Category Archives: Foreign Direct Investment (FDI)

Lexington’s Target Industries

Boasting a robust economy, the Bluegrass is a diversified growth engine for economic success. There are several key industries that are particularly significant to Lexington’s economy and are strategic targets for economic development.

Advanced Manufacturing

Advanced manufacturing uses innovation and technology to improve the manufacturing process, typically through computer technology, advanced robotics, clean technology, automation, innovation, precision control, customization, and waste reduction. The Bluegrass Region has a strong advanced manufacturing sector, particularly in the automotive industry, biotechnology products, and renewable energy machinery. The region’s strong transportation network allows for the easy import of component supplies and the export and distribution of finished products. To support this sector, Lexington strives to help advanced manufacturing  companies expand research and development activities and enhance product lines, and there are many educational programs in place to continue building a workforce to fuel the manufacturing industry for years to come.

Animal Sciences

Animal sciences involves the production and management of livestock and domestic animals. Animal scientists use biological, physical, and social sciences to understand and study animals’ physiology, behavior, welfare, nutrition, genetics, and diseases. The equine industry is an important part of animal sciences, particularly in Lexington. Horses are a major part of Lexington’s economy and are at the heart of our local culture, with an estimated 150 horse farms in Lexington and 450 in the region. Lexington and the Bluegrass Region have a strong infrastructure to support the horse industry, including horse farms, race tracks, the Kentucky Horse Parks, museums, equestrian events, equine medical facilities, and research and development at the University of Kentucky.

Bluegrass Economic Advancement Movement/Foreign Direct Investment 

The Bluegrass Economic Advancement Movement (BEAM) is a regional initiative in the 22-county region anchored by Lexington and Louisville. Recognizing the importance of foreign direct investment (FDI) for innovation, research, exports production, and high-wage jobs, the BEAM Trade and Investment Plan was developed in collaboration with the Brookings Global Cities program to examine FDI in the BEAM Region and proposes the way forward for metropolitan cultivation of FDI that helps build a resilient and growing regional economy. Lexington and the Bluegrass Region have a strong presence of foreign direct investment that makes important contributions to our economy. The Bluegrass Region is home to 21% of all foreign-owned facilities in Kentucky and 23% of the workforce – that’s 99 facilities with ownership from 18 different countries providing full-time employment to over 23,900 people (as of April 2017). In fact, Lexington recently ranked 7th Best City for Attracting Foreign Investment by fDi Intelligence.

Business and Professional Services

Lexington is a regional hub for business and professional services, which help companies operate by providing services and support such as legal, architectural, engineering, consulting, and real estate services, as well as back-office support operations, accounting and payroll services, and processing facilities. Companies engaged in providing professional services tend to concentrate in metropolitan areas near their clients, while back-office and support services companies prefer lower-cost locations. Lexington is idea for both, with 100 headquarters operations and one of the lowest cost-of-business locations in the country. In fact, Lexington was named #8 City with the Lowest Startup Costs by Smart Assets in 2016 and #16 Best Place for Business and Careers by Forbes in 2015.

Clean Technology 

Clean tech uses technologies, processes, or services to minimize the environmental impact of production, energy consumption, and power generation. Renewable energy and energy efficiency are core to clean tech. Clean tech is an emerging industry in Lexington and there are many regional assets to help propel the industry forward. Of particular importance are the growing number of biotechnology firms in the area and the high concentration of life sciences research being conducted at the University of Kentucky. Many partners work alongside UK’s research and development of clean and renewable energy sources. The Center for Applied Creative Research (CAER) is a multidisciplinary energy technology research center to improve the environment, featuring multiple specialized research facilities.

Life Sciences 

In the Bluegrass Region and Kentucky, Lexington is a hub for the life sciences industry. Lexington has leveraged top ranked research programs at the University of Kentucky, a culture of innovation and commercialization, a superior business climate, and an expansive network of medical centers to provide an environment where any market niche of the life sciences industry can grow.  The life sciences industry has two components: direct patient care and biotechnology. Direct patient care includes hospitals, nursing facilities, and medical centers, and is a prominent market in Lexington with a strong base of health care facilities, employers, resources, and several major medical centers. Biotechnology includes animal and plant science research and designing and manufacturing medical/veterinary products. Biotechnology is one of the fastest growing industries in the country, and over 50 biotech companies have chosen to locate in Lexington.

