Home » MRCK16: Asset-rich Lexington and Central Ky. a ‘world class’ business climate

MRCK16: Asset-rich Lexington and Central Ky. a ‘world class’ business climate

By Robbie Clark

Downtown Lexington is an attractive place for businesses, with so many resources and assets being centrally located and within walking distance from residential areas, dining and recreation.

Lexington and the surrounding Bluegrass region continue to reap national accolades regarding the area’s business climate and quality of life.

Site Selection magazine named Lexington No. 8 on its list of top U.S. cities with the best business climate and Fourth Economy, a national economic development consulting firm, ranked Lexington the No. 1 midsize community to attract modern investment and managed economic growth. Forbes put Lexington as No. 7 on its list of best mid-sized cities for jobs in 2015.

Behind these rankings is an impressive list of projects bringing investments, new businesses and expansions to the region. According to Commerce Lexington Inc., the chamber of commerce for Lexington and surrounding communities, 2015 saw 26 locations and expansion announcements in the Bluegrass with total investment of over $130 million estimated to create over 900 jobs. Halfway through 2016, there were 12 project announcements with a total investment of over $90 million estimated to create nearly 450 jobs.

When recruiting new businesses, Commerce Lexington, which takes a regionalism approach to economic development, has an arsenal of attractive incentives its representatives can showcase to promote the region’s strategic advantages over other areas of the country: its educated workforce, great logistics location, streamlined process for development, state and local financial incentives, and what Commerce Lexington President Bob Quick calls the community’s “welcome sign” for doing business.

Market Review of Central Kentucky 2016-17

The Bluegrass Welcome Sign

The “welcome sign” Quick refers to goes beyond quality of life and attractiveness, though that does factor into it – a welcome mat isn’t going to be very inviting on a decrepit home. It’s about an area’s hospitality and dedication in courting new recruits to the region.

“To me, the most important thing about economic development that’s here in the Bluegrass is that the community is really open to new business, new expansions. Everybody wants jobs, but there’s a lot more to creating a job than most people realize,” Quick said. “The question is, does the community have the resources? Does it commit the resources? Does it have a welcome sign out?”

The effect of the region’s welcoming attitude toward new business was recently realized when Richmond, Ind.-based More Than A Bakery, a family-owned, fourth-generation food manufacturing company, made the decision to relocate to Versailles in Woodford County.

The company recently broke ground on a $57 million, 300,000-s.f. facility to produce cookies, crackers and other baked goods by contract for major food brands and retailers. When operational, the plant will employ more than 300 workers. President Bill Quigg says he expects construction to be complete in summer 2017 and production to begin that October.

With the current Indiana facility on its last legs, Quigg said, there was a decision to stay or see if there was a more advantageous site to which to relocate. With the help of a site selection firm, the company initially looked at 35 regions and cities in the triangle between St. Louis, Detroit and Greensboro, N.C. After analyzing transportation costs, raw material, electricity and other factors, the selection was narrowed down to 10 sites, one of which was Lexington.

Over two and a half years, Quigg took key employees on bus tours of these communities, and he was impressed with the red-carpet treatment they received in Lexington, which included a reception with other area industry leaders hosted by Mayor Jim Gray.

“While some communities were very generous from an economic development standpoint, really what it came down to was, we’re a fourth-generation company and we’re very much trying to foster an environment for the fifth generation. We wanted to pick a place where we thought they’d want to live, where can we raise our children, where they would want to have a company 100 years from now just as we had given to us by our parents,” Quigg said. “When it comes down to it, that’s what Lexington really was, because there were other communities that our brain said, ‘this would be a really good location,’ but our heart wasn’t in it.

“It wasn’t until we found Lexington and Versailles and Woodford County and met the people and spent a lot of time here that we said, ‘This is where we want to spend the rest of our careers and where we want to have our children want to live as well.’ ”

Logistical location

Drura Parrish, the founder and CEO of Lexington-based MakeTime understands the region’s welcome sign, too. He says there is a willingness and desire for decision makers and stakeholders to help elevate the business community.

“We all want us all to do well,” Parrish said.

But MakeTime, an online marketplace that connects manufacturing projects with available machinery throughout its network of hundreds of facilities, doesn’t thrive on well-wishing alone. Lexington sits at the geographic center of the nation’s manufacturing supply chain, which means MakeTime has access to a large bundle of nearby manufacturing plants.

“We have access to world class manufacturers up and down the Interstate 75 and across Interstate 64. It’s unparalleled to the rest of the United States,” he said.

