louisville areaart galleries and spaces. Victor previ-ously served on the arts council boardfrom 2001 to 2005.

Along with the new members, ZevBuffman was reappointed for an addi-tional four-year term. The terms for Hock-ensmith, Bass Miller and Victor alsoexpire in four years, on Feb. 1, 2015.

SPOTLIGHT ON THE ARTS

Lori Meadows is executive directorof the Kentucky Arts Council.

Arts Events Around the StateKentucky Guild of Artists & Craftsmen: Works by Juried MembersKentucky Artisan Center at Berea8 a.m.-5 p.m. through Aug. 20 kentuckyartisancenter.ky.gov (859) 985-5448

Quilts from Kentucky and Beyond: The Bingham-Miller Family CollectionThe Speed Art Museum, Louisville10 a.m.-5 p.m. Wed-Sat., 12-5 p.m. Sun.Through Sept. 18speedmuseum.org(502) 634-2700

2011: Kentucky Artist Series 10David Sharpe – Re-Defining SunsetsKentucky Museum of Art and CraftLouisville

10 a.m.-5 p.m. Mon.-Fri., 11a.m.-5 p.m. Sat.Through July 23kentuckyarts.org(502) 589-0102

The Chicago School of Fusing with guest artist Susan ElseAntique Quilts 1860 –1940National Quilt Museum, Paducah10 a.m.-5 p.m. Mon.-Sat., 1-5 p.m. Sun.Through Oct. 4 quiltmuseum.org(270) 442-8856

Want to know more?For details about arts and cultural eventsand activities taking place in Kentucky, visit artscouncil.ky.gov.

New Members Appointed toKentucky Arts Council Board

NEA Awards Funding to Kentucky

Children’s TheatrePermanently

Funded by Gift

THE National Endowment for theArts has awarded a $788,600 Part-nership grant to the Kentucky

Arts Council. “This grant is extremely important to

Kentucky,” said Lori Meadows, execu-tive director of the Kentucky Arts Coun-cil. “Although it is $76,000 less than lastyear’s grant, we will still be able to pro-vide support for arts education pro-grams and arts organizations that bringperforming, visual, media and literar yarts to Kentuckians all across the state.We will also be able to continue the mar-keting and promotional assistance pro-grams for visual, architectural,performing and teaching artists.”

The NEA also announced awards toeight Kentucky organizations for artseducation and arts programming:

• Roadside Theater, Whitesburg, $35,000

• Appalshop, Whitesburg, $38,000 • The Kentucky Historical Society,

Frankfort, $50,000• The Kentucky Museum of Art and

Craft, Louisville, $35,000 • LexArts, Lexington, $25,000 • The Louisville Orchestra, $20,000• The Lexington Children’s Theatre,

Lexington, $10,000 • Pioneer Playhouse,

Danville, $15,000

THE W. Paul and Lucille CaudillLittle Foundation recently madea $2.5 million endowment grant

to Lexington Children’s Theatre’sShooting Stars Youtheatre (SSYT) program, based in Rowan and Elliottcounties, the Bluegrass CommunityFoundation recently announced.

Through this endowment, approxi-mately $125,000 per year will be available to fund LCT’ s outreach programs in these counties.

“A gift of this magnitude furtherdemonstrates the generosity and foresightof the Little Foundation” said Jim Clark,president and CEO of LexArts. “It also setsthe bar for philanthropic support of thearts in Kentucky. This investment in theChildren’s Theatre affirms its importancein the cultural life of Fayette, Rowan andElliott counties.”

The endowment funds SSYT in perpetuity. Now, says Octavia Fleck, director of SSYT, the program “will foreverbe a place for children and their familiesto share an enthusiasm for life throughcreativity and vivid imaginations.”

The grant, along with a similar one forMorehead State University, is the largestgift ever made by the Little Foundation. Itwill be administered by the Blue GrassCommunity Foundation.

