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COVER STORY -
January 2002 by Ed Ford Sidebar- It’s the track record. That’s what convinces companies to locate in Kentucky, according to James Navolio, commissioner for the state’s Department of Business Development. “The business climate we have in Kentucky, the fact that businesses in whatever sector you might be in are here and operating successfully, sends the message to companies throughout the world that this is a good place to do business,” he emphasized. Site Selection magazine, a leading international economic development publication, phrases it another way. A headline in the magazine’s March issue proclaimed, “Kentucky Takes Care of the Companies it Keeps.” “There are a lot of companies that we’ve done more than one deal with,” Navolio points out. “They tell us the reason they look at Kentucky is because they know we’ll always try to help them be successful.” Site Selection ranked Kentucky second in 2000 for the number of jobs created per one million population and 14th for new and expanded corporate facilities. In addition, the magazine’s rankings of the top 100 small towns for corporate facility expansions included 10 Kentucky communities. Bowling Green was ranked second followed by Frankfort (15), Elizabethtown (18), Glasgow (29), Franklin and Paducah (40), Bardstown (42), Madisonville (51), Mount Sterling (75) and London (95). But, specifically, what is it that sells Kentucky? “No. 1,” Navolio comments, “is the quality of our workforce. U.S. Department of Commerce figures show that Kentucky workforce quality is 13-14 percent higher than the national average (Kentucky ranks 12th among 50 states in value added per worker and man-hours). Reasonable wages and high productivity are key factors in determining this. “Second is geography. We’re within one day’s overnight truck drive (600 miles) from two-thirds of the nation’s population and about 75 percent of its wealth. “Then, we have a government that historically understands business. Government doesn’t create wealth nor jobs; we create an environment where companies can invest money and put people to work. “And, finally, the cost of power. We have the lowest industrial sector cost per kilowatt hour in the United States – three cents. The national average is 4.46 cents. “These are the four things we principally market and we market them consistently. And these are things that matter to business.” Navolio points out that Kentucky’s successful communities all have highway access, water and sewage systems – all the necessary infrastructure. “But,” he added, “they have one other thing: a consistently high quality of local leadership.” Navolio notes that the state’s Cabinet of Economic Development has a philosophy about companies locating in Kentucky. “Companies don’t choose Kentucky, they choose communities in Kentucky,” he said. “There are a lot of things the state can do with incentive programs, regulations, permits and so forth, and we like to think we’re pretty good at that. But, ultimately, the companies choose local communities. How communities present themselves is just as important, or more so, than how the state presents itself. The men and women who are the local leaders make the difference.” Navolio says successful local leadership usually has existed in a community for some 15 or 20 years. “When you take the best 15 communities in Kentucky as far as economic development success is concerned, the one common trait they all have is long-time good public and private leadership.” Such leadership includes existing businesses, Chambers of Commerce, city and county government and various civic organizations. “It’s also the existing industry leadership, the banking and financial community,” he continued. The “Golden Triangle” of Louisville, Northern Kentucky and Lexington are lures for a wide range of industries because of the air hubs of United Parcel Service and DHL Worldwide Express and interstate highway crossroads. Mike Bosc, vice president of media relations for Greater Louisville Inc., the Metro Chamber of Commerce, points out that the area is continuing to do well despite the current national economic downturn. He cites assets in the medical and bio areas, the automotive industry and entrepreneurial growth. “We’ve concentrated on three or four niches because of the UPS air hub and our central location in the eastern third of the United States,” he stated. “Bio-medicine is strong because of the presence of regional medical centers and research and development that’s going on with U of L (University of Louisville) and the downtown medical center. “The automotive industry – even in this ‘recession’ – is going like gangbusters. I remind people that three of the four top-selling vehicles in the United States are manufactured in Kentucky. The No. 1 selling vehicle the past 13 years has been the Ford F-series pickup, which we make a version of in Louisville. The No. 1 selling SUV (sports utility vehicle) and the No. 3 selling vehicle last year was the Ford Explorer, which we make in Louisville. And, the No. 1 selling vehicle overall is the Toyota Camry, made in Georgetown.” Danny Fore, who just recently returned from a prospect trip to Germany, points out that the Greater Cincinnati Airport long has been a bonus