Kentucky’s deal with Ford Motors wins national award [Opinion: The Arena]

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The Deal Of The Year

This past October, we shared with readers the good news that Ford Motor Company was going to invest a total of $1.2 billion to expand operations at the Louisville Assembly and Ford Truck plants, creating 3,100 new jobs.  Today comes the announcement that the Commonwealth of Kentucky and Ford Motor Co. have earned the distinction of being named 2011 Economic Development Deal of the Year by national magazine Business Facilities. The project, which was selected by a judging panel of industry experts, emerged as the winner in a competitive field of 23 other big-ticket projects from across the U.S.

Business Facilities Mag.jpgWhat started as a plan to preserve the Ford Motor Co. jobs that already were in Kentucky snowballed into a massive expansion of Ford’s Kentucky operations, and the company’s decision to go “all-in” on its Louisville facilities–with an estimated direct economic impact to the area of $5.2 billion–was spurred by a creative $240-million incentives package.

“Our judges really were impressed by the creative use of incentives in this project,” Business Facilities Editor-in-Chief Jack Rogers said. “The incentive package for the Kentucky-Ford Partnership was structured in a way that it could be renegotiated to induce additional investments made at either of Ford’s plants in Louisville, giving the state more flexibility to negotiate.”

Beshear 5.jpg“It is incredibly exciting and rewarding to be recognized as having the 2011 Economic Development Deal of the Year,” Gov. Steve Beshear said. “Our strategic effort to secure Ford’s long-term investment in Kentucky and its workers was a win-win situation for all.”

The Governor said the recognition is due to the hard work and dedication of many local, state and business leaders.  “We know that these kinds of commitments don’t just happen. They are the result of ongoing relationships, cooperation and forward thinking. Kentucky is proud to be the home of two Ford assembly plants and appreciates being given this honor by Business Facilities magazine.”

Ford Louisville Assembly Plant_0.jpgFord announced in late 2010 an investment of $600 million to transform the company’s Louisville Assembly Plant (LAP) into the company’s most flexible high-volume plant in the world – resulting in a second shift and 1,800 new jobs at the plant. In the fall of 2011, Ford announced a new contract, which workers ratified, that will bring a third shift and another 1,300 jobs to LAP, raising the total new-job count to 3,100.

The contract also secured a separate, $600 million investment at Ford’s Kentucky Truck Plant (KTP) to include a new stamping press. The KTP investment will allow for modernization of tooling for the next generation F-Series Super Duty trucks and the Expedition and Lincoln Navigator SUVs.

“Gov. Beshear and his economic development team, working together with industry and community partners, created a business case that allows Ford to continue to invest and grow in Kentucky,” said Ford Vice President for North American Manufacturing Jim Tetreault. “A strong government/industry partnership is a critical advantage in today's globally competitive environment.”

Deal of the Year.jpgOver the years, Ford’s Kentucky plants have produced some of the world's most popular vehicles, including the Ford LTD, Ranger, Bronco II, Explorer, F-series Super Duty pickup trucks and Lincoln Navigator. But as Ford and the rest of the auto industry hit hard times, the labor force dwindled, and the plants, especially Louisville Assembly, grew more obsolete, said Cabinet for Economic Development Secretary Larry Hayes.

For the first time in a long time, Ford’s future in Kentucky was in doubt, Hayes said.  The Cabinet began working with Ford and the state legislature to take action. The result was a new incentive program in 2007 called the Kentucky Jobs Retention Act (KJRA).

The incentive package was structured in a way that it could be renegotiated to induce additional investments made at either Ford plants in Louisville – giving the state more flexibility to negotiate and giving Ford more reason to make long-term investments in the Commonwealth, Hayes said, adding that the program contains mechanisms to protect the state’s interest.

ford-logo.jpgAn economic impact study performed by the Cabinet shows the direct annual economic impact of Ford’s new full-time jobs on the state’s GDP will be approximately $798 million. Indirect and induced jobs will add more than $1.2 billion more.

“The Ford deal has been among the most positive economic developments in any city in America in 2011, and it's nice that others are also recognizing that,” Louisville Mayor Greg Fischer said.

1-ford-louisville_0.jpg“I am pleased that Ford, the United Auto Workers and the Commonwealth of Kentucky are getting deserved recognition for this project,” said Rep. Larry Clark, of Louisville. “This investment will allow Ford to modernize its Louisville production facilities and create thousands of new jobs. None of this would have happened without cooperation between the company and the United Auto Workers. I applaud both the company and the union for their efforts, and I look forward to a great partnership between them and the Commonwealth that will yield significant economic benefit for generations to come.”

“This is a very exciting announcement that recognizes another chapter in a strong and successful partnership between Ford Motor Company, the UAW, the Kentucky Cabinet for Economic Development Cabinet and Louisville Metro Government,” said Eileen Pickett, executive vice president of community and economic development at Greater Louisville Inc. – the Metro Chamber of Commerce. “This reinvestment further solidifies Louisville’s reputation as a flourishing center for advanced manufacturing on an international scale.”

ford-Louisville-Assembly-Plant-prodcution-line_0.jpgFord is the second-largest private employer in Louisville and has an estimated economic impact on the area of nearly $2 billion.  Ford's two plants in Jefferson County are responsible for $511 million per year in direct income for workers ($193 million at the Louisville Assembly Plant and $318 million at the Kentucky Truck Plant).

The plants, through direct and indirect economic activity, support:

  • $26 million in taxes to city and county governments
  • $10 million in taxes to the Jefferson County Public Schools
  • $3.6 million in taxes to the Transit Authority of River City
  • $155 million in state sales and income taxes

Business Facilities will feature the Kentucky-Ford partnership as the cover story in its January/February issue.  Information on Kentucky’s economic development efforts and programs is available at www.ThinkKentucky.com. Fans of the Cabinet for Economic Development can also join the discussion on Facebook at www.Facebook.com/ThinkKentucky or follow on Twitter at www.Twitter.com/ThinkKentucky.

 

For more background, see:  WLKY’s “Ford History In Louisville

Full disclosure:  The author’s first car was a 1952 Ford, for which he paid $100.  It was the best car he ever owned.

52 ford scottysclassiccars-com.jpg

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Louisville.com's The Arena section features opinions from active participants in the city's politics. Their viewpoints are not those of Louisville.com (a website is an inanimate object and, as such, has no opinions).

 

About Thomas McAdam
At various times I have been a student, a soldier, a college Political Science teacher, a political campaign treasurer, and legal adviser to Louisville's Police Department and Board of Aldermen. I now practice law and share my political opinions with anyone who will listen.
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