Roanne VictorJohn S.Hockensmith

Carla BassMiller



THE LANE LIST

FACILITY INVESTMENT COUNTY/CITY INITIAL JOBSJOBS TOTAL

Ford Motor Co. $400,000,000 Jefferson/Louisville 1,800 1,800Vehicle assembly: Ford Escort, other

Wausau Paper $220,000,000 Mercer/Harrodsburg 41 76Paper towels, tissue, sanitary paper products

Corning Display Technologies $186,570,000 Mercer/Harrodsburg 80 80AMLCD Glass Substrate

UFLEX Ltd. $180,000,000 Hardin 125 250Flexible packaging manufacturer

General Motors Corp. $131,121,000 Warren/Bowling Green 250 250Automobile assembly: Chevrolet Corvette

ZF Steering Systems LLC $95,800,000 Boone/Florence 374 374 Steering gears for car and light truck market

Tractor Supply Co. $53,141,000 Simpson 156 216Distribution facility

Rare Breed Distilling LLC $50,316,000 Anderson/LawrenceburgDistilled spirits

Rio Tinto Alcan $50,000,000 Henderson/Robards 0 0Aluminum extrusion billets & ingots

Hitachi Automotive Products USA $48,000,000 Mercer/Harrodsburg 44 44Automobile electric & electronic components, warehouse and distribution center

Fruit of the Loom $47,000,000 Warren/Bowling Green 600 600Headquarters & distribution center

SCA Personal Care $44,178,000 Warren/Bowling Green 65 65Adult incontinence care products

Armstrong Mines and Processing Facility $35,000,000 Ohio/Centertown 250 250Underground and surface coal mining, preparation plants

Faurecia Interior Systems Inc. $33,630,687 Jefferson/Louisville 425 425Manufactures interior systems and front end modules for global automotive makers

Sister Schubert’s Homemade Rolls Inc. $33,250,000 Hart/Horse Cave Manufacture, package and distribute frozen yeast rolls

Ferus Corp. $30,800,000 Letcher/Jenkins 34 34Warehousing storage facility for liquid nitrogen

North American Stainless $30,000,000 Carroll/Ghent 10 10Stainless steel coils, sheets, and long products (bar, wire, rod)

Gerdau Ameristeel CCK Mill $26,304,000 Marshall/Calvert CityStructural steel mill

Lockheed Martin $26,000,000 Fayette/Lexington 224 224Contractor logistics support - DOD contract

Sun Products Corp. $23,970,000 Warren/Bowling Green 48 73Manufacture detergent, distribution center

NHK of America Suspension Components Inc. $20,067,000 Warren/Bowling Green 52 108Coil suspension springs and trunk lid torsion bars

Asahi Bluegrass Forge Corp. $20,320,000 Madison/Richmond 50 50Automotive press forging, gears, bearings, joints

R.T. Vanderbilt $20,000,000 Calloway/Murray 16 16Industrial chemical additives & petroleum product accelerators

Tempur-Pedic International Inc. $18,000,000 Fayette/Lexington 45 65Headquarters, sales/marketing, warehouse, telecommunications

Douglas Autotech Corp. $17,364,700 Christian/Hopkinsville 28 65Automotive directional controls: steering columns & shifters

NACCO Materials Handling Group $16,948,000 Madison/Berea 187 187Lift trucks

The C. W. Zumbiel Co. $16,000,000 Boone/Hebron 175 175Paperboard packaging and distribution

Magna Seating of America Inc. $15,474,000 Bullitt/Shepherdsville 234 360Manufacture and supply seating and seating components

Pratt Inc. $15,469,400 Boone 66 79Corrugated “point of purchase” displays

Ace Manufacturing Co. $15,465,345 Boone/Hebron 68 68Manufacture open coil innerspring mattress products

Sekisui Specialty Chemicals America LLC $14,610,000 Marshall/Calvert City 0 0Polyvinyl alcohol, acetic acid

U.S. Bank Home Mortgage $14,132,600 Daviess/Owensboro 97 500Loan processing, underwriting center, loan servicing center

