Category Archives: Location

Lexington Ranks 4th Best City for Attracting Foreign Investment!

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.

FDI

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.

Startups in Lexington

Lexington and the Bluegrass Region are a great place for business to locate. Our strategic central location, highly educated workforce, diverse economy, network of colleges and universities, high quality of life, low business costs, and transportation access by road, rail, and sky have attracted major companies to the area, including Toyota, Xerox, Amazon, Valvoline, and many others. However, Lexington is also good at growing companies.

Entrepreneurs can find guidance from many sources in Lexington. To name just a few, the Kentucky Innovation Network, the Bluegrass Business Development Partnership, the Bluegrass Small Business Development Center, Awesome Inc., Lexington Venture Club, 5Across, and Lexington SCORE have helped many entrepreneurs build their startup business.

With the school year just beginning, it seems appropriate to highlight a new initiative to support innovation and encourage entrepreneurship: the University of Kentucky Von Allmen Center for Entrepreneurship’s Venture Studio.

Venture Studio will provide real-world startup experience for members of the UK community, including undergraduates, graduate students, post docs, faculty, and staff. During Venture Studio Bootcamp, participants will explore a problem and develop a solution — their startup. Throughout the semester, teams will work with mentors, identify customers and procure feedback, perfect an elevator speech about their project/business, create a prototype, understand intellectual property rights, and develop financial, marketing, and sales pitches and projections. At the end of the semester, teams present final pitches to a panel of community investors, who select teams to move onto local, regional, and national business plan competitions in the spring semester, including the UK Venture Challenge, the University of Louisville’s Cardinal Challenge, the Georgia Bowl, the Alltech Innovation Challenge, Idea State U, and Global Venture Investment Labs.

Venture Studio offers three unique benefits.

First, the program gives more advanced students a headstart into the economy and their chosen industry. Participants gain access to angel investors, mentors, client focus groups, financial and marketing experts, resources, and constructive feedback at every stage of their business development. These are scarce and valuable resources that other fledgling entrepreneurs may not have easy access to.

Second, Venture Studio  is cross-disciplinary. A team of industry experts may have a brilliant idea but most will need people with other skills, such as finance, software, and legal expertise, to help ensure their startup succeeds. Venture Studio will bring together people of various expertise who may not have otherwise found each other, increasing their startup’s chance of success.

Third, Venture Studio has two subtle built-in advantages: deadlines and expectations. As well intending as every entrepreneur may be, life tends to get in the way. Venture Studio requires weekly attendance, sets goals, and defines tasks, leading teams down the path of creating a startup while holding each responsible for completing each step. This commitment obligates participants to prioritize their startup and sets the framework for achieving the goal of actually creating a business.

University of Kentucky student entrepreneurs have a history of success. Last year, five UK student startups placed in various business plan competitions, including Idea State U, the Alltech Innovation Challenge, Lexington Venture Club, the Cardinal Challenge, and 5Across. These entrepreneurs were MBA Candidates, Pharmacy PhD Candidates, and students from the College of Design, with assistance from professors in the College of Agriculture and the College of Engineering. Their project topics included bio-fuel, food/beverage coloring, mining dust and emission solutions, and enzyme production (Commerce Lexington’s strategic target areas are advanced manufacturing, animal and equine sciences, business and professional services, clean technology, life sciences, software and information technology, and visitor industries).

The University of Kentucky has been a valuable partner in growing Lexington’s workforce and has now created a venue for growing Lexington’s businesses. Check back in a few months for updates!

 

An Intern’s Perspective

We at Commerce Lexington proudly promote the area’s well-educated workforce and talented population as key resources for companies locating in our region. In fact, every year Commerce Lexington welcomes talented interns to our staff, many who either call the Bluegrass Region home or who are attending one of our local colleges. Our most recent intern was Faisal Hamza.

Faisal was involved with our Public Policy and Economic Development teams and made many meaningful contributions to discussions and projects, particularly about education policy and foreign direct investment. While at Commerce Lexington, Faisal wrote a well-researched report on apprenticeships as a form of workforce training, including explaining how apprenticeships prepare future workers, how apprenticeships could be useful to the Bluegrass Region, and steps to further develop apprenticeship programs. From this report comes an eloquent phrase that summarizes the goal of Commerce Lexington’s economic development team:

“The expansion of apprenticeships would of course be a long-term project with the effects of it not being felt for a few years, but that is what economic development is about: planning for the future in order to facilitate growth and prosperity to the region and its people.”

