SUNDAY EDITION: New study holds Louisville economy to the mirror - WDRB 41 Louisville News

SUNDAY EDITION: New study holds Louisville economy to the mirror

Posted: Updated: Nov 3, 2013 02:11 PM EST
GLI CEO Craig Richard GLI CEO Craig Richard

LOUISVILLE, Ky. (WDRB) -- Jefferson County captured most of the population growth in the Greater Louisville region over the last decade, but jobs did not follow.

In fact, more than twice as many jobs were created in Bullitt County than in Jefferson County from 2002 to 2012, despite Jefferson being ten times' Bullitt's size.

The e-commerce warehouses driving job growth in Bullitt County underscore how Louisville's economy has become "dependent" on the flow of physical goods, according to a new report commissioned by Greater Louisville Inc., the metro chamber of commerce.

Without attracting more educated young people -- and keeping the ones we have from moving away -- Louisville will become "increasingly less attractive for quality, skilled technical and professional jobs," the report concludes.

The 60-page "competitive assessment" sizes Louisville up against competitor cities like Nashville and Indianapolis in demographics, jobs and education.

The report, completed in September, is the first step in an initiative called Advantage Louisville, in which GLI is setting a fresh economic development strategy for the region, to be carried out over the next five years.

"This community cannot afford to sit back and wait as the competition grows stronger," GLI CEO Craig Richard said in an interview. "It's important for us to take an inventory of what it is we need to do and then develop the implementation strategies to make it happen."

The report treads over some familiar ground. It notes that Louisville lags competitors in educational attainment, such as the percentage of adults with bachelor's degrees.

It also mentions a common complaint among business leaders such as Yum! Brands CEO David Novak: that Louisville needs more direct flights to be an attractive place for corporate headquarters. In fact, more than a quarter of passenger flights from Louisville International Airport went to Atlanta, according to the report.

Other notable findings include:

-          Unlike other metro areas, Louisville faces a "workforce sustainability" problem, with more older workers on the cusp of retirement than younger workers to take their places.

-          Perceptions of Jefferson County Public Schools' performance and student assignment plan may be a detriment to economic development.

-          While logistics and distribution is a big strength, Louisville needs to diversify its economy to withstand downturns in consumer demand for goods.

Timing

The strategic overhaul comes at a time when GLI itself is undergoing major changes. Last month Richard, who joined GLI in January from the Houston chamber of commerce, laid off most its senior leadership staff in an effort to "streamline away" activities that don't directly related to economic development.

The overhaul also comes as Louisville Mayor Greg Fischer is asking residents to come up with big ideas for the city through his Vision Louisville project.

"I'm really glad that we are doing all this work as a community," said Ted Smith, Fischer's economic development director. "We have been working on a very old economic development road map."

Market Street Services, an Atlanta consulting firm, is leading the Advantage Louisville project, which is expected to wrap up in February with an "implementation plan" for the next five years.

GLI raised money to pay for the plan, Richard said.

Steve Williams, CEO of Norton Healthcare, and Chuck Denny, PNC Bank's regional president in Louisville, are leading the plan.

Demographics

When it comes to population, the Louisville metro area has been growing about as fast as the U.S. as a whole, but not as fast as the competitor metro areas used in the report: Austin, Nashville, Indianapolis and Richmond, Va.

And Louisville's population gains have been driven by births in the region and international immigration – but not by people moving here from other parts of the U.S., the report says.

Unless more people are attracted to the region, Louisville is going to face a workforce problem, as there are more workers nearing retirement (ages 45-64) than younger ones to replace them (25-44).

Nashville, Indianapolis and Austin, on the other hand, have larger populations of younger workers than older ones, an advantage as "businesses flock to a growing and sustainable pool of young talent," the report says.

Within the Louisville metro area, Jefferson County and Bullitt County showed opposite patterns from 2002 to 2012.

Jefferson captured nearly half of the region's population growth but only 20 percent of the region's job growth, while more than half the region's new jobs flowed to Bullitt County, but only 10 percent of its new population.

Thanks in part to the availability of land, Bullitt has attracted several warehouses that store and ship merchandise ordered online, such as the Zappos.com facilities now owned by Amazon.

Job decentralization is occurring all over the country, and the trend is not as acute in Louisville as other regions, according to the report.