The reason for the cluster of manufacturing facilities is Central Kentucky’s location –Lexington is 600 miles away from 50 percent of the country’s population and a day’s drive away from two-thirds of the population. And the two interstates, I-75 and I-64, give quick access to all four directions. This population proximity makes manufacturing goods in the Bluegrass cost effective for companies.

Aside from having a logistical advantage to transporting goods, the Blue Grass Airport also makes it easy to move people in out of the region quickly. Depending on the season, the airport provides direct flights to 18 destinations. If you take into consideration nearby Northern Kentucky and Louisville airports, there are over 100 direct flights available to passengers.

Streamlined process

If a company is interested in moving to Lexington or the surrounding region or a local entrepreneur wants to start a new business, Lexington organizations have teamed up to make a “one-stop shop” to make the process as easy as possible.

Commerce Lexington, the Lexington city government and the University of Kentucky’s office of the Kentucky Innovation Network have partnered to create the Bluegrass Business Development Partnership, which provides a full suite of business development services: creating business and financial plans, providing information on loan programs and tax incentives, connecting funding sources, locating real estate options, and other services. Moreover, the partnership is in the same building as Commerce Lexington, so potential business representatives don’t have to go all over town for information or assistance.

“It’s not uncommon when a company comes into a town that they’ll have to go to multiple locations. They are pointed in the right direction, but it’s really easy here when we can take them by the hand to (the one location) where they need to go. It’s a lot simpler,” Quick said.

To promote the entire region, and not just Lexington, the Bluegrass Alliance is comprised of representatives from economic development agencies across Central Kentucky. These economic development officials work together to promote the entire region.

Financial incentives

In 2014, KPMG, an international business analysis company, ranked Lexington the seventh best city for lowest international business location costs in the United States and Canada.

Along with some of the lowest electricity rates in the country – Kentucky ranks fourth in the nation and first east of the Mississippi – and a comparatively low cost of living, there are a number of city and state financial incentives that makes the Bluegrass an attractive place to set up shop.

The Kentucky Economic Development Finance Authority (KEDFA), a entity established within the Cabinet for Economic Development, provides financial support through a variety of financial assistance and tax credit programs.

The state’s cabinet also offers a range of other incentives and financial programs, such as the Kentucky Small Business Credit Initiative, the Bluegrass State Skills Corporation Skills Training Investment Credit, Tax Increment Financing (TIF), and the Kentucky Investment Fund Act.

Specifically in Lexington, one of two Kentucky cities with its own economic development fund to attract and retain jobs, there is the Lexington Jobs Fund. Established in 2014, the $1 million program geared toward research and high-tech provides loans for up to $250,000 to qualifying businesses.

The Commerce Lexington staff also maintains a working relationship with a number of state and regional venture capital investment groups, such as the Bluegrass Angels, Kentucky Highlands Investment Corp., Chrysalis Ventures, Kentucky Seed Capital Fund, River Cities Capital Funds, Kentucky Science and Technology Corp. and Bluegrass Business Development, and can help pair potential  businesses with the
right group.

Educated workforce

Perhaps one of the most impressive aspects of the Bluegrass region for potential companies is the area’s educated workforce. More than 40 percent of the population 25 years or older has at least a bachelor’s degree, and 17 percent of the population has an advanced degree.

“Those are two big calling cards that we have that grabs people’s attention,” Quick said. “Behind that there’s a lot of skilled workers coming out of our college system, and that’s very critical for us.”

These numbers make Lexington the 13th most highly educated city in the nation among cities with more than 300,000 people, according to the U.S. Census Bureau.

Behind the educated populace is a network of nearby universities, colleges and other educational institutions. Including the University of Kentucky, there are 10 universities and colleges within 40 miles of Lexington, as well as an additional five professional and technical colleges. During the school year, there are more than 70,000 students in the Bluegrass enrolled in higher learning institutions, with more than 15,000 graduating annually – with most of them looking for a job.

Quality of life

One of the most enticing aspects of recruiting businesses and talented individuals to the Bluegrass region really has nothing to do with finances or logistics or an educated workforce. The area’s rich quality of life helps draw people to Lexington and Bluegrass region, too.

For young and old, Lexington is an attractive city to live. In 2016, ranking website Niche.com recently put Fayette County in its top 25 list of “2016 Best Counties for Millennials” and No. 31 on its list of cities with the lowest cost of living; and WalletHub, a personal finance website, ranked Kentucky the No. 5 state with the best schools, the No. 6 best-run city and the No. 16 best large city to live in – the site even says that Lexington is the No. 4 most pet friendly city. For retirees, in 2016 Forbes and Where to Retire both named Lexington one of best places to retire in the country.