Mark Green: How long has the Kentucky Association for Economic Development (KAED) been in existence, and how did that come about?
Hal Goode: In 1967, the Kentucky Industrial Team went on a recruiting trip to New York. Afterward, they wanted a broader representation and formed an association that would enable industrial development efforts to adapt to the priorities of each new governor and each new economic development leader, like the secretary of the Cabinet of Economic Development. The Kentucky Industrial Development Council was formed with 40 individuals; now, the KAED has close to 550 individual members who represent 325 unique companies involved in economic development all around the state. We’re a very diverse group of professionals who have the common interest of building and growing Kentucky. The general purpose of KAED is to educate, to advocate and to connect our association members.
We’re really big about networking; our membership covers all parts and all aspects of industry, and all areas of Kentucky, rural and urban. It allows us to provide a broader array of resources and expertise. We’re active in the state capital with policy work with legislators, with business organizations and want to develop sound economic development policy. We provide members timely, pertinent information about legislative updates and what’s new and on the horizon for economic development. Our No. 1 partner is the Cabinet for Economic Development. We work very closely with the acting secretary, Erik Dunnigan, and his staff.
MG: What is KAED’s structure and makeup?
HG: Beyond the 550 members representing 325 companies, local economic developers in the communities are partners with what we are doing, and there are Chamber of Commerce representatives in each area. We work closely with whoever leads economic development efforts in each community; for example, we’re working closely with SOAR (Shaping Our Appalachian Region) on an event they’re going to do in December, to help them do some educational pieces in Pikeville. In some communities, and it may be the county judge executive or an assistant county judge, so we partner very closely with the Kentucky Association of Counties, KACo, the judges’ association. We work with the Kentucky magistrates and commissioners. This year, we did five trainings all over the state of Kentucky for KACo. Our members do that training.
It’s important to cover all aspects of economic development from the very start: the recruitment piece, the retention piece – how are we going to take care of our business? – also the workforce development piece, which is a more and more prevalent subject at many of our conferences. And then the entrepreneurship, small-business piece, right where it starts.
We work closely with utilities – the electrical and broadband internet service utilities all the way down to water and gas; they’re essential partners of economic development, and they want to be there at the table. And there’re workforce development practitioners. There’re our partners who are involved with the state. There’re engineers, there’re contractors, construction. That whole element of economic development is built on the foundation of those individuals. What KAED does is bring all those pieces of a puzzle together. In economic development, you are looking for pieces of the puzzle or, as we always like to say, tools for your toolbox. We help our economic developers do the best they can in their communities.
MG: So KAED works to get everyone to work as a team to recruit or retain business?
HG: Yes. When I was economic development director in Springfield/Washington County, a small county, I counted on my utility co-ops when I’d bring a prospect in or when we’d have an expansion – and then contractors, design engineers. KAED connects not only our members but any individuals who are there to help.
When we have a conference we also look to those outside the state: What are other groups around the U.S. and internationally doing that Kentucky has to be looking at to remain competitive? That’s good when you’re looking at what you want to do in your community. We bring in speakers, consultants and developers from other states. They’re great to bounce ideas off of about your website, a piece of legislation we’re working on, and what they are hearing internationally about Kentucky.
MG: Does KAED have a formal role in Kentucky’s public economic development network?
HG: We do our things here at KAED, and we work closely with the acting secretary of the Cabinet for Economic Development Erik Dunnigan, (Department for Business Development) Commissioner Mandy Lambert, with their project managers. We are located in Frankfort, but we cover the entire state and we help carry their message around the state. We’re a part of the team.
For example, KAED started the KentuckyUnited program that markets the state. We bring our partners together in sort of a public/private partnership and go to different venues around the U.S. to market Kentucky. We may talk to individuals who are looking to relocate about: Why Kentucky? Our KentuckyUnited brochure is about the entire state: such as our industrial electricity rates being one of the lowest in the nation; our tax structure, which is among the most competitive in the region; progressive financial incentive programs; the lowest business costs in the nation; one of the lowest costs of living in the country; ideal location within 600 miles of two-thirds of America’s population. That’s why we say Kentucky has it all.
We’ll go to Toronto and present that message. We’re going to go to Chicago to the International Machine Trade Show in September with Gov. Matt Bevin, and we’re going to meet with some of the consultants and developers there to tell them about what’s new in Kentucky. We’re also going to meet with some of our existing businesses that are in that area, such as Henderson Axle, which has three Kentucky locations: Lebanon, Somerset and its new Elizabethtown plant. We’re going to tell them, “Thanks for your location. What can we do to help you? How can we help you grow?” Retention in Kentucky is at an all-time high. Generally you’ll see about 75 percent of a community’s growth comes from existing businesses. So retention is a big piece. We’re promoting Kentucky.
Our next KAED conference is going to be in Lexington Nov. 9-11. We ask our members what we need to talk about. What are some of the hot topics we need to discuss? Workforce development is one. We’re going to be bringing in some of the top consultants and developers in the nation.
