Download analysis of economic development problems and opportunities

LINCOLN TRAIL AREA DEVELOPMENT DISTRICT CEDS - 2007
especially in terms of relocation of new
soldiers, workers, and new
employment opportunities for the
existing labor force.
ANALYSIS OF ECONOMIC
DEVELOPMENT
PROBLEMS
AND
OPPORTUNITIES
Economic Background
The Lincoln Trail Region has followed
Kentucky’s transition from a primarily
rural agrarian economy to an industrial
based structure with heavy emphasis
on manufacturing. While
manufacturing continues to be an
important base, local economies are
progressing towards a more technical
and service based structure, as typical
of the United States as a whole.
No significant changes in overall
employment have occurred in the
region within the last year.
Employment continues to be
concentrated in the services sector
(31%), manufacturing sector (23%),
and Utilities, Trade, & Transportation
sector (18%) [see Chart 1.1].
Recent announcements by the U.S.
Military will have a significant impact in
the near future, as Ft. Knox is part of
the Base Realignment and Closure
(BRAC) plan. Adjustments at the Ft.
Knox base include the relocation of the
Army’s human resources command. It
is expected that this will significantly
impact the economy of the region,
While a highly detailed analysis of the
components of the LTADD area
economy might be too sizeable to
include here; a comprehensive
overview is pertinent and will be
discussed.
Cluster Analysis
The presence of certain geographic
and socio-graphic features has shaped
the types and numbers of industrial
sectors present in the area. This has
resulted in clusters of economic
development. An examination of
these clusters is important in
understanding the dynamics of the
local economy and in developing
initiatives to optimize the opportunities
of the region.
Obvious factors affecting the clustering
of industries in the area include the
presence of Interstate 65 (a main U.S.
north-south transportation corridor);
comparatively low energy (electricity)
costs; proximity to markets and raw
materials, lower labor costs, and
agrarian work ethic. These factors
have influenced a concentration of
certain industrial sectors in the region.
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LINCOLN TRAIL AREA DEVELOPMENT DISTRICT CEDS - 2007
Automotive
Manufacturing production operations
are abundant, with a particular
concentration of automotive related
industries. This region of the country
has become, in some respects, an
“auto alley” as automotive
manufacturing has grown away from
the Detroit area. Both U.S. and
Japanese manufacturers have located
several production facilities along the
I-65 corridor including in KY: Ford
Motor Co. truck/suv plant in Louisville,
Toyota in Georgetown, and the
Corvette Assembly Plant in Bowling
Green. As a result, many suppliers
and second and third tier automotive
companies have located in adjacent
areas including the LTADD region.
Automotive Related Industries - LTADD Region
County
Company
Employment
Grayson
Mid-Park, Inc.
Trim Masters, Inc.
Hardin
AGC Automotive Americas, Inc.
AKEBONO Brake
AKEBONO Headquarters
Altec Industries
Dana Corp.
Gates Corp.
Summit Polymers, Inc.
Larue
Konsei USA
Marion
Angell-Demmell North America
Hendrickson Truck Suspension
NSU Corp.
TG Kentucky, LLC
Toyota Boshuku Manufacturing
U.S. Chita
185
111
70
900
105
30
Nelson
Intertec Systems, LLC
Jideco of Bardstown
Johanan America
Tower Automotive
Trim Masters
225
343
60
550
390
35
498
600
1,000
60
323
1,036
181
290
25
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LINCOLN TRAIL AREA DEVELOPMENT DISTRICT CEDS - 2007
Washington
AMTEC Brake
INOAC
Toyotomi America Corp.
273
295
177
Total
7,762
Source: KY Economic Development Cabinet, Community Profiles, 2007
As noted in the table above, over
7,000 workers in the region have jobs
directly related to auto manufacturing.
This figure far surpasses any other
industry in both jobs and payroll.
Payroll figures from 2005 data in
County Business Patterns indicated
over $165,931,000 in annual payroll is
generated from automotive related
manufacturers in the LTADD region,
and total wages earned from
manufacturing far outpaces other
sectors as seen below.
Chart 1.2 Percentage of Total Wages Ea
Employment by Industry - LTADD 2
Othe
0%
Mining
0% Constructi
7%
State & Loc
Gov't
17%
Service
24%
F.I.R.E
5%
Mfg.
30%
Utilities
Trade,
&
Transp
Info
2%
Source: KY Economic Development Cabinet, 2007
and military related civilian jobs in the
area. Many employment figures
compiled by the state do not include
federal employment. In the case of Ft.
Knox, over 8,000 military and 3,500
civilian personnel work at the base.
