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IndustryNet Blog

Kentucky's manufacturing job growth picks up speed

Posted by IndustryNet on Monday, February 12, 2018

100000186grinderRecent data collected by IndustryNet shows Kentucky manufacturers added jobs over the past year, helped by gains in transportation equipment and a stabilization in the coal mining industry.

According to IndustryNet’s survey of 4,702 Kentucky manufacturers, industrial employment in the state inched up by a half percent between October 2016 and October 2017, recovering losses suffered over the 2015-2016 survey period.

After growing for five straight years between 2010 and 2015, Kentucky broke its winning streak during the 2015-2016 survey period, shedding industrial jobs for the first time since the recession.

This was largely due to a 19% employment decline in coal mining. Job losses in Kentucky’s coal mining sector slowed over the past year, however, down 3.2%. In addition, a 2.4% in the state’s transportation equipment manufacturing industry helped to offset losses. gains in the auto industry helped to offset losses.

Transportation equipment remains the state’s top industry by number of jobs, employing 57,597.

This article will explore some major developments in Kentucky’s manufacturing sector  in the post-recession era, and take a closer look at what the future holds for the state. We’ll explore some of Kentucky’s top industrial sectors, companies, and regions, as well as some specific site selection factors that continue to make the Bluegrass State a great location for business.

Kentucky manufacturing: the year in review

Kentucky manufacturers added 1,090 jobs between October 2016 and October 2017, a half percent gain.

Gains were led by transportation equipment, but were also seen in sectors as varied as electronics; furniture/fixtures; fabricated metals; and food processing.

IndustryNet’s regional data shows Kentucky’s industrial job gains were spread out across most regions, with employment up in the state’s Northeast, Northwest, and Southwest regions. Meanwhile, jobs inched down in Southeast Kentucky.

Louisville saw a 2.2% increase in factory employment, and ranks as the state’s top city for number of industrial jobs. Employment rose 4.3% in Florence and 2.6% in Georgetown, but inched down slightly in Bowling Green and Lexington.

Today, Kentucky accounts for 4,702 industrial companies that employ 288,804.

What’s driving Kentucky’s auto industry gains?man in factory with arms crossed.

Kentucky now ranks as the nation’s third-largest automotive manufacturing state, overtaking neighboring Tennessee and Indiana.

Although new data indicates the nation’s auto industry is beginning to cool, transportation equipment manufacturing in Kentucky is still going strong.

Over the past year, we saw the establishment of GM’s new Corvette plant in Bowling Green and Aleris’ automotive body factory in Lewisport.

Toyota launched a massive $1.3 billion investment at its Camry plant, while Ford expanded its SUV line in Louisville. In addition, Tower Automotive announced it would expand two plants in Shepherdsville and Bardstown.

Among the many factors affecting the auto industry today include ride-sharing trends, the high cost of living in urban areas, and the increased longevity of modern vehicles.

Recent IndustryNet reports found Tennessee’s transportation equipment sector lost jobs for the first time since the recession, while auto industry employment growth has virtually come to a standstill in Ohio.

Kentucky’s stronghold in metal fabrication – aluminum specifically – helped drive the state’s industrial sector and secure its reputation as a prime location for auto manufacturing. Kentucky’s aluminum production skyrocketed in the post-recession era in response to a surging auto industry.

Kentucky is home to hundreds of metal manufacturing plants ready to supply transportation equipment manufacturers, and has established itself as a major center for aluminum production.

As more and more auto manufacturers switch to lightweight materials in order to improve fuel efficiency, Kentucky has become a prime location for automakers and metal fabricators alike.

At the start of the year, aluminum rolling company Novelis announced plans to open a massive $300 million automotive aluminum sheet metal plant in Guthrie, one of many bright spots that bode well for Kentucky’s industrial outlook.

