By Rob Shear, Lexington For Everyone Board Member;
Published in Lexington Herald-Leader on March 14, 2022
Imagine a company that employs 160 people with hourly rates exceeding $20 an hour after a year or two and $30 within 5 years. One that has $50 million in sales and $10 million in payroll. And one that is employee-owned with longtime employees whose ownership stake will provide them with a significant nest egg for retirement above and beyond their 401(K) plans.
That sounds like a company Lexington would spend a lot of time and effort to recruit, doesn’t it? But what if I told you that company already is located in Lexington? SRC is an employee-owned company that remanufactures engines and engine components, hydraulics, and power-train products.
The problem is that as we continue to experience growth – SRC has more than doubled in a little over a decade – we are running out of room at our current facility. And unless something changes, there is nowhere for us to relocate within Fayette County.
How did Lexington get to this predicament? There are three main reasons:
- Lexington’s land and regulatory burdens result in land costs that are at least three times higher than surrounding counties, making it even more difficult to attract and retain jobs. We can’t afford to pay $250,000 to $275,000 an acre when other communities are making land available and affordable.
- Fees add at least 30 percent to that cost and are so difficult to discern that even city officials have difficulty estimating them. Thankfully, there is an effort under way to eliminate this costly bureaucratic fee.
- There are few sites where the land is available to purchase, ready to develop and fits the needs of manufacturing companies.
A lack of available, suitable land for jobs means Lexington is losing out on new job opportunities, many existing jobs are threatened and tax revenues that fund important city and school programs aren’t keeping pace with needs.
A 2019 study showed the city could be facing a budget deficit of as much as $17 million by 2024. That’s because more than 60 percent of Lexington’s revenues come from payroll taxes. Creating more jobs in Lexington means:
- Businesses can locate and stay in Lexington, contributing net profits and payroll taxes as well as providing funds and volunteers to nonprofits.
- Everyone can have access to good-paying jobs in our community.
- We can make more quality investments in schools, parks and other programs without raising taxes.
SRC has been named a top 25 small business by Forbes magazine and No. 1 in business practices by Inc. magazine. Our employees own company stock because our CEO believes workers create wealth and should share in that wealth. SRC has grown, and we’d like to grow more. But we haven’t been able to find a place where we can grow in Lexington.
When companies are forced to leave Lexington, they take the jobs and payroll taxes with them. And much of the volunteerism and philanthropy will go to the county where the company is newly located.
But it doesn’t stop there. Workers face the hardship of a longer work day thanks to a commute, more expenses with gas and wear-and-tear on their cars, and child care difficulties that come with working in another county. For those who don’t have reliable transportation, working in another county isn’t an option. There is no bus service to adjacent counties.
We are encouraged that the city is looking to repeal some of the costly and cumbersome regulatory fees. As Lexington undertakes its next Comprehensive Plan to guide our community’s future, we encourage policy-makers and leaders to review and remove other barriers to recruiting and retaining jobs. Our land policies are directly tied to economic development and job creation. Let’s listen to all segments of our community to create solutions that work for all of us.
Rob Shear is the general manager of SRC of Lexington, an employee-owned company that remanufactures engines and engine components, hydraulics, and power-train products. He also is a board member of Lexington for Everyone.