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On The Road to Growth Kentucky’s $11.3 billion travel and tourismindustry has a ‘unique’ plan to meet pent up demand.Page 20

LANE ONE-ON-ONE: MARY PAT REGAN

President, AT&T Kentucky

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THE LANE REPORT • LANEREPORT.COM APRIL 2012 1

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Kentucky’s Business News Source For 27 Years Volume 27 Number 4

APRIL2012

lanereport.comKentucky Business News Online

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20 COVER STORY ON THE ROAD TO GROWTH

Kentucky’s $11 billion travel and tourism industryhas a ‘unique’ plan to meet pent up demand

24 AVOIDING FUTURE SHOCKWith utilities’ help, Kentucky business and industryinvest in energy efficiency to keep costs competitive

26 AN INVESTMENT WITH A YIELDFor those spending more than $60,000 annually on power, efficiency upgrades look like a wise strategy

28 COST COMPETITION FOR CARE PROVIDERSKentucky firm markets software tool allowingprice comparisons for healthcare bargain hunters

30 ‘AN EXTENDED BOTTOM’Kentucky construction contractors compete hard for jobs; manufacturing, multi-family housing show improvement

32 AMERICA’S BEST-RUN BANK?Steady growth and a conservative approach leadRepublic Bancorp to the top of a national listing

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Departments4 Perspective

6 Fast Lane

12 Interstate Lane

13 Kentucky Intelligencer

14 On the Boards

15 Corporate Moves

35 The Lane List

36 Spotlight on the Arts

38 Exploring Kentucky

40 Prep Line

42 Passing Lane

44 Kentucky People

16 Lane One-on-One: Mary Pat Regan Kentucky President, AT&T

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On the Cover Kentucky’s travel and tourism industry had an estimated economic impact of $11.3 billion in 2010., and 2011 is believed to have been better. A mild winter resulted in what state officials say were the best three-month period in history.(Lane Report photo illustration)


4 APRIL 2012 LANEREPORT.COM • THE LANE REPORT

THE circus in Wisconsin’s state Cap-itol last summer, with its profane and obscene signs and threatening behavior from unionized public employees, begs an analysis by hard-working citizens and overtaxed voters. Thousands of unionized government workers (some bused in from Chicago and Nevada) descended on Wisconsin’s Capitol to protest proposed collective bargaining reforms designed to limit government costs.

In the face of a two-year state deficit of $3.6 billion, the governor proposed that state employees begin to pay something into their own pension and health insurance plans just as most of their private-sector neighbors do. The reforms were approved by lawmakers and signed into law by the governor. Big Labor then mounted a bare-knuckle attack on the governor in the form of a recall election.

The Milwaukee Journal -Sentinel summed up the results of the enacted reforms this way: “The governor did bal-ance the budget … reduce the struc-tural deficit significantly … put a lid on property tax increases; he did give schools and municipalities more con-trol over their budgets.” The analysis sounds like a good report card, espe-cially coming from a newspaper that had opposed the governor’s efforts.

While Kentuckians would not desire the protests and trashing of the state Capitol as occurred in Wisconsin, we know that reform must come. In Wis-consin, teachers abandoned students and classrooms for weeks and a group of state senators fled to Illinois to escape voting on the reforms and thwart majority rule.

Wisconsin is not unique and its cri-sis is not an isolated case. If public-sec-tor col lect ive bargaining i s not reformed, other cities and states strapped for money from overspend-ing and over-promising may expect the same type of scenario to show up in their city halls and state capitols. In an economy dominated by long-term unemployment and general decline, America can no longer afford to have taxing and spending decisions made by public-sector union contracts without effective opposing argument.

Elected officials often yield to the demands of union contracts that the government cannot afford. One impor-tant reason is that union officials funnel a large portion of compulsory union dues and fees (often collected for them by the government) into efforts to influ-ence elections. Thus, many elected offi-cials fear angering unions even in the face of critical financial shortfalls. This helps explain why states with the heavi-est tax burdens and worst long-term debts, often due to bloated public employee pension funds and benefits, are those with the most unionized work-forces. In many cases, it truly is the “tail wagging the dog,” with union negotia-tors basically setting budgets and fiscal policies. When there are insufficient funds to meet union demands, unions push for tax increases.

Too often, the union leaders act as the dominant partner in negotiations while the elected officials act as hired help. A number of mayors and governors around the country are working hard to solve the problems of union contracts containing unaffordable and costly sala-ries and benefits, from Republican Gov. Chris Christy of New Jersey to Demo-cratic Gov. Jerry Brown of California.

In New Jersey, Christy, a Republican, and state Senate President Stephen Swee-ney, a liberal Democrat, have offered use-ful examples for states. These two leaders pushed through the legislature require-ments for public workers to begin con-tributing to their health insurance and increased their contributions to their pensions. Senate President Sweeney is also a leader of the state’s ironworkers. He realized that New Jersey had to get a handle on its gold-plated pay and bene-fits to state employees or the private sec-tor, which hires people like ironworkers, would be squeezed out.

Courage from elected officials will be essential to the task of changing the paradigm on how public-employee union contracts are handled. Costs must be controlled in the budget with-out constant tax increases. Many, many fine and devoted people employed by government work hard, are good at what they do and deser ve good incomes and benefits. Their wage and benefit packages should compare favorably with private-sector packages, and with comparable costs to the worker and employer. ■

FACING REALITYStates must address issue ofcollective bargaining reform

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A compilation of economic news from across KentuckyFAST LANE

DHL is investing $47 million to expand its Americas hub facility at the Cincinnati/Northern Kentucky Airport (CVG) to meet the growing demand of international ship-ping customers.

A groundbreaking ceremony was held on March 14 for the project, which will entail building a new 193,000-s.f. sort facility that will be connected to the existing main sort facility at CVG. The new building is expected to be operational by Novem-ber while other improvements to exist-ing buildings and the purchase of material handling equipment will be completed by March 2013.

The expansion is expected to cre-ate approximately 280 new jobs over the next 12 months.

The CVG hub connects the United States to a global network spanning Asia, Europe and the Americas. Pro-cessing more than 2 million interna-

tional shipments a month, the CVG hub handles freight bound for the Western Hemisphere, and connects more than 100 service centers and five international gateways in the United States to more than 220 countries around the world.

With the current expansion, DHL will have invested $105 million in CVG since estab-lishing its U.S. international hub there in 2009. Staffing has also grown from 1,600 in late 2009 to approximately 2,000.

ERLANGER: DHL TO HIRE 280 TO OPERATE NEW $47M SORT FACILITY AT CVG’S EXPANDING INTERNATIONAL HUB

GENERAL Electric held an official grand opening last month for its newest factory at Appliance Park in Louisville, the sec-ond GE facility open in the span of six weeks at the manufacturing complex. (A new facility to produce the company’s GeoSpring hybrid water heater opened in February and was the first new factory to open at Appliance Park since 1957.)

GE Chairman and CEO Jeff Immelt was joined by Gov. Steve Beshear and more than 1,000 GE employees to celebrate the new facil-ity, which will manufacture GE’s French-door bottom-freezer refrigerator. The new line is one of 11 new products that will be launched by GE Appliances by 2014 and is a result of GE’s $250 million investment in bottom freezer technol-ogy and an $800 million investment to upgrade Appliance Park in Louisville.

The refrigerator plant will eventually sup-port 600 new local jobs.

According to a new study, commissioned by GE and conducted by independent consulting firm Tripp Umbach using 2010 data, GE contributes – directly and indi-rectly – $1.6 billion to the commonwealth. According to the study, GE helps support more than 12,000 jobs in Kentucky, with nearly 5,000 direct employees. GE has sev-eral Kentucky facilities in addition to Appliance Park, including GE Aviation engine manufacturing, testing and distribution centers; a GE Energy repair services center; and a medical equipment manufacturing facility under GE Healthcare.

LOUISVILLE: NEW REFRIGERATOR LINE WITH 600 JOBSPART OF $800 MILLION GE APPLIANCE PARK UPGRADE

LEXMARK International is forging ahead with its strategy to expand its presence in software, investing a total of $212 million to acquire three software companies.

Brainware Inc., ISYS Search Soft-ware and Nolij Corp. will all be inte-grated into Perceptive Software, a stand-alone business within Lexmark. Brainware CEO Carl Mergele, ISYS CEO Scott Coles and Nolij President John Collins will all report directly to Scott Coons, president and CEO of Perceptive and a vice president of Lexmark.

Virginia-based Brainware has an intelli-gent data capture platform, Brainware Dis-tiller, that extracts information from paper and electronic documents, validates the extracted data and passes it to customers’ data management systems, enterprise resource planning and/or financial man-agement systems. ISYS is an Australian company that is a global leader in high-performance enterprise search and univer-sity information access solutions. Nolij, headquartered in Massachusetts, provides web-based imaging document manage-ment and workflow solutions for the higher education market.

