Ask anyone to name Kentucky’s top performing business sectors, and you’ll hear about coal, tobacco, bourbon and horses. The automotive industry, however, eclipses them all.
Last month the Kentucky Automotive Industry Association
(KAIA) released results of the first in-depth study of the automotive industry’s economic impact, revealing that automotive companies collectively contribute $14.3 billion to Kentucky’s annual gross state product — roughly 8 percent of the state’s total economy.
The economic impact is highlighted by the state’s three assembly plants — Ford in Louisville, GM/Corvette in Bowling Green and Toyota/Lexus in Georgetown — but also includes hundreds of automotive parts manufacturers and supply businesses, many of them in Northern Kentucky. All told, the automotive sector supports 136,500 jobs statewide and pays $6.1 billion in payroll wages each year.
The numbers and context are helpful to Northern Kentucky leaders who recruit new businesses to the region and help existing businesses grow, says Wade Williams, Vice President of Business Retention & Expansion/Manufacturing Projects at Northern Kentucky Tri-ED
“We’ve never had direct numbers about the automotive industry here, although we always knew those businesses had a significant impact,” Williams says. “The more data and intelligence we can present when hosting companies looking to relocate here, the better it is. We’ll use this information in every presentation going forward.”
Tri-ED parsed the KAIA study further to see how the automotive industry is performing in Boone, Campbell and Kenton counties, finding that the industry supports 8,147 jobs in the three-county region. The counties represent 13 percent of state jobs supported by the auto industry.
Prominent manufacturers and suppliers in the region include Balluff, Bosch, Eagle, Meritor, Mubea and Toyota. Williams says that Northern Kentucky’s central location is a prime reason they’re thriving here.
“The number one factor for most if not all of them is that we’re within a day’s drive of 60 percent of the U.S. population in Northern Kentucky,” he says. “These manufacturers ship parts to car assembly plants from Michigan down to Alabama and Mexico, and logistics and transportation are tremendously important to them.”
Williams cites other positive factors for why Northern Kentucky has attracted so many automotive businesses:
• Utility costs in Kentucky are lower than many states, thanks to energy supplied by local coal;
• Land costs are less expensive in Northern Kentucky than many areas;
• Kentucky doesn’t tax manufacturing equipment;
• State and local governments are motivated to provide financial incentives to attract and retain manufacturing businesses;
• And the cost of living for employees is relatively low.
Robert Bosch Automotive Steering
manufactures steering columns in three plants in Florence. They are the German company’s only U.S. facilities.
“Back in the 1970s, ’80s and ’90s Michigan and northern Ohio were ground zero for automotive manufacturing in this country,” says Mike Hirsch, General Manager of Robert Bosch Automotive Steering. “But now that car assembly is occurring from Canada to Mexico, we find this location to be ideal. Logistics and shipping play a larger and larger role in our cost structure, and we look for every cost advantage we can find.”
The KAIA study said that existing and new employers in Kentucky’s automotive industry have announced $5 billion in investments over the last five years, along with nearly 20,000 new jobs. The average annual wage of a manufacturing employee in the automotive sector is $58,280.
Attracting, training and keeping the workforce talent needed to fuel that industry expansion is topmost in everyone’s minds, Williams says. Tri-ED partnered with local companies to create the Advanced Manufacturing Workforce Development Coalition
to address the need for skilled workers in advanced manufacturing by improving the talent pipeline in Northern Kentucky.
As the automotive industry continues to evolve, manufacturers must help develop the next generation of talent to run it, says Doug Cain, CEO of Mubea North America
. The German company manufactures stabilizer bars, springs, door frames and other components in plants in Elsmere, Florence and other Boone County locations.
“The unemployment rate for people in these kinds of jobs is 0 percent,” Cain says. “They are in high demand. We have our own apprenticeship program, with 45 people in the current class, but some day they might be hired away by other companies. We need to band together to increase the total talent pool so that we all benefit, not just move employees from one company to the next. Mubea doesn’t operate in a vacuum. None of us do, and we all recognize this reality.”
Hirsch says he’s encouraged by the support shown by Gov. Steve Beshear, state officials and Tri-ED. Recruiting talented students into the manufacturing sector is a long-term project with a number of strategies and a host of challenges.
“The challenge is to explain to students and their parents — especially their parents — why manufacturing is a good career,” Hirsch says. “This isn’t dirty work in a dingy, smelly plant like the old days.”
Cain agrees, saying Mubea is joining Bosch and other local companies in presenting the manufacturing career story at colleges, high schools and even grade schools.
“This is a high-tech industry now with an entirely different approach,” Cain says. “Many companies, like Mubea, are foreign-owned, so often there is travel involved. We need to do a better job explaining ourselves to the community, and we intend to host more community events and open houses to be more transparent and welcoming.”
KAIA will further discuss the study results at its first statewide automotive industry conference, AutoVision 2015
, Sept. 14-15 in Lousiville. Industry leaders will focus on the future of manufacturing and technology breakthroughs such as self-driving cars, light-weight vehicles and electric power.
“Kentucky is recognized around the world as a hot spot for automotive manufacturing,” Beshear said when the KAIA study was released. “This international conference will allow Kentucky to bring together industry leaders from across our state and around the world to see what’s creating a spark for growth in the Commonwealth.”