Category Archives: Ranking

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 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.

Biotech is Booming in Lexington!

Last week was the annual Biotechnology Industry Organization (BIO) International Convention. Every year BIO brings biotechnology leaders and innovators together to showcase cutting edge technologies and to offer a week-long opportunity for participants to network and create partnerships. Attendee’s at last year’s convention included over 15,000 people from more than 60 countries, 300+ academic institutions, top 25 pharma companies, top 20 CROs and CMOs, and 1,800 exhibitors.

This year’s convention was held in Philadelphia, and members of the Bluegrass Business Development Partnership (BBDP) were in attendance. The BBDP includes representatives from Commerce Lexington Inc., the University of Kentucky, and the City of Lexington. The BBDP delegation traveled to BIO to advocate for Lexington and Kentucky, to meet with current prospects, and to develop new leads to bring businesses to the Bluegrass.

Lexington is an ideal location for innovative and high-tech companies, largely for its human assets. In fact, 40.1% of Lexingtonians have a bachelor’s degree or higher, which is considerably more than the national average of 28.8%. Lexington consistently earns high praise for its educated citizens. In 2014, Lexington was ranked the 23rd Most Educated City by Wallet Hub and the World’s 24th Smartest City by National Geographic. Lexington has also ranked #7 Best City in Terms of Business Cost (2014), #7 Best Midsized City for Jobs (2013), and #17 America’s Top 25 High-Tech Hotspots (2013).

Over 50 biotech companies have chosen to locate in Lexington, but two have recently made the news: AntiOp Inc. and Transposagen Biopharmaceuticals.

AntiOp Inc. founder Daniel Wermeling created an anti-overdose nasal spray to help save lives from heroin overdoses and has sold the life-saving product to the biotech firm Indivior, PLC. Depending on FDA approval, it may be on the market within six months. The FDA has fast-tracked the spray because there is an unmet medical need for heroin overdose treatment and the spray offers an innovative response with several advantages over existing injection-based anti-overdose methods. By removing the need for a needle, Wermeling’s invention can be used quickly, safely, and successfully by pre-hospital responders (i.e., on-the-scene law enforcement, paramedics, or even family members), and reduces the recipient’s risk of contracting hepatitis or HIV.

AntiOp, Inc. received approximately $4.5 million in SBIR/STTR funds to create the overdose antidote ($650,000 was returned because Indivior is not based in Kentucky). Wermeling, a University of Kentucky College of Pharmacy professor, created the life-saving nasal spray with support from the University of Kentucky and over $5 million in federal and state tax workers.

UK’s College of Pharmacy is the 5th Best Pharmacy Program in the nation and is an asset to Lexington. The cutting-edge medical research on disease and drug development performed by the grad students, faculty, and staff has benefited the area and the nation. Graduates enrich the workforce and faculty members have created 25 startup companies since 1989, including Wermeling’s AntiOp.

Another excellent example is Transposagen Biopharmaceuticals, a Lexington-based biotech company that has been honored with the Tibbetts Award. The Tibbetts Award is granted for exemplary technological innovation and SBIR achievement. This year the U.S. Small Business Administration granted the Tibbett Award to six individuals, three supporting organizations, and 23 small businesses, one of which was Transposagen.

Transposagen Biopharmaceuticals is a privately held biotechnology company that specializes in genetic manipulation technologies, stem cell engineering services, and creating genetically modified laboratory rats. Altering the genetic code of rat models allows scientists and researchers to compare modified organisms with normal organisms to better understand gene functions and advance medical research on disease and drug discovery.

“We at Transposagen are dedicated to providing improvements to the nation and to the world through application of our industry-leading genome engineering technologies. Receiving the Tibbetts Award is a great honor and further fuels our drive to produce high-quality, versatile gene editing tools that play a significant role in improving the quality of human life,” said Eric Ostertag, M.D., Ph.D., founder and CEO of Transposagen, reported by Globe Newswire

Last year, Transposagen entered into a multi-million dollar research collaboration and worldwide license agreement with Janssen Biotech, Inc. to develop allogenic cells that may one day be “on the shelf” cancer treatments that will not require a donor-recipient match. Transposagen’s genome editing technologies will be used to create allogenic Chimeric Antigen Receptor T-cells (CAR-T) therapies, and Janssen will pay up to $292 million per CAR-T therapy.

AntiOp, UK’s College of Pharmacy, and Transposagen are only a few examples of Lexington’s thriving business industry and the success that entrepreneurs and small businesses can have here in Lexington.

