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A conversation with. John Hindman, Secretary, Kentucky Cabinet for Economic Development

"Support and service firms continue to grow, now nearly equaling the number of new and expanding manufacturing firms in terms of projects completed. We've seen continued growth of motor vehicle suppliers in Kentucky, plus the addition of administrative offices for automotive manufacturers and other service firms. Logistics and food processing are also experiencing strong expansion."

Aug/Sep 07
Q. What is driving this year's development news?
A.
The Cabinet's Department of Commercialization and Innovation (DCI) recently launched seven new initiatives. The companies that DCI has funded to date represent all five of the state's priority R&D focus areas: human health and development, information technology and communications, biosciences, environmental and energy technologies, and materials science and advanced manufacturing.

Q. Has any legislation passed that will encourage growth?
A.
HB 536 gave the Cabinet's Bluegrass State Skills Corporation (BSSC) an additional $8 million of training funds. Maximum grant size was increased from a flat $25,000 per company per fiscal year to a range of $50,000 to $200,000 (based on company size), and maximum grant amount for training consortia was increased from $75,000 to $200,000 per fiscal year. Allowable per-trainee costs for higher-waged jobs were also increased, and scoring criteria for determining eligibility was simplified.

The Kentucky Jobs Retention Act (KJRA) is a new incentive program also resulting from House Bill 536, which was signed into law by Governor Ernie Fletcher in March. The program is designed to encourage existing automotive manufacturers to modernize their facilities and retain existing jobs. Recently, the Kentucky Economic Development Finance Authority (KEDFA) preliminarily approved Ford Motor Company for up to $66 million over a 10-year period. KJRA incentives will help support the retention of 5,117 jobs and a payroll of direct and indirect jobs of more than $4 billion in the state.

HB 462 now allows for companies that lease facilities to participate in the KIDA and KJDA tax incentives. These companies may now be eligible for incentives of up to $20,000 per employee credited against machinery purchased in the location or expansion of their manufacturing operation.

Q. What industries show promise?
A.
Support and service firms continue to grow, now nearly equaling the number of new and expanding manufacturing firms in terms of projects completed. We've seen continued growth of motor vehicle suppliers in Kentucky, plus the addition of administrative offices for automotive manufacturers and other service firms. Logistics and food processing are also experiencing strong expansion.

Q. Are there any areas that are growing with a particular type of industry?
A.
While the location of most logistics-based industries are centering near the Louisville Airport due to the UPS hub, most projects spread out according to best match with local assets. Additionally, driven by increasing energy prices, the energy/biofuels business continues to gain momentum throughout the state.

Q. What about exports or foreign investment?
A.
The commonwealth is home to nearly 370 international companies representing 26 countries. Foreign direct investment accounts for 84,700 jobs. European countries provide 53.6 percent of the investment and 42.8 percent of the manufacturing jobs. Japanese foreign direct investment accounts for 41.7 percent of the manufacturing employment.

In the international marketplace, in 2006, Kentucky exports experienced double-digit growth - 15.7 percent - for the third consecutive year, growing by more than $2 billion to $17.23 billion. Kentucky's exports rank eighth among the 50 states on a per capita basis, and support 54,000 direct jobs in the commonwealth.

Canada is Kentucky's largest foreign export market, followed by Mexico, France, Japan, and United Kingdom. Exports include manufactured goods, agriculture and forestry, and minerals and ores. Transportation equipment, chemicals, computer and electronic products, and machinery account for 73.5 percent of Kentucky's 2006 exports.

The Kentucky Cabinet operates five international offices: Brussels, Belgium; Tokyo, Japan; Santiago, Chile; Guadalajara, Mexico; and Beijing, China.

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