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Kentucky at a
Crossroads continued...

Crouch: As a matter of fact, when Bill Brundage was here speaking a few months ago, he said, 'What kind of people do I want to be a part of the New Economy in the state of Kentucky? I want English majors, because they know how to write and how to communicate. I can hire high school graduates who can run a computer, but if they don't know how to communicate, this New Economy is not going anywhere.'

Gov. Martha  Layne Collins
Gov. Martha Layne Collins

Gov. Martha Layne Collins: Out of 100 CEOs and presidents we talked to for a focus group for a program we're working on, most of them said they wanted liberal arts-educated persons with business skills.
Site Selection: You're referring to Georgetown College's Center for Commerce, Language and Culture. Tell us about that program and what you hope to achieve with it.
Collins: We have probably the only school in the state where the liberal arts and the business community are integrated and working closely together -- business, foreign language, political science, history, sociology, psychology, religion -- they're all getting into the act and understanding what we're trying to do. After September 11, we kind of said, 'We rest our case,' because we have got to teach people more about other cultures, what makes people tick, why you do things and don't do things.
      Being an old school teacher and having worked in economic development, I found back in the early 1980s that companies like it when you invest in your people. When we were talking about education reform, companies looked at us and liked that very much, because economic development and education go together. You can't separate them.
With Improvements to Policy, Site Improvements Will Follow

      Following the example of Kentucky's three major metropolitan areas, state economic development officials are looking to offer full incentives only to those companies who can offer higher wages than those of other, similar firms in the locale they are considering. The average manufacturing wage paid in 2000 ranges from $43,341 in Louisville to $22,416 in the Eastern Kentucky region, with Owensboro/Henderson paying $33,607 and Bowling Green/Hopkinsville paying an average of $32,178.
      The state economic development cabinet has also proposed legislative steps to further incentivize the high-tech sector, including: lowering from 25 to 10 the number of employees required to qualify for payroll tax rebates; creating a tax credit for R&D expenses incurred in the state, as well as a credit for investing in early-stage tech firms; and modifying sales and property tax rules to allow more leeway for research-intensive enterprises.
      The sector got a boost in June 2001 when the Kentucky Economic Development Finance Authority pledged $10 million toward a seed fund for high-tech startups, $5 million toward a new $40 million, 27,000-sq.-ft. (2,500-sq.-m.) business and technology center at Western Kentucky University in Bowling Green, and $1 million toward a new Lexington drug company, Intranasal Technology, founded on the innovations of two University of Kentucky professors.

Crouch: Governor Patton has endorsed our Center for Commerce, Language, and Culture as one of the best economic development strategies the state of Kentucky has. Our football team just won the [NAIA] national championship, but what nobody knows is that 35 of our football players speak fluent Japanese. The Japanese professor sits on the end of the bench, and after the game the players run over and explain to him what just happened in Japanese. So he improves their Japanese, and we hope that Toyota is going to hire them all.
      But not only will they know how to speak Japanese, they're going to understand the culture. They'll know how to eat with chopsticks, learn about things that the Gray Company was doing 15 years ago ... they were on the cutting edge a long time ago. This is a perfect example of how higher education and economic development can come together.
Site Selection: Governor Patton seems to be keenly interested in linking higher education and economic development. How is that unfolding, and what would you like to see happen to further that cause?
Wiseman: It's impossible to over-emphasize the connection between higher education and economic development. Certainly for attracting new industry, it's important when you bring a prospective business into the state and say we can help them with their training needs and so forth. But more important is the existing industry base for training and new sorts of partnerships. We offer on-site classes at our Georgetown plant through a consortium of five or six colleges. We bring them to the plant, and it's important for our people if we want to retain them. If we're not giving them that kind of opportunity, they go elsewhere. We bring University of Kentucky professors in, show them how the system works, and they go spread the gospel, which is an innovative partnership that helps existing industry.
Crouch: Another interesting challenge is that since I've been president of the college [1991], the Toyota plant here has had four different plant managers. There are 59 college presidents in the state of Kentucky, and I'm the fourth most tenured. That means 55 college presidents have come to this state in the last nine years. Howard [Gray] has been the CEO of his company a long time, but that doesn't happen anymore. This constant change of leadership in the business world is a real challenge.
Wiseman: One of the best opportunities for a tie between higher education and business is changing. It used to be that businesses looked to support higher ed, because we wanted your graduates, and we still do. But to hold on to good people, one of the key criteria is, 'Are you providing them with development opportunities?' It used to be that a paycheck; and benefits were the key, but 30-year-olds don't just want the paycheck, they want development opportunities. They want the chance to learn more about the computer; they want a sense that they're growing. That's an opportunity to build some ties between higher education and the current workforce, and we're just scraping the surface now.
Cutting Ribbons Instead of Jobs