Ft. Knox is currently home to the
United States Army Armor Center
where soldiers are trained in tanks and
other armored vehicles. The 109,000
acre military base is undergoing a
major transition associated with the
Dept. of Defense’s Base Realignment
and Closure plan (BRAC). Ft. Knox
will lose its Armored School and the
associated personnel but will gain a
human resources command and an
infantry brigade. The resulting
transition will mean a net gain of
approximately 4,500 new military and
civilian personnel by 2011. This
transition will mean soldiers and
civilian workers with different skills will
be located in the area.
Many of the new civilian occupations
are expected to be filled by persons
relocating to the area from Virginia and
Indianapolis, with a smaller portion
being supplied from the existing labor
force.
Ft. Knox BRAC Transition
Civilian Occupational Changes
Military / Government
Services
The presence of Ft. Knox means that
there is a high concentration of military
Occupational Group
Social Science
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Incoming
Outgoing
87
12
LINCOLN TRAIL AREA DEVELOPMENT DISTRICT CEDS - 2007
Human Res. Mgmt
Admin, Clrk, Office
Accting, Budgting
Math / Statistics
Education
Supply
Information Tech
Transportation
Other /Miscell.
Total
1423
494
117
24
117
23
485
5
92
70
149
27
10
228
79
13
215
165
2867
968
Source: Workforce Associates, Inc. and Thomas P.
Miller Associates, Inc., The Ft. Knox – BRAC
Process, 2007
Much of the new employment will be
concentrated in technology information
and human resource administration
and management.
Additionally, the area has seen steady
demand and supply of educators and
school system workers. The school
systems in many counties continue to
be the largest single employer in the
community. In total, over 7,400
personnel are employed by Boards of
Education in the LTADD (KY Office of
Employment & Training, Workforce Investment
Services, 2007). While this component
remains a steady part of the
employment base with solid wages
and excellent benefits and a critical
tool in increasing economic potential, it
is largely a non-revenue generating
endeavor.
Wood Products/ Cabinetry
The availability and quality of
hardwood timber in Central and
Eastern Kentucky has spurred
development of the primary and
secondary wood products industry in
the region. This region has seen
some concentration of cabinet
production and specialty wood
products. Value added products from
local natural resources can
significantly enrich the local economy.
Like many industries, however, the
wood products industry is subject to
global market pressures. In the recent
decade, Chinese and Asian producers
have driven up demand for raw
materials and increased competition of
end products. The custom built
market may be shielded from foreign
competition but may face increased
material pricing pressure. At least 15
companies employ over 1,200 persons
in this industrial segment. A listing of
the largest wood products and
cabinetry companies follows.
Wood Products / Cabinetry
Companies in LTADD
Company
Employment
Indiana Hardwoods
Baillie Lumber
Styline Industries
Mouser Custom Cabin.
Masterbuilt Cabinets
Walters Cabinets
Zak, Ltd.
American Wood Fiber
Canton Wood, LLC
KY Cooperage, Inc.
Lebanon Oak Flring.
Chris's Creations
Mike's Woodworking
Barber Cabinet
Smith Cabinet
Total
Source: KY Econ. Devel. Cabinet, 2007
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15
90
78
305
36
28
50
32
59
300
60
70
52
66
16
1257
LINCOLN TRAIL AREA DEVELOPMENT DISTRICT CEDS - 2007
Food / Beverage Production
Food and Beverage production in the
region should be mentioned because
of its unique specialization. There is a
concentration of bourbon liquor
distillation in Nelson County in the
LTADD region and in several adjacent
counties. Several large distillers have
operations here including: Barton
Brands, Heaven Hill, and Jim Beam
Brands. Bourbon production is
important to the region both for its
direct economic impact and its indirect
impact from tourism and publicity.
Major Food and Beverage
Companies in LTADD
Employees
Company
Bel/Kaukauna USA
Barton Brands, Ltd.
Heaven Hill Distilleries
Jim Beam Brands Co.
Bluegrass Dairy & Food
306
180
405
72
73
Total
1,036
This industry also benefits the area by
utilizing local agricultural products in
its processing, particularly locally
grown corn, wheat, and barley. The
area is also home to Bel/Kaukauna
USA where select cheeses are made,
including the notable Babybel brand,
using regional dairy production.
Analysis / Impact
These concentrations of industry in the
LTADD region point to a couple of
items that should be considered in
planning for future economic
development success. The
concentrations do indicate strengths in
several areas. These strengths
include the area’s proximity and
access to major markets in the East
and Midwest. Industries with intrinsic
ties to market proximity will continue to
regard the area as a potential place for
new or expanded locations.
