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Invest in Kentucky

December 2008

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Welcome to Kentucky

HOFBRAUHAUS

NEWPORT

..

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Where is Kentucky?

Kentucky is located within 600 miles / 1,000 kilometers of two-thirds of the U. S. population.

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Steve Beshear

Governor

Commonwealth of Kentucky

Larry Hayes

Interim Secretary

Cabinet for Economic Development

New Leadership

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• The overall cost of doing business in Kentucky is 7% lower than the national average.– This measurement takes into account:

• Labor

• Energy

• State & Local Taxation

• Kentucky enjoys the 2nd lowest industrial electric costs in the eastern United States.

(Source: North American Business Cost Review, 2008)

Business Costs

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Business Costs

Tax Modernization:

In 2005, Kentucky’s tax system was reformed to improve the tax climate for business investment:

• The corporation license tax was eliminated.• The corporate income tax rate was reduced from 8.25% to 6%.• Tax credit incentives are maintained.

Kentucky manufacturers enjoy favorable tax provisions:• Exemption of sales and use tax on manufacturing machinery for

new and expanded industry.• Exemption of manufacturing machinery from local property taxes,

with state rate at 15 cents per $100 in assessed value.

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Automotive Industry

A significant presence in Kentucky:

• In 2007, Kentucky ranked 3rd in car and light truck production

• Kentucky has 470+ motor vehicle related suppliers employing nearly 90,000, which includes the 15,500 employees at the 4 Kentucky assembly plants.

• 9.9% of all cars and light trucks produced in the U.S. are made in Kentucky.

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Motor Vehicle Related Plants and Suppliers

Automotive Assembly Plants: 4

Automotive Suppliers: 470+

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Automobile and Truck Assembly Plants

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Motor Vehicle Related Manufacturers

500 Miles\400 Kilometers

250 Miles\800 Kilometers

Motor Vehicle RelatedManufacturers

major_cities_easternus

500 miles from the center of Kentucky

500 miles from the center of Kentucky

US States

1 - 6

7 - 19

20 - 52

53 - 160

161 - 276

No Data

great_lakes

cntry05

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Automotive – European Presence

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Recent Accomplishments

Kentucky competes for business growth:

• Kentucky ranked 4th in the Site Selection 2007 Competitiveness Award based on 10 criteria for measuring business expansion activity.

• Kentucky ranked 10th in the 2007 Site Selection Governor’s Cup awarded for most new and expanded facilities.

• Kentucky's Workforce Training Programs, which includes the Bluegrass State Skills Corporation, ranked 5th in the U.S. for 2007.(Source: Site Selection & Expansion Management Magazines, 2008)

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Global Kentucky Kentucky Ranks 10th overall in “Globalization”

• 10th in Foreign Direct Investment, by percentage of workforce employed by foreign firms (3.77%).

• Kentucky ranks 6th nationally in exports per capita for 2007.

• In 2007 Louisville International Airport ranked as the 9th busiest cargo airport in the world and 3rd in North America.

• The Louisville International Airport handled 4.5 billion pounds of cargo, freight, and mail in 2007.

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Foreign Direct Investment

There are 404 foreign-owned facilities employing 76,323 in Kentucky:

• 182 Western European-owned facilities with 26,686 employees.– 69 German-owned facilities with 9,347 employees.

• 156 Japanese-owned facilities with 38,952 employees.

• 66 other foreign-owned facilities.

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Kentucky Cabinet for Economic Development

Primary state agency responsible for business development in Kentucky.– Attraction of new business investment.– Retention and expansion of existing business.

Acting as single point of contact for Kentucky.– Liaison with local development organizations.– Liaison with other state agencies.– Liaison with utility companies.

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Kentucky Cabinet for Economic Development

Your single point of contact in Kentucky will:

• Identify appropriate sites and buildings for your business.

• Provide detailed community and site-specific data on workforce, business costs, utilities, etc...

• Accompany officials to Kentucky communities for confidential community and site/building evaluations and meetings.

• Prepare a package of financial, training, and tax incentives as well as other project inducements.

• Assist in obtaining required state permits.

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www.thinkkentucky.com

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Site & Building Database

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Site Information

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Building Information

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Community Information

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Financial Assistance

To Lower the Cost of Doing Business in Kentucky:

Programs are available to address both front-end costs and long-term recovery of a portion of the investment in land, building, and equipment.

