Business Briefings - May

Here you will find the complete Business Report that appears in the May 2008 issue of In Business as well as many additional entries that did not appear in the magazine.

Exclusively online...

NATIONAL news

Demand for durable goods dropped 1.7% in February, that following a drop of 4.7% in January. Meanwhile new homes sales dropped 1.8%, reaching its lowest point in 13 years.

Kohl's Corp. announced a decline in same-store sales for March of 15.5%. The company now expects first quarter earnings to be in the negative single digits.

After successful test marketing around the country, Miller Brewing Co. will begin marketing craft-style beers nationwide this summer, including a blonde ale, a wheat beer and an amber beer - all with fewer calories and carbs.

Meanwhile, Anheuser-Busch announced plans to build a new brewery in Tangshan, China, scheduled to open in 2009. A-B owns 27% of Tzingtao, brewer of China's best-selling premium beer, and also sells Budweiser products, Harbin and Tang beers in that country.

Google Inc. acquired DoubleClick, an online ad service for $3.1 billion.

The US Dept. of Health and Human Services has developed the Hospital Compare website which allows the public to compare hospitals and access hospital patient satisfaction ratings online. See www.hospitalcompare.hhs.gov.

State News

27 employees in Green Bay will lose their jobs in May after Bon-Ton Stores Inc. decided to pull the plug on its 175,000 sq. ft. distribution facility. Bon-Ton operates 280 stores nationwide, including Boston Store, Carson Pirie Scott, Herberger's and Younkers. The company is consolidating its operations to other locations in PA, OH and IL.

Wisconsin is the 14th healthiest state, according to a report by CQ Press, Washington, D.C. based on health care providers, preventative care, affordability and the population's overall health. Minnesota topped the list, and Mississippi is ranked last.

A public policy professor at George Mason University named Milwaukee as one of the top five cities for technology-growth, behind Columbus, OH, Santa Fe, NM, Palm Beach County, FL, and Houston, TX. Professor Philip Auerswald based his findings on patents & citations received, research awards, and the presence of cultural activities.

Area News

The Overture Center trust fund, which was formed to help pay off construction debt and help finance an operating and maintenance reserve pool, is in trouble. The fund needs $104 million to cover all commitments, and it is currently at $98.9 million, which threatens the future upkeep of the facility. When the fund falls below $100 million, financial firewalls (i.e. Jerry Frautschi, $5 million) are activated to assure debt payments. A group of private individuals is looking into alternatives to keep the fund viable. Taxpayers should not be affected since the fund is managed by an independent trust fund board, not the city of Madison.

Two local brewing companies have slipped in the national list of large craft brewers, according to the Brewers Association. New Glarus Brewing Co. fell from 21st to 23rd based on 2007 sales, while Capitol Brewing Co. fell from 45th to 49th. Monroe's Minhas Brewery (formerly Joseph Huber Brewing) ranked as the nation's 15th largest craft brewer. Boston Beer Co. of Boston, brewer of Samuel Adams beer, owns the top spot nationwide.

Company News

The opening of American Girl Boutique and Bistro locations in Atlanta and Dallas are credited for a 10% increase in first quarter sales at the Middleton doll company.

INTRODUCING

Bath & Body Works has opened up next to Sharper Image in Middleton's Greenway Station.

A new Goodwill retail store has set up shop at 651 State Street, featuring clothing and accessories for the young adult.

The Tilted Kilt Pub & Eatery, a sports bar featuring servers dressed in knee socks and kilts has opened on Gammon Road.

A national burger chain, Five Guys Famous Burgers and Fries, opened a restaurant on State Street, and is expected to open another location in Fitchburg next year.

Yellow Light

McGraw-Hill Construction, a national industry resource, reported that future construction projects throughout Dane, Columbia and Iowa counties declined by 51% in February compared to a year ago. Residential contracts fell 42%, while non-residential fell 58%. January and February combined saw a 36% decline.

