Category Archives: Manufacturing

Kentucky’s Automotive Industry, Part 1: Kentucky, Lexington, and Competition States

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.

AutoCorridor

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. 

 

October is Manufacturing Month in Kentucky

The Commonwealth is home to more than 4,000 manufacturers, representing $27 billion in GDP and 220,000 jobs. To pay tribute to one of Kentucky’s largest industries, Governor Steve Beshear proclaimed October as Manufacturing Month.

Since 2013, 248 of Kentucky’s existing manufacturers have announced over $3.2 billion in new investments and plans to create more than 7,600 jobs. In the same time period, 57 manufacturers announced relocations or openings in the Commonwealth. These projects are expected to create more than 4,300 jobs and $1.4 billion in new investment. In total, Commerce Lexington’s eight-county region in central Kentucky has been the recipient of more than one-fifth of the state’s private investment in manufacturing since 2013.

Jif factory in Lexington, KY
J.M. Smucker Co. spent over $43 million on upgrades to their Jif plant on Winchester Road in Lexington in 2013. Photo Source: Lexington Herald Leader

 

In the past five years alone, Kentucky’s manufacturing GDP has grown by more than a third and it makes up a significant portion of Kentucky’s growing export. Last year, the commonwealth exported a state record $25.3 billion to approximately 200 countries. Exports this year are up nearly 10 percent, far exceeding the national average of 3 percent. Kentucky’s top exports are aerospace products, motor vehicles and parts, and resin, rubber and fiber materials.

Here’s a rundown of some of the more interesting facts about manufacturing in Central Kentucky.

  • Ale-8-One: The soft drink has been bottled in Winchester since 1926 and is the only soft drink invented in Kentucky still in existence.
  • Alltech: Alltech’s Lexington Brewing and Distilling Co. is one of the few joint brewing and distilling operations – or “brewstilleries” – in the world.
  • Big Ass Solutions: Owns the world’s only research and development lab built specifically for testing large-diameter fans.
  • Clark Material Handling Co.: Headquartered in Lexington, Clark is credited with having invented the modern forklift. Today, there are over 350,000 units operating worldwide.
  • Jif: The Jif (J.M. Smucker Co.) plant in Lexington is the largest peanut butter producing facility in the world, requiring 188 billion peanuts annually.
  • Kaba Mas: Headquartered in Lexington, Kaba Mas is the world’s leading manufacturer and supplier of high-security electronic locking solutions.
  • Tiffany & Co.: the Lexington manufacturing plant (Tiffany’s first facility outside of the northeast) produces the classic six-prong engagement ring and other pieces of fine jewelry.
  • Toyota: Toyota Motor Manufacturing Kentucky in Georgetown is able to produce a new Camry from its production line every 65 seconds.
  • Webasto: German-owned Webasto Roof Systems, Inc. started production at in Lexington in 2003, which is now their largest production site for sun and panorama roofs in the United States.

– CLX Economic Development Team

Commerce Lexington Update

  • The October 5Across pitch competition is October 29th at Awesome Inc. in downtown Lexington. 5Across is an informal gathering of entrepreneurs, investors and service providers from Lexington, KY. Each 5Across meeting features presentations from local entrepreneurs who pitch their idea to a panel of judges. To register, click here.
  • Students and recent grads are invited to the Fall 2014 undrcvr Lex  event to learn about the dozens of tech and creative companies in Lexington. From software to hardware, products to services, startups to established companies, come meet the backbone of Lexington’s entrepreneurial tech and design community. Discover opportunities from part and full-time positions to internships and co-ops.

Big Ass Fans to Expand in Lexington, Add 150 Jobs

[May 29, 2012] – Kentucky Governor Steve Beshear joined company and local officials to announce that Lexington-based Big Ass Fans will build a 72,000 square-foot facility in Lexington, adding 150 jobs and an $8 million investment.

“I’m delighted to see this expansion and witness the tremendous success of Big Ass Fans, a Kentucky-based company,” Gov. Beshear said. “These new jobs will have a positive impact for the community, creating quality jobs in the Lexington area. I’m glad the Commonwealth could play a role in making this growth possible.”

The expansion includes 56,000 square feet for office space and 16,000 square feet for storage/warehouse space on Jaggie Fox Way in Lexington, where the company has an existing 45,000-square-foot research and testing facility. Big Ass Fans also plans to maintain its Lexington campus location off Winchester Road.

Founded in 1999, the HVLS (High Volume Low Speed) Fan Company changed its name to Big Ass Fans in 2002 and has become a leading manufacturer of ceiling fans for industrial, agricultural, commercial and residential customers. The fans range in size from 5 feet to 24 feet in diameter and use low horsepower motors to generate energy-efficient air movement for large spaces. There are more than 65,000 Big Ass Fans installed worldwide in locations such as manufacturing facilities, distribution centers, horse arenas, dairy barns, stadiums, restaurants, health clubs and homes.

“While our name may be funny, we take our business seriously,” says President of Big Ass Fans, Carey Smith. “Our company’s success can be credited, in large part, to the quality employees we have attracted and maintained in central Kentucky. Combining this pool of talent with products that really work has led to enormous success, which we’re proud to now reinvest back into the community.”

To encourage the investment and job growth in Lexington, the Kentucky Economic Development Finance Authority (KEDFA) preliminarily approved the company for tax incentives up to $2 million through the Kentucky Business Investment program. The performance-based incentive allows a company to keep a portion of its investment over the term of the agreement through corporate income tax credits and wage assessments by meeting job and investment targets.

KEDFA also approved Big Ass Fans for tax benefits up to $210,000 through the Kentucky Enterprise Initiative Act, which allows approved companies to recoup Kentucky sales and use tax on construction costs, building fixtures, equipment used in research and development, and electronic processing equipment.

“This announcement is good news for Lexington,” said Lexington Mayor Jim Gray. “We’re proud to be home to Big Ass Fans. They bring good jobs to our city, and we have citizens who need those jobs.”

“This is an exciting announcement for central Kentucky,” said Sen. Kathy Stein, of Lexington. “This investment by Big Ass Fans is an investment in our community. The 150 new jobs resulting from this expansion will provide a boost to our local economy and new opportunities for our workforce. Big Ass Fans continues to enhances our position as the prime location for innovative businesses to plant themselves, grow roots and be cultivated into the fertile soil we are developing to be the regional leader in excellence in our new economy. Gov. Beshear shows his continued leadership in job creation to seek out and support this excellent industry. This is the kind of leadership we need and have come to expect from Gov. Beshear. Thank you, Governor.”

“This is great news for our community and one of its signature businesses,” said Rep. Susan Westrom, of Lexington. “I want to thank the company for making this investment, especially for the jobs it will generate, and I’m glad that the state could play a role in helping to make all of this possible. Big Ass Fans has really put Lexington on the map, because of its name and certainly because of its quality work.”

“Commerce Lexington Inc. has always enjoyed working with Big Ass Fans, and we’re thrilled that they are expanding in Lexington,” said Bob Quick, CCE, president and CEO, Commerce Lexington Inc. “Big Ass Fans is a great example of a homegrown company that has an international reach. We’re proud they call Lexington home.”

For more information on Big Ass Fans, visit www.bigassfans.com.