Call to Order and Roll Call
The 2nd meeting of the Interim Joint Committee on Economic Development and Tourism was held on Thursday, August 20, 2015, at 11:00 AM, at the UK Logan County Extension Office, Russellville. This 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 Carroll Gibson, Chris Girdler, Ernie Harris, Reginald Thomas, and Mike Wilson; Representatives Lynn Bechler, Tim Couch, Jim DeCesare, Jeffery Donohue, Myron Dossett, Jim Gooch Jr., Mike Harmon, Chris Harris, Richard Heath, James Kay, Martha Jane King, Brian Linder, Terry Mills, Wilson Stone, Russell Webber, and Jill York.
Guests: Logan Chick, Logan County Judge Executive; Mark Stratton, Russellville Mayor; Tom Harned, Executive Director, Logan Economic Alliance for Development (LEAD); Ken Campbell, Engineering Manager, Ventra Plastics; Stacey Hughes, Human Resources Manager, Logan Aluminum; Doris Moody, Human Resources Team Leader, Logan Aluminum; Lee Hodgins, Vice President of Human Resources, Champion Petfoods; and Dr. Kevin Hub, Superintendent, Logan County Schools.
LRC Staff: John Buckner, Lou DiBiase, and Dawn Johnson.
Welcome
Logan Chick, Logan County Judge Executive, welcomed both committees to Logan County by giving a brief description of the area’s rich heritage and history. He expressed his appreciation for the committees coming to Logan County and how proud he is to have so many corporate partnerships within the county.
Mark Stratton, Russellville Mayor, welcomed the committees by saying it was a privilege and an honor to have the committees, and he appreciates the work they do across the commonwealth. Mayor Stratton expressed gratitude for the great leadership in the legislature that he has seen over the years.
Career Prep Initiative
Tom Harned, Executive Director, Logan Economic Alliance for Development (LEAD), gave a presentation similar to one that he would give to an industrial prospect interested in relocating or expanding in Logan County from an economic development standpoint that highlighted things such as the county’s community, industrial park site, utilities, workforce, timeline, financing, and local incentives.
Logan County is in south-central Kentucky and is within a day’s drive of 60 percent of the U.S. population, with agriculture accounting for 30 percent of their economic activity and 70 percent attributed to industry and business. The West Industrial Park is 200 acres and has been zoned for heavy industry and has a 161 kilovolt transmission from the Tennessee Valley Authority (TVA), who has assisted in providing prospects with conceptual site plans. LEAD also offers studies on the area’s soil and Karst topography to industrial prospects.
Mr. Harned discussed the different utility companies in Logan County such as TVA electrical power distributed by Pennyrile Electric Cooperative, Logan-Todd Regional Water Commission distributed by the City of Russellville, Logan Telephone, Russellville Electric Plant Board, and Atmos Natural Gas via Texas Gas Transmission. There are no capacity issues with any of the utilities in the county.
Mr. Harned detailed Logan County’s workforce, saying that the county has a large metal working cluster including Logan Aluminum (1200 employees), Emerson Electric (360 employees), Sensus die casting (188 employees), welding and fabrication shops, and several electrical and mechanical contractors. The county population is almost 27,000 and, within a 30 mile radius, 143,684 are a part of the workforce. The unemployment rate of 4.9 percent is below the statewide rate of 5.3 percent and the national rate of 5.5 percent as of June 2015. The workforce availability has been effected by some of the county’s manufacturing closures including Red Cap apparel, Auburn Hosiery Mills, and Hemlock Semi-Conductor. In 2013, there were 305 high school graduates entering the workforce with 118 students that had received National Work Ready Certificates. When LEAD makes presentations to prospects, Logan Aluminum is used as an example to demonstrate Logan County’s ability to host a world class advanced manufacturer.
Logan County Industry Perspective: Ventra Plastics
Ken Campbell, Engineering Manager, Ventra Plastics, testified about Ventra Plastics, which was built in Russellville in 1992 and doubled in size by 1994. This led to the company being bought by Flex-N-Gate in 2001. The facility is 105,000 square feet and sits on 25 acres. Currently, the plant employs 274 workers, which includes positions such as machine operators, injection molding processors, general maintenance technicians, automations technicians, and tooling repair technicians.
The company’s biggest client is Ford, with every F-Series Ford truck having parts that were produced from Ventra Plastics Russellville. The plant sends 16 to 18 truckloads to the Ford Truck Plant in Louisville each day. Mr. Campbell stressed the importance of having skilled workers who excel in areas like geometry and trigonometry due to precision being extremely important. For example, if an angle is measured incorrectly by a tenth of a millimeter on a piece of steel, then a $500,000 part mold would be unusable. The presentation included pictures of various machines that are used to produce parts and also a video demonstrating how one of the production machines works.