45 employees of the Community Living Alliance are losing their jobs as a result of a service program changing agencies. The employees, who work with the elderly and disabled, are hoping to be able to transfer to the care program's new agency, Care Wisconsin of Madison.

red light

Ten employees from Marshall Erdman's Building Supply Group were laid off due to a slowdown in contracting work.

Government

Dane County will save $150,000 a year on $15.7 million in bonds through refinancing, according to Kathleen Falk. Long-term debt was reduced by $835,000 overall.

KUDOS

Julann Jatczak, VP-WWBIC, has received the "Women in Business Champion-National Winner" award from the Small Business Administration.

Of 20 total finalists in the Wisconsin Governor's Business Plan contest are several local names: Jingxi Sun, Semiconductor Lighting (street lights), Madison; Matthew Barbian, Helios America (camping gear), Madison; Scott Daigger, Sandbox International (innovation process), Madison; Chao Xie GeoNet (location-oriented mobile social network), Madison; Jeffrey Williams, (portable asthma monitor), Madison; Barbara Israel, Echometrix (ultrasound diagnosis), Mt. Horeb; and Daniel van der Weide, Optametra (complex signal analysis), Verona. Winners will be named at the Wisconsin Entrepreneurs Conference in Milwaukee in June.

Salon Today magazine has named Sun Prairie's MCV Salon & Spa one of the 200 fastest-growing salons in North America.

In the magazine...

NATIONAL news

AT & T announce it will cut 4,600 mostly managerial positions, reducing its workforce by 2%.

Borders Group Inc., which operates Borders Book Stores and Waldenbooks, is considering strategic moves which may include selling all or parts of the company.

Citigroup Inc. announced it will eliminate 9,000 jobs following first quarter losses of $5.1 billion.

Northwest Airlines and Delta Airlines will merge to create the world's largest airline company, and will remain under the Delta name. The merger creates a company with over 80,000 employees and a combined revenue of $31.7 billion. The deal still needs antitrust approval before finalizing. The mega-merger is sparking rumors of a strategic merge between Continental Airlines and United Airlines.

state news

SSM Health Care of Wisconsin and Dean Health System announced the building of a $140 million 50-bed "sister"¢ hospital and clinic in Janesville. Located near I-90 and Hwy 11, the facility will employ 344 staff and is expected to open in 2010.

In Milwaukee, Harley Davidson Corporation announced it will cut 730 jobs following a 12.8% decline in first quarter sales. Both unionized and non-production jobs are affected. The company's net income so far is $5 million less than last year.

Doctors and hospitals treating Anthem Blue Cross and Blue Shield of Wisconsin patients — beware! The company will no longer pay for any of 11 specific medical errors caused by physicians or hospitals, a list that is expected to grow. Anthem claims the new policy will force doctors and hospitals to take better care of patients. WellPoint Inc., parent of Anthem, authored the policy which has been in effect in other parts of the country. Aetna Inc. has taken a similar stance, and other insurers are considering the option.

Wisconsin's unemployment rate grew to 5.8% in February, up from 5.5% in January, and higher than the national unemployment rate of 5.2%. Manufacturing and construction jobs suffered the highest losses statewide. There was good news, however, in that the state added 13,000 jobs in February, compared to February 2007. Dane County's unemployment rate rose slightly in February, to 3.8%, up from 3.6% in January.

High fuel prices are hitting Midwest Airlines hard. After announcing the elimination of 380 jobs from its subsidiary airline, Skyway, the company more recently cut 109 Midwest positions representing 3.5% of the workforce. The Wisconsin airline will also cut its flight schedule by 2.5%.

American Players Theater in Spring Green announced plans to build a 200-seat indoor theatre and a 10,000 sq. ft. production support building. The theatre has already raised $2.7 million of its $4 million goal for the project, which is expected to open in fall of 2009.

Grand Cambrian Resort in the Wisconsin Dells is a "go" after receiving approval from the DNR for plans to build a 112-acre condominium resort on the Wisconsin River. Setbacks and "no disturbance zones" are part of the agreement. The resort will include 323 condos, a restaurant, bar, 10,000 sq. ft. of meeting space, an indoor and outdoor waterpark, and other amenities. The project is expected to cost $160 million.