“Our recent acquisitions enable Lex-mark to offer customers a differentiated, integrated system of solutions that are unique, cost effective, and deliver a rapid return on investment,” said Paul Rooke, Lexmark’s chairman and CEO. “The methodical shift in our focus and investments has strengthened our man-aged print services offerings and added new content and process technologies, positioning Lexmark as a key solutions provider to businesses large and small.”

LEXINGTON: LEXMARK ADDSTO SOFTWARE BUSINESS BY BUYING THREE COMPANIES

DHL executives joined state and local officials last month to celebrate DHL’s $47 million expansion of its Americas Hub at Cincinnati /Northern Kentucky Airport. Pictured are (l-r) Dan Tobergte, president/CEO, NKY Tri-ED; Travis Cobb, vice president of DHL Americas Hubs, Gateways and Network Control; Lt. Gov. Jerry Abramson; Candace McGraw, CVG CEO; Stephen Fenwick, CEO DHL Express Americas; Gov. Steve Beshear; Ken Allen, global CEO, DHL Express; Mike Parra, senior vice president - network operations, DHL Americas; Charlie Dobbie, executive vice president - global network operations, Aviation & IT, DHL Express; and Mark Mallory, mayor of Cincinnati.

GE’s new French-door refrigerator includes a number of new features, such as a hands-free autofill system to fill containers, a hot-water dispenser and an advanced filtration system that removes harmful pharmaceuticals from water and ice.

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BOWLING GREEN■ Beginning this fall, Western Kentucky Uni-versity will be offering a master’s in recreation and sports administration with a concentration in sport media and branding. The new offering, which is part of a partnership with the universi-ty’s school of journalism and broadcasting, will be a two-year online program that WKU officials say fills a niche in the sport management field that hasn’t been met by other programs across the United States.

CAMPBELLSVILLE■ Campbellsville University has announced plans to start a program for registered nurses to earn their bachelor of science degree in nurs-ing. Beverly Rowland, associate professor of nursing at Campbellsville, said the mission of the RN to BSN completion program is to offer a higher level of nursing education through a curriculum tailored to working adults. Classes will be offered online in asynchronous classes, giving students the ability to attend on their own schedule.

ELIZABETHTOWN■ A 119-year-old soda fountain that was once part of the Schmidt Museum of Coca-Cola Memorabilia in Elizabeth-town sold at auction last month for a staggering $4.5 million to an anony-mous bidder. Originally built in 1893 for the World’s Fair in Chicago, the fountain was valued in the auction cata-log at $125,000. “We thought that maybe it could go for as high as $1 mil-lion,” said Larry Schmidt, organizer of

the auction. “But this is incredible.” The museum started in the 1970s from the Schmidt family’s private collection of Coca-Cola items and even-tually grew to 80,000 items. Last year the family announced plans to close the museum and sell its contents. To date, The Coca-Cola Co. has pur-chased more than 170 items, some of which are now on display at the company’s World of Coca-Cola attraction in Atlanta.

FORT THOMAS■ KLH Engineers has opened a new office in downtown Lexington, the fifth location for the Fort Thomas-based firm. The Lexington office will be managed by KLH senior principal Robert Lonnemann and will initially operate with a staff of eight, with plans to grow that figure to 14 in the near future. In addition to its offices in Fort Thomas and Lexing-ton, KLH also has locations in Dayton and Columbus, Ohio, and New York City, and employs a staff of more than 120.

FRANKLIN■ Atlanta-based Premier Transportation has opened a new transporta-tion and maintenance facility in Franklin that will bring up to 100 new employees over the course of the next year. Premier Chairman and CEO Michael Medici said the new location will provide transportation services for the new Tractor Supply Co. distribution facility in Franklin and other area companies and will also allow the trucking company to expand its service offerings to customers from Nashville and throughout south-central Kentucky. Franklin-Simpson Industrial Authority Gary Broady noted that with Premier, Hammond Transportation and Franklin Express all having operations in the area, the community is quickly becoming a center for the trucking industry. “These three companies employ several hundred people and provide tremendous service to the numerous industries and distribution facilities located in our area,” Broady said.

LEXINGTON■ DiamondRock Hospitality Co. has sold the Griffin Gate Marriott Resort in Lexington as part of a $262.5 million transaction involving the sale of three hotels in its portfolio to Inland American, a real estate trust company. The other hotels included in the transaction were the 521-room Renaissance Waverly in Atlanta and the 492-Renaissance Austin in Austin, Texas. With 409 rooms and approximately 16,000 s.f. of meeting and ballroom space, Griffin Gate ranks as Lexington’s largest hotel.

BUSINESS BRIEFS

THE Northern Kentucky region saw 28 companies decide to locate or expand in Boone, Campbell and Kenton counties in 2011, creating 2,839 new jobs and an economic impact of nearly $500 million. Those figures outpace those of prior years, in which the region has averaged 22 new/expanding com-panies, according to the statistics released by the Northern Ken-tucky Tri-County Economic Development Corp. (Tri-ED).

Tri-ED Chairman and Kenton County Judge-Executive Steve Arlinghaus noted the role of the advanced manufactur-ing sector in Northern Kentucky’s 2011 economic develop-ment success, citing the expansions of Messier-Bugatti, Mubea, Linamar and ZF Steering.

Northern Kentucky Tri-ED is now also measuring a new benchmark through the ezone, a division of Tri-ED, which is the amount of capital investment raised/invested in companies in the region through the Kentucky Cabinet for Economic Development and private sources. The average, over the last 10 years, has been $7.8 million. In 2011, the combined investment doubled to $15.3 Million. (This benchmark is not included in the impact study for annual data consistency purposes.)

“There is a strategic focus in Northern Kentucky to encourage entrepreneurs and innovation,” said Dan Tobergte, president and CEO of Northern Kentucky Tri-ED. “We have significant momentum through initiatives like UpT-ech and are working to make private investment easier and to build on our results in this area.”

N. KENTUCKY: REGION EXCEEDS YEARLYAVERAGE FOR BUSINESS DEVELOPMENT

OW E N S B O R O leader s have announced a $44 million redevelop-ment project planned for downtown Owens-boro that will add a new hotel and move more than 200 corpo-

rate headquarter jobs into a new downtown office.Boardwalk Pipeline Partners, a company that handles

the transportation and storage of natural gas, plans to move its Owensboro operations into a new two-story office building on the former site of a car dealership. In addition to the Boardwalk move, the project will locate a new 120-room full-service convention-class Holiday Inn hotel on the west side of a newly planned convention center.

Project developers Jack Wells and Matt Hayden, of River-front Jam LLC, also plan to incorporate residential and retail development along the city’s riverfront and the west Second Street area.

The $44 million private investment is the latest project announced as a result of the market-based downtown plan, which was approved by Owensboro-Daviess County govern-ments in 2009, resulting in $120 million in publicly funded infrastructure and amenities to reinvent downtown Owens-boro as a walkable, mixed-use urban center. Official ground-breaking ceremonies were held last month for a new $20 million Hampton Inn and Suites hotel and the $48.4 mil-lion convention center.

OWENSBORO: $44M HOTEL AND OFFICEPROJECT PART OF DOWNTOWN PLAN

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FAST LANE

LEXINGTON■ The University of Kentucky has formed a “master alliance agreement” with Nicholasville-based animal nutrition company Alltech Inc. with plans to collaborate on a host of agricultural, medical and biological research projects that could also help grow the state’s economy. Alltech officials estimate that the new agreement will help generate annual fund-ing for research activities of $2.5 million within the next year, growing to more than $5 million annually by the end of the third year of the partner-ship. In addition, the alliance also is expected to help UK enhance gradu-ate training and support for post-doctoral fellowships.

■ The Bluegrass State Games, a nonprofit program that promotes amateur athletics through an annual event held each summer in central Kentucky, generated a total economic impact of nearly $7 million last year, according to a study released by the Bluegrass Sports Commission. Based on the study results, more than 16,000 participants and 70,000 spec-tators participated in the 2011 event. The economic impact of an event is drawn from the spending by attendees on things such as hotels, food, gas, shopping and other entertainment options due to their participation in the event. The event, now entering its 28th year, is the signature event of the Sports Commission.

■ Kentucky Ale beer has expanded its dis-tribution network to now include Chicago, where distribution will be handled by Chi-cago-based River North. In addition to the Chicago market, Kentucky Ale, which is produced at Alltech’s Lexington Brewing Co. facility in downtown Lexington, is cur-rently distributed in Kentucky, Ohio, Wis-consin, Georgia, Tennessee, Massachusetts and Indiana. The company also has a distri-bution network in China.

LEXINGTON/LOUISVILLE■ Lexington technology solutions provider SIS has formed a partner-ship with Louisville IT training company Tandem Solutions that will enable the two companies to provide project-specific hardware, soft-ware and training to its customers. SIS’ new Tier 3 data center facility in Lexington will be used to provide comprehensive hosting and cloud offerings, including virtualization, business continuity, security, storage management and application support as well as systems monitoring and management, while the Tandem Solution training center in Louisville will be used for local outreach programs and to host events for the information technology community.