Having skilled workers is key for Ventra Plastics, and although good jobs are available, capable workers are not due to a lack of training and experience. Only 62 percent of youth graduating were deemed College/Career Ready. In the 10 county BRADD area, 25 percent of residents 25 or older have less than a 12th grade education. For this reason, he stated that various partnerships, such as those with the local area technology school, would be useful in trying to train more potential employees. Mr. Campbell emphasized that there are no longer multiple layers of supervision. Workers have to be self-directed and work with minimal supervision.
Responding to Representative Marzian, Mr. Campbell said that a lot of workers are hired right after they graduate from high school, and that tours are given to high school students of their facilities.
Answering Representative Harmon, he said that with everything that robots are capable of doing such as painting, mold making, and cutting of windshields, that it was possible for sewing to be done with robotics.
Representative Donohue suggested more outreach and exposure to high school students that could help the company with recruitment of adequately trained employees.
Representative DuPlessis commented about the difficulty for employers to find technical workers not only in Logan County but statewide. He said he thinks that the focus should be on career readiness and not test readiness when it comes to students and preparing them for the workforce.
Logan County Industry Perspective: Logan Aluminum
Stacey Hughes, Human Resources Manager, and Doris Moody, Human Resources Team Leader, of Logan Aluminum spoke about the company’s history, current state, issues they face, and anticipated needs. In early 1981 construction began, and the plant’s start-up was in 1983. Logan Aluminum was established as a joint venture by Consent Decree when ACRO sold the remainder of its aluminum business to Alcan. The decision to locate in Logan County was based on the work ethic of the people in the area. Today the company is run by two owners, Novelis Corporation and Tri-Arrows Aluminum Corporation, but has its own board of directors.
The plant is located on a 1000 acre site with 39 acres under roof and has over 1000 team members including over 500 operators (OTs) and over 180 maintenance workers (GTs). The company was built for a 400 million pound capacity of aluminum, but over the last 30 years has increased its production to two billion pounds without expanding the original footprint, which has been accomplished through human ideas and continuous improvement. Logan is the largest single can sheet facility in North American and supplies 45 percent of the North American can market.
There are five tenants that are used in their yearly strategic transition excellence plan which include managing costs; production optimization; product quality and consistency; environment, health, safety and security; and employee culture. Logan has a very unique management style that sets them apart from other companies. The well-being of employees is concentrated on to ensure employees are healthy and engaged. A majority of the time the plant operates without supervision or management, and it operates t 24 hours a day and seven days a week. Since the start of Logan Aluminum, the philosophy of using people as a part of the competitive advantage has been used to out produce competitors by changing the way that employees view work itself. There are eight levels of OTs and four levels of GTs with a 5 percent pay increase at each level. The compensation for OTs is $38,600 to $56,000 annually and for GTs $58,000 to $65,500, with full benefits for both.
Logan also operates a corporate university that trains and educates existing employees. There are 600 to 800 internal classes each year, with 35,000 to 40,000 hours of training each year. The topics of study cover three main areas which are technical, safety, and behavioral/team skills. Within the corporate university there are both internal and external instructors. Logan also offers an apprenticeship program that was established 25 years ago. It is a three year program offered to an existing employee that provides training on mechanical, electrical, instrumentation, and automation. The plant partners with Southcentral Kentucky Community and Technical College (SKYCTC) to allow employees to receive a two year technical degree and be paid while in school. The apprenticeship program used to be the company’s main source of maintenance workers, but in recent years due to retirement, the company has had to increase the number of GTs hired externally.
The turnover rate at Logan Aluminum is 2 to 4 percent, but a challenge it is now facing is workforce retirement. Until now the retirement rate has been relatively low, but due to the baby boomer generation beginning to retire, over the next 10 years Logan will lose an estimated 30 to 50 employees a year. Losing highly skilled workers will greatly affect the plant. Experienced and well-trained workers from the community and surrounding areas will be needed to fill those positions. Of those that apply to Logan for a GT position, 6 percent are hired to become an employee after going through the competitive and thorough testing and assessment process. Moving forward, Logan Aluminum will need a career ready workforce that are highly skilled and technically and behaviorally strong.
Replying to Representative Martha Jane King, Mrs. Hughes estimated that 13 to 15 percent of the aluminum is exported outside of the U.S. Logan supplies North America with 45 to 47 percent of its can sheet.
Mrs. Moody explained the apprenticeship program in detail at the request of Senator Thomas. The apprenticeship program is an internal development program. The number of employees entering the program is based on business needs. About 40 to 45 employees apply each year and three to ten are accepted into the program.
Mrs. Hughes stated that experience, a technical degree, maintenance tests, behavioral interviews, technical interviews, and other assessments are involved in the application process in response to Senator Thomas. About 10 percent of people who apply for operator positions are hired on with the company.