Another item is the availability of
resources and raw materials. The
area has relatively low cost power,
water, and land. Additionally, lumber,
steel, and agricultural products are
fairly accessible within the area. A
relatively low cost, manually adept
workforce is also present. This
strength is also a point of high concern
as well. Outside influences can have
a great impact on power and labor
costs. These things are not always
within the control of the local area and
as such can be volatile. As has been
seen in many manufacturing sectors,
increasing technology has allowed
companies to follow less skilled and
lower wage labor out of the area. This
has negatively impacted the area and
will continue in several manufacturing
sectors.
Goals and objectives for economic
development should contain a focus
on those things that will enhance area
strengths, particularly those things that
can be influenced locally, and also
seek to minimize and improve area
weaknesses.
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LINCOLN TRAIL AREA DEVELOPMENT DISTRICT CEDS - 2007
Past, Present, and Future
Economic Investment Trends
As previously discussed, the region
has transitioned from a rural, agrarianbased economy to a more
industrialized economy, and is further
evolving to a more service based
economy. The area remains heavily
tied to its agricultural past. Much of
the region’s land use is still composed
of agricultural, woodland, and open
pastureland. Much less is consumed
by residential, commercial or industrial
usage.
Agriculture still plays a vital role in the
economy of the region. While the area
has mirrored the state and national
trend of labor reduction in the
agricultural sector, the dollar value of
production has remained strong. The
loss of tobacco production as an
important cash crop for smaller farms
has no doubt hurt the regional
economy. However, farmers are
seeking alternative crops and using
tobacco cropland for raising other
traditional crops and livestock. The
volatility of gasoline and energy prices
has spurred renewed interest in
alternative fuels. One such possible
resource is bio-fuels and of particular
interest for this area, ethanol
generated from corn and soybeans.
A national push to supplement
gasoline production with e-85 or
ethanol fuel has caused a rise in the
production and value of the region’s
corn and soybean crops. The
significance of ethanol production has
even resulted in a high level of interest
in investment in production facilities for
distilling and refining ethanol for fuel.
While manufacturing as a dominate
industrial sector in both employment
and revenue in the region is declining,
the area has seen the emergence of a
national trend with services as an
economic engine, at least in terms of
employment. Companies that handle,
process, and maintain information are
growing rapidly and are on the
forefront in utilizing technology and
personnel with higher levels of formal
education. At the state level, United
Parcel Service, has grown its
presence as a package handling and
logistics service with global reach. Its
primary hub is located just north of the
Lincoln Trail area in Louisville and its
effects are spilling over into the
surrounding regions, in terms of
employment, workforce training, and
suppliers.
As Ft. Knox transitions to a new
mission with human resources
command and infantry brigade
training, its demand for a serviceoriented civilian workforce will be a
challenge to the area. The area’s
workforce has traditionally been adept
at mechanical and manual skills and
has always been highly adaptive;
however, new skills and educational
tracts geared towards services and
technology will be necessary for the
local workforce. Local investments in
a more technological and marketplace
driven education system will be
required across the country, but the
Lincoln Trail region will see that need
grow exponentially.
As evidenced by the recent WIRED
grant received by the LTADD
Workforce Investment Board, the area
is keenly interested in enhancing the
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LINCOLN TRAIL AREA DEVELOPMENT DISTRICT CEDS - 2007
technological capabilities of its
workforce.
NEW INVESTMENTS
The area has seen several companies
locate new facilities and expand
existing facilities in the region within
the last year. Following is a list of new
companies and investments as
compiled by the KY Economic
Development Cabinet from 2006 and
2007 in their New and Expanding
Industry Report.
New and Expanding Firms (Manufacturing & Supportive Service) in LTADD 2006-07
County
Breckinridge
Grayson
Hardin
Larue
Marion
Nelson
Amount of
Investment
Company
Manufacturing
Campbell Machine, Inc.
Eleanor Beard Studio,
LLC
Whitworth Tool, Inc.
Inplast USA, LLC
KenCoat
Accumetrics, LLC
AGC Automotive
Americas
Bluegrass Tank &
Equipment
Fischbach USA
Gates Corp.
KY Concrete, Inc.
Mouser Custom Cabinetry
Summit Polymers, Inc.
Konsei USA, Inc.
Metaltek of KY, Inc.
Walters Cabinets, Inc.
Lebanon Machine Shop,
Inc.
Makers Mark Distillery,
Inc.
Portland Forge
TG Kentucky, LLC
Barton Brands, Ltd
Chris's Creations
FET Engineering
Heaven Hill Distilleries,
Inc.
Intertec Systems, Inc.
