Call to Order and Roll Call
The 4th meeting of the Interim Joint Committee on Economic Development and Tourism was held on Thursday, October 17, 2013, at 11:00 AM, in the North American Production Support Center at Toyota Motor Manufacturing, Kentucky, Inc., Georgetown, Kentucky. The meeting was a joint meeting with the Interim Joint Committee on Labor and Industry. Senator Alice Forgy Kerr, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Alice Forgy Kerr, Co-Chair; Senators Julian M. Carroll, Denise Harper Angel, Ernie Harris, Dennis Parrett, and Mike Wilson; Representatives Lynn Bechler, Leslie Combs, Mike Denham, Jeffery Donohue, Myron Dossett, Jeff Greer, Mike Harmon, Richard Heath, Richard Henderson, Dennis Horlander, Thomas Kerr, Adam Koenig, Brian Linder, Tom McKee, Terry Mills, David Osborne, Ruth Ann Palumbo, John Short, Arnold Simpson, John Will Stacy, Fitz Steele, Wilson Stone, Russell Webber, and Jill York.
Guests: Mike Price, Vice President of Administration, Toyota Motor Manufacturing, Kentucky, Inc. (TMMK); Kim Menke, Manager of External Affairs and Government Relations, Toyota Motor Engineering and Manufacturing North America, Inc. (TEMA); Dr. Augusta Julian, President/CEO, Bluegrass Community and Technical College; Dr. Michael McCall, President/Chief Executive Officer, Kentucky Community and Technical College System; Hollie Spade, Chief of Staff, Kentucky Cabinet for Economic Development; John Cooper, Capital Link, Connections; Jeremy Gillis, Advanced Manufacturing Technician Program (AMT) Student; and Sarah Jenkins, AMT Student.
LRC Staff: John Buckner, Lou DiBiase, and Dawn Johnson.
Approval of Minutes
A motion by Senator Parrett and second by Senator Wilson to approve the minutes of the July 15 and September 30 meetings carried by voice vote. Co-Chair Kerr expressed thanks to the officials of Toyota Motor Manufacturing, Kentucky, Inc. (TMMK) and Scott County for hosting the Interim Joint Committees on Labor and Industry and the Interim Joint Committee on Economic Development and Tourism. Senator Damon Thayer extended appreciation to the corporation for its continued support and positive economic impact on Scott County and the Commonwealth.
Mike Price, Vice President of Administration, TMMK, gave an overview of the structure of Toyota’s partnership with North America, the Lexus incentive project at TMMK, the workforce development needs of the Advanced Manufacturing Technician Program (AMT), and the transportation and infrastructure needs of the plant.
Toyota Overview
Kim Menke, Manager of External Affairs and Government Relations, Toyota Motor Engineering and Manufacturing North America, Inc. (TEMA), informed the committee of Toyota’s national and regional operations in North America. Toyota’s headquarters for manufacturing is based in Erlanger, Kentucky, at TEMA. Vehicle development, engineering design, an advanced research is conducted at facilities in Erlanger and Ann Arbor, Michigan. Regional operations include TEMA, TMMK, Toyota Motor Sales, Inc. in Blue Ash, Ohio, and North American Parts Operations in Hebron, Kentucky. Fourteen manufacturing facilities exist across North America, producing 12 models.
Mr. Menke said the total economic investment that Toyota has made in its North American operations is $27 billion, and employing over 39,000 team members. About 1.8 million vehicles are produced, and local purchasing equals $26 billion. In the past 24 months, more than $2.1 billion has been invested in North American manufacturing and 4,000 jobs have been created. Approximately 600 suppliers operate in North America (100 in Kentucky). The supply base adds nearly 48,600 jobs to the automotive industry. TMMK operates as one of the largest plants in the world on 1300 acres and 7.5 million square feet. A $6 billion investment, the production capacity reaches 500,000 vehicles annually and employs 7,000 team members. In 2014, TMMK will reach the milestone of producing 10 million vehicles. Toyota’s North American production facilities exported 125,000 locally assembled vehicles in 2012 to 21 countries.