Kentucky manufacturing: the road ahead


Looking ahead, a number of policy changes are likely to have an impact on Kentucky’s industrial sector, and on its auto industry in particular. According to a CNBC study, Kentucky relies heavily on exports to Canada and Mexico and the Trump administration’s plans to potentially withdraw from NAFTA could potentially set off a trade war.

In addition, many automakers rely on a supply chain that stretches far beyond U.S. borders, and the elimination of the treaty could have far-reaching effects on their suppliers.

TRUMP TRADE WAR62.5% of the material used in automobile manufacturing must be U.S.-made in order to enter the U.S. tariff-free, according to current NAFTA guidelines. A proposed renegotiation of NAFTA seeks to increase this to 85%.

On the other hand, a careful renegotiation of the treaty has the potential to boost U.S. industry.

The National Association of Manufacturers calls NAFTA a “win for U.S. manufacturing” yet acknowledges a renegotiation of the treaty could help remove any lingering trade barriers and cut red tape -- ultimately boosting the industrial sector.

The tax reform bill is also set to have a major impact on Kentucky manufacturers in the auto industry and beyond.

Support for the tax reform bill has been strong among the nation’s manufacturers. A recent manufacturers’ outlook survey conducted by the National Association for Manufacturers found optimism among industrial companies in the U.S. hit an all-time high of 94.6 in the third quarter of 2017, and Kentucky manufacturers were no exception.

NAM recently reached out to Atlas Machine & Supply Inc. in Louisville to ask what sort of effect the new tax reform bill would have on their operation. Atlas reported they planned to reinvest tax savings into R&D and modernize their facility.

In addition, further tax relief may be coming to Kentucky manufacturers, with Gov. Matt Bevin proposing an elimination of the inventory, inheritance and corporate income taxes, and eventually removing the individual income tax as well. This would go a long way in helping to boost the state’s competitiveness.

According to a survey by CNBC, Kentucky ranks 35th in the nation for business conditions, lagging far behind competing states like Tennessee and Indiana. Though, by CNBC’s metrics, Kentucky’s infrastructure is sixth-best in the nation and its cost of doing business third-best, the state falls far behind in respect to its workforce, with many workers lacking the skills needed for today’s advanced manufacturing.

This has deterred tech-focused industrial enterprises from venturing into Kentucky, with the state ranking 37th in the nation for technology and innovation.

On the other hand, a recent U.S. News & World Report study found Kentucky’s efforts at bridging the “skills gap” to be among the most comprehensive in the nation, with programs like the $100 million Kentucky Work Ready Skills Initiative helping to foster a skilled workforce. The state also passed right-to-work legislation early in 2017, which, despite driving down wages, increases Kentucky’s competitiveness with neighboring right-to-work states.

The rise of Kentucky manufacturing in the post-recession era

2009-2010

A decade ago, 5,929 manufacturers called Kentucky home. Industrial workforce levels stood at 320,814 jobs. Employment fell sharply during the recession, and by October of 2010 the number of industrial companies in Kentucky stood at to 5,384 and the workforce shrank to 277,616 workers.

Decreased demand plagued Kentucky’s manufacturing sector, particularly in transportation equipment and industries related to the housing market

Jobs in Kentucky’s transportation equipment sector plunged 21% during the recession.

However, losses began to ease over the 2009-2010 period, and a number of new operations broke ground in the state. We saw the establishment of Kentucky Copper Inc.’s new plant in Morgantown and the opening of Coating Excellence International’s packaging facility in Hebron.

Mountain Valley Recycling broke ground on a new plant in Frankfort; WL Plastic established a factory in Elizabethtown; and Olympic Steel unveiled its new factory in Mount Sterling.

Some Kentucky manufacturers reported expansions to IndustryNet that year, including ZF Steering; Magna Car Top Systems; Integrated Pharmaceutical Packaging; Polyair Corporation; and Raytheon Missile Systems.

2010-2011

The recovery gained momentum in this year, with Kentucky adding jobs for the first time since the recession. Helped by low business costs, Kentucky added a little over 700 new jobs, as employment in the transportation equipment sector began to recover, climbing 2.8%.