Jif Plant $14,000,000 Fayette/Lexington 22 22Peanut butter

Alltech Inc. $14,000,000 Clark/Winchester 10 20Algae factory

Martinrea Hopkinsville LLC $13,689,000 Christian/HopkinsvilleAutomotive assemblies & painting of chassis components & suspension systems

DHL $13,500,000 Boone/Erlanger 0 0Airfreight delivery service, out-of-state hub distribution facility

UPS Supply Chain Solutions $13,100,584 Jefferson/LouisvilleWarehouse, distribution, third-party logistics for healthcare

Gilt Groupe $13,000,000 Bullitt/Shepherdsville 200 200E-tailer and fulfillment center

2010-11 Grand Totals 290 projects $2,586,872,653 12,776 jobs2009-10 Grand Totals 222 projects $824,863,652 6,964 jobs

Source: Kentucky Cabinet for Economic Development, Division of Research

KENTUCKY NEW AND EXPANDED INDUSTRYRanked by total invested in Kentucky – June 2010 through May 2011Economic development investment in Kentucky tripled in 2010-11 over the preceding year to nearly $2.6 billion. Vehicle man-ufacturing investment lead the way with a $400 million commitment by Ford and $130 million by General Motors plus manysupplier operations. Harrodsburg/Mercer County notably scored two major projects totaling a combined $406 million.



LEXINGTON and Louisville areamong the very lowest-cost localesin America for medical technology

manufacturing, according to a new study.Kentucky’s two major cities scored

second and third best in the nation in acorporate location study by The BoydCo. of Princeton, N.J., of costs in 55comparative locations in the UnitedStates and near-shore alternatives inCanada, Mexico and Latin America.

The medical devices and suppliesindustry already is an important to theregional and state economy, employing2,300 workers in Kentucky with an annualpayroll of $80 million, according to Boyd,which presented its findings to a privateaudience in Lexington in mid-June.

The study by Boyd, a top site selec-tion consultant, analyzes all major geo-graphically variable operating costspivotal to a medical supplies company’sdecision as to where to locate new pro-duction. It scaled costs for a 175,000-s.f.plant employing 325 and shipping to anational U.S. market.

Annual costs among the U.S. loca-tions range from a high $30.7 million in

San Jose, Calif., to a low $22.56 millionin Sioux Falls, S.D. Second-place Lex-ington registered $22.66 million annu-ally and Louisville $22.68 million.

A Maquiladora border site in Mexicoregisters the overall lowest operatingcosts in the Boyd study at $16.8 millionper year. Costa Rica, a popular near-shore destination for medical devicesand supplies manufacturing, shows costsof $17.8 million per year.

Economy raises role of costsComparative costs rule the corporate siteselection process like never before in thepresent difficult economy, the reportstates, especially in the medical deviceindustry, which has the added cost of FDAregulatory review and a new 2.3 percenttax under healthcare reform.

The industry is facing lower demandbecause high unemployment meansless health insurance coverage andslower traffic at hospitals, according toBoyd. Meanwhile, the trend of aggres-sive hospitals buying out physicianpractices is weakening the price lever -age medical device makers have held

over doctors and putting pressure onmargins.

In today’s slow-to-recover economy,improving bottom lines on the cost side ofthe ledger is often easier than on the rev-enue side for medical device makers. FDAregulatory costs are mostly fixed; othercosts such as labor, taxes, power, real estateand shipping vary widely by geography, theBoyd study finds. That means site selectioncan address the cost equation.

Jobs wash back on U.S.Labor climate issues are seen as especiallypivotal as Boyd is forecasting that thou-sands of final assembly and quality controljobs within the medical devices and sup-plies industry will be washing back on U.S. shores over the next decade. They willreturn from China, India and theCaribbean basin due to security issues;greater FDA scrutiny; heightened patent,counterfeiting and piracy concerns; andexpanded compliance arenas comingunder review by the FDA as well as theFAA (for the growing interactive, wirelesstechnologies and healthcare I.T. sectors).

