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.

The Road to the Future of Auto Starts Here

Self-driving cars. Lighter-weight vehicles. Long-lasting electric batteries. These products are being made a reality by the world’s greatest automotive minds. Many of those innovative thinkers will come together to share what’s next for the auto industry at the inaugural AutoVision Conference. The event will celebrate how far the automotive industry has come, and, more importantly, envision where it goes from here.

The two-day conference will be held at the Louisville Marriott Downtown on Sept. 14-15, and will feature more than 20 experts and industry leaders providing insight into how the auto industry can continue to grow while adjusting to an evolving marketplace.

Special guests will include Sheryl Connelly, manager of global consumer trends and futuring with Ford Motor Company, Mustafa Mohatarem, chief economist for General Motors, Doug Cain, CEO of Mubea North America, Pierre Abboud, president and CEO of Bosch, Kristin Dziczek, director of the industry and labor group with the Center for Automotive Research and many others.

Along with the diverse group of experts who will be in attendance to share insight into the future, guests will also have the option of getting an up-close look at the industry. Tours of Ford’s Louisville Assembly Plant will be offered, putting some of the changing technology on display.

“Over the last year, KAIA has taken great strides toward becoming an influential part of the future of business in the Commonwealth,” said Dave Tatman, executive director of KAIA. “With this inaugural AutoVision Conference, we want to emphasize that it is our goal to ensure that Kentucky and the auto industry continue to be closely intertwined for the foreseeable future.”

“Kentucky and the automotive industry have had a thriving partnership for decades, and the chance to host an event like AutoVision 2015 is an incredible opportunity for both the state and the industry,” said Larry Hayes, secretary of the Kentucky Cabinet for Economic Development. “The Cabinet is proud to have the opportunity to sponsor this event, which will bring together some of the best minds in the industry to discuss the future of auto manufacturing in the state. This conference will also be a great way for the Cabinet and industry leaders to network and build connections to ensure Kentucky’s automotive industry has even greater success in the future.”

With the industry enjoying great success in the current market, it’s easy to see why there is so much optimism for the future. AutoVision 2015 will begin the discussion of how to build upon that success, and how we can ensure the continued growth of the automotive industry together.

To register or to find out more about AutoVision 2015, visit www.AutoVisionConference.com.

Regional forums a success
More than 130 members and non-members attended six regional forums last month to learn more about the automotive industry’s economic impact on Kentucky. Attendees engaged in good discussion on topics including:

• Workforce development: Finding workers with the right skill sets is an ongoing challenge, and the current skilled workforce is retiring. Fittingly, the forums were held on campuses of the Kentucky Community and Technical College System – and many KCTCS staff attended.
• Image and perception: Manufacturing is not the dark and dirty work it might have been decades ago. Industry leaders, with the assistance of KAIA, need to educate tomorrow’s workforce about the plants of today.
• Operational challenges: Concerns were expressed regarding wage pressure and the cost of workers’ compensation premiums. Technology has quickened the pace of engineering changes, putting pressure on supply logistics.
• Opportunities: Small businesses enjoy the connections that KAIA affords them. Kentucky’s community banks, low utility costs and economic development entities give the Commonwealth an edge.

Part of KAIA’s mission is to provide a unified voice to advocate for the Commonwealth’s auto industry, and the forums provided plenty of feedback as we shape our platform and message going forward. We ask that our current members help us reach out to others who would benefit. We are stronger working together than separately.

Download the KAIA Forums PowerPoint

Economic Impact of the
Automotive Industry in Kentucky

Momentum continues to build for your Kentucky Automotive Industry Association! First and foremost, I want you to be aware of a major event coming up, and it’s one you absolutely will not want to miss. AutoVision 2015 will be our very first KAIA annual automotive summit. The event will be an exciting showcase focusing on the bright future of the auto industry in Kentucky and beyond. You can find additional details about the event in this newsletter. We are working very hard to ensure that our first conference has a global feel to it, with a large number of internationally known guests to address the audience. Make your plans now!

As you are no doubt aware, we recently released the results of our Automotive Economic Impact Study. The results of the study will assist KAIA and our industry members in educating the public about the importance of the industry and to develop strategies to further expand automotive-related manufacturing in the state. KAIA and industry leaders throughout the Commonwealth are looking to change the way Kentuckians view manufacturing, and the amazing results reflected in the economic impact study are the perfect place to start. Highlighted in this newsletter is commentary from Gov. Beshear and others who have had the opportunity to review the key points of the study and talk about the importance of our industry to the Commonwealth.

Following the release of the study, we proceeded into a round of regional forums throughout the state to roll out the specific details of the study to interested parties. These forums allowed KAIA to share information about business opportunities and to address any concerns industry leaders have about the rapidly changing auto industry. Thank you to the many members who were able to come out and join us. Many industry stakeholders who were not previously familiar with KAIA attended the sessions as well, and several have now joined our organization. The conversations and dialogue that took place at these forums will be invaluable as we move forward with our strategic planning for the future.

In closing, thanks again for your membership and your support of KAIA. We are very proud of the impact our industry has on the economy of Kentucky, and each and every one of you are playing a role in that. Encourage your circle of colleagues in other automotive companies to consider joining us today. And, as always, don’t hesitate to call me if you have any questions or comments.

