Here at Commerce Lexington, we’re always working to attract companies to the region and to help existing companies grow, and international companies are a large part of that effort. We’re proud to say that Lexington has ranked #4 Top 10 Small American Cities of the Future 2015/16 for FDI Strategy by fDi Intelligence!
The fDi Intelligence team gathered data on 421 locations in five categories — Economic Potential, Business Friendliness, Human Capital and Lifestyle, Cost Effectiveness, and Connectivity — and a sixth qualitative category, FDI Strategy, was gathered for 105 locations.
Many international companies have chosen to locate in Lexington and the Bluegrass Area. According to the Kentucky Cabinet for Economic Development, there are 28 facilities with foreign ownership in Fayette County, providing over 4,000 full-time jobs. In the Bluegrass Region, there are 88 facilities with ownership from 17 different countries employing almost 21,000 Kentuckians full time. A previous blog post offers more details on countries that have invested in our community.
The Global Cities Initiative, a joint project of the Brookings Institute and JPMorgan Chase, studied foreign direct investment (FDI) in 100 of the country’s largest metro areas over a 10 year period and found that mergers and acquisitions create more jobs than greenfield investments. That is, more FDI jobs are created by buying and revamping existing companies (M&A) than are created by starting new ones. Lexington has benefited from both methods.
Founded in Lexington in 1984, Blue Star Plastics is a plastics fabrication company that employs around 90 people and provides custom thermoplastic injection molding and contract manufacture of plastic assembled parts. The company’s consistent growth required additional investment and was purchased by the family-owned international company Seventh District Holdings, LLC, a subsidiary owned and led by Ahmed Hamza and his son Mohammad Hamza. In 2013, The Lane Report quoted Ahmed Hamza about the decision to acquire Blue Star Plastics: “They have a strong business concept, a long established successful track record, an excellent customer and supplier base, quality products, and a highly professional management team. Lexington, Ky., is an ideal location for our first venture in the United States and one from which we can grow.”
Earlier this year, Piramal Enterprises Limited of India purchased Coldstream Laboratories Inc. in a $30.65 million cash transaction, including $5 million to purchase the building while the remaining funds purchased the company’s shares. Founded in 2007 by the Lexington-based University of Kentucky Research Foundation, Coldstream is a specialty pharmaceutical contract manufacturer of sterile liquid and lyophilized parenterals and injectables that employs around 120 people. Coldstream’s revenues had been increasing from $9 million in 2012 to $14 million in 2014. This success attracted Piramal, said Mr. Vivek Sharma, CEO of PEL’s Pharma Solutions: “Coldstream is a very high quality operation and has been able to build significant customer relationships and track record for sterile products. We see this as a great platform for growth in our Pharma Solutions business.” Piramal hopes to enhance its products by acquiring Coldstream’s expertise in developing and manufacturing sterile injectables.
Some foreign-owned companies began in Lexington. Funai Electric Company, Ltd., of Japan acquired Lexmark’s inkjet technology assets, over 1,000 patents, and a manufacturing facility in 2013 and announced plans to open Funai Lexington Technology Corporation in 2014 to support its research and development. Kiyoski Chinzei, Office & General Manager of the Office Solution Business Unit of Funai Electric Co. said, “This new company will continue research and development in the inkjet and microfluidic technologies… we are pleased with the technology resources available in Lexington and the support of the Commonwealth of Kentucky.” As discussed, Funai will create 50 new jobs and invest over $4.2 million.
Other notable Lexington companies that have been partially or fully acquired by foreign owned investors include:
- Florida Tile was founded in Florida in 1954, but was purchased by the Italian company Panariagroup in 2006 and moved its headquarters to Lexington in 2010.
- Aventics GmbH is an industrial pneumatic systems manufacturer (i.e., a gas or pressurized air alternative to electric motors, such as in air brakes on vehicles) that was recently purchased by the German company Triton Partners. Aventics was originally Bosch’s pneumatics division formerly named Rexroth Pneumatics.
- Young An Hat Company of Korea acquired CLARK Material Handling Company in 2003 and opened its new North American headquarters in Lexington in 2005. CLARK manufactures forklift trucks.
- Link-Belt Construction Equipment Company was established in Lexington in 1986 as a joint venture between the American company FMC Corporation and the Japanese company Sumitomo, and is now wholly owned by Sumitomo Heavy Industries and remains headquartered in Lexington.
Not only is Lexington attracting foreign investors, but the jobs created by their investments are quality, high-paying positions that will provide Kentuckians with economic security and stability for their families. Funai’s 50 new jobs, for example, will pay an average wage of $100,000 per year.
Of course, jobs are also created when established companies expand. Some recent expansions by major international companies in the Bluegrass include:
- In 2013, Japanese-owned Toyota Motor Manufacturing Kentucky (TMMK) announced a $530 million expansion creating 750 new jobs to support production of the Lexus ES 350 at Toyota’s Georgetown plant beginning in 2015.
- Last year, Surelock McGill opened its first American sales and distribution office in Lexington.
- Funai Electric Company opened a new research and development center in Lexington last year, with an investment of over $4.2 million that created 50 new jobs.
- Earlier this year, Sumitomo Electric Wiring System broke ground on a new 440,000 square foot facility in Lexington, representing an investment of almost $8.5 million that will create up to 10 new jobs and retain more than two dozen current employees.
Lexington’s skilled and innovative workforce provides the human capital these companies need to thrive and continue to grow in the Bluegrass. 40.1% of Lexingtonians have at least a bachelor’s degree, and 17.3% have an advanced degree. Lexington consistently earns praise for its educated citizens. Last year, Lexington was ranked the 23rd Most Educated City by Wallet Hub and the World’s 23rd Smartest City by National Geographic.
Lexington is also an attractive place for businesses, both foreign and domestic, because of our high quality of life. This year alone, Lexington was ranked the 8th Best Large City to Live In by Wallet Hub, 6th Most Inspiring City for Young Artists by World Wide Learn, and 27th Most Literate City by Central Connecticut State University. These qualitative aspects of everyday life matter to a community’s ability to attract and retain businesses, along with Lexington’s other attributes, and Sumitomo’s and Toyota’s continued commitment to the region is proof that Lexington is a great place to do business.