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DECEMBER 29, 2017

$1.3 BILLION ALUMINUM ROLLING MILL IN NE KENTUCKY; $70,000 average for 500 permanent jobs

 

Heavy hitters in the business world have joined together as shareholders in Braidy Industries, the firm that’s building a $1.3 billion aluminum rolling mill in northeastern Kentucky.

The list includes entrepreneurs, industrialists, investors, a former member of the U.S. Joint Chiefs of Staff, a world-renowned Harvard University economist, as well as current and former researchers at the Massachusetts Institute of Technology.



Braidy Industries Chairman and CEO Craig T. Bouchard released the names of the eight shareholders in a news release about a new scholarship fund they have created for local high school students.

Bouchard said in the new release that each of the shareholders “takes responsibility to the community seriously” and will work to make eastern Kentucky “the crown jewel of the commonwealth.” 



The planned aluminum mill came as welcome news last April to local residents who have been hammered with jobs losses over the past two decades. Once an employment hub, the Ashland area has lost thousands of manufacturing jobs.

Gov. Matt Bevin and Braidy Industries Chairman Craig Bouchard, at the April announcement. Gov. Matt Bevin and Braidy Industries Chairman Craig Bouchard, at the April announcement.



One of the hardest blows to the economy was the shutdown of an expansive AK Steel mill along the Ohio River. Other smaller companies also have moved out, including a plant in Wurtland that made pigments for a variety of industrial products.



“Braidy Industries’ decision to locate in eastern Kentucky has the potential to be as significant as any economic deal ever made in the history of Kentucky,” Gov. Matt Bevin said when the project was announced.

The proposed 2.5-million-square-foot aluminum mill will be built at the EastPark Industrial Center outside Ashland. 

Braidy Industries has purchased 204 acres of land at a cost of just more than $900,000. Bevin said in April that the project would create about 1,000 temporary construction jobs and more than 500 permanent manufacturing positions when it’s up and running.

The facility is expected to produce about 300,000 tons of aluminum a year, with opportunities to expand over time. 

Bevin said the average wage of workers in the new facility will be about $70,000 a year. He said the company will also provide low-cost healthy meals, a day care, a fitness center and other amenities to create an employee-friendly workplace.



“Our team recognizes an opportunity to make incredible impacts both in the global aluminum industry and in bringing well-paying jobs to eastern Kentucky in the heart of Appalachia,” Bouchard said the day the plant was unveiled. “The state’s willingness to partner closely with private industry makes this a prime location to found and grow our world-class and cutting-edge rolling mill.” 

In March, during the final hours of the 2017 legislative session, lawmakers approved the Bevin administration’s request for a $15 million incentive for what was described at the time as a mystery economic development project. 

About a month later, Bevin announced that Braidy Industries would be building the massive aluminum rolling mill. The $15 million was transferred to Commonwealth Seed Capital, a limited liability company that’s owned by the state and is listed as one of the shareholders.

Commonwealth Seed Capital invested the money in Braidy Industries. 



Bouchard had initially refused to divulge the names of other shareholders, saying that is proprietary information.



However, Attorney General Andy Beshear said in October that the Kentucky Cabinet for Economic Development is required under state law to release documents containing the names of shareholders. 

Beshear weighed in at the request of the Courier Journal newspaper in Louisville.



“This puts to rest the question of who our shareholders are,” Bouchard said.

Bouchard, Commonwealth Seed Capital, and Charles Price, president and CEO of Louisville-based Charah, the largest privately held manager of byproducts from coal-fired power generation in the U.S., are the only investors with direct ties to Kentucky. 

Price is described as an entrepreneur and industrialist who has more than 35 years of experience in the construction and industrial sectors in Kentucky and beyond. 



The other shareholders are:



• Michael Porter, a world-renowned economist who leads Harvard University’s Institute for Strategy & Competitiveness and a professor at the Harvard Business School. 




• Norton “Nordy” Schwartz, a former chief of staff of the U.S. Airforce who, in that role, served as a member of the Joint Chiefs of Staff in the U.S. Department of Defense.




