After a long economic recession and stifled growth, the resurgence of manufacturing in Central Kentucky inspired the mayors of Lexington and Louisville to join forces in a strategic effort to position their region as a global leader in advanced manufacturing and exports.
At the conclusion of two years of research and planning – using the Metropolitan Business Planning concept developed by the Brookings Institute as a “North Star” for their collaboration – Lexington Mayor Jim Gray and Louisville Mayor Greg Fischer shared their economic vision for the region in a press conference last November that they called “Seizing the Manufacturing Moment: An Economic Growth Plan for the Bluegrass Region of Kentucky.”
The strategic overview outlined dozens of ambitious strategies and goals to take advantage of the renewed growth in Central Kentucky manufacturing. The mayors, along with numerous leaders in manufacturing and economic development, termed the effort the Bluegrass Economic Advancement Movement.
The BEAM region is 22 counties in Central Kentucky and Southern Indiana anchored economically by the Louisville and Lexington metropolitan areas. It accounts for over 50 percent of the commonwealth’s gross domestic product and is home to an impressive number of advanced manufacturing firms, many of which are engaged in the global marketplace. Among the most recognizable names are UPS Worldport, Toyota Motor Manufacturing, Ford Motor Co., Humana, GE Appliances, Lexmark, Lockheed Martin and Raytheon. About 1,600 other medium-sized and small firms produce a wide array of goods and services.
Many goals in the BEAM overview are directed at growing this base into what organizers envision as a “super region” for advanced manufacturing serving a global market base.
Primary spokespersons for the BEAM initiative are Margaret Handmaker, director of the innovation delivery team with Louisville Metro Government, and Scott Shapiro, a senior advisor to Lexington Mayor Gray.
“Central Kentucky has the potential to become a world-class advanced-manufacturing hub,” Shapiro declared. Changes in global manufacturing trends allow Central Kentucky to aspire toward a leadership position in advanced manufacturing.
Handmaker and Shapiro cited a “re-shoring” of manufacturing functions back to the United States. “Rising labor costs in China and South America are bringing jobs back home,” Shapiro said. “Lower (U.S.) energy costs and new manufacturing innovations are also contributing factors to the rise in manufacturing activity in the BEAM region.”
Enhancing industry clusters
While the BEAM region welcomes any new industries interested in the area, Handmaker said, “What economic development people know is that the likelihood for future success is growing that which already exists in the region.”
Until now, an obstacle to Central Kentucky’s global market growth, according to the BEAM strategic overview, has been the reluctance of Louisville and Lexington to function as a “unified economy.” Today, Handmaker said, the cities are committed to “leveraging their various strengths” and working together as business partners to build the region into a global economic force.
Kentucky has a several industry sectors with clear opportunities for growth and success in the changing global economy, she said. Analysis of the region’s manufacturing strengths found the automotive sector its most obvious asset with major modern Toyota and Ford assembly operations.
But in addition to rolling finished cars and trucks off the line, the region is also a center for original equipment manufacturers (OEMs) that supply the assembly plants: Its leading industry is in motor parts and vehicle body molds.
The BEAM region has multiple additional strengths: in the manufacture of large appliances such as heating and air-conditioner systems, commercial refrigeration and electrical equipment; primary materials such as plastic products, forging and stamping; and a food and beverage sector represented by the pre-eminence of Kentucky’s bourbon producers as well as the world’s leading restaurant franchiser and producer of processed foods.
Louisville and Lexington combined are strong in economic research and have numerous organizations dedicated to the support of businesses operating in a global market. These organizations are crucial to move the BEAM region forward by pairing major product manufacturers with partners who “fit” with them strategically, Handmaker said.
“What we hear from our manufacturers is that they really want their suppliers to be within 50 miles of their plants,” Handmaker said. “Creating these clusters of complementary manufacturing interests can dramatically reduce the cost of transportation and reduce the losses associated with breakage of supplies. These represent good opportunities for the 22 counties in the region to attract and establish these companies within their borders.”
Fall Expo to cultivate clusters
One BEAM strategy region planners are pursuing is to encourage further development of these clusters through an expo co-sponsored by the Kentucky Association of Manufacturers and the Kentucky Chamber of Commerce in association with the BEAM movement.
Still in the planning stages at this point, the expo will target Kentucky’s small and mid-sized manufacturing firms, providing them with information on resources available to help develop and innovate, Shapiro said.
“In terms of productivity and innovation,” he said, “there are a host of organizations in Kentucky that exist to help manufacturers with data and research. This expo will be a way of connecting firms with information providers.”
Another expo goal is to focus on manufacturers here who are innovating.
“There are a lot of them,” he said.
The expo will share information to demonstrate to local companies the leading edge in advanced manufacturing techniques in various fields, he said. Details about the event should surface in the late summer and early fall.
