Over the last decade, Louisville’s job market has been bleeding, with little real aid — and critics point to lethargy in Greater Louisville Inc., as the leading culprit.
From January 2000 to January 2010, the Bureau of Labor & Statistics shows that the city shed 34,600 private sectors jobs. Those losses represent a 5.5 percent decrease underway before the recession of 2008 nearly tanked the nation’s economy.
Beyond the depressing job statistics, there is Louisville’s inclusion on several Worst Of-type lists — Sixth dumbest city, fifth worst place to find a job; worst place for allergies; et al. — that make you wonder: What is possible in Possibility City?
For several months, job creation and attraction has been at the center of the race for mayor of Louisville between Democrat Greg Fischer and Republican Hal Heiner. Both candidates have made reviving our local economy a top priority.
In a few days, voters will select one of them to stitch our economy back together, but some in the business community think the city’s chamber of commerce, Greater Louisville Inc., and their unwillingness to change or challenge regulations integral to business expansion is to blame for the sustained hemorrhaging, and could stand in the way of the next mayor’s lofty goals.
“Nobody wants to address this, including the Kentucky chamber of commerce and GLI,” says Bill Stone, owner of Louisville Plate Glass and member of GLI’s governmental affairs steering committee. “I think they’re concerned about pissing off the existing office holders who may get re-elected or stick around, and that is the problem. In order for a chamber of commerce … to be successful, there has to be a level of adversarial relationship with government. They have no adversarial relationship with government. None.”
Like many other business leaders, Stone think GLI fails to pursue pro-business policies because of perceived political pressure emanating from the Mayor’s Office and Metro Council, because both branches have the power to alter GLI’s budget at their leisure.
Additionally, they think GLI’s failure to lobby for specific legislation and regulatory changes — a decrease or abolishing of the state’s personal income tax coupled with an increase in sales tax (á la Tennessee); lower workers’ compensation payouts (á la Indiana); improvements in the public school system; improving public transportation and others — exhibit an unwillingness to buck against the city’s and state’s Democratic establishment.
“I think GLI is concerned that what they’ll do will upset the Mayor’s Office,” Stone continues. “And I think that’s more of a GLI perception than any desire of the Mayor’s Office. But I think their board is very concerned, their executives are very concerned to not upset the city, because if they do, then they will receive less money and the labor unions will be angry. So what?”
Economic data published by Business First paints an even bleaker picture than federal statistics show. In an April 8 article, it reported that Louisville lost 40,800 private sector jobs between 2000-2010, pushing the percentage of jobs lost to 7.63, while Nashville and Indianapolis gained 48,000 and 45,000 jobs, respectively.
These statistics dovetail nicely with the results of a report conducted by the University of Cincinnati and Northern Kentucky University.
Dubbed “The Regional Indicator Report,” the study examined 15 different economic criteria including quality of life and educational attainment across 12 different cities. Ultimately, the reported ranked Louisville dead last, below Cincinnati (10th) and Cleveland (11th), whose toxic Lake Erie shores actually manage to draw tourists.
Stone says that “the crack in the door” appeared 25 years ago, when the mayor and county judge executive were allowed to sit on the board of the chamber of commerce, setting the stage for practices that would lead to too cozy relationship between government and business in Louisville.
“It should’ve never happened,” Stone recalls. “ I was on the chamber board at the time, and I was opposed to it and Mitch McConnell was county judge, so it has nothing to do with who’s in office. It’s just bad business.”
Metro Councilman Kelly Downard, R-16, who as a former council president met with GLI on a monthly basis, agrees that political pressure is as much a factor as is a perceived lack of direct involvement from the mayor, who holds a spot on GLI’s executive committee.
“I was comfortable with what (GLI was) doing,” Downard says. ”And I was comfortable with the way they were doing it and the efforts that were made. But I noticed the same thing that’s being said: The mayor got involved at the end for the press conference instead of being on the front-end saying (to companies) ‘You need to come here, you need to be in Louisville, and here’s why.’ That’s my observation.”
“I don’t think it’s wrong for (GLI) to know what the mayor wants and does,” he continues. “But they’re hired to do a job that they know better. it’s like the police chief: You can hire the police chief, and the police chief knows what the mayor wants but the mayor ought not to be telling him how to police.”
Chad Carlton, a spokesman for the Mayor Jerry Abramson, dismisses the criticism, saying Downard hasn’t been “on the front-end, back-end or any-end of a business deal” the way that the mayor has. Furthermore, he points out that while the city is last according to the Regional Indicator Report, it is poised to make a comeback and could see the largest growth out of any other city on the list.
“Louisville had a higher percentage of a manufacturing base than other cities,” Carlton says. “Those other cities had already lost their manufacturing base. We were still holding on to our base. Remember, manufacturing took a disproportionate hit during the recession. As a result, we lost more than our competitors.”
“If there are three kids on the playground,” Carlton continues, “and one of them has more fruit snacks then the other two, and some hungry guy comes in wanting fruit snacks, we have more fruits snacks to lose, so we had more of a decrease in that.”
Local business leaders don’t quite see it in those terms.
