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Business & Economy

Ky. Economic Dev. Official Talks ‘Breaking Down Silos’ And Building ‘Team Kentucky’

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Matt Markgraf
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WKMS

“Have you heard the good news?” asked Kentucky Cabinet for Economic Development Interim Secretary Vivek Sarin to a room of community and economic development leaders in Murray on Wednesday. “The good news I’m talking about is in the context of economic development.” 

Sarin touted accomplishments under the Bevin administration, saying the state has surpassed $20 billion in new investment over the past three years and more than 54,000 new jobs announced statewide - more than 1,200 new jobs last month. “The encouraging message is: we really are just getting started,” he said.

Sarin and Commissioner Erran Persley were in Murray to kickstart a series of business and community forums across the state to better communicate the cabinet's efforts. Another new effort, Sarin said, involves a webinar series with economic developers. “We realized we need to do a better job out of Frankfort and out of the Cabinet of Economic Development of just fundamentally communicating,” said Sarin. The idea involves building a unified ‘Team Kentucky’ approach when interacting with clients. 

On the theme of collaboration, Sarin held up a list of attendees to the Wednesday luncheon categorized by the various groups they represent and said, “Do you know what I see when I look at this list? I see a lot of silos. And the question I begin to ask is: if all of us are gathered here today and all of us are wearing our economic development ballcaps, then what does it look like in the future to begin breaking down the silos and, from a regional point of view, collaborating in such a way whereas our state motto says: ‘united we stand, divided we fall.’”

He suggested consolidating regional economic development efforts to create a unified front against modern competition: neighboring states - and even the world. (This notion of regional collaboration was recently brought up by Congressman James Comer at a Purchase Area Development District event and has been mentioned in the recent past by a local economic development leader.)

Sarin said Kentucky is not the most competitive when it comes to other states with regard to “pure incentives.” But, he said, it’s not incentives the state is leading with in negotiations. He said the lead presentation usually involves location, lifestyle, quality of workforce, infrastructure and ‘political harmony’ - including at local levels, and later noted the importance of hospitality in economic development. 

“There’s power in numbers,” said Sarin in a follow-up. “There’s efficiency that comes in consolidation,” developing a unified effort to pursue opportunities that exist out of state or out of country.

Noting the common perception of Kentucky and otherwise noteworthy resources, Sarin said on international trade trips the number one thing people know about the commonwealth is Kentucky Fried Chicken, followed by the Kentucky Derby, bourbon and Mohammad Ali. He said people don’t know that Kentucky is a top producer in the automotive industry, serves as a logistics hub with UPS, DHL and Amazon, is a major exporter of aerospace components, is centrally-located in the U.S., and other factors. “Where in the world were our predecessors?” Sarin asked. “What were they doing? How come nobody has been out selling this incredible product?” 

Specifically in west Kentucky, Sarin noted the economic potential of the I-69 Ohio River Bridge, “that whole corridor is going to open up. A whole new, just explosive growth of economic opportunity for this area.” He also pointed to the region’s coal industry faring better than coal in other parts of the state. “We have different countries that we’re talking to that are eager to trade with us on that product and we’re working hard to do that.” Sarin mentioned the economic growth potential in hemp as well as advanced manufacturing and shipping potential in Paducah. In a follow-up, Sarin also noted the importance of having airports like the one in Murray, as well as universities like Murray State. “This is a university under great leadership. It’s on a mission. It’s on a great track. A vibrant university is also another really important cornerstone to economic development.” 

Sarin said the cabinet is thankful that Kentucky is a ‘right-to-work’ state, because it helps Kentucky stay on the shortlist when businesses are looking for the right state in which to locate. “And so now we’re getting looked at. We’re not getting passed over. That has been a significant contributor to our success.”

Touting the benefits of the Red Tape Reduction initiative, Sarin described in a follow-up an example from his Cabinet, where most of the entrepreneurship and small business functions had been outsourced to a third-party. Sarin said he believed that work could be integrated into the cabinet, saving bureaucracy, reducing the cost-burden and driving a greater entrepreneurial experience. That effort turned into ‘Kentucky Innovation.’ Sarin said this is a good example of cutting red tape to help the local business community. 

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Credit Matt Markgraf / WKMS
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WKMS
Erran Persley (left), Vivek Sarin (right)

Murray Calloway County Economic Development President Mark Manning said after the federal tax cuts, RFIs (Requests For Information) “exploded,” but then slowed down after the “tariff talk” began. He asked the cabinet officials what they thought about that pipeline when the tariff issue gets resolved.

Commissioner Erran Persley previously served as foreign direct investment advisor under U.S. Commerce Secretary Wilbur Ross and said he worked on the tariff issue. Persley said tariffs are a “double-edged sword” in that some foreign companies have sought to come to the U.S. to beat the tariffs. “The issue is, what we haven’t figured out is, there’s winners and losers in every policy decision. What we haven’t weighed out is how many losers do we have compared to the winners,” he said, and recalled a conversation with Ross last November in which he asked how long the tariffs were going to last and said Ross’ answer was “I don’t know. We’re playing the long game here.” Persley said he believes, at the end of the day, if the tariff situation can be worked out, then it will be to the benefit of the U.S. “At some point, it has to work out,” he said. 

Sarin added that in a season of “great national tension,” Kentucky’s economic development team continues to keep China “on the radar screen.” He noted a trade mission trip last November in which Governor Matt Bevin was the only governor to attend an import/export expo in Shanghai. “And that really resonated with the Chinese people in a manner that is really hard to describe,” said Sarin. From this trip, he said, companies began to “fill up our pipeline.” 

“And in fact, we have a couple of projects that are developing and moving forward right now that I’m very optimistic in the near future we’ll be making some wonderful announcements.,” he said. WKMS News asked in a follow-up to clarify whether these are Chinese projects. Sarin said he could not speak about the projects until given approval to do so. 

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Credit Matt Markgraf / WKMS
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WKMS
Erran Persley and Vivek Sarin

WKMS News asked to further describe what the tariff issue looks like at the Economic Development Cabinet level, Sarin said: “What the tariff issue has fundamentally done is introduce to the business community the one thing that a lot of business leaders don’t desire to see and that’s uncertainty. And so with the tariff issue and the other trade discussions going on, there’s a lot of businesses that are affected by that and we’re just in a season right now of uncertainty. Everybody’s wondering where’s it going to go, what’s the final result going to be, so they can make some final decisions.” 

“I do believe that that uncertainty has caused not all corporations, but some, to maybe slow down their investments and delay making it,” he said “We’re still very fortunate that we are coming out with record announcements. But I think, nationwide, there’s probably statistically been a little bit of a slowdown in that world.” 

WKMS News asked how USMCA will help Kentucky where NAFTA may have fallen short. Sarin said some of Kentucky’s largest trading partners are in Canada and Mexico, particularly in the automotive industry. “Fundamentally, we are proponents of a breakdown in trade barriers. Those things that allow our businesses to ship products back and forth easier, to do so at less cost, that’s good for them, ultimately that’s good for Kentucky.” He added that if the new agreement will deliver on this aspect, then he’s all for it.

“To only be known for chicken, a drink and a horse race and boxing - c’mon, we’re so much more than that,” said Sarin toward the end of his presentation. “But it’s kind of nice to be the underdog isn’t it? It’s nice because you step into the arena of economic development and all these other people are so surprised to hear all that we have to offer and we should all be very excited about the opportunities ahead.”

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