We asked Faisal to write about his experience at Commerce Lexington:

An Intern’s Perspective, by Faisal Hamza

My first impression of Commerce Lexington could not have been a better one. I grew up in Dubai and am currently attending university in the United Kingdom, so this was the first time I was interning in the USA. My family recently invested in a manufacturing company in Lexington called Blue Star Plastics, so I thought this would be the ideal place to gain experience. Before my arrival however, my initial thought was “Is this just going to be another thing to put on my CV?” Many of my previous experiences with internships were quite unsatisfactory; they were boring, unconstructive and lacking a challenge so I was worried that coming here would be the same. As you may have already guessed, I was in fact very wrong.

The first people I met at Commerce Lexington were Gina from the Economic Development department and Andi from Public Policy. After introducing themselves and the company, any reservations that I might leave empty-handed were evaporated. I can safely say that they are two of the kindest, most hard-working people I have met. They and the rest of the staff at Commerce Lexington have been unbelievably accommodating and helpful from day one. There was not a trace of condescending attitude despite my comparatively young age; it was the first time I was able to allow my maturity to show through during an internship, enabling me to contribute and integrate. Although I was mainly involved with the Economic Development and Public Policy departments, it did not stop other members of the chamber from also being extremely welcoming. I was shocked to see that some people I rarely engaged with even remembered my name (thank you Tyrone for your concern when I was outside in the rain!). I don’t think they realize just how great they are, both in personality and in work ethic. It was truly refreshing to meet people of such caliber and experience.

I would personally recommend this internship with Commerce Lexington to anyone interested. Just in the short time I was here I managed to attend various economic and policy meetings, produce analysis reports, develop and suggest my own ideas and even meet Mitch McConnell.  For anyone particularly interested in economics, public policy or business or just passionate about contributing to the public in general, this is the ideal experience. The process of policy making and facilitating growth in the economy are just a few of the areas you will become accustomed to. Even if you unsure of your future career path, working here provides you with a certain understanding and skill that can be applied to various areas of life. The impacts of this sector are significant to society as a whole, no matter what they do.

My international exposure proved to be very useful here, not only as a point of conversation with much of the staff (learning about fraternities/sororities was a particular horror); it was a valuable asset when analyzing policies, trends and in particular, methods of attracting FDI. It allowed me to provide another perspective on issues. For example, having looked at ways to improve the workforce in Lexington, I wrote a report recommending the expansion of the apprenticeship system in Lexington, something that is highly underused in the USA. I would not have been able to do this without my prior experience of having lived in the United Kingdom which has an expansive apprenticeship scheme. It goes to show how mutually beneficial engaging with other countries can be.

Lexington is the ideal location for businesses wishing to expand into the U.S. market. Despite this, if there is at least one thing I know it is that people abroad have rarely heard of Kentucky (apart from their fried chicken and horses!), let alone Lexington itself. Surveys amongst companies also indicated that most came here only off the back of personal connections and recommendations by other companies. Word of mouth is a powerful thing, so once Toyota expanded here a while ago many others followed suit. Using all of this information, I proposed in a meeting between various Kentucky chambers that in order to put Kentucky on the map they should target and develop relationships with specific countries. Taking state/local leadership on a trade visit would be highly received in many cultures who highly value such a personal gesture. Trade visits are already conducted by the chamber but it is now something they might look at expanding and making more official.

Whether or not these ideas ever come to fruition here is not the point however. The point is that because of the encouraging and resourceful environment provided by Commerce Lexington, I quickly found that there was space for me to be creative and genuinely contribute to the organization, which gives you valuable confidence. To be able to rub shoulders with people of such experience and integrity would be refreshing for anyone, regardless of their age. I can also sincerely say that Kentucky and Lexington will hold a place in my life from now on. The people and the place leave a great impression on you and I can now see why companies skeptical of moving here at first end up loving it!

I would like to sincerely thank Bob, Gina, Andi and the rest of Commerce Lexington for everything they have done for me. From the upbeat environment and laughs to the challenging assignments, it has all combined to give me an amazing life experience that I will take into the future. I was taken out of my comfort zone a few times (especially when writing this article!) and I am better for it. Although it was a tough decision, I have come to the conclusion that I do not regret giving up a portion of my vacation to come and work for Commerce Lexington. If that doesn’t make you interested then I’m not sure what will!

Education for Kentucky’s Aerospace Workforce

Kentucky’s aerospace industry is taking flight! At $7.7 billion, aerospace parts and products were Kentucky’s largest export category in 2014 and Kentucky exported more aerospace and aviation products that every other state, except California and Washington.

Lexington and the Bluegrass Region are particularly appealing to the aerospace industry because of the area’s extensive network of colleges, universities, and other educational institutions with aerospace and aviation programs working to develop the region’s workforce.

NASA Kentucky is located in downtown Lexington on the University of Kentucky campus and operates the Space Grant Consortium and EPSCoR program. The Space Grant is a higher education program funding students and supporting research and workforce development in STEM areas, as well as expanding access to other educational resources through networking. The NASA Exprimental Program to Stimulate Competitive Research (EPSCoR) award programs support research and partnership with NASA and offer improved access to workshops, conferences, and seminars through grants.

