Foreign Direct Investment in the Bluegrass Region

Following our recent ranking as #7 Top Small American City of the Future 2017/18 for FDI Strategy by fDi Intelligence (read more here) let’s look at the presence of foreign direct investment in the Bluegrass Region.

According to the Cabinet for Economic Development, there are over 480 foreign-owned facilities in Kentucky employing nearly 106,000 Kentuckians. The eight counties of the Bluegrass Region are home to 21% of the FDI facilities in Kentucky and 23% of the employees – that’s 99 facilities with ownership from 18 different countries providing full time employment to over 23,900 people (as of April 4, 2017).

In Lexington, there are 34 facilities with ownership from 14 countries, employing nearly 6,600 people full time. China is the largest FDI employer with 2,128 jobs (or 33% of Lexington’s FDI employment), followed by Japan with 1,210 jobs (or 18%).

In the Bluegrass Region, Japan is the largest FDI employer, with nearly 16,000 employees, or 67% of the FDI workforce and 60% of the foreign-owned facilities. Not surprisingly, 60% of the Japanese FDI workforce is in Scott County, followed by 14% in Madison County.

Germany is the second largest employer, with nearly 2,500 employees (10% of the FDI workforce), 95% of which work in Fayette, Franklin, and Woodford County.

Half of the foreign-owned facilities are located in Fayette (34%) and Scott County (18%). Around 41% of the FDI workforce is in Scott County alone, with 27% in Fayette County, 11% in Madison County, 8% in Franklin County, and the rest spread throughout Bourbon, Clark, Jessamine, and Woodford County.

The majority of foreign-owned facilities employ less than 100 people (54%) and a just over one third employ less than 50 people (38%) and around one third employ between 100 and 500 people (37%). However, several Japanese-owned facilities are major employers in our region, including around 8,200 employees at three Toyota facilities in Scott County and 1,449 employees at two Hitachi facilities in Madison County.

Check back next week for highlights from the Center for Automotive Research’s report on the economic impact of Toyota in Kentucky. 

Want to learn more about foreign direct investment in the Bluegrass Region? Check out the Bluegrass Economic Advancement Movement (BEAM) Global Trade and Investment Plan.

Lexington Ranks 7th Best City for Attracting Foreign Investment

The economic development team here at Commerce Lexington is always working to attract companies to the region and to help existing companies grow. In fact, we regularly meet with 160 businesses each year that fall into our strategic targets. International companies are a large part of that effort, and we’re proud to announce that Lexington has ranked #7 Top Small American City of the Future 2017/18 for FDI Strategy by fDi Intelligence!

The fDi Intelligence team collected data for over 420 locations under five categories:

  • Economic Potential – including factors such as population, population growth, GDP, unemployment, patents, outward FDI (a domestic firm expanding operations to a foreign country), inward FDI (a foreign company investing in or purchasing a local company), FDI in research and development, and FDI in advanced manufacturing.
  • Business Friendliness – including factors such as advanced manufacturing companies, hi-tech companies, knowledge-based sector companies, jobs created by inward and outward FDI, and expansion projects.
  • Human Capital and Lifestyle – including factors such as institutions of higher education, literacy, physicians, and life expectancy.
  • Cost Effectiveness – including factors such as average annual salaries for a variety of skill levels, annual rent per office and industrial space, and other costs associated with establishing a business.
  • Connectivity – including factors such as internet speed, airports and international destinations, and proximity of ports.

A sixth strategy, FDI Strategy, was qualitative in nature. Over 70 locations discussed their strategy for promoting FDI. Commerce Lexington submitted an application on behalf of Lexington, highlighting our commitment to establishing and maintaining relationships with companies and investments in our community.

One example is the Lexington-based biotech company Allylix. This company, founded in 2002, develops terpene products and their derivatives for the flavor and fragrance, food ingredient, pharmaceutical, agricultural, and biofuels markets. In 2014, Allylix was acquired by Swiss-based Evolva. Since the acquisition, Commerce Lexington has established strong relationships with the Evolva leadership team and meets with them as part of our existing business retention and expansion program.

Another is Coldstream Laboratories. Over the past decade, Commerce Lexington has maintained a strong relationship with Coldstream Laboratories, a specialty pharmaceutical contract manufacturer that spun out from the University of Kentucky. In January 2015, Coldstream Laboratories was acquired by India-based Piramal Enterprises. As with other mergers and acquisitions, our team met with the new owners as soon as possible to make them aware of how we may assist them. Over the last two years, Commerce Lexington has cultivated that relationship with the company as they have grown. Out team partnered with the Kentucky Cabinet for Economic Development on an expansion project for Piramal. The company announced in February of 2016 that they would invest $10 million and add 40 new jobs to the Lexington operation.

Foreign direct investment (FDI) has long been an important part of the economic growth of the region, due to the presence of major corporations such as Lexmark (China), Toyota (Japan), Webasto (Germany), Sumitomo Electric Wiring Systems (Japan), and many others.