According to John Boyd Jr., a principalin The Boyd Co., where these medicaldevices jobs wash back on U.S. shores willlargely be led by labor issues, i.e., costs,local skill sets, and labor-management rela-tions along with state tax climates.

Commentary on KentuckyPASSING LANE

Med Tech Operating – Cost Study RanksLexington, Louisville Pictures of Health

Kentucky Cities Recognized as Good for Families

PARENTING magazine has pub-lished its annual list of the BestCities for Families, and Kentucky’s

cities score highly. Louisville is No. 10and Lexington is No. 18.

Cities were ranked on great schools,affordable homes, low crime rates, jobs,and parkland. Said the magazine’s edi-tors: “You want the best for your family,and that includes great schools, afford-able homes, low crime rates, plenty ofjobs, and lots of parkland. So wecrunched more than 8,000 bits of datain 84 categories to determine this year’stop places to raise kids.”

Washington has the greatest historicmonuments anywhere, Austin claims thetitle of Live Music Capital of the World,plus has 27,000 acres of parks. Bostonspends $23,000 per public school studenta year. Honolulu is a tropical paradise witha good economy powered by tourism and the military.

Louisville has an impressive list offamily-friendly assets as well.

Parenting says: “Site of the KentuckyDerby, the famous Thoroughbred horserace, Louisville offers both pasture-richgrasslands and Midwestern city culture.The affordable housing means you can

live comfortably amid lots of parklandand top-notch schools.

“Home to the Louisville SluggerMuseum & Factory, the Kentucky StateFair, and Americana arts and crafts,Louisville is also known as the ‘City ofParks.’ And it’s making a fourth appear-ance on the America’ s PromiseAlliance’s list of 100 Best Communitiesfor Young People.”

See the magazine’s comments athttp://tiny.cc/zt0a0

Lexington was No. 5 on the list lastyear, when Parenting said: “Known as theHorse Capital of the World, Lexingtonoffers plenty of stable tours and activi-ties, as well as arts, dining and greatmusic venues for bluegrass, country, andmore.” For 2011, Lexington still fareswell, ranking 18th.

The Kentucky Derby and related festivitiessuch as hot-air balloon races were one reasonLouisville was ranked among Top Cities forFamilies by Parenting magazine.



WE hit our thumb rather than the nail on the head in onephoto caption while cobbling together our June issuearticle about the impressive rate of capital construction

at Kentucky colleges and universities the past few years.The one we’re

smarting a littleabout is the captionon page 28 with animage of the $30million Center forHealth, Education& Research build-ing at MoreheadState. It incorrectlyidentified the archi-tect and contractor.Ouch!

RossTarrant Architects designed the building, and D.W.Wilburn Inc. was the contractor; both are based in Lexington.That feels better already.

Oops!

THERE is a final addendum to the 2011 edition of The LaneReport’s annual Kentucky Blue Chip 25 list of the largestpublicly held corporations based in the state. Our ongoing

research identified Rhino Resource Partners LP (RNO:NYSE)after a tip from the Kentucky Cabinet for Economic Development.

Founded in 2003 and based in Lexing-ton, the steam and metallurgical-grade coalproducer went public in mid-2010. As aresult, Rhino reported revenue of $305.6million in 2010, which ranks it 18th amongpublicly held Kentucky based companies. Itsreported net income was $41.4 million.Rhino Resource Partners (rhinolp.com)had a market capital-ization of $570.5 million as of June 21.

Rhino holds interests in surface and underground mines in Cen-tral and Northern Appalachia, the Illinois Basin and the W esternBituminous region. As of Dec. 31, 2010, it operated five under -ground and five surface mines in Kentucky, Ohio and West Virginia.

The company has 897 full-time employees. David Zatezalois president and CEO.

Another Blue Chip 25 Member

FOR an evening last month at Tran-sylvania University in his home-town, Henry Clay was alive again.

