July 2, 2020

How manufacturing strength, ideal location prime Kentucky for post-pandemic growth

“Unprecedented” – the word describes both Kentucky’s economic expansion during the past decade and the ensuing pandemic that stalled those historic gains in a relative instant.

But despite the hardship pervading the state and the entire US, Kentucky’s economic advantages stand to help the Bluegrass State not merely recover, but reach new heights in the years ahead.

With robust resources in advanced manufacturing, fully formed supply chains, unsurpassed air-cargo assets, an outsized logistics and distribution industry and a key geographic advantage, the state’s assets bode well for the future.

In fact, manufacturing, service and tech industry growth has remained strong in Kentucky across the past six months. Since Gov. Andy Beshear took office in early December, the state recorded 135 proposed new-location or expansion projects across that range of industries, totaling more than $1.3 billion in planned investment. Those projects promise to create nearly 4,700 full-time jobs in the coming years, providing hope and opportunity for Kentuckians in every corner of the state.

In May and June, Kentucky saw a combined 19 expansion and new-location projects announced, totaling $406 million in planned investment and promising to create nearly 1,550 full-time jobs in the coming years. Those figures compare well to the pre-pandemic months of January and February, with $387 million in planned investment and 1,033 new jobs.

Kentucky is also prepared to leap ahead in onshoring, securing foreign direct investment (FDI) and diving into emerging industries such as AgriTech. State leaders are emphasizing development of the commonwealth’s AgriTech industry – a marriage of Kentucky’s advanced manufacturing industry and longstanding status as an agricultural powerhouse.

Kentucky’s manufacturing and logistics prowess paves the road to recovery

A nationally outsized manufacturing industry, fully formed supply chains, and a strong workforce make Kentucky a prime destination for onshoring projects. The state is one of the nation’s leading manufacturing forces, with about 4,500 facilities operating across the commonwealth. The manufacturing sector employs 13% of Kentucky’s workforce versus 8.5% nationally, according to the National Association of Manufacturers.

One recent FDI example is PRCO America Inc., a division of Puyang Refractories Group Co., one of China’s largest publicly traded refractory companies, which is establishing its first US manufacturing plant in Hickory, Ky. The facility will produce custom-sized, resin-bonded magnesia graphite refractory brick, which steel mills use to line their furnaces and transfer ladles.  The $5.5 million project is expected to create 32 state-resident, full-time jobs in West Kentucky’s Graves County and open by the end of 2020.

Like many of the 500-plus internationally owned facilities currently operating in Kentucky – the largest presence being from Japan and Germany – PRCO chose Kentucky for advantages such as ideal location and cost-effectiveness, which make Kentucky a premier business partner and illustrate its ability to support companies of any size from across the globe.

Kentucky’s location advantages also support another mainstay industry, one primed for post-pandemic growth. As online ordering and home delivery continue growing as go-to methods for consumers, opportunity abounds for Kentucky and its more than 540 logistics and distribution facilities. That industry currently employs 75,000 people in the state, and the sector will likely expand as Kentucky emphasizes logistics and data center projects by adding it to our target markets amid the e-commerce boom.

Nearly a dozen Amazon distribution facilities across Kentucky make the commonwealth rank second only to the company’s home state of Washington for number of Amazon employees. Growing reliance on overnight shipping and an increased role for the industry overall may well attract more logistics operations and help Kentucky compete for additional manufacturers looking to onshore in the pandemic’s wake.

Kentucky is also currently the nation’s No. 2 air cargo state, thanks in large part to UPS, DHL and Amazon Air shipping hubs. The state is likely to soon top that list, as Amazon’s new $1.5 billion facility at Cincinnati/Northern Kentucky International Airport gradually comes online.

Emerging AgriTech industry yields growth potential in Kentucky

Though these well-established industries are key in Kentucky’s future economic prosperity, so too are the industries of the future, such as an AgriTech industry forging ahead with a sense of global urgency.

Gov. Andy Beshear last week announced an initiative to build America’s AgriTech capital in Kentucky. Using technology in agricultural practices in ways that improve yield, efficiency and profitably, AgriTech plays to Kentucky’s strength in advanced manufacturing and its deep-rooted history as an agricultural powerhouse. The United Nations estimates the world needs to increase its food supply by 70% to feed a population that will include an additional 2.3 billion people by 2050, and tech products, services and applications developed and exported from Kentucky can contribute to solving this problem.

The building blocks are already in place, with about 70 ag-related manufacturers, service and technology providers already operating in Kentucky. Among them is Alltech, a company at the forefront of innovation as it relates to the future of the AgriTech industry. Headquartered in Nicholasville just outside of Lexington, Alltech researches and delivers products for the sustainable nutrition of plants, animals and people.

Kentucky is also slated to become home to the nation’s largest greenhouse and one of the world’s largest facilities, period. Startup AgriTech company AppHarvest is constructing a $97 million high-tech greenhouse in Morehead, Ky., expected to generate 285 full-time, Kentucky resident jobs. Produce will grow at the 2.76-million-square-foot facility year-round, and company leaders plan to ship up to 45 million pounds of tomatoes annually.

These current developments yield even more promise when considering Kentucky’s potential to develop a robust workforce pipeline to support a variety of AgriTech jobs statewide. Those efforts will be supported through Kentucky’s colleges and universities, the 16 schools across 70 campuses in the Kentucky Community & Technical College System and bespoke programs and multi-partner collaborations such as Registered Apprenticeships, the state’s Work Ready Skills Initiative and the KY Federation for Advanced Manufacturing Education (KY FAME). With last week’s announcement, Gov. Beshear also launched a new website dedicated to the emerging industry: Kentucky AgriTech.

With an emphasis on both continuing to grow its major industries and gaining a foothold in emerging ones, the Bluegrass State is poised to not only recover, but prosper in a post-pandemic world.