• Christopher Schuh, head of Massachusetts Institute of Technology’s Department of Materials Science and Engineering where his research focused on optimizing the mechanical properties in metals.




• John Preston, former director of technology development at MIT where he was responsible for commercialization of MIT-developed technologies.




• The Robert Stucker Trust. Stucker is chairman emeritus of Vedder Price and has extensive experience advising corporations and financial institutions with respect to executive compensation, mergers and acquisitions, corporate finance and governance matters.




• Carl Westin, a Swedish national described as “an astute, accredited investor who has no business relationships within Kentucky.”



Braidy Industries wants to become the nation’s leading producer of high-quality aluminum for the auto industry and of ultra-high strength alloys for the aerospace industry. 

The state has agreed to potentially provide more than $12 million in tax incentives to the company. Up to $10 million of those incentives are tied to hitting job numbers and wage targets over a 15-year period. The other $2.5 million in incentives is meant to offset taxes on construction materials. 



Boyd and Greenup counties agreed to allow Braidy Indusrtries to forgo paying property taxes on the property in EastPark for 20 years. However, 

Bouchard has said the company will be paying its school taxes and plans to continue investing in northeastern Kentucky.



The aluminum mill would neighbor an Ashland Community and Technical College campus. The company has worked with the college and the Kentucky Community and Technical College System to develop a joint training program for prospective employees at the mill.



”Eight months ago they said they were breaking ground April 1, 2018, and they’re still on schedule,” said Ashland Alliance President Tim Gibbs. “For them, staying on schedule is crucial.”


By Mark Maynard
Kentucky Today

 

DECEMBER 29, 2017

Rotarians gathered for their weekly meeting on Thursday, December 29th at the Southern Spoon for their last meeting of the year. As always the meeting began with a prayer for our community, the Pledge of Allegiance, and the reciting of the Rotarian four-way test.

LOUISA ROTARY 12/28/17 - From L to R Chris Jobe, President of Louisa Rotary, Jimmy Rowe, owner of SERVPRO, and Kathy Bamer, Marketing Manager of SERVPROLOUISA ROTARY 12/28/17 - From L to R Chris Jobe, President of Louisa Rotary, Jimmy Rowe, owner of SERVPRO, and Kathy Bamer, Marketing Manager of SERVPRO

President Chris Jobe as always asked if anyone celebrated a birthday or anniversary during the past week. Jailer Roger Lee Jordan was celebrating a birthday, and tradition goes you pay one dollar when you do. Guests for the week were introduced and recognized, among those were Sarah Lycans, daughter of member Steve Lycans, LMS principal Joey Cecil and Austin Taylor, son of members Tommy and Ellen Taylor.

Speakers for the week were from Servpro with offices located in the Flatwoods, Ky. area, and serve Carter, Greenup, Lewis, Boyd and Lawrence Counties.

Jimmy and Jerry Rowe are the owners and also cousins. They have been in business for a little over 5 years.

Their marketing manager, Kathy Bamer spoke about Servepro and what they do. She also spoke to the character of the owners, saying that together they are "unstoppable and hands on." They are both married and both are veterans. They not only do the work that Servpro is known for, they are also very involved in giving back to their community of Flatwoods.

The Rowes not only give help in many ways to their own community, they also help out others when a disaster hits. Just recently they took a six man storm team to Houston, Texas.

"They worked anywhere from 14 to 16 hours a day to help in the cleanup of the storm that hit hard," Ms. Bamer said. "They stand behind their motto, it being, 'Like it never even happened!'.

She stated that they do every type of cleanup jobs from carpets to catastrophes such as when the Pentagon was attacked. Servpro trucks were everywhere and cleaned it up to the point that when they are done, their clients feel as if it is better than it was before, Ms. Baden said.

Servpro also provides a free service to come in your home or business and set up a file of all water cutoffs, identify all inventory, etc. so you have peace of mind knowing that if something happens, they have a informative folder that basically tells them everything about your building and it's contents. Open seven days a week, 24 hours a day (even Christmas) their number is 606-836-8000 and their Facebook address is facebook.com/servpro10192

After the speaker concluded, President Jobe presented them with a Rotarian coin and the meeting was adjourned for the week.

