Despite the global economic downturn, Kentucky governor Steve Beshear is bullish, especially when it comes to America’s challenged automotive sector.

That’s because Kentucky’s high-tech companies and universities are working on initiatives that he claims “will make Kentucky the epicentre of the nation’s automobile industry of the future”.

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In April, the Commonwealth of Kentucky, the University of Kentucky and the University of Louisville announced a partnership with Argonne National Laboratory to establish a national battery manufacturing research and development centre.

This will facilitate the development and deployment of advanced manufacturing processes for lithium-ion and other advanced vehicle batteries.

Favourable position

In the same month, the National Alliance for Advanced Transportation Batteries (NAATBatt) selected Kentucky over Texas, Illinois, Kansas, Missouri, New York, Pennsylvania and South Carolina as the location for a first-of-its-kind lithium-ion battery cell manufacturing facility.

However, construction depends on whether the US Department of Energy can secure some of the $2bn-worth of federal stimulus funds set aside by the Obama administration for electric drive vehicle battery and component manufacturing projects.

If successful, NAATBatt, a consortium of about 55 companies, will establish a manufacturing campus in Glendale in the corridor Mr Beshear refers to as “auto alley”. The campus will include a headquarters, a manufacturing facility for refining products and production processes, and a larger plant for mass battery manufacturing.

“This manufacturing operation could create as many as 2000 permanent jobs with an average annual wage exceeding $40,000,” says Mr Beshear.

The governor sees both announcements as important, as Kentucky is the third largest producer of cars and light trucks in the US, behind only Michigan and Ohio, and president Barack Obama’s goal is to have 1 million plug-in hybrid electric vehicles on the road by 2015. Today, virtually all advanced automotive batteries are manufactured in Asia.

Mr Beshear believes Kentucky is uniquely positioned to take the lead in advanced materials for energy generation. In addition, the state is promoting its strengths in biotech and high-technology.

“We are rapidly approaching the point where we will have critical mass in these areas,” he says. Yet, the governor admits Kentucky is facing challenges due to the recession.

Tax breaks

In order to make continued investments, Kentucky offers aggressive tax incentive programmes to attract companies, such as tax credits for corporate income tax, occupational tax, sales and use taxes. There’s also the Kentucky New Energy Venture Fund, a state programme that invests public funds in promising renewable and alternative energy companies. Another programme matches funds that come from the federal government for small business innovation research and small business technology transfer.

“We also have a strong reputation for leading and exceeding customised, flexible and industry-drive skills training,” he adds.

Mr Beshear is working with Kentucky’s legislature to expand and create other incentive programmes that he claims will help the commonwealth put Kentucky on the cutting edge and, hence, attract more FDI.

Already, Kentucky is home to over 400 foreign-owned facilities representing 26 countries and employing about 80,000 people.