Mr. Menke said team members at TMMK reside in 72 of Kentucky’s counties, and 80 percent live within an 80 mile radius of the plant. The top five counties of residence for team members include Scott (2,202 team members), Fayette (1,404), Harrison (356), Jefferson (245), and Grant (240).
Lexus Project Announcement–Overview, Wage Assessments, Local Infrastructure Improvement, and Workforce Development
Mr. Price testified about the Lexus ES 350 Incentive Project at TMMK. The Lexus RX and ES models that are produced in North America (in Canada and Kentucky) represent nearly 60 percent of total annual sales. The project will produce 50,000 units per year for the North American market, add two production shifts at TMMK, and create 750 team member positions. The investment is $531 million. Hollie Spade, Chief of Staff for the Secretary, Cabinet for Economic Development, said that in 2007, the Kentucky Jobs Retention Act was implemented to meet the needs of the larger automotive industry. Existing incentives from this program may be utilized for the current Lexus project at TMMK. As the project develops, modifications may be made to the investment. The Kentucky Economic Development Finance Authority awarded $146.5 million over ten years to the project.
Ms. Spade discussed the importance of the infrastructural needs pertaining to Interstate 75 and the interchange at Cherry Blossom Way and Champion Way during the expansion of the Lexus Project at TMMK. Oversight will be brought to the attention of the legislature in the 2014 General Assembly. A skilled workforce is important to the project. To build the “talent pipeline,” the cabinet has partnered with the Bluegrass Community and Technical College (BCTC) and developed the AMT program at TMMK.
KCTCS/BCTC Advanced Manufacturing Technician Program
Mr. Price commented on the growing need for highly skilled workers in specific trades skill positions, particularly within the automotive industry. A work-ready workforce is needed to fill hundreds of open positions. In partnership with KCTCS and BCTC, the AMT program seeks to address the issues facing TMMK specifically. These issues include the retirement “bubble,” the negative perception of industrial jobs, and the national problem of approximately 600,000 unfilled skilled positions. Toyota’s campaign to change the perception and value of jobs in manufacturing includes partnerships with the Foundation for Kentucky Industry’s “Dream It! Do It!” campaign, Project Lead the Way, and the STEM initiative for support for careers in science, technology, engineering, and mathematics. The AMT program was implemented in 2010. The program offers an associate degree in applied science and on-site training in the technical aspects of a manufacturing position, as well as floor experience and core exercises within the plant. The classroom aspect of the program utilizes a new-model classroom which looks and feels like a factory setting. The AMT program partners with the Bluegrass Manufacturing Development Collaborative made up of 16 member companies, 11 of which sponsor current students in the program.
Mr. Menke introduced two AMT students, Jeramy Gillis and Sarah Jenkins to give insight to the benefits of the program. Mr. Gillis was homeschooled in Georgetown and learned about the program through his home school group. He stated the benefit of training on-site with the opportunity to obtain a career position at the completion of the program as the reason he made the decision to apply for AMT. Ms. Jenkins is a 2012 graduate from Harrison County, who participated in Project Lead the Way classes at her high school. Ms. Jenkins said after comparing the costs of college to the cost and beneficial training of the AMT program, she chose AMT for the opportunity to be debt-free and prepared for a position upon graduation. Representative McKee, Ms. Jenkins' district representative, commended her for her scholastic efforts and recognized his constituent, Dennis Parker, also in attendance, as a key individual involved in the development and research of the AMT program. Mr. Parker has been integral in transferring the program to Toyota’s other facilities. Mr. Menke invited the members and guests to tour the AMT classroom at the conclusion of the meeting.