Proposed

The Truax neighborhood may be getting a $60 million facelift. The city has proposed a redevelopment plan to overhaul the publicly-owned Truax Park apartments across from MATC. Plans would include adding 261 new housing units, revamping 18 others and keeping 48 existing properties, virtually doubling the housing capacity of the neighborhood. If approved on all levels, construction could begin in 2009 and completed in phases over ten years.

Middleton is proposing an airport shuttle service that, for the most part, would transport Epic transferees to and from the airport, to Middleton hotels, and to Epic in Verona. A $10 fee would be tacked on to customer hotel bills for the airport service. The proposal also includes a public trolley that would move people to the city's various shopping districts. Total cost: $180,000/yr. If approved by the city council, service could begin this summer.

T. Wall Properties is proposing a $45 million replacement of the 43-year old downtown public library that would include, in addition to a new 115,000 sq. ft. library, street-level retail and 120,000 sq. ft. of private office space above. The proposal must be approved by the Library Board before an RFP process could begin. City officials are intrigued by the plan, which Terrence Wall hopes could begin in late 2009.

A new tax incremental financing district is being considered by city officials for the Park Street area north of the Beltline. Nearly $50 million in development is possible. Park Street's Villager Mall (see IB April '08 issue) would be located in the TIF district, and is already scheduled for a three-phase overhaul beginning this summer.

Meriter Hospital is looking to expand over the next 10 years to better accommodate the aging population. $170 million is budgeted for a 5-year plan to add operating rooms, private rooms and a women's health facility within the existing structure. An additional amount, not yet specified, would be spent on four new buildings, including a power plant.

Area News

MATC has opened a new Multicultural Business Resource Center in Madison's Villager Mall on Park Street. The center will assist entrepreneurs in getting started or expanding business ideas. Services provided will include business planning, entrepreneurial support groups, financial debt/credit counseling and business-related workshops and seminars.

Taking top honors at this year's UW School of Business' G. Steven Burrill Business Plan Competition was Sky Vegetables, a company that plans to build and operate commercial greenhouses on the rooftops of supermarkets across the country. The plan's developers say the greenhouses would be cultivated year round and provide vegetables, fruits, herbs, and flowers directly to the store beneath it, effectively cutting out the need for transportation, packaging and storage costs. Sky Vegetables hopes to break even within two years.

Cogdell Spencer has completed its acquisition of Marshall Erdman & Associates Inc. for $247 million. The combined company has 600 employees.

Foreclosures were down in March, according to Realty Trac of California. Dane County registered 131 filings in February, and only 80 in March, but new filings increased 2.5% over the same time last year. Statewide foreclosures also decreased from February to March.

There will be no change in Madison's 30-year old billboard ban in the city, for now. The Madison Plan Commission delayed a decision on Ald. Jed Sanborn's proposal to alter the ban to allow for the relocation of billboards in areas affected by major development, something not currently allowed. If the ban is not changed, developments would have to be designed around the billboards.

The World Dairy Expo signed a new 3-year contract with the Alliant Energy Center. The event has been held in Madison for 42 years, and last year attracted over 67,000 visitors from 90 countries. To accommodate the Expo's growth, there is now discussion about expanding portions of the Alliant-Energy Center.

The Willy Street Co-Op pulled out of its deal to open a second store in the beleaguered Metropolitan Place phase II condos downtown. The co-op got caught in Met II's financial trouble's, which sparked the co-op Board's decision. It is now looking for a new location, but has lost $500,000 in the meantime, and will have to lay off 15 positions as a result.

Metropolitan Place Phase II has subsequently gone into receivership and is now assigned to a Milwaukee attorney who has assumed control over developer Cliff Fisher's company, Buckingham LLC and the condo development.