MG: So KAED plays a liaison role between state government, the Cabinet for Economic Development and local entities?
HG: You could say that. We’re a kind of traffic cop. I like folks to call our office if they have a question, whatever their need is. If someone wants to talk about the new Kentucky Work Ready Skills Initiative, we’ve talked about that nearly as much as Gov. Bevin and (Education and Workforce Development Cabinet) Secretary Hal Heiner. This $140 million Work Ready Skills Initiative they just launched is a great idea. Parts of our membership are involved; I serve on the Work Ready steering committee. We can give our members direction. We are kind of – maybe instead of traffic cop – today’s term would be the Wikipedia of economic development
A member called yesterday saying, “I want someone to look at my website. I’ve done this…” I referred that person to one of our corporate sponsors that does websites, that did our website actually. I gave them an email introduction, and now they’re working together. I also reached out to a consultant in Dallas, Texas, and said, “Do you mind looking at this website and passing along what you’re looking for when you do a project for this individual?”
MG: How does your membership divide among private companies and local officials?
HG: When we say 325 unique companies, those fall into your larger utilities, your KU, your LG&E, your TVA, your AT&T, all the way down to your Branscum Construction or Gray Construction. But we have been able also to reach out to local elected officials, such as members of KACo. I’ve been a magistrate in Washington County myself for 23 years, and it’s important to me to make sure local elected officials are kept up with what’s happening in economic development. Our economic development partners do that, but elected officials need to be informed on all of the economic development strategies and these “tools in the toolbox.”
So we’ve reached out to the judges. They’ve invited KAED to speak at some of their conferences. They want to be involved. A judge called me this week from Western Kentucky; he is chair of the local economic development board and wants to get more involved and asked what he can do. He needs to be at our conference Nov. 9-11 in Lexington, I said, and explained our agenda. I explained that we’re doing a KACo training in Morehead in September, which is further to drive but would be a good day to spend because he would hear not only from project managers for the cabinet such as Josh Benton talking about some of the workforce initiatives going on, but there will be a utility presentation. We’ll have an entrepreneurship and small business presentation. I’ll give a presentation about how local officials can work better with economic development groups. Local elected officials are the leaders in their community. They can take our messages back to their constituency and say this is how we’re handling and looking at economic development.”
MG: The more understanding they have, the better “tool” they become for the state’s business recruiting and retention toolbox?
HG: At the end of the day, everyone has to work better. I’ve always been a proponent of regionalism. Kentucky has 120 counties, and some of those areas now are coming together and forming regions. Dave Hourigan, who was the county judge in Marion County (1993-2006), told me once, “Hal, our county lines don’t divide us; they join us.” And he’s right.
We’re seeing some regional groups work together. They pool their resources and are able to show a workforce that’s more readily available. Commerce Lexington works through a regional group called Bluegrass Alliance that is bringing in more communities. In Springfield, we have a group called Kentucky Crossroads in nine Central Kentucky counties. This regionalism shares resources such as a hospital, but also shares elected officials. You’re bringing in judges and magistrates, and the state representatives and the senators within nine counties. When you bring all those great minds together on a program or a project, it’s really exciting.
MG: Are KAED members directly involved in business recruitment with prospects or are they in a supportive role?
HG: Local economic development officials, KAED members, speak directly with prospects. Projects will come to the Kentucky Cabinet for Economic Development, which does a wonderful job in marketing and outreach, and are fairly distributed to what is available within the state. For instance, if a prospect comes in looking for a 150,000-s.f. building on 50 acres, the Cabinet will see what is available in the state.
ED is a process of elimination. Prospects look for reasons to eliminate your community. You want to stay alive, to be able to say, “What’s the next step to keep this company coming back?” If I don’t have a 150,000-s.f. building on 50 acres, I’m not going to get looked at. Checklists have many items, and KAED tries to make sure a member is ready when they receive a request for a proposal. We bring consultants and developers to talk to members and tell them, “This is what I look for. These are the questions I need answered. This is the electronic version that I need of maps, or drone video coverage of your industrial park.”
This business is ever-changing, and you have to change with it. I just mentioned drone flyover videos; who would have thought about that a year ago? When I was working ED in Springfield, we had paper maps for projects. Anymore, everything’s electronic. You have to prepare. By working with the Cabinet, our partners see that. Our partners also develop their own relationships and recruiting. They do their own partnerships by reaching out and meeting with groups in different cities, communities. They meet them at our conferences. They meet them at KentuckyUnited events.
We’re in a relationship business, and at the end of the day people like to do business with who they like. And we want to make sure our folks know that if you reach out, you’re informed, you’re handling the paperwork correctly and working with the Cabinet for Economic Development and their stages of projects, that is how they move forward.
MG: Do all counties nowadays have officials who work exclusively in economic development?