Kentucky is home to hundreds of international companies with operations around the state, and the Bluegrass Region has particularly benefited from foreign direct investment. According to the Kentucky Cabinet for Economic Development, there are 484 foreign-owned facilities employed nearly 106,000 people in Kentucky (as of April 4, 2017). The eight counties of the Bluegrass are home to 21% of these facilities (that’s 99 facilities) and 23% of the employees (nearly 24,000 people).

Check back next week for more about international companies in Lexington and the Bluegrass Region.

For more Bluegrass Rankings, click here

Economic Dashboard

Introducing Commerce Lexington’s Economic Dashboard! This tool measures aspects of Lexington and the Bluegrass Region that are important to economic development, including our highly educated workforce, business climate, foreign direct investment, and quality of life. (Full-sized version can be found here.)

This is the first year of the Dashboard. Data reflects both Lexington and the Bluegrass Region. Detailed and supplemental information is available.

Life Sciences and Biotech in Lexington

The Bluegrass Region has acquired a niche within the plant and genetic engineering segment of the life sciences industry, and many area companies are creating valuable pharmaceuticals, including Alltech, Naprogenix, ParaTechs Corporation, MosquitoMate, Evolva, Transposagen Biopharmaceuticals, and Hera BioLabs.

Alltech is a top ten animal health company founded in Lexington, with biosciences centers in the U.S. and Ireland, offices and distributors in more than 120 countries, and nearly 100 production facilities globally. Alltech’s $200 million algae production facility in Winchester is one of the largest algae production facilities in the world and was so successful that Alltech expanded to a second facility in Brazil. Algae are expected to become a crucial area of development as the United States pursues renewable sources of energy to power the country in the coming decades. Locally, the company is known for its award-winning line of beers and spirits with a brewery and distillery in downtown Lexington and, soon, in Pikeville.

Naprogenix is a startup biotech research company that derives compounds from native Kentucky plants to develop new technologies. Plants have a variety of uses in food and medicine and Naprogenix enhances specific bioactivity and qualities of native plants through genomics and molecular pharmacology to increase their usefulness to the pharmaceutical, health, and agrochemical industries. Naprogenix’s products are natural, giving the company a competitive advantage as consumers increasingly pull away from synthetic ingredients in both chemicals and medicines.

ParaTechs Corporation recently developed a bio-insecticide targeting corn earworm moths, the highest crop-damaging pest in North America and the second-highest worldwide. ParaTechs’s bio-insecticide is a mutated nudivirus, a sexually transmitted disease that sterilizes 100% of corn earworm moths it infects, compared to a 30% effectiveness rate when the nudivirus occurs in nature. In addition to increased effectiveness, ParaTechs’s bio-insecticide reduces the need for chemical pesticides and is unlikely to affect other species that do not mate with corn earworm moths.

MosquitoMate developed a biopesticide to reduce or eliminate Asian tiger and Aedes aegypti mosquitoes through sterilization. These pests carry several diseases that are harmful to people and animals, such as dengue, yellow fever, heartworm, West Nile virus, chikungunya fever, and the Zika virus. MosquitoMate infects male mosquitoes with a form of Walbachia bacteria and releases them to mate with females, who are permanently sterilized by the Walbachia. As a result, the next generation of mosquitoes is reduced and the spread of disease is prevented. MoquitoMate’s biopesticide is not transmitted to humans, animals, or other insects, and does not include chemicals or genetic modification.

Evolva, formerly Allylix, Inc., generates and isolates natural chemical compounds that are in high demand for pharmaceutical, agriculture, and flavor-and-fragrance industries. Evolva uses a reengineered version of the fermentation process to grow compounds in a way that is faster and more reliable that the traditional plant extraction process, and cheaper and less complicated than the chemical synthetization process. Evolva is developing a library of compounds that will make many previously unstudied compound samples available for research screening by biotechnology and pharmaceutical companies. These compounds can be used in the manufacturing of products such as foods, medicines, cosmetics, insecticides, and industrial cleaners.

Transposagen Biopharmaceuticals is a worldwide leader in genome engineering technologies and services with applications in therapeutics, research, drug discovery, bioproduction, clinical genetic testing, and agriculture. Transposagen specializes in genetic manipulation technologies, stem cell engineering services, and creating genetically modified laboratory rats.

Hera BioLabs Inc. is a Lexington-based Contract Research Organization (CRO) and a spinoff of Transposagen. Like Transposagen, Hera uses gene editing tools and services to manufacture genetically specialized products and services. In 2016, Hera announced an investment of $1.8 million to move its operations from its current location on the University of Kentucky campus and establish a new headquarters.

Many of these companies operate around the world and several were founded by University of Kentucky researchers.

For more about each of these companies, check out our Life Sciences webpage and white paper.