Welcome to the April 25 Monday Business Briefing, your private business intelligence digest from Insider Louisville.
Union to fight GE’s outsourcing plans
A local union leader has taken issue with GE’s explanation for inefficiencies at a local distribution center.
GE wants to outsource the work, which would affect 217 employees, including about 200 union members — but the union said it plans to fight to keep the work within the company.
The 47-acre warehouse at Appliance Park handles finished appliances — made locally, elsewhere in the U.S. and internationally — before they are shipped to customers including retailers or to other distribution centers closer to customers.
GE said last week that the center costs more to run than the others it owns and that despite investments of about $5 million into the facility since 2013, its performance has continued to slip.
GE spokeswoman Kim Freeman told IL that the facility had missed shipments and disappointed customers.
Glenn Hagan, vice president of the IUE-CWA Local 83761, said plant inefficiencies are a result of scheduling problems caused by a third party, error-prone software and the company’s slow response to employees’ improvement suggestions.
He said union and company officials will begin meeting this week to try to find a solution that works for both parties. The union has 60 days to offer a proposal to counter GE’s plans. The proposal also has to be ratified by the union.
If GE proceeds with the outsourcing, the warehouse employees would be transferred to other plants within the park. Hagan said that while the company is hiring, it may not find 200 positions, which means that employees with the least seniority — in any of the plants — would face a layoff.
Hagan said the local’s president, Dana Crittenden, pegged the chances of the jobs remaining within the union at 50-50.
“There are still ways to stop the outsourcing,” he said.
Hagan said that while the company has invested $5 million in the facility, most of the money was spent not on operational improvements, but on safety features: The bulk of the funds paid for a nurse’s aid station, cameras and a GPS system that collects data to see if routes in the facility can be optimized.
Hagan, who has been with GE for 38 years, said the company also installed a new computer system that frequently malfunctions. When workers start their shift, a computer on their forklift should inform them about which products have to be transported to which docking bay, but Hagan said the information often is missing, and the computers require reboots, which means employees lose time.
About a year ago, GE also outsourced the scheduling at the facility, which, Hagan said, “hasn’t worked effectively.” Scheduling errors have resulted in trucks being loaded far away from where the product is being stored, which has forced forklift drivers to waste time covering large distances in the giant warehouse.
“Killed the productivity,” Hagan said.
He also said employees have suggested that high-volume products be stored closer to loading docks than those that are shipped with lower frequency, but the company has been slow to implement such changes, which also has hampered productivity.
Candy store sweetens space left by WHY Louisville
As a child, Louisville resident David Carney sold candy off his parents’ front porch for an upcharge in order to raise enough money to buy more candy. Therefore, it seems only natural that he’d end up owning a candy store.
“It all has been pretty magical,” Carney said.
Carney and his husband Brian Wigginton are opening the candy store, called The Sweet Spot Candy Shoppe, in the former WHY Louisville building in the Highlands. They expect to open during the third week in May.
The pair completely renovated the 3,269-square-foot space with the help of Carney’s parents, who flip houses. The outside is painted an eye-catching green; the floors and the plumbing are being redone; and they are retrofitting the interior to their needs.
“We gutted it,” Carney said. “It was kind of trashed. There had been some damage done.”
The Sweet Spot will sell 120 to 130 varieties of candy in bulk bins, so customers can fill their own bags of candy, as well as candy-related novelty items, gourmet chocolates and vintage candies that can’t be found in a regular store.
People also will be able to rent the store for parties, particularly children’s birthdays, and hire The Sweet Spot to set up a candy buffet at a wedding or other event, he said.
He and Wigginton liked the WHY Louisville spot, Carney said, because it is close to their Cherokee Triangle home and is a family-friendly area of Bardstown Road.
“I wanted it to be the neighborhood candy store where kids can grow up,” Carney said. “Growing up going to the candy store with my grandfather, it was a huge deal. No one’s in a bad mood buying candy.”
The couple even have an adorable advertiser, their kindergarten-aged son, who regularly and sometimes unsolicitedly tells people about his parents’ store. “He’s tickled to death,” Carney said. —Caitlin Bowling
Humana to rename, upgrade wellness program
Humana will rename and upgrade its wellness program, which aims to improve customers’ health through advice and incentives, such as discounts at retail stores.
The Louisville-based insurer said in a press release that Go365, currently known as HumanaVitality, will “offer members enhanced features including a more personalized approach to health and wellness.”
The company said it would announce more details about Go365 before it goes live on Jan. 1.
“Since its inception, HumanaVitality has been at the leading edge of data-driven, incentivized wellness programs,” Humana Vice President Joe Woods said in the release. “Now, with Go365 and exciting enhancements coming in just a few months, we’ve opened the door to an entirely new standard for helping our members make life’s moments more rewarding.”
