Home » The Lane Report Economic Forecast: Further Strengthening Expected in 2016

The Lane Report Economic Forecast: Further Strengthening Expected in 2016

upandupLexington, Ky. – The U.S. auto industry had its best sales year in history in 2015 and 2016 looks just as strong, which is very good news in a state that is a major vehicle manufacturer. Kentucky usually lags the nation during economic recoveries, but the commonwealth’s jobless rate has been better than the national average for about a year. The United States is the strongest, safest economy in the world, and Kentucky’s ideal location to supply this market is paying off. Ford is putting another $1.3 billion into its Kentucky Truck Plant, and an industry shift toward lighter, more fuel-efficient aluminum is motivating multiple nine-figure investments around the state, which is a major aluminum producer due to cheap electricity and its central U.S. location.

Louisville, Lexington, Northern Kentucky, Bowling Green and other cities all are experiencing job growth as a result of investment by business and industry seeking to keep up with an economy that continues to gain momentum – plus a preference among millennials for urban life. Ongoing decline in the coal industry, however, is causing pain in Eastern Kentucky as energy markets shift to cheap gas, which is environmentally less impactful also. Meanwhile, the world’s demand for premium Kentucky bourbon continues to fill that expanding industry’s glass. Tourism and travel sector growth is bringing hotel construction around the state. The world is becoming more aware of Kentucky, and interest will likely increase as portions of the project to install statewide gigabit Internet service begin reaching completion.

Matthew Bevin, Governor, Commonwealth of Kentucky: 

Kentucky Governor Matt Bevin

“This year is pivotal for Kentucky’s economic future. Later this month we will present a budget to the legislature and, in doing so, will signal to the world that we are serious about getting our financial house in order. Rapid growth in Medicaid spending and pension obligations is crowding out other priorities, like education and infrastructure. Our administration will pursue transformational and sustainable reforms to these high-growth budget items in order to stabilize and then grow the Kentucky economy. We will work across party lines to enact bold solutions. The result will be a better environment for long-term economic growth and job creation.”

Greg Fischer, Mayor, Louisville Metro: 

“We predict great things for Louisville’s economy in 2016. Unemployment is low, shrinking from 10.3 percent in 2011 to 3.9 percent now. We continue focusing economic development efforts on five key sectors: advanced manufacturing; business services; food/beverage; lifelong wellness/aging care; and logistics. We’re working with industry leaders to recruit more businesses and create more jobs, including 2,000 from a $1.3 billion expansion at Ford’s Kentucky Truck Plant, and 300 in a $310 million UPS expansion. We’re growing workforce skills through nationally recognized efforts, such as free certified production technician training, which qualifies participants for jobs at GE that start at $15.51 an hour, and tech initiatives like Code Louisville. We also expect continued growth downtown, including the transformative Omni Hotel project.”

Dr. James Ramsey, President, University of Louisville:

Dr. James Ramsey
Dr. James Ramsey

“Continued steady employment growth of 1.5-2 percent for 2016 – with regional variation; rural Eastern Kentucky will lag the rest of the state – will translate to General Fund revenue growth, but at a modest rate due to the loss of elasticity over time in our tax structure. The state budget will remain structurally unbalanced primarily due to unfunded pension liabilities and the need to fund the increased Medicaid population, which will limit state General Fund support for higher education. Institutions will continue their cost management programs and looking for alternative revenue streams. The University of Louisville will maintain its strategy of: aggressive cost management; converting underperforming assets to fully performing assets; Enhancing clinical income; using the private sector for non-educational investments; continue to focus on generating income from intellectual property; relying on funding from our three tax increment financing districts. And UofL will announce our next capital campaign of $1.5 billion.”

Vicki Fitch, Executive Director, Bowling Green Area Convention & Visitors Bureau: 

Vicki Fitch
Vicki Fitch

“Kentucky tourism increased in 2015. Hotel occupancy continues its upward trend. Bowling Green’s classic, all-American feel is getting national media attention, and people are road-tripping thanks to lower gas prices. More growth is expected in 2016 with Mammoth Cave’s 200th tour anniversary, the National Park Service’s Centennial and the National Corvette Museum’s new Corvette Cave-In exhibit. Bowling Green will host more than a dozen national shows at its NCM Motorsports Park and Beech Bend Raceway hot rod havens.”

