The Call to Regionalism

Another right thing to do is to merge. The accumulated goodwill from Citigroup related to facilities in both Northern Kentucky and Louisville is proof enough of mutual economic development benefit, and community officials are taking the hint.

Kentucky Gov. Ernie Fletcher, shown here during his 2004 budget address, tells Site Selection that tax reform and technical education are two of his keys to bringing job creators to the Commonwealth.

        Louisville and Jefferson County recently followed Lexington's example after many attempts and now has a merged government headed by former mayor Jerry Abramson, who served for 13 years beginning in 1986. Meanwhile, Lexington finally followed the economic development example set by successes in Louisville, Northern Kentucky and Bowling Green in merging its several entities into the newly named Commerce Lexington.
        In Louisville, Mayor Abramson exulted in the Citgroup announcement after a year that saw attrition at call centers operated by Sears, Bank of America, homegrown Humana and Providian Financial, the closing of a Frito-Lay plant in Shively and the departure of longtime corporate resident Brown & Williamson Tobacco. Citigroup will be helped on the project by a $20-million, 10-year incentive package approved by the Kentucky Economic Development Finance Authority. That includes reimbursement from city and state property, occupational and income tax coffers. In addition, industrial revenue bonds in the works at the city level will exempt the company from local property tax for 20 years.
        The city's talents at merging were cited as one of the main reasons for the GE Industrial Systems division's move from Plainville, Conn. – the city had already shown what it could do when GE decided a few years ago to locate its merged lighting and appliance divisions there.
        Abramson tells Site Selection the metro's business climate has come a long way.
        "For the 13 years I was mayor, we really didn't have our act together to be responsive to the needs of investment," he says of his previous terms. "We had two governments competing for locations of businesses, with different regulations in terms of construction and different permitting processes. Literally, the Mayor would say 'Locate within these 61 square miles,' and the county executive would meet them at the plane and say 'Please locate outside the 61 square miles but within the county of Jefferson.' The prospect would get back on the plane and say 'Call me when you get your act together.'"
        Now, says Abramson, a single set of regulations and incentives, plus one stop for project sign-offs, has helped tremendously in both corporate recruitment and the nurturing of smaller ventures and clusters. One that continues to bloom in the wake of the major UPS hub location several years ago is a flock of end-of-runway repair service companies, which perform work for some of the world's biggest computer manufacturers.
        "The question became – as Gateway and IBM and Dell showed up – did we have 300 to 400 people prepared?" says Abramson. "The community college and technical schools began developing six-month programs and graduates were able to go into that work force."
        Meanwhile, back at city hall, having one lead person can't be underestimated, he says.
        "I spent more time before negotiating with the county than I spent with the prospect," he laughs. "Now, there's one chief executive, and the decision is made more quickly, as well as [one leader] being held accountable. Now citizens know it's me."
        Current prospects come from the airplane manufacturing, financial systems and call center sectors. And Abramson approaches them with a long view that he thinks is finally becoming more accepted.
        "I once wrote a piece in the Washington Post after we were not successful in attracting to our community a United Airlines maintenance facility in the 1990s," he says. "What troubled me regarding the process we deal with is there are many CEOs focused on the bottom-line-dollar incentive package for the moment, and do not take into account on behalf of their shareholders the opportunity for a future that a community provides – technical school opportunities, education – to ensure there will be a work force available 10 years down the road.
        "I found it to be very shortsighted in terms of many CEOs' focus, and yet those CEOs who get it understand it's not a momentary opportunity for incentives. They look beyond it to understand the school sysem, the fabric of a community, which would reassure them and their stockholders that this is long-term and not just a quick hit."
        Among the long-term measures maintaining the city's inner density of jobs and people – while simultaneously broadening its self-image to encompass other counties and nearby Indiana communities – is an ongoing team effort among 23 counties' leaders and 27 different institutions of higher learning. There's also a pledge from the state to devote $118 million toward the $1.9-billion Ohio River Bridges Project over the next two years. That's enough to keep the $1.9-billion project on schedule for completion in 2017. But the sense of connection extends well beyond even the larger metro.
        "I drove 45 minutes to E-town [Elizabethtown] the other day and went through their industrial park," says Abramson, "and what you find is major companies feeding institutions in Louisville. UPS has a mega-distribution facility there. It's the regional economy that begins to interconnect. Campbellsville is where Amazon.com is located, and in Louisville, we have the company that makes the cardboard framing for the book package, which is then sent out UPS.
        "We got over the 'our turf, your turf' a long time ago" he says.

Stars Align in Commonwealth

If it's not Cosma, it's Infiniti. After being passed over by Bethesda, Md.-based USEC for a uranium enrichment centrifuge facility because of seismic concerns, Paducah will see some earth move after all for Torrance, Calif.-based Infiniti Media.
        The media packaging firm will invest $47 million in a 100,000-sq.-ft. (9,290-sq.-m.) plastics molding facility, expected to start up operations in late 2004. Beginning with 35 employees, the company may grow to as many as 105 people in five years. Right next door in Industrial Park West, the Coca-Cola Bottling Plant of Paducah is investing $3 million in its own facility improvements. The park recently invested approximately $2.7 million in improvements, and plans to invest more in a rail spur for the Infiniti site.
        In another region – Northern Kentucky – Toyota Motor Manufacturing North America embarked in March 2004 on its $15.6-million, 98,400-sq.-ft. (9,141-sq.-m.) headquarters expansion, which comes on the heels of the company's celebration of 15 years at its assembly operation in the Bluegrass city of Georgetown.

In February 2004, the City of Louisville acquired the former Naval Ordnance property. Part of the transfer agreement for the 142-acre (58-hectare) property, now known as Technology Park of Greater Louisville, was the pledge by longtime denizen Raytheon Systems Co. to extend its lease by 10 years. Raytheon also plans to add 130 new jobs by August 2004. Raytheon and fellow defense contractor United Defense are the largest of the park's 13 tenants, which employ some 1,200 overall. The hope is to add another 1,000 jobs to the facility through new corporate locations and expansions.

        Elsewhere in this busy region south of Cincinnati, geriatric pharmaceutical care company Omnicare has decided to more than double its headquarters space to 92,585 sq. ft. (8,601 sq. m.) in Covington. The consolidation move will bring in some 240 employees from around the country to join the operation's current payroll of 80.
        Omnicare CEO Joel Gemunder said at the March 2004 announcement that in order to efficiently support strong company growth, "we find Covington an excellent choice for the consolidation and centralization of various support functions located across the United States."
        Following the Ohio River further east finds a 204,521-sq.-ft. (19,000-sq.-m.) expansion by Mitsubishi Electric at its Maysville facility, which makes automotive ignition components. The $32-million project, expected to be complete in November 2004, will create about 60 new jobs, and is part of a companywide growth pattern that is also seeing renewed investment by the company in several facilities in Japan, Thailand and the Philippines.
        Oliver Cox, spokesman for the company's Tokyo office, tells Site Selection that Mitsubishi Electric's choice of Maysville "made the best sense from the point of view of developing productive capacity. Productivity and ease of distribution were the key factors, and likely remain as such when similar construction decisions are made in the future. At each of the four sites already in use [excepting a brand new plant in Himeji, Japan], the new facilities being constructed provide greater production capacity for goods which are already being manufactured there."