■ UKHealthCare and Louisville-based Norton Healthcare have part-nered to create a new non-for-profit membership corporation that will focus on developing collaborations with hospitals across the state. The Norton Healthcare-UK HealthCare Partnership for Quality will initially focus on improving population health in the areas of cancer care, stroke and heart disease.

■ Residential real estate sales in Kentucky’s two largest cities saw signifi-cant growth in February, according to the latest statistics released by the Lexington-Bluegrass Association of Realtors (LBAR) and the Greater Louisville Association of Realtors. Single-family residential sales in Lexington in February 2012 increased 28 percent over February 2011, while condo sales increased 22 percent for the same time frame. In Louisville, sales of single-family homes and condos in February 2012 combined to create a 25.9 percent increase over February 2011.

LOUISVILLE■ Donald Demuth, Ph.D., associate dean for research and enterprise at the University of Louisville School of Dentistry, has received a patent for a novel bio-chemical discovery that could lead to a new way to treat gum disease. Demuth, who is collaborating with UofL chemistry professor Frederick Luzzio on the research, is working with the Office of Technology Transfer at UofL to find an industrial partner to license and commercialize the technology.

BUSINESS BRIEFS

THE University of Kentucky Gatton College of Busi-ness and Economics honored the success and achievements of three of its graduates last month as it inducted Amitabh Chandra, Ruth Cecelia Day and Donald C. Rogers into its Alumni Hall of Fame.

Chandra (Class of 2000, 2001), is an econo-mist and a professor of public policy at the Harvard Kennedy School of Government. A research Fellow at the IZA Institute in Bonn, Germany, Chandra’s research focuses on productivity and cost-growth in healthcare and racial disparities in healthcare and has been widely published and cited. He is an edi-tor of the Review of Economics and Statistics, Eco-nomics Letters, and the American Economic Journal, and was previously an editor at the Journal of Human Resources.

Day (Class of 1985) is vice president for administrative services at Landstar System Inc., a multibillion-dollar transportation ser-vices company headquartered in Jacksonville, Fla. A CPA for more than 24 years, Day also serves on the UK Accounting Advisory Board and is a UK Barker Fellow.

Rogers (Class of 1965, 1967) is chairman of Rogers Petro-

leum Inc., a company he founded in 1980 that has grown to become one of the largest con-ventional and renewable fuels, lubricants and convenience store companies in the South-east. Rogers, whose company is headquartered in Morristown, Tenn., is a past president of the Tennessee Oil Marketers.

A total of 75 men and women have been inducted into the Gatton Hall of Fame since its formation in 1994.

LEXINGTON: UK COLLEGE OF BUSINESS INDUCTS THREE INTO HALL OF FAME

LOUISVILLE-based Churchill Downs Inc. has partnered with a New York gaming and entertainment company to purchase a racetrack in Lebanon, Ohio, that will be developed into a $225 million video lottery terminal facility with up to 2,500 VLTs and a harness racetrack.

Through a joint venture agreement, Delaware North Companies Gaming & Entertainment and CDI have formed a new company, Miami Valley Gaming & Racing to manage the development and operation of the VLT facility and racetrack. Miami Valley Gaming intends to acquire the harness racing licenses and assets held by Lebanon Trotting Club Inc. and Miami Valley Trotting Inc. for $60 million.

CDI President and COO Bill Carstanjen said the acquisi-tion “fits well with our strategy to grow the company through both acquisition and development of new gaming facilities.”

Plans call for construction of the new facility to begin this year, with completion scheduled for fall 2013.

The development will create approximately 700 new jobs and is expected to bring $24 million a year to the area.

Delaware North Companies Gaming & Entertainment and CDI will each own a 50 percent interest in the new ven-ture and will have equal representation on its board of man-agers. Collectively, Delaware North Companies Gaming & Entertainment and CDI plan to contribute up to $90 million in equity with the rest of the development funded with debt.

LOUISVILLE: CHURCHILL TO DEVELOP OHIOVIDEO LOTTERY/HARNESS RACETRACK

Ruth Cecelia Day

AmitabhChandra

DonaldC. Rogers

Alltech/Kentucky Ale photo

DonaldDeMuth



FAST LANE

LOUISVILLE■ SHPS Inc., a Louisville-based company that is one of the country’s largest independent providers of benefits administration, health and wellness services, and collaborative care software, is selling its human resources subsidiary to ADP, a New Jersey company that specializes in human resource outsourcing, payroll services and benefits administra-tion. SHPS President and CEO Rishabh Mehrotra said the move allows the company “to focus 100 percent of our business on healthcare at a time when a rapidly changing marketplace has greater opportunities than ever before.” According to local reports, approximately 840 SHPS employees in Louisville – almost half of its work force – will become ADP employees, though around 650 of those employees will continue to work out of SHPS offices as ADP employees. The acquisition will increase ADP’s Louisville work force to about 1,000.

■ Louisville is one of nine new markets being added by Greyhound Express, a divi-sion of Greyhound that offers nonstop premium bus service between major cities. Last month, Greyhound Express rolled out 260 new city pairs across the eastern United States, creating a network of more than 600 potential city pairs. The company is now

offering service to and from Nashville and Cincinnati from Louisville. Express buses offer free Wi-Fi, power outlets and reserved seating.

■ Bellarmine University has announced plans to begin offering a master of science in taxation degree, designed for practicing accountants and attorneys, financial planners and recent accounting graduates. The 30 credit-hour program will launch this fall, with all classes being held in the evenings and on Saturdays, and can be completed in as little as a year.

■ In its third acquisition so far this year, Louisville-based insurance company Neace Lukens has acquired Arison Insurance Services, a full-service brokerage firm also headquartered in Louisville. With a focus on health, life, dental, vision, disability, and Medicare supple-ments, Arison’s offerings will complement Neace Lukens’ established

employee benefits practice and help the organiza-tion deploy additional services to its existing and prospective clients across the state. Once the acquisi-tion is complete, Neace Lukens will expand its offices in Louisville, Lexington, Pikeville and Bowl-

ing Green and will add Pineville to its network. Neace Lukens, founded in 1991, has more than 150 licensed agents and more than 600 employees operating in 22 offices throughout Kentucky, Ohio, Indiana, Illinois, Michigan, Tennessee, Arizona, Georgia, Arkansas, Florida and South Carolina. Financial details of the acquisition have not been released.

McLEAN/MUHLENBERG COUNTY■ Oxford Mining Co. has laid off 121 workers in McLean and Muhlen-berg counties, according to a report published by The (Owensboro) Mes-senger-Inquirer. According to Oxford officials, the lay-offs were a result of the termination of a contract between Oxford and Henderson-based Big Rivers Electric Co.

NICHOLASVILLE■ MediVet-America, a Nicholasville company that specializes in vet-erinary stem-cell technology and regenerative medicine, has entered into a distribution partnership with Butler Schein Animal Health that will result in the addition of more jobs at MediVet in the coming months. Ohio-based Butler, one of the leading animal health distribu-tion companies in the nation, will sell and distribute MediVet’s stem-cell kits and equipment to more than 26,000 veterinary clinics nationwide. With Butler’s sales staff numbering nearly 400, MediVet anticipates that demand for its products will increase and expects to add five to seven sales jobs and 10 to 20 manufacturing jobs to its existing 12-member work force.

BUSINESS BRIEFS

SEVENTEEN high-tech Kentucky companies will share $6.2 million in state funds as part of a program to sup-port and attract technology-based small businesses. Through the state’s competitive Small Business Innovation

Research (SBIR) and Small Business Technology Transfer (STTR) Matching Funds program, Kentucky matches all or part of federal SBIR-STTR awards received by Kentucky-based companies or those willing to relocate operations to Kentucky.

The companies and research initiatives receiving the awards include:

• 3H Co. (Lexington) – $232,212 to develop technology to capture and store carbon dioxide underground that can reduce greenhouse gas emissions from coal-fired power plants and reduce energy loss during the coal capture process.

• Advanced Genomic Technologies (Louisville) – $500,000 to develop laboratory animal models that can be used to pattern sporadic Alzheimer’s disease in humans.

• AllTranz Inc. (Lexington) – $150,000 to develop pharma-ceutical products to treat a variety of neurological disorders.

• Amelgo (Covington) – $100,000 to support the devel-opment of effective non-antibiotic dry-off agents for the dairy industry to reduce disease outbreaks in cows.

• AMT nano (Lexington) – $90,000 to assist in develop-ing multi-functional micro robots for use in medical devices, aerospace and defense applications, and other micro-electri-cal mechanical system projects.

• ATI Inc. (Lexington) – $98,748 to develop aluminum alloy weld wire for products ranging from armored military vehicles to commercial lightweight bikes.

• Bexion Pharmaceuticals Inc. (Covington) – $500,000 to support further development of BXQ-350 for glioblas-toma multiforme (GBM), one of the most common and aggressive brain cancers in humans.

• customKYnetics Inc. (Versailles) – $494,458 to develop an electrical stimulation device for individuals undergoing orthopedic rehab and those with neuromotor disorders.