Malcolm Bryant, President/CEO, Malcolm Bryant Corp.: 

“Global uncertainty is confirming the United States is still the most sought-after place to invest for long-term consistency. Infrastructure investments in Kentucky’s cities are preparing us for a positive future. World investors are awakening to Kentucky. More high-wage jobs are needed, so we must turn our attention to our greatest asset: people. We must create value in our workforce and be extremely healthy in mind and body. All areas of commercial real estate are riding a rising wave of capital liquidity, leading to lower cap rates. Regulation and construction costs are current headwinds, leading to less speculative construction.”

Jared Arnett, Executive Director, Shaping Our Appalachian Region Inc.: 

“2016 is poised to be a breakthrough year for Appalachian Kentucky. The KentuckyWired broadband project will be well underway, and communities will be planning the build-out of last-mile technology so high-speed Internet can be delivered to every family and business. Through our Kentucky Appalachian Regional Development Fund, we will award grants to help communities harness the power of broadband to revolutionize our economy, improve health outcomes and expand education. I’m looking forward to our 2016 SOAR summit, which will connect leaders and volunteers to once again share ideas and successes as we continue our momentum to build Appalachian Kentucky’s vibrant future.”

Dave Adkisson, President/CEO, Kentucky Chamber of Commerce: 

Dave Adkisson
Dave Adkisson

“Each year of the recovery seems to gain momentum, with highlights such as the Lexus roll-out, Ford’s Kentucky Truck Plant announcement and dozens of other local announcements that underscore true recovery. My hope for 2016: that the Fed will be cautious on interest rates so Kentucky can continue to gain steam. On the home front, we welcome policy changes the Bevin administration will champion to make Kentucky more business-friendly. But above all, Frankfort must demonstrate in early 2016 it can get its house in order and prove it has the discipline necessary to fix its pension problems.”

Eric Summe, President/CEO, Northern Kentucky Convention and Visitors Bureau: 

“For 2016, the Northern Kentucky hospitality industry is forecasting moderate growth. We enjoyed high occupancy and rate levels the past couple of years, but we think this will level off. Two new hotel properties open in our region in 2016; that additional supply, along with added hotel rooms in neighboring Cincinnati, should keep occupancy and rate growth lower than in the last few years. The Ark Encounter slated to open in July in Grant County is expecting over 1 million visitors the first year. We’re excited about the significant economic impact this one-of-a-kind attraction will have on Northern Kentucky.”

Wil James, President, Toyota Motor Manufacturing Kentucky: 

Wil James
Wil James

“It’s a great time to be in the auto industry, and Kentucky continues to be a great place to do business. In 2015, strong replacement demand, an improving economy and low interest rates helped drive auto sales to a sixth consecutive year of growth: 17.5 million in the U.S., a new record. In Georgetown, 2015 ended with the ramping up of Lexus production, a historic project 30 months in the making, while Camry made the best-seller list once again – true testament to the skill of our workforce. For 2016, U.S. demand and Toyota sales are anticipated to remain around the record level of 2015. Another busy year for Kentucky’s automotive industry!”

Eric J. Frankl, Executive Director, Blue Grass Airport: 

“We are optimistic about the 2016 growth trends we see in the travel industry. After years of bankruptcies and mergers, the airlines have stabilized and experienced a couple of years of healthy growth. At Blue Grass Airport, we have been fortunate to see new routes added and been able to provide our travelers and visitors with convenience and upgraded amenities. We will continue offering enjoyable travel experiences, and, in turn, we ask the community to continue supporting its local airport by using our services and facilities.”

Paul Patton, Chancellor and Interim President, University of Pikeville: 

Paul Patton
Paul Patton

“I expect the economy of the nation and of Kentucky to continue its recovery from the Great Recession at a moderate pace, but the decline in Eastern Kentucky will continue to be a drag on the rest of the commonwealth. Regardless of the political environment, coal production in Eastern Kentucky will continue to decline because 115 years of mining have depleted the easier-to-recover reserves, Western Coal can be brought to the East more cheaply than our coal, and natural gas costs less than coal and is easier to burn.”

