Kentucky Adapts Investment Fund to New Markets

The Bluegrass State recently sweetened the pot for new high-tech investments.
        This spring Gov. Paul Patton signed into law a bill that increases access to capital and tax credits for research and development for emerging or high-tech firms. The bill changes the Kentucky Investment Fund Act that provides tax credits to individuals and companies that invest in approved venture-capital funds.
        But that does not mean the Commonwealth's traditional industries are running away. Kentucky offers manufacturers the advantage of reasonably priced power. According to the U.S. Energy Information Administration, the Bluegrass State's average industrial rate for electricity per kilowatt-hour is 2.9 cents, roughly 41 percent below the national average of 4.92 cents.
        "We spend $30,000 to $50,000 on electricity a month, but that's about half what that same bill would cost us in New York," says Jon Taylor, plant manager of Eastern Alloys. His firm built a new plant in Henderson after operating a facility in New York for nearly 30 years. The firm is just one of many in the metals arena that have found western Kentucky conducive to their work, especially within the aluminum sector.
        Despite the well-publicized failure of the state to acquire the necessary land parcels to beat out Alabama for the Hyundai plant location, manufacturing firms of many stripes have continued to heed Kentucky's call.
        Since December 2001, Kentucky has scored five new major manufacturing operations, including a $45-million investment by Toyoda Gosei in Christian County. The firm expects to employ 152 workers at the new plant and will manufacture automotive weather-stripping.
        The state also registered 21 expanded manufacturing plants between January and April. North American Stainless will employ 250 new workers at its expanded $100-million stainless steel coil plant in Casey County.
        Hitachi Cable of Japan will build a new plant in Russell County and provide parts to automotive companies. Company officials note key factors for the site selection were proximity to the customer base as well as various financial incentives offered by the state.
        "Hitachi Cable's commitment to bring jobs to the state is indicative of Kentucky's ability to attract global companies," notes Gene Strong, Secretary of the Kentucky Cabinet for Economic Development. "Kentucky continues to be recognized as having one of the top business climates in the nation."
        The Louisville office market has experienced a decided slump in the last year. Rental rates for class A space in the area registered between $16.15 and $20.25 per square foot, with many tenants receiving such extras as free rent and above standard improvements. According to Grubb & Ellis, vacancy rates in the CBD topped 15 percent by the end of 2001.
        The vacancy rate for industrial space in the Greater Louisville area at year's end was 7.2 percent, with R&D vacancy rates somewhat higher at 7.8 percent.

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