Ron Crouch, a longtime Kentucky demographer who is not involved in Advantage Louisville, said Jefferson County's population growth is likely due to available housing for workers, even if they might commute to Bullitt County.

He added that more recent statistics show the trend reversing, with strong job growth in Jefferson County in the economic recovery.

Education

The report mentions Louisville's lack of educational attainment – a critical economic development issue that leaders have been trying to address – and notes the area is improving at a faster rate than competitor metros.

"We are stopping the leakages," said Mary Gwen Wheeler, executive director of the education initiative 55,000 Degrees. "We are improving the number of people graduating high school, the number of people graduating college."

Wheeler, who is on the Advantage Louisville steering committee, said the report highlights a related challenge: keeping recent graduates from leaving the metro area to begin their careers.

"We seem to be improving our output, but they are either are not staying or we are not balancing the ‘in' and ‘out' migration as well as we need to," she said.

The report includes comments from more than 1,000 responses to an online survey of Louisville-area residents, nearly half of which said the region's options in K-12 public education are a "disadvantage to economic growth."

Survey respondents panned JCPS, saying the district gives parents little choice in their child's school while bussing students long distances to maintain diversity.

"There is a reason our Catholic/private school system is so robust in this city," said one survey respondent. (Respondents were not identified in the report).

The survey was distributed through GLI's networks and was not a scientific sample of community opinion. Responses came primarily from East End zip codes 40222 and 40220, and two-thirds of respondents did not have children under 18 in their household.

JCPS spokesman Ben Jackey provided statistics that challenge the opinions expressed in the survey:

- About 80 percent of children in the district attend JCPS, a high "market share" for an urban school system, he said.

- More than 80 percent of incoming kindergartners in the system get their first choice of school.

- About half of incoming kindergartners apply for a school that is not the one closest to their home.  

"Parents arguably have more choice in Jefferson County than in any other school district in the country," he said.

But reputations of public schools matter, especially when it comes to attracting quality jobs, said Christa Tinsley Spaht of Market Street Services, manager of the Advantage Louisville project.

"We have to talk about what the perception is, or we can't address it strategically," she said.

Comments also touched on the role of Jefferson Community & Technical College. One person said JCTC has "the worst community college campus in Kentucky." Another person identified as a "JCTC official" said: "There is a gap from what the community wants from the college and what it can provide in terms of workforce."

JCTC spokeswoman Lisa Brosky said the college is "remarkably responsive to meeting the needs of our area employers," but she didn't take issue with the notion that the school has acute needs for facility upgrades.

"I suspect it is easy for someone to look down First Street, where we have planned new manufacturing and technology centers, and imagine how much more we would be able to accomplish; or, to see how much more we could do with dedicated campuses in Carrollton and Bullitt County, where we currently lease space for classes," she said.

Jobs

Much like population growth, Louisville's job growth is coming from existing company expansions rather than new entrants to the area, according to the report.

In fact, from 2000-2010, Louisville was the only metro area (compared to Austin, Indianapolis, Nashville and Richmond) to lose jobs through more places of business moving out than moving in, and through more folding than starting. Louisville's growth came entirely from expansions of existing businesses.

The report noted Louisville's strength in logistics and distribution thanks to UPS' global air hub, but it adds that these industries are "highly cyclical and dependent on national and global customer and consumer confidence."

And, many logistics job do not pay well, the report notes.

Louisville has other strengths such as healthcare (particularly aging care), manufacturing, and food and beverage (Brown-Forman, Papa John's).

"Sectors beyond logistics do have a strong presence in the region, but not nearly the level of impact on the economy," report said.

One bright spot in the report: Louisville is becoming better known as a place for entrepreneurs and early-stage companies, spurred in part by a 33 percent increase in research and development funding at the University of Louisville since 2006.

There is "tremendous momentum" toward investment in young companies with establishment of business accelerators and incubators like Velocity Indiana, XLerateHealth and Innovate LTC.

"The region is gaining ground, and national recognition supports the growing entrepreneurial culture," according to the report.

Smith said the growth in research at U of L is encouraging, especially if coupled with another strategy: linking local entrepreneurs with big corporations in the area like General Electric. The bigger companies could be customers, or investors, in young companies, he said.

 "You look at Austin, you can't help but take that away; it's not South by Southwest (the festival) -- it's (the University of Texas at Austin) and Dell," he said.

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