Call to Order and Roll Call
The 3rd meeting of the Interim Joint Committee on Economic Development and Tourism was held on Thursday, September 17, 2015, at 1:00 PM, in Room 149 of the Capitol Annex. Representative John Short, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Alice Forgy Kerr, Co-Chair; Representative John Short, Co-Chair; Senators Carroll Gibson, Chris Girdler, Denise Harper Angel, Ernie Harris, Wil Schroder, Reginald Thomas, and Mike Wilson; Representatives Lynn Bechler, Kevin D. Bratcher, George Brown Jr., Hubert Collins, Leslie Combs, Tim Couch, Jim DeCesare, Mike Denham, Bob M. DeWeese, Jeffery Donohue, Myron Dossett, Jim Gooch Jr., Mike Harmon, Chris Harris, Richard Heath, James Kay, Dennis Keene, Kim King, Tom McKee, Terry Mills, David Osborne, Ruth Ann Palumbo, Arnold Simpson, Fitz Steele, Wilson Stone, David Watkins, Gerald Watkins, and Russell Webber.
Guests: Dr. Len Peters, Secretary, Energy and Environment Cabinet; Dr. Lee Todd, Bruce Dawson, Vice President, Drone Systems, LLC; Clif Morehead, Government Relations Manager, GE Aviation; Dr. Ben Malphrus, Director, Space Science Center, Morehead State University; Dr. Tim Smith, Executive Director, National Air & Space Education Institute; Twyman Clements, President, Space Tango, Inc.; Robert Riggs, Kentucky Aviation Association; and Mike Young, Kentucky Aerospace Council.
LRC Staff: John Buckner, Lou DiBiase, and Dawn Johnson.
Minutes
A motion by Senator Harris, seconded by Representative Simpson, to approve the minutes of the July 16, 2015, and August 20, 2015, meetings carried by voice vote.
2015 House Bill 84, AN ACT relating to nuclear power.
Representative Gerald Watkins and Dr. Len Peters, Secretary of the Energy and Environment Cabinet, discussed 2015 HB 84 and provided background information on the Paducah Gaseous Diffusion Plant. HB 84 would lift a 31 year moratorium on construction of a nuclear power facility in Kentucky only in a location previously used in the manufacture of nuclear products, which would limit any new facility to the property in Paducah within a 50 mile radius. Five of seven surrounding states have operating nuclear power plants, and the other two do not have moratoria. Representative Watkins explained this is not an affront to the coal industry. Energy options must be diverse to enhance economic development opportunities.
Dr. Len Peters, Secretary of the Energy and Environment Cabinet, spoke in favor of 2015 HB 84. Repealing the band sends the message that the state is open to an honest and full discussion about the energy challenges faced by the state.
Responding to Representative Denham’s question, Dr. Peters said there will never be another facility like Maxey Flats, Kentucky.
In response to Chairman Short’s question, Secretary Peters said a majority of costs for nuclear sourced energy are upfront during construction. Nuclear fuel is much cheaper than gas-sourced energy, the price of which can fluctuate significantly.
Responding to Representative DeCesare’s question, Representative Watkins said it is time to address alternative power sources in Kentucky and it is up to House members to obtain a floor vote to move the process forward in 2016.
Representative Combs said that, with recent Environmental Protection Administration rulings, the cost of mining coal is largely prohibitive. With massive layoffs in eastern Kentucky, nuclear power could be a viable option.
Representative Gooch said this has become a state level issue due to the inaction of federal officials on the Yucca Mountain Nuclear Waste Repository.
Representative Kim King requested LRC staff acquire recent New Madrid fault line earthquake data due to potential earthquake hazards. Secretary Peters said new construction requires earthquake protection for the highest probable earthquake.
Representative Heath said that he visited a nuclear power plant in Tennessee and was impressed with the safety and security of the operation, and that he supports lifting the moratorium.
Aerospace Industry in Kentucky
Mike Young, Acting Director of the Kentucky Aerospace Council spoke about job creation in the aerospace industry. Mr. Young gave an overview of the council’s history and mission. Funds from the state’s jet fuel tax go into an airport development fund. The council oversees approximately $8 million that is used to support small regional local airports. Kentucky’s aerospace manufacturing industry is larger than the three automobile facilities in the state combined. Kentucky ranks third in the nation in aerospace manufacturing. The industry provides high wage jobs with college graduates entering the field at a $50,000 average annual salary. To capitalize on the aerospace industry, three things are needed: education, industry, and federal government support. He asked members for their support in coordinating the three to become number one in the industry.