Jack Moreland, President, Southbank Partners: 

“Northern Kentucky’s “Southbank” riverfront is on a vibrant upward trajectory thanks to the ongoing urban migration trend of business and residents, with multiple tourism, residential, entertainment and commercial developments. Two hotels are rising in Newport and one Covington. Work on the 12-mile Riverfront Commons walk-run-bike path connecting Southbank’s six cities continues. Ky. 9’s reconstruction through Newport is projected to create $500 million in new development. Residential projects include Aqua apartments near Newport on the Levee; redeveloping Newport’s Fourth Street Elementary into apartments; 40 new million-dollar homes in Dayton; and downtown Covington and Ludlow riverfront residences. Entertainment projects include a distillery, a 180-foot Skywheel, craft breweries and new riverfront parks.”

Dave Sevigny, President, DMD Data Systems: 

Dave Sevigny
Dave Sevigny

“2016 will be a generally positive year for the overall Kentucky economy. Investments by the commonwealth in an educated workforce and uniform access to high-speed Internet service are key to Kentucky’s future economic growth. From large industries to small businesses, companies across the commonwealth will continue the path of slow but steady growth. DMD expects customers to make strategic investments in software and technology infrastructure to increase IT resiliency, optimization and security. This will generate demand for managed IT services as public and private entities continually transition capital purchases into operating expenses.”

Jerry Rickett, President and CEO, Kentucky Highlands Investment Corp.: 

“The numbers are catastrophic for our 22-county service area – the loss of 4,700 coal jobs with payroll of $296 million. But it has mobilized people to explore new solutions together, and the power of partnerships will lead to success: The Promise Zone partners have attracted $210 million in public and private investment in two years. And SOAR’s (Shaping Our Appalachian Region) broadband initiative will put the region on equal footing with the rest of the world. Meanwhile, KHIC and UK have identified a new product line of energy-efficient modular housing to diversify the products of houseboat manufacturers, which have lost 650 jobs.”

Casey Barach, Director, Kentucky Innovation Network @ Northern Kentucky; Senior Vice President, Northern Kentucky Tri-County Economic Development Corp.: 

“A key driving force in Kentucky’s high-growth entrepreneurship activity is the availability of investment capital for start-ups. The launch of Kentucky’s Angel Investment tax credit in 2015 directly drove over $7.5 million into early-stage deals. Indirectly, the program created public interest and drove creation of new investment funds and angel groups, i.e., more investment capital. Entrepreneurship will take 2015’s momentum and build upon it for significant growth in 2016. The potentially dark cloud on the long-term horizon is the $3 million cap on the investment tax credits. The expansion of the tax credit is an expansion of investment capital and expansion of startup companies.”

Karen Williams, President/CEO, Greater Louisville Convention and Visitors Bureau: 

Karen Williams
Karen Williams

“According to American Express Meetings and Events, the meetings industry is thriving and will continue to strengthen. Hotel rates are increasing; North American group hotel rates will show an increase of 4.2 percent. Louisville in 2015 had a 3.8 percent increase in hotel rates. This is positive news entering 2016. In August 2016, the Kentucky International Convention Center will close for two years – LCVB team will focus on smaller meetings that can be self-contained in hotels, while also using the Kentucky Expo Center and the Yum! Center for larger conference and trade show exhibitions.”

Jennifer Willis, Market Vice President in Kentucky, Humana: 

“The current healthcare system is too complex and too challenging to navigate. Humana is working to simplify it by personalizing healthcare experiences, providing support where people need it, and creating easy-to-use options for engaging in health. Fortunately, we’re working with the best in the industry, such as primary care physicians committed to delivering integrated care, incentivizing healthy choices and reducing the progression of disease. We’re partnered with more than 45 community leaders and organizations in Louisville to help us implement collaborative strategies to improve the health of the city and the surrounding areas. Humana is confident in a cooperative approach – we know it is the only way to improve population health.”

Skip Miller, Executive Director, Louisville Regional Airport Authority: 

Skip Miller
Skip Miller

“We anticipate modest commercial aviation growth in 2016. After consolidation, airlines are posting financial results on par with other industries. They will continue to replace smaller aircraft with larger equipment offering more onboard amenities and to be very conservative when considering service to new markets. They will seize lucrative opportunities if communities clearly demonstrate regional demand. Louisville International Airport, the world’s seventh busiest cargo airport, is well positioned in this environment to retain and enhance connectivity to the global marketplace. The future for air cargo and logistics is bright and we expect continued success in this segment. Our sister organization, Renaissance Zone Redevelopment Corp., anticipates a robust year of land sales.”

