Wednesday, November 28, 2007

Recent Bad News

Well, it can't be sunshine and rainbows everyday, now can it? Louisville has had two major announcements in past two weeks, and neither of them have been good.

Medco, the New Jersey-based pharmacy company, has decided that it will not locate a major 1,300 position facility in Louisville; the facility will instead be located in a suburban collar county of Indianapolis. The Medco project would have brought hundreds of very high paying jobs to the area, and would have been a major coup for a city that is branding itself as the next big logistics hub in America.

In choosing to locate in Indianapolis, Medco decided to forgo 30,000,000 dollars in tax incentives offered by the state of Kentucky. Indiana offered substantially less money to Medco at 18,000,000 dollars. It looks like that the key reason Medco picked Indiana over Kentucky was pretty simple: they currently couldn't operate in Louisville under current pharmacy laws. Indiana quickly changed their regulations, while Kentucky put it off at several meetings, until it was too late for Medco. The damage was done, and 1,300 jobs went 100 miles north.

The other major disappointment of the week is the sale of locally headquartered Genlyte to Netherlands-based Royal Phillips Electronics. Genlyte is Louisville's fifth largest publicly held company, and with strong growth, it was poised to break into the Fortune 1000 list. The sale is a serious blow to the local business community.

The silver-lining to this cloud is that Phillips has at least agreed to headquarter this new division of the company in Louisville. Current Genlyte management has all agreed to stay with the newly formed division of Phillips. Phillips has been on a buying spree, of sorts, in the field of light production, having acquired a Massachusetts and Canadian based company in recent months.

4 comments:

The Urbanophile said...

Jake,

I put the Medco thing into the "win some-lose some" bucket. Learn the lessons, yes (I am not sold regulation was the reason - I believe availability of labor supply was a huge factor), but don't beat yourself up. Louisville is going to win its share of deals like this. For every Medco, there's a Geek Squad.

Having an HQ bought out can be a bad thing, but can also be good. If the acquirer invests and ramps up the operation, it can be a good thing. Time will tell.

keatssycamore said...

Big articles in the C-J's Sunday paper about troubles with arena funding and Louisville's falling bond rating.

City's $9.5 million in the red and refinancing existing projects for more favorable terms ain't gonna be as easy as it was back in 2002. What with the credit crunch and all...

Anonymous said...

I miss ya, kiddo.

Anonymous said...

me too! i love reading your blogs. hope you blog soon.