Earlier this month, the Kentucky Automotive Industry Association (KAIA) released “The Economic Impact of the Automotive Industry in Kentucky.” This report comprehensively detailed Kentucky’s growing automotive industry, compared Kentucky to competition states, and analyzed the industry’s economic and fiscal impact on the state economy, including jobs and taxes.
Competition states included states that border Kentucky (Illinois, Indiana, Missouri, Ohio, Tennessee, Virginia, and West Virginia) and five southeastern states (Alabama, Georgia, Mississippi, North Carolina, and South Carolina). These states comprise almost all of the auto manufacturing corridor and house the majority of the country’s auto assembly facilities.
Some key findings from the report include:
- Kentucky ranks 5th for number of full- and part-time automotive industry employees (2013). Over 85,000 Kentuckians are directly employed by an automotive-related business at one of the 470+ establishments in Kentucky and 136,500 jobs are supported by the automotive industry, including 41,705 in the Lexington Region.
- Automobile manufacturing pays the 4th highest wage in Kentucky’s manufacturing sector at $58,280, behind computer and electric products manufacturing ($79,490), electrical equipment and appliance manufacturing ($65,180) and primary metals manufacturing ($63,040).
- Of the 44 automobile assembly plants in the United States, 4 are in Kentucky. These facilities actually put vehicles together and send out the finished product for purchase. Kentucky produced 1.28 million cars and light trucks in 2014, which is 11.2% of all passenger vehicles produced in the United States and makes Kentucky the third largest automobile producer behind Ohio (13.5%) and Michigan (20.4%).
- Although almost all of Kentucky’s finished automobiles were for domestic consumption, Kentucky’s motor vehicles, bodies, trailers, and parts exports totaled $5.9 billion in 2014 and were 21.5% of all Kentucky exports.
- The Bluegrass Region has 97 auto manufacturing facilities, representing over 20% of all auto-related businesses in Kentucky.
The report also explains how Kentucky has cultivated such a thriving auto industry. Kentucky and Lexington are ideal for auto manufacturing companies and facilities for several reasons. Both have lower overall costs of doing business, easy access to skilled labor, an array of incentives, and Kentucky has the 4th lowest utility costs in the nation at 5.67 cents per kWh. However, the report states that the primary reason is a strategic location.
Kentucky and Lexington are positioned in the center of an auto manufacturing corridor containing 38 of the country’s 44 automobile assembly plants and the hundreds of supporting auto manufacturing facilities. Interstates, highways, and two major rail systems (CSX Transportation and Norfolk Southern) enhance Kentucky auto manufacturers’ ability to quickly and easily reach both inputs (parts) and markets.
Measuring from the center of the state, Kentucky has the shortest driving distance to each automotive assembly plant in the eastern United States, averaging 327 miles. Importantly, Lexington is the approximate center of Kentucky (the researchers used Richmond), meaning that Lexington and the Bluegrass Region are the best location for auto manufacturing facilities to minimize transportation costs and quickly reach nearly every actor in the national auto industry.
Clearly, Kentucky’s automotive industry is competitive and among the best in the nation. Next week’s blog will address the fiscal and economic importance of the automotive industry for the state and Lexington.
Note: The KAIA considers the Lexington Region to be the following counties: Anderson, Bath, Bourbon, Boyle, Clark, Fayette, Franklin, Garrad, Harrison, Jessamine, Lincoln, Madison, Mercer, Montgomery, Nicholas, Owen, Robertson, Scott, and Woodford. As always, Commerce Lexington includes eight counties in the Bluegrass Region: Bourbon, Clark, Fayette, Franklin, Jessamine, Madison, Scott, and Woodford.