Led by their new mayors, Louisville and Lexington have launched an effort to knit themselves into an advanced-manufacturing “super region” that the world will come to know for skilled labor and high-quality production. The innovative partnership effort launched publicly in August, with backing by the highly regarded Brookings Institution in Washington, D.C.
This Bluegrass Economic Advancement Movement (BEAM), an open-ended years-long undertaking, will aim to develop a global economic reputation for the region – creating strategies that lead to a branding for superior workmanship and productivity, for a work ethic that includes lifelong learning and as an area companies with top quality products will seek to locate their manufacturing facilities.
Leaders in the 27-county Greater Louisville-to-Lexington Bluegrass region mention Germany as a model and expect to adopt some of its methods for competing successfully against low-cost countries.
The result, if BEAM succeeds, will be more jobs with better pay, a resurgent middle class and a solid, growing tax base that helps support the entire state.
The project is a team effort between the administrations of Mayor Greg Fischer of Louisville and Mayor Jim Gray of Lexington, both successful businessmen newly elected last November to lead the state’s two largest cities. Already, the mayors convinced Brookings Institution to provide the initial expert guidance via the Brookings Metropolitan Planning Project. The noted think tank is committing $750,000 toward the BEAM effort through the Brookings Rockefeller Project on State and Metro Innovation program, which the Rockefeller Foundation backs.
“The alignment is very propitious,” said Amy Liu, senior fellow and co-director of the Metropolitan Policy Program at Brookings. Both mayors are seasoned, successful business executives with an informed economic perspective that includes repeated travel outside the United States, Liu said.
“They are people who understand how to get things done,” she said.
In addition to Brookings’ talent, Fischer and Gray also convinced Kentucky’s own project super manager Jim Host to lead team BEAM.
The first step is an inventory of regional commercial and cultural assets, an assessment of how they can be used as foundations for further growth and formulation of a focused, feasible economic development plan with benchmarks for reaching goals. By next October, Liu said, the BEAM project will produce an individualized development plan that plays to the region’s strengths.
“This is about making sure this is not just a plan on a shelf but an actual economic initiative,” she said. Key will be defining a clear central goal that the region can unite around rather than a laundry list of undertakings that divide and dissipate energy and resources. BEAM’s plan will be derived in part from studying data on what is happening economically in the region to determine what is needed to stimulate the specific type of growth desired.
“The goal is to deliver job growth in the short term, and to position Louisville and Lexington for job growth in the future,” Liu said.
Fischer said he expects the BEAM plan to include benchmarking likely derived from metrics Germany used to achieve world-class productivity and quality standards.
Germany competes successfully against the low-cost countries, Fischer said, and he believes Kentucky can, too. The German approach includes “a more intentional partnership between business and education,” he said. Its industrial policy provides for industry, government and education working together directly with defined roles toward a specific outcome rather than separately toward independent goals.
Before his election, Fischer attended a Clinton Global Initiative event that focused on U.S. job creation and economic growth. He learned about the Brookings Metropolitan program there.
Post election, shortly after each had taken office, Fischer invited Gray to the Dec. 31 University of Kentucky-University of Louisville basketball game. As the intense interstate rivalry played out on the court, he made a pitch to the Lexington mayor about teaming up.
Such a union is something that long has occupied the mind of Host, the man who played a key role not only in getting the new $238 million KFC Yum! Center built on Louisville’s riverfront but also downtown Lexington’s Rupp Arena 35 years earlier.
Host, a UK alum, told The Lane Report last year he received many questions “from my Big Blue brethren” about why he was building an arena for UofL. His answer was that he was doing it not for UofL but for the commonwealth.
“Louisville is a great city,” Host said as the arena project was wrapping up in fall 2010. “I learned that as Louisville goes, so goes Kentucky. I learned that the people of Kentucky don’t have a clue about what Louisville means to Kentucky.”
It’s true, too, of Lexington. Both cities provide jobs employing many thousands who drive from outlying counties to earn paychecks. And together they generate half of Kentucky’s GDP and a majority of the state government tax dollars that fund programs across the commonwealth.
“We’ve got to do a better job of understanding that the strong of this state, the Louisvilles and Lexingtons, have got to be continually developed and pushed because it helps the rest of the state,” Host said.
Fischer explained that Louisville and Lexington together are a substantial market of more than 2 million people, making the combined Bluegrass much more economically significant than either metropolitan area alone. Together they can brag of being home to Toyota’s largest North American auto manufacturing facility and two major Ford operations, including the Louisville Assembly Plant, which will be one of the most advanced production sites in the world when it reopens later this year after a $600 million renovation.
With several hundred supporting supply operations, the region already has a base of 100,000 jobs involved in vehicle manufacturing. Crucially, that also means important skill sets.
“When you think about advanced manufacturing today,” Gray said, “that’s all about the processes, the systems, the quality systems, the technologies that are created. It’s more than robotics and engineering. It’s management systems. It’s creating a culture.”
When connected by infrastructure, a region’s businesses, suppliers, workers and consumers can create a “spatial efficiency” that benefits all, according to Brookings. Concentrated activity in regional industry clusters creates knowledge spillovers and exchange, enhancing innovation, enabling shared labor, and reducing transportation costs.
The politicians and planners alike agree that the most important element is human capital – Kentuckians themselves.
UK economics professor Ken Troske said the BEAM project has strong potential, but he has concerns about the education piece in the plan. When he conducted a study a few years ago for the Kentucky Chamber of Commerce on why the commonwealth has underperformed against neighbor states, lack of academic achievement in the general population surfaced as a factor.
Advanced manufacturing requires an educate workforce, Troske said. Fayette County has one of the highest rates of college-educated adults in the nation, but Kentucky as a whole is below average.
Three U.S. regions constitute the first class of participants in the Metropolitan Business Plan Program. Northeastern Ohio, Minneapolis-St. Paul and the Puget Sound region of Washington State launched their efforts in early 2010 and last April their study and planning products were presented.
Minneapolis-St. Paul, an area noted for being home to major Fortune 500 members such as 3M, General Mills and Target, knew that job creation and productivity was slipping, Liu said. It was surprised to learn, as a result of its assessment, that it had created not one net new business in the past decade.
The big-company town had become too complacent, Liu said. Its plan strategies are to create an entrepreneur ecosystem with near-term goals supporting incubation and acceleration of start-up businesses directed to the new economy.
“In the aftermath of the Great Recession, America needs to move toward a more productive next economy that will be increasingly export-oriented, lower-carbon and innovation-driven – as well as opportunity rich,” Brookings explains on its website. “At the same time, leading U.S. metropolitan areas – which drive the national economy – are mounting increasingly strategic, locally developed and sophisticated initiatives to move in that direction themselves.”
Regional clusters such as the one Louisville and Lexington aim to foster are the front line.