Dr. McCall, President/Chief Executive, KCTCS, continued the discussion explaining the bigger picture of KCTCS involvement. KCTCS seeks to provide, through 16 colleges and 70 locations throughout the Commonwealth, the workforce training needs of businesses and industries, and individuals who want to enhance their employability and quality of life. A results-oriented training provider, KCTCS provides workforce solutions to more than 5,000 Kentucky companies annually, primarily in the manufacturing sector. The Kentucky Center of Excellence in Automotive Manufacturing led to a $5.5 million National Science Foundation grant which created the Automotive Manufacturing Technical Education Collaborative (AMTEC). AMTEC has collaborated with 35 community colleges in 12 states. Through the development of national standards, a workforce of multi-skilled technicians for the automotive sector is being trained. Their partnership with Toyota began in 2003. In 2006, the Advanced Manufacturing Technician Program was appropriated $1.5 million to acquire property and to design a facility. Dr. McCall expressed to the committees the importance of the expansion of the facilities and the funding that will be needed in 2014. In 2011, the National Governor’s Association selected AMTEC as the best practices model for the nation.
Dr. Julian, President/CEO, BCTC, described the expansion plan for the AMT program. Sixty-three students are enrolled at AMT, and 29 students have graduated. The expansion would provide for 1,200 students, 12 full-time faculty, and 20 part-time faculty on 20 acres of land that the Scott County Fiscal Court and the City of Georgetown has acquired. Dr. Julian stated 100 percent of AMT’s students who took Toyota’s general assessment test passed. Less than 50 percent of the general public pass Toyota’s test for employment readiness.
Mr. Cooper, Capital Link, Connections, spoke to the committee about the need for infrastructure changes to support the Lexus Project expansion. Nearly 10,000 people, not including those driving trucks transporting parts, travel the facility on a daily basis. The proposed I-75 Interstate Interchange Project would connect Cherry Blossom Way and Champion Way, creating a safe and functional route for business at TMMK. Mr. Price asked that the General Assembly authorize funding for the interchange project and the expansion of the AMT program.
Co-Chair Kerr thanked the speakers for their presentation and commented on how the presented information is an example of the best model of education, economic development, and labor and industry partnering for success in the Commonwealth. Senator Carroll spoke about the value of the investment made in 1978, when Kentucky sought partnership with Japan by opening an office in Tokyo. Ms. Spade, in response to Senator Carroll, stated that there are 154 Japanese owned businesses in Kentucky with 37,000 employees.
Senator Wilson and Representatives Denham, Linder, and McKee commented on the great need for skilled employees across the nation and commended the AMT program for providing the training and education needed to meet the needs of America’s workforce.
In response to questions from Representative Bechler, Mr. Menke said the AMT program is targeted towards skilled trade jobs including tool and die and skilled maintenance positions, which represent the largest need for trained workers in the industry. Dr. Julian responded machinist, tool and die, and welding training are in high demand at BCTC. Mr. Menke said the program has partnered with the Society of Manufacturing Engineers in its outreach training within high schools, specifically in robotics programming.
Co-Chair Kerr asked Mr. Gillis and Ms. Jenkins to explain their goals after finishing the program. Ms. Jenkins said her goal is to pursue an engineering degree. However, she enjoys the variety of work in machine maintenance. Mr. Gillis agreed and commended the multi-skilled training opportunities at AMT such as hydraulics training, electrical, mechanical, welding, crane work, and injection molding. Mr. Menke added that BCTC and the University of Kentucky partner in a pathway where AMT graduates can earn a bachelors degree in engineering.
In conclusion, Co-Chair Kerr announced that the next meeting of the Interim Joint Committee on Labor and Industry will be Thursday, November 21, at 10:00 in the Capitol Annex. The next meeting of the Interim Joint Committee on Economic Development and Tourism will be Thursday, November 21, at 1:00 in the University of Kentucky Student Center Ballroom.
The committee members will tour the AMT classroom upon adjournment.
There being no further business, the meeting adjourned.