• Invenio Therapeutics Inc. (Lexington) – $434,480 to develop a therapy for acute myeloid leukemia patients that offers higher potency, lower toxicity and fewer side effects than current treatments.

• NaugaNeedles (Louisville) – $500,000 to develop high-aspect-ratio atomic force microscopy probes.

• nGimat (Lexington) – $750,754 to develop advanced energy storage nanomaterials for use in advanced lithium-ion automotive batteries for electric vehicles.

• Orthopeutics LP (Lexington) – $359,400 to develop and commercialize nonsurgical solutions to treat degenera-tive disc disease and repair damaged tendons and ligaments.

• ParaTechs Corp. (Lexington) – $459,478 to further develop and commercialize a non-surgical assisted-reproduc-tive technology for mice used in biotechnology discovery and development.

• Regenerex (Louisville) – $500,000 for further develop-ment of a bone-marrow cell-processing procedure to help induce patient tolerance following kidney transplantation.

• Tier1 Performance Solutions (Covington) – $396,000 to develop software to support NASA design projects.

• Transposagen Biopharmaceuticals (Lexington) – $500,000 to develop a method to create mutations in the genome of lab rats that can produce models that mimic human diseases in studies to develop new therapies.

• W-Z BioTech (Lexington) – $150,000 to develop a non-surgical medical device to manage heart failure in congeni-tal heart defect patients.

STATE: KY MATCHES $6.2M IN SBIR-STTRFUNDS FOR 17 SMALL HIGH-TECH FIRMS



FORD Motor Co.’s i n v e s t m e n t i n Kentucky ranks as one of the top 15 cor-porate investment projects in the coun-try, according to Trade & Industr y Develop-ment, a leading maga-zine dedicated to site selection.

The project was selected from among hundreds submitted from across the coun-try to make the top 15

in the corporate investment category. Criteria for judging included the number of new jobs created, number of current jobs retained, unemployment figures, income level of the region and plant closings.

Ford announced in late 2010 an investment of $600 million to transform the company’s Louisville Assembly Plant (LAP) into the company’s most flexible high-volume plant in the world – resulting in a second shift and 1,800 new jobs at the plant. In the fall of 2011, Ford announced a new contract, which workers ratified, that will bring a third shift and another 1,300 jobs to LAP, raising the total new-job count to 3,100.

LOUISVILLE: FORD’S $600M INVESTMENT AMONG TOP U.S. CORPORATE PROJECTS

OWENSBORO■ Owensboro Grain Co. is building a new glycerin refinery in Owens-boro that will provide pure glycerin for the cosmetics market. (Crude glycerin is a byproduct of the biodiesel process.) The highly automated plant, which represents a $15 million to $20 million investment, is scheduled to be operating by summer 2013 and will employ 10 to 12 workers with an average salary of $50,000.

PADUCAH■ The chief executive officer of Dippin’ Dots, a Paducah-based novelty ice cream products com-pany, has resigned as part of a bankruptcy agree-ment to keep the company from being liquidated. Regions Bank, which Dippin’ Dots owes nearly $12 million, Dippin’ Dots founder and CEO Curt Jones was discouraging acquisition offers that would lessen his control over the business and said it would not loan the company any more money until Jones was removed. With Jones’ resignation, an agreement has been reached to keep the company operational until a sale takes place. Jones’ attorney told The Paducah Sun the resignation could put him in a position to buy the company.

WESTERN KENTUCKY■ The state government has awarded an emergency contract to repair and reopen the Eggners Ferry Bridge over Kentucky Lake by Memorial Day in order to alleviate any negative impact on summer tourism, which is a significant part of the area’s economy. The bridge, which carries U.S. 68 and KY 80 across Kentucky Lake between Marshall and Trigg counties, has been closed since Jan. 26, when a cargo vessel struck and tore away a 322-foot-long span of the 80-year-old bridge. The $7 million contract to repair the bridge has been awarded to Hall Contracting of Kentucky Inc. of Louisville.

BUSINESS BRIEFS

Ford Motor Co. is investing $600 million to make the company’s automotive plant in Louisville its most flexible, high-volume plant in the world.

Ford photo



INDIANA■ Roll-Royce is investing $42 million to build a new advanced manu-facturing facility in Indianapolis that will produce components for air-craft engines. The new facility is expected to be operational by 2014 and will create more than 100 new jobs.

■ Amazon.com Inc. plans to locate a new ful-fillment center in Jeffer-sonville, Ind., that will create up to 1,050 new jobs by 2015. The Jeffer-sonville facility is slated to open this fall and will be Amazon’s fifth fulfillment center in Indiana.

■ Employment Plus Inc., a full-service staffing, recruiting and human resources provider, has announced plans to expand its Bloomington headquarters and add more branches across the state, creating up to 307 new jobs by 2015. Employment Plus has more than 100 locations in 17 states and recently opened four new branches in Indiana as part of its expansion.

■ DECA Financial Services, an account receivables management firm for government agencies and corporations, plans to expand its Fishers, Ind., headquarters, creating up to 270 new jobs by 2015.

OHIO■ The Beach Waterpark, a popular tourist attraction located in Mason, Ohio, just north of Cincinnati, announced last month that it would not reopen for the 2012 season. The park’s management attrib-uted the decision to “a challenging competitive and economic climate and changing patron entertainment habits.” The park, which opened in 1985, had operated in the red for the past several years.

■ Cincinnati-based Convergys Corp. has signed a definitive agree-ment to sell its information management business to NEC Corp. for $449 million in cash. Following the acquisition, the IM business and organization will be integrated into NetCracker Technology Corp., a subsidiary of NEC.

TENNESSEE■ After announcing last summer that it was looking to market itself for a potential sale, The Krystal Co., an 80-year-old hamburger chain founded and head-quartered in Chattanooga, Tenn., has been sold to Argonne Capital Group, an Atlanta-based private investment firm. Krystal owns and franchises 360 res-taurants in 11 states throughout the South and has more than 6,000 employees. Officials said the company will remain headquartered in Chattanooga and will continue with new store developments planned for 2012 and beyond.

■ Oxford Diagnostic Laboratories is opening a new lab in Memphis that will create 65 lab processing, medical technology and management positions. The company is the service laboratory division of Oxford Immunotec, a global company that focuses on developing new tests for diseases based on its patented T-SPOT technology.

■ Kyowa America Corp., an automotive supplier that specializes in plas-tic injection molding, is opening a new facility in Portland, Tenn., that will create 160 new jobs. The new facility is expected to open by late summer.

WEST VIRGINIA■ Toyota is investing approximately $45 million to increase the annual production capacity of its six-speed automatic transmission produced in Buffalo, W. Va. The company is adding about 80 new jobs to support the expansion, raising total employment at the Buffalo plant to approxi-mately 1,200. In addition, Bodine Aluminum, which provides transmis-sion cases and housing parts to the West Virginia plant, will also increase capacity to support TMMWV and will add some 25 new jobs.

BUSINESS BRIEFS

VOLKSWAGEN Group of America announced on March 22 that it will be hiring an additional 800 workers at its plant in Chatta-nooga to help meet growing customer demand for the new U.S.-produced Passat.

“These 800 new positions are a combination of produc-tion and support functions,” said Hans-Herbert Jagla, Volk-swagen executive vice presi-dent of human resources. “We will use this opportunity to hire many of our current Aerotek contract employees. So, Aerotek will be recruiting to fill full-time contract production positions that will open up as a result. We will also be hiring additional supervisors, quality engineers, and professionals in a number of area.”

The job expansion news comes on the heels of an announcement earlier this year in which the company said it would be adding 200 more workers at the Chattanooga plant.

The Volkswagen plant in Chattanooga currently employs more than 2,700 people. According to independent studies, the Chattanooga Volkswagen plant is expected to generate $12 billion in income growth and an additional 9,500 jobs related to the project.

“We have made a commitment to this market, both in terms of products and investment, “ said Jonathan Browning, presi-dent and chief executive officer of Volkswagen Group of America Inc. “Our original commitment to invest $4 billion into the U.S. market continues to grow, with a parts depot announced last week and now another further commitment to employment here in Chattanooga. Quite plainly, we need more Passats to meet the market demand, and I’m glad that we can respond so quickly by adding staff in Chattanooga.”

The plant has been working daily overtime to meet the market demand.

TENNESSEE: VW TO HIRE 800 TO HELPMEET GROWING DEMAND FOR PASSAT

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

SUPREME Industries, a manufacturer of customized truck bodies, is investing more than $7 million to expand its operations in Goshen, Ind., where the com-pany is headquartered and operates the largest of its seven manufacturing sites.

The expansion project involves refurbishing and equip-ping multiple facilities used in the truck and bus production located on the company’s 100-acre Goshen campus.

Supreme, which currently employs 630 people in Goshen and more than 1,600 nationwide, plans to add 350 new jobs in Goshen by 2015 as a result of the expansion.