It was Lexington’s first ever HenryClay Week, and just as when he roamedcourthouses, halls of government andthe social scene two centuries ago, the

force of his personalitydrew to him the powerful– in this case sittingSpeaker of the HouseJohn Boehner and histwo immediate predeces-sors, Nancy Pelosi andDennis Hastert.

Kudos to the organizersat the Henry Clay Center for Statesman-ship, based at his former law office. Maythe Clay Week of 2011 be the first of many.

Clay was a key figure in U.S. history, aswe all learned in school. His leadershipand legislative prowess averted the CivilWar by decades, allowing a young nationto knit together more strongly. Schools,streets, buildings and more bear his name,but modern-day Kentucky generally payslittle mind to this profoundly importantman. Deeply partisan but ultimately apatriot, Clay is referred to in history as“The Great Compromiser.”

His regard was such when he died in1852 that church bells tolled for hoursacross the entire United States. Clay wasthe first to lie in state in the U.S. Capi-tol, a gesture not repeated until Presi-dent Lincoln’s assassination. His bodytook a circuitous route home to Lexing-ton through the country’s major citiesso tens of thousands of Americans could

glimpse the procession and recognizeClay’s passing.

First in Lexington and Frankfort thenWashington, he played a leading role inpublic life for a half century. The U.S. Sen-ate sometimes canceled proceedings somembers could attend major speeches bythe charismatic Clay, who could hold audi-ences for hours with his dramatic baritone.In an Illinois eulogy he later said embar -rassed him at its inadequacy, Abraham Lin-coln did manage to say of his idol: “Thelong enduring spell with which the soulsof men were bound to him is a miracle.Who can compass it?”

Washington’s modern-day Speakerscame to participate in a forum titled “TheRole of the Speaker of the House: A Trib-ute to Henry Clay.” Boehner, Pelosi andHastert set aside their partisan differences

for 90 minutes to discuss the challenges ofpolitical and legislative leadership. Eachwell knew it was Clay who turned thespeakership into the fulcrum of Washing-ton power it remains today.

Boehner said he has read “at least10” biographies of Clay, whose first termas Speaker began 200 years in 1811 – onhis first day as a member of the House.

At the conclusion of the forum, keptlively by moderator John Harwood ofCNBC, Boehner, Pelosi and Hastert eachreverently received the Henry Clay Medal-lion in recognition of lives’ work reflectingthe ideals held by Henry Clay. Other livingpast Speakers Newt Gingrich and JimWright, who were unable to attend, weregiven the medallion in abstentia; TomFoley is a previous recipient.

Clay’s life and ideals remain worthyof our attention.

A Henry Clay TributeGives Giant His Due

Above: Kentucky-native John Harwood of CNBC,from left, moderated a panel discussion June 24 at Transylvania University by Speaker of theHouse John Boehner and former speakers NancyPelosi and Dennis Hastert to cap off Henry ClayWeek in Lexington.

Standing before a painting of former Transylvaniaprofessor and trustee Henry Clay, depicted at the 1814 signing of the Treaty of Ghent, are Transylvania President R. Owen Williams, fromleft, U.S. Speaker of the House John Boehner andhis immediate predecessors Nancy Pelosi and Dennis Hastert.

Henry Clay

Transylvania University photos



THE fact that folks often don’tappreciate what’s in their ownback yard might well apply to in-

staters who don’t visit the KentuckyState Parks (KSP) scattered throughoutthe commonwealth.

Jed and Kelly Utsinger often drivesix hours round trip from Baltimore,Ohio, to visit Kentucky’ s parks.“They’re terrific,” said Kelly, who withher husband and kids, Kaylee, 6, andIan, 10, have explored Natural BridgeState Resort Park, Constitution SquareState Historic Site, Jenny Wiley StateResort Park and the William WhitleyHouse State Historic Site.

Added incentive for their travels camefrom participation in a program begunin 2006 by the Kentucky Department ofParks. In devising a way to lure people –families in particular – into learningmore about state parks at their own pacewhile having fun in the process, thedepartment created Family AdventureQuest (FAQ), a trivia and digital photocontest for families and/or friends inteams of two to six people. That first year,229 teams registered for the yearlongcompetition; 38 won prizes.

