Category Archives: Research

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!

Innovation Index

To innovate means literally to renew or change something. Innovation is about coming up with a better process, creating a new product, improving an existing one, opening a new market, finding a new source of supply or creating a better way to organize ourselves. Innovation may be technology-driven today but it is just as likely to focus on a new and better way for people to work together.

Why is innovation such a hot topic right now?

Quite simply, we believe it to be the primary drive of economic growth – and after years of recession across the industrial world, growth is a top priority. However, innovation turns out to be surprisingly hard to measure, since it flows through ideas and experiments into services and products.

An initiative of the U.S. Department of Commerce Economic Development Administration, Purdue University, and Indiana University is working to provide a deeper understanding of where innovation is taking place.  StatsAmerica  has produced an “innovation index” for every county in the United States. Kentucky’s county-level results are illustrated on the map below, with the highest innovation index values anchoring the three angles of the urban triangle—the Louisville area, Northern Kentucky, and Fayette County. The index is based on four broad categories and includes 22 different variables. The four broad categories include Human Capital, Economic Dynamics, Productivity and Employment, and Economic Well-Being. Some of the variables include educational attainment, high-technology employment, broadband adoption, venture capital investments, patent creation, worker productivity, proprietor income, the poverty rate, and per capita income.

The index is scaled so that 100 is the U.S. average. The highest ranked Kentucky county is Fayette at 101.8. Santa Clara County, California—which is Silicon Valley—and Broomfield County, Colorado—which is the Denver area—have the highest values in the United States at 125.4 each; Hancock County, Tennessee, which is located along the Kentucky-Tennessee border in the eastern region has the lowest index value in the country at 61.7.

Kentucky Innovation Index by County

Innovation Index
Source: www.statsamerica.org, funded in part by the U.S. Department of Commerce Department’s Economic Development Administration. Work was conducted by the Purdue Center for Regional Development, the Indiana Business Research Center at Indiana University’s Kelley School of Business, and other research partners.

Efforts by the Von Allmen Center for Entrepreneurship within the Gatton College of Business and Economics, the Innovation Network for Entrepreneurial Thinking (iNET) within the College of Communication and Information at the University of Kentucky, as well as Kentucky’s Innovation Network, a partnership between the Kentucky Cabinet for Economic Development and Kentucky Science and Technology Corporation, are designed to stimulate entrepreneurialism, foster commercialization, and improve the state’s innovation capacity – essential elements for our collective future.

To read more about innovation in Kentucky, check out the 2015 Kentucky Annual Economic Report, recently released by the Center for Business and Economic Research at the Gatton College of Business and Economics at the University of Kentucky.

– CLX Economic Development Team

Commerce Lexington Update

  • Piramal Enterprises Limited, an Indian firm based in Mumbai, has acquired Coldstream Laboratories  for $30.6 million. Coldstream was founded in 2007 and controlled by the University of Kentucky research foundation.  Coldstream is a contract development and manufacturing organisation (CDMO) focused on the development and manufacturing of sterile injectable products.  Coldstream currently employs 91 people.

Labor Force Participation

 There are lies, damned lies and statistics. – Mark Twain

 America’s job picture appears to be seeing a huge improvement, with robust numbers that are giving investors’ confidence in the economy. The U.S. added 248,000 jobs in September, bringing the national unemployment rate below 6 percent.

 However, unemployment rates provide an incomplete measure of local labor market conditions. Unemployment does not include involuntary part-time workers; nor does it include discouraged workers who stop seeking work because they cannot find jobs. If we were to look at the labor force participation rate, which is essentially the percentage of persons 16 years of age and older that are classified as employed or unemployed (but looking for a job), we would see a different picture.

The labor force participation rate grew from about 60 percent nationally in 1970 to about 67 percent in 2000, with much of the increase resulting from increased participation by women. Unfortunately, the American labor force has been shrinking for more than a decade, and the September participation rate fell to 62.7%, marking the lowest level since 1978. The falling participation rate has been a hotly debated topic for some time, but the puzzle is even more confusing given the string of solid jobs gains and the continued drop in the unemployment rate.

A detailed new report from the White House Council of Economic Advisers estimates the majority of the decline has been driven by the retirement of the Baby Boom generation and that only one-sixth of the decline is clearly attributable to a weak economy. Other economists, however, believe that the decline in the labor force participation is a result of a historically weak economy and the unprecedented numbers of Americans who have lost their jobs and given up hunting for another one. Research from different arms of the Federal Reserve, such as this paper from a Boston Fed conference and this paper from the Philadelphia Fed, has reached contradicting conclusions.

So, how does our local labor force participation rate compare?

For selected areas, the U.S. Bureau of Labor Statistics Local Area Unemployment Statistics program produces current estimates of labor for participation rates. This includes all 50 states, the District of Columbia and a handful of large metropolitan area, excluding the Lexington-Fayette MSA. Thus, to estimate labor force participation locally, we used the U.S. Bureau of Labor Statistics Local Area Unemployment Statistics data to calculate the size of the labor force and Census Bureau population estimates to estimate the age-16-and-up population of Fayette County (per this ARC report, Local Area Unemployment Statistics data may validly be combined with Census population estimates to determine the labor force participation rate).