HG: A community point person in economic development is a must. That’s one reason we’ve developed this kinship with KACo, the judges and the magistrates. With local budgets it is crucial to fulfill all your duties to your constituents in your community, but if you invest in economic development the returns can be phenomenal.
And that doesn’t just mean a company that’s going to create 500 jobs; let’s talk about entrepreneurial ventures and the growth that’s happening. Look at Alltech, with Dr. Pearse Lyons; he started in Lexington many years ago in his back yard. Look where he is today, and look at his commitment to Kentucky. I admire the man. How many Dr. Pearse Lyonses are in your community? How many of those are we nurturing? How many of those are we working with?
Everybody wants to get the grand slam home run, but economic developers realize they have to be there for the sacrifice bunt and the single to bring in a run. We have to be there for every piece of it. That is something KAED is able to do. Those just getting started in the economic development field come to us and we’re able to give them the proper training that they need. Being there for the ribbon-cutting is fantastic, but when a company is waving goodbye to you and you’re in the rearview mirror, that’s when you actually need an economic developer. I’ve been there on both occasions. I do know that’s when you need an economic developer.
MG: Do KAED members get involved with the state’s economic development incentive packages, or is that a cabinet-level function?
HG: Our folks will work with all the incentives the state offers; incentives are a big part of working projects. But first is, what is offered there in the local community? Companies look at that. When they come in, they’re looking for reasons not to locate in your community. Tom Lund in Marion County said one company on their second visit wanted to see the sidewalks on Main Street in Lebanon and see the boys’ bathroom at Marion County High School. Those were the only two things they wanted to see to get further. The reasoning was company officials felt like community pride will show if it takes care of its schools and if sidewalks and the Main Street have that nice look. As you move forward with projects, the incentive piece is looked at in combination with the Cabinet for Economic Development. And then sound competitive incentives are built and based on job creation and capital investment.
MG: How many local communities have their own incentives?
HG: A local incentive might be (covering the cost of) the sewage hookup, things we can do locally to help make it easy for a company, even a small business, to locate. One company we did, which was a retention project, needed some help with a parking lot; it was an expensive piece. We were able to work with the city and the county, and did some excavating for them to level out some land, and then they blacktopped it. The local community worked together, and the company realized, hey, they want us here; they want us to be a part of their community. Most local communities are putting together very unique incentives to complement the state incentives but also to set themselves apart. If you’re competing with another county or community or state, maybe that will be enough for a company to look at you again. Incentives aren’t the be-all and end-all for projects – that’s more the communities and their outreach.
Incentives are a big part of what we do, but what complements those incentives? That could be a range of things. The $140 million Work Ready Skills Initiative Gov. Matt Bevin and Secretary Hal Heiner are releasing is going to really ignite more looks at Kentucky. This is a great way to develop a highly trained, modernized workforce in the commonwealth, meet the needs of employers and promote a sustainable income for Kentuckians. It’s bringing industry together in partnership with KCTCS and what they’re doing, and with workforce training projects that our local economic developers are going to be looking at not only for new companies but to help existing companies in their community grow.
MG: What are the top issues and decision points representatives for business location and expansion prospects are most concerned with today?
HG: A skilled workforce is one of the largest. This Work Ready Skills Initiative is very important to help compete in today’s global economy. The process of corporations considering a proposed site has changed because of advancements in technology, coupled with changes in the global economy. As we look toward more tools for our toolbox, we have to look at legislation for the programs that are out there. We have supported in the past the LIFT initiative, the local tax option, as another tool to utilize. As a non-right-to-work state, we think we’re losing out on some prospects just because of that filtering technique. Sometimes your state will be nearly immediately removed from consideration.
MG: What other tools would KAED like the General Assembly to put into place?
HG: There’s been discussion about tax reform; we hope to be in on having a competitive tax code. The first, most critical standard of review is tax policy. Kentucky’s tax code must encourage economic growth through job creation and capital investment. Our regional and local economic developers know we are challenged by dog-eat-dog competition on a global scale, which is produced by a shrinking number of new business projects being pursued by increasingly aggressive competitor states and communities.
MG: Do you have a closing comment?
HG: Economic developers are Kentucky’s front-line “first responders” in the competitive environment of recruiting job creation and capital investment. There’s no group among our state’s business and industrial leaders more attuned to the needs and challenges of Kentucky’s business climate, which is influenced by a complex variety of political, economic, cultural, social, geographic, infrastructural, educational and workforce issues.
In our group, you wake up every day to improve your community. It’s just like how we wake up and want to make sure our clothes look nice, that we have a pressed shirt, we’re shaved, our hair is combed – but if we went three or four days and didn’t do that, we’d look pretty shabby. If you’re not doing economic development in your community every day, your community could start looking a little shabby. That’s why it’s important to have economic development professionals of some aspect in your community. I admire our economic developers so much. They put it on the line every day. I love the term “first responders” – because if something happens, I’d better call my economic developer. ■
Mark Green is executive editor of The Lane Report. He can be reached at [email protected]