Welcome to the April 30 top secret, always confidential Monday Business Briefing.
These are biz tips Insider Louisville staff and contributors have collected during the past few days, some of which are NOT double-verified like Insider Louisville’s daily reporting.
But as we always say, this is inside dope from insider sources with direct knowledge of events.
Since this is the last MBB before the Derby break, we thought we should make this meaty enough to last you for two weeks.
• Heaven Hill’s announcement last week of a $10 million Main Street mini-distillery/tourism center was a big deal. That announcement came just weeks after Michter’s closed on the Fort Nelson Building at Eighth and Main where the New York-based company plans to spend $8 million on the distillery/tourist attraction. All very exciting. But our real estate sources tell us that’s just the beginning.
An entire series of urban bourbon facilities are likely, with five – maybe six – companies looking at real estate. Execs at brands large and small are convinced the concept makes more sense than tourists trekking to the sticks to see quaint rural operations such as Maker’s Mark and Woodford Reserve. We hear Chicago-based Beam is considering a Louisville project. Ditto for Angel’s Envy, where founder Wesley Henderson already has said he wants a downtown facility, open to the public.Progess Paint Building
The hot property we hear is Angel’s Envy and everyone else is looking at is the The Progress Paint building at Brook and Market streets. The odd man out will be Brown-Forman, say our sources, because they’ve spent so much money on their Woodford Reserve boutique distillery near Lexington. It’s hardly an industry secret the bucolic Woodford Reserve property is something of a Potemkin Village. Yes, they make a little bourbon there at the little three-pot distillery, but most Woodford Reserve is made in Louisville. Still, does BF really want to jeopardize reducing traffic to that very seductive brand-building experience with a more convenient urban bourbon facility?
This whole urban bourbon phenom could be a transformative series of complimentary projects, redefining downtown Louisville as a tourist/convention draw. Completely driven by private investment, like NuLu, though we’re guessing the mayor, the governor, GLI, Joe Reagan and Alan DeLisle will all find some way to take credit.
• Big buzz this week about a coming partnership between Walmart and General Electric Co. The giant Bentonville, Ark.-based discounter is getting into the appliance business in some markets as a test. Louisville Appliance Park is going to be making the bottom-end models Walmart is looking to sell. The washers are going to be built at Appliance Park’s Building 1. These econo-models will be made on Line 1 in Building 1. We’re assuming Walmart is anticipating a residential real estate rebound. This is a long way from GE’s new “Green” image, because these inexpensive machines will be old-stye white box energy hogs. But for a family who doesn’t need a Ferrari-red LG stackable (about $2,000) this GE/Walmart thing could turn out to be genius. And GE could end up adding shifts to keep up. But there is the Best Buy cautionary tale – appliances helped the Minneapolis-based electronics discounter, then really, really hurt it when the real estate crash came … something that’s still dragging down Best Buy sales.
• Here is your Biz First/CJ story early: State, federal and local officials will fall all over themselves this morning to take credit for CafePress moving its headquarters to River Port from San Mateo, Calif. Kentucky Economic Development Finance Authority officials approved Cafe Press for $10 million in state tax incentives to move about 500 jobs here, working toward 600 in the next few years. Which is a big deal. CafePress is investing $16 million in the project, supposedly. Though it’s hard to understand why Kentucky is giving up tax revenue in a deal that was going to happen anyway. Companies are more and more screwed about playing states. But where was CafePress going to go? Memphis, and take their 7-year-old Louisville operation with them? Insider Louisville has already decided we’re going to demand state officials give us money so we don’t relocate our vast empire to Mumbai. Pretty sure this will work.
• This is an odd bit. The newspaper business isn’t working out so well for McLean, Va.-based Gannett. (Ask the dozens of people who’ve been booted out at the Courier-Journal since 2008.) So now, Gannett execs are pushing into Louisville hawking web page development to small businesses, competing against the Via Studios of the world. “(Gannett) will build you a website for your business for between $750 and $1200 … and then try to sell you SEO, SEM, enhanced programming etc.,” said a source. These are the guys who used to sell print ad space. Now they’re doing this. Oddly, Gannett isn’t in the more lucrative hosting end, said our source. They just want to update websites. All the work is being done out of Nashville, with local reps working with clients. We’ll see ….
• Sources are telling us Integrated Combat Systems is going to be growing substantially in Louisville. Those sources say ICS, part of Long Island, NY-based Orbit International Corp. (trades on the NASDAQ exchange under the symbol “ORBT,”) already has received several million dollars worth of contracts from the U.S. Navy and is likely to get more. ICS handles the high-skilled engineering and tech piece of building/repairing/rebuilding the MK 110 weapon, a 57-cal. anti-aircraft/anti-missile cannon used or to be used on a number of next-gen warships. Good news for Louisville; bad news for Iran.
• This is a nuanced story, and one that’s far more important than the “Roman Catholic Church is trying to take over Kentucky health care” narrative that sank the hospital merger. So the CJ and Biz First won’t go near it. Yet, Kentucky’s budget hangs in the balance. Kentucky’s Cabinet for Health and Family Services made a risk adjustment payment to Coventry Cares Friday. Why does this matter? Because the payment is a defacto admission that Kentucky medicaid managed care system is a smoking ruin. Earlier this month, Insider Louisville broke the story that Appalachian Regional Healthcare was suing two Medicaid managed care organizations – Centene Corp. and Coventry Cares – and the state over $5 million in late payments on uncontested claims. Coventry had declared ARH out of network because Coventry got stuck with ARH’s high-risk patients in a double-cross engineered by state officials. So now the state is giving the Bethesda, Md.-based insurer the risk adjustment payment because state officials got, ah, busted. After ARH sued Coventry, the local Coventry president wrote the ARH CEO a letter blaming the Beshear administration for a clunky implementation that has caused insurers, health providers and patients nothing but grief.
Kentucky has A LOT of people who depend on Medicaid for health care and for their paychecks! During the gubernatorial campaign against Sen. David Williams, Gov. Steve Beshear needed a big coup to both satisfy that electorate, and “solve” Kentucky’s Medicaid deficit, taking the issue away from Williams. So Beshear rushed a switch to managed care – a system designed to monitor the system for unnecessary care – from fee for services. Unfortunately, since the system went into effect Nov. 1, nothing has gone well. And now, the courts are likely to have to sort it all out. For years.
• Sources are telling us Kindred has multiple meetings scheduled around downtown during the coming weeks in advance of a major announcement. The mass employee meetings were scheduled for February, then cancelled abruptly. Our sources say this is about Medicaid.