“We are very thankful for the support we have received from Kentucky”, said Larry Schwartz, president of Diageo North America, when the company broke ground in 2014 on a full-scale bourbon facility in Kentucky called the Bulleit Distilling Company. “We look forward to a long and fruitful working relationship”.
This is the kind of reaction Kentucky hears when working with international companies.
Kentucky has long been a leading US state for international investment. Today, nearly 450 international facilities from 32 nations call Kentucky home. Those companies, including 27 United Kingdom-owned, employ more than 87,000 people across the state. In fact, nearly a quarter of new jobs and almost a third of new investment announced in the state last year came from internationally-owned companies. In the past five years, international projects have resulted in an investment of more than $5 billion in Kentucky and nearly 17,000 jobs.
Kentucky is experiencing its most successful time ever. In 2014 the state recorded the most business investment since records began – more than $3.7 billion – and more than 350 new location and expansion projects, scheduled to create nearly 15,000 new jobs. In this time-frame, this is the highest number of new facilities per capita of any state in the United States.
KENTUCKY AND UK CONNECTION
The bond between Kentucky and the UK is strong and continues to grow. Britain is one of Kentucky’s main business partners as Kentucky’s exports to the United Kingdom increased by 24% last year to a record $2.3 billion. The products being shared include aerospace parts, chemicals, pharmaceuticals and medicines, beverages, motor vehicle parts and plastics. And in 2015, exports through to August were more than 30% above the same period in 2014.
UK-owned companies also continue to make significant investments in the Commonwealth. In the past two years, 10 British companies have invested nearly $170 million in Kentucky. Diageo’s 1.8 million-gallon distillery – which will open in 2016 – will produce Bulleit Bourbon, as well as a number of other current and future Diageo bourbon and whisky brands. Other companies to announce recent investments include Zotefoams, Intelligrated Inc., Meggitt Aircraft Braking Systems, Aventics, Speyside Cooperage and Intertek Testing Services.
KENTUCKY: A CENTRE FOR ADVANCED MANUFACTURING
Kentucky is widely known for its great bourbon and award-winning horses, but the Bluegrass State also is at the heart of some of the world’s most prominent advanced manufacturing industries.
Many are surprised to learn Kentucky’s largest export industry is, in fact, aerospace. Last year, the Commonwealth exported more than $7.7 billion in aerospace products and parts – more than 25% of the state’s total exports. Pumping billions of dollars into Kentucky’s economy and providing thousands of jobs, the aerospace/aviation footprint is expanding in almost every sector, from parts manufacturing to supply, from air freight service to education and workforce development.
Some of the most cutting-edge aerospace technology is being developed in the Commonwealth. Morehead State University, for example, specialises in designing and building micro- and nano-satellites, extremely small satellites ranging in size from toasters to dishwashers that orbit Earth in formations. These satellites perform intricate tasks such as scanning warehouse inventory from outer space and surveying natural disasters in real time. Developers even have plans to send a satellite to the moon to search for water.
Kentucky is also one of the nation’s leaders in automotive manufacturing. The Commonwealth is the third-largest US producer of light cars and trucks and number one on a per capita basis. Kentucky’s nearly 475 motor vehicle-related establishments, which include four major auto assembly plants, employ more than 88,000 people.
Like aerospace, there is no shortage of success stories resonating from Kentucky’s automotive industry. Toyota has just produced its fi rst Kentucky-made Lexus ES 350 model, the top-selling Lexus saloon in the world. Toyota is expected to produce 50,000 each year in Kentucky. Two other major vehicle manufacturers, Ford and General Motors, also recently expanded their plants. Ford produces many different car and truck models in Kentucky, and General Motors manufactures the Chevrolet Corvette.
The rise in auto production is attracting more suppliers to the state and causing others to expand. BILSTEIN, a German company, broke ground in late October 2015 for a new $130 million manufacturing plant in Bowling Green that will employ 110 people. Kobe Aluminum, a Japanese company, is expanding its Kentucky operation, investing $57 million and adding 112 new jobs. Logan Aluminum, which already had an aluminium facility in Kentucky, is investing $50 million and adding 190 new positions to produce aluminium for the automotive industry.
Kentucky-made vehicles are found on streets around the world. In 2014, the state’s motor vehicle exports exceeded $5.9 billion and were shipped to more than 100 countries, making it Kentucky’s second-largest export category. Cars and trucks are being shipped throughout Europe, Asia and the Middle East. Kobe Aluminum and Logan Aluminum’s expansions are proof of Kentucky’s growth in an industry vital to the automotive industry – aluminium. Tighter fuel efficiency requirements are causing vehicle manufacturers to expand their use of lightweight aluminium to include hoods, door panels and boots. In fact, experts say the use of aluminium sheet for vehicle bodies is projected to increase to 1.8 million tons in 2025, from 90,000 tons in 2012.
