Kentucky’s Secretary for Economic Development Terry Gill was in Murray this week to look at how the cabinet can better highlight Murray State’s graduates. He spoke with WKMS about Kentucky’s workforce, right-to-work, federal tariffs and trade.
Tariffs and Trade
Changes in federal tariffs and international trade are making the job of Economic Development Secretary complicated, Gill said.
In response to changes in federal trade policy, many countries are targeting the home states of many prominent politicians- like bourbon in Senate Majority Leader Mitch McConnell’s home state. Gill said the trade woes are making it complicated to attract businesses to locate to Kentucky.
“But with that being said, I think this is a fluid situation...I think this is part of a negotiation. Let’s just assume if this is a baseball game we’re in the seventh inning stretch. I don’t think we can fully understand what the ‘end game’ looks like,” Gill said. “I think what they’re trying to do is negotiate trade agreements that are fair and balanced. I think this is part of that process but I think eventually we’ll get to an end point that looks different than where we are today.”
Gill said the changes to aluminum and steel tariffs can benefit some companies in Kentucky, like new aluminum rolling mill Braidy Industries near Ashland. He said they are filling a need left after costs went up for imported aluminum. Also, the aluminum tariff’s have allowed a Hancock county smelter to boost production.
“Because pure aluminum is so essential to defense applications, the nation needs to have a sufficient supply of that,” Gill said. “Because so much of that has been imported at low market prices, those who were responsible for smelting couldn’t make the economics work.”
He said the tariffs could hurt other companies like General Electric Appliances in Louisville. Gill said ‘downstream manufacturers’ such as this one are susceptible because they source many of their products from a global network.
Gill said Kentucky’s historically low unemployment rate can be misleading. It is currently 4% according to the Bureau of Labor Statistics. He said it’s more accurate to look at labor participation rate, which is still lower than the national average. Kentucky’s labor participation rate was an average of 57.6% in 2016.
But he said the jobs that are in demand fall in line with what Kentucky graduates are being trained for. Gill said his duty to connect businesses who are short on skilled workers with these graduates.
“Kentucky has seen such an upswing in growth in manufacturing,” Gill said. “Students who come into the workforce with the right soft skills, technical skills and critical thinking skills...those are also in demand. We have companies are saying ‘we’re looking for people who are willing to be trained in our process, but they have to have those base fundamentals,’ so a strong STEM background certainly helps.”
Gill said technical trades like software developers and engineers are among jobs experiencing the greatest need for workers.
Kentucky recently became a 'right-to-work' state, a policy that weakens labor unions by allowing workers to stop paying union dues or fees once current contracts expire. Supporters say it makes the state more competitive and ideal for businesses.
Gill said he believes right-to-work legislation has helped to bolster Kentucky’s economy. He said an example of the legislation’s success can be seen by Braidy Industries, who weren’t going to locate to Kentucky before right-to-work passed.
“Within weeks after the session ended, they decided to give Kentucky a chance,” Gill said. “So I don’t think there’s any question that the $9.2 billion the state attracted last year...some of that is related to the business climate, and part of the business climate obviously relates to right-to-work.”
He said union’s in Kentucky haven’t been impacted by the legislation, adding that a growing economy means that some people won’t choose to join them. He said the legislation lets companies not feel coerced one way or another.
“I think what we’re seeing here is a bit of a rising tide,” Gill said. “And I think it’s going to benefit all companies.”
Workforce Concerns in Agriculture
Immigration reform is causing the ag industry’s workforce to dwindle. Gill said workforce concerns across all industries is something the cabinet spends a lot of time on.
He said local farmers that might be concerned about having sufficient workers should be in contact with their local and state representatives in order to help change policy.
“I think what influences policy are businesses that employ our residents,” Gill said. “When they are struggling, when they can’t expand or compete for a new contract because they don’t have workers...that makes a difference. I would just suggest that making sure that at the local level and federal level that those folks are being very, very, very vocal about what isn’t working.”
Resources For New Businesses
Gill said the Cabinet For Economic Development is examining how they can give businesses more resources in different parts of the Commonwealth. He said he believes west Kentucky has opportunity for ag-tech industries and will be working with his cabinet to put more resources in play for the region.