“I think that from a manufacturing standpoint, Kentucky is not generally viewed as a favorable place to do business,” says Rich Gimmel, owner of Atlas Machine & Supply, Inc., a machine component design company with offices in Kentucky, Ohio and Indiana. “By having operations in three states, we can at least make a comparison between Kentucky and its neighboring states of Ohio and Indiana. We see that of the three, Indiana is by far the most pro jobs, pro-business.”
Like Stone, Gimmel thinks Metro government — including the mayor’s economic development cabinet — and its influence over the chamber of commerce are responsible for the cumulative job losses. They describe a lethargic entity that waits for instruction rather than jumps at opportunities.
“I think there are some people in government in Frankfort and at Metro Hall that are not particularly turned into how jobs are created,” Gimmel says. “And businesses, particularly in Jefferson County, are faced with an unduly burdensome set of regulations that tend to stifle job growth. When I was on the board, GLI received $1.25 million from Metro government. The fear then was that the people that run GLI were extremely worried about losing that money, and that sometimes they would pull their punches. I’m not sure that happened all of the time, but I think that it certainly did in a couple of cases.”
Over the course of the general election campaign, the distinction between Democrat Greg Fischer and Republican Hal Heiner has been creation versus attraction.
Both have stressed the importance of jobs in the local economy, with Fischer, a Louisville businessman and entrepreneur, proposing that as mayor he will convene the top local executives of major employers to identify opportunities for their industry to partner with others and to locate new operations or expand existing ones.
“Greg’s view is that a good economic development strategy includes job attraction, but job creation is much more important,” says Chris Poynter, a Fischer campaign spokesman. “Those business leaders and entrepreneurs who start companies here such as Humana, Inc. and Brown-Forman are some of our biggest industries. That emphasis is the best difference between the two.”
The Fischer campaign has also pointed to investment opportunities in key areas of west Louisville, the Louisville International Airport and capitalizing on the expansion of Fort Knox in the next several years.
Heiner has emphasized that the mayor needs to take a more personal role in bringing jobs to the city ahead of GLI. He says the chamber’s role should be on the “ground game” of the local job market.
“From my observation job attraction, expansion and retention has not been a high enough priority for the current administration,” Heiner says. “What I see in other cities is placing a very high priority on economic development where the mayor is directly involved often every day or every week in going through the prospect list and trying to build relationship with interested companies. Here, we have outsourced completely to GLI and I know it’s time for a different structure.”
The East End Republican has said he will personally court companies during their final decision, and make reforms to the city’s economic development strategy that could include a possible cut to the chamber of commerce’s budget.
“Certainly the funding to GLI and how that is directed will be on the table as well as the amount,” Heiner says. “But we still need them on the ground game, calling companies, marketing Louisville and letting business know we have culture welcoming their investment.”
There is a larger problem outside the mayor’s purview that business leaders cite as a handicap, Gimmel says: the city’s lagging public education system.
“I’m presently in the process of trying to relocate other people in other states to Jefferson County,” he says. “And in each case the realtor that they’ve been dealing with has told them ‘stay away from Jefferson County Public Schools, if you can.’“
The Kentucky Core Contest Test showed that only 21 percent of the district’s 133 schools met their goals under No Child Left Behind, compared with 37 percent last year and 44 percent in 2008.
Indeed, the area of low educational attainment is perhaps the only area that business leaders and GLI agrees on. The lack of educational attainment is “an admitted problem that we’ve been trying to address,” GLI spokeswoman Carmen Hickerson says.
Like Carlton, she highlights the Regional Indicator Report, noting how far Louisville can climb once the recession ends, even though are economic woes started beforehand.
“We have a contract with the city to provide specific business attraction services and expansion services,” Hickerson says of her organization. “So we work with businesses that are looking to expand and we work attracting new businesses to the city in certain industries. As such, we have very specific goals each year that we’re held accountable to meet those goals in the specific areas that we work. We have met those goals every year, over the last 10 years, with the exception of last year, which we all know what happened to the economy last year.
Hickerson further dismisses claims that GLI is subject to any political intimidation by pointing out that about 10 percent of its roughly $9 million budget comes from Metro government, with the rest coming from membership dues.
But the numbers don’t lie, and whatever businesses GLI has managed to attract have failed to eclipse the net loss of jobs Louisville’s higher-than-average unemployment rate. Orbiting at 10.1 percent (which is actually closer to 16 percent if the Bureau of Labor & Statistics’ more holistic definition).
“I think we’ve just gotten complacent through the years,” Downard says. “And that goes across the board.” He says that the mayor’s use of economic development director Bruce Traughber to solicit jobs instead of the mayor is confusing. “When you’re the CEO of a major company, you’d expect to see (the mayor) all the time.”
Looking to Louisville’s future, former GLI chairman Jonathan Blue says that the next mayor must make job attraction “a priority, every day for the next four years, period,” and that the grim economic numbers don’t lie.
“Whoever wins on Tuesday, that person needs to be proactive and needs to find companies,” says Blue, CEO of Blue Equity. “We do not get companies relocating here by waiting for the phone to ring. So whoever wins, and it doesn’t matter to me, and they need to make sure that’s agenda item number one on a daily basis.”
story by Jonathan Meador with contributions from Phillip M. Bailey