Software and Information Technology

Lexington has a unique business mix of software and information technology industry leaders, world-class small businesses, and social networking and interactive media startups. With such diverse businesses in the industry, Lexington is an ideal location for software and IT businesses. Software leaders include IBM branch offices, Funai Electric Company, Conduent, and Software Quality Systems (SQS). Lexington’s local startups are making a name for themselves in the world of social networking and game development, such as Frogdice Inc., an independent game developer of online role playing games and virtual worlds, and Gun Media, another Lexington-based gaming company whose goal is to build fresh and exciting interactive experiences for a wide range of platforms and gamers.

Visitor Industries 

Visitor industries includes the sale of goods and the accommodation, entertainment, and recreational opportunities available for tourists, visitors, and residents, including businesses such as retail trade, travel arrangements, convention and trade shows, performing arts, spectator sports, museums, and food services. Lexington is a great place for business and leisure. Lexington is at the heart of the horse industry, the start of the Bourbon Trail, and the home of the University of Kentucky. Visitors are drawn to Lexington for events and conferences at the Lexington Convention Center, which contains Rupp Arena and the Lexington Opera House. In addition, Lexington has attracted visitors through both national and international events such as the Creative Cities Summit, the Alltech World Equestrian Games, and the 2015 Breeders’ Cup World Championship. To help strengthen and grow Lexington’s visitor industries, Commerce Lexington Inc. and VisitLEX’s teams have embarked upon a more formal partnership to develop strategies to recruit associations and business meetings to the area. Our teams meet quarterly to discuss various topics including infrastructure, marketing strategies, client feedback, incentives, and other items, as well as review our strategic plan.

 

Economic Contributions of Toyota

Last month, Toyota Motor Manufacturing Kentucky, Inc. (TMMK) announced a $1.33 billion investment in its Georgetown operations to increase manufacturing flexibility and decrease model changeover times. The investment will improve equipment and add new technology in multiple manufacturing areas to prepare TMMK for the Toyota New Global Architecture (TNGA), a global vehicle platform for multiple configurations and powertrains. TNGA is a new way of designing, engineering, and manufacturing vehicles that will create a flexible production environment allowing quick response to demand while preserving Toyota’s values of exceptional quality and safety. Furthermore, TMMK will be the first vehicle assembly facility in North America to adopt TNGA.

Toyota Motor Manufacturing Kentucky, Inc. (TMMK) in Georgetown, KY, is Toyota’s largest manufacturing plant in the world, producing 550,000 vehicles and 600,000 engines annually at its 1,300-acre campus featuring over 8.1 million square feet of work space. TMMK produces four cylinder and V-6 engines, Camry, Avalon, Camry Hybrid, Avalon Hybrid, and the first U.S.-assembled Lexus.

In fact, Toyota produced more than 2 million vehicles in North America in 2016, and nearly one-fourth were made in Georgetown. Looking back even further, Toyota has produced more than 30 million vehicles since 1986 in North America, and one-third were made in Georgetown.

Additionally, there are over 100 parts and commodities suppliers for Toyota located in Kentucky, and a total of more than 350 suppliers in the U.S.

The Kentucky Cabinet for Economic Development estimates that there are over 9,500 people employed by Toyota across the state (as of May 8, 2017), excluding Erlanger. Toyota plans to close its operations at the Erlanger Engineering Laboratory Building, which it will then donate to Boone County Schools for a STEAM-focused education center, the Ignite Institute – an innovative, tuition-free school for students grades 9-12 with a focus on biomedical sciences, advanced manufacturing, pre-engineering, logistics/IT/coding, and building trades, with the opportunity to earn an associate’s degree.

Toyota’s involvement in the Bluegrass Region goes beyond employment and dollars invested in infrastructure. Several years ago, Toyota created the Advanced Manufacturing Technician (AMT) Program in collaboration with the Bluegrass Community & Technical College to craft a homegrown workforce with soft skills as well as technical knowledge. Today, the program has grown into a new,  $24 million, 78,000 square foot Advanced Manufacturing Center in Georgetown, KY, with over 60 students enrolled in the most recent semester. Through an apprenticeship-based curriculum, the AMT program combines learning with hands-on experience in an immersive environment. Students learn the knowledge and skills required to be advanced manufacturing technicians and apply those concepts while working part-time for actual manufacturers in the region, such as Toyota.

According to a study by the Center for Automotive Research, Toyota has operations in 19 states around the country and that 70 percent of Toyota vehicles sold in the United States were also built in the United States. Toyota employs over 135,900 people in manufacturing, supporting operations, and dealerships, with another 108,400 intermediate jobs that supply Toyota and 225,800 induced jobs created by the spending of these direct and indirect employees. This brings Toyota’s total American employment impact to 470,000 jobs.

Want to learn more about advanced manufacturing in Lexington and the Bluegrass Region? Click here!

 

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.