Western Kentucky is Where
It All Comes Together

How many people know that Calvert City, outside Paducah, is the home of IndustryWeek's Best Plant Award winner for 2002, the ISP Corp. specialty-chemical plant, renowned for its creative solutions to labor-management negotiations? It's just one modest accomplishment in this region where the Mississippi, Ohio and Missouri rivers converge. But its secrets to industrial success are not so well-kept anymore.
        "We're beginning to see an uptick in activity – nothing like it was prior to 9/11, but there are some hopeful signs on the horizon," says Sam Burke, director of the South Kentucky Industrial Development Authority (SKIDA) and managing director of SKIDA'S Tennessee Valley Authority parent group, which comprises eight regional organizations. SKIDA, funded by the electric power distributors in the region, fosters development in 26 Kentucky counties, and is actively marketing several parcels in the "super-site" category.
        "We have several sites upwards of 1,800 to 2,500 acres [729 to 1,012 hectares] that could potentially attract a large automotive manufacturer," says Burke. And with these sites, unlike 2002's infamous Hyundai hiccup, all arrangements have been made with former owners. "We're hoping to attract a major automotive company, but we're happy to attract all sorts of suppliers," Burke says.
        One of those potential sites is being marketed by the Purchase Area Regional Industrial Authority, based in Graves County, which has raised $3 million toward the purchase of land for an industrial mega-complex. Some of the money has come from the U.S. Dept. of Energy, and $1 million has come from the Delta Regional Authority, to begin buying some of the 2,251 acres (896 hectares) now available under three-year options. The developers are still seeking another $10 million in state and federal funds.
        The automotive theme continues even in the west, with Helsinki, Finland-based Ahlstrom Engine Filtration choosing Madisonville for a $3-million, 17,000-sq.-ft. (1,579-sq.-m.) R&D and office facility for its engine filtration business. The location is a consolidation move, says the company's vice president of manufacturing Herman Moore. But the region is more well-known for its materials and distribution prowess, boasting more than its share of aluminum industry companies, for instance.
        Texas-based SeaPac is making its first foray into Kentucky, opening a 50,000-sq.-ft. (4,645-sq.-m.) facility on 22 acres (8.9 hectares) in Eddyville, just north of recreational area Land Between the Lakes. The dry bulk processor, packager, warehouser and distributor is investing $11.2 million in the facility, and plans to add an additional 200,000 sq. ft. (18,580 sq. m.) to the purchased facility. The company already operates facilities for both paper and chemical handling and packaging in Atlanta and St. Mary's, Ga.; Mobile and Cottonton, Ala.; Bastrop, La.; and the company's hometown of Baytown, Texas.
        While it's not a manufacturing concern, Burke points to another interesting project that's helping out the area's farmer constituency. Commonwealth Agra Energy will invest $32 million in the construction of an ethanol production facility that will employ some 34 people, and perhaps more importantly, provide a market for area corn farmers. The rural site has an ample supply of both water and rail service. Burke says about $1 million for the project came from the TVA, with another $3 million coming from a special state agricultural fund made available for the project.
        The only issue that may interfere somewhat with this or any other area's rising hopes is pending legislation sponsored by Rep. Ruth Ann Palumbo that would exclude retail operations – including distribution centers – from any of the state's Enterprise Zones.
        "We're looking at Western Kentucky for a large distribution center for a large national retailer," says concerned site selection specialist Jim Renzas. He says the room for interpretation of what constitutes a retail facility is just enough room for worry. "We've seen it happen in other states," he says. "Red flags are starting to go up."
        Renzas is also concerned about a paucity of training funds in the state, but says that the state's distribution infrastructure is better positioned than ever.
        "The mantle that Memphis used to wear as distribution center of the world is moving into Western Kentucky and Louisville," he says. "Look at Western Kentucky – it's between FedEx and UPS – that says it all as far as distribution."
        J.M. Smucker, just named by Fortune among the top ten best companies to work for in the United States, found the area among the top locations to make a facility work. In Scottsville, just north of the Tennessee border, the big news is a $51-million, 150-job facility being built by the Orrville, Ohio-based food company for the manufacture of its popular "Uncrustables" line of sandwiches. The company's recent acquisition of JIF, which has its main peanut butter plant just up the highway in Lexington, played into the decision. A subsequent announcement in March will mean even further investment on the 50-acre (20.2-hectare) site, as the company looks to consolidate activity from other facilities in its portfolio. Company officials declined to be interviewed for this article.
        "We had a great experience with that," says Burke. "They kept their identity totally confidential for the longest time for any project I've ever worked with. We knew what they wanted, but they were not overly demanding. John Emory worked very closely with them on the local level. I can't imagine a smoother situation."
        In Murray, things were not so smooth following the shutdown of the Mattel Corp. toy plant in the wake of that manufacturers flight to greener NAFTA pastures. But in June 2002, in stepped Pella Corp., with an eye toward better serving its Southeastern U.S. customer base.
        "Pella searched a multi-state area, with its first criteria being the quality of life available in a community, rather than simply available buildings or building sites," says Kathy Krafka Harkema, corporate public relations specialist for the Pella, Iowa-based company. More than 50 communities in several states were considered, all within a day's drive of corporate headquarters, and Murray won the day.
        Since September 2002, the company has been remodeling the 733,000-sq.-ft. (68,096-sq.-m.) facility and hiring people. The current payroll is 120, with plans to employ as many as 500 within two years. The company employs some 6,900 throughout its system, with six plants in Iowa and others in Portland, Ore., Fairfield, Ohio, and Gettysburg, Pa.
        The facility is gaining a high profile because of its manufacture of the company's new line of Pella Impervia windows and doors, made from a new material the company has developed called Duracast(tm). Accordingly, the company's Advanced Materials Division corporate headquarters is located in Murray as well.
        Perhaps most importantly for both the company and the Commonwealth, Pella, like fellow Western Kentucky newcomer J.M. Smucker, was recently ranked near the top of that Fortune "100 Best Companies to Work For" list, coming in at No. 12 in 2003. Kentucky officials, looking to attract people as strongly as corporations, will surely seek to keep that streak alive.