Numbers Add Up to Growth

According to the "State of the South" report issued last year by nonprofit research firm MDC (www.mdcinc. org), Chapel Hill, N.C., Kentucky gained 543,000 jobs between the years 1978 and 1997. That 33 percent growth rate was led by the strong rates in Louisville and Lexington -- 31.4 percent and 54.4 percent respectively. While job losses in the Commonwealth basically mirrored national trends, job growth in the motor vehicle and transportation equipment sector has grown by an impressive 132 percent. Health services and business services jobs in Kentucky have grown at rates of 119.9 percent and 280.9 percent respectively, also outpacing the nation as a whole. The air transportation sector has exploded by 1,438 percent thanks mainly to the cargo and passenger hubs in Louisville and Northern Kentucky.
        As the economy has diversified, so has the ownership of its businesses. Only about 100 foreign-owned enterprises operated in the state in 1978. Today that number stands at over 700, employing nearly 90,000 Kentuckians. In fact, one in five residents employed in manufacturing works for a foreign-owned firm -- the highest such ratio anywhere in the South. Japanese-owned firms, led by the far-reaching presence of Toyota, own 104 plants in the state, employ over 33,000 people and are worth over $7 billion. Overall, foreign manufacturers have invested around $11.5 billion in some 309 facilities.
        "We're very active internationally, from a direct investment and an export standpoint," says Strong. "Our 1990 to 1999 percentage growth rate in exports is fourth in the country, with a total export value of $9.6 billion. Foreign direct investment has continued to be very steady for us. It's a diverse group of companies from many areas of discipline."
        That kind of layered growth has lent greater value to those jobs, and to the companies that create them. For instance, when Lexington computer printer maker Lexmark announced it was moving 600 manufacturing jobs overseas last year, much of the community's immediate dismay was tempered by the knowledge that the company will be adding 700 higher-paying jobs in its burgeoning research and development sector by the end of 2002. That change is part of the company's overall restructuring, which includes a new $70 million R&D facility expected to come on line in Lexington in 2002. While there will be a short-term restructuring cost of $35 million to $45 million, the overall cut of 900 jobs worldwide is expected to save Lexmark $100 million annually.
        As Gov. Paul Patton announced at his recent State of the Commonwealth address, "The net effect of our efforts is that we've stopped the out-migration of our people that was so pervasive in the 1980s. There are now four million Kentuckians, an increase of 9.7 percent over the past decade. More people are moving into Kentucky to find economic opportunity than are moving out ... Few would challenge the argument that a Kentuckian making $30,000 a year is much better off than a New Yorker making the same wage."

Where the Rubber Meets the Road

In a variety of ways, Kentucky has been making news in the transportation field. Kentucky fifth district U.S. Congressman Hal Rogers has helped bring about $23 million in federal spending for transportation projects in the Commonwealth. A rollback on certain types of jet fuel taxes has certainly helped in and around the hub operations in Northern Kentucky and Louisville.

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       But it's manufacturers such as Toyota, now employing 8,500 people, that drive the transportation sector in Kentucky. They're growing as fast as Camrys coming off an assembly line. Out of approximately 500 North American suppliers to Toyota (who ring up $8.65 billion a year in sales to the company), 60 do business in Kentucky. The company's corridor of plants across the region are all well served by Kentucky suppliers. Navolio points to the significance of the company's North American headquarters and parts distribution center in Northern Kentucky as well.
        It's not all Toyota, however. The General Motors plant in Bowling Green, known for manufacturing the Corvette (and soon, the Cadillac Evoq) came to the state in 1982, 14 years after Ford's truck plant opened for business in Louisville in 1968. The supplier network is equally diverse, with top performers like Wintech, located in Winchester, and AK Steel, based in Ashland, garnering top quality awards from primary customers Nissan and DaimlerChrysler respectively.
        "People don't know Kentucky is the third largest state, behind Ohio and Michigan, in auto manufacturing," says Navolio. "We'd be foolish if we didn't support the whole auto industry."

More Than Horse Power

In a market fraught with the perils of deregulation, Kentucky's utility rates continue to be among a handful of the lowest in the nation.
        Utility access has had a direct influence on a flurry of growth in the Car rollton area, halfway down the Ohio River from Cincinnati to Louisville. BPB Celotex recently opened a $75 million gypsum board plant, located near the Kentucky Utilities Ghent power plant in order to obtain its supply of limestone slurry, an otherwise wasted byproduct that can be made into gypsum for use at the new facility.

—Kentucky Gov. Paul Patton

Just down the road, North American Stainless (NAS), already implementing a $200 million meltshop expansion, will invest an additional $130 million for further expansion at its facility in Carroll County, to be used to construct a third cold rolling mill and a third annealing and pickling line. By 2003, the company expects 52 new jobs to be filled.
        That brings the company's total investment in Kentucky to nearly $1 billion. The NAS facility currently employs 500 people, and is owned by Acerinox, S.A. of Madrid, Spain, one of only five major producers of stainless steel flat products in the world.
        "When Kentucky was selected initially," says NAS vice president of finance Mary Jean Riley, "those items that attracted were, one, a small percentage of union workforce, and two, the river and interstate access, which was positive for our product. We import a lot of our raw material, and this location is within half a day's truck drive to 60 percent of our market for stainless in the U.S."
        Riley appreciates the strong work ethic of not only the workforce, but of the economic development personnel with whom she has worked.
        "The cabinet has been extremely supportive when we've had expansions," she says, noting the local government's support with bond issuances as well. But underlying all that positive energy is the positive energy cost.
        "The favorable utility rates continue to be attractive," says Riley, observing that similar factors may have contributed to the success of neighbors like Elf Atochem, Dow Corning and Gallatin Steel.