Monday, December 31, 2001
Year in Business:
Cincinnati scene all shook up
Mergers, restructurings dominated Tristate business
By Amy Higgins
The Cincinnati Enquirer
Though business news for 2001 was overshadowed by stories about recession and bear stock markets, the Greater Cincinnati scene was busy enough to fill the Enquirer pages.
Local business news was dominated by corporate mergers and restructurings with some venerable firms forever changed and others disappearing.
To refresh your memory, here are some top headlines, in chronological order:
Chiquita won't pay on bonds
Wants to swap debt for equity; bankruptcy filing a possibility
A decade-long financial struggle at Chiquita Brands International Inc. culminated in late January with the Cincinnati company defaulting on $862 million of debt. Chiquita said it could not find a lender to refinance the debt and would stop making payments, starting with an $87 million payment due two months later.
By the end of the year, the banana giant would find itself in bankruptcy court. The stock price, once $50 in 1991, fell to the cost of two bananas at 42 cents a share.
The company hopes to emerge from Chapter 11 bankruptcy in the spring with a new class of stock, but without Reds owner Carl Lindner having a dominant stake in the company he's controlled since the mid-1980s.
SEC charges investors bilked
$6M alleged for condo, personal use
In late February, federal investigators accused the former president of S.G. Donahue & Co. of bilking investors out of $6 million and using much of the money to buy a Florida condo, land to build a home and other personal expenses, including his own taxes and investments.
Stephen G. Donahue resigned as president of the prominent downtown financial-services companies he started in 1981. According to court papers, he confessed the scheme of bogus mutual funds to federal investigators in February.
For the rest of the year, court appointed trustees and government lawyers worked at recovering investors' money including putting most of Mr. Donahue's assets up for sale. No criminal charges have been filed.
Profits depend on cuts
Market pressures force elimination of 9,600 jobs
Procter & Gamble Co., determined to reassert its dominance of the consumer-goods industry, in March announced 9,600 job cuts including 1,900 in Cincinnati.
The goal: to lower costs, revive profits and become more competitive.
We're in a marathon, chief executive A.G. Lafley said at the time. And to win that marathon, we've got to be leaner, stronger, and we've got to be faster.
Through the year, P&G sold several of its brands and acquired others as part of its realignment. The company shed Jif, Crisco and Spic & Span, while introducing Crest Whitestrips and Charmin Moist Mates.
In its largest acquisition ever, P&G bought the Clairol hair-care brand from Bristol-Myers Squibb for $4.95 billion in November.
Comair pilots walk out
No talks scheduled; major issues remain
Comair pilots went on strike in late March and company officials shut down the airline after last-ditch efforts to salvage contract negotiations.
During the next 89 days, the 27th-longest airline strike in history, Comair's parent company Delta Air Lines would lose more than $320 million and Comair's 1,200 pilots more than $13 million in wages.
Comair laid off 2,400 workers, including about 1,600 local employees, and returned 37 planes, most of which have been or will be brought back. An additional 152 people working in the airport were laid off, as Concourse C was shut down.
The contract the pilots eventually signed in late June was better, but not much better, than the one they turned down both before the strike and midway through. It made Comair pilots the highest paid in the regional industry and improved benefits and work rules.
Kroll-O'Gara calling it quits
Vehicle-armoring division sold to Florida company
Kroll-O'Gara Co., the security products and services company, decided to end its rocky three-year marriage with a divestiture rather than a divorce.
The company announced in April that it would sell its O'Gara-Hess & Eisenhardt Armoring Co. vehicle armoring business in Fairfield to rival Armor Holdings Inc. of Jacksonville, Fla., for up to $56.5 million in cash and stock. The sale, completed in August, canceled the previous plan to split into two separate, publicly held companies.
Software developer brings $1B
Structural Dynamics Research Corp., the Clermont County-based engineering software developer, agreed in May to be acquired by Electronic Data Systems Corp., the Texas computer services company, for almost $1 billion.
SDRC shareholders received $25 a share in cash from EDS by the time the deal was completed in August. Shortly thereafter, EDS combined SDRC with its Unigraphics Solutions Inc. subsidiary, changing the name of the unit to EDS PLM (Product Lifecycle Management) Solutions.
In October, EDS cut about 100 former SDRC jobs in Clermont County. A new management structure announced in November retains several former SDRC executives.
Baldwin in bankruptcy court
Piano maker plans to reorganize
Struggling Baldwin Piano & Organ Co., the 140-year-old company whose instruments have been played by artists ranging from composer Aaron Copland to rock musician Bruce Hornsby, went into bankruptcy court in May.
It came out in November when creditors sold the company to Nashville's Gibson Guitar Co., ending a Cincinnati tradition. Gibson will continue the Baldwin name, producing Baldwin pianos at the company's two Arkansas plants and giving hope to Baldwin's more than 300 dealers, who had complained about the company's management under former CEO Karen Hendricks for several years.
One cool, tough leader
New GE boss has deep Cincinnati roots
When Jeffrey R. Immelt was growing up in Finneytown as the son of a GE Aircraft Engines manager, the top job at General Electric Co. wasn't a topic of dinnertime conversation.
But in early September, the 45-year-old succeeded the legendary Jack Welch as chairman and CEO of one of the world's largest and most powerful corporations. Mr. Immelt, former president of GE's Medical Systems business, was picked over former GEAE president James McNerney and former GE Power Systems president Robert Nardelli.
The 1974 graduate of Finneytown High School faced his first major test on the second day on the job as the Sept. 11 attacks rocked both the nation and financial markets.
In his first meeting with Wall Street analysts 10 days after the attacks, he attempted to reassure investors that GE's portfolio of business still would deliver double-digit earnings gains despite the economic recession.
Delta to announce layoffs today
September's terrorist attacks delivered 2001's fifth blow to the Greater Cincinnati's Delta Air Lines hub. The airline already had suffered locally from a sluggish economy, subsidiary Comair's pilots strike, downtown race riots and a lackluster Reds season.
Delta added to the almost 100,000 airline layoffs nationwide with several hundred based mostly in Northern Kentucky, where it operates its second-largest hub.
Leading players Dot-coms unite
Consumer pipelines now one company
Intelliseek acquires PlanetFeedback
PlanetFeedback was seen as the poster-child of Cincinnati's fledgling tech scene. Hyped early and often, a leader of the Digital Rhine entrepreneurial community but financially struggling.
In October, it was acquired by Intelliseek, another shining star in Greater Cincinnati technology, creating a company at the fore of harvesting consumers' feelings about products and services.
Both companies are privately owned and heavily backed by venture capital. Other than to say that Intelliseek paid for PlanetFeedback with an undisclosed amount of stock, the companies would not share their combined revenue.
The deal was hailed in Over-the-Rhine's troubled technology corridor as Intelliseek moved half of its Sharonville staff to PlanetFeedback's rehabbed headquarters on Main Street. The combined company has about 75 employees, including 20 in Sharonville.
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