Meanwhile, Fisher, no longer manager of Met II, is now looking to renovate the old St. Raphael Cathedral School at 31 S. Henry Street. Fisher wants to add 3-floors on to the already 3-story building, creating 58 apartments above a first-floor commercial space. Construction should begin in June and be completed in 2009.

Company News

Third Wave Technologies has formed a partnership with DCL Medical Laboratories of Indianapolis. DCL's women's health reference laboratory will gain access to Third Wave's molecular diagnostics, while Third Wave will gain a laboratory for research and development, as well as a customer development facility.

Tomotherapy is looking to acquire Chengdu Twin Peak Accelerator Technology Inc., of Chengdu, China, a company that makes key components For Tomo's radiation systems. Financially, Tomotherapy scaled back its anticipated first quarter revenue projections due to lengthy installation times and slow European sales. Stock shares dropped 32% on the news.

Madison-based Imago Scientific Instruments has entered into a partnership with FEI Co. of Hillsboro, Oregon. FEI will market and distribute Imago's atom probe microscope.

WPS announced a statewide campaign asking businesses to encourage their employees to become organ donors. Titled, "ORGANize to Save Lives," the company hopes to sign up one million new organ donors by 2010. Information is available at http://www.wpsic.com/organize/index.shtm.

Madison-based BT Squared Engine-ering & Science has opened an office in Northfield, IL to better serve its Illinois clientele.

Datakeep, an area records management firm, has been acquired by Access Information Management of San Francisco for an undisclosed amount.

Gander Mountain's new 90,000 sq. ft., $6.5 million store at the intersection of I-39/90/94 and Highway 51 opened on May 2. The new location replaces stores at both East and West Towne malls.

Madison-based JJR has partnered with SmithGroup of Washington, D.C. to create SmithGroup/JJR Urban Design, Planning + Landscape Architecture Studio in the nation's capital.

TrafficCast International Inc. of Madison announced a partnership with GeoMicro, a GPS navigation application provider, to provide real-time traffic (road speed) and weather information for mobile phones and other mobile devices.

The U.S. Patent and Trademark Office has issued another patent to Madison's Centrose LLC for continued studies on drug-resistant bacteria.

Madison-based Virent Energy Systems has teamed with Shell Oil to seek an alternative fuel to oil-based gasoline. The project will create biofuels from plant sugars that come from non-food items (i.e. switch grass, wheat straw) thus reducing the necessity for special engine designs, mechanicals and equipment.

green light

Costco Wholesale Corp. will open a $10.2 million, 154,000 sq. ft. "members only" store in Middleton's Discovery Springs area later this summer.

The state awarded the Allied Drive Neighborhood with $7.5 million in tax credits to help redevelop the area. The tax credits were crucial toward the first, $9.2 million phase, which will create 48 low-income rental units. Later, phase II — which will include a mix of 61 owner-occupied homes, townhouses and duplexes — will be built. Total cost of the redevelopment is expected to be around $28 million. Construction will begin on phase I later this year.

An ITT Technical Institute (the third in Wisconsin) will soon occupy space in the Novation Campus at 2450 Rimrock Road, offering degrees in IT, Electronics, Drafting & Design and Criminal Justice.

yellow light

68 employees at Stoughton Trucking may be temporarily laid off in June. 62 of the workers would be from this area.

Developer Jim Corcoran has decided to delay until next year construction on Wingra Shores, a 45-unit condominium project planned for the 2600 block of Monroe Street. Now expected to break ground in July 2009, the project will include 4,000 square feet of commercial space and underground parking for 57 vehicles.

Hilldale's $70 million, phase II development, including office space, a 65,000 sq. ft. Whole Foods store and a 140-room, six-story hotel, is on hold. Developer Joseph Freed & Associates said construction will be delayed until later this year, with completion dates scheduled into 2009 and 2010.

red light

Famous Footwear announced the company headquarters will leave Madison later this year. 270 employees will have to decide whether to follow the company to St. Louis or take a severance package and remain in the market here.

