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KENTUCKY
From Site Selection magazine, May 2016
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Gaining Traction

KENTUCKY

The growing automotive sector drives manufacturing growth.

by CRYSTAL VILLARREAL

Automotive growth in Kentucky is accelerating the state’s manufacturing sector. While over the last five years, Kentucky’s automotive industry has announced $5 billion in investments and 21,000 new jobs, more than 360 automotive-related projects have also announced expansions or new locations in Kentucky, resulting in nearly $7 billion in investments and more than 20,000 new jobs. Kentucky has virtually every component needed for producing a car, and manufacturing companies want to be near the plants they’re producing parts for in order to cut costs and increase production.

Ford, General Motors and Toyota each made recent investments in their plants — Ford is putting another $1.3 billion into its Kentucky Truck Plant (one of two plants it operates in Louisville), and Toyota has started producing the first US-made Lexus in Georgetown. Mandy Lambert, commissioner of business development for the Kentucky Cabinet for Economic Development, says that there are many factors that have driven Kentucky’s manufacturing growth over the years, including the presence of these three major auto manufacturers. These manufacturers have created a ripple effect across the state. It also helps that Kentucky is located at the center of a 34-state distribution area, within a day’s drive of two-thirds of the US population.

“The growth in the automotive industry has no doubt been a driver of Kentucky’s manufacturing economy,” says Lambert. “Our manufacturing GDP, for example, makes up 19.3 percent of our total GDP, compared with the national average of 12.2 percent, and our manufacturing GDP has grown at nearly twice the national average since 2008. Of our 2,400 manufacturing operations, nearly 490 are automotive-related.” Those 490 automotive-related manufacturers employ some 90,000 of 242,000 manufacturing employees in the state, according to Lambert.

Thai Summit America Corp., a supplier of stamped and welded parts for automakers, is building a new facility in Kentucky to be closer to Ford. The company’s $110-million facility in Bardstown will create 216 full-time positions, and is Thai Summit’s first in Kentucky. Construction will begin in January 2017 on the 220,000-sq.-ft. (20,438-sq.-m.) facility in the Nelson County Industrial Park. The factory will be delivering stamped and welded aluminum assemblies to the Ford Kentucky Truck Plant in Louisville.

Top 10 Automotive Employers in Kentucky

11,078 Toyota Motor Manufacturing Corp.
8,491 Ford Motor Company
2,472 Hitachi Ltd.
2,311 Akebono Brake Industry Co. Ltd.
2,050 Johnson Controls Inc.
1,923 Martinea International Inc.
1,569 Dana Holding Corp.
1,498 Toyota Tsusho Corp.
1,413 Grupo Poeza SA de CV
1,390 Toyoda Gosei Co. Ltd.
Source: Kentucky Business & Industry Information System (KBIIS), 2015

“One of the reasons why we chose Bardstown for our new plant is its location, which is close to our main customer, Ford Truck Plant,” says Nunthawat Yuktanonda, executive manager of finance, Thai Summit America Corp. “Another reason is because the economic development leaders of Bardstown and Nelson County were very supportive and provided financial incentives that helped make our project viable. Our new plant will be manufacturing automotive metal stamping and assemblies and supplying the Kentucky Ford Truck Plant for the F250-350 trucks.”

Established in 1985 in Howell, Michigan, Thai Summit currently operates facilities in North America and Asia. The company offers remote laser welding, 3-D white light measurement and high-strength steel capabilities to other Ford facilities, Chrysler and other automotive manufacturers. Rep. David Floyd, of Bardstown, said that the decision by Thai Summit will help further Kentucky’s reputation. “Kentucky must continue to solidify our reputation as a good place to do business, and programs like the Kentucky Business Incentive [KBI] have proven successful tools in our economic development toolbox.”

“Thai Summit and my economic development team just clicked from the minute we met,” says Kim Huston, president, Nelson County Economic Development Agency. “We learned about their company, its corporate culture, and knew that this company would be a great fit for our industrial community. We look forward to celebrating with them during the groundbreaking in May.”

Second City

Another big win for Kentucky landed in Bowling Green. Precision Strip processes, stores and delivers steel and aluminum for several markets, including the automotive industry, and is growing beyond its facility in Woodburn, where its 308,000-sq.-ft. (28,613-sq.-m.) facility employs 112 people and has expanded three times since opening in 1995. Now, the metal processor will build a second facility, with an estimated $15.5-million investment and 15 full-time positions.

“The new Precision Strip location in Bowling Green will be a nice complement to our existing operations in Woodburn,” said Joe Wolf, president of Precision Strip. “It will allow us to add capacity for metals processing in a geographic region that is experiencing healthy growth in the markets we serve.”

The new 80,000-sq.-ft. (7,432-sq.-m.) facility is a direct result of the effort Kentucky puts into helping businesses grow. The Kentucky Economic Development Finance Authority (KEDFA) preliminarily approved the company for tax incentives up to $300,000 through the KBI program. The incentive allows a company to keep a portion of its investment over the agreement term through corporate income tax credits and wage assessments by meeting job and investment targets.

TMM USA Inc., a subsidiary of Toyo Tire & Rubber Co. Ltd., is expanding to Franklin and will create 42 jobs with an investment of $5.6 million. “The addition of TMM USA improves operations at Toyo Automotive Parts and further solidifies Kentucky’s standing as a prime destination for the nation’s automotive industry,” said Governor Matt Bevin. “It is a testament to the quality of Simpson County’s workforce and further indication that Kentucky is open for business.”

“It will allow us to add capacity for metals processing in a geographic region that is experiencing healthy growth in the markets we serve.”
— Joe Wolf, president of metals processing, storage and delivery firm Precision Strip, on the company's addition of a new facility in Bowling Green to complement a facility in Woodburn that's expanded three times in 20 years

The 45,000-sq.-ft (4,180-sq.-m.) expansion is expected to save time and money. At its Franklin facility, Toyo Automotive Parts makes anti-vibration components including engine mounts, bushings and strut mounts. Company executives expect to save on metal and raw materials, as well as on shipping and storage, by locating TMM in-house. Currently, Toyo purchases more than 50 percent of those materials from outside suppliers.

With a wealth of support in the state as well as the booming auto industry, it’s easy to see why companies keep coming back. Kentucky’s industrial power rates are the lowest of any state east of the Mississippi River, and 20 percent lower than the national average. The state’s cost of living is also among the lowest in the country.

“In addition to the many great tangible benefits Kentucky has to offer, a big part of our success lies in the fact that we take the time to listen and to develop relationships with companies,” says Lambert. “We want to know their challenges and their opportunities. We use that knowledge to add value to their operations by tailoring our programs and services to help them reach their goals, which in turn helps Kentucky reach its goals.

“Whether it’s through tax credits, tax refunds, workforce training or other cost-recovery methods,” Lambert says, “we can structure a package that allows the company to significantly lower their cost of doing business.”

Source: Kentucky Automotive Industry Association, 2015

Crystal Villarreal

Crystal Villarreal

Crystal Villarreal has worked as a public relations coordinator for the healthcare conglomerate, McKesson. Crystal is a published author, who recently released her debut novel. She's also held roles as an editorial assistant for JEZEBEL magazine and worked as a communications specialist for a fashion merchandise company.

 



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