Founded in 1979, Supreme is known for building and distributing specialized commercial truck bodies and buses, including armored trucks, dry-freight and insulated cargo vans, service vans, shuttle buses and trolleys. Today, the com-pany, which supplies more than 1,000 customers worldwide, has operations nationwide, including seven manufacturing facilities and a service and distribution center. In 2011, the company reported revenues of $301 million.

INDIANA: SPECIALTY VEHICLE COMPANYEXPANSION TO CREATE 350 NEW JOBS

The Volkswagen plant in Chatta-nooga, the world’s only LEED certi-fied Platinum factory, opened in May 2011. The plant produces the popular Passat sedan.

VW p

hoto



A sampling of economic development dataKENTUCKY INTELLIGENCER®

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

0

20,000

40,000

60,000

80,000

100,000



AGRICULTURE■ Donald Durs has been named marketing manager for Monty’s Plant Food Co., a Louisville manufacturer of plant and soil enhancement products.

ARTS■ Jennifer Humphreys has been named director of development for The Speed Art Museum in Louisville.

AUTOMOTIVE■ Shigei Terashi has been named president and chief operating officer of Toyota Motor North America Inc. Terashi will retain his posi-tion as president of Erlanger-based Toyota Engineering and Manufacturing North Amer-ica Inc.

BANKING/FINANCE■ Addam Lewis has been named vice president and retail market manager for First Security Bank, working for the Owensboro-based company out of its Lexing-ton office.

■ Joel Stone has been pro-moted to vice president of the Fifth Third Bank of Kentucky.

■ Tracy King has been pro-moted to vice president-i n v e s t m e n t s a t T h e C u n n i n g h a m F i n a n c i a l Group in Louisville.

■ John L. Gohmann has been named as PNC Bank’s regional president for Lexington and Central Kentucky.

■ Lexington-based Ameri-can Founders B a n k h a s announced the following pro-m o t i o n s : David Verville – vice presi-dent, portfolio manager; Law-rence Weth-erby – v ice p r e s i d e n t , c o m m e r c i a l lender; Ann Renee Camp-bell – assistant vice president, loan process-ing manager; and Andrew Miller – assistant vice president, marketing officer.

■ Phil Campbell has been promoted to vice president-information systems auditor for Louisville-based Republic Bank.

EDUCATION■ Lisa Sons has been named director of the educational talent search program at East-ern Kentucky University.

■ Karunarathna “K.B.” Kulasekera will join the Uni-versity of Louisville School of Public Health and Informa-tion Sciences as the chair of biostatistics and bioinformat-ics. Kulasekera comes to the position from Clemson Uni-versity, where he has served as a professor and graduate pro-gram coordinator of mathe-matical sciences.

FOOD/SPIRITS/HOSPITALITY■ Jason Koval has been named director of investor relations for Louisville-based Brown-Forman Corp.

■ Kimberley Bennett has been named director of the Jim Beam Heritage Center in Clermont.

GOVERNMENT■ Steve Conrad has been named chief of the Louisville Metro Police Department. The Lou-isville native comes to position from Arizona, where he was the Glendale chief of police.

■ John T. Ward has been named executive direc-tor of the Kentucky Horse Racing Commission.

■ Jerry F. “Freddie” Lewis Sr. has been named executive director of the Kentucky Office of Mine Safety and Licensing.

■ Robert F. Scott has been named director of Kentucky’s Division of Abandoned Mine Lands. Scott succeeds Steve Hohmann, who was named commissioner of the Kentucky Depart-ment for Natural Resources earlier this year.

■ Audrey Tayse Haynes has been appointed secretary of the Kentucky Cabinet of Health and Family Services.

HEALTHCARE■ Jacob Bast has been named chief operating offi-cer of St. Elizabeth Physi-cians, in Crestview Hills.

■ Dr. James Mumford has been named medical director of Passport Health Plan.

INSURANCE■ Humana Inc. has promoted Thomas J. Liston to presi-dent of the company’s retail segment.

LEGAL■ Ross D. Cohen and Peter L. Thurman Jr. have been named partners at Bingham Greenebaum Doll LLP. Both Cohen and Thurman are based in the firm’s Louis-ville office.

MEDIA■ Dr. David Keeling, professor and head of the department of geography and geology at Western Kentucky University, has been appointed as the North American editor of the Journal of Transport Geography.

TECHNOLOGY■ Devin Herper has joined Lexington-based SDFblue LLC as director of security and com-pliance.

■ George McGourty has been appointed chief sales officer for Paducah-based Com-puter Services Inc. (CSI)

TELECOMMUNICATIONS■ Verizon Wireless has pro-moted Marion Nolan to asso-ciate director for strategic sales in Kentucky.

OTHER■ Greg Hydes has been named vice president of oper-ations planning at Lexington-b a s e d C L A R K M a t e r i a l Handling Co. Hydes will over-see the transition to and opening of CLARK’s new fac-tory in Mexico.

■ Lexington-based Office Suites PLUS has announced the following appointments: Ryan Harris – director of real estate; Gina L. Whitis – director of accounting; and Seth T. Newton – director of information technology.

Donald Durs

New leadership for Kentucky businessesCORPORATE MOVES

DEPARTURES■ William F. Pollard is stepping down as vice presi-dent and dean of the col-l e g e a t Tr a n s y l v a n i a University, effective July 31.

■ John Bendoraitis, presi-dent of Erlanger-based Comair, has resigned to accept the position of chief operating officer for Frontier Airlines.

■ William B. Drake Jr. has stepped down from his position as president of Midway College, where he has served since 2002.

■ Harold Workman has announced plans to retire as president and CEO of the Ken-tucky State Fair Board, effective Dec. 31.

■ University of Kentucky Provost Kumble Subbaswamy will be leaving his position to become chancellor of the University of Mas-sachusetts at Amherst, effective July 1.

AddamLewis

Tracy King

LawrenceWetherby

DavidVerville

AndrewMiller

Ann ReneeCampbell

PhilCampbell

LisaSons

Karunarathna Kulasekera

JacobBast

Dr. JamesMumford

WilliamPollard

MarionNolan

GinaWhitis

SethNewton



AMERICAN BAR ASSOCIATION■ Robert L. Brown, a partner in the Louisville law office of Bingham Greenebaum Doll LLP, has been named mem-bership officer-elect of the American Bar Association’s Section of International Law.

BANK OF THE BLUEGRASS■ Lynne Walker McNees has joined the advisory board of Bank of the Bluegrass & Trust Co. McNees is president of the International SPA Association.

BIG SANDY COMMUNITY AND TECHNICAL COLLEGE■ April Preece, of Lovely, and Justin Roark, of Salyersville, have been appointed to the board of directors of Big Sandy Community and Technical College.

BLUEGRASS SPORTS COMMISSION■ The Blue-grass Sports Commission has added the following indi-viduals to its board: Darren Bilberry, assis-tant commis-sioner of the K e n t u c k y High School Athletics Asso-ciation; Sally H a m i l t o n , commissioner of general ser-vices for the L e x i n g t o n -Fayette Urban County Gov-e r n m e n t ; Cindy Jaco-belli, director of athlet ics a n d r e c r e -ation at Cardi-n a l H i l l Rehabilitation Hospital; Dan McBride, associate athletics director for exter-nal relations at Eastern Kentucky University; John Nicholson, executive director of the Ken-tucky Horse Park; and Bryan Pettigrew, senior vice president of the National Thoroughbred Racing Association.

BLUEGRASS TOMORROW■ T. Bruce Simpson Jr., an attorney with the Lexington firm of McBrayer, McGinnis, Leslie & Kirkland, has been elected to the board of direc-tors for Bluegrass Tomorrow.

CENTER FOR RURAL DEVELOPMENT■ Michael Calhoun, special assistant for alumni relations at Georgetown College, has been appointed to serve on the exec-utive committee of the board of directors for The Center for Rural Development.

COMMERCE LEXINGTON■ The follow-ing individu-als have been named to the e x e c u t i v e board of Com-merce Lexing-t o n I n c . : Chair – Jeri Isbel l , Lex-mark International; Chair-elect – Danny Mur-phy, University of Kentucky College of Law; Immediate Past Chair – Harry T. Richart III, PNC; Treasurer – Laura Boison, U.S. Bank; General Counsel – Kenneth R. Sagan, Stites & Harbison; and Secretary – Robert L. Quick, Commerce Lexington Inc.

COVINGTON BUSINESS COUNCIL■ Mark Calitri and Bob Berendsen have been named to the board of directors of the Covington Business Council. Calitri is director of sales for the Holiday Inn Riverfront in Cov-ington. Berendsen is the owner and operator of Berendsen & Associates, a firm that repre-sents creative illustrators and photographers around the world.

KENTUCKY COMMISSION ON COMMUNITY VOLUNTEERISMAND SERVICE■ The Kentucky Commission on Community Volunteerism and Service has elected Daron Jordan as commission chairman and DeAnna Brangers as vice chairwoman.

KENTUCKY HUMANITIES COUNCIL■ Brian T. Burton and Mary Elizabeth Ham-mond have been appointed to serve on the Kentucky Humanities Council. Burton, of Lex-ington, is an investment adviser with PNC Bank. Hammond, of Paducah, is executive director of the Paducah/McCracken County Convention and Visitors Bureau.