Sub-Zero Freezer Company Inc. announced the termination of 235 employees due to a downturn in the luxury appliance market.

government

The Dept. of Administration has announced it will temporarily postpone any further work on a $150 million technology project. The plan to overhaul 100 different state accounting systems was shelved in light of an estimated $652 million state budget deficit.

Despite the state's economic shortfalls, Gov. Doyle announced the creation of the Wisconsin Energy Independence Fund to encourage the development of energy-saving projects and renewable energy technologies. The fund will distribute up to $15 million a year for 10 years to qualifying businesses and researchers through a grant process.

Commerce Dept. secretary Jack L. Fisher announced the appointment of Aggo Akyea to Director of Wisconsin's bureau of minority business development. Akyea most recently served as minority business enterprise program manager at the DOT.

found money

The Bill and Melinda Gates Foundation awarded UW-Madison $1.3 million to study the molecular structures of influenza pandemics — specifically in relation to how viruses mutate between animals and humans — in an effort to ward off future pandemics. UW will partner with Maryland-based Lentigen on the study, and WARF and Lentigen have agreed to share the results with the international research community.

Madison-based Nerites Corp. will receive $5.7 million in second round funding from Venture Investors of Madison and Black Mountain Ventures of California to continue developing Medhesive, a product used to close surgical incisions. The adhesive is derived after studying how mussels stick to the bottoms of boats. The company plans to double its staff size as a result of the investment.

Landmark Services Cooperative of Evansville, WI received a $4 million commitment from Gov. Doyle toward the construction of the state's first soybean crushing facility. Crushing soybeans extracts oil from the soybeans, which can be used in the production of bio-fuels.

At the same time, North Prairie Productions will develop a 62,400 biodiesel plant at the same location, financed by the state and private investors. Upon completion, the plant is expected to create over 100 jobs and produce 45 million gallons of fuel per year.

Mount Horeb-based Inviragen has been pegged to receive a $250,000 Technology Venture Fund loan from the Dept. of Commerce. The company develops vaccines for emerging infectious diseases. This particular loan will allow the company to lease office space and a 4,000 sq. ft lab in Madison.

Union Cab will receive a grant from the state for $69,669 which will be used to enhance and provide local transportation options to Madison citizens with disabilities.

in the courts

A hearing is scheduled for May 20th in Wauwatosa to decide whether or not Chuck Chvala, former WI senate majority leader will have his law license reinstated. Chvala's license was suspended for two years following criminal convictions regarding misconduct in office. He was sentenced to 9 months in jail (with work release privileges) and 2 years of probation. At the hearing, Chvala needs to prove, among other things, that 1) he has the moral character to practice law; and 2) that his reinstatement would be in the public interest and not a detriment to the administration of justice. Public comment at the hearing is welcome.

Edward Kraemer & Sons Inc. of Plain, WI, a general contractor, will pay $100,000 to settle charges that it violated state water pollution laws when doing work on a Rock County bridge project in 2005 and 2006. A Kraemer spokesperson said the company disputes the charges, but decided to settle rather than pay ongoing litigation costs.

Watterloo's Trek Bicycle Corp. wants out of its arrangement with 3-time Tour de France winner, Greg LeMond. This follows LeMond's suit which charged that Trek failed to adequately market the LeMond-branded bikes in lieu of those with the Lance Armstrong name. Trek's suit was filed in Madison's federal court.

new digs

Nakoma Capital Management LLC relocated to 8040 Excelsior Drive, Suite 401, Madison.

The Blettner Group has moved to 3220 Deming Way, Ste.100 in Middleton.

ALD Automotive (formerly ULTEA), an auto fleet management company, moved its U.S. Headquarters and its 25 employees from Fitchburg to 901 Deming Way on Madison's west side.

correction

A correction to last month's Employment Services list: Londa Dewey is the President of the QTI Group of Companies. Jay Loewi, formerly President, now serves as QTI's CEO and Chairman of the Board.

FortÉ

Forté Madison, a weekly online e-zine and interactive website for the area's young professionals, will launch in June. To subscribe go to ForteMadison.com.