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Jeff McKenzie quoted in Kentucky Association of Manufacturers "The Goods"


The Kentucky Association of Manufacturers (KAM) hosted a sold-out crowd on Feb. 11, at the second annual ProsperousKentuckySM Manufacturing Summit and Trade Show. Nearly 400 gathered at the Franklin Convention Center for the event, including manufacturers, legislators, educators, government and business leaders.

Sandra Wilson, KAM board chairman and manager of Public Affairs for New Page Corporation, kicked off the summit by welcoming attendees, encouraging them to visit the trade-show booths and drawing attention to “money” strewn across the tables. “It’s all about our theme, ProsperousKentuckySM” Wilson explained. “Manufacturing is the No. 1 industry in Kentucky, and that money symbolizes the $27 billion a year we contribute to the state gross product and Kentucky’s prosperity.”

“Manufacturing is by far Kentucky’s largest industry, contributing 20 percent of the state gross product – more than twice as much as the secondplace industry, real estate,” added Jim LeMaster, KAM president and CEO. “Our 260,000 workers make an average of $45,000 a year, and we produce 97 percent of Kentucky’s exported goods.”

“Yet we have lots of challenges to overcome if we are to stay in first place over the next decade,” LeMaster added. “We are here to talk about how we can reduce our costs to compete in the global economy and look at ways to help members find qualified workers to replace retiring baby boomers.”

Next came a veritable “who’s who” list of speakers, including Kentucky Governor Steve Beshear. Following are highlights of those speeches:

Jeff McKenzie
Chairman and CEO
Greenebaum Doll & McDonald PLLC, and
Chairman of the firm’s Economic Development/Incentives Team

Contrary to misconceptions seemingly shared throughout the Commonwealth, incentives do play a vital role in Kentucky’s ability to compete. “I hear these things and want to deal with them right away,” said McKenzie.

Misconception: We don’t need incentives. Abolish them nationwide, and the states will stand side-by-side, on the same playing field.

McKenzie: Fair competition state-to-state? No. There are different tax structures that vary considerably from state to state. Each determines what it needs to offer to bring in and promote expansion of business.

Misconception: We’re in a nationwide fist fight for jobs. State by state, we push, pull and tug for every one of them.

McKenzie: It’s not a nationwide battle. Jobs are not going to Tennessee; they’re going to Mexico, China and other places. That’s not to mention the high-tech jobs we never see, going to Ireland and other countries where we just aren’t competing.

Misconception: Why should I care? Incentives don’t really matter.

McKenzie: They do matter. Whether or not your company has incentives can determine whether you can compete with businesses in the next state or nationwide. They are there for your company and community and important to being able to bring in and expand jobs in your area.

Misconception: There are no incentives in Kentucky for existing jobs; nothing for me unless I’m bringing in new jobs.

McKenzie: I’ve heard this from manufacturers, and there are incentives, in fact – BSSC (Bluegrass State Skills Corporation); IRBs (Industrial Revenue Bonds); KEIA (Kentucky Enterprise Initiative Act); KIRA (Kentucky Industrial Revitalization Act); and KREDA (Kentucky Rural Economic Development Act), to name a few.

“There are others as well, but I will leave you with this one; something KAM has asked me to look into,” noted McKenzie, who discussed a potential incentive for companies trying to decide whether to invest more in Kentucky, versus Tennessee, Mexico or China.

The incentive would involve a credit against corporate income tax for use on extraordinary expenditures, with a 10 percent limit on the amount involved. So if a plant put a million dollars into equipment, it would have the ability to obtain $100,000. That amount would be applied over a 10-year period, with 1 percent of that investment obtainable for each of 10 years and a “carry forward” allowance when depreciation applies.

“KAM has listened to you regarding this program, and it’s an issue I think Kentucky should aggressively address,” said McKenzie. “I propose we consider it moving forward.”

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