The Paducah Sun
The Paducah Sun
Paducah, Kentucky
Monday, December 09, 2002

Plant decision should change focus

With the Purchase region facing the possible loss of one of its largest and highest-paying employers, it's essential that local leaders look beyond the pursuit of specific industrial prospects to broader issues of economic growth and diversification.

The decision by USEC Inc. to build a test plant for gas centrifuge technology in Portsmouth, Ohio, did not sound the death knell for the nuclear industry in Paducah, but it was a very clear warning to the people of the region to prepare for a future that does not include the uranium enrichment plant.

Some local leaders remain convinced that Paducah can win the competition for the permanent gas centrifuge plant USEC intends to build after it tests the centrifuge process in Portsmouth. The company expects to make a decision on the location of the permanent facility in 2004.

It's true that Paducah hasn't been eliminated as a site for the permanent plant; however, by any realistic assessment, Portsmouth holds the upper hand.

Nick Timbers, USEC's chief executive officer, emphasized that in announcing the decision on the test plant. "Those issues that apply today will be applicable in 2004," he said. "One has to be realistic that the decisions made today do have a bearing on the evaluations that will occur in 2004."

Timbers' statement was diplomatic, but it's not hard to read the message between the lines: Paducah has at best a small chance of overcoming the two key issues that decided the location of the test plant.

The Portsmouth plant has a facility the federal government built there in the 1980s to house gas centrifuges. That will allow USEC to save time and construction costs.

Even more important, perhaps, is the fact the Paducah plant is located in an earthquake zone. By picking Portsmouth, which is not in a seismic zone, USEC will save millions on construction.

From all indications, state officials and local leaders made an aggressive bid to overcome Ohio's advantages in the competition for the test plant. J.R. Wilhite, commissioner of the state Department of Community Development, said the incentive package the state offered USEC was one of the largest in the state's history.

At some point state and local economic development officials are going to have to ask themselves whether it's worth making a tremendous sustained effort to pursue USEC when the odds are stacked against Paducah.

Local leaders should keep the gas centrifuge project in their industrial recruitment plans, but they need to concentrate on the best opportunities not long-shot gambles.

Paducah has two industrial parks; it needs new businesses to fill them. If local officials can land several good industries, the potential loss of USEC (the gaseous diffusion plant is scheduled to shut down in eight years) will not cast such a long shadow over the future.

Officials in the Purchase region also need to continue pushing for state funding for the regional industrial park in northern Graves County.

But having land, transportation and local officials eager to attract new business and industry still is not enough. The state's recent experiences with USEC and Hyundai, the Korean automaker that considered locating in Hardin County, also indicate hefty incentive packages aren't enough to lure industrial prospects.

What's needed to ensure economic growth and prosperity in our region is a change in the state's political culture.

For the past 20 years Kentucky's tax burden has been growing rapidly while the state's economy has expanded at a relatively slow pace. Neighboring states where taxes have remained low have grown much faster than Kentucky.

It's not a coincidence that Tennessee, a state with one of the nation's lowest tax burdens, has outgrown Kentucky by 20 percent since the mid-1980s.

States that emphasize private sector growth fare better economically than those that depend on government to create jobs. Big-spending politicians will deny it, but this is an inescapable fact of economic life.

Elected officials and economic development leaders in western Kentucky must become advocates for growth and disciples of the free market. This means supporting tax and regulatory policies that create a favorable state business climate as well as building industrial parks and chasing prospects with tax-funded incentives.

If the loss of the USEC test plant sparks a new awareness of the importance of the business climate and the limits of government, the Paducah area will already be on the way to a brighter economic future.