Clif Morehead, Government Relations Manager, GE Aviation, explained that GE manufactures and services commercial and military aircraft engines as well as an avionics. GE Aviation is a global, long-cycle business that is growing quickly—mostly fueled by international demand. The company has approximately 45,000 employees worldwide, with locations in 22 countries, 79 manufacturing sites, and 11 engineering centers. There are two sites in Kentucky—a manufacturing facility and a material handling distribution center. Mr. Morehead said the opportunities are greater than ever. As engines become more sophisticated there is greater opportunity with GE Aviation.
Twyman Clements, President, Space Tango, Inc., gave an overview of Kentucky Space, a Lexington-based nonprofit umbrella organization that works with different universities throughout the state. Mr. Clements explained his Kentucky-based education and training in NASA small satellite development.
Mr. Clements explained the ExoMedicine Institute which studies how living systems and disease processes change in zero gravity.
Mr. Clements gave an overview of Space Tango, Inc., a for-profit company that develops equipment for microgravity use in the International Space Station. The equipment supports customer experiments with near-real-time interaction.
Dr. Ben Malphrus, Director, Space Science Center, Morehead State University explained the importance of the aerospace industry on a state and national level. Including the Department of Defense sector, aerospace accounts for approximately 15 percent of the United States Gross Domestic Product. This year, Kentucky’s aerospace manufacturing exports were $8 billion. Dr. Malphrus indicated one of their goals is to see more counties in central and eastern Kentucky included in one of the twelve federally designated manufacturing zones. Dr. Malphrus explained Morehead State’s involvement in nanosat technologies. Five satellites built in Kentucky have flown into space. Nanosat technology and its wide range of uses is an important industry to expand upon. The inventor of CubeSat is Bob Twigs. CubeSat established the worldwide standard for small satellites. Dr. Malphrus said the most important issue is a cohesive strategy between industry, private sector, government, and education statewide. State infrastructure appropriations are key to supporting the $16 million research and development space research facility at Morehead. He explained other projects at the research facility. The three goals of the center are expanding the southwest regional aerospace corridor, developing an aerospace strategic plan, and having the Exomedicine project anchored in Kentucky.
Dr. Tim Smith, Executive Director, National Air & Space Education Institute, explained that the purpose is to bring the industry to the students with courses including dual college credit, industry certifications, competitions, informal learning opportunities, summer camps, and teacher professional development. It serves over 40 school districts with 1,000 students currently studying flight and aeronautics, aerospace engineering, and manufacturing and maintenance. Students use full scale aircraft, nanosatellites and unmanned aerial systems. Participants go through a process of design and engineering, manufacturing, operations, and logistics and maintenance. The institute’s goals are a private/public support model with the private sector providing programs, equipment and labs, and the public sector financial support to renovate a hanger to serve as a beacon for aerospace education in the state.
Bruce Dawson, Vice President of Drone Systems, LLC, explained the commercial uses for professional drones. Some uses include assisting emergency management personnel, law enforcement accident mapping, agriculture, surveying, power and pipeline inspections, and coal and construction excavation mapping. Mr. Dawson expressed concerns about restrictive legislation that may hinder professional use of drones.
Robert Riggs, Kentucky Aviation Association spoke about the economic impact of aviation and aerospace on Kentucky. Logistically, Kentucky offers two international world air hubs, significant interstate, rail, and waterway access, advanced manufacturing and advanced materials, low energy rates, and an advanced workforce through educational partnerships. He noted the need for a skilled workforce in the coming years in areas such as advanced manufacturing, aerospace engineering, and pilots.
Dr. Lee Todd spoke on the need of higher education to advance and expand innovation in Kentucky. Many engineering students leave the state to find jobs. The state needs more entrepreneurial Kentucky graduates like Twyman Clements. Programs like those offered by the National Air & Space Education Institute are important to reach children at an early age. Dr. Todd said good things are happening at the state’s public universities. He commended the legislature for funding Advanced Placement classes.
Dr. Todd said the state has suffered from a lack of vision in economic development for many years. The state strives to protect declining industries like tobacco and coal rather than having a progressive vision by investing efforts and dollars in the direction of an ascending market such as aerospace and advanced manufacturing. He recommended investing in creating opportunities to retain college graduates to enable them to make competitive wages and start their own companies such as Space Tango and being progressive about company recruitment. The state has reached an economic tipping point to begin thinking about a progressive business economy that uses the state’s talent.
Responding to Senator Thomas’s questions about their facility, Dr. Smith explained that teachers receive training to teach in their local areas and students from outside areas attend summer camps. Mr. Riggs said it is important to send the message to students that most stereotypes of manufacturing careers are outdated. Advanced manufacturing requires a specific technical skillset.
There being no further business, the meeting adjourned at 3:10 PM.