 

DECEMBER 28, 2017

Governor's office offers bleak picture of state funding with low tax receipts and big bills...

 

Commonwealth of Kentucky
Office of State Budget Director

Matthew G. Bevin, Governor

John E. Chilton
State Budget Director

 

*  Estimates of FY 2018 Revenue and the Budget Reduction Order

*  The budget for the next biennium

*  Fiscal Year 2017 - 2018

FRANKFORT, Ky. - Thursday, December 28, 2017 - On December 15, the Consensus Forecasting Group (CFG) revised their “official” estimate of tax receipts for this fiscal year – FY 2018. The CFG determined that General Fund revenues will be $156 million less than previously budgeted. In response to their determination and in accordance with statutory requirements, Governor Bevin has issued a BUDGET REDUCTION ORDER that specifies spending reductions prior to the end of this fiscal year, June 30, 2018.

Language in the biennial budget bill (2016 HB 303, Part VI) requires spending reductions equal to the shortfall to be allocated proportionately among all branches that receive money from the General Fund budget. Additionally, the Governor, the Chief Justice, and the Legislative Research Commission are required to implement reductions for their respective branch budget units as may be necessary to resolve the shortfall.

In accordance with the budget bill, the shortfall, after adjustment for dedicated severance tax revenue, is allocated to the three branches of government in proportion to their share of General Fund spending for the fiscal year.

Executive Branch $152,523,900 1.3%
Legislative Branch 807,900 1.3%
Judicial Branch 4,668,200 1.3%

Total $158,000,000

How the Legislative Branch and the Judicial Branch implement reductions is up to the heads of each of those branches. Within the Executive Branch budget, reductions are allocated among the Executive Branch agencies and the Constitutional Officers in proportion to their share of General Fund spending for the fiscal year:

Constitutional officers:

* Attorney General $ 141,000 1.3%

* Auditor of Public Accounts 63,300 1.3%

*  Department of Agriculture 217,800 1.3%

*  Secretary of State 22,800 1.3%

*  State Treasurer 25,400 1.3%

*  Other Executive branch budget units 152,053,600 1.3%

Total $152,523,900

The schedule attached to the Budget Reduction Order details the spending reductions for each appropriation unit within the other Executive Branch units.

The FY 2018 spending reductions are less than requested by the Governor when he asked for planning estimates earlier this year because the Budget Reduction Order addresses only the revenue shortfall and cannot be used to replenish the Rainy Day Fund. In addition, spending reductions specified in the Budget Reduction Order affect more agencies, thereby reducing the percentage applicable to most agencies.

*  The Next Biennium

*  Fiscal years 2018-2019 & 2019-2020

In addition to addressing revenues for this fiscal year (FY 2018), the CFG issued their “official” estimate of General Fund receipts for the next biennium – fiscal years 2018-2019 and 2019-2020. While the CFG projects a slight overall increase in tax revenues compared to FY 2018, the increases are modest for FY2019 and 2020 – $287.5 million and $284.1 million or about 2.7% and 2.6%, respectively.

In addition to only modest increases in revenue, the Commonwealth will be addressing various budgetary strains associated with pension funding, Medicaid, and other funding requests. Furthermore, responsible budgeting demands that the Budget Reserve Trust Fund be replenished to a reasonable level. As a result, it is certain that there will be a need to reduce spending well beyond the reductions implemented in the FY 2018 Budget Reduction Order. Those spending reductions are likely to approximate one billion dollars.

In this Budget Reduction Order, as in the past, spending reductions have not been ordered in cases that would jeopardize important governmental activities such as K-12 education (including the funding of the SEEK formula), corrections, Commonwealth and County Attorneys, Election Finance, Kentucky Retirement Systems, Teachers Retirement Systems, Board of Elections, Executive Branch Ethics Commission, School Facilities Construction Commission, Local Government Economic Assistance and Development Funds, Economic Development, Kentucky Higher Education Assistance Authority, etc. Protecting those categories from reductions in the next biennium will be difficult, if not impossible – there is just not enough revenue to satisfy all of the funding needs.