Current Conditions Report

Current Conditions Report for Greater Kansas City

 
December 2011


On The Upside:
  • Transportation continues as a strength for the Midwest. Railway Age reports that BNSF is planning up to $680 million in investment to keep pace with Asia’s taste for specialty grains and commodities. For the first eight months of 2011, USDA reports that the number of marine grain containers heading from the US to Asia rose by 29% from the year before, and that continued expansion in seaborne grain transport is likely. Development continues apace to match the trend – BNSF’s intermodal facility west of Kansas City will match the firm’s new Memphis base when it opens in 2013 with a capacity of about 500,000 intermodal lifts. Total domestic loads – that is, an intermodal operation handled by rail – rose about 7% nationally through October YOY.
     
  • Long-stalled development projects showed signs of life, or at least of movement over the past few weeks. The abortive West Edge project, which has sat idle since late 2008 will be recast, reset and otherwise restarted as a new headquarters for Polsinelli Shugart. While the main office building originally erected as part of the West Edge project will be removed and rebuilt, the hotel portion of the development will remain with the project as a whole scheduled to open by the fall of 2013. And the development formerly known as Corbin Park was purchased out of bankruptcy for $8.1 million by developer Mike Schlup, who has also renamed the retail complex Aspen Square and says he’ll be ready to resume work by mid-summer of 2012. Finally, the KCMO City Council approved a 177-unit luxury apartment project at 46th and Pennsylvania, just north of the Plaza, which would be the largest development in the area in 12 years.
     
  • If job creation as a whole hasn’t been booming for the metro area lately, it at least has ticked along at a respectable rate. French-owned medical software firm CapGemini announced an additional 125 jobs at its facility in Lee’s Summit, which already has 150 employees on site. Downtown’s historic Hanna Building could soon be occupied by 100+ employees of Sporting Innovations, an ap-buildling offshoot of soccer franchise Sporting KC. And the Hollywood Casino out at the Legends is continuing its local hiring fairs, with a target of 1,200 full-time employees by early 2012 when it’s scheduled to open its doors. Overall, metro employment grew 1.1% from October 2010 through October, 2011.The only fly in the ointment was the relative imbalance of job creation – about 5,000 fewer jobs on the Missouri side than one year ago, and about 4,500 more in Kansas.
On the downside:
  • Companies offered financial incentives by the State of Missouri have made for rather, uh, interesting reading over the last few weeks. In Glascow, Bonnybrook Steel Forms laid off most of its workers on October 3rd and announced that it plans to auction its equipment on December 21st. Embroiled in payment disputes with a Pennsylvania company over a nearly $1 million steel form contract, Bonnybrook had planned to eventually have more than 150 employees on the payroll. The firm’s former COO and co-owner noted that he hoped it might be possible to re-open by spring. A substantially bigger deal in Moberly promising up to 600 new jobs with the Chinese manufacturer Mamtek has also fallen apart, leaving the city of Moberly potentially on the hook for nearly $40 million in bonds meant to finance development. In neither case did the troubled firms take state incentives, which were contingent upon jobs created and maintained over time. However, red flags unearthed in state government emails regarding Mamtek before any decisions were made have led to hearings in the state legislature and to a black eye for the Missouri Department of Economic Development.
     
  • Even as private-sector hiring slowly regains its momentum, public sector layoffs are likely to throw something of a wet blanket over spending, consumer confidence and tax revenues. Johnson County, KS has already offered buyout packages to 550 eligible employees, with 175 of them so far accepting the offer. Since 2009, the county has already eliminated 300 jobs through attrition but needs to cut another 300 positions to fund operations without raising taxes by 2014. Jackson County has generally been able to avoid layoffs through spending cuts, but we’ll see how long it can maintain that streak.
     
  • As a state, Kansas may not get back to where it was pre-recession for another three years. Such are the findings of IHS Global Insight, which in November projected that Kansas had lost a total of 90,000 jobs since April, 2008 and would not gain enough net new jobs to match these losses until the end of 2014. Kansas fared far better than Ohio or Michigan, states with huge manufacturing job losses, and better than California and Florida, where the housing bubble was at its worst. Beyond that, Wichita State’s September survey projected 15,000 new jobs by the end of 2012, but in the words of the executive director of the university office that created the survey, “Fifteen thousand jobs don’t begin to cover the hole we’re in.”

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