for Northern Kentucky and its economic development efforts in Europe. “We have direct non-stop service to London, Paris and Frankfurt,” said Fore, the president and chief executive officer of Northern Kentucky Tri-ED related, “and that makes us attractive to international firms. Our market plan for Europe is based on three countries in the priority order of Germany, England and France. “I’ve had four appointments in Germany (during November), one of which is likely to result in a deal for this area. Two others are a bit longer term, but viable, and the fourth was with an organization that sponsors seminars directed to companies locating in the U.S. marketplace. We’re tapping into that as a marketing mechanism.” The air accessibility, Interstates 71 and 75, the area’s manufacturing reputation and skill-based labor continue to be assets for Northern Kentucky, Fore noted. “And now, we’ve seen the emergence of many high-end office users in Northern Kentucky. This includes such companies as Ashland Inc. with world headquarters here, GE Capital Information Technologies Solutions, also with headquarters here, and Fidelity Investments, which has a regional center with 3,400 employees. “Much of this success relates to the quality of life, cost of living and cost of doing business. This is a very affordable community (area).” Lexington also continues to be a major attraction for business. In the past year, “seven projects have been announced,” according to Terry Burkhart, president of Lexington United. “We’ve had two new startups – both information technology companies – and five expansions.” “I think one of our major strengths is the educational level of our labor force,” he continued. “Access to the University of Kentucky is absolutely critical and we sit on a major transportation hub that serves the better part of the country.” Burkhart describes the state’s Cabinet for Economic Development as “our strategic partner,” pointing out that most of Lexington’s projects “are partnership type of efforts.” “They’re an excellent group to partner with because they’re very professional, know what they’re doing and sell the state extremely well.” Other community economic development leaders agree, including Margaret Grissom, president and chief executive officer of the Bowling Green Chamber of Commerce. She cites Navolio’s staff “or the shop of J.R. Wilhite (commissioner, Department of Community Development) where expansion is concerned” as key to the Warren County’s business and industrial success. Recently, Bowling Green has seen its automotive activity substantially expand with KIRIU USA Corporation announcing plans to locate a new automotive brake plant there with another new facility planned by CTS N.A., a supplier of car top systems. The Corvette automotive plant, of course, is a long-time manufacturing staple in Bowling Green. Since 1996, Bowling Green has realized 4,343 jobs from new and expanding industries that have invested more than $378 million in the area. Grissom says a “very aggressive marketing campaign” has been a tremendous asset. “We have a consistent and strong marketing effort that includes project trips, trade shows and direct mail,” she commented. “This year, we’ve already sent out more than 3,000 direct mail pieces to different targeted segments.” She points out that one of the city’s strengths is its location, “right in the middle of the eastern United States.” And, a proposed 4,000-acre Trimodal Transpark – which would provide access by road, rail and air – “is a phenomenal project that’s going to happen.” Navolio cites a recent development in Hazard as one of the best examples of how cooperation among government, business and organization representatives can equal success. American Woodmark Corp. announced plans in October to build a facility in the Coalfields Industrial Park that will process lumber into hardwood components for kitchen and bath cabinets. Woodmark, which expects to employ 450 by next year at its dimension mill in Wayne County, plans to hire 260 employees during the next few years at Hazard. “You can’t believe the level of cooperation from everybody involved in putting that project together,” Navolio emphasized. “Nobody wanted credit for it, they just wanted to get the project done. It was a difficult deal for a lot of reasons and the competition from the State of Virginia was intense – they wanted it as badly as we did. But we found a way to make it work. “Ultimately, this project will provide about 400 jobs in Perry County, an area where jobs are really needed. That’s what is most satisfying about it.” One of Navolio’s favorite economic development stories concerns a businessman who located a facility in Kentucky. It illustrates the the state’s appeal as a business and industrial site. “I just want
to thank you,” the businessman said. “You didn’t give
me any red tape, you gave me the red carpet.” Ed Ford is a
staff writer for The Lane Report. |
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And,
the numbers show success breeds success. In 2000, for example, 954 Kentucky
companies spent more than $2 billion in expansions, creating more than
9,000 additional jobs. Thirty-seven other manufacturing firms located
new facilities in the state, investing more than $1 billion and creating
3,165 jobs.