For the first time in several years, multiple industries in Kentucky reported gains, led by chemicals; rubber/plastics; paper products; and primary metals.

This was offset, however, by continued losses by industries related to the housing sector like furniture/fixtures; lumber/wood; and stone/clay/glass.metal fabrication_close up_hand

The auto bailout and growing foreign investment helped speed the auto industry’s recovery, with Hitachi unveiling plans to establish operation in Berea; and expansions announced at Cooper Standard and Hahn Automotive.

Other major announcements included the opening of Tiffany & Co.’s manufacturing plant in Lexington; the expansion of Ventra Plastics; and the establishment of Florida Tile’s headquarters in Lexington.

Bloomfield Farms broke ground on gluten-free food manufacturing plant in Bloomfield.

This was also the year “green” technology really began to take hold. A number of new manufacturing operations focused on the development of renewable fuels and alternative energy solutions began to crop up around the nation, including Alltech’s algae fuel production facility in Winchester

2011-2012

Kentucky added more than 4,000 manufacturing workers in this year, led largely by a flourishing transportation equipment sector. Jobs in the industry surged 10% as automakers and suppliers flocked to the state, attracted to the state’s low labor costs.

New operations were mostly limited to the auto industry, with the establishment of Ashai Bluegrass Forge’s new automotive parts plant in Richmond and a Magna Seating facility in Shepherdsville. Ford expanded its Louisville assembly plant, while Denyo Manufacturing expanded its Danville auto supply plant.

Yet we also saw additional sectors begin to strengthen with the establishment of GE’s new water heater plant in Louisville, and L’Oreal’s hair care products production facility in Florence. Gains were strong in textiles/apparel; food processing; industrial machinery; and electronics.

Losses were once again attributable to the fallout in the housing sector, with employment down in furniture/fixtures; stone/clay/glass; and lumber/wood.

2012-2013:

Kentucky industrial growth accelerated in this year, with the state adding another 7,400 jobs to its manufacturing workforce, a gain of 2.6%. This was nearly double the gain reported in 2011-2012 survey year, and triple the gain from the year prior to that.

Gains in the transportation equipment sector fell short of the impressive 10% increase reported over 2011-2012, but still rose by a robust 4.2%.

Instead, this year we saw Kentucky’s industrial climate strengthen across the board, with jobs in the electronics sector up nearly 9%; chemical processing up by 8%; medical instruments/related products up by 6%; and primary metals by 5%.

older woman on an assembly line autoA number of new expansions were announced over the year, including Toyota’s $360 million expansion of its plant in Georgetown.

Kobe Aluminum Automotive Products established a plant in Bowling Green, while auto supplier Mubea opened a new facility in Florence. Kayser Automotive Systems unveiled plans to establish a plant in Fulton.

Beyond the auto industry, we also saw Custom Food Products expand their facility in Owingsville. Brady Corp broke ground on a factory in Louisville, while Thunder Manufacturing established a new stamping plant in Richmond.


2013-2014

Industrial job growth in Kentucky slowed in this year, adding 1,448 jobs or about a half percent. The transportation equipment industry added jobs for the third straight year, up about 6%.

Adding to gains in the industry, Toyota announced it would ramp up production at its Georgetown plant and Ford unveiled plans to expand hiring at its truck factory in Louisville. Suppliers such as Dr. Schneider Automotive Systems, Kowa Kentucky, and Faurecia announced expansions in response.

Gains in the transportation equipment sector were offset by losses in food processing; chemical processing; furniture/fixtures and electronics. Contributing to the state’s losses was the closure of a Borden Dairy plant in Madisonville and the Fruit of the Loom facility in Jamestown

2014-2015iron fabrication_sparks

Kentucky’s manufacturing job growth accelerated somewhat over this year, adding more than 3,000 jobs – double the increase reported over the 2013-2014 period. Once again, gains were led by transportation equipment, which surged by 7.4%.