Dr. Eli Capilouto, President, University of Kentucky: 

“The University of Kentucky is emboldened in 2016 by synergies in support for its mission of teaching, research, service and healthcare. Over the last several years, UK has made substantial investments in its infrastructure and key priorities of its mission. Public and private partners are supporting new academic programs, quality living/learning spaces and modern research facilities. The potential for renewed public support for research and discovery will help us address the complex challenges of our day and build Kentucky’s economy. Our investments recently yielded a strong reaffirmation of our priorities from independent rating agency Standard and Poor’s.”

Dr. Pearse Lyons, President, Alltech: 

“We were part of a 2015 that has been called the year of M&A, completing seven acquisitions this past year. We believe 2016 will require three corporate characteristics: size, speed and innovation. Companies need to be the right size to do the job, and the right size means being fit for agility to move quickly to seize emerging opportunities. And, of course, innovation is central. It remains true that the future belongs to those who have the curiosity and the courage to create it.”

Bill Bissett, President, Kentucky Coal Association: 

Bill Bissett
Bill Bissett

“2016 will continue to be a challenging year for Kentucky coal. With a year left in office, we expect President Obama and his allies will try to complete their anti-coal agenda, which will further hurt coal miners and the entire Kentucky economy. Without the low-cost, reliable electricity coal provides Kentucky, our manufacturing base will suffer along with every other sector. Wrongheaded policies out of Washington, like the misnamed Clean Power Plan and Stream Protection Plan, must be stopped to protect Kentucky’s affordable electricity supply.”

Robert Quick, President/CEO, Commerce Lexington Inc.: 

“Central Kentucky continued a strong upward economic trend in the past year with Fayette County’s unemployment rate among the lowest in the state. As the county’s population steadily climbs, the workforce is expanding and wages are increasing. Economic activity over the last five years among the partners of the Bluegrass Business Development Partnership affected 4,820 new jobs and $643 million in investment by a wide range of companies. We expect our many marketing trips and meetings with site-selection consultants to produce more leads, jobs and investment through expansions and relocations. Companies around the world recognize Lexington as a city on the move due to its unified economic development efforts, diverse economy, educated workforce, growing high-tech sector and entrepreneurial culture.”

James O’Reilly, CEO, Long John Silver’s: 

James O'Reilly
James O’Reilly

“Consumers will engage the restaurant industry with increased optimism and spending power in 2016. This will be a year of modest growth for the economy supported by the positive trajectory of indicators such as growth of GDP and disposable income. The National Restaurant Association’s Restaurant Performance Index is up and has been above 100 for 32 straight months, which indicates expansion ahead for the restaurant industry. Assisting factors will be a stable, mid-single-digit unemployment rate and reasonable consumer inflation with continued improvement in consumer confidence.”

Michael Karpf, Executive Vice President for Health Affairs, University of Kentucky / UK HealthCare: 

“The healthcare economy will change; the only questions are how fast and what will the results be? Kentucky’s governor has said he will make changes to the Medicaid expansion enacted in 2013. Medicare and Medicaid control a large percentage of every provider’s income, so changes require adjustments. If Medicaid eligibility were rolled back, I expect unreimbursed healthcare costs to increase. Navigation of these changing times hinges on our ability to maintain flexibility and preserve a margin for continued investment in people, technology and facilities. Mergers, alliances and spending on information technology will continue increasing.”

Bill Thomason, President/CEO, Keeneland: 

Bill Thomason
Bill Thomason

“The overwhelming success of the 2015 Breeders’ Cup World Championships at Keeneland proved the economic importance of the Thoroughbred industry to Kentucky while showcasing the local community’s hospitality and enthusiasm for horse racing. The event, which featured the “Grand Slam” victory by Triple Crown winner American Pharoah in the $5 million Classic, generated worldwide attention for the Thoroughbred industry, Keeneland and Central Kentucky. At Keeneland, we believe this exposure will be a positive influence for our racing and sales in 2016 and beyond.”

John Roush, President, Centre College: 

“While Centre College remains strong and has positioned itself for measured growth, global economic pressures and the continued threat of terrorism will cause people to be cautious generally, producing a flat forecast at best for our nation and the Commonwealth of Kentucky. The longer term is better. Our sister nations around the globe will figure things out, as will we, and those men and women prepared to do evil will not prevail.”