KENTUCKY SPORTS AUTHORITY■ Douglas R. Hall, Wade Houston Sr., Janna M. Clark and Stephen N. St. John have been named to the Kentucky Sports Authority. Hall, of Louisville, is executive vice president with Evergreen Rehabilitation. Houston, of Prospect, is the executive vice president of Houston-Johnson Inc. Clark, of Elizabethtown, is sports and sales director for the Elizabethtown Tourism Bureau. St. John, of Pikeville, is general manager of the East Kentucky Exposition Center.

LEXINGTON-FAYETTE URBAN COUNTY AIRPORT BOARD■ Chuck Ellinger has been appointed to the Lexington-Fayette Urban County Airport board. Ellinger is an attorney and also serves on the city council of the Lexington-Fayette Urban County Government.

LOUISVILLE ARENA AUTHORITY■ Timothy M. Mulloy has been appointed to the board of directors for the Louisville Arena Authority. Mulloy is CEO of Peritus Public Relations in Louisville.

LOUISVILLE BAR ASSOCIATION■ Jennifer Y. Barber has been appointed to serve on the Louisville Bar Associa-tion’s board of directors. Bar-ber i s an a t torney wi th Bingham Greenebaum Doll’s Louisville office.

MADISONVILLE COMMUNITY COLLEGE■ Cheryl D. Moore, clinical laboratory coordi-nator for Trover Health System, has been appointed to the board of directors of Madi-sonville Community College.

MICROSOFT ADVISORY COUNCIL■ Tim Arthur, chief information officer for Nich-olasville-based Alltech, has been selected to serve on the Microsoft U.S. CIO Advisory Council.

NATIONAL ASSOCIATION OF HOME BUILDERS■ Chuck Kavanaugh, executive vice presi-dent of the Home Builders Association of Lou-isville, has been named as the 2012 president of the executive officers council for the National Association of Home Builders.

NATIONAL INSTITUTE ON ALCOHOL ABUSE AND ALCOHOLISM■ Dr. Craig J. McClain, professor of medicine at the University of Louisville, is one of four new members appointed to the National Advi-sory Council on Alcohol Abuse and Alcohol-ism of the National Institute on Alcohol Abuse and Alcoholism.

NATIONAL EQUINE LAW CONFERENCE■ Laura D’Angelo, a partner in the Dinsmore law firm’s Lexington office, has been elected chair of the University of Kentucky College of Law National Equine Law Conference.

PREMIER■ Vicki A. Darnell, president and CEO of Ephraim McDow-ell Health in Danville, has been appo in ted to the national quality improvement committee for Premier, a per-formance improvement alli-ance of more than 2,500 U.S. hospitals and 80,000-plus other healthcare sites.

REGIONAL CANCER CENTER CORP.■ Sherri Black, Campbell Brown and Mary Griffith have been named to the board of directors of the Regional Cancer Center Corp., a community advisory group that provides advocacy and support for the James Graham Brown Cancer Center. Black is the owner of Black Box Inc. Marketing and Advertising in Louisville. Brown is director – Southern Com-fort Americas and vice president of Brown-For-man Corp. Griffith is the former senior associate vice president for communications and marketing at the University of Louisville.

Kentuckians named to organizational leadership rolesON THE BOARDS

JenniferBarber

Vicki Darnell

RobertL. Brown

Lynne WalkerMcNees

SallyHamilton

DarrenBilberry

DanMcBride

CindyJacobellie

BryanPettigrew

John Nicholson

T. BruceSimpson Jr.

MichaelCalhoun

DannyMurphy

Jeri Isbell



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

Ed Lane: You were appointed president of AT&T Kentucky in early 2009 and oversee regulatory, legislative and com-munity affairs in the state. Could you further elaborate about your job duties and responsibilities?Mary Pat Regan: I have responsibility for regulatory and external affairs teams. The external affairs team works out in the communities and in Frank-fort. It monitors bills that are being moved through the Kentucky General Assembly. Our team defends and pro-tects if there are potential adverse implications to AT&T or our custom-ers. It also runs bills like the moderniz-ing telecom laws that passed in 2004 and 2006. The external affairs manag-ers also have responsibility in the com-munities for volunteer and foundation check presentations.

The regulatory team is responsible for dealing with the Public Service Com-mission, in implementing any laws and providing reports. Basically this team keeps AT&T on the straight and narrow, and in compliance with applicable laws.

EL: One industry trend seems to be for wired telephone systems to bundle with other IT service providers to provide a package of services to compete with cable broadband providers. What are

future trends in this segment of the tele-communications industry? MR: Customers are really demanding ser-vice packages. They want a one-stop shop, so AT&T’s products and services are in response to our customer’s needs. Our competitors are also offering packages.

EL: What is the lowest cost for AT&T’s wireless and landline services in Kentucky? MR: A low-income family can qualify for (government-supported, discounted) Lifeline service available from AT&T. A qualified family gets a credit off its bill.

The least expensive landline plan with the Lifeline credit is $15.90, while the least expensive price for wireless service with a Lifeline credit is $16.74. For anyone, the least expensive wireless option is our prepaid service that allows purchase of $100 worth of airtime that is good for one year; that works out to an effective rate of $8.33 per month.

EL: How are taxes for communications services regulated in Kentucky?MR: Pass-throughs of federal or state levies are governed either by the Federal Com-munications Commission or the Kentucky PSC. AT&T is not considered a utility. Probably the biggest misconception is that AT&T is a utility, and it is not. The commu-nications market is highly competitive.

The PSC does not regulate wireless service, but consumer protections still apply. The PSC has jurisdiction over 15 percent of the landlines that are left. AT&T was first unregulated in 2004, then again further in 2006 (by the Ken-tucky Emerging Technology and Con-sumer Choice Act).

AT&T can set its own rates without getting PSC approval, but the market really drives the price.

EL: Recent Kentucky Senate Bill 12 (formerly SB135) to further deregulate AT&T’s telecommunication services did not pass the Kentucky General Assem-bly. What were the key issues regarding AT&T’s proposal to modify its basic services?MR: The goal of the bill was to modernize telecom law. There are existing laws and requirements that only apply to telecom-munications companies and don’t make sense in the world we are living in today. AT&T wants a basically level playing field and the ability to take investments into products and services that people want. Consumers are looking for wireless broad-band voice service. AT&T’s goal is to invest in both broadband and wireless in the rural communities and give people in rural areas the same opportunities that are available in urban areas.

I think there was confusion about SB12 because the legislation was origi-nally proposed under one number, but that bill was not officially rolled out. AT&T worked with the Kentucky Resource Council, the League of Cities, the PSC, AARP and other groups to get their input on the first language, and also with legislators on issues they may have considered to be problematic. The origi-nal bill as it was first written wasn’t the same as SB12; there was confusion about the bill. Basically, we just ran out of time.

I believe there was concern that AT&T was going to take phone service away from people. If our customers have phone service today, they will have it tomorrow. Look at any other state that has passed this legislation, and no one has lost phone service.

Our Kentucky team definitely wants to bring more investment and jobs to Kentucky. What concerns me is that AT&T Kentucky has to compete for (company) capital against 50 other states (in which AT&T does business). Telecom modernization bills passed in Indiana, North Carolina and Tennessee. When I go to compete for capital invest-ment in Kentucky, it may instead be invested in states where there is a posi-tive business climate and AT&T can invest with certainty. It really gets down to: Do you really want to keep investing

‘KENTUCKY IS USING ALL THERIGHT TOOLS TO GROW ITS ECONOMY’AT&T Kentucky President Mary Pat Regan discusses the company’s services, future growth and planned capital investment in Kentucky

BY ED LANE

Mary Pat ReganAs president of AT&T Kentucky, Mary Pat Regan oversees the company’s regulatory, legislative and community involvement in the commonwealth and works closely with both government and private-sector business lead-ers regarding telecommunications technol-ogy. Regan, whose office is located in Louisville, also directs AT&T’s many civic and philanthropic endeavors in Kentucky. She currently chairs the Greater Louisville Inc. board of directors, is leading the current Lou-isville Metro United Way annual fundraising campaign, and serves on the board of direc-tors for numerous Louisville and Kentucky organizations. In 2011, she was named to Louisville Magazine’s annual list of the 50 most influential people in Louisville. A gradu-ate of the University of Wisconsin, Madison, Regan has served in her current role since 2009. She came to Kentucky from Chicago, where she was executive director of regula-tory affairs for AT&T Illinois.



in a network that people don’t want, or do you want to invest in the future – wireless broadband phones, what con-sumers are demanding.

EL: Last June, AT&T announced plans to invest $525 million into its land lines and wireless networks over the next three years. How will these funds be used?MR: Actually the updated amount is $600 million, and it’s not only for main-tenance of landlines but also for bring-ing 3G and 4G (network services), expanding broadband in rural areas and building cell towers.