As the chart below indicates, the decline in national labor force participation is mirrored by both state and local data, although Fayette County appears to have experienced a much more dramatic drop in labor force participation, followed by a leveling off that, as of 2013, was comparable to the national rate.

Annual Average Labor Force Participation Rate

 

Lexington, KY Labor Force Participation Rate
Annual Labor Force Participation Rate

 

What about the big drops in participation locally?

While our diverse economy continues to reflect national trends, Lexington has experienced a fairly rapid growth in its working age population. The population age 16 years and over grew from 204,082 to 248,945 between 2005 and 2014, representing a 22% increase. Since the labor force is expanding at a slower rate than the population, the participation rate is going down. The large drops in labor force participation on the chart are reflective of significant jumps in the overall working age population, which were primarily due to an increase in college-aged residents. It could be that the younger populations that are largely responsible for the area’s population growth are enrolled in college, and thus, not part of the labor force. The good news for Lexington: rising education levels increase labor force participation rates in the long-term.

– CLX Economic Development Team

Commerce Lexington Update

  • Commerce Lexington is leading a group of Lexingtonians through Dubai this week. The itinerary includes time dedicated to exploring the connections between Central Kentucky and Dubai, including a meeting at the Dubai Chamber of Commerce, a look at the Dubai Thoroughbred racing tradition, and a visit with representatives of Dubai businesses with Kentucky connections.
  • The Kentucky Association of Manufacturers and the Kentucky Chamber of Commerce is hosting the first Kentucky Manufacturing Innovation Conference on October 24th at the Lexington Center. The one-day event is designed to bring the state’s manufacturers together to discuss, share and learn about cutting edge manufacturing innovations and technologies that can help increase productivity, improve quality and add to the bottom line. The conference is an initiative of BEAM, the Bluegrass Economic Advancement Movement, a partnership between the mayors of Lexington and Louisville and the Brookings Institution.

 

Clusters and Regional Strategy

Q: What drives high-wage growth, higher patenting rates, and economic resiliency?

A: Industry clusters.

Clusters are a regional concentration of related industries in a particular location.  It isn’t just proximity that make clusters special, it’s that an entire value chain exists within a cluster: suppliers, manufacturers, distributors, academic institutions, researchers, and workforce training – which results in tight linkages, better market insights, larger spools of specialized talent, and faster deployment of new knowledge.

Clusters act as a catalyst for economic growth, enhancing productivity and spurring innovation. Consider the clusters that have blossomed around automobile factories in Kentucky. According to the Kentucky Cabinet for Economic Development (PDF), more than 460 “motor vehicle-related” facilities are now located in the state, employing more than 82,000 workers.

Recently launched, the U.S. Cluster Mapping Project is a national economic initiative that provides over 50 million open data records on industry clusters and regional business environments in the United States to promote economic growth and national competitiveness. The project is led by Harvard Business School’s Institute for Strategy and Competitiveness in partnership with the U.S. Economic Development Administration.

The U.S. Cluster Mapping tool provide a powerful understanding of the industry dynamics shaping a regional economy and highlights opportunities for coordination and join action.  It can also offer insights into new and emerging clusters in different regions. Charts and maps from the tool illustrate, for example, that the Lexington-Fayette MSA, generally regarded as the “Horse Capital of the World”, is also major center of biopharmaceutical development and printing services.

Lexington-Fayette MSA Traded Industry Clusters
Lexington-Fayette MSA Traded Clusters

Rather than chasing investment in generically “attractive” industries, Commerce Lexington has long worked to strengthen the region’s distinctive competitive position in light of its location, existing strengths and industry mix, and business environment qualities. With one of the nation’s most educated populations, a low cost of living, ideal location and infrastructure, and a rich entrepreneurial history, it’s not hard to identify the Bluegrass Region’s unique value proposition. Click here to learn more about our strategic industry sector targets.

– CLX Economic Development Team

Commerce Lexington Update

  • Commerce Lexington Inc. and Lexington Mayor Jim Gray announced that hydra, a manufacturer of aromatherapy and bath products to more than 2,000 retailers around the world, has moved its company headquarters from San Francisco to Lexington. Click here to read the press release.
  • The U.S. Small Business Administration has awarded a State Trade Export Promotion (STEP) Grant to the Commonwealth of Kentucky, which is designed to encourage and boost international trade among small businesses in the Commonwealth. The STEP program has two objectives: 1) increase the number of small businesses that begin to export and 2) increase the value of exports for small businesses that currently export.
  • Commerce Lexington will host Kentucky Secretary of State, Alison Lundergan Grimes for a Public Policy Breakfast on Wednesday, Oct. 15.