See you in Louisville!

Dave

MURRAY Ky. (March 6, 2015) – Governor Steve Beshear today joined company and local officials to celebrate the opening of German automotive supplier iwis in Murray.

iwis (pronounced ee-vis and written in lowercase) will create 75 new, full-time jobs and invest more than $12.5 million in the Commonwealth.

“We are very excited to celebrate iwis and the opening of its first U.S. facility,” said Gov. Beshear. “The fact that world-class companies continue to choose Kentucky as the destination for their global operations speaks volumes for the pro-business climate and workforce quality we have to offer. There’s no doubt that iwis will do big things in Kentucky for years to come.”

The 119,000-square-foot facility, located off U.S. Highway 641 North in Murray, will manufacture timing drive systems for engines. iwis is currently working on projects with several motor vehicle manufacturers, and the start of production is planned for this summer.

The company first announced its move to Kentucky in 2012, several months after Gov. Beshear met with iwis officials in Germany. iwis began hiring employees earlier this year and will continue to do so through 2016.

“Murray was chosen as the new iwis location in the U.S. because we found there some very interesting and good advantages,” said Johannes Winklhofer, iwis managing partner. “Kentucky has a very professional infrastructure, qualified people for a high-tech production company and highly motivated local authorities. Gov. Beshear visiting iwis in Germany also played a big role in our decision.”

Formed in Germany in 1916, iwis, a family-owned company, first began with success in the production of bicycle chains. It eventually became the iwis Group, a global technology leader in high-quality automotive and industrial chains. The company now has more than 1,000 employees at 22 facilities worldwide.

The company is Kentucky’s most recent addition to an already dynamic and vibrant automotive industry, comprised of more than 460 motor-vehicle related establishments. Those facilities, which include four major auto assembly plants, employ 85,000 people across the state.

The location of iwis also adds to Kentucky’s success in attracting foreign direct investment. Kentucky is home to more than 430 internationally based companies, including 175 from Europe. Last year, nearly a third of all new investment and 20 percent of jobs announced in the state was a result of foreign direct investment.

“Our state has become a leader in automotive supplies manufacturing,” said Sen. Stan Humphries, of Cadiz. “To see yet another international company open a manufacturing center and create opportunities for skilled workers – this time in Murray – is great news. I welcome iwis to Kentucky and look forward to working with them as they get established here.”

“iwis has already become an important part of our community,” said Murray Mayor Jack Rose. “In addition to creating good employment opportunities, the company has taken steps to buy as many local goods and services as possible. We look forward to a long and productive partnership between iwis and the community. We are proud to have them here.”

“iwis has worked closely with our economic development corporation to ensure that its startup is a success,” said Calloway County Judge-Executive Larry Elkins. “As the company obtains contracts and grows, I feel certain that it will be a great employer in the community, and the community will help iwis be strong and profitable.”

To encourage the investment and job creation in Murray, the Kentucky Economic Development Finance Authority preliminarily approved the company for tax incentives up to $2.5 million through the Kentucky Business Investment program. The performance-based incentive allows a company to keep a portion of its investment over the term of the agreement through corporate income tax credits and wage assessments by meeting job and investment targets.

For more information on iwis, visit www.iwis.com.

A detailed community profile for Murray (Calloway County) can be viewed here.

Kentucky’s thriving automotive industry enjoyed a banner year in 2014. The Commonwealth produced nearly 1.3 million vehicles and continued to have the highest motor vehicle output per capita in the United States and third in overall production.

Both OEMs and suppliers made significant investments in their Kentucky operations last year. In total, 71 automotive-related companies announced projects, which are expected create nearly 3,400 jobs and result in more than $750 million in new investment. More than a fifth of Kentucky’s new investment and nearly 20 percent of new jobs announced in 2014 came from motor vehicle-related projects.

More Kentucky-made cars and trucks are being enjoyed around the world. Last year, the state exported a record of nearly $6 billion in vehicles, parts, bodies and trailers, making automotive Kentucky’s second-largest export. These products were shipped to more than 100 countries.

Greetings from our KAIA Board of Directors and myself! I trust that this note finds you looking ahead to a great spring. 2015 has gotten off to a terrific start for many in Kentucky’s automotive industry, and we have some exciting opportunities in the months ahead.

KAIA continues to gain positive attention across the Commonwealth and around the world. During the recent session of the Kentucky General Assembly, we had the chance to review our organization’s mission and objectives before the state legislature. We followed those presentations with a legislative reception in Frankfort.

As I mentioned in our previous newsletter, we have engaged the Urban Studies Institute at the University of Louisville to conduct an economic impact study of the Kentucky automotive industry. We expect that study to be completed in April.

We want to share the results of this study with you firsthand. Our team will host a series of regional workshops across the state this summer. The study’s authors will present their findings, answer questions and discuss the industry’s future.

We’re also excited to announce our first-annual Kentucky Automotive Summit in September 14-15. We expect a large turnout of interested participants, and several high-profile, national speakers have already expressed interest in presenting to the group. More information will be coming soon.

Although our organization is only a few months old, KAIA is already making an impact on Kentucky’s automotive industry. Please continue to encourage your automotive colleagues from other organizations to consider joining us for the cause.

All the best,

Dave