Art in the Bluegrass! Lexington Ranks 6th Most Inspiring City for Young Artists

WorldWideLearn recently sought to identify cities that inspire, support, and encourage young artists, and ranked Lexington 6th Most Inspiring City for Young Artists.

The report looked at cities with populations over 300,000 (for the record, there are 64) and used seven metrics to determine city rankings: college or graduate school enrollment, percentage of the population between the ages of 18 and 34, art dealers, performing arts companies, museums, fine arts schools, and creative industries businesses. In every area, Lexington performs better than the national average.

Inspiring City Criteria

What exactly is a “creative industries” business? According to Americans for the Arts: “The creative industries are composed of arts businesses that range from nonprofit museums, symphonies, and theaters to for-profit film, architecture, and design companies.”

In other words, these cities have a culture of art, with supportive resources to help artists develop and express their creativity, and to receive feedback from other creators in an environment that welcomes and encourages them.

According to Americans for the Arts, there are 825 arts-related businesses in Lexington employing 3,930 people. The largest share is design and publishing, with 306 businesses and 1,249 employees in advertising, architecture, and design. Visual arts and photography is the second largest creative industry category with 260 businesses, while the performing arts is third with 128 businesses that include music, opera, and theaters. There are also many organizations to support young and aspiring artists, such as LexArts and the Lexington Arts League.

Other than direct jobs, why is art important for a local economy? The answer boils down to two reasons: (1) tourist and consumer spending and (2) quality of life that attracts and supports development.

Tourist and consumer spending on the arts contributes to local economies. Americans for the Arts studied how arts and cultural organizations contribute to local economies and found that the national economic impact of art and cultural organizations and their audiences totaled $248.34 billion in 2010.

InspiringCitiesSpending

People attending an art event not only pay for admission, but also spend money on related items and experiences, such as parking, local restaurants, local ground transportation, lodging, shops, souvenirs, and other local crafts. The Americans for the Arts study found that, in addition to admission costs, the average art attendee spends $24.60 per event. Even more profitable for local economies, about 30% of attendees are from out of town (of which 60% visited solely to attend the art event) and spent twice as much as local attendees. In many cases, this represents money that would not have entered the local economy without the art event that attracted the attendee.

Art/cultural organizations themselves also contribute to the local economy because they employ citizens, pay wages and federal, state, and local taxes, and spend on supplies, buildings, and services. In addition, arts organizations are entirely local and offer unique consumer goods and volunteer experiences that cannot be generically replicated or imported.

The arts industry and culture also contribute to a community’s quality of life and its ability to attract and retain businesses. The American Planning Association stresses the importance of the arts as a community asset as companies are increasingly considerate of the kind of environment that attracts the high-tech, high-education workforce. And that isn’t just a neat theory. When companies ask Commerce Lexington about locating here, they request information about quality of life factors, such as schools, colleges, outdoor recreation, youth sports leagues, nightlife, museums, art and entertainment, theaters, and festivals. And, as WorldWideLearn has acknowledged, Lexington has a lot to offer.

Kentucky Horse Sales Rank #1 in Nation at $178 million (2012)

 

HorseSalesGraphic2

In addition to taking inventory of horses and ponies by county, the quinquennial USDA Census of Agriculture also reports sales. While the sheer number of horses and ponies in Kentucky, the Bluegrass Region, and Fayette County was impressive, the number and dollar amount of horse and pony sales is even more remarkable.

Horse and pony sales in Kentucky totaled $178.34 million in 2012, ranking #1 in the nation and representing 13% of the total national sales.

The Bluegrass Region generated $151 million in horse and pony sales, representing 85% of the total state sales dollars and 32% of the horse and ponies sold.

Fayette County ranked #1 in Kentucky for horse and pony sales at $63.6 million dollars, with 10% of the horses and ponies sold in Kentucky and 36% of the total sales dollars.

Nine counties in Kentucky had more than $1 million dollars in sales in 2012. Of those eight counties, six were in the Bluegrass Region. Even among these high-sales counties, Fayette County still outperformed the closest county by about $20 million, and most by $60 million.

HorseSales

Fayette County ranks second in the nation with $63.6 million in horse and pony sales. The only county in the nation with more horse sales than Fayette County was Marion County, Florida, with $112.8 million in 2012 sales. The next highest sales county behind Fayette County was Maricopa County, Arizona, with only $13.6 million in horse and pony sales.

Fayette County also outsold every state except Florida ($162 million) and Texas ($146.9 million).

 

Note: The USDA Census of Agriculture surveyed county farmers to report gross value of sales in 2012, and should not reflect sales that occurred at Keeneland by non-Fayette County residents.