Economic Impact Study

Economic-Impact-Study

Auto Industry Contributes $14 billion to Kentucky

We all know that Kentucky and the automotive industry have formed a strong partnership for decades. Now we also know just how fruitful that relationship really is.

What we now know is that the industry contributes $14.3 billion to Kentucky’s gross state product (GSP) and directly or indirectly provides employment for 136,500 Kentuckians. This and other industry facts came to light after a six-month economic impact study conducted by researchers at the University of Louisville Urban Studies Institute.

“This report underscores what many automotive manufacturers and suppliers have known for years – Kentucky is a great place to do business and a great place to call home,” Gov. Steve Beshear said. “It details the tremendous contributions our automotive industry is making, bringing billions of dollars into our economy and supporting more than 136,000 high-paying jobs.”

As Gov. Beshear notes, not only is the industry bringing an abundance of jobs to the state, but with an average salary of $58,280 for manufacturing employees, those jobs often include high wages. The success of Kentucky’s auto industry isn’t just about the big name companies either.

“Kentucky’s automotive industry is more than Ford’s assembly plants in Louisville. More than GM’s Corvette plant in Bowling Green. And more than the Toyota and Lexus operations in Georgetown,” Beshear added. “This vital industry includes regional parts suppliers, tool-and-die shops, warehouses, trucking companies and metal-stamping operations throughout the Commonwealth.”

Other noteworthy findings from the study include:

  • Roughly $1 out of every $13 in the state’s economy is tied to the automotive industry.
  • Kentucky’s automotive manufacturers and suppliers contribute $6.1 billion to payrolls annually.
  • Auto-related businesses directly employ 85,552 workers at more than 470 establishments across the state.
  • Roughly 1 out of every 18 jobs in the state is supported by the direct, indirect or induced effects of automotive-related manufacturers.
  • $1 out of every $14 in state taxes results from the automotive industry. Annually, $488 million in state income and sales taxes come from industry-supported jobs.
  • Twenty percent of the state’s exports in 2014 were tied to the auto industry at a value of $5.9 billion.
  • Over the past five years, employers in Kentucky’s auto industry have announced $5 billion in investments and created nearly 20,000 new jobs.

While the statistics reflecting the auto industry’s impact on the state have been a major talking point over the past month, the study also reveals why Kentucky has been such a great fit for the constantly expanding industry.

First and foremost, Kentucky’s location has been an influential factor, as it is the shortest average distance to assembly plants in other states in the region, which makes it a prime location for automotive companies, especially Tier 1 suppliers who serve multiple manufacturers. Logistics plays a part as well, with the state’s interstates and parkways allowing companies to stay connected, and suppliers to have easy access to manufacturers. Auto facilities have primarily been locating in counties with four-lane, high-speed roadways.

There’s plenty of value in moving a company to Kentucky as well, with low utility costs, which, on average, are among the lowest in the nation. The growing workforce is the final piece of the puzzle unveiled by U of L’s study, noting that modernized automotive manufacturers are seeking a higher-skilled labor pool. Many auto companies have located in Kentucky to take advantage of customized training for potential workers through community and technical college systems.

“Automotive manufacturers and suppliers do business in two-thirds of Kentucky’s counties, and many are expanding their operations in the Commonwealth to meet the growing global demand for cars and trucks,” said Dave Tatman, executive director of KAIA. “We are pleased to provide the first clear picture of Kentucky’s auto industry to show citizens and leaders across the state who we are, where we are and how we are making Kentucky a national leader in automotive-related manufacturing and production.”

The Kentucky Automotive Industry Association (KAIA) commissioned U of L’s study, and the results showed exactly what the organization knew before the study began: Kentucky’s auto industry is thriving.

Download the complete economic impact study here.

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