HumanaVitality includes online health assessments, provides advice on health-related matters including nutrition and exercise, and encourages customers to set and meet goals. The completion of goals nets customers VitalityBucks, which provide them with discounts at major retailers such as Target and Macy’s.
Sears closing Kmart stores nationwide, including three locally
Sears Holdings, which owns Kmart, announced that it plans to shutter 68 Kmart stores and 10 Sears stores in the United States, according to The Wall Street Journal.
On the list are three Louisville area Kmarts. One is located at 4025 Poplar Level Road, and the other is located at 3911 Taylorsville Road. The final area Kmart closing is located at 3525 Grantline Road in New Albany.
“The decision to close stores is a difficult but necessary step as we take aggressive actions to strengthen our company, fund our transformation and restore Sears Holdings to profitability,” said Edward Lampert, Sears chairman and chief executive, in a statement.
The stores closing were unprofitable, The Wall Street Journal reported.
FirstBuild announces next product: Pique Cold Brewer for coffee
In their latest co-creation challenge, FirstBuild, GE’s makerspace, challenged members to submit designs for a better, faster cold brew system for coffee. Nick Allen, from San Francisco, submitted the winning design for the Pique Cold Brewer and has been awarded $5,000; or a percentage of their upcoming Indiegogo campaign. The Indiegogo campaign goes live in late June.
Cold brewed coffee is less acidic. You can drink it cold or heat it up. And, if refrigerated, cold brew coffee can last up to four weeks. Best yet, cold brewing usually takes up to 12 hours — the Pique does it in 12 minutes!
In other news: Dear IL Office Manager, Debbie: Can we have one please?
In other FirstBuild news: They will begin shipping the Opal Nugget Ice Maker starting in July. Pre-order one for $449 here. —Melissa Chipman
After nine months of renovation, KMAC is slated to reopen June 4
After nine months and $3 million, the renovations at the Kentucky Museum of Art and Craft (KMAC) on West Main Street are nearly complete. They’re so close to being done, that they’ve released a reopening date — Saturday, June 4 — where a ribbon cutting and celebration will be had.
The renovations to the 35-year-old organization created additional public space for a cafe and activity center, streamlined exhibit areas and increased its capacity for education programming. Christoff:Finio Architecture and Bosse Mattingly Constructors were tapped for the job.
“We invite the community to join us in celebrating a massive accomplishment in the Louisville art scene,” said Aldy Milliken, executive director and chief curator, in a press release. “This new flexible design will help further KMAC’s presence as a downtown community center that connects people to art.”
Last year alone, more than 40,000 visitors and 60,000 participants in classes came through the museum’s doors, and KMAC is looking to double those numbers with this new space.
Net Tango pumping out high-profile sites
A local full-service technology firm that specializes in custom web application development and system integration has been churning out some pretty high-profile websites lately.
Net Tango was tapped to redesign floydmemorial.com for New Albany-based Floyd Memorial Hospital and Health Services; the website serves as the health care provider’s primary communication gateway to patients and medical professionals as well as the community.
In addition, Net Tango recently released a brand new site for housing guide Joe’s House, a nonprofit that helps cancer patients and their families find a place to stay when traveling away from home for medical treatment. Joeshouse.org serves as the organization’s primary communication mechanism for patients and hotel partners. Joe’s House is based in New York City.
“Customers count on us to solve their web-based technology challenges,” said Stephanie Minier, NetTango project and business development manager. “In fact, the more complex a problem is, the more we love developing the right solution and Joe’s House is a great example. Our team really enjoys translating complex challenges into simple solutions by leveraging our strong engineering and programming expertise.”
The other side of the FantasyHub crash
There’s more than one side to every story and the truth often lies somewhere in between, so after having reported on the meltdown at FantasyHub last month, we finally got to sit down with one of the co-founders.
In February, the daily fantasy sports site shuttered abruptly, leaving its players and the charities it supported in the lurch. The company subsequently was bailed out by a much larger fantasy sports site, Draft Kings, who then dragged their name through the mud in the media, reinforcing the negative internet reports from players who felt duped.
FantasyHub was founded in Louisville in July 2013 right after its founders, Stephen Plappert, Andrew Busa and Chris Pierce, graduated college. They started working on the company full time in January 2014. In March 2015, they were accepted into the prestigious TechStars accelerator program in Austin, and when they graduated, they moved the company there and started raising funds.
Before last year’s football season started — their salad months — the co-founders raised $1.1 million, according to Plappert, and $850,000 of that raise came from one Houston-based investment group.
The group delivered on the initial $400,000, and FantasyHub invested that money in marketing contracts, among other things. The plan was for the investment group to issue the remainder in 30 days, but that’s when stuff hit the fan on a national level with the online fantasy sports industry.
At the end of 2015, close to a dozen attorneys general across the country called into question the legality of daily fantasy sports wagering. The investment group balked, according to Plappert, and not only withheld the rest of their investment but threatened to sue to reclaim the initial $400,000.