Trey Grayson, President/CEO, Northern Kentucky Chamber of Commerce: 

“The economy is strong in Northern Kentucky. There is a giant “Now Hiring” sign as you enter our region. Many employers, especially in logistics, manufacturing and those in search of entry-level workers, are struggling to find and keep talent. I expect this to result in local employers increasing wages to try to coax more employees to rejoin the workforce, increase hours or move to the region.

Jon Stewart, President/CEO, KEMI: 

Jon Stewart
Jon Stewart

“Although competition in the workers’ compensation insurance marketplace saw modest growth this past year, KEMI focused on strong underwriting discipline and provided our policyholders with the tools needed to control their workers’ compensation costs. Employers who remain focused on creating and maintaining safe workplaces should expect minimal changes regarding workers’ compensation insurance coverage in 2016.”

Eddie Goff, Vice President, Business Development, boice.net: 

“2015 was a year of “disruption” in IT and 2016 will continue that trend. Technology solutions providers are challenged with continually innovating and bringing change to their customers faster. We’ll see providers leveraging relationships not only with their partners but with each other to build more collaborative solutions. Whether that’s working in unified teams, developing new partnerships or merging with other organizations, we’ll see providers become leaner, more efficient, more effective and continue helping companies use technology to be more productive and increase profitability.”

Philip Patterson, President/CEO, Owensboro Health: 

Philip Patterson
Philip Patterson

“Owensboro Health is moving forward with its plan to expand access to care in Kentucky and Indiana. In addition to its 2015 lease and asset purchase of Muhlenberg Community Hospital in Greenville, Owensboro Health plans to open new outpatient facilities – each with urgent, primary and specialist care – throughout the region by 2017. These will expand our system’s One Health medical group and employer wellness capabilities. The health system also recently established a clinical alliance with St. Mary’s Health in Evansville, Ind., allowing each to share and learn from the other in areas of quality, safety and implementing best practices.”

Mark Gillming, Senior Vice President, Messer Construction Co.: 

“Commercial construction is seeing another year of growth, particularly in higher education and healthcare but also in the bourbon industry. Universities are updating classroom, lab and housing offerings. Healthcare systems are investing in renovation and expansion to urban campuses and single-patient rooms. As more work comes to market, a labor shortage is creating upward pricing pressure. Subcontractors are struggling to find skilled trades people, and some are more selective about the projects they take, which also impacts pricing. Skilled trades make up nearly half of Messer’s workforce, and we’re attracting people back to the industry and providing them with the training they need to be successful.”

Jim Gray, Mayor, Lexington-Fayette Urban County Government: 

Jim Gray
Jim Gray

“There is around $2 billion worth of investment happening all over Lexington currently: infrastructure, healthcare, education, commercial, residential and everywhere in between. These investments are creating jobs and improving quality of life, which is an important part of staying competitive. Our unemployment rate is among the lowest in the state. That’s good, but we know low unemployment also brings the challenge of workforce development. In 2016, we’ll continue to focus on workforce training and growing high-quality jobs across Lexington.”

Mary Quinn Ramer, President, VisitLEX: 

“2015 was a banner year for Lexington tourism with new restaurants, growth in the Lexington Distillery District, the Red Mile grand reopening, the Breeders’ Cup Championships and a jump in the Fayette County hotel room average daily rate. The ADR was $102.44, up 8 percent over 2014, which was up 6 percent over 2013. In 10 months, 2015 citywide room revenue was $151.4 million. In 2016, we anticipate further 6-8 percent growth with more than 100,000 hotel room group bookings contracted for future years and the opening of 21C Museum Hotel product.”