The Aviation Museum of Kentucky (AMK)located in Lexington’s Bluegrass Airport, houses 20,000 square feet of restored historic airplanes and modern aircraft. Visitors learn about how aviation came to Kentucky and about the science of flight. The Museum strives to introduce young people to aviation and encourage aviation as a career. With the Learning through Aviation program, the AMK helps teachers bring aviation into the classroom and shows how STEM subjects build a foundation for successful aerospace and aviation careers. During the summer, the AMK’s Summer Camp introduces 10 to 15 year olds to aviation, teaching them the history of aviation, the principles of flight, aircraft and engine design, about aviation careers, and gives them hands on experience with a flight simulator and actual flights with instructors. Besides the primary Lexington location, camps are also held in Hazard, Bowling Green, Louisville, and Pikeville, and nearly one third of the campers attend for free through the Museum’s scholarship program.

Nearby, Eastern Kentucky University’s Aviation program offers the nation’s first FAA-approved 1,000-hour power aviation degree program. Students graduate with a concentration in Professional Flight, Aerospace Management, or Aerospace Technology, with supporting courses in mathematics, physics, and business management. Graduates are prepared for an array of aerospace and aviation careers, including piloting, aviation/aerospace management, military, and aerospace technology.

The National Air & Space Institute/Air & Space Academy is a four-year program operating in high schools throughout Kentucky, including several in the Bluegrass Region, that teach high school students aerospace concepts and skills through a STEM curriculum designed to prepare them for college and the aerospace industry. Students engage in online  course study, flight training, and competitions that apply knowledge and skill to create functioning aviation products, such as high performance wings or nanosatellites. Students can receive college credit for participation in the program, giving them a boost into their future careers.

How important is Kentucky’s specialized training and growing aerospace workforce? The Kentucky Legislature has directed the Cabinet for Economic Development, the Transportation Cabinet, and the Commission on Military Affairs to conduct a study on the aerospace and aviation industry in Kentucky. The report will look at where aviation/aerospace parts manufacturing facilities are located, their workforce needs, tactics to grow the industry and create more jobs, an understanding of the industry’s economic impact, and will provide an overall better understanding of how the aerospace/aviation industry affects Kentucky’s economy. Stay tuned!

Kentucky’s Aerospace Industry is Taking Flight!

Kentucky’s aerospace industry is taking flight! According to the U.S. Census Bureau, Kentucky exported $27.6 billion in 2014, an increase of 9% from 2013. Although Kentucky is traditionally known for horses and bourbon, aerospace parts and products were the largest export category in 2014 at $7.7 billion, while other transportation (i.e., motor vehicles, parts, bodies, and trailers) totaled almost $6 billion. Furthermore, Kentucky exported more aerospace and aviation products than every other state in the country, except California and Washington. Clearly, aerospace is Kentucky’s up-and-coming industry.

Three notable aerospace companies in Lexington are Belcan Corporation, Space Tango, and Lockheed Martin. Each has made significant or unique contributions to aerospace and aviation.

Belcan Corporation is a leading engineering services, design center, and technical staffing company for the aerospace industry that opened its Lexington office in 2005. Today, Belcan serves over 600 clients in the automotive, aviation, energy, marine, and medical industries. Belcan’s engineering services include automation design and build, engineering analysis, project management, and software and systems engineering. Last month, the company announced it will be expanding in downtown Lexington with an investment of $1.2 million, creating 100 new engineering jobs and growing by an additional 15,000 square feet in the Vine Center, a necessary increase for Belcan’s expanding customer base.

Lexington is also home to Space Tango, the first business accelerator for space startups. Through a 12-week program, Space Tango gives entrepreneurs the opportunity to access advisors, sales and marketing professionals, investors, experienced mentor expertise, clean room facilities, and test equipment to help innovative businesses create novel applications and successfully access diverse markets.

Lockheed Martin is an international leader in the aerospace and defense industries. As a global security and aerospace company, Lockheed Martin specializes in aeronautics, information systems and global solutions (IS&GS), mission systems and training, and space systems, among others, with facilities and employees worldwide. Lexington’s Lockheed Martin office is a contractor and logistics support services facility, offering repair, maintenance, and modification of equipment, such as helicopters damaged in service. Lockheed Martin is also one of the Bluegrass Region’s major employers with over 1,000 employees.

As with other industries, Lexington is able to provide the aerospace industry with a skilled and well-educated workforce and a central location. However, Lexington and the Bluegrass Region are particularly appealing to the aerospace industry because of the extensive network of colleges, universities, and other educational institutions with aerospace and aviation programs working to develop the region’s workforce. More about educational opportunities for the Bluegrass Region’s developing aerospace workforce next week!