The need for an advanced workforce
Meanwhile, perhaps the most critical component of the BEAM plan is the development of “human capital” among the state’s primary research universities, the University of Kentucky and the University of Louisville, with targeted advanced manufacturing training among the various branches of the Kentucky Community and Technical College System in the BEAM region, Handmaker said.
UK and UofL have excellent facilities for the development of innovators, researchers and trade visionaries equipped to continue BEAM’s efforts long term.
“On manufacturing and innovations, all the universities and colleges in the BEAM region are critical partners to the success of our efforts,” she said. “KCTCS and its member schools have been an important driver in the development of degree programs for certified-skills professionals. They have a tremendous impact on developing a workforce of highly skilled professionals that dovetails nicely with the research work being actively conducted at UK and UofL.”
The need for an advanced workforce was in clear evidence even before the BEAM movement was conceptualized. “When we checked with manufacturers in the region, there were jobs. Even when the economy was struggling, there were dozens to hundreds of jobs that went unfilled because the labor force was unskilled in these areas,” Shapiro said.
This lack underscores the importance of the colleges and universities to the BEAM effort.
“We are working with KCTCS and Toyota to create a school and degree program tailored to the skills that the manufacturer needs out of its specialized workforce,” Shapiro said. “KCTCS is building one such facility near the Toyota facility in Georgetown.”
Earn and Learn apprenticeship programs
One BEAM workforce development strategy encourages manufacturers to adopt Earn-and-Learn modern apprenticeship programs, Shapiro said. This model has allowed Germany to train students in advanced manufacturing techniques while they earn their academic degrees.
Toyota has earned national recognition for its worker training programs, Shapiro said. Other companies are re-discovering the value of apprenticeships as an answer for unfilled specialized spaces within their company.
A UofL contribution is its Innovation and Product Realization Institute (IPRI), an initiative of the J.B. Speed School of Engineering, which is modernizing its campus. IPRI will take ideas and innovations coming out of both UK and UofL and develop ways they can be commercialized and marketed, Handmaker said.
“We have a strong emphasis on new technology and innovation,” she said. “We know that is the future. We take the innovation and invention and find a way to commercialize them so that consumers and local manufacturers can use them.”
Ideas traveling from lab to practical reality at IPRI are expected to give the BEAM region a competitive advantage, maintaining long-term predominance in contemporary standards for specialized advanced manufacturing techniques by staying at the cutting edge of innovation, she said.
‘Build it locally, sell it globally’
BEAM encourages more regional manufacturing firms to begin exporting goods to foreign markets or to expand their reach into new overseas markets.
“BEAM partners are working with smaller and mid-sized companies to help them engage in international exports,” Handmaker said. “BEAM organizers can put firms interested in expanding into the global market in touch with specialists with knowledge and connections to help them develop their export capabilities.”
Soon after the November release of its strategic overview, the BEAM partnership released “Build it Locally, Sell it Globally: A Regional Export Plan.” The report makes a case for companies to consider exports and set strategic long-range goals. A first-stage goal is to increase export successes in Kentucky 50 percent by 2016.
The effort has been a success so far, according to Haley Stevens, program director with the Louisville Metro Government, and Jeanine Duncliffe, special advisor on export development with the Louisville Metro Government. Successes, according to the export plan, are defined as “companies that enter new foreign markets, expand within existing foreign markets or begin exporting for the first time.” To date, BEAM region export successes are about 40 percent ahead of their targets.
Stevens credits BEAM export partners: U.S. Commercial Service offices in Louisville and Lexington; the World Trade Center of Kentucky; Kentucky Small Business Centers; the Kentucky Cabinet for Economic Development; Greater Louisville Inc.; and CommerceLexington.
“These are the organizations that help companies break into world markets,” Stevens said. “They provide critical research into potential foreign markets, help organize meetings and trade missions that put decision-makers in touch with distributors for the products they’d like to market and can answer any question a company has on exporting products.”
Duncliffe has been working with the Kentucky Export Initiative for several years. The BEAM export plan is, in fact, heavily influenced by KEI’s work, Haley said.
“Some companies in the region are not doing as much international marketing as they could. What we want to do with our outreach is to keep our focus true to small and medium-sized companies that are making products that have export potential,” Duncliffe stated.
She and Haley have compiled a training program to help BEAM region economic development officials introduce the export plan to their local companies.
“Economic development professionals are a key link between the BEAM partners and their local manufacturers. If exports are not talked about a lot, it doesn’t become part of the business culture,” Duncliffe said.
The long-range goal, Stevens said, is to sell “Kentucky-Made” to the world and have that brand be meaningful to firms and consumers in the global marketplace.
For more information about the BEAM Metropolitan Export Plan, contact Haley Stevens or Jeanine Duncliffe by email at [email protected] or by phone at (502) 574-5013.
Josh Shepherd is a correspondent for The Lane Report. He can be reached at [email protected]