      Despite the universal effects of last year's economic slowdown, plenty of Kentucky projects moved forward all over the state.
      Toyota and Nissan supplier New Mather Metals, based in Ohio, will build a 100,000-sq.-ft. (9,300-sq.-m.) facility in Franklin, in western Kentucky, where 94 employees will manufacture stabilizers.
      In Sebree, near Henderson, Universal Tower has expanded into a 48,750-sq.-ft. (4,500-sq.-m.) building due to growth in its cell tower and high-voltage electrical line tower manufacturing business. The growth will create around 100 new jobs.
      Over a dozen call centers have located in the state in the last five years. The most recent are two 42,500-sq.-ft. (3,950-sq.-m.) centers in Hazard and Pikeville for Sykes Enterprises, and the 105,000-sq.-ft. (9,750-sq.-m.) Cingular Wireless center in the EastPark Industrial Center in Carter County, in eastern Kentucky, which opened in August 2001 and employs close to 1,000 people.
      In the Northern Kentucky region that it has already helped to grow, industrial and commercial construction and development firm Paul Hemmer Companies is making more footprints at its 366-acre (148-ha.) Airport International Business Park. The next phase is the speculative development of a 107,100-sq.-ft. (9,950-sq.-m.) office and distribution building, expected to be complete this spring.

