Lexington, KY - When the mayors of Lexington and Louisville announced plans to join their cities in a concerted regional effort to transform the Bluegrass into a hub for advanced manufacturing, the people of Lexington-based Kinemetrix already knew how this story could play out.
Founded 16 years ago when Jim Peyton left Toyota to form his own company, Kinemetrix builds processes and assembly lines for the exact type of facilities Lexington Mayor Jim Gray and Louisville' Mayor Greg Fischer hope to attract to the area. Upon hearing of the "super region" plan known as the Bluegrass Economic Advancement Movement (BEAM), Peyton and his Business Development Manager Chris Gullo knew there were more facets to the concept than many may have realized.
When a manufacturer like Hitachi, having outgrown its Harrodsburg, Ky. factory, decides to expand by opening a second operation in Berea, Ky., the news is often about the jobs that would be created within the walls of the new facility. But Gullo sees more: a supply chain ripple effect as the equipment those new employees will require for production doesnʼt just magically appear in a factory.
Assembly lines and processes often are imported to Kentucky from places like Michigan or Ohio, where manufacturing still maintains a strong presence, but many times - all too often, in Gullo's view - contracts for high-tech production systems go overseas to Japan.
"If they're going to locate (locally) and from an economic development point of view, if we can avoid giving a company a tax break to have them simply ship their investment dollars to Ohio, Michigan or Japan for equipment build, our Kentucky workers are going to get two, three, four bites at this apple of economic development," he said.
"The first tier (the regional approach) is to get the factory in, get the manufacturing jobs into Kentucky and let that factory start producing. But there are equipment builders, there are machine shops, there are technicians; there is all this other infrastructure there that if we can join together with the overall economic development effort I think we can leverage that Kentucky tax dollar into more than just the manufacturing jobs," Gullo noted.
That's a layer of the onion that was immediately evident to Gray. At the invitation of Kinemetrix and Business Lexington, he visited one of the two local Kinemetrix facilities to see a system that had been specially created for a Michigan auto supplier's facility.
"When we think today about Toyota 25 years after landing here, we tend to think of the plant out there (in Scott County) and jobs out there," Gray said. "We are often unaware of the lessons we have learned while we are learning them, and what Toyota teaches is a way of thinking, a way of creating."
What Gray saw when Peyton and Gullo fired up a sight-guided line that can seamlessly create multiple parts for the client's facility in Michigan was an outgrowth of Toyota's decision to build its first North American plant in Georgetown in the 1980s. Not only had Kinemetrix's founder worked at Toyota and decided to himself create jobs in the region, but he brought along with him the ideals and thinking processes from the renown Japanese auto maker.
"He's a Toyota alum; heʼs a Toyota disciple. He's been fully embedded with the Toyota DNA, which is continuous improvement. That commitment to total quality is what advanced manufacturing is all about: that commitment to studying an industrial process and determining what and how we can build on what we know today," Gray said.
"Companies like that are flying under the radar. They're doing this work, and I suspect they are doing it without a real support system and encouragement - flying solo," he said.
In a lot of ways, Gullo said, Gray is right.
"I'm not sure it was really on their radar map at all," he said, referring to officials of the Kentucky Cabinet for Economic Development. "There's a lot of thought that goes into the contractors that pour concrete and make steel buildings and stand those steel buildings up and electricians that wire the building and all of those things. There appears to be a database with the economic development cabinet (that it could) give companies that are locating.
"But in our meeting with those folks recently we realized there isn't even a category right now for our type of company and we would love for there to be so that we can get the word out that we exist," Gullo said. "If we can get in the conversation early and make them aware that world-class equipment manufacturing and advanced manufacturing technology exist here in Kentucky, then we think that they will be more than pleased to work with us and give that Kentucky worker a couple more bites of that apple."
But in order to be ready to go for that bite, Kinemetrix must grow, and it has run into two obstacles as it has attempted to expand.
The first is space; the group has outgrown its headquarters on Trade Street and is leasing warehouse space off Jefferson near downtown for a recently completed project that was too large to handle at their headquarters. Peyton said he wants to keep the company in Lexington, but months of searching has not shown a suitable space. Peyton said he is worried the economics of building his own facility will move him across county lines.
The second concern: Who is going to work for the company? Advanced manufacturing requires a special innovative and engineering mind. Education is an essential in this world.
"Our world sits in that space between academia and the practical factory sort of a world. And a person working in our business needs to have a strong theoretical background that comes from a university education typically ... but at the same time needs to be that backyard mechanic kind of a guy who is comfortable with a wrench in his hand ... because it takes that breadth of understanding," he said.
As might be expected, finding that right mix is no easy task, Gullo said.
"We have tried to grow our own at times. We have hired experienced people away from other competitors ... Once a person achieves both (theoretical knowledge and experience), they become highly sought after and thereʼs a tendency for competitors to rob people from each other in order to get the folks that they need," he said.
Simply shifting talent from one company to another doesn't really help to further our efforts to grow American manufacturing, Gullo said. That can only come from a concerted effort to expand the labor market by producing more college graduates with the required skills.
Gray said he recognizes that finding solutions to issues like these are what will make BEAM a success.
"It's the way of thinking that can lead to a culture that can encourage advanced manufacturing, that can encourage that next level of technology and the production process," Gray said.
How does academia respond to this challenge? Read Tom Martin's interview with Merl Hackbart, interim dean at the University of Kentucky's Gatton College of Business and Economics, in this issue.