The Commonwealth is reaping the benefits of aluminium’s growing popularity. According to the U.S. Geological Survey, Kentucky has the greatest capacity of any state to produce aluminium. In the past year, six companies have announced aluminium-related projects in the state, resulting in more than a half-billion dollars in new investment. The aluminium industry accounted for $2 billion in Kentucky gross domestic product and employed more than 20,000 people in 2014.
LOOKING TOWARD THE FUTURE
Not only does Kentucky manufacture motor vehicles and parts, it also conducts advanced research on next generation technology. Those highlights include the following:
National Network for Manufacturing Innovation
The National Network for Manufacturing Innovation (NNMI) is a partnership between industry, education and government to nurture manufacturing innovation and accelerate commercialisation by maximising existing resources. Through NNMI, Kentucky is actively participating in three projects of national significance.
- Institute for Advanced Composite Manufacturing Innovation (IACMI) – With the need for vehicles to be lighter to meet new and rising Corporate Average Fuel Economy (CAFE) standards, IACMI is working to make carbon fibre the next big thing in the auto industry. The Carbon Materials Group at the University of Kentucky Center for Applied Energy Research (UK CAER) is the group’s primary research lab in Kentucky
- Lightweight Innovations For Tomorrow (LIFT) – The focus of LIFT is to improve lightweight manufacturing technology, as well as prepare a workforce pipeline for the metals industry. The Commonwealth of Kentucky and UK are founding members of the group and assist in creating R&D and workforce opportunities
- Digital Manufacturing and Design Innovation Institute (DMDII) – This federally funded R&D organisation encourages factories to deploy digital manufacturing and design technologies and develop prototypes to become more efficient and cost-competitive. The Commonwealth of Kentucky and University of Louisville (U of L) are founding members of DMDII
Efficient Vehicles and Sustainable Transportation Systems (EV-STS)
U of L is one of six universities involved in the planning effort to establish EV-STS, an effort to develop, advance and apply technologies to dramatically improve the energy efficiency and environmental sustainability of vehicles. The research of EV-STS will focus on five general areas of the auto industry: electrified vehicle powertrains, advanced conventional powertrains, non-powertrain vehicle systems, transportation systems and infrastructure and efficient/sustainable vehicle design and analysis tools.
Kentucky-Argonne Battery Manufacturing Research and Development Center
Since 2009, the Kentucky-Argonne Battery Manufacturing Research and Development Center has been working to develop new battery technologies for plug-in and hybrid vehicles. The centre conducts cutting-edge research and offers access to Argonne’s Chicago research and development facilities. Research has now expanded to cover the development of additive manufacturing with a variety of automotive materials and components. The centre’s partners include Argonne National Laboratories, University of Kentucky, University of Louisville, Kentucky Cabinet for Economic Development, Energy and Environment Cabinet and the private sector.
KENTUCKY PROVIDES EASY SHIPPING
Many factors draw businesses to Kentucky. At the centre of a 34-state area in the eastern US, Kentucky facilitates the distribution of goods and materials to a massive industrial and consumer market. The state’s borders are within a day’s drive of more than 65% of the nation’s population, personal income and manufacturing establishments.
Two global air cargo hubs (UPS and DHL), located at Kentucky’s two international airports, also give Kentucky a logistics boost, and are a main reason why the state ranks among the top places worldwide in total air cargo shipments. Both UPS and DHL have recently announced major expansions to increase capacity.
DHL ships to more than 60 countries and works with more companies than any other logistics specialist. UPS delivered more than 4.3 billion packages last year and ships worldwide, including to every address in Europe and North America.
Add that to Kentucky’s extensive highway, air, rail and waterway transportation systems, and it is easy to see how Kentucky businesses can successfully compete in the global marketplace.
Kentucky is also home to an impressive variety of corporate headquarters, including such internationally known names as YUM! Brands (KFC and Pizza Hut), Papa John’s, Lexmark, Alltech, Humana, Tempur-Pedic and Brown-Forman. While some of these companies have grown up in Kentucky, others have been lured to the state by its favourable business climate, low energy costs, progressive incentive programmes, significant logistical and geographic advantages, superior quality of life and an exceptional labour climate.
GREAT INCENTIVE TO DO BUSINESS
Many of Kentucky’s most recent economic development successes have been made possible by the state’s Incentives for a New Kentucky (INK) programme, which offers several innovative tax incentives to businesses locating, expanding or reinvesting in the state.
It also does not hurt that Kentucky’s cost of living was named the lowest in the country by CNBC, and the state’s utility costs are the lowest in the eastern half of the US. Additionally, a top business publication ranked Kentucky in the top 10 for lowest cost of labour.
The bottom line is – Kentucky is a great place for international companies to grow their businesses. Whether a company is looking for a competitive tax climate, skilled workforce and training programmes, an ideal location or an unsurpassed quality of life, Kentucky offers the “can-do” business climate to help companies of all shapes and sizes succeed in the global market.