Before we ring in the new year, let’s look at a few of the events and trends that shaped Central Kentucky’s economy in 2016.
Lexmark, the Lexington-based technology company formed in 1991 from the old IBM typewriter unit, was bought out for $3.6 billion by a group of Asian investors led by Apex Technology Co. and PAG Asia Capital.
The company’s common stock stopped trading last month, and officials announced that its enterprise software division, a big growth area in recent years, would be sold. That will leave the imaging company mainly making printers, with a focus on the Asian market.
Lexmark is one of Lexington’s largest employers, but it is unclear how many of the 2,300 workers will remain at the sprawling headquarters complex at Newtown and New Circle roads.
The buyout could be good for Lexington if the better-capitalized company decides to expand here, Commerce Lexington President Bob Quick said.
But Kris Kimel, president of the Kentucky Science and Technology Corp., worries the buyout could mean a continuing loss of Lexmark research-and-development jobs and the talent they attract to Lexington.
On the other hand, Kimel said, local entrepreneurs are developing new technology businesses with R&D talent. While they don’t now equal the numbers Lexmark used to have, their diversity may be better for the local economy in the long run.
“Everybody’s on the block these days; there’s a massive consolidation going on around the world,” Kimel said. “We need to make sure that we are aggressively creating an environment for the startup and growth of innovation companies.”
Central Kentucky’s small tech companies added 307 jobs this year, according to Commerce Lexington. That is significant, since those jobs typically have starting salaries in excess of $40,000 a year. Among these are software companies such as MakeTime, an online marketplace for manufacturing capacity that hired 28 employees this year, and Space Tango, which helps companies put low-gravity research experiments on the International Space Station.
Biotech and pharmaceutical companies continued to become a bigger part of Lexington’s economy, attracted here in part by the University of Kentucky’s College of Pharmacy and Health Sciences. Coldstream Laboratories added 40 employees this year, while Hera BioLabs hired 23.
Automotive industry suppliers also continue to locate here, to be near Toyota and other regional assembly plants. Astecnos America Corp., which makes control panels, brought 41 jobs to Nicholasville. Nishida Art Specialty Composite America brought 30 jobs to Lexington.
As industries consolidate and manufacturing becomes more automated, Kentucky will see fewer huge employers such as Lexmark and Toyota.
Other large numbers of new jobs announced last year included: 562 in Lexington at Big Ass Solutions, which makes ceiling fans; 262 in Versailles at Lakeshore Learning Materials, which distributes classroom furniture and educational materials; and 310 in Versailles at More Than A Bakery, a commercial food factory.
A big deal for the local agriculture economy was Bluegrass Stockyards’ decision in February to build a new facility in Fayette County on 100 acres at Ironworks Pike and Interstate 75. That move was prompted by a Jan. 30 fire that destroyed the company’s longtime facilities on Lisle Industrial Avenue. The Lexington stockyards had $200 million in sales in 2015, and it added 20 jobs this year. Meanwhile, the Thoroughbred breeding and racing industry continued its recovery from the Great Recession.
The Urban County Council raised Lexington’s minimum wage from the federal level of $7.25 to $8.20 on July 1, but the state Supreme Court in October invalidated it and a similar increase in Louisville.
While the court decision prevents future local minimum wage increases, it is unclear how many, if any, Lexington companies cut workers’ recently increased pay after the ruling. “I cannot imagine and I would hope people wouldn’t roll that back,” Quick said.
With Republicans in control of Kentucky’s General Assembly and the U.S. Congress, the chances for state or federal minimum wage increases next year are somewhere between slim and none.
The University of Kentucky’s continuing construction boom pumped money into the local economy, as did the $100 million Summit at Fritz Farm mixed-use development, which opens next year; the $43 million renovation of the 21C Museum Hotel, which opened in February; and the $30 million renovation of the old Fayette County Courthouse.
Work recently resumed on CentrePointe’s underground garage after two years of idleness, raising hopes that something may finally happen on that key block in the center of the city more than eight years after it was demolished.