Site Selection: Mr. Gray, we've heard two examples of how your company has led the way, first through hooking into the Japanese business culture, then through the downtown revitalization example of your company's headquarters in Lexington. How has the fertile ground of Kentucky helped your firm in its growth in other states and countries?
Howard Gray: A lot of that goes back to people. There are good people here. I grew up in Glasgow, Kentucky, and we're working on some of those Renaissance Kentucky projects there, including the renovation of an old high school.
      We started working with the Japanese 25 to 30 years ago, and that was fertile ground at the time. We haven't discovered exactly what that means today, because it's not like it was. But with education of people, and tying in with industry, that education has to come from the leadership of these companies, not just from the universities and colleges.
Site Selection: Is smart growth going to be an issue in 2002 and beyond in Louisville and some of the other metropolitan areas in the state?
Wilhite: It's an issue, and has been for a while. We had 15 public hearings across the state over the past year. I think the only thing that keeps it from advancing at a higher level is our state's financial situation and implementing some of the ideas that came out of the Smart Growth Task Force. We found out that, like the New Economy, smart growth has many facets. Places like Louisville are already aware of the need to redevelop brownfield areas. It's one of the tools that will allow us to reuse land that is not economically productive and has the infrastructure and locations conducive to that, and keeps us from going and dealing with new ground on the edge of town.
      So last year was the opening of a discussion, and I think over time, various issue areas will come to some kind of implementation. Businesses locate in a particular spot, and it comes down to a community's assets and resources -- does that community only have the land, buildings and infrastructure, or does it have the leadership that indicates an ability to work with companies, to change with time? Because companies are making thirty-, forty-, fifty-year investments. If they're going to be here that long, they have to perceive that the community is going to be providing value for that long.
Lovely: I like to think smart growth is communities doing smart things and taking a look internally at what they're doing. To get a little controversial with you, we were delighted that the bill passed [in 2001] to allow the wet/dry votes in eight or nine Kentucky communities, because restaurant investment follows and you can have a glass of wine with dinner. We have an incredible number of dry counties. I think it's a big issue.
Wiseman: More and more, any business expansion decision you make is fraught with peril. People get up in arms because they think you're polluting the neighborhood, even if there's very low impact on the neighborhood. You put up some lights and people complain that it's light all night, or they complain that you're increasing traffic. It's a big challenge for any business.
Site Selection: Isn't there currently some resistance to the development of the Trimodal Transpark in Bowling Green?
Lovely: That's typical of what Jim is talking about. Making public policy decisions is one of the most interesting challenges out there. I think Trimodal is an exciting project. Do we know exactly what it's going to produce and its exact impact? No, but do we ever know the future? There are some legitimate concerns, like the environmental impact on Mammoth Cave right next door, so thank goodness there are naysayers, so there will be some checks and balances. That's all healthy, but you wonder sometimes with all the courts and all the possibilities people have to stop stuff, how anything gets done.
Wilhite: You talk about communities that have the foresight to make long-term investments -- that project is exactly one of those. The components of it are, in the first phase, a 250-acre expansion of industrial parks in the community and ultimately enough land to build a 7,000-ft. runway, which will allow for the replacement of a local municipal airport in the second phase. In doing that, you combine the assets of Interstate 65, a main railroad line plus air all in one location. You're talking about a community that's trying to assemble a significant number of transportation assets that should be attracting business in the long term. Consistent with smart growth, it allows them to redevelop the current airport, surrounded by residential and commercial. Certainly opposition is part of the process, but you do your due diligence about the nature of the land and what the potential impacts are, and provide as much protection as you reasonably can. But you can't let a few objectors stop everything.
Collins: It's human nature. Change is just tough, and you have to understand that leadership means taking risks and sometimes making decisions that are not real popular. Sometimes people think a leader is just someone with a title who sits at a certain desk. But leadership is not taking a poll and finding out what everybody wants and then getting in front of the crowd. You want input, you want people to keep your feet to the fire and ask the questions, so that you're constantly looking at things. But then the leaders have to go on and move ahead, because things are not going to wait for us.
      In Kentucky, especially where we're located, we have so much potential, but we can also get left behind if we're not careful. We've got to keep moving, because these other places are moving. They're not waiting for you to catch up. If we had voted in Kentucky, we would not have had Toyota. That's true of many things in Kentucky. You have to have people in positions that make decisions that move things ahead, because in the long run, you're going to be better off and your people are going to benefit from it.
Crouch: You're going to have somebody on occasion who emerges as a natural-born leader, but leadership is developed through things like the Leadership Kentucky program. My first year in Kentucky, I was lucky enough to participate in that program, which transformed me as a leader in this state.
Wilhite: More communities are creating leadership programs, and providing for the next generation's leadership. It's very disheartening to go work with a community and the leadership is just a few years away from extinction, because they have not created opportunities for new leaders. Communities that have been in Kentucky for the last 200 years or more have to at least be capable of lasting another 200 years. We can't sell the state without communities that sell themselves.
Crouch: I went to Rotary today, and I was the youngest Rotarian there by 15 years. I see that in all the civic organizations. They're aging out, because they can't get young people into leadership. All these organizations are going to have to start learning how to attract and retain people.
Wiseman: The computer has widened that generational gap. That 30-year-old has very little in common with that 60-year-old Rotarian. As we communicate with people who work for us, whole different communication strategies and tools are required. They don't want to sit and listen to a lot of stuff. They want it quick.
Site Selection: What can we tell people about Kentucky that they don't know? What's the story of Kentucky they're not hearing?
Lovely: There's a lot going on in Kentucky, I just sense it. We have an opportunity in this state, maybe created by that tobacco culture, because that tobacco plant took a lot of care and nurturing. People know this state, they know the land, they're sturdy. That's real. We're seeing people either returning to the state who left before, or coming in new, and there is that movement, and there is a high level of energy here.
Collins: The location is tremendous, the quality of life is tremendous and constantly getting better, and there's a hospitality here. We have good leadership here, and we're working diligently to improve that and to include this younger generation we've all been talking about. We're not going to be set in concrete. There's great potential here -- we just had our light under a bushel basket for too long, and now that that basket has been removed, we've proven our worth.
      While we have very passionate, loyal native Kentuckians, because we've thought globally, in the last 25 years, there have been a lot of outstanding people who have chosen to come to Kentucky and make it their home, and they have contributed a lot to our state.
Wiseman: I'd list a few assets. One is central location. For manufacturing, you cannot beat it in terms of getting parts and materials in and getting your products out. It's about the best location around. Related to location is access to excellent transportation. Toyota has its North American manufacturing headquarters in Northern Kentucky right next to the [Cincinnati/ Northern Kentucky] airport, and that's the main reason we're there. Quality -- this Georgetown plant of ours has been listed as the top automotive plant in North America in terms of quality five times, and those are Kentuckians working there, so obviously they can do good work.
      The work ethic, which comes from tobacco and coal, is outstanding no matter what the business is. And finally, I think there's a new crop of leaders at our state's institutions -- Bill Crouch here, Dr. Lee Todd at the University of Kentucky, who comes from the high-tech industry -- people like that, not just at higher education institutions, but throughout the state.
Crouch: I had dinner recently with our students with the vice chair of Johnson & Johnson Worldwide, a 1962 graduate who grew up in Covington, in Northern Kentucky. He told our students that leadership boils down to one thing: passion. When I first came to Kentucky, I went with Jim Wiseman to the Kentucky Derby. They got ready for the eighth race, and we were out on the patio, and they played "My Old Kentucky Home" and everybody had tears in their eyes. There's a passion for this state that I've never seen anywhere before, and I think that passion means we're going to make good decisions because of the great love and respect we have for this gift of Kentucky that's been given to us.
Gray: I think culture is so important. As Kentuckians, we are proud of our culture, but we are still willing to change.
Wilhite: As we change, I think there's an interesting process of Kentucky opening itself up to the world, accepting and recognizing where it is in the universe. Since Toyota and all the foreign investment has come in and spread all over Kentucky, we have more than 100 Japanese investments and over 150 European investments. They're finding places in smaller and smaller communities, so more Kentuckians are seeing how they relate to the rest of the world. The acceptance of that is really a good sign for Kentucky. This is a state that's opening itself up and taking an active part in the world economy. Site Selection


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