Ron Bunch, CEO, Bowling Green Area Chamber of Commerce: 

Ron Bunch
Ron Bunch

“2015 was extraordinary for the South Central Kentucky region, and we look for 2016 to be another prosperous year. In 2015 we had 23 announcements of more than $943 million in investment and 1,000-plus jobs – 124 percent of the previous decade. Warren County had two of the state’s top five 2015 projects. South Central had 25 percent of manufacturing location and 35 percent of manufacturing expansion investment. All levels of education are working to ensure companies have the workforce talent they need. From our first-in-the-nation comprehensive Leader In Me initiative to our Training Consortium that serves member companies, the chamber has been developing talent initiatives that we look forward to expanding in 2016. ”

Victor Staffieri, Chairman/CEO/President, LG&E-KU: 

“Kentucky’s abundant resources and historically low energy rates offer competitive advantages in attracting and maintaining energy-intensive industries. More than 100 new or existing business expansions announced in 2015 will create investments of over $1.28 billion and more than 5,300 new jobs, further strengthening the state’s economy and our communities. However, federal environmental regulations like the Clean Power Plan are jeopardizing these advantages. In this ever-changing industry, Kentucky’s utilities are challenged, once again, to balance future federal environmental requirements and keep energy rates among the lowest in the nation.”

Gary A. Ransdell, President, Western Kentucky University: 

“While Kentucky’s economy is improving, it remains to be seen whether higher education – Kentucky’s best hope for economic development in the future – will find improved funding as the General Assembly pieces together a budget for the 2016-18 biennium. The last 10 years have been a lost decade for higher education funding in Kentucky. All nine public institutional presidents have endorsed a higher education budget request that attempts to get back a portion of the $173 million lost in recent years. Paying the pension fund and Medicaid bills is important, but so is an investment in higher education.”

Ed Jerdonek, President/CEO, Luckett & Farley Architects, Engineers  and Interior Designers: 

Ed Jerdonek
Ed Jerdonek

“With the ‘new normal’ slow economic recovery compelling Kentucky’s businesses to seek new sources of top-line growth, in our 163rd year we are launching Luckett & Farley Development LLC with an equity firm partner to complement our core. The outlook for 2016 is positive for those tilling new ground, so we’re helping create economic development in Kentucky. Luckett & Farley Development will help restart existing clients’ projects stalled by limited access to capital and provide facility solutions to new clients. Luckett & Farley is investing in Louisville’s SoBro District with a $38.5 million project.”

Lori Meadows, Executive Director, Kentucky Arts Council: 

“Kentucky continues to gain momentum and national recognition for its work in creative placemaking to enhance community and economic development. Partnerships in public, private, nonprofit and community sectors are critical in continuing this growth trend. Nationally, philanthropy to the arts grew 9.2 percent in 12 months, the largest one-year jump among giving categories tracked and analyzed in the 2014 Giving USA, published by Indiana University Lilly Family School of Philanthropy. Kentucky’s ability to keep pace with the national funding in the arts will determine the strong growth in the creative industry sector.”

Dr. Andrew H. Henderson, CEO, Lexington Clinic

Dr. Andrew H. Henderson
Dr. Andrew H. Henderson

Healthcare has been full of surprises in recent years and 2016 will be no different. To keep up with this ever-changing environment, Lexington Clinic continues to adapt and implement new practices in order to better serve Central Kentucky. In 2015, we opened our newest location, Lexington Clinic Beaumont, which provides complete family care and walk-in services in one convenient location. Additionally, we have acquired many new, highly trained physicians and specialties and expect to add more in the coming year. These changes allow Lexington Clinic to respond quickly and continue to provide our patients with the quality care they have come to expect from us for more than 95 years.

Steve Sigg, CEO, SIS Holding Company Inc.: 

“The economic outlook for the information technology industry is exciting and evolving rapidly in the era of Big Data, Analytics and the Internet of Things. Our clients are taking a bimodal approach to addressing internal IT support and the external requirement to create growth and profitability by leveraging “the third platform” of Technology Enablement. Clients are re-engineering internal IT for cost saving, efficiency and better customer service. Lines of business will be enabling new growth opportunities by leveraging public, private and hybrid clouds for improved solution offerings, agility and expanded client services. This bimodal, stability-agility approach enables cost savings and supports growth initiatives.”

Nick Rowe, President, Kentucky American Water: 

Nick Rowe
Nick Rowe

“It’s estimated over the coming decades that more than $1 trillion in capital will be needed to upgrade U.S. water infrastructure. This investment remains a priority for Kentucky American Water, the state’s largest investor-owned water utility and provider of water and/or wastewater services to portions of 11 counties. To maintain excellent service for customers, we have invested more than $370 million in Kentucky in the past decade, and plan to invest $20 million in 2016. We will also remain focused on controlling operational expenses and providing a fair return to investors.”