Although during the football season, FantasyHub saw massive growth — from $30,000 a month in entry fees in August to $780,000 a month in December — come February, they were unable to pay out all of their players’ winnings due to the lost investment. They desperately tried to raise more money but couldn’t quite make it happen.
Through TechStars, the founders already had a relationship with DraftKings. FantasyHub turned all of its cash over to DraftKings, and DraftKings paid off all of FantasyHub’s players and charities. “Every single player and charity got paid,” said Plappert.
In exchange, DraftKings got to control the narrative and chose to paint themselves as a “white knight” and the FantasyHub founders as charlatans.
Plappert said FantasyHub isn’t entirely done because they still own the technology that they developed for the site. They’re hoping to license that asset to get their initial investors, many of whom are here in Louisville, their money back. “They don’t expect their money back,” said Plappert. “But you want to go above and beyond, especially as a first-time entrepreneur.”
During the course of the company, FantasyHub donated around $200,000 to charity and there was more than $3 million wagered. The site had 27,000 users and around 3,000 were active on a weekly basis. At their peak, there were seven employees.
“Be careful of your investors,” Plappert said. “They can do a lot to impact your business in both a positive and negative way.”
Plappert intends to be a “serial entrepreneur.” Pierce and Busa remain in Austin looking for work. Plappert is here in Louisville for the next 12 months, looking for part-time work, and in a year, he and his girlfriend and a friend intend to hike the Appalachian Trail. He said it will give him lots of time to work on new ideas. —Melissa Chipman
Speaking of nonprofit donations, file this one under random…
Just hours after the world learned that Prince had died last week, IL reported that back in 2001, the iconic musician made a secret donation to the Western Branch Library to the tune of $12,000. He earmarked those funds for “community building” at that specific library, which was the first library in America staffed by and serving the African-American community.
Then an IL reader sent us the following tip:
Loved reading about Prince’s Louisville donation. Media has not yet noticed Gen. Petraeus’ 2016 donation to the Fund for the Arts recognizing Col. Fred Johnson, his former protégé, who now works at the Fund.
After a storied career in the military, Patraeus served as director of the CIA from Sept. 6, 2011, until his resignation on Nov. 9, 2012, following a series of events that led to an FBI investigation and Patraeus eventually pleading guilty to a misdemeanor charge of mishandling classified materials.
The check is below, in case you’re interested. —Melissa Chipman
Perhaps it had something to do with the NFL’s ties to another Louisville restaurant company, but according to Yum! Brands CEO Greg Creed, the national sports organization declined to move the Super Bowl to help out Taco Bell’s bottom line.
Creed was pretty obviously joking while answering an analyst’s question last week about Taco Bell’s soft sales numbers.
“I tried to get the Super Bowl brought forward a couple of weeks because that would have really helped us, but unfortunately, the NFL wasn’t going to play along,” Creed said. “So we were so tied up to the launch with that event that there was a couple of weeks where we were a little naked, I would say. And so obviously, sales and transactions up to there were soft. The good news is that after that event, the Quesalupa has mixed at over 10 percent and has done well for us.”
The fast-food chain is usually Yum Brands’ best performing subsidiary, but during the first quarter of 2016, same-store sales only rose 1 percent. For comparison, Taco Bell’s same-store sales rose 4 percent in each of the last two quarters of 2015 and 6 percent in the first quarter and second quarter of 2015.
On a more serious note, Creed told analysts that Yum Brands was looking at growing delivery at its subsidiaries and making it easier for customers to access the brands. Pizza Hut has offered delivery for years, and 46 percent of its orders are placed online or through its mobile app. Taco Bell also recently started delivery, offering it in 500 stores thus far, and the chain launched a mobile ordering app and online ordering platform last year.
“We’ve got to find ways to make it easier for our people, for customers to get to our brands,” Creed said. “We do that two ways: we build more units, but we also obviously will start looking at delivery as a way to get our food to customers in their home.” —Caitlin Bowling
Maker’s Mark releases commemorative American Pharoah bottle
In honor of last year’s Triple Crown winner American Pharoah, Maker’s Mark is ditching its signature red wax and dousing itself in Smurf blue and yellow — the colors of the horse’s silks — for a commemorative bottle that’ll be released across the country on May 1.
The bottle is endorsed and supported by American Pharoah owner Ahmed Zayat, and both Zayat and Maker’s will mark the occasion by making a contribution to the Kentucky Derby Museum.
“American Pharoah proved to an entire generation of racing fans that the impossible can be achieved,” said Zayat in a press release. “It was a joy for us to race him each and every time he took the track, and we thank Maker’s Mark for their fitting tribute to this once-in-a-lifetime racehorse.”
The limited-edition bottles will sell at select locations for a suggested retail price of $74.99. —Sara Havens