The $600 million capital investment is not enough to keep up with the demand for faster data speeds. In 2006, when the telecom law was updated, the iPhone (whose apps generate high data usage) hadn’t even been rolled out yet. So that’s the kind of data explosion tele-com is experiencing.

EL: How significant was AT&T’s strategic relationship with Apple to introduce the iPhone and iPad to its customer base?MR: Apple has been a fantastic product, but no one could have predicted at the time how many people would use it to download movies, books and applications.

The explosion has created an 8,000 per-cent increase in data usage during the last couple of years. AT&T has kept building more infrastructure to boost its service capacity. (The company invested $20 bil-lion in 2011.) That’s why the T-Mobile merger was so critical to AT&T, because there’s only a limited amount of (wireless data) spectrum, and we need that spec-trum to be able to provide the speeds that people want. Data growth is just going to keep escalating. Unfortunately, the T-Mobile merger went sideways. (AT&T officially terminated its $39 billion plan to buy T-Mobile on Dec. 19, 2011.)

EL: Do you see a future merger?MR: I’m not privy to that, but I antici-pate as a corporation AT&T will be look-ing at ways of gaining spectrum because it has to have it. But as far as a merger, no new deals have been announced.

EL: When AT&T builds a cell tower, will it share the structure with a competitor?MR: It depends. There are areas where it makes financial sense for AT&T to share the cost, and other competitors may use our facilities. And there are other areas where it makes sense for us to exclusively own our tower.

EL: How does AT&T manage day-to-day technical operations in Kentucky?MR: There are different AT&T organi-zations, and each one reports up to a different manager. I report up into our Washington, D.C., office. My boss’s boss is also in D.C., and he reports to Randal Stephenson (chairman, CEO and presi-dent of AT&T Inc.) in Dallas. The (tele-phone and data) network team reports up through Dallas. The head of each AT&T management group is either located in Dallas, Connecticut or Wash-ington, D.C.

EL: How many people work for AT&T in Kentucky?MR: In June 2011, AT&T Kentucky employed over 3,200 employees. In 2010 , AT&T’s Kentucky payro l l exceeded $194 million and its opera-tions generated more than $197 mil-lion in Kentucky taxes. We also operate 23 company-operated retail locations in the state.

EL: How many customers does AT&T serve in Kentucky, and what is the com-pany’s share of the state’s telecommuni-cations services?MR: That information is proprietary.



EL: There are time periods when custom-ers experience dropped calls or weak sig-nals. What are the primary factors that cause dropped service, and what is AT&T doing to resolve this issue?MR: A cell tower’s capacity could be an issue or a cell tower’s signal may not extend to the next tower. I know for a fact while driving back and forth from Lexington to Louisville there are areas where there’s a drop. We’re identifying areas where the network needs improvement. Part of the capital investment plan is to reduce dropped calls. I am happy to report you can now drive the Bluegrass Parkway (Ver-sailles to Elizabethtown) pretty much the whole way without a dropped call.

EL: How can wireless users help AT&T identify cell phone dead spots in Kentucky?MR: They can call into the customer ser-vice center or call into our offices in Louis-ville. There’s also a free app to identify AT&T’s poor service areas. When you get on the app, it will record the spot where the call was dropped and advise AT&T.

EL: How does the wireless network accommodate communities that have large seasonal increases in wireless demand due to educational facilities, venues for special sports and entertain-ment events, or seasonal tourism?MR: AT&T brings in COWs (cell towers on wheels), or we can bring in other equip-ment. We work with the mobility team on special events to provide adequate services. I’m sure in New Orleans at the NCAA tour-nament, AT&T positioned COWs and gen-erators to boost capacity. AT&T can mobilize where it needs to. If a tornado hits one of our towers, we can bring in a mobile tower while the damaged one is being repaired. AT&T can do that all over the

world. The past year has been the worst weather in the South, and we’ve been mobilizing people and technicians all over.

AT&T was the first private company to be certified for the Federal Emer-gency Preparedness Program. We’ve done a couple demonstrations: The last one was in Atlanta, and it’s very impres-sive how the program can maintain or recover communications services follow-ing natural or man-made disasters.

EL: Who are AT&T’s major wireless and landline competitors in Kentucky?MR: Insight (recently purchased by and now converting to Time Warner), Veri-zon, Windstream, Bluegrass Cellular and the rural carriers. The marketplace is very competitive.

EL: You are active in Greater Louisville Inc., the Kentucky Chamber of Commerce and the Bluegrass Economic Advance-ment Movement (BEAM) as well as a num-ber of not-for-profit and educational entities. How do you rate the performance of GLI and the Kentucky Chamber?MR: I would say that both organizations are really doing a great job. GLI has been very effective with its 55,000 Degrees pro-gram in education, the Ohio River Bridges Project, logistics, and bringing in new Ford and GE product lines. The Kentucky Chamber has been very effective in Frank-fort. (President/CEO) Dave Adkisson has done a fabulous job leading the Kentucky Chamber. Both organizations have a focus on recruiting jobs and investment, and creating a pro-growth business environ-ment throughout the state.

EL: The BEAM mission is to create a super region comprised of the Greater Louisville and Lexington trade areas (and counties

located in between) in which to provide advanced manufacturing opportunities for companies from around the world. When will this initiative become more formalized and active?MR: I attended my first BEAM meeting the other day at the Kentucky Historical Society (office in Frankfort), and one of the issues people focused on is that Ken-tucky doesn’t have enough people with the skill sets needed to attract advanced manufacturing. So it’s important to communicate to students that it’s criti-cal to get a postsecondary degree.

A BEAM report will be coming out later this summer, and there are going to be additional meetings with small groups.

EL: AT&T’s Kentucky headquarters are located in Louisville. Do you have a comment about Louisville Mayor Greg Fischer’s performance?MR: Mayor Fischer is doing a fantastic job. He’s very pro-business, inclusive of every-one in the community, and very focused on compassion and giving back to the city.

EL: Do you have a closing comment?MR: Kentucky is using all the right tools to grow its economy. There’s a great pub-lic-private partnership effort throughout the state. Kentucky business and political leaders all have the same goal: to move Kentucky forward. They may not agree on how to get there, but everyone’s focused in the right direction. Kentucky is a great state. I’ve only been here three years, and I call it home. ■

LANE ONE-ON-ONE

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

Realty Research.indd 1 3/10/12 11:18 AM



TOURISTS go to New York to see Times Square and the Statue of Liberty. Florida has Walt Disney World. Califor-nia, the top state at attracting travel dollars, has Hollywood, the iconic Golden Gate Bridge and the photo-op-at-every-bend Pacific Coast Highway.

Kentucky Department of Travel and Tourism officials want to make one thing perfectly clear, though: From Wickliffe to Warfield, the Bluegrass State has its own long list of unique attractions blending world-class destina-tions like the Kentucky Derby and Mam-moth Cave National Park with heartland must-sees such as Abraham Lincoln’s birthplace, the Kentucky Horse Park and Shaker Village.

Some of the state’s attractions can be categorized as offbeat curiosities with niche appeal. This year’s 85th anniver-sary of the “invention” of the Hot Brown open-face sandwich at Louisville’s Brown Hotel likely won’t have a measur-able impact on Kentucky tourism. Like-wise for visitation to the Monte Cassino Chapel in Crestview Hills, a 6- by 9-foot

stone structure identified by Ripley’s Believe It Or Not in 1922 as the world’s smallest church.

Combine all tourism and travel, how-ever, and you have the state’s No. 3 sec-tor in terms of overall economic impact.

It was an industry with an $11.3 bil-lion economic impact in 2010 (the most recent statistics available), according to Cabinet for Tourism, Arts and Heritage estimates. Those tourism dollars could represent as much as 7 percent of the state’s $163 billion gross state product.

The 2010 travel and tourism dollar figure, an increase of 5 percent over 2009, includes both direct expenditures such as lodging, meals and shopping by visitors as well as in-state expenditures by people who are employed in the travel and tourism industry.

Cabinet Secretary Marcheta Sparrow in a statement released last May said tourism and travel were the source of 169,258 jobs in the state in 2010, up more than 2,600 from 12 months ear-lier. Those jobs generated more than $2.5 billion in estimated Kentucky wages, and tourism generated $1.188

billion in tax revenues for local and state governments.

State officials are actively working to build the sector.

Earlier this year, the Department of Travel and Tourism launched the “There’s Only One” media campaign to emphasize that the commonwealth is laden with eas-ily driveable destinations that don’t require a $200-a-night hotel room, a $650 plane fare or $75 admission ticket. The department has ear-marked $1.3 million – nearly half its $3 million marketing budget for 2012 – for the campaign, according to Gil Lawson, communications director for the Cabinet of Tour-ism, Arts and Heritage, parent agency of the department.

“It’s a very warm advertising cam-paign (and) has a good call to action,” said Sparrow. “We think it kind of sets Kentucky apart – There’s Only One – things you can’t find anywhere else.

“A lot of states have caves, but no other state has the largest cave system in the world with Mammoth Cave National Park.