Jideco of Bardstown, Inc.
Johnan America, Inc.
Jim Beam Brands, Co.
ORBIS Materials
Handling
Synergy Tool & Gauge,
Job
Impact
130,000
174,000
800,000
4,700,000
2,515,000
Product
CNC mill & lathe work
50
28
10
35
1,200,000
hand stitched quilts, clothes
metal stamping / fabrication
plastic injection molding
plastic coated steel furniture
sealants, adhesives
2,745,000
1,925,000
4,299,000
900,000
600,000
705,000
4,890,000
315,000
150,000
24
25
3
2
auto glass
food grade stainless steel
tanks
plastic injection molding
motor cycle / industrial belts
ready mix concrete
custom wood cabinetry
injection molded plastics
auto parts, machinery
custom metal fabrication
wood cabinetry
100,000
2
machinery & equipment
10,875,000
6,335,000
1,500,000
200,000
200,000
120,000
4
23
200
bourbon
steel die forging
rubber & plastic auto trim
whiskey distillation
custom wood cabinetry
electroform plating
4,750,000
12,656,000
583,622
2,126,000
3,000,000
55
108
16,200,000
2,600,000
52
31
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18
27
6
1
20
distilled spirit bottling
auto instrument panels
automotive electrical controls
auto window/sunroof controls
whiskey distillation
collapsible containers
aluminum components
LINCOLN TRAIL AREA DEVELOPMENT DISTRICT CEDS - 2007
Washington
LLC
Bluegrass Dairy & Food
Springfield Products, Inc.
Toyotomi America Corp.
Nelson
Supportive Service
Akebono Corporation
Raytheon Technical
Services
U.S. Cavalry
American Greetings Corp.
LTADD
Totals
Hardin
2,780,000
4,219,000
3,261,000
8
40
24
dairy food products
automotive trim
auto aftermarket parts
2,100,000
75
headquarters
14,217,000
3,000,000
300,000
100
25
90
support service center
military apparel / distribution
greeting cards
117,170,622
1,086
Source: KY Cabinet for Economic Development, New & Expanding Industry Report, 2007
The new and expanding company list
for this year mirrors the area’s cluster
of industrial sectors. Several
automotive and food and beverage
related companies have annouced
expansions this year with over 1,000
new jobs and over $117 million in new
investment expected.
than $5 million in gross receipts. This
definition catches a majority of
companies in the region.
A few company and employment
losses have occurred as well. Over
the past year, the KY Economic
Development Cabinet listed seven
companies in the region that slowed
production or closed operations in the
area. The two largest were in
Elizabethtown as Robert Bosch Tool
and Cott Beverages announced
closings with losses of over 180 jobs.
Total job losses identified with those
listed by the E.D. Cabinet amount to
over 300.
Renewed focus on assisting and
encouraging small business
development should be a mission of
any economic development program.
The LTADD promotes small business
development directly through its EDA
funded Revolving Loan Fund. This
program assisted 3 businesses during
the past year, leveraging over
$200,000 and spurring at least 10 new
jobs for the area. The LTADD
Workforce Investment Department
also coordinated a forum where
hundreds of local contractors could
gain information about the many
contracts and projects associated with
the Ft. Knox transition and other large
projects in the state.
As is typical in any year, several other
companies throughout the region
opened and closed operations with no
significant impact to the overall
economy. The vast majority of new
growth in jobs and companies in the
region is from small businesses.
Typically a small business employs
less than 50 persons and has less
In light of today’s growing trend of
technology and service based
businesses, many of which begin as
very small companies, governments
and the private sector should reevaluate programs and tools available
to small business owners.
Empowering them with access to new
markets, capital, and new technology
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LINCOLN TRAIL AREA DEVELOPMENT DISTRICT CEDS - 2007
can make a significant difference to
their success.
Local and state economic
development professionals maintain
valuable information about available
sites and land for larger businesses
and industries. The Kentucky Cabinet
for Economic Development oversees
several state incentive programs. The
programs fall into three main
categories: direct loans, tax credits,
and infrastructure development.
Detailed information for each program
can be found at the website:
http://www.thinkkentucky.com/KYE
DC/kybizince.aspx?param=0
Assisting its local communities in
planning for and having the most
appropriate industrial infrastructure
available is an important goal of the
LTADD. The region has a variety of
industrial park facilities that can meet
nearly any industrial or commercial
endeavor. Following is a regional map
depicting local industrial parks with
available sites. Detailed information
regarding each site can be found from
website links on the map or at the KY
Economic Development Cabinet’s
website at:
http://www.thinkkentucky.com/EDIS
/Sites/siteindex.aspx
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