This represented the fifth straight year of manufacturing job gains, with the state’s industrial workforce growing by 6.4%.

Employment growth in transportation equipment manufacturing hit 35% at this five-year mark, among the strongest growth trajectory in the nation.

A number of Kentucky auto suppliers announced openings over the year. Iwis established a facility in Murray; American Howa Kentucky announced plans to open a factory in Midway; while TWB unveiled plans to establish a facility in Glasgow.

Grupo Antolin announced plans to establish two manufacturing facilities in Louisville. Meanwhile, Ford and GM continued to add jobs at facilities in Louisville and Bowling Green.

Many other industries added jobs in Kentucky over this year. Food processing recovered, adding 1.3% to its workforce, while lumber/wood; fabricated metals; stone/clay/glass; and paper products all added significant numbers of jobs.

These gains were offset, however, by losses in electronics; textiles; and fabricated metals.

2015-2016

This survey period marked the first year Kentucky lost manufacturing jobs since the end of the recession. The setback was mostly due to severe losses in the coal industry, which shed a staggering 19% of its workforce. Overall, the state lost about 1,300 jobs, or about a half percent.

Coal mining in Kentucky had been slowly losing jobs since 2013, when the industry’s workforce stood at nearly 10,000 jobs. The sector shed the most jobs, however, between 2015 and 2016, plunging by more than 1,600. Coal mining accounted for 6,845 workers as of October of 2016.

Losses would have been more severe were it not for the transportation equipment sector, which once again added jobs, up 4.4% over the year.

metal workerIn this year we saw Constellium-UACJ break ground on automotive sheet plant in Bowling Green, while automotive plastics makers MACA and Riken Elastomers established new plants.

Automotive supplier Faurecia opened a new seating plant in Simpsonville.

Growth was also noted in industrial machinery; food processing; rubber/plastics; and textiles.

2016-2017

This past year we saw Kentucky’s industrial employment edge up, recovering losses suffered over the 2015-2016 survey period. Gains were again led by transportation equipment, while job losses in coal mining slowed.

Next, well take a look at some of the top industries, cities and manufacturing companies in Kentucky:

Kentucky manufacturing: the top five

Top 5 Kentucky Industries by Employment:

21% Transportation equipment
12% Food and kindred products
10% Industrial machinery and equipment
8% Fabricated metal products
8% Rubber and miscellaneous plastic products

Top 5 manufacturing companies in Kentucky

Toyota Motor Mfg., Kentucky, Inc. (Georgetown) - 8,200 employees
Ford Motor Co., Kentucky Truck Plt. (Louisville) - 8,000 employees
Haier US Appliances Solutions, Inc. (Louisville) - 6,000 employees
Ford Motor Co., Louisville Assembly Plt. (Louisville) - 5,000 employees
Lexmark International, Inc. (Lexington) - 3,275 employees

Top 5 Kentucky counties with the most manufacturing jobs:

Jefferson - 72,502 workers
Fayette - 19,683 workers
Boone - 19,263 workers
Scott - 10,971 workers
Warren - 10,550 workers

Kentucky cities with the most manufacturing jobs:

Louisville - 71,936 workers
Lexington - 19,683 workers
Florence - 11,437 workers
Georgetown - 10,910 workers
Bowling Green - 10,383 workers

For more information on Kentucky manufacturing companies

MNI’s extensive manufacturing data powers IndustryNet, an industrial marketplace that connects buyers with suppliers of 10,000+ products and services. IndustryNet allows users to search and source more than ten thousand types of products, parts, supplies, and services for free. IndustryNet® lists every U.S. manufacturer plus thousands of wholesalers & distributors and industrial service providers.

To connect with industrial suppliers in Kentucky and across the U.S. start your free search on IndustryNet. Or, to access detailed profiles of Kentucky’s 4,800 industrial companies and their 17,000  executives, learn more about IndustryNet’s EZ Select database subscription.

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