“A lot of states have museums, but no place has the world’s largest baseball

COVER STORY

On the Road to Growth

Kentucky’s $11 billion travel and tourism industryhas a ‘unique’ plan to meet pent up demand

BY GREG PAETH

The 98-year-old Belle of Louisville steamboat cruises from Waterfront Park in downtown Louisville.

Marcheta Sparrow, Secretary, Cabinet for Tourism, Arts and Heritage

Young visitors admire an exhibit at the Frazier History Museum in downtown Louisville, which has had more than 1.5 million visitors since opening in 2004.

Louisville Convention and Visitors Bureau photos



bat,” Sparrow said, referring to the 120-foot-long specimen leaning against Louisville Slugger museum in Louisville.

“No one else has Muhammed Ali. No one else has Kentucky Fried Chicken – and the Colonel,” she said, referencing Muhammed Ali Center in Louisville and the global KFC restaurant chain whose roots originated at Harland Sanders’ Corbin service station in 1930. “Lots of communities have things that are one of a kind.”

The state is very conscious of change in the industry, Sparrow stressed, and is concentrating much of its marketing on the Internet and social media, especially influential Facebook.

Also evolving is an effort to satisfy a growing demand for non-“passive” attractions.

“We are still in the development phase of adventure tourism. We’re see-ing a lot of tourism development around that,” Sparrow said in a recent interview. “We’ve had two or three zipline adventures come online in the past year, and there’s a lot of buzz on trail development for horseback riding and hiking and biking. We’re also work-ing hard on what we call ‘blue water trails’ – canoeing and kayaking opportu-nities all across the state.”

Bourbon packs a tourism wallopOne of the 31 “There’s Only One” attractions may be unique for its admo-nition that it should be experienced “responsibly.”

The Kentucky Bourbon Trail, which links six Central Kentucky distilleries for a two-day tour, and its independent Louis-ville offshoot – the “Urban Bourbon Tour” – are part of what the state refers to as “Bourbon Country,” an umbrella term that covers the explosive growth of “bourbon tourism” throughout the commonwealth.

“The Bourbon Trail has so much poten-tial, and it’s becoming so popular. It’s something that is really having an impact in the areas it touches,” Sparrow said.

Interest extends far beyond the state, especially since CNN International in February selected the trail one of “10 Classic American Experiences,” a desig-n a t i on s hared w i th iconic attractions such as a road trip on U.S. Route 66, enjoying jazz in New Orleans, or a grandstand seat for a NASCAR race.

“This is helping to change the face of the Kentucky tourist over-night. We’re becoming known as the Sonoma of the South,” said Eric Gregory, president of the Kentucky Dis-tillers’ Association. The Sonoma refer-ence is to California wine country tourism that has become a multibillion-dollar industry. Interest in the Bourbon Trail

There’s Only OneKentucky is home to many unique places and attractions that can’t be found anywhere else. The commonwealth’s There’s Only One tourism campaign focuses on these 31:

• American Saddlebred Capital of the World – Shelbyville

• Belle of Louisville, National Historic Landmark – Louisville

• Birthplace of Abraham Lincoln – Hodgenville

• Birthplace of Bluegrass Music, Bill Monroe – Rosine

• Birthplace of Jefferson Davis – Fairview • Birthplace of Loretta Lynn – Country

Music Highway – Butcher Hollow• Bourbon Country – Central Kentucky • Cumberland Falls, Niagara of the

South – Corbin • Cumberland Gap National Historic

Park – Middlesboro • Home of the Kentucky Derby,

Churchill Downs – Louisville• Horse Capital of the World –

Lexington• Houseboating Capital –

Lake Cumberland• International Barbecue Festival –

Owensboro • International Bluegrass Music

Museum – Owensboro• Kentucky Derby Museum – Louisville • Kentucky Horse Park – Lexington• Land Between the Lakes National Rec-

reation Area – Golden Pond• Lost River Cave – Bowling Green• Louisville Slugger Museum

and Factory – Louisville• Mammoth Cave National Park –

Cave City• Monte Cassino Chapel – Crestview Hills• Muhammad Ali Center – Louisville • My Old Kentucky Home – Bardstown• National Corvette Museum –

Bowling Green • National Quilt Museum – Paducah • Red River Gorge – Slade • Rosemary Clooney House – Augusta • Sanders Café – Corbin• Shaker Village of Pleasant Hill –

Harrodsburg • St. Mary’s Cathedral Basilica of the

Assumption – Covington• World’s Championship Horse Show –

Louisville

Eric Gregory, President, Kentucky Distillers’ Association

Kentucky industry officials are in the development phase of adventure tourism attractions in the state and plan “blue water trails” for kayaking and canoeing.



that KDA created in 1999 has grown so quickly that distillers in January hired a manager to oversee it, Gregory said.

Gov. Steve Beshear called the industry “a homegrown gem and a bright spot in a struggling economy” at a February news conference unveiling a KDA study of bour-bon production’s impact on the state economy. Louisville Mayor Greg Fischer said bourbon “isn’t just a drink anymore. It’s a culture, a lifestyle and an essential part of our tourism efforts.”

In 2011, 450,000 people visited at least one of the six stops, said Adam Johnson, the new trail manager.

“We’re on an upward trajectory. The numbers for January (2012) were 51 percent over January of last year,” John-son said.

Many visitors express interest in the esoteric art of bourbon making and a con-noisseur’s knowledge of the distinctive fla-vors of each distillery’s inventory. But it’s clear some tourists are just looking for an opportunity to drink bourbon.

“One guy who called from New York said he was planning to bring a motor coach for a bachelor party,” Johnson said.

In 2007, KDA created a promotional passport and promised free T-shirts for anyone collecting official stamps from each trail distillery. Roughly 200 people completed the circuit the first year, Gregory said, but by 2011 that number had exploded to nearly 12,000.

The financial analysis for the distill-ers’ group estimates about 25,000 peo-ple filled passports the past four years, creating an $18.5 million economic impact.

Authored by University of Louisville economist Dr. Paul Coomes, the study reports the distilled spirits industry’s value at about $1.8 billion in 2010 – more than 1 percent of that year’s $163.3 billion “gross state product” and more than twice the 1997 figure.

From 1999 to 2010, bourbon produc-tion more than doubled to 787,000 bar-rels, according to the association, which also likes to mention Kentucky has a bourbon inventory of 4.7 million barrels compared to a population of just more than 4.3 million.

Mild winter bodes well for 2012Although a variety of state sources identi-fied travel and tourism as the No. 3 indus-try in Kentucky, there is less certainty about which industries rank above tourism. One state source pointed to U.S. Department of Labor research indicating the broad cate-gory of “Trade, Transportation and Utili-ties” (364,700 jobs) is the commonwealth’s largest economic sector, followed by “Edu-cational and Health Services” (255,700). However, economic impact figures were not available.

Secretary Sparrow and cabinet spokesman Lawson said they do not have a list of the top 10 attractions in the state.

It’s safe to assume, though, that the biggest event every year is the Kentucky Derby and the Kentucky Derby Festival that leads up to it, Sparrow said. A study released in January by the festival’s orga-nizers said that two-week event has an economic impact of $128 million. No dollar figure was available on the value of the Derby itself.

The economic impact report for 2011 was still being compiled last month, Spar-row said. But despite economic struggles throughout the country, she believes Ken-tucky’s travel and tourism industry will show modest growth for last year.

“From all indications, we think we are probably going to be up a bit, not a great deal,” she said. “We had a really good winter in terms of travel – the best three months of visitation and revenue that we’ve seen in the past five years.”

The mild winter, Sparrow pointed out, was an important factor in the strong numbers for months that are typically the doldrums for tourism and travel.

She was cautiously optimistic about growth for 2012.

“All the indicators look good for the year,” said Sparrow. “I think our tourism industry remains strong in the heart of the country. A visit to Kentucky is very economical. Our tourism attractions

have maintained their attendance; our hotel occupancy has stabilized and grown at a good rate.

“However, the big unknown factor for Kentucky this year is the price of gasoline. We do not know how that will affect our tourism economy.”

The industry tends to thrive on upbeat attitudes.

Mary Hammond, pres-ident of the Kentucky Association of Convention and Visitors Bureaus, also voiced optimism for the 2012 tourist season.

“I saw something the other day that said we have gone from (customer attitudes of) ‘We can’t,’ to ‘We shouldn’t’ to ‘We’re out of here’ with our travel plans,” said Hammond, who is executive director of the Paducah Convention and Visitors Bureau.

For example, she said, preliminary reg-istration numbers for one of the biggest events in her region, the American Quil-ter’s Society show in late April, are running ahead of last year’s pace for an annual event that revolves around Paducah’s National Quilt Museum.

Hammond also stressed the impor-tance of online marketing.

“People are very savvy today because of the Internet and they want to be assured of the quality of the attraction – make sure that what’s advertised is really there,” Hammond said. “And peo-ple are looking for value-added attrac-tions. Everybody wants to make sure that they’re getting something good for their dollars.�

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