Coal production in Kentucky’s Appalachian coalfields recently improved slightly, thanks to recession recovery and higher natural gas prices, bringing a temporary sigh of relief to Eastern Kentucky.
Even in its long, slow decline, coal, along with horses and bourbon, is interwoven into the songs and stories of Kentucky history, leaving a large cultural and political footprint in the wake of its gradual decline.
Meanwhile a decidedly less sexy industry has been steadily out-producing all three of these signature industries, and with the recent announcement of two massive car battery plants in Hardin County, Kentucky has fully taken the reins as an automotive state.
“We’re not only an automotive state, but we’ve secured our future,” said Gov. Andy Beshear, taking another well-deserved bow over the state’s single largest economic development project in its history — a $5.8 billion investment by Ford Motor Corp. and South Korea-based SK Innovation to build two battery manufacturing plants in Glendale in Hardin County that are expected to employ 5,000 people. Whether this will be enough to secure Beshear’s future as a two-term governor is another question, but it has cemented Kentucky’s status in not just automotive manufacturing, but advanced manufacturing that is adapting to a very quickly changing world.
According to the Bureau of Labor Statistics, automotive manufacturing jobs have made up nearly 4 percent of state employment for the past two decades, with some dips during the Great Recession. Coal jobs in 2001 made up about 1 percent of jobs, while last year, they came in at less than two-tenths of a percent.
“Coal has been a very important part of Kentucky’s economy, but coal employment has been declining for several years, and that seems to be a long-running trend,” said Michael Clark, director of the Center for Business and Economic Research at the University of Kentucky. “It’s still an important part of some communities, and very important to the families in those communities, but if you look at Ky’s economy across the board, it’s very diverse, and we’ve got a lot of other sectors that are larger than coal.”
Those include services overall, health services in particular, and manufacturing, both automotive and aerospace, according to the Cabinet for Economic Development. Aluminum production and manufacturing (with the exception of the Braidy plant in Ashland), have reinvested to produce automotive grade aluminum, another piece of the automotive industry.
Kentucky has four “Original Equipment Manufacturers:” Toyota in Georgetown, two Ford plants in Louisville and the GM specialty plant in Bowling Green that makes Corvettes. Roughly 103,000 people work directly for an OEM or a supplier. The battery plant signals Ford’s investment in electric cars, which could have the same kind of exponential effect that Toyota has had since the 1980s. Toyota recently announced a $460 million expansion of its Georgetown plant.
“The market is driving all of this,” said Kris Kimel, former president of the Kentucky Science and Technology Center, and now co-founder and chairman of Space Tango in Winchester, an aerospace research and manufacturing company. “Obviously these kinds of advanced manufacturing plants are clearly where the global economy is going and a lot of Kentucky’s traditional industries, while they still are important, are likely not to be part of the future. It’s just market forces, this now big panic that we don’t have enough batteries to fuel the move to electric cars.”
Kimel said the battery plants are a huge step forward for Kentucky, but will bring their own sets of pressures, like infrastructure and energy consumption. Beshear noted that federal infrastructure money will be key to building much of what the new plants will need in terms of roads and bridges. Now automotive companies will continue to push for tax giveaways from the state, but there will be less environmental degradation than coal, and possibly, fewer state legislators will feel the need to oppose state efforts to fight climate change in an effort to cozy up to coal interests. (It’s possible, of course, that we’ve merely pushed dangerous and damaging resource extraction to other countries with the rare earth metals necessary for battery production. The New York Times recently published an investigation about the war over cobalt in Congo being wages between China and the United States.)
“For decades the General Assembly embraced programs about how coal mining is our future, and they ignored end loaders full of evidence that the mining industry was in decline, even necrotic,” said Dee Davis, founder and president of the Center for Rural Strategies in Whitesburg. “So it was easier for the legislators to pretend and preen than it was for them to be honest with local people. I think most local people knew what was coming.”
Davis pointed out that coal mining helped fuel the automotive booms in Michigan and Ohio over the years, so now it will be up to state leaders to somehow attach Eastern Kentucky’s economic struggles to a booming automotive industry.
“We need a way to identify ourselves that’s iconic and strong and shows our contribution to the rest of society,” Davis said. “Even with all these jobs that came from Toyota, Ford in Louisville, Corvette, we still have a way to go before we universally call ourselves an automotive state. It takes time, it’s important to have a sense of who we are and a sense of contribution … what’s important next is to tell the story of how we’re contributing to the rest of the country, then we can begin to take some pride in automotive batteries and aerospace.”
Beshear thinks that with more four-lane roads, broadband and energy, automotive can be tied to Eastern Kentucky, although these kinds of promises are made by every politician without much change in the region’s fortunes.
“I do think Eastern Kentucky has opportunities to be part of that supply chain,” Beshear said. “Employers need to see a workforce that is ready and certainly, Eastern Kentucky has a workforce that’s ready.”
When an economy is less subject to boom and bust, and when good jobs depend on education, it might then be possible to layer in more research and development that brings even higher-paying jobs.
“I still think it’s an issue, we don’t have enough economic activity in industries that do their own research and development here, and that’s typically where the value is,” Kimel said. “Unfortunately Kentucky has never been a big hub for research and development, although lot of companies do their manufacturing here.”
That would require much more investment in education — K-12 and higher ed — than General Assemblies have seen fit to over the years. There’s a reason that North Carolina has a Research Triangle, and a state higher education system that ranks among the top in the land.
Still, the battery plants could supercharge Kentucky with the kinds of jobs that bring more prosperity than we’ve seen in many years. Bluntly, it’s on Kentucky leaders not to screw it up.
“I believe it’s a game changer,” Beshear said. “It’s planetary with a gravitational pull that will bring so many companies here. We are entering an era the likes of which we haven’t seen, but we need to make sure it reaches every part of Kentucky and we want to get this historic moment right.”