• Front End Grant and Tax Refunds – Typically recovered within the first 3-5 years of project implementation

• Employee Recruitment and Training– Available when workforce recruiting and training is implemented

• Long Term Cost Recovery Programs– Allows a 10 or 15 year recovery period upon activation of incentives

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Front End Cost Reductions

• Kentucky Enterprise Initiative Act (KEIA) is a program to refund sales and use taxes for construction materials, building fixtures and research and development equipment.

• Economic Development Access Road Fund is a pool of money Kentucky uses to ensure an industrial location has good, functional and safe highway access.

• Kentucky Office for Employment & Training provides a free service to businesses by recruiting, screening and referring potential employees based on criteria provided by the company.

• Bluegrass State Skills Corporation (BSSC) & Kentucky Workforce Investment Network System (KY WINS) are two programs to provide funding for training employees.

• Economic Development Bond (EDB) Grant funds are available for Kentucky to inject cash into a project in a creative and flexible manner for infrastructure, equipment, research and development, or other special needs.

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Manufacturing Operations in Kentucky may be Eligible for One of the Following:

• Kentucky Industrial Development Act (KIDA)

• KIDA is a manufacturing incentive program available in every county in Kentucky that is not eligible for KREDA.

• Kentucky Rural Economic Development Act (KREDA)

• KREDA is a more aggressive program available in higher unemployment areas of Kentucky. It offers a longer term for recovery and higher eligible costs.

Service Oriented Operations in Kentucky may be Eligible for:

• Kentucky Jobs Development Act (KJDA)

• KJDA is a service oriented incentive program available in every county in Kentucky

Long Term Cost Recovery

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Long Term Cost Recovery

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Kentucky Industrial Development Act (KIDA):

Eligible Operations: Manufacturing companies locating or expanding in Kentucky.

Eligible CostsKIDA allows companies to recover land, building, and equipment costs, with equipment costs limited to $20,000 per Kentucky job created, over the ten-year term of the program.

InducementsFor up to 10 years the company can receive either a 100% credit against their state corporate income tax or the company can assess Kentucky resident employees up to 3% of their gross payroll. Employees offset this with personal state income credits equal to the assessment.

Long Term Cost Recovery

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Kentucky Rural Economic Development Act (KREDA):

Eligible Operations: Manufacturing companies that locate or expand in qualifying KREDA counties.

Eligible CostsKREDA allows companies to recover land, building, and equipment costs over the fifteen-year term of the program.

InducementsFor up to 15 years the company can receive a 100% credit against their state corporate income tax and the company can assess Kentucky resident employees up to 4% of their gross payroll. Employees offset this with personal state income credits equal to the assessment.

Long Term Cost Recovery

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Kentucky Jobs Development Act (KJDA)

Eligible Operations: Service or technology (non-manufacturing) related companies locating or expanding in Kentucky

Eligible CostsAllows approved companies to recover up to 50% of their annual lease cost over the ten-year term of the program and up to 50% of their start-up costs (up to $10,000 per new full time Kentucky resident employee) including the cost of furnishing and equipping the facility.

InducementsFor up to 10 years the company can receive a 100% credit against their state corporate income tax and the company can assess Kentucky resident employees up to 5% of their gross payroll. Employees offset this with personal state income credits equal to the assessment.

Long Term Cost Recovery

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• Single Point of Contact for Site, Community, and Workforce Evaluations

• Help in the Establishment of Workforce Training Programs

• Assistance with the Office for Employment and Training on Recruiting and Screening of New Employees

• Ability to Expedite Permitting Processes Relating to Air, Water, and Construction

• Coordination in Arranging Meetings with Additional Entities Interested in the Project

• Provide Access to Financial Assistance Programs Available to Support Future Expansion of Existing Operations

Summary

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Contact Information

Larry Hayes, Interim Secretary Jim Navolio, Commissioner Cabinet for Economic Development Business Developmentlarry.hayes@ky.gov jim.navolio@ky.gov

Kentucky Cabinet for Economic Development Old Capitol Annex Building

300 West Broadway

Frankfort, Kentucky 40601Phone: 502-564-7140Fax: 502-564-3256

www.thinkkentucky.com