Logan County Industry Perspective: Champion Petfoods
Lee Hodgins, Vice President of Human Resources, Champion Petfoods, testified about the Canadian-based globally distributed Champion Petfoods that is currently building a pet food kitchen in Logan County. Dog Star is the name that has been given to the 300,000 square foot facility that is being built to house the first U.S. location of the company. According to Mr. Hodgins, the company is building one the most technologically advanced pet food manufacturing facilities in the world. The company has been distributing their products worldwide for over 25 years. The mission is divided into three components: biologically appropriate, fresh regional ingredients, and never outsourced (BAFRINO). When a fire struck one of the kitchen locations in Canada three years ago, instead of outsourcing and hiring another manufacturing company to produce their pet food, the company informed suppliers around the world that it would have a decreased amount of product until repairs could be completed because it wanted to stay true to its mission. Logan County was chosen for the local ingredients that would be readily available to provide customers with quality pet food.
Champion Petfoods has strong values that have allowed them to be a successful pet food manufacturer. Those values include teamwork, responsibility, authenticity, innovation, and leadership. Mr. Hodgins stated that the company spends a lot of time on the teamwork within the company. As a result, it has a competitive screening and application process. It is currently in the hiring process to find the best employees possible. Training and development programs are being created to ensure a well-trained and skilled workforce. Although Champion Petfoods has employees that have been with the company for many years, it is looking for new and innovative leadership within the group entering the workforce to help continue to grow and thrive. The new kitchens in Logan County will be completed in four to five months and they will be hiring around 150 employees. Within that time, it will be seeking individuals who are a meaningful fit, are highly skilled in every opportunity they are given, and are well aligned with the culture and values of Champion Petfoods.
Mr. Hodgins stated that the initial investment in the facility in Logan County was
$85 to $100 million after being asked by Representative Martha Jane King. The company has developed partnerships with local farmers and growers after doing two years of research to provide fresh local ingredients.
Logan County Area Technology Center Construction Plans
Dr. Kevin Hub, Superintendent, Logan County Schools, gave an overview of the Logan County Area Technology Center construction plans. Logan County has approximately 3500 students with 600 employees. There are five P-8 schools and one comprehensive high school. Logan County is considered a distinguished district, ranking 16th in the state. There are two National Blue Ribbon Schools and four Middle Schools to Watch. This year, 557 students are attaining dual credit college courses by taking courses through the Russellville Area Technology Center (RATC) or at the high school, which is a total tuition savings of more than $625,000.
RATC celebrates its 50th year in 2015-2016 and has served more than 50,000 students over the years. Of the 53 area technology centers in Kentucky, only five offer nine programs like RATC, and none has quite as high student enrollment, which is more than 600. The nine programs currently offered are office technology, automotive technology, health sciences, information technology, drafting, electricity, welding, accounting, and machine tool technology. In addition to offering dual credit college courses, the center is also graduating students that have earned industry ready certifications such as American Welding Society Certifications, Nursing Assistant Certificates, AutoCAD Certificates, and IC3 Digital Literacy Certifications.
Although RATC does a tremendous job educating its students, there is now a need for a new area technology school due to the age of the current facility and the need for updated training equipment to properly teach students and provide them with modernized instructional resources. The new center, through partnerships with local businesses, will also provide adult workforce training. The local nickel recallable tax has been approved with no petition signatures, which will fund half of the $20 million construction of the new facility. Dr. Hub stated he hopes the legislature will vote to fully equalize, which will fund the other half of the project. Therefore, the facility would be able to be constructed without using any funds from the Logan County Board of Education bonding capacity. The architect selected by the board is an industrial architect who has planned for the center to be built for expansion and under industrial principles, which will allow the center to better train and educate individuals with the most current updated technology. Site visits have been done to local businesses to receive input on their needs to ensure that the programs offered and equipment used will give the students the most benefit within the workforce upon graduating.
Groundbreaking of the new area technology center will be spring 2016 and the anticipated opening will be fall 2017. The size will be nearly double that of the RATC, with the new facility being around 68,000 square feet. That will not only house the current nine programs but has also been designed to have extra room for expansion and additional programs. Dr. Hub said he will continue to petition the Department of Education to approve new programs. He said if he cannot accomplish that, then he will work with the board to have new programs offered through the high school but located at the new area technology center. There is also going to be extra space for higher education partners. The new center will also be a model for energy savings which includes an off peak ice storage, a 68 kilowatt solar array that will provide 25 percent of the building’s energy, and an energy efficient use of daylight.
Closing
Representative Martha Jane King thanked both committees and all speakers for attending. She acknowledged former state Senator Richie Sanders for assisting in organizing the meeting.
There being no further business, the meeting adjourned at 1:30 PM.