Basically, FAQ is a scavenger huntmade up of 25 challenges, or quests, thatteams complete by traveling to state parks

across Kentucky and taking photos whilethere. Although there is no set number ofparks a team must visit, an average ofeight parks might be used to complete thecontest. While no more than three questsmay be completed at one location, partic-ipants can research on the Internet andthrough park brochures to plan a tripwith as much or as little travel as they pre-fer. Though a few quests are park-specific,a majority can be completed at one of sev-eral locations.

For instance, a photo may need to betaken of a team relaxing beside a struc-ture built by the Civilian Conser vationCorp (CCC), and several parks havethose buildings. One quest calls for aphoto of a plant used in pioneer folkremedies. Participants may have to“Google” a bit, but the plant grows inmost parks, and once the competitor canidentify it, they may choose which park tovisit to snap the required picture.

Questers may need to enlist helpfrom park employees or have a parkstaffer or guest snap a photo of theentire team. Should a team not getaround to visiting a particular park, sev-eral bonus questions may be substitutedto alleviate any performance anxiety.

For a registration fee of $15, a teamreceives a booklet describing 25 quests,

a backpack, a simple compass, a KSPbrochure and a Kentucky Visitor’ sGuide. The prize for entries with all 25answers correct is an $85 gift certificategood at any state park; 20 correctanswers will net a $50 card.

Through the years, teams of youngcouples, senior couples, groups offriends and even a dog – with owners –have joined families in the challenge.Though only 65 teams participated lastyear, 100 had already registered as ofJune 1, 2011, and have until December1 to complete their entries. Registrationis still open.

The Utsingers, known as Team TravelJunkies, participated in 2010 and had somuch fun they’ve signed up for 2011.

Ed and Karen Stotts of Louisvilleand their kids, Nathan, 9, Katie, 7, andBen, 4, have used FAQ each year since2009 to supplement their homeschool-ing curriculum. Already this year, TeamStotts Rocks has visited Tompkinsville’sOld Mulkey Meetinghouse State His-toric Site, which has its own graveyardscavenger hunt that the kids love.

“Natural Bridge is a favorite for us,”Karen said. “It has safe hiking trails forlittle kids, and Ed can go on more chal-lenging ones with his hiking buddies.”

“We hear from so many participantsafterwards that they never would have vis-ited a particular park if it hadn’t been forthis program, or that they didn’t realizethere was a bison herd at Big Bone LickState Park,” said Dawn Garvan, marketingspecialist supervisor for the KentuckyDepartment of Parks. “The Parks Systemhas something for just about every interest,every season.”

Features vary from park to park, andinclude a variety of ranger-led pro-grams, golf courses, camp grounds,archaeological finds, educational andhistorical facilities, organized gamesgalore, marinas, lakes for boating andfishing, woods for hiking and birdwatching, cozy fireplaces for warmingwinter toes and comfy rocking chairs forsimply gazing into a setting sun.

The system has earned kudos, to boot.In 2010, ReserveAmerica.com named sixKentucky State Parks among the 100 topcampgrounds in North America.

Four of KSP’ s 18-hole courses –Grayson Lake, Pine Mountain, Dale Hol-low and Yatesville Lake – have receivednational recognition from Golf Digest as“Best New Affordable Public Courses.”

If the FAQ sounds like fun – and it is– take a peek at photos from last year’ scompetition and pick up your team reg-istration form at parks.ky.gov (look forthe “Adventure” tab). �

Katherine Tandy Brown is a correspondent for The LaneReport. She can be reached at [email protected].

EXPLORING KENTUCKY

State Park SleuthsInvestigating Kentucky’s park system pays off big in family fun

BY KATHERINE TANDY BROWN

The rock garden at Natural Bridge State Resort Park near Slade, KY is a popular spot for all ages.

Ky Dept of Parks photo


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