Even in the face of recent tariff wars, the state’s exports continued to grow, reaching more than $33 billion in goods and services shipped abroad in 2019, according to data recently released by the U.S. Census Foreign Trade Bureau and WISERTrade. That represents a 4 percent increase over 2018’s figures, despite a nationwide downturn of 1.2 percent.
The state’s ideal location, skilled workforce and business-friendly environment contribute to the Commonwealth’s reputation as an exporter of quality made goods, says Jack Mazurak, Communications Director for the Kentucky Cabinet for Economic Development.
“Manufacturing is more advanced than it has ever been and continues to embrace technology to further enable the manufacturing process. Manufacturers know what they need and we are here to help make that happen,” Mazurak said.
While Kentucky is home to several large exporters, most of the state’s exporters are small and medium-sized businesses, Mazurak noted. Manufacturing as a percentage of Kentucky’s GDP in 2018 was 18.6 percent, or $38.67 billion and much higher than 11.4 percent of the national GDP from manufacturing, he said.
The reason, he says, is that the Bluegrass State’s more than 4,500 manufacturing facilities are adept at adapting to today’s dynamic market conditions. When the coal mining industry in Eastern Kentucky began to experience a downturn, Logan Corp., maker of mining equipment, turned to the science of advanced manufacturing to begin producing high-end dump trucks in 2015.
Since then sales have grown 20 percent year over year with continued growth anticipated.
“Logan Corp. reinvented its business model when faced with a market shift, and the company’s innovation has been rewarded with solid growth and the ongoing creation of much-needed jobs for Eastern Kentuckians,” newly elected Gov. Andy Beshear said in February when the company announced a $1.2 million expansion of its Salyersville production facility, the company’s second growth spurt in the last five years.
The latest investment will expand the Salyersville facility by 13,000 square feet to accommodate the installation of a Wheelabrator—a large-scale sandblasting unit that prepares dump truck bodies for paint application. Investment in the massive sandblaster allows Logan to dramatically increase production speed by eliminating a labor-intensive, hand-sanding process.
“It is an example of advanced manufacturing at its finest,” Mazurak said. “Investment in this new, automated process allows the firm to shift employees where needed and potentially add new ones. This company understands the market and found their niche, producing super high-quality dump trucks with a high feature bed, high usability that’s easy, efficient and reduces weight while remaining strong and rigid.” And the paint job is showroom perfect, he added.
With nearly 13 percent of the workforce in manufacturing versus 8 percent nationally, the state’s manufacturers know how to build on the state’s long history of manufacturing success, Mazurak says. In the last five years, manufacturers have announced more than 1,100 facility location or expansion projects with a reported capital investment of more than $21 billion and nearly 39,000 additional jobs.
In 2019 alone, the state worked with private businesses to announce the planned creation of more than 10,700 full-time jobs as part of 234 expansion or new facility projects. So far in 2020, the state has announced 12 projects, adding 342 new jobs.
“Kentucky’s strengths in advanced manufacturing, logistics and tech innovation continue to grow jobs and attract corporate investment,” Beshear said when the 2019 numbers were released. “Our skilled workforce, high quality of life and low costs of conducting business will help us continue to create jobs in the future. I look forward to a strong focus on increasing wages for our families and focusing on our counties who are not seeing these opportunities.”
In a tight labor market, providing manufacturers with a highly skilled workforce is critical to global competitiveness, and a top priority for the newly elected governor.
“We want to ensure every Kentuckian has the opportunity to secure a good-paying job in a career with a path to advance and succeed. We will continue to seek out business relationships that provide reliable, long-term jobs for our workforce.”
With more than 260,000 Kentuckians working in a manufacturing facility now, the need is great, and growing. Several education programs are aimed squarely at supplying the technical know-how to ensure that the state’s industries continue to remain globally competitive.
The Kentucky Federation for Advanced Manufacturing Education, or KY Fame, partners with regional manufacturers and community colleges to create a pipeline of skilled workers. The apprenticeship-style work and learn program offers students on-the-job training at private-sector manufacturing companies three days a week while attending a local technical college two days a week. Now in its 12th year, the program recently added its 10th and 11th chapters.
Talent Pipeline Management – Looking beyond the automotive sector, the state’s talent pipeline management (TPM) program, implemented by the state, Kentucky Chamber Workforce Center and U.S. Chamber of Commerce, is applying supply chain management philosophy and the KY FAME model to IT, healthcare, logistics, construction and finance. In the TPM program, businesses create collaborative efforts to assess current and future workforce needs.
Registered Apprenticeship Programs – Companies also can set up an apprenticeship program registered with the state to find and attract talent. So far in 2020, more than 300 employers across the state are participating in this flexible, employer-driven approach to training and job-based learning with more than 4,100 apprentices registered as participants.
Nearly $3 million in federal funding has been designated to help establish and grow intermediaries to connect Kentuckians with employment and training through apprenticeship opportunities. Since receiving an Apprenticeship USA Expansion Grant in November 2016, 148 veterans, 116 minorities, 263 women and 971 youths aging 16-24 have earned apprenticeship certificates throughout the state.
“We have a close relationship with our manufacturing base,” Mazurak said. “They have the expertise and knowledge of their own plant floor and processes. Through these partnerships we’re creating a highly skilled workforce pipeline to meet the needs of our companies. Attracting new jobs, helping existing companies grow jobs, providing educational opportunities to improve workforce skills—that’s what moves the bar for individual families in Kentucky.”
INVESTING IN THE SHOW ME STATE
When it comes to capital investment in manufacturing, the Show Me State is putting up some impressive numbers.
“A lot of projects continue to keep hitting the highwater mark on capital investments—and it continues to go higher and higher. As equipment becomes more advanced, companies need to invest to stay competitive,” said Subash Alias, CEO of Missouri Partnership, a public-private economic development organization focused on attracting new jobs and investment to the state and promoting Missouri’s business strengths. Manufacturing contributes more than $39 billion (12 percent) toward Missouri’s gross domestic product, he said, and capital investment in the sector is reaching new levels.
“GM is making a billion dollar plus capital investment to produce its next generation mid-size pickup trucks here. In aerospace, Boeing manufactures wing and tail parts for the new 777X passenger plane at its plant in St. Louis. That project alone represented a $300 million commitment,” Subash said.
One of Missouri’s largest capex projects to date, he said, is Nucor Steel’s new $400 million steel rebar manufacturing plant in west-central Sedalia. The plant opened in late December 2019 and is expected to be fully operational by 2022.
During his state of the state address in January, Gov. Mike Parson praised businesses bringing new jobs into Missouri, including the Nucor investment and a $110 million Dollar Tree distribution center in Warrensburg that’s expected to create 375 new jobs.
The state’s robust advanced manufacturing sector is home to Boeing, Kawasaki, Honeywell, GM, Emerson, GKN Aerospace, Lear Corporation, QinetiQ North America, EaglePicher Technologies and CertainTeed, to name a few.